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Attorney Teresa Demchak on Employment Discrimination and Pre-Litigation

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Oakland, CAAs managing partner in Goldstein, Demchak, Baller, Borgen and Dardarian (GDBBD), a California firm specializing in public interest class actions, Teresa Demchak oversees a busy firm with a large and varied practice. That practice is not strictly litigation, as we'll see.

LawyersandSettlements (LAS): Your practice in the past has involved a variety of discrimination issues. Is that your current focus as well?

Teresa Demchak (TD): At the firm I've been handling mostly employment discrimination, both for gender and race. Within the last year we were involved in racial discrimination class actions against Walgreen's in federal court for the Southern District of Illinois and against Lufkin Industries in the Eastern District in Texas.

In the Texas case, we won at trial, and the decision was appealed to the 5th Circuit Cour of Appeals. Within the last month, we got an order confirming the Eastern District judge's finding and sending the case back to the Eastern District for stronger injunctive relief and to revisit its order on our fees. Both parties filed for rehearing, which is still pending; once the court rules on those, it should be back in the Eastern District for rehearing.

LAS: What did the Illinois Walgreen's case involve?

TD: It involved racial discrimination on Walgreen's promotions and store assignments of African Americans in five positions in the retail and pharmacy management track. We alleged that African Americans were not being promoted in proportion to their participation in the workforce and were being assigned to less desirable stores and kept there longer than white managers. That case was settled prior to class certification.

The settlement included $20 million in compensation for the class; it also involved extensive changes to Walgreen's promotion and assignment practices. They've agreed to hire a human resources consultant to develop and train managers, external and internal monitoring and reporting to EEOC and my firm. It's a very detailed and comprehensive agreement that will make a big difference in how Walgreen's assigns and promotes managers.

LAS: And the Texas case?

It involved Lufkin Industries in Lufkin, about 90 miles outside Houston. This involved racial discrimination in the promotion of both hourly workers and salaried employees. Lufkin had four manufacturing divisions at the time of the suit; one was a foundry, and working conditions there were less desirable. We alleged that the company assigned African American workers to the foundry disproportionately and under-assigned them to the other three facilities.

Another issue involved hourly workers; even though they were unionized, their contract contained a number of loopholes that management used to avoid making promotions on the basis of seniority. The evidence showed that African Americans were promoted in a lower proportion than their representation in the workforce.

This case was originally filed in 1997 by our co-counsel, a small three-person firm in Nacogdoches, Texas headed by Tim Garrigan. We got involved in 2001 after the class was certified. Lufkin was represented by Vincent and Elkins, a big defense firm, so it was a David and Goliath situation. We got involved to provide additional resources.

It was a very long drawn out, arduous process. We went through two years of negotiations, which eventually proved fruitless. The case was tried in 2003-2004. After the judge issued the decision in 2005, he passed away. Both sides appealed his original decision; We appealed on the relief and the defendants appealed both their liability and the relief.

LAS: How does the judge's passing affect the case now?

TD: It means that when we go back to the District Court we'll have a different judge who's going to have to handle the proceedings. At the point when we return, it's really a matter of determining remedies; injunctive relief is important, what kind of changes Lufkin has to implement to remedy the problems the original judge found.

LAS: After more than ten years, will this make much difference to the original complainants?

Well, some of them are still there, some have left or retired, but the company continues to engage in the same practices that the District Court found to be unlawful, so it's important for the remedy to be in place for the new group of workers.

There are very very few employment class actions in the 5th Circuit; it's one of the more conservative circuits. I think this is the first case of its kind to go to trial there in many many years, so it's a very unique case.

LAS: You've also handled quite a few cases through pre-litigation. How does that work?

TD: That's been a very important part of our practice, and I think a good way for companies to avoid the kind of public litigation that goes on in large class actions. We've been glad to be able to resolve cases without litigation if we can because it's an important way for companies to make change and have a say in how it's done, which they often don't have if they're found liable after trial.

The companies we've negotiated with have agreed to make changes and we've recorded those changes in a settlement document, which includes an arbitration-like process for resolving disagreements. Sometimes that includes a special master with experience in these kinds of cases who can look at, interpret, and enforce the terms of the settlement.

It's much more collaborative and much more a matter of problem solving with the company. It avoids years of litigation and discovery. When we negotiate, we exchange some information, but it's not full-blown discovery, it's quicker, it's less costly, and it's less antagonistic and confrontational. It's win-win, we think.

A 1970 graduate of Cleveland State University, Demchak received a JD from the Cleveland-Marshall School of Law in 1976. After working as a cooperating attorney and Assistant General Counsel for the NAACP, and as a staff attorney with the National Center for Youth Law in San Francisco, Demchak joined GDBBD in 1990; she has been managing partner since 2000.

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