Texaco Bias Case Decision Has Glass Ceilings Rattling

By THOMAS S. MULLIGAN

Dec. 8, 1996 12 AM PT

TIMES STAFF WRITER

NEW YORK —

In Richmond, Va., a federal jury Monday found systematic discrimination against black employees by electronics retailer Circuit City Stores Inc.

In Chicago, a year-old age-discrimination suit just spawned a new charge of racial bias in layoffs at the major printing firm of R.R. Donnelley & Sons Co., prompting the Rev. Jesse Jackson to intervene last week.

In Los Angeles and Houston, black workers at Shell Oil Co. are drawing new media attention to their long-standing claims of a “glass ceiling” blocking job advancement.

And in Miami on Wednesday, Burger King Corp. announced two new vice presidents and--in a touch that seemed oddly out of date--identified them as African Americans in the headline of the news release.

The common thread among these incidents is that they follow on the heels of the racial scandal at Texaco Inc. The impact of the Texaco case is rippling through courtrooms and workplaces across the country, say legal, business and civil rights experts.

The spectacular difference between the Texaco case and other discrimination suits, of course, was the existence of secret tape recordings of a 1994 meeting in which oil company executives disparaged black employees and apparently plotted to hide or destroy evidence.

The explosive publicity surrounding the tapes quickly forced the oil giant to the negotiating table for a record $176-million settlement, announced Nov. 15. It also sparked an investigation by a federal grand jury in Texaco’s hometown of White Plains, N.Y., which so far has resulted in felony obstruction-of-justice charges against one former Texaco executive. The inquiry is continuing.

Although most other plaintiffs lack such compelling evidence, their cases may still be influenced by the Texaco tapes, lawyers say.

“I’m not sure it will make a difference in the minds of jurors, but I hope it will make a difference in the minds of judges,” said Candace Gorman, attorney for laid-off workers suing R.R. Donnelley. “Courts have always been reluctant to doubt what organizations say, but the Texaco case is so public and so outrageous that I hope it can be used as an example.”

Added attorney David Cynamon, who represents the two Circuit City employees awarded damages of $237,500 and $51,200, respectively: “To the extent that any of our jurors were aware of Texaco, it may have sensitized them to the fact that, yes, racial discrimination can occur at an otherwise reputable company.”

Lawyers for the Texaco plaintiffs said that before the tapes emerged, they suspected the company of concealing or altering documents because the material they received during pretrial discovery appeared “sanitized,” in one lawyer’s words. They felt vindicated by the taped conversations in which one executive offered to “shred” potentially damaging documents.

Cynamon had similar concerns about Circuit City after his legal team was unable, despite numerous requests of the company, to obtain a copy of a 1995 employee opinion survey showing that many minority workers felt promotions were racially biased. Just before trial, one of the plaintiffs’ witnesses--a woman who works at Circuit City--managed to produce a copy of the survey.

The day after the verdict, the presiding judge ordered Circuit City to explain why it shouldn’t be punished for failing to turn over the survey. That issue is still pending. Circuit City is also expected to appeal the verdict.

Cynamon and other lawyers predicted that at least for a while, judges will become more skeptical and plaintiffs’ advocates more aggressive during the discovery phase of lawsuits.

Corporations, for their part, are struggling to figure out the implications of the Texaco case for them.

“I think the notoriety of the underlying case and certainly the settlement have got to give corporate America pause,” said Gary Siniscalco, a partner in the San Francisco firm of Orrick, Herrington & Sutcliffe who frequently defends companies against such lawsuits.

Siniscalco said he is fielding a lot of calls these days from executives wondering whether minority hiring and promotion issues may land them in court.

One enduring result of the Texaco case may be to prod the Equal Employment Opportunity Commission into taking more action on glass-ceiling complaints. The EEOC, Siniscalco said, has been “relatively dormant with respect to big-case enforcement.”

The EEOC, in fact, has already started flexing its muscles over Texaco, insisting that it must approve the settlement before it becomes final. The agency is currently negotiating with both sides.

Although it is too early to tell whether the Texaco plaintiffs’ success will lead to a rash of new lawsuits--experts seem to doubt it--cases already in progress are getting heightened attention from the media and civil rights groups.

The new Donnelley lawsuit arose from the 1993-94 layoffs of about 660 workers at a plant in a largely minority neighborhood near downtown Chicago. The plaintiffs contend that Donnelley later hired back as many as a third of the white employees but none of the black ones. The earlier suit alleged that the rehirings illegally excluded older workers.

“We can categorically deny any pattern of racial discrimination related to the closing of that plant,” Donnelley spokesman William H. Lowe said. He said the plant was shut because its main customer, Sears Roebuck & Co., had cut back on the size of its catalogs, sharply reducing the flow of work to the plant.

Jackson, the Chicago-based civil rights leader who earlier called for a boycott of Texaco, last week called the Donnelley case even more disturbing and said that unless there is a quick settlement, the printer could face a boycott or stock-divestiture campaign.

At Shell, more than a dozen black workers in the retail marketing division--which oversees gasoline stations--contend that the company simply won’t move blacks into senior management. According to the complaint, no black employee in the division has ever moved beyond Grade 12, the top step in the middle-management ranks.

