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Texaco settled a racial discrimination lawsuit by disgruntled black employees in 1996.  Bill Lann Lee, the DOJ, and the EEOC conspired to fabricate a prima facie case of racial discrimination!   (In 2000, Coca-Cola used Texaco as a "model" for a similarly jumbo-sized racial extortion settlement.)

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Case 14 - Texaco Pays Off Minorities in Order to Continue Doing Business
Updated February 09, 2001

Racial Preferences Cost!

Texaco faced many years of government harassment unless they submitted to government racial quotas.   Texaco paid $176 million to make the government harassment "go away".

(Feb. 16, 1999) - A half-dozen disgruntled black employees of Texaco, Inc. capitalized on the Clinton administration's racial quota mandate and extorted over $176 million from Texaco in a racial protection racket.

GO:  Texaco Summary Texaco "Historic Settlement":  $176 million is small potatoes get government off its back!  Stock prices rise.

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(Feb. 6, 2001) - Texaco's cave-in racial extortion demands paved the way for the same scam against Coca-Cola in 2000!

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.

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          It has been hailed as "an historic settlement" and "the largest settlement ever of its kind."

         As 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 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 Texaco’s 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 hiring policies.  

As of 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 Lee’s 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). 

Note:  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.


          After almost two years (1994 - 1996), it had begun to look like Texaco would resist the government’s 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.


          Texaco's Mr. Richard A. Lundwall had enjoyed a highly paid position as Texaco’s 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 Texaco’s U.S. headquarters).

          (Remember Linda Tripp’s 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.)


          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 of minorities.


          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 government’s racial-record keeping requirement.

          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 employer’s 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 employer’s 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. (Whoopee!)

          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. employees.)

          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 frame.

          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 support.")

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 managers.
* 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."

Absent from EEOC’s 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

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*  We use the term reverse discrimination reluctantly and only because it is so widely understood.  In our opinion there really is only one kind of discrimination.