Landmark US Sex Discrimination Case Settled

By Dr. Merrilyn Sernack

Originally published 22 October 2004

Recent sex discrimination cases in the US and the UK have received widespread press coverage in Australia. What were they all about, and could this happen in Australia? Yes and no…

A former senior banker is suing Merrill Lynch for £7.5M alleging she was "bullied and belittled" by her former male boss. Stephanie Villalba, who is claiming sexual discrimination, unfair dismissal and unequal pay, says she was eventually forced out of the firm. Ms Villalba was made redundant in August 2003.

If she is successful, the damages could be the biggest awarded by a UK employment tribunal. The bank has already paid £53M to settle nearly 900 claims in recent years.

On 12 July 2004 Morgan Stanley and the US Equal Employment Opportunity Commission (EEOC) announced the settlement of a staggering $54M sex discrimination claim under Title VII of the US Civil Rights Act 1964 alleging discrimination against women in its Institutional Equity Division (IED) regarding promotion, compensation, and the terms, conditions and privileges of employment.

Obviously, the extraordinary size of the settlements are more a product of the US and UK legal systems than a realistic probability in Australia. The publicity could happen anywhere.

Australian managers should also take action if they can identify inequities in the conditions relating to their current, and perhaps even previous, female employees. Otherwise they may be ordered to redress the imbalances, pay damages and incur the unfortunate publicity.

Based in London, Stephanie Villalba worked for the bank's European global private client business. Last August her employers told her she had no future in the company and she was made redundant.

Ms Villalba alleges that while on one plane trip abroad with colleagues, her boss told her to sit where the cabin crew sit and to serve drinks to the six male colleagues present. Her boss is also alleged to have described Ms Villalba as "high maintenance" and once when Ms Villalba said how hard she worked, he is said to have replied "Stephanie, my maid works hard".

Merrill Lynch denies the claim and says Ms Villalba was removed from her post because of the extensive losses the firm was suffering on the continent. Merrill Lynch says "the decision to replace Ms Villalba was a judgment based on her performance at that time, it was nothing to do with sex."

The EEOC enforces Title VII of the Civil Rights Act which prohibits employment discrimination based on race, colour, religion, sex, and national origin.

Wall Street-based Morgan Stanley is a global financial services firm and a market leader in securities, investment management and credit services, with more than 600 offices in 27 countries.

Morgan Stanley denied the allegations but agreed to a Consent Decree from EEOC under which present and former women IED employees who believe they were the subject of discrimination will have the opportunity to claim from a specially established fund of $40M. The fund will have a Special Master (a retired Federal circuit judge) who will decide the amount each claimant can receive.

Any money remaining in the fund will be used for scholarship programs for female students pursuing careers in the financial services industry.

Under the Consent Decree, Morgan Stanley will also provide:

• at least $2M for diversity programs designed to enhance the compensation and promotional opportunities for its female employees; and
• an internal ombudsperson and an outside monitor; management training on Federal
  anti-discrimination laws; promotion and compensation analyses; a complaint data base, and programs to address the promotion and retention of women.

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