Recent Multimillion-Dollar Settlements May Cause Employers to Avoid Hiring Women and Minorities for Less Desirable Jobs to Improve the Statistical Picture.

By James P. Scanlan

The National Law Journal Mar. 27, 1995

In late December 1994, eight women grocery chains recently paid almost $150 filed a putative class action in the U.S. million to settle employment District Court for the Northern District discrimination claims involving more of charging that The Home than 500 California stores. In November Depot Inc. systematically had 1993, Albertson’s Inc. agreed to pay discriminated against female employees $29.5 million to resolve discrimination and applicants at 99 of its stores in seven claims by female and Hispanic 1 Western and Southwestern states.TPF FPT employees in 144 of its California 3 The complaint alleged that the stores.TPF FPT superstore chain’s Western Division had In April 1994, Inc. agreed to segregated its employees into two pay $5 million to settle sex different work forces: one, primarily discrimination claims involving 216 4 male, enjoying preferential treatment stores in .TPF FPT and opportunities for advancement; and Dwarfing both of these settlements, the other, primarily female, holding a however, was an agreement reached in disproportionate share of the lowest- December 1993 providing that Lucky level jobs with little opportunity for Stores Inc. would pay as much as $107.5 advancement. The plaintiffs are million to settle discrimination claims by represented by Oakland, Calif.’s female employees in 188 of Lucky’s 5 Saperstein, Goldstein, Demchak & grocery outlets in Northern California.TPF FPT Baller, the firm that Business Week When the Lucky Stores settlement recently dubbed “The SWAT Team of was announced, The New York Times 2 Bias Litigation.”TPF FPT reported that the agreement “could alter Certain claims in this case are 3 distinctly similar to allegations asserted TP PT “Settlement of $29.5 Million Announced on by the Saperstein firm on behalf of Race, Sex Claims Against Albertson’s,” Daily Labor Report, Nov. 23, 1993 at A-12. plaintiffs in three other suits in which 4 TP PT “Safeway Will Pay $5 Million to Settle Suit Over Promotion at Northern California Stores,” 1 TP PT Butler v. Home Depot Inc., No. C94 4225 Daily Labor Report, April 5, 1994, at A-5. 5 (Dec. 20, 1994) TP PT “Settlement of $107.25 Million Announced in 2 TP PT “The SWAT Team of Bias Litigation,” Sex Bias Suit Against Lucky Stores,” Daily Business Week, Jan. 23, 1995, at 88. Labor Report, Dec. 17, 1993, at A-1. the personnel practices throughout the Possibly of greater importance, Judge 6 grocery industry.”TPF FPT It is not only in the Patel found that among the reasons grocery industry, however, that punitive damages might be warranted personnel practices may be altered by against Lucky Stores was that its the settlement. Practices may change management had “abandon[ed] two dramatically in any number of industries affirmative action programs despite that employ large numbers of minorities continued evidence of a gross gender or women. Such changes will not imbalance in the Deli-Bakery and 9 necessarily benefit those groups. General Merchandise Departments.”TPF FPT To appreciate why the Lucky Stores In other words, Lucky Stores had had settlement may prove to be too many women in those jobs and had disadvantageous to minorities and decided not to do anything about it. women, one must examine the court Lucky Stores tried unsuccessfully to th decision underlying that settlement, and persuade the 9P P U.S. Circuit Court of which, very likely, influenced both Appeals to hear an interlocutory appeal. Albertson’s and Safeway to reach Then, faced with years of damage settlements. In August 1992, in Stender proceedings before it would have an 7 v. Lucky Stores,TPF FPTJudge Marilyn Hall appealable judgment, Lucky Stores gave Patel, of the U.S. District Court for the in, settling for an amount in the range of Northern District of California, issued a the liability estimates of the plaintiffs’ lengthy opinion, finding that Lucky lawyers, though sparing itself Stores had discriminated against women considerable attorney fees and a great in a range of employment practices. deal of adverse publicity. A central feature of Judge Patel’s The Lucky Stores agreement, ruling was the determination that Lucky however, was not the first $100 million Stores had discriminated in the “initial settlement in which plaintiffs had relied placement” of women. Judge Patel heavily on a group’s high representation evidently had meant that women were in an employer’s less desirable positions. not fairly considered for the grocery In November of 1992, Shoney’s Inc. department in Lucky’s . agreed to pay $105 million to settle Women made up about 35 percent of claims of racial discrimination at 1,700 new hires. restaurants in 36 states. Judge Patel reached that conclusion, In that case, which also was litigated however, not because women were by members of the Saperstein firm, shown to have made up substantially plaintiffs maintained that the best single more than 35 percent of persons seeking indicator of what the level of black jobs in the grocery department, but representation in food server and other because women constituted 84 percent “front-of-the-house” jobs would have of persons hired into the less desirable been, absent discrimination, was the deli-bakery and general merchandise level of black representation in other 8 departments.TPF FPT positions at Shoney’s. Thus, the more blacks Shoney’s had hired as cooks and for other “back-of-the-house” jobs, the 6 TP PT Jane Gross, “Big Grocery Chain Reaches greater was its liability for putatively Landmark Sex-Bias Accord,” The New York Times, Dec. 17, 1993, at A-1. 7 TP PT 803 F. Supp. 259. 