|Texaco: A Case Study in Racial Intimidation!
Firm Pays $176 Million to Avoid Years
of Government Harassment
Also pays additional millions to
buy-off Jesse Jackson, the NAACP, the Urban League and others.
|Texaco Buys Temporary
Freedom from Racial Harassment: In late 1996, and in early 1997,
Texaco, Inc. agreed to a settlement of over $176 million in order to bring to an end a
profit-killing vendetta by the NAACP -- aided by the U.S. Department of Justice and the
U.S. EEOC -- for Texaco's alleged racial discrimination.
It has been hailed as "an historic settlement" and "the largest settlement
ever of its kind."
the dust settles two years later, the central question remains: Did Texaco
intentionally have in place a policy to racially discriminate? Interestingly,
supporting evidence on this point was never produced by the plaintiffs. Indeed, it
was almost a non-question.
The government wasn't officially a party to the litigation, but it was the government's
regulatory climate that landed Texaco in court. According to the plaintiff's
attorneys, the government's required racial record keeping showed only that blacks were
"underrepresented" in upper management positions at Texaco. (Which article
of the Bill of Rights guarantees us of proportional representation in private employment
based on our race?)
IN THE BEGINNING:
In 1994, six black employees of Texaco filed a racial discrimination lawsuit against
Texaco based upon their assertion that they didn't think they had received the positions
nor the pay to which they felt they were entitled. For good measure their attorneys
added the assertion that Texaco had established a pattern of racial discrimination.
In short order, with strong encouragement from the NAACP Legal Defense Fund (where Bill
Lann Lee made his home at the time), from the Clinton Justice Department, and from the
Clinton EEOC, 1400 or so other black employees joined the suit which the judge quickly
certified as a "class" for the lawsuit.
One of the law firms representing the plaintiffs even established a web site saying
"If you have information which will help us convict Texaco, click here!"
In the face of continued threats of racial boycotts by the usual racial special interests
such as the NAACP and its Legal Defense Fund; and ...
In the face of years and years of ongoing government harassment, especially from the
Clinton Justice Department and the Clinton EEOC; and ...
In the face of massive amounts of negative publicity (from the NAACP and the plaintiff's
lawyers) which was affecting Texacos stock prices and profits; therefore ...
Texaco, Inc., decided that a $176 million settlement made good business sense. It
became a simple business deal. $176 million to get these people off its back was
small potatoes in Texaco's overall revenue picture. Texaco's stock prices rose the
very day they announced the settlement.
The settlement by Texaco, Inc., approved by the Court on March 21, 1997 contained the
following major components:
(a) $115 million in cash to the
1400 - 1500 aggrieved minority employees; ...
(b) Over $20 million in salary
increases to the aggrieved minority employees; and ...
(c) Approximately $35 million
for "diversity / sensitivity training", a new corporate requirement for
employees; and ...
(d) The creation of an Equality
and Fairness Task Force; an independent committee selected by Texaco and the plaintiffs,
with court approval, which has the power to implement personnel policies designed to
rectify alleged discriminatory practices by Texaco.
The original Chair of the Texaco Task Force, approved by the Court on June 24, 1997, was
none other than former United States Attorney General for Civil Rights, Deval L. Patrick.
|SIDE BAR: Deval Patrick was subsequently hired by Texaco as Vice President and
General Counsel, the better to oversee ongoing racial-preference policies at the oil
giant. Texaco achieved an affirmative action two-fer in hiring Patrick: (1)
He's black and (2) He was trained by U.S. DOJ in enforcement of racially preferential
Jan. 2001, Mr. Patrick has left Texaco to take a job as general counsel at Coca Cola
following the soft-drink company's settlement of a similar class action lawsuit.
Thus, Mr. Patrick has become a highly paid overseer of corporate racial preferences.
