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Blockbuster Settlements of 2000

December 31, 2000

Employers elect to settle employment discrimination cases for a host of reasons: to minimize the risk of encountering a "runaway jury," to avoid disrupting and inconveniencing those who might otherwise be required to testify at deposition or at trial, to avoid the adverse publicity a trial might bring, or simply to resolve a dispute amicably in the interest of moving on to more productive pursuits. Each year, however, a handful of these cases are settled on terms that are themselves newsworthy. For example, the year 2000 saw the largest race and sex discrimination settlements in history, several large settlements involving the federal government, and two multimillion dollar settlements by Ford Motor Company. Some of this year's more interesting settlement agreements are discussed below.

Hartman v. Albright ($508 million)

The U.S. Information Agency (the "USIA"), a formerly independent agency of the federal government that disseminated U.S. government news and information overseas, agreed in March 2000 to pay $508 million -- the largest settlement ever of a federal sex discrimination lawsuit -- to 1,100 women who were denied jobs or promotions with that agency.

The case was initiated by five women in 1978. In the intervening 22 years, forty-eight individual cases of sex discrimination against the agency were tried; the government lost all but two of those trials.

The plaintiff class included women who had applied for jobs as international radio broadcasters, radio broadcast or electronic technicians, writers and editors, and production specialists at the USIA and the Voice of America (the USIA's broadcast branch) between October 8, 1974 and November 16, 1984. Many of these women had prior broadcasting experience or other relevant experience. One of the plaintiffs was allegedly told when she applied for work that "a woman's place is at the stove, not on the air." Another plaintiff was informed by her interviewer that he wasn't going to hire a woman. In addition to gender-biased remarks such as these, the plaintiffs alleged that USIA officials altered male applicants' written and voice test scores to avoid hiring women who had scored higher on those tests.

Abdallah v. The Coca-Cola Co. ($192.5 million)

In what has been described by some as the largest race discrimination settlement ever, Coca-Cola agreed in November 2000 to pay $192.5 million to settle a class action race discrimination case pending in federal court in Atlanta since 1998.

The plaintiffs claimed in their lawsuit that Coca-Cola racially discriminated against them with respect to pay, performance and evaluations. One of the four named plaintiffs contended that she was consistently paid thousands of dollars less than her white counterparts, while another claimed she was continually denied promotions. Coca-Cola initially denied the plaintiffs' allegations; then, in February 2000, the Company suddenly released publicly certain incriminating internal documents. Simultaneously, the parties began to participate in mediation talks in an effort to settle the case.

The Coca-Cola settlement is noteworthy not only because of the staggering monetary award, but also because of the sweeping changes the Company has agreed to make in the way it conducts business. For example, the Company agreed to revamp its human resources policies and to create a task force whose purpose will be to closely review the Company's human resources procedures over the next four years. The task force will be comprised of seven members, each of whom will have civil rights, diversity, labor, employment, business and/or legal expertise. Three of the task force members will be selected by the Company, three more will be selected by the plaintiffs' attorneys, and the seventh member will be selected jointly. The task force will be empowered to make recommendations that are binding on the Company with respect to pay, promotion and evaluation of African American employees.

The Company has also agreed to permit two independent industrial psychologists to review its human resources policies and prepare a report for the task force; to create a 24-hour employee complaint hotline; and to hire an ombudsman to investigate all discrimination complaints and report directly to the Company's CEO. Likewise, the Company has agreed to regularly provide its Board of Directors with diversity reports, and to consider diversity when selecting future Board members. Currently, the Company's 12-member Board includes two women and one African American.

The class covered by the settlement comprises all salaried African American employees of the Company in the United States who worked for the Company at any time between April 22, 1995 and June 14, 2000, or a total of approximately 2,000 potential class members. The settlement is expected to be approved by the court in early 2001.

Thornton v. Amtrak ($16 million)

In April 2000, Amtrak agreed to pay $16 million to settle a race discrimination lawsuit filed in 1998 by the Brotherhood of Maintenance of Way Employees on behalf of 13 black employees who build and maintain the railroad's track and equipment in the Northeast corridor. The lawsuit alleged that Amtrak had discriminated against these employees in hiring, promotion, discipline and training, and that the plaintiffs were subjected to a racially hostile work environment.

The plaintiffs' specific allegations included being subjected to racially offensive comments by their white supervisors (e.g., being called "boys," and being told "you people like watermelon" and "all you people lie"), working on segregated work crews and receiving inferior job assignments.

In addition to paying monetary damages to a class of plaintiffs that ultimately grew to as many as 1,000 employees and 4,000 rejected job applicants, Amtrak agreed to keep detailed records regarding applicants for promotion, and to establish an internal grievance system for black employees who believe they have been disciplined harshly because of their race.

This settlement was reached nine months after Amtrak settled for $8 million a lawsuit filed by black managers and employees seeking management positions.

Rapier v. Ford Motor Co. ($9 million)

In a class action lawsuit filed in federal court in Chicago, women working at the Chicago Ford Assembly Plant and the Chicago Ford Stamping Plant alleged that they were subjected to a sexually hostile environment (including fondling, requests for sexual favors, cursing, catcalls and suggestive language), and that management condoned and perpetuated this misconduct.

Last year, Ford offered to settle the case for $7.5 million, but the federal judge overseeing the case criticized that proposed settlement figure as too low, saying it "lack[ed] bite." The newly-increased monetary settlement will be shared among 1,043 class members.

It is noteworthy that the plaintiffs in this case were represented by the same New York City-based law firm that represented a class of black Texaco employees in a highly publicized case filed in 1994 which ultimately settled for more than $140 million.

Evans v. Anderson ($8.5 million)

In August 2000, a federal judge in Washington, D.C. approved the proposed settlement of an age discrimination class action pending against the U.S. Agency for International Development ("USAID").

The lawsuit was filed by USAID Foreign Service officers who claimed that they were selected for a 1996 reduction in force because of their age. According to the plaintiffs, they were placed in jobs vulnerable to layoffs, while entire classes of younger workers were exempted from the reduction in force. Indeed, of the 97 USAID employees discharged in the 1996 reduction in force, all but one were over age 40, and two-thirds of those discharged were over age 50.

In addition to receiving $5.5 million in monetary damages, the class members have been promised another benefit valued at an additional $3 million: preferential consideration for agency contract provisions for the next three years.

The case has been described as the first class action to challenge a reduction in force by the federal government on age discrimination grounds, and one of the largest payments ever made by the federal government in an age discrimination case.

The settlement was reached at the conclusion of a three-week trial, prior to the announcement of the court's decision.

OFCCP/Ford Motor Co. ($3.8 million)

In February 2000, Ford Motor Co. agreed to settle a discrimination case filed by the U.S. Department of Labor's Office of Federal Contract Compliance ("OFCCP"). Specifically, Ford has agreed to compensate women and minority applicants for lost wages for entry-level assembly positions at seven Ford plants, and to hire 100 of the women and minorities who had previously applied for assembly jobs at the plants. Finally, Ford agreed to employ women and minorities at all its facilities in proportion to the percentage that apply.

The majority of the monetary award -- $2 million-- will go to 318 qualified female applicants who were rejected for employment at Ford's Kentucky Truck Plant in 1993, shortly after that facility underwent a major expansion.

This settlement is the fifth-largest ever entered into with the OFCCP.