8 9 TP PT Id. at 332-33. TP PT Id. at 336. excluding blacks from front-of-the- from which those workers were house jobs. recruited. But minorities, filled a far Almost since the day Title VII of the higher proportion of the cannery jobs, 1964 Civil Rights Act became law which, for a variety of reasons, were nearly 30 years ago, people have been considered less desirable than the non- trying to prove in one manner or another cannery jobs. The plaintiffs argued that that a group has been discriminatorily minorities should have been more excluded from one job by pointing to equally distributed between these jobs, th 13 that group’s high representation in and the 9P P Circuit essentially agreed.TPF FPT another job. A firm rejection of that The case had a superficial appeal in approach occurred in 1979 in another light of what four dissenting justices case brought in the Northern District of would term “an unsettling resemblance 14 California. to aspects of a plantation economy.”TPF FPT In Edmonds v. Southern Pacific Yet, a Supreme Court majority 10 Transportation Co.,TPF FPT Judge Alfonso J. recognized not only that internal Zirpoli rejected claims that Hispanics comparisons of this nature could not were discriminatorily assigned to laborer prove discrimination, but that the positions rather than operating craft jobs, plaintiffs’ argument was an invitation to when there was no evidence of employers to avoid liability by hiring discrimination against Hispanics seeking fewer minorities for less desirable 15 the craft jobs. Judge Zirpoli observed, jobs.TPF FPT “Plaintiffs imply that Southern Pacific The key to its analysis was the court’s must deny Hispanic applicants jobs they observation that what the plaintiffs seek and qualify for because it has ‘too claimed was the labor market for non- 11 many’ of them. Such is not the law.”TPF FPT cannery jobs was “at once both too 16 A decade later, the U.S. Supreme broad and too narrowTPF FPT.” It was too Court reached the same conclusion. In broad, the court maintained, because 1989, in Wards Cove Packing Co. v. most cannery workers did not seek non- 12 Atonio,TPF FPT the court issued an opinion cannery jobs, and it was too narrow that has been justly criticized for because it did not include the many cavalierly reversing 18 years of persons not employed in cannery jobs precedent concerning an employer’s who were part of the labor market for 17 burden in justifying employment non-cannery jobs.TPF FPT procedures that disadvantage minorities It is the latter point that is of or women. The opinion, however, was particular consequence. Sometimes entirely sound in its rejection of an many persons hired into an employer’s approach to statistical proof that was as less desirable jobs will be qualified for pernicious as it was illogical. and interested in the employer’s better The Wards Cove case involved an jobs, and those persons thus are part of Alaskan cannery where non-cannery 13 workers had a minority percentage that TP PT Atonio v. Wards Cove Packing Co., 827 F.2d th appeared to be roughly in line with the 439 (9P P Cir. 1987). 14 minority percentage of the labor market TP PT 490 U.S. at 663 n.4 on 664 (Stevens, J., Joined by Brennan, J., Marshall, J., and Blackmun, J., dissenting). 10 15 TP PT 19 FEP Cases 1052. TP PT 490 U.S. at 654. 11 16 TP PT Id. at 1075. TP PT Id. at 653. 12 17 TP PT 490 U.S. 642. TP PT Id. at 653-54. the comparison pool for determining interpretation of the Wards Cove whether the group has been analysis, are shared universally. discriminatorily denied hire into the Judge Patel, for example, though better jobs. citing Wards Cove for the proposition Typically, however, they make up that internal work-force comparisons are 19 only a very small part of that pool. The inadequate to prove discrimination,TPF FPT great majority is comprised of persons nevertheless appeared to rely on such who were not hired at all and whose comparisons to find not only that Lucky racial or gender composition are Stores had discriminated against the unknown. persons hired into the poorer jobs but As a general rule, minorities and also that the discrimination was women constitute a higher proportion of sufficiently egregious to warrant the persons seeking, or at least willing to punitive damages. accept, an employer’s less desirable jobs Nor do these views seem to be shared than an employer’s better jobs. Reasons by the U.S. Department of Labor, whose for this tendency include differences in Office of Federal Compliance Programs interests and qualifications, as well as plays a leading role in enforcing the the fact that minorities and women may prohibition of employment have fewer alternatives in a society discrimination in the private sector. where many employers do discriminate In March 1994, in Department of 20 against them. Labor v. Honeywell Inc.,TPF FPTthe Secretary But whether a particular employer of Labor, without even citing the Wards discriminates with regard to its more Cove decision, upheld an administrative desirable jobs usually will have little law judge’s ruling that Honeywell had bearing on how large a proportion of its discriminated against women at its poorer jobs are filled by minorities and Minneapolis-St. Paul facilities by hiring women. Because it is expected that them for less desirable jobs at higher minorities and women will comprise a rates than it hired them for its more higher proportion of an employer’s desirable jobs. Like the California poorer jobs whether or not the employer grocery stores, Honeywell would have discriminates with regard to the better been less vulnerable had it hired fewer jobs, the high representation of women for jobs deemed to be less minorities and women in the poorer jobs desirable. logically cannot be probative of The case was settled in September discrimination. 1994 by an agreement that cast all of the Yet, neither the view that a perceived 3,200 women whom Honeywell had overrepresentation of minorities and hired into the less desirable jobs as women in less desirable jobs is victims of discrimination. The $6.5 essentially irrelevant to the issue of million settlement amount, $3.5 million whether they have been discriminatorily of which would go to the affected class, denied hire for more desirable might be considered either a quite 18 positions,TPF FPT nor the foregoing modest recovery given the size of the class or a very large one given the

