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81 Tex. L. Rev. 1249 (2002-2003)
The Price of Discrimination: The Nature of Class Action Employment Discrimination Litigation and Its Effects

handle is hein.journals/tlr81 and id is 1265 raw text is: The Price of Discrimination: The Nature of Class
Action Employment Discrimination Litigation and
Its Effects
Michael Selmi*
I.   Introduction
The last decade has seen an explosion of employment discrimination
class action lawsuits that have been resolved through record breaking
settlements. The best known of these cases is the $176 million settlement
involving Texaco, one that came on the heels of the much publicized discov-
ery of tape-recorded meetings that seemingly indicated the use of explicit
racial epithets by management-level employees.1 There have also been
substantial settlements involving Coca-Cola ($192 million), Home Depot
($104 million), Shoney's ($105 million), Publix Markets ($81 million), and
State Farm   Insurance Co. ($157 million).2      A  recently filed sex discrim-
ination suit against Wal-Mart appears poised to set a new record.3
Despite the proliferation of these high profile cases, we know
surprisingly little about their effects on either the firms that have been sued
or the plaintiff classes. For example, we do not know whether the lawsuits
produce substantial benefits to the plaintiff class, prompt any changes in
corporate culture, or exact costs sufficient to serve as an adequate deterrent
* Professor of Law, George Washington University Law School, Distinguished Visiting
Professor of Law, Suffolk University Law School. An earlier version of this Article was presented
at faculty workshops at George Washington University Law School, Suffolk University Law
School, and William and Mary Law School, where I received many helpful comments from the
participants. I am also grateful for comments on earlier drafts from Ian Ayres, Bill Bratton, Charlie
Craver, Mitu Gulati, Larry Mitchell, Molly McUsic, Naomi Cahn, Stewart Schwab, Susan Sturm,
and Jonathan Walker. I have also benefited from the work of a number of research assistants, in
particular Phoebe Papageorgiou who assisted with the statistical portion of this study, as well as the
research of Juan Carlos Flammand, Adrienne Rosen, and Patti Soh.
1. The Texaco case is discussed infra subsection III(A).
2. The Home Depot case is discussed infra subsection III(B). For discussions of the other
settlements see Philip Hager, State Farm to Pay Women $157 Million for Job Bias, L.A. TIMES,
Apr. 29, 1992, at Al; Allen R. Myerson, Supermarket Chain to Pay $81 Million to Settle a Bias
Suit, N.Y. TIMES, Jan. 25, 1997, at A1; Henry Unger, Coke to Settle Racial Suit with $192.5 Million
Deal, ATLANTA J.-CONST., Nov. 17, 2000, at Al; Lynne Duke, Shoney's Bias Settlement Sends
$105 Million Signal, WASH. POST, Feb. 3, 1993, at Al. As discussed in more detail below, the
reported settlement amounts often exaggerate the actual cost of the settlement by stating the
maximum possible cost over an extended period of time. See infra text accompanying notes 264-
3. See Reed Abelson, 6 Women Sue Wal-Mart, Charging Job and Promotion Bias, N.Y. TIMES,
June 20, 2001, at CI.

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