Bank of America Arbitration Lawsuit: Ex-Merrill Adviser Asks Court to Void JAMS Policy for Bias Claims

A former Merrill Lynch adviser filed a Bank of America arbitration lawsuit in Manhattan federal court late on Thursday, October 29, 2026, asking a judge to declare void the bank's November 2024 policy that sends employees' discrimination and harassment claims to individual arbitration before JAMS. The plaintiff, Katherine Mackey, says the policy breaks promises Merrill made in its 2013 $160 million race-discrimination settlement and that JAMS lacks basic due process safeguards for civil rights claims, a theory her lawyers say they will press in a series of follow-on cases.

The complaint is the second high-profile attack on the same policy in the Southern District of New York. It does not ask the court to rule on whether Merrill discriminated against Mackey; it asks the court to decide where that question gets answered. For any employer that rolled out a mandatory arbitration program by email and continued employment, and for plaintiffs' firms weighing whether to fight the forum before fighting the merits, the case is a useful test of how far a prior settlement, provider standards and federal arbitration law constrain an employer's choice of forum.

This report is built from Reuters' October 30 account, trade coverage in AdvisorHub and Seeking Alpha, the public complaint in the earlier Davila v. Bank of America case, the 2013 settlement coverage, and the published FINRA and JAMS rules. The Mackey complaint itself was not available for review, so descriptions of its allegations are limited to what that reporting attributes to it.

What is the Bank of America arbitration lawsuit about?

The Bank of America arbitration lawsuit is a challenge to the forum, not yet to the firing. Mackey wants the court to void the policy so that her own gender and age discrimination claims can proceed in federal court rather than in private arbitration, according to Reuters. She names Bank of America Corp. and its wealth-management unit Merrill Lynch as defendants.

The policy at issue was distributed to US employees on Friday, November 8, 2024. Bloomberg reported at the time that it would require Bank of America's US workforce to take nearly all workplace legal disputes to private arbitration, and the bank described it as bringing the company in line with peers in financial services. Reuters' 2026 report says the policy covers many claims, including discrimination and harassment, and requires employees to "forever waive" the right to sue in court or pursue class actions. The complaint in the earlier Davila case quotes the policy as requiring that claims be brought "in arbitration in an individual capacity only" and adjudicated "on an individual basis."

Two points about scope matter. First, Bloomberg's 2024 report said the policy carved out sexual harassment and sexual assault claims, which federal law already exempts from forced arbitration. Second, Reuters' 2026 account describes the policy as covering harassment claims generally. The two descriptions can be reconciled if the carve-out reaches only sex-based harassment, but the policy text has not been published, and the Mackey complaint's framing of her harassment allegations will determine whether the carve-out comes into play.

Who is Katherine Mackey and what does she allege?

Mackey is a former Merrill financial solutions advisor who worked out of Reston, Virginia, according to AdvisorHub. She joined Merrill's program for aspiring financial advisers in 2023, when she was 65. She alleges that younger male colleagues and supervisors discriminated against and harassed her because of her gender and her age.

On the employment facts, AdvisorHub reports that Mackey acknowledges she missed her production goals, that Merrill initially gave her until the summer of 2025 to catch up, and that the deadline was then accelerated and she was fired in February 2025. The accelerated timetable is likely to be the factual center of any merits dispute, because an employer's stated performance rationale and the timing of a termination are the usual battleground in age and sex discrimination cases under the Age Discrimination in Employment Act and Title VII.

Mackey has not abandoned arbitration. AdvisorHub reports she filed her discrimination claims with JAMS as a precaution and intends to seek a stay of that proceeding while the federal court decides whether the policy binds her. That two-track approach is a familiar move for a claimant who wants a judicial forum but cannot risk losing the claim if the court rules against her on arbitrability.

Why does the 2013 Merrill Lynch settlement matter?

The settlement is the novel part of the case. In August 2013, Merrill agreed to pay $160 million to resolve McReynolds v. Merrill Lynch, a race-discrimination class action brought on behalf of roughly 1,200 Black brokers in the Northern District of Illinois before Judge Robert Gettleman. The suit, led by broker George McReynolds, alleged that Merrill's teaming and account-distribution practices steered Black brokers away from lucrative business. The Seventh Circuit had granted class certification in 2012 after Gettleman initially denied it.

According to the Mackey complaint as described by AdvisorHub, Merrill agreed as part of that settlement not to require arbitration of employment discrimination claims except through individually negotiated agreements. Reuters frames the claim more bluntly: the bank backed out of its 2013 settlement commitment not to require employees to arbitrate discrimination claims. Mackey argues the November 2024 policy, imposed on the workforce as a condition of continued employment, is the opposite of an individually negotiated agreement.