18 TP PT The group’s representation in the poorer job is 19 highly relevant to a determination of whether the TP PT 803 F.Supp. at 322. 20 group has been discriminatorily denied TP PT The decision is printed in Daily Labor Report, promotion from the poorer job to the better job. March 3, 1994, at E-1. fundamental defect of the principal In this context, the single factor most 21 claim.TPF FPT easily interpreted to suggest that To disparage these cases is hardly to something is amiss is the glaring pattern say that none of them involved actual of job segregation- regardless of whether discrimination. On the contrary, they discrimination by the employer has in may have involved all sorts of any manner contributed to that pattern. discrimination, including even the The emphasis given to that pattern not discriminatory exclusion of women or only obscures the inquiry into whether minorities from the less desirable jobs. there has been any actual discriminatory But what typically leads to litigation exclusion from the better jobs but also in contexts in which the gender or racial obscures whether there has been any makeup of the work force differs discriminatory exclusion from the poorer dramatically from job to job is the filing jobs. of a discrimination charge by a woman Decisions like Lucky Stores create a or minority who either has been considerable problem for a variety of terminated or has been denied a employers. Supermarkets throughout promotion to a better job. the country- whether or not they exclude Such a claim may or may not have women from better jobs- are likely to merit, but, regardless of its merit, the have concentrations of women in their claim often will occasion an examination lower-paying jobs that are little of the employer’s overall policies with distinguishable from those that proved regard to the claimant’s group. so problematic for Lucky Stores of Determining whether there exists a Northern California. Retailers, whether pattern of discrimination as to any aspect or not they exclude women and of an employer’s personnel practices minorities from their more remunerative, rarely is easy. In order actually to prove, big-ticket sales jobs, are likely to have or disprove, that an employer engaged in much higher concentrations of women discriminatory hiring with regard to its and minorities in their sales-clerk jobs. better jobs, it generally is necessary to There is no easy solution for such review large numbers of applications, employers. Lawyers may tell them that including particularly the applications of the fact that they hire large numbers of the persons who were not hired. Those minorities and women into their lower- applications may not always be available paying jobs logically cannot show that and will be expensive to analyze when they hire too few minorities and women they are. into their better jobs. Counsel also may advise that the Supreme Court has, in fact, so ruled. 21 TP PT For a sampling of other contexts, when a But, as illustrated by the Lucky Stores group’s high representation in one job has played decision, attorneys will not be able to a large role in creating the perception that the group has been excluded from other jobs, see guarantee how a case will come out in “Illusions of Job Segregation,” The Public court- leaving aside how a claim of job Interest, Fall, 1988, at 54; “Indiscriminate segregation may be perceived by the Reading of Statistics Can ‘Prove’ Bias Where public during the course of protracted None Exists," Manhattan Lawyer, April 25, litigation. 1989, at 11; “Are Bias Statistics Nonsense?” Legal Times, May 8, 1989, at 22; and “Unlucky Lawyers, however, can guarantee that Stores: Are They All Guilty of Discrimination?” there will be two factors distinguishing San Francisco Daily Journal, Jan. 29, 1993, at 5. their clients’ cases from the Lucky Stores case. First, in order for Judge Patel to conclude that punitive damages against Lucky Stores were warranted, she had to rule- erroneously, it would turn out, according to the Supreme Court’s recent decision in Landgraf v. USI Film 22 ProductsTPF FPT- that the punitive damages provisions of the Civil Rights Act of 23 1991 applied retroactively.TPF FPT In future cases, by contrast, there will be no doubt as to the availability of punitive damages. Second, in the Lucky Stores case, plaintiffs had to persuade a federal judge of the probative value of superficially appealing, if fundamentally illogical statistical analysis. In consequence of the Civil Rights Act of 1991, however, future cases- Butler v. Home Depot Inc. among them- are likely to be tried before juries, in which case the superficial appeal of such analyses is likely to have even greater sway. Under these circumstances, it will not be surprising as the Supreme Court observed in Wards Cove and as Judge Zirpoli had suggested a decade earlier, if employers give increasing thought to whether they may have too many minorities or women in jobs deemed not to be the most desirable, even if not wholly undesirable to the persons applying for them.

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22 TP PT 114 S. Ct. 1522 (1994). 23 TP PT 803 F.Supp. 318, 324.Û