Thursday, October 29, 2009

State Law Sex Discrimination Action Filed against Anheuser-Busch: New Trend?

Budweiser This past Monday (as reported by the St. Louis Business Journal and the AmLaw Daily), Francine Katz filed a sex-discrimination action against her former employer Anheuser-Busch, alleging that the company maintained a "frat-party" atmosphere that kept women out of corporate opportunities and that the company paid her less because of her sex.

Katz was the highest-ranking female in the company, vice president of communications and consumer affairs and a member of the company’s Strategy Committee. She raised concerns about her salary and bonuses several times between 2002 and 2007, but according to her complaint was told that her compensation was based on the market rate for her position, that the CEO and Chairman of the Board had no discretion to deviate from the market rate, and that she was "ungrateful" and she could have been paid less. After six years in her final position, Katz was paid only 46% of what her male predecessor had been making six years earlier and had significantly less in stock options. In 2008, Katz learned that the two lowest paid people on the Strategy Committee were both women, that she had been offered fewer stock options than men with less seniority, and that the CEO and Chairman had broad discretion to set compensation and often set it above market rates for male Strategy Committee members. Additionally, as a consequence of her relatively lower pay and stock options, Katz did not receive as much compensation as male colleagues when the company was bought by Belgium-based InBev.

The most surprising part of the lawsuit isn't so much the allegations, although those are pretty awful, but the fact that it was brought in Missouri state court under Missouri law alone, bypassing the EEOC and Title VII completely. Missouri law is more favorable in many ways to a defendant like Katz. Actual and punitive damages are available with no cap, for example, and the state court can award injunctive relief as well. Perhaps more importantly, there may not be the same kind of record in state courts generally as in federal courts of plaintiffs losing on motions to dismiss, summary judgment, or appeal. Does the bypassing of the federal forum represent a new trend? Could be, and if so, employers will want to take notice and take more advantage of pre-dispute arbitration agreements.

In fact, that looks like it will be the first hurdle for Katz. According to AmLaw Daily, a company spokesperson has said,

we believe any challenges she chooses to make about her compensation are subject to the Dispute Resolution Program, which Katz and all other nonunion [A-B] employees agreed to during their employment. . . . As both an attorney and a member of the strategy committee, Katz was familiar with the requirements of the DRP, which is an A-B program that resolves employment disputes without resorting to lawsuits.

Stay tuned.


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It is already common in California for plaintiffs to bring only state-law claims in employment cases, because state law provides better remedies and the state courts are less hostile to employment plaintiffs. It would indeed be interesting to see this trend emerging in other states.

Posted by: Eric Fink | Oct 29, 2009 3:34:15 PM

Interesting case Marcia. Thanks for bringing it to our attention. I'm working on an article regarding pay discrimination and cases like this one are common. I just wanted to add that I don't think the trend to file in state court is a new one. When I was in private practice in Michigan (1998-2004), most plaintiffs preferred to file in state court because of precisely the issues you identified--easier to get past summary judgment and no caps on damages. In addition, depending on the area, plaintiffs believed they could get a more sympathetic jury in state court than they could in federal court.

Posted by: Nicole Porter | Oct 30, 2009 4:39:42 AM

Based on what I've heard elsewhere, the trend isn't new in lots of states. But we still have an awful large number of cases filed in federal courts. Perhaps there are still enough states for which the state law doesn't provide better remedies, or the state forum isn't more hospitable. Does anyone know of anyone doing research on what's happening in states? I am starting to do that, but it would be great if I could piggyback on what others are doing.

Posted by: Marcia | Nov 3, 2009 8:14:58 PM

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