Over
17 long years
— starting long before the #MeToo movement galvanized the
nation — one of the most powerful banks in the country has been
able to keep
the lid on
many embarrassing details of a high-profile gender discrimination
case. A day of reckoning could be on the horizon, though, with a
recent agreement
between Goldman Sachs and a group of women suing the firm in that
case to unseal their allegations of harassment and discrimination.
The
names of the accused at the powerful investment bank will be blacked
out and replaced with corporate titles, according to the agreement
the two sides
filed in June, but the details of their alleged actions will be
unveiled for the first time. For a flavor of what’s been under
wraps, consider a section of the women’s 2014 request
for class certification entitled “Goldman Condones the
Sexualization of Women and an Uncorrected Culture of Sexual Assault
and Harassment.” Today, those words are followed by 23 black
lines of redacted text. If the court approves the parties’
agreement and the two sides file the documents, the details will be
disclosed for all to see as early as two weeks after the court
approval.
These
days, it would be “extraordinarily unusual” to see this
level of detail about allegations against a Wall Street firm, said
Linda D. Friedman, a lawyer whose Chicago firm brought high-profile
class-action lawsuits against brokerage firms beginning in the 1990s.
Wall Street was an early adopter of mandatory arbitration agreements
that cut off employees’ access to the courts, she said, giving
it a longer history of silencing complaints than most industries.
And since a 2018 Supreme Court decision, companies have additionally
been able to forbid employees from joining together in class-action
lawsuits that can provide “a body of evidence that would not
exist in arbitration,” she said. It is the rare case against a
Wall Street firm that gets this far.
The
case began back in 2005, when former Goldman Sachs Vice President
Cristina Chen-Oster filed a charge with the U.S. Equal Employment
Opportunity Commission on behalf of herself and other women at the
bank. She claimed
she received less pay than men at her level, got bad reviews after
she reported a sexual assault by a senior salesperson and that she
stopped getting meaningful work assignments when she returned from
maternity leave.
The
EEOC looked into the charges but closed
the case
in 2010, which released Chen-Oster to file a case on her own. Along
with two other women, she filed a lawsuit
in federal court three months after the EEOC closed its case. The
plaintiffs sought status as a class that would represent thousands of
women at Goldman.
How
to Keep Discrimination Complaints Under Wraps
From
the earliest days of gender discrimination complaints against Wall
Street firms in the 1990s, defendant companies have shared a priority
focus: Do whatever
is necessary
to keep complaints — and complainants — quiet. Banks and
securities firms met this goal in large part by implementing,
sometimes by way of sneaky
tactics,
policies that obligated employees to give up their right to court.
Morgan
Stanley took court rights away from thousands of its employees by way
of what looked to some workers like a routine company email. In 2015,
the firm was looking to force employees into a new dispute resolution
policy. So over the course of several months, it sent out batches of
emails offering a choice to either opt out or accept the new policy
that precluded use of the courts. Only
1%
of the 15,656 employees who received the first batch of emails opted
out.
But
three months later, when the firm dispatched its second batch to
21,076 employees, opt-outs soared to 27.8%. What changed? A trade
publication had published a story that explained the dire
ramifications of failing to opt out, and many employees rushed to
preserve their rights to access the courts.
Arbitration
has been a powerful strategy for Wall Street firms looking to quash
harassment claims and protect men. In 2018, when I studied
30 years of sexual harassment and hostile environment decisions by
arbitrators at the Financial Industry Regulatory Authority, which
runs Wall Street’s private judicial system, I found only 17
cases in which women won — 18% of all cases. Among a smattering
of 14 harassment cases brought by men, though, 29% were winners.
“This
is an unbelievably long time to have to wait for justice. You have to
question what we mean by justice at this point.”
~
Joan C. Williams, founding director, Center for WorkLife Law at UC
Hastings College of the Law
Goldman
is facing some potentially bad PR once those documents are released,
but it could have been worse. The plaintiffs had
pushed to
reveal the identities of two “high-ranking alleged sexual
harassers” whose names appeared in six places in their highly
redacted request for class certification. On June 9, the court ruled
that the two names will not be released. After the ruling, the two
sides wrote
to the court with suggestions on how they would proceed with
redactions before the documents are filed publicly.
That’s
a lost opportunity, said Marybeth Cremin, a stockbroker who was lead
plaintiff in a historic gender discrimination case
against Merrill Lynch that was settled in the 1990s. “Releasing
those names would have sent a message to everyone on Wall Street that
there is no more hiding and that the old boys can’t protect
each other anymore.”
That
the Goldman case has even gotten to this point is something of a
miracle. Over the 17 years that have elapsed since Chen-Oster filed
her EEOC charge, Goldman has employed seven
law firms
— the women have two — to fight Chen-Oster and the other
plaintiffs at every step.
Goldman
has battled to keep
documents secret,
persuaded
the court to
eliminate more than 1,000 women from the class and tried several
times to convince the court that the women had no business being
certified to pursue a class action lawsuit in the first place.
(Goldman made its most
recent such request
in March; the court has yet to rule on the motion). It even had the
impudence to argue — without success — that a statistical
report meant to illustrate pay disparities between men and women
should
exclude the compensation data
of mostly male “outliers” who pulled in the biggest
salaries.
The
uneven legal power and long duration of the case makes it a stark
example of the grueling challenges that women face when they fight
back against unequal treatment at work, said Joan
C. Williams,
founding director of the Center for WorkLife Law at the University of
California, Hastings College of the Law. “This is an
unbelievably long time to have to wait for justice,” she said.
“You have to question what we mean by justice at this point.”
