Judge Drops Thousands from Sterling Discrimination Case

New York–A federal judge ruled last week that the arbitrator in charge of the sex discrimination case against Sterling Jewelers overstepped her bounds in including women who did not opt into the class, and he cut thousands of women from the case.

Arbitrator Kathleen A. Roberts ruled in February 2015 that women could pursue claims of pay and promotion discrimination against the retailer as a class, and certified a class of approximately 70,000 individuals that included all women who had worked for Sterling within a specific range of dates, regardless of whether or not they had said they wanted to be part of the case.

Sterling appealed the decision twice and in July 2017, the U.S. Second Circuit Court of Appeals sided with the retailer, ruling that the issue of whether or not an arbitrator has the power to include people who do not opt into the class had never been “squarely addressed,” and remanded the issue to the U.S. District Court in Manhattan.

On Jan. 16, federal Judge Jed S. Rakoff ruled that the arbitrator does not have this power, writing in his decision, “Arbitrators are not judges. Nowhere in the Federal Arbitration Act does Congress confer upon these private citizens the power to bind individuals and businesses except in so far as the relevant individuals and businesses have bound themselves.”

“The court finds that the arbitrator here had no authority to decide whether the RESOLVE agreement permitted class-action procedures for anyone other than the named parties who chose to present her with that question and those other individuals who chose to opt in to the proceeding before her.”

RESOLVE is the name for Sterling’s internal dispute resolution system; upon hire, all employees agree to settle any workplace disputes in private arbitration, a practice some lawmakers are looking to force companies to change because, they say, it can discourage women who have been discriminated against or sexually harassed from speaking up.

The judge’s ruling cuts the size of the class down from 70,000 to the approximately 250 women who either filed the original arbitration claim under Title VII–which covers claims of promotion discrimination–or were part of the claim before the 2015 class certification that Rakoff just overturned.

There are, however, 10,000 other women who opted into a separate class in 2016 under claims brought under the Equal Pay Act (EPA).

Washington, D.C.-based attorney Joseph Sellers, who represents the women who filed the case against Sterling, said he “respectfully disagrees” with Judge Rakoff’s decision and already has filed an appeal.

“At the very least, we think we should proceed to trial on behalf of the claims of more than 9,000 women. We hope the Second Circuit (Court of Appeals) will allow the balance of the women’s claims,” he said, referring to the 60,000 women excluded by Rakoff’s decision.

David Bouffard, the vice president of corporate affairs for Sterling parent company Signet Jewelers Ltd., said the company will be challenging the certification of the EPA class as well.
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The ruling, and subsequent appeal, is the latest in a convoluted case that has stretched on for nearly a decade and has included numerous rulings and appeals on the issue of allowing the women to pursue their claims as a class even though their case has to be heard in arbitration.

The sex discrimination case against Sterling began back in 2008 when a group of 12 women who used to work at the retailer’s stores accused it of paying women less than men and passing them over for promotions.

Filed as part of that case but not released until this past spring were more 1,000 pages of sworn statements obtained by The Washington Post that went beyond allegations of pay and promotion discrimination, painting a portrait of Sterling in the late ‘90s and early 2000s as a boys’ club where the sexist culture started at the top with now-departed CEO Mark Light.

These claims are not part of the class arbitration, and Sterling has repeatedly disputed them, saying they give a distorted and inaccurate picture of the company’s culture.

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