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The allegations are sensational. Women were routinely and publicly cursed and threatened in the factory where they worked. They were groped and fondled; one woman had her shirt ripped off. These are among the charges in a class action the Equal Employment Opportunity Commission (EEOC) brought against The Dial Corp. Filed by the EEOC’s Chicago office, the complaint details alleged harassment of as many as 100 women at a suburban Chicago factory. In February, the 7th U.S. Circuit Court of Appeals refused to hear an appeal attempting to dismantle the class. This is the agency’s largest sexual harassment case since it settled one four years ago against Mitsubishi for more than $34 million. A class action can make a general counsel long for early retirement. Especially when the allegations are splashed across the media. “There’s no doubt these cases today get litigated in the press in a way that didn’t happen 10 or even five years ago,” says Condon McGlothlen, a partner at Chicago’s Seyfarth Shaw who represents Dial. “Part of that is the big dollar figures attached to some high profile cases like Texaco and Coca-Cola,” he says, referring to racial discrimination class actions that settled for $176 million and $192.5 million, respectively. “Part of it is because the plaintiffs’ bar and now the EEOC are very concertedly using media strategy as part of their litigation game plan.” Though nearly all of these cases settle, McGlothlen says Dial may not: “Some institutions that are wrongly accused want to dispel the accusations.” Specialists in employment law say that large companies should expect to be hit with class actions. In the year ending last September, the EEOC filed 134 class actions — a 43 percent increase from 1997. Another 77 “opt-in” class actions under the Fair Labor Standards Act were filed in federal courts as private lawsuits — a 148 percent jump from the 1997 level. “Given the current environment,” says Kris Meade, a partner at Washington, D.C.’s Crowell & Moring, “if you’re a Fortune 500 company, you can expect that you’re going to get one of these lawsuits.” He attributes this environment, he adds, to the plaintiffs’ bar, attracted by some large and relatively speedy settlements. Consumer products companies that depend on public goodwill are particularly vulnerable to bad public relations and may settle even before classes are certified, as Coke and Texaco did. STATISTICS Increasingly, and with increasing sophistication, plaintiffs are building cases based on statistics, which Glenn Dowd, a partner at Hartford, Conn.’s Day, Berry & Howard, calls “the glue that holds class actions together in the employment field.” Dowd and others who advise employers recommend that they conduct statistical analyses of their own to avoid lawsuits. Two years ago, one of Dowd’s clients was planning to eliminate 7 percent of its 10,000 employees. After the legal and human resources departments had compiled a preliminary list, they had Dowd review methodology and, using his firm’s proprietary software, analyze the selections for disparities based on age, race, disability, gender and national origin. He declines to discuss whether changes were made, but acknowledges: “It’s not unusual for this to go through several iterations before you get to a final list” of who will be laid off. Dowd has provided this service for clients ranging from a company of 200 employees that laid off 10 to a Fortune 500 company with tens of thousands of employees that laid off 2,500. DECISION-MAKING IS CENTRAL The crux of many cases is the subjectivity of the decision-making process. Whether the issue is hiring, firing, promotions or compensation, the argument frequently turns on this fulcrum. As an example, Gregory Homer of Washington, D.C.’s Swidler Berlin Shereff Friedman cited the class action that Home Depot settled in 1998 for $104 million. The plaintiffs in that case argued that women were disproportionately represented in less desirable jobs like cashier, says Homer, who didn’t represent Home Depot but was called by another retailer worried it would be similarly targeted. Home Depot attempted to parry the allegation by insisting that male and female employees simply had different interests. The evidence: the application form on which prospective employees specified their preferences. The problem, Homer says, is that one of the boxes candidates could check was “anything,” and many women chose it. Homer’s advice to his client was simple. The company’s job application ought to include specific jobs along with brief descriptions of each. Job applicants should be instructed to choose one. If they attempt to write in something else, including “anything,” the application should be returned. The key, Homer says, is for companies to establish and document objective