October 3, 2018 / 9:57 PM / 2 months ago

UPDATE 1-Race bias lawsuit against Morgan Stanley sent to private arbitration

(Adds Morgan Stanley comment, background on arbitration policy)

By Brendan Pierson

NEW YORK, Oct 3 (Reuters) - A black former Morgan Stanley broker who filed a lawsuit accusing the bank of racial bias must pursue his claims in private arbitration, a federal judge ruled on Wednesday.

U.S. District Judge John Koeltl in Manhattan ruled that the former broker, John Lockette, was bound by a company policy requiring employees to arbitrate all claims, including discrimination claims.

"We are pleased with the court’s decision in this case," Morgan Stanley spokeswoman Susan Siering said in an email. "The firm is strongly committed to non-discrimination and looks forward to addressing this dispute on the merits."

Linda Friedman, a lawyer for Lockette, could not immediately be reached for comment.

Lockette, who was hired by Morgan Stanley as an assistant vice president in wealth management in 2013, sued the company in February.

The New Jersey resident said he was given negative performance reviews, denied raises and bonuses, deemed too "verbose," and subjected by a supervisor to the nickname "Johnny" because of his race.

Lockette also said one supervisor insisted that he join a special program to prepare for the Series 7 broker examination because blacks' "intellectual weakness" left them "inherently less capable" of passing, the complaint said.

He said the discrimination culminated in his firing in August 2016. He sought compensatory and punitive damages, back pay, and an injunction against further discrimination.

Morgan Stanley filed a motion seeking to send the case to private arbitration, pointing to a May 20, 2015 email in which Morgan Stanley employees were told that the company was expanding its arbitration policy.

The email said that employees could opt out, but would be deemed to have agreed to the policy if they did not do so before a given deadline and continued working for the company.

Lockette said he never got the email, and so never agreed to arbitration, but Koeltl ruled that his "mere denial of receipt" was not enough to escape the policy under New York law.

The case is Lockette v Morgan Stanley et al, U.S. District Court, Southern District of New York, No. 18-00876. (Reporting By Brendan Pierson in New York; editing by Grant McCool)

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