Boeing Deal in Bias Suit Canceled

A federal appeals court threw out a $15-million settlement of a class-action racial discrimination suit against Boeing Co. on Tuesday, saying there was no justification for the $4 million in lawyers’ fees or the substantial disparity in payments among plaintiffs. The ruling forces the company to reopen negotiations that could lead to a more costly settlement or trial.

The settlement, approved in 1999, would have allowed Boeing a relatively inexpensive resolution to a suit on behalf of 15,000 black workers. It alleged widespread harassment and discrimination in promotions at Boeing plants across the country, including Long Beach. The alleged harassment included signs in workplaces that purportedly said “whites only” and “white power,” and the hanging of a noose over a work station in a Wichita, Kan., plant.

The settlement called for the Seattle-based company to pay $3.65 million for diversity training. An additional $3.77 million would have been split among the 237 named plaintiffs, $3.53 million was to have been divided among the rest of the class, and the remaining $4.05 million was to be for lawyers fees.

By comparison, Coca-Cola Co. agreed two years ago to pay a record $192.5 million to settle claims brought by 2,200 current and former employees that the company routinely discriminated against blacks. That settlement was patterned after a 1996 agreement by Texaco Inc. to pay 1,500 current and former employees $176 million -- the previous record -- to end a similar suit.

A three-judge panel of the U.S. 9th Circuit Court of Appeals voted two-to-one to send the Boeing case back to federal district court in Seattle.

If a new settlement cannot be reached, the case could go back to trial, said lawyers familiar with the case and with civil procedure.

A lawyer for more than 200 black Boeing workers who filed the appeal objecting to the settlement said the group wants to see a new settlement that involves substantially more money, is distributed more fairly and forces the company to change its promotion practices.

“We believe the evidence would show that black employees of Boeing have not fared as well as their white counterparts, and when you take the experiences of 15,000 people over the 10 years that this would incorporate, that is very substantial and certainly far in excess of the remuneration that was agreed upon by class counsel,” said Alan B. Epstein, a Philadelphia-based lawyer representing the objectors. “If proven, the damages could be substantial.”

In the majority opinion, Circuit Judge Marsha S. Berzon said there was no explanation for why 237 plaintiffs were to receive an average of 16 times more than other class members. “We find no sufficient justification in the record for this differential in the amount of damage awards and the process for awarding them,” Berzon wrote.

The lawyers who brokered the deal for the class did not return calls.

A Boeing spokesman said the company could not comment on the ruling because its lawyers were still reviewing it Tuesday.

The spokesman defended the settlement, saying it was “about inclusion and moving forward together.”

“Regardless of the decision, the company has been and will continue to be committed to encouraging diversity in the workplace and promoting equal employment opportunities for its employees,” Boeing spokesman Ken Mercer said.

The reversal puts the case back to square one, said Joseph Beachboard, a Los Angeles lawyer and publisher of the California Employment Law Letter.

“It is relatively rare that one of these settlements gets overturned,” Beachboard said. “Usually when you have the plaintiffs and the defendants in agreement with the terms of a settlement, the courts will go along with that. Here you had some pretty strong objectors, and that caused the court to take a good long look at the case.”

Shares of Boeing rose 18 cents to close at $33.67 in New York Stock Exchange trading.

Times staff writer Peter Pae contributed to this report.