Deval Patrick previously served under Bill Clinton
as head of the U.S. Dept. of Justice Office of Civil Rights from 1994 to 1997. Bill
Clinton illegally appointed Bill Lann Lee to replace Deval at Justice.
(Bill Lann Lees old
employer, the NAACP Legal Defense Fund, had weighed in earlier with an extensive friend of
the court brief in support of the plaintiffs' position.)
The EEOC, while not formally involved in the original litigation, publicly reserved the
right to file its own legal action against Texaco if EEOC did not like the settlement or
Texaco's subsequent efforts to rectify the alleged discrimination.
|SIDE BAR: Texaco's EEOC "oversight" agreement bites them on
the buttocks! As of November 2000, Texaco has been sued again by a group of
disgruntled black employees who feel Texaco's massive settlement is not resulting in their
rapid advancement in the company.
In Nov. 2000, 25 hourly employees of Texaco asked Judge Charles L. Brieant in U.S.
District Court in white Plains to order Texaco to arbitrate their charges of racial
discrimination, saying that the oil company is defying the terms of an earlier
"settlement" with the Equal Employment Opportunity Commission.
Judge Brieant presided over Texaco's earlier litigation and is empowered to force
compliance with the terms of the original 1997 lawsuit, according to the black employees'
lawyer, Mr. Robert S. Weininger.
Texaco's 1997 race-based agreement with the EEOC gave the agency permission to examine
minority employment and promotion of minority employees of Texaco. The 25
disgruntled blacks in this new lawsuit maintain that as hourly employees the agreement
with EEOC applied to them. Texaco initially maintained that the agreement with EEOC
only applied to salaried minorities.
Plaintiff's lawyer Weininger is taking advantage of the new, negative publicity generated
by a similar settlement against Coca-Cola in which the soft drink giant allowed itself to
be extorted into paying almost 1/2 billion dollars (in direct settlement as well as
ancillary minority programs).
Texaco now has become an ardent opponent of voter initiatives seeking to end racial
quotas! That's right. In 1997, following its settlement of the suit, Texaco
contributed significantly to the defeat of Houston's
Civil Rights Initiative which sought to end that city's use of racial quotas.
This kind of activity looks very, very good to the EEOC.
TEXACO MIGHT HAVE WON, BUT...
After almost two years (1994 - 1996), it had begun to look like Texaco would resist the
governments racial quotas for a very long time, perhaps forever. Progress by
the plaintiffs toward a settlement had been extremely slow, even dismal. BUT in late
1996 plaintiffs' lawyers released a secretly (and probably illegally) made audio tape of
Texaco executives allegedly making racist remarks AND plotting to destroy documents
pertinent to the case.
WHO MADE THE TAPE?
Texaco's Mr. Richard A. Lundwall had enjoyed a highly paid position as Texacos
personnel coordinator for its finance department. Unfortunately for him (and, as it
turns out, for Texaco), Texaco had eliminated his job in a downsizing action.
Perhaps in anticipation of losing his job, Mr. Lundwall made the infamous tape recording.
According to news accounts, it seems Mr. Lundwall had participated in and secretly
tape recorded meetings with Texaco executives in which at least two damning conversations
were documented on tape:
(a) The meeting participants allegedly discussed
"purging the files" of incriminating racial data (a record-keeping requirement
imposed by the government), evidence that had been requested during discovery by the
plaintiffs' attorneys; and ...
(b) The tape(s) made by Lundwall also allegedly
contained racial slurs -- alleged proof that Texaco execs were racists.
However, after expert audio analysis, the only "slur" that could be verified on
the tape(s) was the executives' use of the phrase "black jelly beans" in
reference to the black employees who were suing Texaco for discrimination. (The
NAACP and the plaintiffs' attorneys were later forced to admit that the N-word was not
used in the recorded conversations.)
