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As settlements in the Coke and Mitsubishi employment discrimination class actions both reach critical points, they are drawing both praise and criticism from legal experts for the way they have followed the path of an earlier, high-profile discrimination case. Five years ago, Texaco Inc. settled its race discrimination class action for a then record-breaking $176.1 million. In that case, Texaco was the first company to embrace what some employment experts think is an extreme approach to countering an alleged corporate culture of discrimination. In settling a suit that potentially could have had a huge negative impact on consumer sales, Texaco agreed to let a court-appointed, blue-ribbon panel aggressively oversee changes in the way it paid and promoted its workers. A year later, Mitsubishi Motors of America Inc. adopted a similar, companywide “zero tolerance” program before it, too, signed a $34 million settlement in its sexual discrimination suit. The deal included a court- appointed, blue-ribbon panel with substantial power to monitor the results of Mitsubishi’s reform effort. More recently, on Nov. 16, Coca-Cola Co. agreed to a $192.5 million settlement in a case in which more than 2,000 former and current black employees claimed they had suffered discrimination in pay and promotions. Under the deal, which is still not finalized, a special task force would monitor comprehensive internal changes to Coke’s human resources operations. During a May 29 class action fairness hearing, U.S. District Judge Richard W. Story of Atlanta called Coke’s approach a “historic” building upon the Texaco precedent. Deval Patrick, who was hired in April as Coca-Cola’s new general counsel, was chairman of Texaco’s Equality and Fairness Task Force after the Texaco settlement and then became Texaco’s general counsel in December 1998. “In my experiences with Texaco and during the very short time I’ve been with Coke, I’ve realized that what’s significant about them is not that lawsuits were brought, but that the companies used the crises involved for [major] change,” he says, explaining that both companies realized that, to succeed, their approach had to be broad in scope. “[T]hey had to create a workplace environment that [embodied] fairness for everyone,” he says. Few doubt the sincerity of Texaco, Mitsubishi and now Coca-Cola in wanting to eradicate any vestiges of discrimination within their ranks. On May 24, Mitsubishi’s monitors released a final report that generally praised the company for its unique anti-harassment program, thereby paving the way for the consent decree in that case to expire, as planned, on June 23. And yet, because of the precedents set in the three cases, some corporate defense lawyers are concerned that companies accused of discrimination in the future will have to cave into plaintiffs’ lawyers’ demands to appoint blue-ribbon oversight panels without fully understanding their potential impact. Steve Gerber, the chair of the employment law section at the Chicago-based Defense Research Institute, says that by granting such sweeping powers to independent monitors, “you are giving the plaintiffs something they could not have gotten in the lawsuit; that is, the ability to make everyday business decisions” quickly and without outside interference “from people who cannot possibly know the company’s business or needs.” “What these companies have done is to put part or all of their human resources functions into court receivership,” agrees Lawrence Lorber, a partner at New York’s Proskauer Rose. COKE’S HEAVY HITTER Under the Coca-Cola proposal, the seven-member Coke task force would be led by former U.S. Secretary of Labor Alexis M. Herman, with the group filing progress reports annually for four years. Of particular concern is that the proposed Coca-Cola settlement arguably gives the monitors the ability to make recommendations that can bind the company — unless the company can show that the changes involve “unsound business practices,” are not feasible or are too expensive. Even more than in the Texaco case, “this is going to be a top-to-bottom, across-the-board evaluation of Coca-Cola by some of the best experts available to ensure that workers are rewarded strictly on the basis of their job performance,” says Jeffrey O. Bramlett, co-lead plaintiffs’ counsel and a partner at Atlanta’s Bondurant Mixson & Elmore. The Coca-Cola settlement includes several safeguards for company workers that do not appear in the Texaco plan, explains Thomas S. Williamson Jr., who replaced Patrick as chairman of Texaco’s Equality and Fairness Task Force and is a partner at Washington, D.C.’s Covington & Burling. According to Williamson, one key difference is that Coca-Cola’s monitors would deal more directly with the company’s board of directors, instead of its senior managers. For instance, while senior managers’ bonuses in both scenarios are tied to a showing of progress, the Coke executives’ compensation fate will be explicitly decided at each year’s end by the board itself, rather than according to a predetermined formula. “This level of control given to an outside body is unheard of,” concludes F. Shields McManus, a plaintiffs’ lawyer who had objected to Coca-Cola’s proposed cash award. Patrick, however, says that ceding power is not a problem. “While at Texaco, I found that much of the worries over the task force was more hypothetical than real.” He says these committees are made up of experienced people who see their role as partnering with the company and making changes that are consistent with the company’s business plan. “Sure, you can fret about the powers of the task force when a difference of opinion arises,” he says. “But, then, the court is always there to serve as a check and balance.” Now, with the favorable, final report issued to Mitsubishi by its monitors, there is concrete proof that these structured settlements can work, says Ellen J. Gleberman, Mitsubishi’s senior vice president of legal affairs. She is not alone in urging, however, that the monitoring committee consist of “experienced” players. These kinds of remake-the-company-image settlements “don’t mean a tinker’s damn if they are not implemented by known quantities who have a great amount of credibility with the public as well as the parties,” says John C. Hendrickson, the Equal Employment Opportunity Commission’s lead trial lawyer in the Mitsubishi case. Others warn defense counsel to “think twice” before ceding power to a blue-ribbon panel because of its potential impact.

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