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A federal judge last Wednesday ruled that a suit by a former casino employee, who claims she was demoted and fired because she is white, can proceed as a class action. The ruling by U.S. District Judge Stephen Orlofsky in Osgood v. Harrah’s Entertainment Inc., C-00-240, did not address the merits of the plaintiff’s reverse-discrimination case, but merely allowed the case to move ahead as a class action. Mary Osgood, who worked at Harrah’s Atlantic City, N.J. casino, alleges she was discriminated against because her employer’s Equal Employment Business Opportunity Plan impermissibly favors minorities in hiring and promotion and thus violates her civil rights, as well as those of other nonminorities. The Casino Control Commission requires each casino to adopt an equal employment plan. Orlofsky said Osgood, on behalf of herself and other current and former white employees, may seek declaratory and injunctive relief against Harrah’s in her attempt to have the plan declared invalid. The judge, however, denied Osgood’s motion that her request for monetary damages proceed as a class action. Because of the wide disparity of potential damages among the plaintiffs, Orlofsky ruled, a class action would violate rules of federal procedure. Osgood alleges that in August 1999, she was demoted from her position as a shift manager, a position she says she had held for about three years. According to her complaint, Osgood says she was offered a position as a casino host, a lower-grade position that entitled her to fewer employee benefits, such as bonus incentives, stock awards and participation in deferred compensation plans. Osgood alleges that she was replaced as shift manager by an African-American man, Glenn Cunningham. Osgood says she was demoted because of the language in Harrah’s plan and alleges that race was a consideration in every promotion made at the casino. In allowing the suit to go forward, Orlofsky relied heavily on a 1999 ruling by the 3rd U.S. Circuit Court of Appeals, Schurr v. Resorts International Hotel, 196 F.3d 486, 491. There, the court ruled that Resorts engaged in discrimination when it hired an African-American man over an equally qualified white applicant. The hotel contended that the move was permissible because it had not yet attained its goal for minority employment. The court found that the plan relied on for the hiring decision was not created to rectify past or present discrimination by the casino. The U.S. Supreme Court has ruled that race can be used as a hiring factor only if it is intended to remedy past discrimination. The plaintiff, Karl Schurr, applied for a job as a light and sound technician at Resorts in July 1994. The director of show operations at the casino narrowed the field of candidates to Schurr, who is white, and Ronald Boykin, who is black. The director found the two men to be equally qualified and hired Boykin because the hotel had not yet reached 25 percent minority employment in all technical jobs, as is encouraged by the New Jersey Casino Control Act. When Boykin was hired, minority technical employees constituted 22.25 percent of Resorts’ technical workers. The circuit court found that Resorts refused to hire Schurr on the basis of his race and that the decision violated Title VII of the Civil Rights Act of 1964 because the affirmative action plan was not created as a result of any imbalance or in response to a finding that any relevant job category had been affected by segregation. Orlofsky said it appeared as though Osgood had made a prima facie showing that Harrah’s, because of its plan, had violated her civil rights and that there was little question she could proceed on her own. “[T]he Supreme Court has held that the ‘injury in fact’ in an equal protection case … is the denial of equal treatment resulting from the imposition of a barrier,” he said, quoting Northeastern Florida Chapter of the Associated General Contractors of America v. City of Jacksonville, 508 U.S. 656 (1993). He wrote: “Osgood’s claim, insofar as she alleges that she was denied equal treatment, based on her race, pursuant to Defendants’ EEBOP policy, clearly satisfies this requirement. “Furthermore, Osgood has adequately alleged a causal connection between the injury of which she complains and the Defendants’ conduct, in that she charges that her alleged demotion and subsequent replacement by an African-American employee were the direct result of Harrah’s implementation of its EEBOP, an affirmative action program which Osgood alleges favors minorities. “Finally, it is likely that Osgood’s injury would be redressed through a favorable decision on the merits. Since Osgood’s claim satisfies these criteria, I conclude that Osgood has individual standing to assert a claim of race discrimination. …” Orlofsky found. The casino argued that Osgood’s status as a supervisory nonunion employee defeated her claim of typicality — a showing that must be made for a class to be certified — because she could not purport to represent the claims of nonsupervisory union employees or job applicants. Orlofsky, however, said he disagreed. Because Osgood is seeking injunctive and declaratory relief as to the validity of the plan, he said, her claims are typical of the class of white casino employees and job applicants. “Thus, to the extent that Plaintiff frames her claim in the context of declaratory and injunctive relief she seeks, namely, enjoining Harrah’s from utilizing its EEBOP or other race-based criteria in making employment decisions, Plaintiff’s claim is typical of the class claim,” he says. One of Osgood’s lawyers, Stephen Console, says he is pleased with the ruling, even though Osgood cannot represent nonminority current and former employees on the damages claim. “The EEBOP has been shown to be flawed,” says Console, who heads a Westmont firm. If Osgood is able to convince Orlofsky that Harrah’s plan violated her rights, there will ultimately be an award of monetary damages, Console says. Russell Lichtenstein, a partner at Atlantic City’s Cooper Perskie April Niedelman Wagenheim & Levenson who is representing Harrah’s, declined to comment due to the pending litigation. One casino lawyer, who spoke on the condition he not be identified, says Schurr and any unfavorable outcome in Osgood leave the casinos in a tough situation. Under the Casino Control Act, N.J.S.A. 5:12-1 et seq., the plan must address how the casino will meet its affirmative action obligations. “On one hand, you have casinos meeting their licensing obligations by creating an affirmative action plan through its EEBOP,” the casino lawyer says. “Then you have nonminority plaintiffs winning in federal court because the courts have ruled that those plans impermissibly discriminate against whites. “The problem is that the casinos cannot unilaterally drop their EEBOPs without violating the statute’s affirmative action rules,” the lawyer adds. The Casino Control Commission is reviewing its EEBOP requirements because of the 3rd Circuit’s ruling in Schurr. “Affirmative action goals are part of the licensing requirement,” says Steven Suflas, a partner at Haddonfield, N.J.’s Archer & Greiner who represents management in employment cases. “But now a large part of the casino licensing regulations are under serious attack.” The key to Orlofsky’s ruling may not necessarily be that he allowed Osgood’s particular suit to go forward, he says, but rather that he allowed it to proceed as a class action, at least as far seeking to obtain injunctive relief. That, Suflas says, may open the gates to litigation by other nonminorities who believe they were not hired, or that they were passed over for promotion, because they are white. Suflas agrees that casinos are caught between contradicting principles of affirmative action and discrimination. “Welcome to the life of an employer in New Jersey,” he says.

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