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Nancy Martignago, Rhonda Deeney, Amy Ferguson, Cindy Sellers v. Merrill Lynch & Co.

January 13, 2012


The opinion of the court was delivered by: Paul G. Gardephe, U.S.D.J.:



Defendants have moved to transfer this Fair Labor Standards Act ("FLSA") case to the Northern District of Texas pursuant to 28 U.S.C. § 1404(a). For the reasons stated below, Defendants' motion will be DENIED.


Plaintiff Nancy Martignago filed this action on June 9, 2011, on behalf of herself and all others similarly situated alleging that Defendants violated the FLSA, 29 U.S.C. § 201 et seq., by failing to pay overtime wages and certain benefits. (Cmplt. ¶ 1) The putative class consists of Client Associates ("CAs") who were employed by Defendants at their retail branch office locations nationwide. (Id. ¶ 2) Martignago has worked for Merrill Lynch, Pierce, Fenner & Smith Inc. ("Merrill Lynch") since 1985 and currently is employed as a CA in the firm's Fort Worth, Texas branch office. (Id. ¶ 6) Defendant Merrill Lynch -- which, until January 1, 2009, was a wholly owned subsidiary of Defendant Merrill Lynch & Co., Inc., a financial services holding company -- is a registered broker dealer and investment advisor. (Id. ¶ 7) Defendant Bank of America, a financial services company, acquired Merrill Lynch on January 1, 2009. (Id. ¶¶ 8-9) Merrill Lynch & Co., Inc. and all of its subsidiaries are now wholly owned subsidiaries of Bank of America. (Id. ¶ 9)

On August 25, 2011, Martignago filed an Amended Complaint. (Dkt. No. 24) The Amended Complaint names Rhonda Deeney*fn1 , Amy Ferguson, and Cindy Sellers as additional named plaintiffs. (Am. Cmplt. ¶¶ 9-12) Ferguson worked as a CA in Naples, Florida branch offices from December 1999 until April 2011. (Id. ¶ 11) Sellers currently is employed as a CA in a Seattle, Washington branch office, but previously worked as a CA in Naples, Florida and Bridgewater, New Jersey. (Id. ¶ 12) Several other CAs have filed consents to become party plaintiffs. (Dkt. Nos. 22, 23, 30, 35)

CAs are assigned to work for Merrill Lynch Financial Advisors ("FAs") who provide retail brokerage services to their clients. (Am. Cmplt. ¶ 23) CAs "provide . . . administrative and sales assistance to FAs, which help[s] FAs meet compliance requirements, operate efficient[ly] . . . and properly service clients and grow their business and client bases." (Id.) All CAs in Merrill Lynch branch offices allegedly perform essentially the same job functions and are subject to the same compensation policies and practices. (Id. ¶¶ 26-27)

CA income has two components: (1) a salary paid by Merrill Lynch; and (2) "supplemental compensation" paid from the commissions of the FAs to whom CAs are assigned as set forth in written agreements among the CA, FA, and Merrill Lynch. (Id. ¶¶ 28, 31-32) The FAs set supplemental compensation for CAs, but Merrill Lynch must review and approve CA supplemental compensation. (Id. ¶ 31) Merrill Lynch also administers the payment of supplemental compensation, which constitutes a significant percentage of CAs' compensation. (Id. ¶¶ 29, 31)

Plaintiffs allege that overtime pay is calculated on their base salaries rather than on their total compensation -- including supplemental compensation -- in violation of the FLSA. (Id. ¶ 33) Plaintiffs contend that Defendants' alleged FLSA violations have occurred pursuant to corporate policies imposed nationwide:

Through its corporate policies and practices that divert certain supervisory and compensation decisions regarding CAs to its FA workforce, Merrill Lynch has created a work and pay structure for CAs that results in a pattern of FLSA violations, including the failure to maintain proper employment compensation records and the failure to pay lawful overtime for hours CAs are required to work. (Id. ¶ 99; see also ¶ 34) Plaintiffs further assert that Merrill Lynch managers frequently refuse to authorize overtime work by CAs, even where CAs are required to work overtime by their supervising FAs, resulting in a denial of overtime pay in violation of the FLSA. (Id. ¶ 35) Plaintiffs maintain that Merrill Lynch is "well aware" that many CAs, "out of fear of angering their FAs or disturbing their compensation arrangements with the FAs, do not refuse to work the overtime hours requested or required by their FAs, nor do they raise overtime issues with or ask to be paid overtime by their FAs." (Id. ¶ 36)

Merrill Lynch's corporate headquarters and principal place of business is located in the Southern District of New York. (Id. ¶ 7) Plaintiffs allege that if the collective action is certified, "it will include class members and party plaintiffs who work for Merrill Lynch across the country, the greatest concentration of whom worked and/or resided in New York." (Id. ¶ 8) Bank of America is incorporated in Delaware and headquartered in North Carolina. (Id. ¶ 14)

On August 12, 2011, Defendants filed a motion to transfer this action to the Northern District of Texas. (Dkt. No. 13) Plaintiffs oppose the motion.