Jimmy Hunter, a Houston-based engineer who received top Shell awards for getting projects done on budget and on time, said in a recent interview that he became frustrated at seeing promotions go to white co-workers whom he outperformed.

A self-described “die-hard Shell man who lived and breathed the company,” Hunter was stuck for years at mid-level Grade 9. When he complained to a supervisor, the man told him, “I don’t understand why you still have shackles around your ankles.”

Los Angeles-based Sharon J. Ambeau, a 17-year Shell veteran, said her experience as a marketing manager was similar: She came up with a promotional idea known as “crazy days,” when Shell gas stations would use radical price cuts, balloons and bunting to create excitement and drum up sales volume. The idea worked so well that it was quickly adopted in other sales districts, but Ambeau never received the promotion she thought would follow.

“Not only do African Americans move more slowly, but so do women,” she said.

Shell declined to comment on the specifics of the case but said in a statement Thursday, “We believe the facts will show that their allegations are not true and that no system of discrimination against African Americans or any other employees exists in Shell Oil.”

The statement added that Shell is “not where we’d like to be” in the diversity of its work force but has “comprehensive programs and meaningful efforts underway to address diversity,” including having an executive director of diversity who reports to Shell’s president and chief executive.

Besides being defendants in race-discrimination suits, Shell and Texaco are linked in another key way: The two are planning to merge their refining and marketing operations to create the nation’s biggest gasoline dealer, with 15% of the market.

Much has been made in discussions of the Texaco case of the oil industry’s rough-hewn culture and of Texaco’s own long-term reputation as a litigious and sometimes ornery competitor. However, there seems to be little evidence that Big Oil stands apart from the rest of corporate America in its performance in the hiring and promotion of minorities.

The executive offices of aerospace companies, hospitals, computer programming firms and newspapers--to cite a few examples--contain just as few black faces as those of the oil-refining industry, according to the most recent U.S. government data.

Nevertheless, it was still jarring this week to see Burger King identify its new vice presidents so prominently by their race. The company named Vincent L. Berkeley Jr. and Anthony L. Austin--both PepsiCo veterans--to head its diversity/corporate affairs and field human resources departments, respectively.

“They had the right impulse, but the way they handled it was much too overt,” said one public relations executive who asked not to be identified. In the wake of the Texaco case, he noted, many firms are similarly trying to spotlight their voluntary initiatives to promote diversity.

For at least the next five years, Texaco’s own initiatives will be a mixture of the voluntary and the compulsory. A key part of its settlement, which must still be approved by the federal court where the lawsuit was filed, is the creation of an “equality and tolerance task force,” three of whose seven members will be appointed by the plaintiffs.

The task force will have the ability to push through policy changes at Texaco affecting the company’s hiring, promotion, job-evaluation and other workplace practices. Texaco has already committed itself to expanding its current diversity-training programs as well.

Gorman, the lawyer representing the laid-off Donnelley workers, said the task force idea could spread to other companies because it provides “a mechanism for current employees who still feel they’re being victimized to bring their grievances forward without retaliation and without having to go back to court.”

Implementing such a settlement can be tricky, however, because, for instance, if diversity training is handled improperly, it can further polarize the workplace rather than solve problems, said Frederick R. Lynch, a professor at Claremont McKenna College and author of “The Diversity Machine,” a forthcoming book on corporate diversity efforts.

Lynch noted that the Texaco officers whose banter was secretly taped were jokingly using expressions picked up in diversity-training classes, including a “jelly bean” metaphor created by the prominent diversity consultant R. Roosevelt Thomas Jr.

On the tape, one executive remarks that Texaco’s “black jelly beans” tend to agree, and another quickly rejoins: “That’s funny. All the black jelly beans seem to be glued to the bottom of the bag.”

Such talk demonstrates to Lynch that, at least in the case of these executives, Texaco’s training backfired, so simply expanding the program won’t help.

“You’ve given a spoonful of medicine and the patient threw up,” Lynch said, “so now you’re going to administer three tablespoons?”

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OPPORTUNITY GETS KNOCKED

The racial scandal embroiling Texaco has given a black eye to Big Oil in general. Some critics contend that the industry stands apart from the rest of corporate America as a bastion of good ol’ boy culture hostile to diversity in its upper ranks. However, the most recent U.S. government survey data--specifically the Equal Employment Opportunity Commission publication “Job Patterns for Minorities & Women in Private Industry-1994”--tell a different story. While the oil industry has relatively fewer high-level women than most other industries, management opportunities for black males might actually be a little better. The chart lists the numbers of “officials and managers” in various industries and by several race and sex categories.

INDUSTRY: Petroleum refining

ALL EMPLOYEES: 19,225 (100%)

WHITE MALES: 15,367 (79.9%)

BLACK MALES: 807 (4.2%)

WOMEN: 2,288 (11.9%)

INDUSTRY: Aircraft and parts

ALL EMPLOYEES: 45,426 (100%)

WHITE MALES: 37,589 (82.7%)

BLACK MALES: 1,102 (2.4%)

WOMEN: 4,810 (10.6%)

INDUSTRY: Amusement services

ALL EMPLOYEES: 15,252 (100%)