Federal Overtime Claims Follow Morgan Stanley

     (CN) – Morgan Stanley need not face most state-law claims related to how it paid a class of commission-based financial advisors, a federal judge ruled.
     The multidistrict litigation is led by former Morgan Stanley Smith Barney financial advisers Jimmy Kuhn, Robert Gibson, Nick Pontilena, Gregg Vanasse, Howard Rosenblatt and Denise Otten.
     Each filed a separate a separate complaint against the firm last year in Connecticut, New Jersey, New York, and Rhode Island, alleging violations of each state’s laws and the federal Fair Labor Standards Act.
     They said Morgan Stanley applied wage deductions to their paychecks without permission for items such as overhead, and that it denied overtime or reimbursement for expenses such as messenger services, overnight mail delivery and client lunches.
     After the Judicial Panel on Multidistrict Litigation transferred the cases to New Jersey federal court for pretrial purposes, the plaintiffs filed a consolidated class and collective-action complaint.
     They seek to represent current and former financial advisors and financial advisor trainees.
     Morgan Stanley moved to dismiss the Rhode Island overtime claim, the New Jersey failure to maintain records claim, and all four state wage deduction claims.
     U.S. District Judge William Martini agreed Friday, leaving the class with the as-yet unopposed overtime claims under federal law and the laws of New York, New Jersey and Connecticut.
     In nixing the claim advisors’ Rhode Island overtime claim, the court noted that Rhode Island has only recently explicitly adopted a private right of action for overtime claims under the Minimum Wage Act.
     “Since the cases encompassed in this MDL were filed in 2011, Morgan Stanley maintains that the new law is not retroactive; plaintiffs appear to agree,” Martini wrote, abbreviating multidistrict litigation. “Because pre-existing law did not recognize a private right of action, the court will dismiss count seven with prejudice.”
     The state-law claims of impermissible wage deductions all failed.
     For example, “under Connecticut law, deductions are not ‘impermissible’ in the abstract,” Martini wrote. “Instead, deductions are impermissible relative to a given agreement. The complaint does not so much as quote a single provision of plaintiffs’ contract. Accordingly, any claim that Morgan Stanley ‘impermissibly’ deducted money from plaintiffs’ wages is entirely conclusory. The court will dismiss this count without prejudice.”
     Meanwhile the court deemed the failure-to-maintain-records claim duplicative.
     “Even if additional damages were available, plaintiffs have waived them. Ultimately, if plaintiffs are to recover compensatory damages under count six, they will have to demonstrate that Morgan Stanley shorted them on compensation,” Martini wrote. “But demonstrating that Morgan Stanley shorted them on compensation is exactly what plaintiffs attempt to do with their other claims.”
     Morgan Stanley also moved to strike the class and collective allegations, but Martini said it would be premature to strike overtime class allegations at this time.
     He did, however, strike trainees from the putative impermissible deductions classes after noting that this aspect was not properly alleged in the complaint.
     The plaintiffs have 30 days to file a second amended complaint consistent with Martini’s opinion.

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