Finance: Sexual Harassment
Smith Barney: A Settlement That's Not Settled
Some plaintiffs in the sex discrimination class action cry foul
In the struggle against sexual discrimination on Wall Street, Pamela K. Martens is a latter-day Rosa Parks--a woman who, metaphorically speaking, refused to sit in the back of the bus. The soft-spoken West Virginia native was a broker at the Garden City (N.Y.) branch of Smith Barney, whose locker-room atmosphere was epitomized by its notorious boys-only basement playpen, the "Boom-Boom Room."
After years of petty harassment and stymied promotion, Martens fought back. She was lead plaintiff in a landmark 1996 class action lawsuit that resulted, two years later, in a wide-ranging settlement with the firm, now merged with Salomon Brothers. To its defenders, the outcome was a masterpiece of justice that has resulted in dramatic change, not just at Salomon Smith Barney but also on Wall Street in general--where affirmative action is, in public at least, a rallying cry. Smith Barney agreed to set up an independent dispute-resolution process (DRP) for aggrieved women and to introduce various programs to encourage the hiring and promotion of women. "There was a lot of good done by that lawsuit, a lot of change," says Chicago attorney Linda D. Friedman, whose law firm, Stowell & Friedman, filed the suit. "The company has done some amazing things"--firing objectionable managers and vastly increasing its hiring of women, she says.SKEWED? But Martens--and some other former Smith Barney employees who initiated the suit--have a far less glowing view of the settlement. They have raised troubling questions about its fairness and execution--concerns rejected by U.S. District Court Judge Constance Baker Motley, who approved the settlement in July, 1998. Critics among the plaintiffs assert that the DRP is skewed toward Smith Barney, and unnecessarily shrouded in secrecy that even Smith Barney agrees is not required by the settlement.
One claimant who may wind up not getting a penny in compensation is Martens--who opted out of the settlement and has since seen her case tossed out by Motley on a technicality. The continued legal wrangling has cast a pall over a settlement that was widely hailed at the time as a model for dealing with thorny gender-discrimination issues.
For Martens, a former journalist who joined the branch in 1985, its suburban offices were a throwback to an earlier era--the Stone Age, perhaps. In the basement was the infamous Boom-Boom Room, a kind of frat-house bar with a garbage bin filled with Bloody Marys and a rusty bike hanging from the ceiling. The atmosphere was so Neanderthal, Martens says, that she rarely strayed from her office. She complained to management, to no avail. In October, 1995, Martens was fired--because, she was told, she missed a meeting.
That was the first salvo in a war that has dragged on to the present day. On one side are Martens and other dissatisfied plaintiffs, backed by the New York chapter of the National Organization for Women. On the other are Stowell & Friedman, some of the plaintiffs, the national NOW, which supported the settlement--and Judge Motley, who has firmly sided with Stowell & Friedman since the settlement. Salomon defends the deal's fairness, but general counsel Joan Guggenheimer declined comment on the legal wrangling."STONEWALLED." The issues are complex, but they boil down to this: Are women treated fairly in the settlement? There are 22,000 potential claimants--every woman who worked at Smith Barney from 1993 to 1998. Some 1,900 members of the class filed claims, and 1,300 of them were settled. Friedman insists that the DRP has worked splendidly. At the sessions, she says, women are treated fairly and with courtesy and are not required to undergo humiliating mental examinations that, she says, are common in other types of legal proceedings. At one typical mediation session, she says, attorneys for Smith Barney apologized for the treatment that was meted out to a claimant. One of those attorneys, she says, was even reduced to tears--something that, she insists, was heartening to the claimant. And, above all, she asserts, the women have received generous settlements. How much? Critics' estimates averaging under $16,000 are hotly disputed by Friedman, who says the figure is higher. How much higher? She won't say--and neither will Smith Barney. Friedman notes that claimants have individually agreed not to disclose their settlements, which is standard practice, she says.
Critics insist that, based on the limited information that has emerged, the DRP process has been a failure. "Women are being stonewalled in their attempts to proceed to mediation, obtain discovery materialand obtain awards that bear a relationship to the egregious civil rights violations committed by Smith Barney," argued the New York chapter of NOW in a friend-of-the-court brief in May. Nonsense, says Friedman, who attacks the settlement's opponents as misguided or self-interested.
One central criticism of the settlement, however, is not in dispute. Not only are individual settlements secret, but so is the total amount paid to claimants. That number is known only to Salomon Smith Barney and to Friedman & Stowell--and they're not telling. Salomon general counsel Guggenheimer says the settlement doesn't prohibit disclosure of individual amounts or the total but that the firm doesn't believe it's appropriate to release such data. Friedman declines to give a precise number and will say only that "when it's all finished," the total cost to the firm will be in "the hundreds of millions." Guggenheimer won't comment on that, either.
Such secrecy is a main grievance of the dissenting plaintiffs. But an effort to get a detailed status report on the settlement--as well as a court-appointed Special Master to oversee its implementation--has failed, big time. In May, Judge Motley summarily rejected an effort to get such relief by Kent Spriggs, a Florida attorney hired by some of the dissenting plaintiffs. In a stinging decision, Motley levied fines of $5,000 apiece on Spriggs and his law partner and revoked their permission to appear before the court. Motley acidly commented that Spriggs had made "serious allegations which were unsupported by affidavits" and that "by all credible reports, the [dispute resolution process] is running smoothly and serving class members well."DOUBLETALK. In recent days, Spriggs has appealed Motley's rulings--as has Martens. In a separate decision, Motley threw out an effort by Martens and co-plaintiff Judith P. Mione to pursue their cases separately. In her ruling, which Martens is vigorously contesting, Motley makes the ironic allegation that Martens and Mione failed to pursue their claims vigorously enough. She accused the two women of "pettifoggery" that "focused on interloping in the affairs of the class."
If the judge's ruling stands, Pamela Martens won't get a dime for the years of petty harassment she suffered at Smith Barney. Usually, such a decisive legal defeat would be fatal--the last chapter in the saga of the Boom Boom Room. But if you think that--well, you don't know Pamela Martens. While her attorney files briefs seeking to overturn the decision, Martens has filed an ethics complaint against the judge (who did not return calls seeking comment).
And despite all the frustrations, Martens looks back on the past few years without a tinge of regret. "I hear people say they would never go through it again, it has taken such a toll," she says. "For me, it has been so enriching. I opened my eyes and took action." But as long as the sums paid out to claimants are shrouded in mystery, the public will never know for sure whether the women received justice--or were sold down the river.By Gary Weiss in New YorkReturn to top