Not even the EEOC was allowed at this sex discrimination hearing

On Feb. 26, eight women who had sued Sterling Jewelers, Inc. were ushered into a private hearing room in midtown Manhattan with their lawyers, lawyers for Sterling, and an arbitrator. The door was shut behind them.

Like an increasing number of disputes between employees and employers, this one would be heard in a forum where the public and the press were forbidden.

I asked to attend the late February hearings on this sex discrimination case that could wind up including 44,000 women in 50 states, but the arbitrator declined my request. More important is that the Equal Employment Opportunity Commission – the agency in charge of enforcing federal civil rights laws – also asked, and also was declined. 

Joseph Sellers, a lawyer for the plaintiffs, said that the agency was told it could ask for a transcript, although no guarantee was made that it would receive one.

Sterling, based in Akron, Ohio, is parent of 12 jewelry chains in the U.S., including Jared the Galleria of Jewelry and Kay Jewelers.

The two sides presented their arguments for and against a motion to certify a class of women who’d worked in sales positions at Sterling since 2003. The women at the hearing, who would act as representatives of the class, say that Sterling discriminated against them in its pay and promotion policies.

The case, which I wrote about Saturday in The New York Times, includes examples of some of the worst sexual harassment allegations I’ve ever heard, and that includes the vulgar behavior I wrote about in my book “Tales From the Boom-Boom Room: The Landmark Legal Battles That Exposed Wall Street’s Shocking Culture of Sexual Harassment.”

Sterling says the allegations are “without merit.”

The complaint against Sterling doesn’t seek damages for harassment, but contends that top management created a climate that devalued women’s work, resulting in lower pay and fewer promotions than the firm’s men received.  Skim down to page 33 of the brief filed last June and you’ll find a summary that includes “groping and grabbing,” public undressing at company events, and even mention of a rape.

Right after that, a new section entitled “Conduct of Executives” begins. It includes 6 ½ pages of redactions. The arbitrator allowed the plaintiffs’ lawyer to publish the brief so that Sterling women could be apprised of developments in the case, but not before they cleaned up the ugliest allegations.

When civil rights cases are adjudicated behind closed doors, it reduces the incentive for companies to change. It used to be that only Wall Street had a lock on forced arbitration of disputes, which in my opinion fueled much of the egregious behavior in the financial world that I wrote about 12 years ago in my book.

These days, though, Wall Street has a lot of company in the privatization of civil rights claims.

At Sterling, a so-called mandatory arbitration policy has been in effect since 1998. The company has a dispute resolution program called Resolve that employees are required to use. It’s a three-step program, the third of which is arbitration. Only two of the 474 Resolve complaints filed between 1998 and 2010 wound up moving all the way to a decision by an arbitrator.

The plaintiffs said in their brief that Sterling requires that grievances including harassment be supported by accounts from two witnesses.  Sterling spokesman David A. Bouffard said in a statement that the company has never had such a policy, but in their brief, the plaintiffs cite the Employee Relations Handbook as the source of that information.

In their brief, the women describe an in-house hotline called TIPS that was worse than ineffective. The document cites one woman who was fired within days of reporting unwelcome advances by her district manager.

Another woman, Maria House, told me that her boss approached her at a Kay Jewelers in California one morning and told her “I would like to suck on your boobs.” She said she called the district manager in tears only to be told, “You need to stop overreacting and get back to work.”

House said that a manager once pushed her to the floor to pick up a piece of jewelry she’d dropped. As she recalls the incident, he told her to “Pick it up,” and added  “If you were living in my country, you wouldn’t have any teeth left because women there know their place.”

The Sterling women are handicapped by their lack of access to the courts, but it could be worse. They at least managed to get an arbitrator to consider certifying them as a class – a decision that is probably months off. But more and more companies are writing clauses into employment contracts that prohibit class actions even in arbitration, said Cliff Palefsky, a San Francisco employment lawyer. And without a large group to share legal expenses, wage discrimination cases like the one against Sterling are all but impossible to pursue.

It’s a long shot today that an employee with a civil rights grievance can have a case heard in court. Now, even when a case is relegated to private arbitration, litigants are having a tougher time than ever getting permission to move forward as a class.

So it shouldn’t come as a surprise that, with fewer ways to hold companies accountable for breaking civil rights laws, those laws get broken more often. I’d guess that there are more companies with practices like those alleged of Sterling. But we may never hear about them.

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