standards. “The Holy Grail for plaintiffs’ firms,” he says, “is that protected employees never even have an opportunity to advance because the whole thing is done by a tap on the shoulder.” INVITING COMPLAINTS In many ways, the effectiveness of a company’s grievance policy comes down to how it handles complaints. The aim isn’t to eliminate them. As attorney Joseph Sellers points out, “The receipt of complaints is often evidence that the internal communication system is working. “You want to give people the sense that you want to hear from them,” says Sellers, a partner in Washington, D.C.’s Cohen, Milstein, Hausfeld & Toll, a plaintiffs’ firm specializing in class actions. If employers establish multiple channels of communication, investigate complaints objectively and provide employees appropriate feedback that can go a long way toward keeping them happy. Coca-Cola Enterprises (CCE) is creating an innovative system for handling complaints. Based in Atlanta, like its namesake, CCE is a separate company that bottles and distributes Coke and other soft drinks. According to General Counsel John Parker, employees can air concerns to human resources, to a hotline or to the company’s ombudsman, who is located in a separate facility and treats all communications as confidential. The company will soon train all employees — more than 50,000 nationwide — in conflict management, and next year expects to have 125 specially trained volunteer employees available to counsel colleagues. The system was designed, Parker adds, with the active participation of the company’s own employees and consultants from Chorda Conflict Management. “This was a business-driven issue, not a legal issue,” says Parker, who insists it was not directly related to the suit against the Coca-Cola Co. Giving employees outlets, he says, demonstrates that the company cares and helps solve problems that reduce morale and impede productivity. A “secondary benefit,” he adds, is that happy employees are less likely to sue. TRAINING CCE’s global approach to training is by no means universal. William Milani, a partner at New York’s Epstein Becker & Green, sometimes is hired to conduct targeted trainings. In one recent example, women in a financial services company had accused their manager of favoring the department’s men with choice assignments and invitations to ball games. After HR investigated and found that the assignments had been equitably distributed, Milani met with the manager and, focusing on the ball games, explained that socializing is often perceived as an opportunity for advancement. A subordinate’s perception that she’s been unfairly treated in one area, Milani went on, can lead her to believe she’s been unfairly treated in others. Though defensive at first, the manager ultimately got the message, Milani says. Terri Solomon, a partner in the New York office of San Francisco’s Littler Mendelson, says that her firm offers training sessions in a variety of formats, including interactive CD-ROMs, videotapes and personal presentations. For example, she showed the staff of a health clinic a video called “Avoiding Litigation Landmines.” In it, a supervisor commits nine serious mistakes. Solomon stopped the tape several times to discuss them. At the conclusion, the staff sat in stunned silence. “We’ve made every one of those mistakes,” the clinic’s director confessed. “That’s OK,” Solomon told her, “you won’t make them now.” Solomon’s partner in Dallas, Ronald Manthey, who heads Littler’s class action practice group, has recently trained companies about the Fair Labor Standards Act. He works with HR departments to ensure employees are not working “off the clock” and that those deemed exempt from wage and hour laws really are. He encourages companies to conduct statistical audits, but also to inspect conditions on-site. Companies have a large motivation to comply: In recent years, Pacific Bell, Albertson’s and Rite Aid have settled class actions for amounts ranging from $25 million to $37 million, and Farmer’s Insurance was hit with a $90 million jury verdict. Beyond the direct benefits companies get from lawyers’ advice, a lawyer’s assistance also brings into play the applicable privileges — an additional benefit from the relationship, says Crowell’s Meade. Without attorney-client privilege, he explains, a company’s good-faith efforts to uncover problems may be discoverable and used against it in court. When all is said and done, outside counsel say, a lawsuit may turn on factors that have little to do with the merits. Dowd says large companies should develop media strategies anticipating a suit. “You’re not going to put together an entire campaign when you don’t need to,” he says. “But you need to know where you’re going to go when you have a drumbeat of negative publicity.”

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