Salomon Smith Barney Bias Settlement Rejected

A federal judge Wednesday rejected a settlement between Salomon Smith Barney and a group of women who had alleged the company engaged in gender-based discrimination, harassment and retaliation against workers.

U.S. District Judge Constance B. Motley found that the settlement was not fair, reasonable and adequate.

The case had gained notoriety because of the original litigants’ lurid descriptions of working conditions, including the use by men of a basement “boom boom room” at a branch office on Long Island.

As part of its settlement last November, Smith Barney, which merged with Salomon Brothers last September, agreed to let plaintiffs use outside mediators to rule on their discrimination cases.

It also agreed to spend $15 million on diversity programs, to set up a central database to track harassment and discrimination complaints and to boost its promotion of women.

But it was the diversity plan that drew particular criticism from the judge, who said it failed to explain how it could live up to its promise to “promote equal employment opportunity, gender equality, a work force rich in diversity and a workplace free from harassment, discrimination and retaliation.”

The judge said the programs were not defined and that the firm had failed to explain how expenditures would be apportioned.

“It is possible to envision good-faith compliance with the settlement’s intent that the money support programs to implement change at Smith Barney. Yet it is also possible to envision that $15 million over four years for a company as large as Smith Barney is grossly inadequate if personnel training, for example, is included,” she wrote.

The deal was supported by 23 of the 25 original plaintiffs in the lawsuit filed in May 1996. The lawsuit included a description of executives whisking condoms to female workers through pneumatic tubes and showering them with obscene language.

Salomon Smith Barney’s parent is Travelers Group Inc., which is merging with Citicorp.