3) a system which measures earnings by quantity or quality of
production; 4) a differential based on any factor other than sex.
29 U.S.C. § 206(d)(1); see also Corning Glass Works v. Brennan,
417 U.S. 188, 196, 94 S.Ct. 2223, 41 L.Ed.2d 1 (1974). An
employer who attempts to justify a pay differential based on a
"factor other than sex" must also prove that the genderneutral
factor was adopted for a legitimate business reason. See Aldrich
v. Randolph Central School District, 963 F.2d 520, 526-27 and n.
1 (2d Cir. 1992).
Here, Kidder Peabody has introduced evidence of legitimate
reasons for the pay differentials: (1) that performance and
production justified certain pay decisions; and (2) that the firm
paid a premium to attract and hire talented new bankers to
rebuild its investment banking ranks after their depletion in
1989 and 1990.
a. Rewarding Performance and Production
A firm's practice of paying high revenue generators more than
individuals who produce less does not violate the EPA. See
Sprague v. Thorn Americas, Inc., 129 F.3d 1355, 1364 (10th Cir.
1997) (permissible to pay female assistant manager less than male
assistant managers where female's department produced less than
10% of revenues produced by males' departments indicating that
tasks and functions were dissimilar); Byrd v. Ronayne,
61 F.3d 1026, 1034 (1st Cir. 1995) (affirming dismissal of discriminatory
pay claims; fact that one attorney brought in substantially more
clients and revenue than plaintiff afforded employer affirmative
defense to Equal Pay Act claim). In her 1988 and 1989
calculations, Sobol compared herself to three senior M & A
bankers who were considered extremely valuable assets to the firm
because of their expertise and skills. As discussed above, the
Utility Group's revenue production was sluggish during Sobol's
b. Attracting New Hires to the Firm
An employer may pay higher wages to a male than a female when
it is necessary to do so in order to hire or retain an employee
with particular desired skills. See Horner v. Mary Inst.,
613 F.2d 706, 714 (8th Cir. 1980) (where a higher salary was paid to
a male employee because his "experience and ability made him the
best person available for the job and because a higher salary was
necessary to hire him," the salary was based on a factor other
than sex); Sigmon v. Parker Chapin Flattau & Klimpl,
901 F. Supp. 667, 679 (S.D.N.Y. 1995) (paying male associate more than
female associate in order to keep him from joining another firm
was lawful); Mazzella v. RCA Global Communications, Inc.,
642 F. Supp. 1531, 1552 (S.D.N.Y. 1986) (male employee's higher salary
justified in part because he could not be induced into
transferring without a salary match); Walter v. KFGO Radio,
518 F. Supp. 1309, 1318 (D.N.D. 1981), (education, experience, and
marketplace value of an individual's skills are relevant factors
in determining an employee's starting salary, and if a higher
salary is necessary to hire the best person to do the job, that
consideration is a valid "factor other than sex").
Yet, Sobol compared her salary to those of several new bankers
with hiring guarantees. For example, 13 of the 26 males to whom
Sobol compares herself in 1990 obtained hiring guarantees. If
these 13 individuals are not considered, the average compensation
of male managing directors drops considerably from $662,186 to
$472,944, approximately $150,000 less than what Sobol earned that
year. See Johnson Aff., Vol. II: Alan Wurzbach, Human Resources
Manager for Investment Banking Unit, 4921-22; Liddle Aff., Ex. C,
3. Absence of Panel's Written Opinion
Sobol argues that the Court may draw an inference that the
her claims in manifest disregard of the law from the
"overwhelming" evidence of discrimination and the absence of a
written opinion. In Halligan, the Second Circuit reversed an
arbitration award denying relief to a petitioner who claimed he
had been terminated in violation of the ADEA. See 148 F.3d at
204. Although the arbitrators had conducted extensive hearings
and rendered a written award describing the claims and defenses,
their writing did not contain any reasoning to support the
result. Given the strong evidence that Halligan was fired because
of his age,*fn17 the court was "inclined to hold that [the
arbitrators] ignored the law or the evidence or both." Id. The
fact that the arbitrators provided no explanation for their
opinion supported the court's view that the award was rendered in
manifest disregard of the facts and the law. While Halligan
does "not hold that arbitrators should write opinions in every
case or even in most cases," it stands for the proposition that
where a court is inclined to find a manifest disregard of the law
on the part of arbitrators, the court can infer from the absence
of a written opinion that the arbitrators did not have a
reasonable explanation for the award. Id.
In the instant case, although the arbitrators failed to provide
a written rationale for their decision, the facts presented do
not amount to overwhelming evidence of discrimination as was the
case in Halligan. Because I do not find a manifest disregard of
the law on the part of the arbitrators, I draw no negative
inference from the absence of a written opinion.
Based on the foregoing, plaintiff has not established that the
arbitrators acted in "manifest disregard" of the law in denying
her EPA claim. The arbitrators were informed of the governing
law, which was well-defined and clearly applicable to the case.
