Harassment Verdict Prompts Review

A record $30.6-million jury award for six women in their sexual harassment case against Ralphs Grocery Co. sent shock waves through California’s business community Monday and prompted workplace experts to predict a spike in similar lawsuits.

Calling Friday’s award a “whopper of a verdict,” California Chamber of Commerce Vice President Fred Main said the size of the award would push business managers to review their sexual harassment policies and to brace for an increase in complaints.

Others said it might give pause to businesses considering locating in California. The award was far larger than any previous jury verdict in a sexual harassment case, surpassing a $7.1-million judgment--subsequently reduced to $3.7 million by a judge--in 1994 to a secretary at a law firm in California.

“Employment litigation is the fastest-growing area of litigation in the state,” Main said. “A verdict like this really reinforces the lottery aspect of litigation.”

Workplace consultant David J. Bowman said most employers offer sexual harassment awareness training once or twice a year, but the Ralphs verdict suggests they ought to make it part of new-employee orientation to ensure that everyone gets the message at least once.

“If management doesn’t get the point, the courts are significantly going to curtail the stockholders’ dividend checks,” said Bowman, of TTG Consulting in Los Angeles. “These juries are really going after employers who thumb their nose at the law.”

Ralphs--a division of Kroger Co., the nation’s largest supermarket chain--was disappointed with the verdict and is considering its options, including appeal, said spokesman Terry O’Neil. He declined to comment further on the verdict.

In the case, a San Diego County jury awarded each woman $5 million in punitive damages and a total of $550,000 for pain and suffering.

The evidence supported the award, said Philip Kay, the San Francisco lawyer who represented the plaintiffs.

The women--four cashiers, a bookkeeper and a bakery department manager--accused the supermarket chain of covering up years of abusive language and violent behavior toward them by a store director, Kay said.

The women alleged that when they complained, they were transferred to other stores, Kay said.

Jury foreman John Adair said jurors struggled to figure out how to punish and deter a company that they were told had a net worth of $3.7 billion. He said he proposed awarding each woman 1% of Ralphs’ net worth, or a total of $222 million.

“We scolded them,” Adair said of the $30.6-million verdict. “Ralphs could have stopped this at any time along the way. That’s why they are being punished. They chose to ignore it.”

Corporate lawyer Rick Albert said he has come to expect that kind of outrage from juries, particularly in California.

“Juries get extremely upset when they feel an employer has been put on notice of inappropriate conduct and doesn’t do what it needs to do to make it stop,” Albert said.

Under federal law, which is followed by more than 40 states, employers who promptly address complaints can mitigate damage awards in sexual harassment cases.

But last year, a state appellate court ruled that California law did not allow employers to point to remedial action as a defense against corporate liability. The state Supreme Court has agreed to take up the issue.

In the meantime, Bowman said, he recommends employers establish a policy against sexual harassment, promote a complaint process and conduct ongoing training.

Another important aspect of California’s law is the absence of limits on the size of damage awards in employment discrimination cases, including sexual harassment, said Noel Ragsdale, a USC law professor. States that follow federal law have a $300,000 per-plaintiff cap on damages in sexual harassment suits.

“If you had these six people, they probably could not have recovered more than about $2 million” in another state, said Joseph Beachboard, a lawyer and publisher of the California Employment Law Letter.

“Every time one of these big verdicts comes out, California loses jobs,” he said. “Employers read about these cases and start doing their own cost-benefit analyses. The rules are so different here in California, I think more and more employers will say, ‘We’ll just do it elsewhere.’”

The Chamber of Commerce’s Main said he suspected business managers already were calling human resources directors saying, “This better not happen to us.”

Ralphs operates more than 450 stores under Ralphs, Food4Less and other brands out of its Los Angeles headquarters. Kroger acquired Ralphs in 1999 when it bought Fred Meyer Inc. Fred Meyer acquired Ralphs a year earlier.