Roberts v. Texaco – Management Research Paper

Roberts v. Texaco – Management Research Paper

The case of Roberts v. Texaco covers many of the items we have gone over in class. It talks about the EEOC, mediation, racial discrimination, Tittle VII and settlements. A suit was filed on March 23, 1994 by Bari-Ellen Roberts and four other African-American Texaco employees on behalf of more than 1400 Texaco employees. Roberts worked for Texaco as their Senior Financial Analyst from 1990 to 1997. The basis of their suit was that Texaco had been practicing hiring and promotion practices based off race and not qualifications. At the time of the suit, there were 873 executive that were earning more than $106 thousand dollars a year and only six were African-American.

Ms. Roberts was called uppity and a smart-mouth little colored girl. For three years the case worked its way throught the judicial system until it finally made a breakthrough.

On November 3, 1996, the New York Times reported that they had evidence of several upper level employees at Texaco being recorded on audio tape using repeated racial slurs and using demeaning terms to describe African-Americans. They had also been told that this evidence was ordered to be destroyed by Texaco. Immediately the EEOC launched a probe to determine what pieces of evidence the company had that would corroborate the claim.

While Texaco had settled in for the long haul in this legal battle, it came to a quick conclusion. After the tapes were uncovered, Texaco started looking to settle the case as quick as possible. The public relations issues that would arise the longer the case drew out could seriously hurt the company more than was already done. Within one month on November 17, 1996, the EEOC and the plaintiffs announced that an agreement had been made for a $176.1 million dollar class-action settlement. The suit was declared moot on January 27, 1997.

The settlement included the following:
• Provide a payment to the plaintiff-class in the amount of $115 million, along with a one-time salary increase of about 11 percent for current employees of the plaintiff-class, effective January 1, 1997;
• Create an Equality and Tolerance Task Force which will be charged with determining potential improvements to Texaco’s human resources programs, as well as helping to monitor the progress being made in those programs (three members of the Task Force to be appointed by the plaintiffs, three members by Texaco and a mutually agreed-upon chairperson);
• Adopt and implement company-wide diversity and sensitivity, mentoring, and ombuds programs;
• Consider nationwide job posting of more senior positions than are currently posted; and
• Monitor its performance on the programs and initiatives provided for under the settlement agreement.

A study that was conducted showed that the suit will end up costing Texaco about $500 million dollars.

The statute that was relevant was Title VII of the Civil Rights Act of 1964. The point of contention was discrimination because of race. This discrimination was shown in the form of hiring practices that didn’t accurately represent the community as well as promotions that were biased. The interesting thing about this case is that the EEOC didn’t get involved until there were allegations made by a major publisher and they knew what to look for; three ninety minute audio tapes. Once this came out, the EEOC filed their claim on behalf of the plaintiffs. These audio tapes were very explicit in the terms they used to describe the executives feelings toward minorities. Texaco hired a retired U.S. Attorney to investigate the tapes to find out how damaging they were before they agreed to a settlement. The attorneys investigation is extremely interesting to read as he tries to spin certain parts of the tapes as non damaging. At one point in the tapes, an executives refers to black jellybeans and how they always end up at the bottom of the bag. The attorney advises that this comment was not racially motivated but none of the conversation prior was about candy. No matter the spin, he couldn’t avoid the language used and discriminatory remarks. After seeing his report was when Texaco decided to settle, knowing that the evidence was much too damaging for their company to overcome in a lawsuit.
The employment environment since this case has been drastically changed at Texaco. The task force that was put in place as part of the settlement had authority for five years to determine the policies that needed to be put in place to meet the objectives of the agreement. This task force met for two days a week and was composed of seven people; three appointed by Texaco, three appointed by the plaintiffs, and one independent who served as a chairperson. Even though the settlement was agreed to, this task force seemed to use mediation to arrive at policies both sides could live with. I think this made for a much less hostile environment when putting the policies in effect.

The task force’s goals were set high. Within the first six months, Texaco was charged with implementing a diversity and training program for the entire company as well as a mentoring program. They also had to begin posting jobs at a certain paygrade or above nationally. An extremely important objective that they had to meet during this time was to develop a way for there to be no fear of retaliation for employees with complaints of discrimination. This is similar to the whistleblower statutes that we studied. A policy such as this would keep the employer from commiting unlawfull acts such as discrimination while keeping employees from feeling like they might lose their job if they took an injustice to the authorities.

The fallout from the case included the firing of one executive, suspension of another, and two executives that had retirement benefits taken away.
This case clearly shows the power and importance of Tittle VII of the Civil Rights Act of 1964. It also demonstrates the effect of good mediation as well as what happens when the EEOC gets involved in a case.

Pruitt, Stephen W., The Texaco racial discrimination case and shareholder wealth. (2002) Retrieved from InfoTrac on August 7, 2005.
Exhibit 1, Pragmmatic Relief. Retrieved from on August 7, 2005.
Texaco fires executive, Disciplines three others. January 9, 1997, Los Angeles Times.