In an apparent effort to avoid going down with the ship, a ship from which Lundwall had
been forcibly ejected anyway, and perhaps for a little revenge, Mr. Richard A. Lundwall
turned over the secret tapes to the minority plaintiffs' attorney, Mr. Michael D. Hausfeld
of Cohen, Milstein, Hausfeld, and Toll.
Revenge is a bitter fruit, however, and Lundwall was subsequently charged with obstruction
of justice in the Southern District of New York.
There doesn't seem to have been any discussion in the press of the ethics involved in the
making of, and subsequent use of, and subsequent public release of, the secret
tapes. (The tapes were presumably made in New York State, at Texacos U.S.
(Remember Linda Tripps secret tapes of her conversations with Monica Lewinsky? It
seems Tripp made the mistake of recording the phone calls from her home in Maryland in
which state, it turns out, it is quite illegal to record a conversation in which all of
the parties have not granted informed consent and in which one or more of the parties has
a reasonable expectation of privacy - a violation of the wiretap statutes in Maryland.)
TEXACOS EMPLOYMENT POLICIES:
Also absent from the press coverage of this important case is any serious discussion of
the circumstantial nature of the charges leveled against Texaco.
No mention is made of any documentary proof of Texaco's intent to racially discriminate,
nor of the existence of any actual Texaco policy to deliberately inhibit the advancement
WHAT DID THE COMPLAINANTS ACTUALLY HAVE
There were four broad points working in the plaintiffs's favor -- these might constitute a
profile for most large racial discrimination lawsuits. There is a fifth point - a
smoldering gun - which is every plaintiffs' dream, but which is rarely actually found:
(1) Strength of numbers, both in
the 1400 + plaintiffs certified for the class, and in the loud, frequent, and very public
statements from the NAACP throughout the litigation.
(2) An intrusive, burdensome,
and constitutionally dubious government requirement that Texaco collect and record data on
the race of its employees, and that it submit those racial records to the government.
According to press coverage of the case: "Two years of [intensive examination
of Texaco's government-required racial records] -- including retaining the services of
high level expert statistical analysts -- revealed that African-Americans were
significantly under-represented in high level management jobs and Caucasian
employees were promoted more frequently and at far higher rates for comparable positions
within the Company." This, of course, constitutes an a priori assumption of
racially motivated discrimination based only upon the governments racial-record
There was no serious discussion about other potential reasons that the aggrieved
minorities did not achieve their job expectations, such as qualifications, technical
expertise, prior experience, ability to function amiably and effectively with other
employees, years on the job, education levels, and/ or a demonstrated willingness to
support their employers goals! This is a most interesting omission.
(3) A racially biased regulatory
climate in which government agencies are able assert that an employer is guilty of illegal
discrimination if the employers government-mandated racial records do not conform to
some abstract 'ideal' of promotion and advancement of people of certain colors (i.e.,
racial quotas). The very concept of 'proportional representation' based on race is of
dubious validity at best.
(4) A politically and racially
biased judicial system in which politically appointed judges, abetted by 'case law' (which
case law has been based upon questionable government-imposed racial guidelines), is
prepared to presume guilt of racial discrimination based solely and exclusively on
government-defined 'racial targets'.
(5) A plaintiff's dream:
The barely smoldering gun. This one item "made" the case for the
plaintiffs -- the secret tape which allegedly documented Texaco's intent to alter or
destroy "evidence", and which also allegedly contained a racial slur. The
existence and release of this tape alone generated more negative publicity for Texaco than
the entire preceding two years of litigation.
In the Aftermath:
Amidst much hooplah, Texaco designated a $420,000 grant for a black-owned circus.
Texaco became a major player in helping to defeat the Houston Civil Rights Initiative
which would have ended that city's use of racial quotas in November 1997. Following
the lawsuit and settlement, Texaco was MUCH more receptive to Houston Mayor Bob Lanier's
threats of lost city business unless firms doing business with the city "ponied
up" against the ballot initiative.