Moreover, plaintiff has not shown that the arbitrators ignored or
failed to apply the law. The Second Circuit has cautioned that
the reach of the "manifest disregard of the law" doctrine is
"severely limited". See Halligan, 148 F.3d at 202 (quoting
Government of India v. Cargill, Inc., 867 F.2d 130, 133 (2d
Cir. 1989)). Sobol has not presented "overwhelming" evidence of
discrimination. Kidder Peabody has offered "legitimate business
reasons" for any pay disparity between Sobol and other heads of
departments or investment bankers. Moreover, the court may not
review the weight accorded to conflicting evidence by an
arbitration panel. See Chisolm, 966 F. Supp. 218, aff'd, No.
97-7828, 1998 WL 695041 (2d Cir. 1998). Even though the
arbitrators did not explain the reasoning behind their decision,
I am not persuaded that they ignored the applicable law.
Therefore, the panel's award based on Sobol's equal pay claims is
C. Sobol's Constructive Discharge Claim
Nevertheless, the Court may vacate the arbitration award should
it find that the panel acted in manifest disregard of the law
applicable to Sobol's constructive discharge claim.*fn18 In
order to establish
a prima facie case of termination of employment in violation of
the ADEA or Title VII, Sobol must show (1) that she was within a
protected group (age or sex), (2) that she was qualified for the
job, (3) that she was discharged, and (4) that the discharge
occurred under circumstances giving rise to an inference of age
or sex discrimination.*fn19 See, e.g., Stetson v. NYNEX Serv.
Co., 995 F.2d 355, 360-61 (2d Cir. 1993) (ADEA claim); Tyler v.
Bethlehem Steel Corp., 958 F.2d 1176, 1180 (2d Cir. 1992) (same
standards of proof apply to Title VII and ADEA claims). A
"discharge," in satisfaction of the third element of the prima
facie case, may be either an actual termination of the
plaintiff's employment by the employer or a "constructive"
discharge. See, e.g., Pena v. Brattleboro Retreat,
702 F.2d 322, 325 (2d Cir. 1983).
A constructive discharge occurs when the employer, rather than
acting directly, "`deliberately makes an employee's working
conditions so intolerable that the employee is forced into an
involuntary resignation.'" Pena, 702 F.2d at 325 (quoting
Young v. Southwestern Savings and Loan Assn., 509 F.2d 140, 144
(5th Cir. 1975)). In determining whether or not a constructive
discharge has taken place, "`the trier of fact must be satisfied
that the . . . working conditions would have been so difficult or
unpleasant that a reasonable person in the employee's shoes would
have felt compelled to resign.'" Pena, 702 F.2d at 325 (quoting
Alicea Rosado v. Garcia Santiago, 562 F.2d 114, 119 (1st Cir.
Here, evidence presented by Sobol of Newquist's difficult
personality and her stressful relationship with him does not rise
to the level of "intolerable" working conditions. The
requirements of constructive discharge are not met when the
evidence shows only that an employee was dissatisfied with her
work assignment, or that her working conditions were difficult or
unpleasant, or that she preferred not to work for a particular
supervisor. See Spence v. Maryland Casualty Co., 995 F.2d 1147,
1156 (2d Cir. 1993). Moreover, Sobol has failed to prove that
Newquist or Kidder Peabody deliberately created an intolerable
environment because of Sobol's sex or age. See Stetson, 995
F.2d at 359-60.
Sobol cites Newquist's desire to appoint a co-head to lead her
group as well as his refusal to appoint her to firm committees as
reasons for her resignation. However, constructive discharge is
not established simply through evidence that an employee is
dissatisfied with the nature of her job assignments. See
Stetson, 995 F.2d at 360; see also Pena, 702 F.2d at 325.
Moreover, although Sobol states that Newquist's desire to hire a
co-head compelled her to resign, she was aware of his intentions
for two years prior to her resignation and even assisted in
interviewing potential candidates for the position. In addition,
the fact that Sobol negotiated for a consulting position with
Kidder after her resignation indicates that her working
conditions were not intolerable.
Based on the foregoing, the panel's decision to deny Sobol's
constructive discharge claims was not in manifest disregard of
the law. The arbitrators were informed of the legal principles
governing constructive discharge. Unlike the plaintiff in
Halligan, Sobol has not presented overwhelming evidence of
discrimination to justify a finding of manifest disregard of the
law or the
evidence by the panel pertaining to her constructive discharge
D. Plaintiff's Allegations of Panel Bias and Procedural
1. Panel Bias
Citing the arbitrators' professional backgrounds and their
track record of awarding low damages, Sobol charges that the
panel was biased against her.*fn20 Indeed, the NASD has been
criticized for its partiality towards member firms in the
selection of arbitration panels. See, e.g., Daily Labor Rep.
(BNA) No. 93, at A-3 (May 14, 1996); Rosenberg v. Merrill Lynch,
Pierce, Fenner & Smith, 995 F. Supp. 190, 206-212 (D.Mass.