That theory raises questions the court will have to sort out:

• Who can enforce the promise? Mackey was not a member of the McReynolds class, which covered Black brokers, and her claims are for sex and age discrimination. Whether a later employee can invoke a settlement term depends on how the settlement was written, whether it was meant to benefit future employees, and whether it has expired.
• Which court decides? Settlement agreements approved in class actions often reserve continuing jurisdiction to the approving court. If the McReynolds settlement does, Bank of America may argue that any enforcement belongs in Chicago, not Manhattan.
• Does the FAA override it? Under the Federal Arbitration Act (FAA), an arbitration agreement is enforceable "save upon such grounds as exist at law or in equity for the revocation of any contract." A prior contractual promise not to impose arbitration is an ordinary contract defense, so the FAA does not obviously displace it, but it also does not convert the promise into an automatic bar.

The lawyer behind the theory knows the settlement well. Mackey is represented by Linda Friedman of the Chicago firm Stowell & Friedman, which represented the brokers in McReynolds and also represents the two Black advisers in Davila.

Is the JAMS arbitration policy enforceable?

The default answer under federal law is yes, which is why the case depends on Mackey's specific theories. The Supreme Court held in Gilmer v. Interstate/Johnson Lane Corp. (1991), a case brought by a securities representative, that age discrimination claims under the ADEA can be subject to compulsory arbitration. Circuit City Stores v. Adams (2001) confirmed that the FAA covers most employment contracts, and Epic Systems Corp. v. Lewis (2018) held that a Class Action Waiver in an employment Arbitration Agreement is enforceable notwithstanding the National Labor Relations Act. Bank of America's statement leans on exactly that line of authority: "Congress and the Supreme Court have long encouraged the use of arbitration to resolve employment disputes," a spokesperson said, adding that policies using JAMS "are routinely upheld in court, as has this one."

Against that baseline, Mackey's challenge runs on three tracks reported so far:

1. Prior promise. The 2013 settlement commitment, discussed above, is a contract-based defense that sits within the FAA's savings clause.
2. Forum fairness. The complaint argues JAMS lacks "basic due process safeguards for civil rights" and questions its impartiality, contending it favors large repeat-player employers. Courts have generally rejected generalized attacks on a provider's neutrality; a challenge of this kind tends to succeed only when tied to a specific term, such as a cost, discovery or remedy limitation, that prevents a claimant from vindicating a statutory right. That is the Effective Vindication Doctrine, which the Supreme Court has kept narrow.
3. Formation. A policy distributed by notice and accepted through continued employment raises the usual questions of assent: whether the employee received the policy, understood that staying on the job meant accepting it, and had any opportunity to opt out. Courts applying New York law have often enforced such rollouts where notice was clear, which places the burden on the challenger to show something more.

There is one statutory route the reporting has not mentioned. The Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act lets a plaintiff elect to void a predispute arbitration agreement for a case that relates to a sexual harassment dispute. Mackey alleges harassment because of her gender. If the complaint pleads that harassment as sexual harassment, the Second Circuit's September 30, 2026 decision in Diaz-Roa v. Hermes Law, which read the statute to reach the entire case, could keep her age claims in court alongside it, as an Eastern District of New York judge held in the Ali Awad Law case in October. Whether her allegations fit that statute is a question of pleading that the available reporting does not answer.

How does the policy compare with FINRA arbitration and JAMS standards?

The choice of JAMS is itself part of the story. Registered brokers have long arbitrated industry disputes at FINRA, but FINRA Rule 13201(a) provides that a claim alleging employment discrimination in violation of a statute "is not required to be arbitrated" under FINRA's Industry Code, although parties may agree to arbitrate it. FINRA's forum also does not hear class actions. A firm that wants statutory discrimination claims arbitrated individually therefore needs a private provider and a separate agreement, which is what the 2024 policy supplies.

JAMS, for its part, publishes a Policy on Employment Arbitration Minimum Standards of Procedural Fairness. JAMS states it will administer mandatory employment arbitrations only if the clause complies with those standards, and its fee schedule caps the employee's share at $400 in matters arising from a clause required as a condition of employment, with the employer paying the remaining fees. Those standards are the bank's best answer to the due process argument, and Mackey's complaint will need to show why they are not enough.

Feature	FINRA arbitration (Industry Code)	2024 BofA/Merrill policy (JAMS)	Federal court
Statutory discrimination claims	Not required to be arbitrated (Rule 13201(a)); only by agreement	Required to be arbitrated, as reported	Available by right
Class or collective claims	Not heard in the FINRA forum	Waived; individual basis only	Available under Rule 23
Sexual harassment or assault claims	Claimant may elect court after FINRA's 2022 EFAA amendments	Reportedly carved out, per Bloomberg's 2024 report	Available; EFAA election
Employee fees	FINRA filing fees by claim size	Capped at $400 under JAMS Minimum Standards	Filing fee; no forum fees
Public record	Awards published by FINRA	Proceedings and awards generally private	Public docket and opinions
Jury	No	No	Yes

How is this different from the Davila v. Bank of America case?

Davila v. Bank of America Corp., No. 1:24-cv-08526 (S.D.N.Y.), was filed on November 8, 2024, the same day the policy went out. Two Black Merrill financial advisers, Linda Davila and Cathy Bender, brought a putative class action alleging race and sex discrimination and challenging the policy in the same pleading. In February 2025 the defendants told the court that the policy covered the advisers' claims and that the case belonged in arbitration.

