Suits' Effect May Be Widespread

August 27, 2004
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GRAND RAPIDS — A pair of high-profile sexual discrimination cases could change the way companies of all shapes and sizes operate.

On Wall Street, securities giant Morgan Stanley settled its case with an agreement to pay $54 million to plaintiffs and establish new diversity programs overseen by an outside monitor. Meanwhile, a lawsuit against Wal-Mart is proceeding as a class action lawsuit covering about 1.6 million women.

The former is the second largest judgment of its kind, while all bets are on the latter becoming the largest settlement by a considerable margin.

Although the plaintiffs are as different as working women might be, the two massive cases have similar patterns that may exist in many local companies, according to Dave Rhem, a partner at Varnum, Riddering, Schmidt & Howlett who specializes in employment litigation defense.

“I think what those companies need to do, and the lessons that smaller employers need to take from that, is to first of all take any and all complaints that they get from women seriously,” he explained. “The other thing is to perform an internal audit and take a look at the demographics of the organization.”

While both cases have an element of sexual harassment — trips to strip clubs or Hooters, breast-shaped birthday cakes and workplace stripteases — such lurid details did not make either case for the plaintiffs. Rather, establishing an environment hostile to the advancement of women is at the heart of both cases.

Even West Michigan employers certain that they are free of such activity may have an interest in the cases.

In the Wal-Mart case, women made up 65 percent of the company’s hourly employees but only 33 percent of its managers. Women made up 89.5 percent of its cashiers and 79 percent of its department heads, but only 37.6 percent of its assistant store managers and 15.5 percent of its store managers.

The disparity found in the rate of promotion between men and women was also apparent in the pay scale. There was a 6.2 percent gap in hourly wages and an average $16,400 advantage for men in annual managerial salaries.

Similar situations, whether by design or not, may exist in local companies.

“I think the biggest thing employers need to look at is what they are doing to prepare their people to advance,” Rhem said. “If you have a process in place where people will get training, be mentored and be rewarded for meeting goals and expectations, then you will have women and people of color advancing.”

Although the strip club trips make the headlines, it is the failure of companies to provide advancement opportunity that provides the backbone of most sexual discrimination litigation. The best defense against such litigation is to establish a program that creates equal opportunity for all employees to advance.

“I think a lot of companies think they have one,” Rhem said. “They may have a practice of promoting from within, but it’s informal. I think what they need to do is evaluate their top management and people at the supervisory level on their efforts to train their people and make them promotion ready. It’s hard sometimes to step back and look at the process, to ask, ‘What are we doing to advance our people?’ We need to get away from the informal process and to a more intentional system that’s monitored and evaluated.”

Rhem also mentioned that with the prevalence of at-will employment, cases of this type are increasing in number because it is now one of the few litigation options available for employees.

A sexual discrimination case made headlines locally in the recent past.

The Grand Rapids Police Department successfully defended charges of gender discrimination, sexual harassment and retaliation last year. Originally filed by four former and current officers, the case swelled to include 14 plaintiffs and involve more than 100 police department employees, accusing officers on up to Chief Harry Dolan of wrongdoing — from denied promotions to assault.

“The playing field is slanted against (the defense),” explained Mark Smith this past May. Smith is managing partner of Nantz, Litowich, Smith & Girard, outside labor counsel for the city of Grand Rapids. “Juries are of the belief that more likely than not, something happened. That is their belief, based on their own experience or the experience of a friend — the employer starts these cases with a disadvantage in terms of the jury pool.”

The department eventually won a complete victory, with all claims either withdrawn by the plaintiffs or rejected by the court.

On top of that, the accusers and their counsel were ordered to pay a portion of the city’s legal fees.

“The law is more difficult for the plaintiffs,” Smith pointed out. “There are more things they have to prove, and it isn’t really an easy burden to establish. You have this dynamic where the human side of the juror wants to favor the plaintiff, but the law sometimes gets in the way of doing that.

“It’s our task as defense counsel to neutralize the predisposition that something happened and get (the jury) to understand what the law is.”

“They are difficult cases to defend,” Rhem added. “But they are difficult cases to bring. They’re a challenge for both sides of the bar.”    

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