Judge rejects Smith Barney sex-bias accord Litigation


NEW YORK -- Smith Barney Inc.'s settlement of a class-action lTC sex discrimination case was rejected yesterday by a federal judge, who called the company's plan to expand the role of women insufficient.

"The settlement is not fair, reasonable and adequate," U.S. District Judge Constance Baker Motley wrote in a 48-page decision.

Motley said the No. 2 U.S. brokerage company's proposed affirmative-action program for women was "amorphous" and questioned whether spending $15 million on it over four years would be enough.

Her decision was a surprise. She had given preliminary approval to the settlement last year.

Motley praised other terms of the settlement, which would have required Smith Barney, a unit of Travelers Group Inc., to establish a mediation program for plaintiffs to resolve sex-bias and harassment complaints, and create a fund to pay damages.

The mediation program "seems more favorable to plaintiffs than the status quo securities industry arbitration, which makes it an advantageous term," Motley wrote.

The Smith Barney lawsuit, filed in 1996 with graphic allegations of women being groped by male brokers during drinking parties in a basement "boom boom room," prompted criticism of mandatory arbitration. Arbitration bars workers from taking race, sex, age or other types of discrimination or harassment cases to court. Critics contend that arbitration favors companies.

The settlement stops short of letting the plaintiffs take individual discrimination cases to court, but Smith Barney was the first major Wall Street firm to wean itself away from mandatory arbitration.

Under typical private arbitration, three-member industry-run panels decide disputes.

Pub Date: 6/25/98

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