Merrill Lynch, Pierce, Fenner & Smith Inc. v. Oliver
681 F. App'x 64
| 2d Cir. | 2017Background
- Marc A. Oliver was terminated by Banc of America Securities, LLC (BAS) in 2004; BAS filed a Form U-5 stating the separation was “involuntary” for “performance, non-securities related.”
- Oliver sued for discrimination; the parties executed a settlement agreement that included a merger clause, a broad release of employment-related claims, and a neutral-employment-reference procedure vesting exclusive jurisdiction in New York courts/agencies.
- In 2015 Oliver initiated a FINRA arbitration alleging, inter alia, defamation and breach of the settlement agreement based on the Form U-5 and related conduct.
- Merrill Lynch (successor to BAS) sued in federal court seeking to enjoin the FINRA arbitration and obtain declaratory relief that the settlement released these claims and that the neutral-reference clause was not breached.
- The district court granted the injunction and declaratory relief for Merrill Lynch; Oliver appealed pro se.
Issues
| Issue | Plaintiff's Argument (Merrill Lynch) | Defendant's Argument (Oliver) | Held |
|---|---|---|---|
| Whether the settlement’s forum-selection/merger clause and release displace FINRA Rule 13200 arbitration obligations | Settlement expressly supersedes prior agreements and releases claims; it vests exclusive jurisdiction in NY courts/agencies, displacing FINRA arbitration for released claims | Settlement cannot override Merrill Lynch’s FINRA obligation to arbitrate under FINRA Rule 13200 | Held for Merrill Lynch: settlement release and forum-selection clause displaced arbitration for the released claims (affirming injunction) |
| Whether statements in the Form U-5 are actionable as defamation despite the release | The settlement release bars claims arising from employment/termination, including the Form U-5 posted before the settlement | The Form U-5 is defamatory and actionable; Oliver retains defamation claims | Held for Merrill Lynch: the release barred any claims based on the Form U-5 (summary judgment/declaratory relief for Merrill Lynch) |
| Whether BAS breached the settlement’s neutral-employment-reference clause by the Form U-5 or failing to amend it | The neutral-reference clause specifies procedures for neutral references (employer inquiries to BAS Personnel Center); it does not require amending the Form U-5 | The Form U-5 violated the neutral-reference clause and settlement obligations | Held for Merrill Lynch: clause did not obligate BAS to amend the Form U-5; no breach |
Key Cases Cited
- Goldman, Sachs & Co. v. Golden Empire Sch. Fin. Auth., 764 F.3d 210 (2d Cir.) (standard of review for permanent injunction)
- Credit Suisse Sec. (USA) LLC v. Tracy, 812 F.3d 249 (2d Cir.) (describing FINRA’s arbitration role)
- Cohen v. UBS Fin. Servs., Inc., 799 F.3d 174 (2d Cir.) (scope of FINRA arbitration and limitations)
- In re Am. Express Fin. Advisors Sec. Litig., 672 F.3d 113 (2d Cir.) (settlement release can remove claims from arbitration)
- Applied Energetics, Inc. v. NewOak Capital Mkts., LLC, 645 F.3d 522 (2d Cir.) (enforcing contractual forum-selection/merger clauses over arbitration expectations)
- Interpharm, Inc. v. Wells Fargo Bank, Nat’l Ass’n, 655 F.3d 136 (2d Cir.) (valid release bars actions on released claims)
- Pampillonia v. RJR Nabisco, Inc., 138 F.3d 459 (2d Cir.) (New York law enforces clear, knowing, voluntary releases)