Defendants' transfer motion is founded on 28 U.S.C. § 1404(a), which provides that "[f]or the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought." "The purpose of § 1404(a) is 'to prevent waste of time, energy and money' and 'to protect litigants, witnesses and the public against unnecessary inconvenience and expense.'" In re Stillwater Min. Co. Sec. Litig., No. 02 Civ. 2806(DC), 2003 WL 21087953, at *2 (S.D.N.Y. May 12, 2003) (quoting Trehern v. OMI Corp., No. 98 Civ. 0242(RWS), 1999 WL 47303, at *1 (S.D.N.Y. Feb. 1, 1999) (internal quotations omitted)).

"A court performs a two-part inquiry to determine whether transfer is appropriate. First, the court must determine whether the action sought to be transferred is one that 'might have been brought' in the transferee court." In re Collins & Aikman Corp. Sec. Litig., 438 F. Supp. 2d 392, 394 (S.D.N.Y. 2006) (citing 28 U.S.C. § 1404(a); In re Nematron Corp. Sec. Litig., 30 F. Supp. 2d 397, 400 (S.D.N.Y. 1998)). Second, "the court must evaluate whether transfer is warranted using several factors relating to the convenience of transfer and the interests of justice." Id. (citing In re Nematron Corp. Sec. Litig., 30 F. Supp. 2d at 400; Lewis v. C.R.I., Inc., No. 03 Civ. 651(MBM), 2003 WL 1900859, at *2 (S.D.N.Y. Apr. 17, 2003)). The parties do not dispute that this action could have been brought in the Northern District of Texas, but they disagree as to whether transfer would promote the interests of justice and the convenience of the parties and witnesses.

Under § 1404, the party seeking transfer has the burden of demonstrating that transfer is appropriate. See New York Marine & Gen. Ins. Co. v. Lafarge N. Am., Inc., 599 F.3d 102, 114 (2d Cir. 2010) ("[T]he party requesting transfer [under § 1404(a)] carries the 'burden of making out a strong case for transfer.'") (quoting Filmline (Cross-Country) Prods., Inc. v. United Artists Corp., 865 F.2d 513, 521 (2d Cir. 1989)). "A motion to transfer pursuant to 1404(a) rests within the 'sound discretion' of the district court." Montgomery v. Tap Enters., Inc., No. 06 CV 5799(HB), 2007 WL 576128, at *2 (S.D.N.Y. Feb. 26, 2007) (quoting Schwartz v. R.H. Macy's, Inc., 791 F. Supp. 94, 94 (S.D.N.Y. 1992)). "In making this determination, the Court has 'considerable discretion in adjudicating a motion for transfer according to an individualized, case-by-case consideration of convenience and fairness.'" Williams v. City of New York, No. 03 Civ. 5342(RWS), 2006 WL 399456, at *3 (S.D.N.Y. Feb. 21, 2006) (quoting In re Cuyahoga Equip. Corp., 980 F.2d 110, 117 (2d Cir. 1992)).


A.This Action "Might Have Been Brought" in the Northern District of Texas

"'The threshold question in a transfer motion [under § 1404(a)] is whether the action could have been brought in the district to which transfer is proposed.'" Freeman v. Hoffman-La Roche, Inc., No. 06 Civ. 13497(RMB)(RLE), 2007 WL 895282, at *2 (S.D.N.Y. Mar. 21, 2007) (quoting Arrow Elecs., Inc. v. Ducommun, Inc., 724 F. Supp. 264, 265 (S.D.N.Y. 1989)).

Plaintiffs do not dispute, and the Court finds, that this action "might have been brought" in the Northern District of Texas. A lawsuit claiming violations of the FLSA "may be maintained against any employer . . . in any Federal . . . Court of Competent Jurisdiction." 29 U.S.C. § 216. The question of where venue is proper is governed by 28 U.S.C. § 1391(b), which provides in relevant part:

A civil action wherein jurisdiction is not founded solely on diversity of citizenship may, except as otherwise provided by law, be brought only in (1) a judicial district where any defendant resides, if all defendants reside in the same State, (2) a judicial district in which a substantial part of the events or omissions giving rise to the claim occurred, or a substantial part of property that is the subject of the action is situated, or (3) a judicial ...

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