In the largest civil rights case settlement in history, State Farm Insurance Co. said Tuesday that it will pay $157 million to 814 California women who had brought suit contending they were denied jobs as sales agents because of their sex.
The settlement, which is the climax of a 13-year legal battle, comes in addition to $36 million already recovered from the company in individual trials and agreements. Lawyers said that when all pending claims have been resolved, the total damages paid will probably exceed $200 million.
Under a unique separate arrangement, more than $320,000 --with more to come--was contributed by successful plaintiffs and their lawyers to 37 other plaintiffs who decided not to settle and lost their cases in court.
The settlement disclosed Tuesday stems from a class action suit filed in U.S. District Court here in 1979. Under a consent decree approved by U.S. District Judge Thelton E. Henderson in 1988, at least 50% of the new agents hired in California over a 10-year period by State Farm were to be women. Further negotiations led to the huge settlement.
Both sides said Tuesday that they welcomed the agreement as a way to vastly reduce time and costs and insure faster payments to the victims. Plaintiffs' lawyers said the mammoth size of the settlement was certain to deter sex bias in the workplace.
"This sends a pretty powerful message," said Guy T. Saperstein of Oakland, lead attorney for the women who sued. "This is substantial money, and would get any company's attention."
Jim Stahly, a spokesman for State Farm in Bloomington, Ill., said the settlement would shorten legal proceedings by five years, reduce attorney fees and speed money to women who suffered discrimination.
The pact will have no significant effect on the firm's overall financial health, nor will it result in rate increases, he said. Fortune magazine said recently that State Farm, the largest homeowner and auto insurance carrier in the nation, was worth $18 billion.
Stahly noted that State Farm in recent years has substantially increased the hiring of women, including 43% of all new sales agents being hired nationwide. Overall, women make up 15% of all sales agents. "We're just glad to get this piece of our past over and done with," he said.
The settlement is by far the largest involving discrimination of any kind--race, sex, religion or age--in a case brought under the 1964 Civil Rights Act, Saperstein said.
Last year, $60 million was recovered in a sex discrimination case brought by the U.S. Equal Employment Opportunity Commission against AT&T; Technologies. In 1985, the U.S. Supreme Court let stand a $58-million sex discrimination award won by a group of stewardesses against Northwest Airlines.
In another landmark sex bias case, a Los Angeles Superior Court jury in October awarded $20.3 million in damages to Janella Sue Martin, a credit supervisor who waged a five-year legal battle against Texaco.
The State Farm case began when Muriel Kraszewski, who lives in San Clemente, filed a complaint with the U.S. Equal Employment Opportunity Commission charging the company with bias in refusing to hire her as a sales agent in 1974. At the time, fewer than 1% of the agents hired by the firm were women.
Kraszewski was earning $8,000 annually with State Farm assisting sales agents. She said many agents had encouraged her to seek a job as an agent, which had a salary of about $60,000 a year. But when she went to the firm's managers, she said, they first told her she needed a college degree--despite the fact that many male agents lacked a degree--and then told her State Farm would not employ women agents.
Later, when Kraszewski was working as an agent for Farmers Insurance, she joined other women in a class action suit against State Farm. In 1985, Judge Henderson ruled that the company was liable for sex discrimination, finding the firm had "lied to, and/or given false and misleading information" to women who sought jobs as sales agents.
The 1988 consent decree opened the way for individual hearings before nine special masters and settlement proceedings that culminated in the agreement announced Tuesday.
Under the settlement, the 814 women are to receive an average of $193,000--the highest individual awards ever made in a sex discrimination case--and no plaintiff will receive less than $150,000.
Kraszewski, who appeared with other plaintiffs at a news conference, said her main interest in bringing the suit was to attack sex discrimination in the workplace. "I didn't want any other woman treated like I was," she said. "They patted me on the head and told me how qualified I was . . . but later said they couldn't hire me."
Saperstein said the relatively high individual damage amounts were attributable to several factors, among them the worth of sales agents' jobs--which now pay an average income of about $120,000.
The idea of compensating losing plaintiffs from the winners' proceeds came from Gloria Bernell Scott of Porterville, one of the winners, who pledged $5,000 to begin an "appreciation fund" for the losers. "It had been their experiences, their witnesses, their time, their effort and trauma--along with those receiving favorable decisions--that put pressure on State Farm," Scott said Tuesday.
Saperstein declined to reveal how much attorneys for the plaintiffs would receive in fees. Such cases are taken on a contingency basis, meaning that lawyers will receive a share of any recovery--usually about one-third of the total--but nothing if the case is lost.
The lawyer said the fees would be "not insubstantial," but noted that they would be used to cover 13 years of legal work, the hiring of about 100 people (including 30 other lawyers), the rental of office space and travel and other expenses. The fees for plaintiffs' lawyers undoubtedly will be less than those for State Farm's lawyers, he said.
"If we had lost this case we'd have gone down the tubes," Saperstein said. "Our firm would have been bankrupt."