Pacific Bell Will Pay $3 Million to End Gay Bias Case

In what lawyers say is the largest financial settlement of its kind, Pacific Bell has agreed to pay $3 million to resolve claims by former employees and applicants who say they were denied jobs and promotions because they are homosexuals.

The agreement, subject to approval by a judge, culminates a widely watched, 11-year legal battle that produced a landmark state Supreme Court ruling in 1979 protecting homosexuals from employment discrimination.

In a joint statement issued Thursday, Pacific Bell and lawyers representing gay and lesbian plaintiffs in a class-action lawsuit described the agreement as “fair.” They said it represents neither an admission of bias by the company, nor a concession by the plaintiffs that there was no discrimination.

The company said that since 1980 it has followed a written policy that specifically bars discrimination on the basis of sexual orientation, as well as race, sex, religion and national origin.

Under the agreement, Pacific Bell will set aside a fund of $3 million for payment of claims that are expected from an estimated 250 persons alleging discrimination over a period dating back to 1970.

An independent arbitrator, retired Alameda Superior Court Judge Robert L. Bostick, will examine the claims and will award compensation from the fund. If valid claims exceed a total of $3 million, individual awards will be reduced accordingly.

Any amount remaining is to be distributed statewide to nonprofit charitable organizations providing health assistance, counseling and social services to homosexuals.

The agreement also calls for the company to pay court costs and attorney fees that may reach an additional $2 million, lawyers said.

Attorneys and leaders of gay rights organizations hailed the agreement as the largest single financial settlement ever attained in a case asserting homosexual rights.

“Employers should now know that the gay and lesbian communities of this country have the strength and ability to win in the courts,” said Jean O’Leary, executive director of National Gay Rights Advocates. “We will hold employers accountable for any acts of discrimination against members of our community, and we will win.”

Roger Orr, a spokesman for Pacific Bell, said the company would have nothing to add to the joint statement but reaffirmed that its current policy bars discrimination by sexual orientation.

The suit was filed in June, 1975, by two organizations and several individuals who claimed they were denied jobs because they were homosexuals.

Four years later, the California Supreme Court ruled 4 to 3 that state law forbade the company or other employers from discriminating against job holders and applicants because of their homosexuality.

The late Justice Mathew O. Tobriner, writing the majority opinion, concluded that the disclosure of one’s sexual orientation was a “political act” entitled to protection under the law.

“One important aspect of the struggle for equal rights is to induce homosexual individuals to ‘come out of the closet,’ acknowledge their sexual preferences and to associate with others in working for equal rights,” Tobriner wrote.

The case was returned to the lower court but never reached trial, as attorneys fought over the exchange of pretrial evidence and negotiated over a potential settlement.

At a news conference Thursday, lawyers for the plaintiffs released copies of Pacific Bell documents indicating that an applicant had been rejected in 1973 as an “overt homosexual.” The documents also indicated that the company labeled homosexual applicants with the notation “Code 48” and that it did not give “favorable consideration” to “manifest homosexuals.”

O’Leary described the documents as “the smoking gun in this lawsuit” and said their disclosure helped pave the way for a settlement.

The terms of the agreement, detailed in a 149-page document, will be submitted shortly for review in San Francisco Superior Court, attorneys said. They said court approval is expected.