Mackey's case differs in three ways. It is an individual suit framed around the policy's validity rather than a class bias claim; the plaintiff was fired three months after the policy took effect, so her termination claim arose entirely under it; and the theory now leans explicitly on JAMS's procedures and the McReynolds commitment. Bank of America's statement that its policy has already been upheld suggests at least one court has enforced it against an employee, but the reporting does not identify the ruling, and this report does not assume which one the bank means.

What happens next in the Mackey case?

The near-term sequence is predictable. Bank of America and Merrill are likely to move to compel arbitration under 9 U.S.C. §§ 3 and 4 and to stay the federal case. If the policy contains a Delegation Clause or incorporates JAMS rules that let the arbitrator decide arbitrability, the bank will argue that most of Mackey's objections are Gateway Questions for JAMS, not the court. Mackey, in turn, will argue that challenges grounded in the settlement and in contract formation go to whether any agreement exists, which courts decide.

Two procedural markers to watch:

• The stay request in JAMS. If the arbitrator declines to pause Mackey's precautionary arbitration, the parallel proceedings could force an earlier ruling from the court.
• Interlocutory appeal. Under 9 U.S.C. § 16, an order denying a motion to compel arbitration is immediately appealable, and the Supreme Court held in Coinbase v. Bielski (2023) that the district court proceedings are automatically stayed during that appeal. A win for Mackey at the district level would therefore likely mean a trip to the Second Circuit before any merits discovery.

Friedman told AdvisorHub that the suit "is part of a series of cases we will be filing to challenge mandatory arbitration under current rules," so further filings by other Merrill or Bank of America employees are possible.

Timeline: Merrill, arbitration and bias litigation

Date	Event
2005	McReynolds v. Merrill Lynch filed in the Northern District of Illinois (No. 1:05-cv-06583)
2012	Seventh Circuit permits class treatment after the district court denied certification
August 2013	Merrill agrees to a $160 million settlement covering about 1,200 Black brokers
November 8, 2024	Bank of America distributes mandatory arbitration and class waiver policy; Davila filed the same day
February 2025	Mackey fired; defendants argue in Davila that the policy covers the claims
October 29, 2026	Mackey files suit in the Southern District of New York
October 30, 2026	Reuters reports the suit; Bank of America defends the policy

What it means for employers, plaintiffs' counsel and arbitration providers

For employers and drafters. The case is a reminder to audit legacy settlement agreements, consent decrees and conciliation agreements before rolling out an Arbitration Clause by notice. A commitment made a decade ago to resolve one class action can become a contract defense to a policy adopted for an entire workforce. Drafters should also confirm that the clause states its carve-outs, including the EFAA, in terms that track the statute, and that opt-out mechanics and acknowledgment records will satisfy a court examining assent.

For plaintiffs' counsel. Mackey's approach, filing in court while preserving the claim in arbitration, shows how to contest the forum without risking forfeiture. Generalized attacks on provider bias rarely succeed alone, so the stronger challenges pair a forum critique with a contract-specific defense such as a prior settlement promise, a defect in formation, or a federal statute that removes the claim from arbitration altogether.

For the plaintiffs' bar running high-volume employment dockets. If the class waiver holds, individual arbitration remains the path, and coordinated filings against a single employer begin to resemble Mass Arbitration, with JAMS fee rules and its Mass Arbitration Procedures shaping the economics. If the waiver falls, the fight returns to Rule 23.

For JAMS. A complaint that puts a provider's due process standards at the center of a public challenge invites scrutiny of how those standards apply in practice, including arbitrator disclosure and repeat-player concerns.

Frequently asked questions

Who sued Bank of America over its arbitration policy?

Katherine Mackey, a former Merrill Lynch financial solutions advisor who was fired in February 2025, sued Bank of America and Merrill Lynch in the Southern District of New York on October 29, 2026. She is represented by Linda Friedman of Stowell & Friedman.

What does the Bank of America arbitration policy require?

The policy, distributed on November 8, 2024, requires covered US employees to arbitrate most workplace claims, including discrimination claims, before JAMS on an individual basis and to waive court and class action rights. Bloomberg reported at launch that sexual harassment and sexual assault claims were excluded.

What was the 2013 Merrill Lynch settlement?

It was a $160 million settlement in McReynolds v. Merrill Lynch, a race-discrimination class action brought for about 1,200 Black brokers. Mackey's complaint says Merrill agreed in it not to require arbitration of discrimination claims except through individually negotiated agreements.

Has a court ruled on Mackey's challenge?

No. As of November 1, 2026 the case is at the complaint stage. Bank of America says JAMS policies are routinely upheld and that this policy has been upheld before.

Can employers require arbitration of age and sex discrimination claims?

Generally yes. Gilmer, Circuit City and Epic Systems allow mandatory individual arbitration of federal employment claims, subject to contract defenses and to the EFAA, which lets a plaintiff keep sexual harassment and sexual assault cases in court.

Does the lawsuit affect other Bank of America and Merrill employees?

Not yet. Mackey is seeking relief from the policy for her own claims, but a ruling that the policy is void or conflicts with the 2013 settlement would give other employees a ready argument, and her lawyers say more cases are coming.