1998) (refusing to compel arbitration of Title VII sex
discrimination claim, in part, because of institutional bias due
to industry influence over arbitration at self regulatory
organizations). However, the Second Circuit recently has rejected
charges of arbitral bias that were raised after the rendering of
an unfavorable award. See York Research Corp. v. Landgarten,
927 F.2d 119, 122 (2d Cir. 1991).
Sobol raised a peremptory challenge to Chairman Cutler's
appointment two and a half months after the NASD deadline to
raise such a challenge. The parties were notified of Cutler's
selection on December 15, 1993. Pursuant to Section 22 of the
NASD Code of Arbitration Procedure, a party has five business
days from the date she is notified of the identity of the
arbitrator to exercise a peremptory challenge. Plaintiff did not
notify the NASD of her intention to exercise her peremptory
challenge until March 3, 1994. See correspondence from Maria
Campese Diglio, NASD Staff Attorney to Jeffrey Liddle, dated
March 3, 1994, Johnson Aff., Ex. E. At no time did Sobol
challenge the selection of Levy or Madan.
In any event, even if Sobol's challenge to the partiality of
the panel members had been timely, it would not have risen to the
level of "evident partiality" required by the FAA to vacate an
award. 9 U.S.C. § 10(b). "Evident partiality" involves more than
just the "appearance of bias." Local 814, Int'l Bhd. of
Teamsters v. J & B Systems, 878 F.2d 38, 40 (2d Cir. 1989). It
does not, however, require proof of actual bias. Id. "Evident
partiality" exists "where a reasonable person would have to
conclude that an arbitrator was partial to one party to the
Sobol speculates that Cutler could not have been impartial
because as former general counsel to Lord, Abbett & Co. he
undoubtedly defended the firm against employment-related matters.
Similarly, Sobol merely speculates that Levy and Madan's damages
record is indicative of bias against plaintiffs. This speculation
does not rise to the level of "evident partiality."
2. Alleged Procedural Misconduct
In addition, Sobol complains of the limited scope of
pre-hearing discovery. However, the NASD Code of Arbitration
specifically limits the discovery available to the parties.
Misconduct warranting vacatur pursuant to § 10(a) of the FAA must
be serious; it "must amount to a denial of fundamental fairness
of the arbitration proceeding." Areca, Inc. v. Oppenheimer &
Co., Inc., 960 F. Supp. 52, 54-55 (S.D.N.Y. 1997) (citations
omitted) (arbitrators' refusal to allow investors to present
testimony of brokerage firm's chief financial officer was not
"misconduct" warranting vacatur of arbitration award). Sobol has
presented no evidence to justify this Court's vacatur of the
arbitration award based on procedural misconduct.
E. Arbitration Fee Award
The arbitration panel, relying upon NASD Rule 10205(c),
assessed Sobol $24,650 in forum fees. The NASD Regulation Code of
Arbitration Procedure states in relevant part: "The arbitrators
in their award, shall determine the amount chargeable to the
parties as forum fees and shall determine who shall pay such
forum fees." See NASD Code of Arbitration Procedure Rule
10205(c). In some securities industry arbitrations, unsuccessful
plaintiffs have been required to shoulder substantial forum fees
in addition to paying their attorney's fees. See New York Stock
Exchange arbitration decision in Barbara A. Wolfe v. Charles R.
Schwab, NYSE Arbitration Docket No. 1993-003197 (Aug. 19, 1994)
(claimant pursued an unsuccessful sex discrimination allegation
and was assessed one-half of $82,800 in forum fees for 55 hearing
sessions and one discovery conference).
Nevertheless, Sobol contends that the assessment of forum fees
against her violates public policy by discouraging arbitration.
Sobol cites a D.C. Circuit case holding, in the context of
statutory discrimination claims, that employees cannot be
required to pay arbitration fees when employers insist that
employees agree to mandatory arbitration. See Cole v. Burns
Int'l Security Servs., 105 F.3d 1465, 1468 (D.C.Cir. 1997).
Cole held that an employer may not force an employee to sign a
pre-dispute arbitration agreement and also require the employee
to pay all or part of the arbitrators' fees. Id. at 1467-68 &
n. 1. However, Cole is distinguishable from the instant case.
Cole was not a securities industry employee; he did not sign a
U-4 agreement. Rather, he signed a contract giving his employer
the right to compel arbitration before the American Arbitration
Association. Id. at 1469, 1481 & n. 8. To uphold the validity
of the arbitration agreement, the court interpreted the agreement
to require the employer to pay the arbitrators' fees. Id. at
1485-86. Given that the sharing of forum fees is authorized by
NASD rules, and that arbitration is generally less expensive than
litigation, the assessment of half of the forum fees against
Sobol will neither discourage arbitration nor offend public
For the foregoing reasons, defendant's motion to confirm the
NASD panel arbitration award is granted. Plaintiff's motion to
vacate the $25,650 arbitration fee assessed against her is