Edison Will Pay $18.25 Million to Settle Racial Bias Class Action

A racial discrimination suit brought by African American workers against Southern California Edison has been settled with a pact requiring the utility to pay $11.25 million to as many as 2,500 current and former employees.

The court-approved settlement disclosed Tuesday, one of the largest ever in a race discrimination case, also calls for Edison to pay $7 million to the plaintiffs’ lawyers.

In addition, the utility is required to combat workplace discrimination by establishing or overhauling an array of training and complaint review programs.

Teresa Demchak, one of the lawyers representing the black employees, lauded Edison for agreeing to adopt those programs and for entering into the complicated settlement talks shortly after the class-action suit was filed in 1994.

The settlement, she said, “demonstrates that when a company recognizes there is a problem and seeks to address it, early settlement is possible. The relief that was obtained won’t only benefit African Americans, it will benefit all employees and make it a better company.”

Edison’s chairman and chief executive, John E. Bryson, said in a prepared statement that the company is proud of the advances it has made since 1989, when the utility reached a previous agreement with civil rights groups to improve its hiring and promotion of minorities.

But, he said, “We--like the rest of society--still must work hard to improve our performance.”

While 6.7% of the people living in Edison’s service area are black, African Americans make up 7.7% of its employees. But blacks account for only one of the company’s top 22 officers, 3.8% of its top 500 managers and 5.2% of its overall management.

The plaintiffs named in the class-action suit, a group of nine management and hourly workers, accused the company of unfairly underpaying blacks, denying them promotions and permitting hostile work environments. The workers said management failed to step in when they were subjected to racial slurs, and sometimes subjected workers to retaliation when they complained of discrimination.

In response, the company pledged in the settlement to improve its complaint review and job posting procedures, to expand career development initiatives and to require all of the company’s 13,000 employees to attend diversity training.

Rosemead-based Edison declined to indicate its legal fees or the cost of implementing the new programs required by the settlement. The company said only that the expenses would not have a material impact on the company or its customers, who include 11 million California consumers.

One of the ironies of the case is that Edison has cultivated a reputation in recent years as a leader in workplace diversity programs, particularly initiatives to help workers balance the demands of work and family.

“Our plaintiffs alleged that the diversity programs were working for others, but not for them,” Demchak said.

Potentially eligible for the $11.25-million payout are all of the estimated 2,300 to 2,500 black employees who worked for Edison from 1989--a starting point agreed to by both sides--through this spring. Although that would translate into an average of $4,700 per employee--a relatively high sum for class-action cases--the individual payouts are expected to vary widely.

For instance, full-time workers and those who can provide evidence of discrimination will receive far more than part-timers who cannot establish that their careers were damaged by racial bias. In some cases, there will probably be black employees who receive no compensation.

Regardless of how many of the black employees win damages, however, Edison is required to pay out the entire $11.25 million.

The $7 million in legal fees will go to the high-profile plaintiffs’ law firm of Saperstein, Goldstein, Demchak & Baller. The Oakland-based firm has played a key role in some of the biggest discrimination settlements in U.S. history, including the record-setting $250-million gender discrimination victory against State Farm Insurance and the $132.5-million win in a race discrimination case against Shoney’s Restaurants.

Lawyers for the firm ranked the Edison case as among the nation’s five biggest race discrimination settlements.

The plaintiffs’ lawyers said their legal fees were justified because of the complexity of the case. They also noted that they accepted the case on a contingency basis, meaning they would have received nothing if the plaintiffs lost.

Moreover, the plaintiffs’ lawyers said the Southern California workers came to them only after they were turned down by lawyers in the Los Angeles area. “They had a real tough time finding an attorney to take on a case of this magnitude,” said Barry Goldstein, managing partner of the plaintiffs’ firm.

The fees include work done on the case, along with the firm’s continuing role monitoring the pact until it is completed in five to seven years.