By November 1997 Texaco had forced 12,000 of its 20,000 U.S. employees through its
'diversity' training courses. (Texaco's goal is to 'diversity train' all 20,000 U.S.
By November 1997 Texaco had hired an additional 600 minority employees (this count
allegedly contains non-minority women, a bone of contention with the NAACP). 600 is
3% of Texaco's total U.S. workforce, and this almost immediately brought Texaco's
'minority' concentration up to 26%. Too bad for white guys applying during that time
Jesse Jackson praised Texaco's new effort to tie 10 to 20 percent of senior executives'
compensation to 'diversity' - a hot concept in 'diversity' circles.
Within days of the settlement announcement, Texaco inundated minority-owned newspapers
with Texaco ads. Texaco agreed to recruit dozens of blacks to become Franchisees and
wholesalers. They agreed to spend $865 million a year on goods and services from
minority businesses. Woe unto white, male-owned contractors who had been doing
business with Texaco!
Two of the biggest "correct color" beneficiaries of Texaco's new "race
conscious religion" were Blaylock & Partners, a black-owned investment
firm. A few months after the settlement, Blaylock was tapped to underwrite $150
million in Texaco commercial paper. Also reaping huge Texaco racial-intimidation
dollars was Uniworld, a black-owned advertising agency.
(Side Bar: Jesse Jackson and the other racial special-interests did the same thing
with Flagstar, owner of the Denny's chain. They obtained $58 million a year in vows
to buy from or invest with business patrons of minority extraction, plus $1.5 million in
direct donations to groups which are part of Jackson's "constellation of
Big Brother: In January
1997, following announcement of its settlement, Texaco Inc. agreed to report annually to
the EEOC on its hiring and promotion of racial minorities, providing details about each
applicant for each position. Under the terms of Texaco's "voluntary
agreement" with the EEOC, that agency will be allowed to examine Texaco records, and
interview employees and applicants. As always, the EEOC stipulated that it could
still sue Texaco if the firm fails to perform to EEOC's satisfaction.
The formal Texaco 'diversity' plan
included the following race-based goals:
||Raising the number of African Americans on the
payroll to 13 percent, up from 9 percent, by 2000. In all, minorities would make up 29
percent of the company, up from 23 percent.
||Raising by more than 25 percent the number of
managers who are black or female. The number of black managers would increase to 6.6
percent from 4 percent.
||Using higher pay to reward managers who do
better "in creating openness and inclusion in the workplace."
||Imposing new "behavior standards" for
||Including women and minorities on every company
Human Resource Committee.
||Increasing purchases from minority- and
female-owned businesses from $135 million to about $200 million.
||Increasing dealings with banks and investment
firms that are minority or women-owned from $32 million to $200 million.
A NOTE ON RACIAL RECORD KEEPING:
The EEOC, on its web site, says:
"Requesting pre-employment information which discloses or tends to disclose an
applicant's race suggests that race will be unlawfully used as a basis for hiring.
Solicitation of such pre-employment information is presumed to be used as a basis for
making selection decisions. Therefore, if members of minority groups are excluded from
employment, the request for such pre-employment information would likely constitute
evidence of discrimination."
EEOCs pious statement is any balancing statement that "such data would also
constitute evidence of discrimination against non-minorities".
Speaking out of the other side of their mouths,
the EEOC adds:
"However, employers may legitimately
need information about their employees' or applicants' race for affirmative action
purposes [government-mandated racial record-keeping] and/or to track [racial]
applicant flow" so that the government won't have to go to all the trouble of
actually proving that an employer intentionally discriminated.
(Note: The EEOC web page has been changed several times since Adversity.Net went on-line
in 1997. Originally, the EEOC web page did NOT include the additional disclaimer
"However, employers may legitimately need information about their employees' or
applicants' race for affirmative action purposes and/or to track applicant
flow." The EEOC has apparently added this statement in the face of increasing
public criticism of government race-based guidelines and quotas.)
End Case 14: Texaco