Corporate
defendants can benefit greatly when a case goes on for so long, said
Nancy
Erika Smith,
the New Jersey employment lawyer who represented former Fox News
anchor Gretchen Carlson in her sexual harassment lawsuit against the
late CEO of the network, Roger Ailes. “It’s helpful to
drag it out,” she said. “You lose class members when they
die, go to other firms, get fired or get sick. Destroying the class
is the whole point.”
“If
you are treating women as sex objects, it doesn’t take a big
leap to say you are probably not paying them as humans.”
~
Nancy Erika Smith, employment lawyer
Notwithstanding
the potentially unsavory details that will emerge if the unredacted
files are made public, a potential trial would focus on
discrimination in Goldman’s compensation, promotion and
employee evaluation systems — not sexual harassment. The court
said
in 2018 that the women’s so-called boys’ club allegations
of sexual assault, sexual harassment, stereotyping, impunity for
misconduct and retaliation would require “individualized
inquiries” that did not qualify for class treatment.
That
doesn’t necessarily mean that the plaintiffs wouldn’t be
able to tell a jury about alleged harassment, assaults or
misogynistic language used at Goldman, said Smith: “If you are
treating women as sex objects, it doesn’t take a big leap to
say you are probably not paying them as humans.”
Goldman
spokeswoman Maeve DuVally said in a written statement that the bank
is proud of its record of promoting and supporting women, adding that
the firm “has been recognized for transparency as we advance
the effort within the financial services industry.”
By
some measures, Goldman has indeed boosted women both on and off its
payroll. The firm won’t sign on to take a company public unless
it has two diverse directors — one of which must
be
a woman. It has committed
$10 billion to address gender and racial biases faced by Black women.
And, late last year, it announced that the 643 people who would be
promoted to managing director as of January 1, 2022, represented its
“most diverse class in our history.” A record 30%
of that class were women — about
in line
with competitor Morgan Stanley’s numbers this year, according
to Financial
News.
By Wall Street standards, a managing director slate that is one-third
women is something to brag about, even in a world where women make up
49.58%
of the population.
Michelle
A. Lamy, a lawyer representing the plaintiffs, said the women “look
forward to challenging the sufficiency of Goldman Sachs’
diversity and inclusion programs at trial.”
“Pay
Up and Change Your Culture. It’s Easy”
Goldman’s
efforts to address diversity — effective or not — stand
in stark contrast to the aggressive role it has played in fighting
current and former female executives at the firm. By now, defense law
firms know exactly what policies need to be in place at their
clients’ firms to identify and minimize bias, William
T. Bielby,
a sociologist who gives expert testimony in discrimination trials,
told Capital & Main. Yet those same law firms take no prisoners
when employees blame powerful companies for failing in their
diversity efforts, he said. Cremin, the former Merrill broker, said
the duration, cost and tone of the litigation suggests Goldman isn’t
committed to change. “Pay up and change your culture,”
she said. “It’s easy.”
Goldman’s
DuVally said that “creating and maintaining best-in-class
programs that support women at the firm is not at odds with
vigorously defending against a lawsuit that we consider without
merit.”
For
all Goldman’s hype about diversity, it’s instructive to
hear how clueless the firm’s C-suiters can be about its
equality efforts. During a deposition in late 2020, Gary Cohn,
Goldman’s former president and chief operating officer, was
asked
if he had ever been part of the Management Committee’s
Diversity Working Group. He stammered a bit. “I don’t —
I actually — I don’t remember,” he said. Had he
served on any firmwide diversity committees? “I don’t
know if I technically served on the committees or not, but I may
have.”
Last
spring, Goldman was pushed
by shareholders to investigate its arbitration policy and determine
how its use of a private justice system impacted employees. In
December, Goldman reported that while there had been concerns that
arbitration may “allow harassment and discrimination to go
unseen and unaddressed,” its review
found that those concerns simply didn’t apply to Goldman. The
law firm that represented Jeffrey
Epstein
and Roman
Polanski
in their sexual assault cases conducted
the investigation,
assisted by a scholar
who is on the panels
of two arbitration providers.
The
Goldman Sachs women relegated to arbitration face a system that, by
accident or by design, tends to produce better results for men.
In
2020, more than a year before it concluded the arbitration review,
Goldman persuaded
the court in the Chen-Oster case to force more than 1,000 women out
of the class and into closed-door arbitration. The approximately
1,800 women who remain in the public class action are able, of
course, to speak freely about the litigation process that’s
been winding through the federal court system for more than a decade
— that’s how court works. It’s doubtful that the
Goldman women stuck in arbitration will be permitted to do the same,
though DuVally did not respond to questions about possible
restrictions.
The
Goldman women relegated to arbitration face a system that, by
accident or by design, tends to produce better results for men.
During my research
into three decades of FINRA sexual harassment cases, the biggest
award
I found went to a female stockbroker who said she’d been
harassed by a male broker; she got $3.5 million in damages plus
$418,262 for legal fees. Though the arbitrators found the man liable
for sexual harassment, his public
records
with FINRA include no mention of it.
Compare
that to arbitrators’ response in a recent case in which a hedge
fund executive said he’d been defamed when his firm said
publicly that he’d engaged in sexual misconduct. On June 29, a
highly sympathetic panel said
the man had not committed sexual misconduct and awarded him $52
million. A FINRA spokesperson said in an email that, among cases
between members of the securities industry, it was the biggest FINRA
award ever.
It’s
encouraging that the Goldman women have gotten this far with their
fight in a public forum, said Friedman, the Chicago lawyer. But with
Goldman again challenging the court’s decision to certify the
class, the years-long battle could extend further with no trial in
sight. Even the agreement to release the unflattering documents could
be in peril should a settlement be struck that’s contingent on
keeping everything sealed. That would be a big win for Goldman, said
Friedman: “It would prevent the public and the victims from
learning about the full extent of the gender hostility at the firm.”
This
commentary is also posted on Capital
& Main
