The largest race bias settlement ever: $160 million
Brokerage firm Merrill Lynch has come out on the wrong end of a record-breaking race discrimination lawsuit.
The firm recently settled a class action bias case for an eye-popping $160 million.
When paid out, that would make it the largest amount of money ever distributed by a U.S. firm to plaintiffs in a race bias suit — dwarfing what massive employers such as Coca-Cola, Texaco and Morgan Stanley have paid for similar issues in the recent past.
The suit was first filed in 2005 by lead plaintiff George McReynolds. At the time, only one out of every 75 workers at the company was black, and out of 14,000 brokers around the globe, there wasn’t a single black broker in 25 states.
McReynolds claimed that most black employees were considered poor performers, due to the fact that after black workers were hired, they received little help from their supervisors and were ostracized by their colleagues. That left them disadvantaged and meant they were unfairly denied promotions and important accounts, he claimed.
A New York Times article provided more detail on the alleged bias as related by McReynolds’ lawyer Linda D. Friedman:
She told a panel of three judges that Merrill’s practice of encouraging brokers to form teams and letting departing brokers hand off customers to other team members had a disparate effect on black brokers. Black brokers were rarely invited to join teams and were too widely scattered to form their own teams. By being left out, they were being left behind, Ms. Friedman argued.
8 years in court
McReynolds was the sole plaintiff at first, but gradually was able to persuade more brokers to join the case, eventually amounting to 700 workers. By the time of the settlement, the number had reached 1,200 employees.
The case then spent eight years in federal court, and was even appealed to the Supreme Court — twice.
Another twist: E. Stanley O’Neal, the company’s first black CEO, who served from 2003 to 2007, admitted that black brokers could have had a hard time because most of Merrill Lynch’s clients are white and might not trust their money to brokers who weren’t of the same race.
The $160 million settlement, if paid out, will be available to all black trainees and brokers at the firm since May 2001.
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