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The joint press release issued by the U.S. Equal Employment Opportunity Commission (EEOC) and the Dial Corp. last week sheds little light on why two parties that had been vowing to fight to the finish just days before suddenly agreed to step back from the brink of trial and settle their highly publicized sexual harassment case. Interviews with Dial and EEOC attorneys suggest that a series of rulings by U.S. District Judge Warren K. Urbom of the Northern District of Illinois in the weeks before trial, most of which went the EEOC’s way, overcame Dial’s longstanding reluctance to settle the four-year-old case [ NLJ, March 31]. In addition, and perhaps more importantly, Dial CEO Herbert M. Baum may have been unwilling to see his reputation tarnished over problems that had occurred mostly under his predecessors. The consent decree approved by Urbom on April 29 requires Dial to pay $10 million into a compensation fund, to beef up enforcement of its anti-harassment policy, and to submit to two-and-a-half years of monitoring by an independent panel chosen jointly by Dial and the EEOC. The company did not admit fault. The EEOC will distribute the $10 million to victims of harassment who have worked at Dial’s Montgomery, Ill., plant since 1998, using criteria spelled out in the decree and subject to review by the court. Women who were not members of the original class of 91 victims may still be eligible for compensation, but those who refused to assist the EEOC during its prosecution of the case can expect only “nominal damages,” in the words of the decree. No victim will receive more than $300,000. If given equal shares, the original class members would get about $100,000 each. The sum of $10 million might seem relatively small, given the EEOC’s earlier warnings that Dial could face liability of more than $27 million. But lawyers for both sides agree that the larger figure would hold only if all members of the original class received the statutory maximum of $300,000, an unlikely outcome, since the victims’ experiences varied widely. Dial’s trial attorney, Camille A. Olson of Chicago’s Seyfarth Shaw, argued in addition that some members of the original class might not have been entitled to any compensation, because some signed litigation waivers or were employed for short periods of time. EEOC attorney John Knight disputed that claim, arguing that the agency could show that some waivers were obtained under duress. THE RULINGS “How far back?” was the theme of one of Urbom’s rulings in the weeks before trial. The EEOC sought to introduce evidence going back to the 1970s in order to establish that there was a pattern or practice of sexual harassment at the Montgomery plant. Dial argued that the cutoff date should be 1991, since under federal law no recovery of money damages is allowed for violations that occurred prior to that year. Urbom gave something to both sides, ruling that the EEOC could introduce evidence going back to 1986, but no further. Both Knight and Olson characterized that decision as a victory for their respective sides. Olson suggested that the decision may have made the EEOC more prone to settle because the worst evidence against Dial was also the oldest. Knight replied that the EEOC had plenty of recent evidence to make its case. On April 22, Urbom made a ruling that, Olson said, weighed heavily in Dial’s decision to settle. On that day, Urbom rejected Dial’s challenge to his road map of how the trial would be conducted. The road map called for four phases. In the first two phases, a jury would decide if Dial was at fault and whether punitive damages were merited. In the third phase, an entirely separate jury would look at each class member’s case in isolation and award damages. In the fourth phase, Urbom would reconcile the overall amount of punitive damages awarded in the second phase with the individual awards in the third phase. According to Olson, if the initial verdicts favored the EEOC, Dial would have been tied up in litigation for years before even getting out of trial court. Knight conceded only that the process might have been a matter of months. In a final blow to Dial, Urbom ruled on April 22 that the company could not introduce testimony about class members’ profanity and sexual histories, evidence that the company claimed demonstrated that many class members welcomed sexual attention at the plant. CONSUMER APPEAL A number of employment law experts have expressed surprise that Dial, whose existence depends on its appeal to consumers, hadn’t settled much sooner. Joseph Sellers, a class action specialist at Washington’s Cohen, Milstein, Hausfeld & Toll, has seen similar intransigence at companies he’s gone up against: “I think that executives are sometimes hesitant to take responsibility because they know that they would have to give an explanation to shareholders and might suffer reductions in compensation or even dismissal.” He added that new managements are often free of that mental block, since they can package a settlement as a way of cleaning up the mess left by their predecessors. EEOC attorney Noelle Brennan speculated that something similar may have gone on at Dial, pointing to a recent comment by Baum. On April 25, Baum, who took the CEO post in 2000, told the Arizona Republic that “It really hasn’t happened on our watch. … We need to dispose of it.” Baum did not return telephone calls seeking comment. A Dial publicist said the company agreed to settle for business reasons. Olson said that the company wanted to put behind it problems that arose under supervisors who were fired as long ago as 1990. Knight denied that the harassment had come to a halt in recent years. He said that as recently as two weeks ago, one member of the original class reported that she had found pornography posted on her computer.

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