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SHAPIRA v. CHARLES SCHWAB & CO.

October 3, 2002

GUY SHAPIRA, PLAINTIFF,
V.
CHARLES SCHWAB & CO., INC., ET AL., DEFENDANTS.



The opinion of the court was delivered by: Lewis A. Kaplan, District Judge.

MEMORANDUM OPINION

This case involves a claim that defendant Charles Schwab & Co., Inc. ("Schwab") improperly inquired into plaintiff's supposedly sealed arrest record and, upon discovering that he had been arrested, therefore denied him employment in a position that allegedly had been promised to him. The matter is before the Court on Schwab's motion for summary judgment dismissing the complaint.

Facts

The Arrest and the Records

On June 3, 1999, plaintiff, a licensed securities broker, was arrested for petit larceny. The parties agree that the arrest was the product of mistaken identity and that no charges ever were brought against him. Indeed, plaintiff asserts that he "was not involved in any `court proceeding,' . . . never [was] charged with a crime[, and that n]o charging instrument was ever filed.'"*fn1

Plaintiff contends that the New York Criminal Procedure Law resulted in the sealing of the arrest record once prosecution was declined.*fn2 The implicit assumption that the statute applied to this record is questionable as a matter of law.*fn3 But the salient point for present purposes is that the record in fact was not sealed immediately, whatever the statute intended.*fn4 Plaintiff evidently learned as much in or about February 2000, as he then commenced a proceeding to seal the arrest record, a proceeding that ultimately resulted in an order and judgment in plaintiff's favor, which was entered on June 2, 2000.*fn5 The interval between the mid-1999 arrest and the mid-2000 sealing order, however, was to prove significant for purposes of this case, as the National Association of Securities Dealers, Inc. ("NASD") learned of the June 3, 1999 arrest by March 2000.*fn6

The Employment Application at Schwab

In December 2000, plaintiff applied for corporate relationship manager and sales manager positions with Schwab.*fn7 Following an initial interview, he filled out an employment application and signed a form authorizing Schwab "to have full access to any and all court records pertaining to any criminal proceeding in which I have been involved, either as reflected on this form or on my employment application form, or as revealed in the records of the" Central Registration Depository of the NASD.*fn8 These forms then were faxed from Schwab's New York office, where plaintiff had been interviewed and where his application was pending, to Schwab's Risk Management & Investigations ("RMI") department in San Francisco for the purpose of RMI conducting a background check.*fn9 RMI then made inquiry of the NASD and learned that plaintiff had been arrested for petit larceny on June 3, 1999.*fn10

At some point, plaintiff had a second interview in New York at which he claims he was promised a job. His pertinent deposition testimony was as follows:

"Q * * * My first question is, what representations did Schwab make to you that you would in fact be employed?
"A I was specifically requested when I could start. I was specifically requested for compensation. Expected compensation. I was specifically discussed and outlined the job duties. The preference of what position would be best suited for me from the two open positions, by the hiring manager. I was told specifically that I would be contacted shortly and this was a sure thing. In addition, I was asked to follow-up, after multiple interviews, with a digitized document from a presentation that I had made to Schwab.
"Q The next one, the second part says this was a sure thing. You would be contacted shortly and this was a sure thing. Did someone say those exact words to you?
"A Zachary Jolly [one of the interviewers] made it very clear that I would be contacted very shortly, within a day or so, and that at that point an offer would be formally presented."*fn11

He testified also that he was told "the only impediment to his being hired in the position he applied for was to check his registration status with the National ...


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