Texaco Inc. Racial Discrimination

Case Summary

Prior to founding M&S, Cyrus Mehri was co-lead counsel on what was at the time the largest employment race discrimination case in history. Cyrus represented a class of African American workers employed by the oil giant Texaco Inc. in litigation alleging racially discriminatory employment practices. The plaintiffs alleged that while working at Texaco they hit a “glass ceiling” which prevented them from rising through the ranks to upper level management and supervisory roles. The suit also alleged that Texaco failed to compensate African-American employees at comparable levels to their white counterparts when holding similar positions.

Through thorough investigation of the business practices and promotions procedures at Texaco Inc., plaintiffs were also able to determine that the company kept an undisclosed list of employees with ‘high potential for advancement’ which was used in making decisions regarding promotions. No African American employees were included on this list that virtually insured advancement.

Through the course of the investigation plaintiffs and their attorneys believed that Texaco was actively attempting to withhold documents that would be detrimental to their defense. These suspicions were vindicated when secret tape recordings emerged of Texaco executives discussing withholding sensitive human resource documents and expressing the racially insensitive attitudes that were prevalent in their board room. These tapes were eventually released to the general public in November 1996. The release of the tapes led to a national scandal; provoked the company’s chairman to publicly denounce the attitudes expressed; and prompted settlement negotiations to resolve the lawsuit.

Settlement

Programmatic Relief

The settlement provided for the creation of a Task Force, chaired by Deval Patrick, to evaluate Texaco’s human resource policies and to advise the company as to what policies needed to be corrected to ensure an equitable workplace.

Among the changes implemented by the Task Force was the creation and implementation of a company-wide diversity training program and a mentoring program available to all employees. Procedures regarding promotions and employee development were also significantly improved.

In addition to these, and other, initial changes the Task Force was charged with evaluating the results of the new policies and practices, reporting their findings yearly and correcting any issues that emerged.

Financial Relief

The financial settlement in this case was in the amount of $172 million. Of this total sum, $115 million was placed into a class fund which was distributed among the approximately 1,500 current and former Texaco Inc. employees that made up the class.

Additionally, all current Texaco employees who were class members received a one-time salary increase of 10%, this provided an additional value of approximately $26.1 million to the class.

The remainder of the settlement went to fund the operational budget of the Task Force which was appointed to implement the necessary programmatic changes to Texaco policies, and to compensate the class representatives and attorneys for their work.