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Sterling suit moves toward class-action status

By Michelle Graff
September 18, 2009
David Bouffard, spokesman for Sterling Jewelers, which operates 1,400 retail stores nationwide including Kay Jewelers, told National Jeweler that on Aug. 31, a federal judge upheld a ruling that provided that Sterling's workplace arbitration agreement cannot be construed to prohibit class arbitration.

New York--A federal judge has upheld an arbitrator's ruling that could clear the way for a group of women who filed a sex discrimination lawsuit against Sterling Jewelers in March 2008 to pursue class-action status, a Sterling spokesman confirmed to National Jeweler.

On Aug. 31, a federal judge involved in the litigation--which is currently in arbitration--upheld an interim procedural ruling by the claims arbitrator that provided that Sterling's workplace arbitration agreement cannot be construed to prohibit class arbitration, according to Sterling spokesman David Bouffard.

Sterling had argued that the women couldn't pursue a class-action lawsuit because when they were hired, they signed agreements to submit employment disputes to binding arbitration.

Despite the judge's ruling, arbitrator Kathleen Roberts still has yet to officially certify the case as a class action, and Bouffard said there are still a number of procedural issues to work through in the case and noted that the ruling did not address the merits of the case itself.

"There are likely to be many more procedural issues and rulings in the future," he said.

If the case does become a class-action suit, however, meaning it is broadened to cover current and former employees companywide, a lawyer for the plaintiffs told the Cleveland Plain Dealer that it would become possibly the largest sex discrimination case ever arbitrated in the United States, affecting as many as 20,000 women.

Sterling operates 1,400 retail stores nationwide under the store names of Kay Jewelers and Jared The Galleria Of Jewelry, among other regional banners.

Filed in March 2008 by a group of 15 women, the lawsuit charges that female employees were paid less than their male counterparts, passed over for promotions and sexually harassed.

According to the original suit, filed as a class action, a status Sterling is fighting, Sterling lacked a system of advertising open positions or allowing employees to express interest when positions became vacant, leading to a situation that allowed managers to recruit employees they personally favored and denying women equal opportunity for promotions.

The suit cites similar problems with Sterling's compensation policy, which, according to court papers, "offers little or no guidance on setting wage rates," leaving it up to the managers' discretion again and leading them to set wages based on "personal biases and stereotypes, rather than merit-based criteria."

In addition, the suit accuses Sterling of overlooking female employees' claims of sexual harassment in the workplace.

Bouffard said Sterling plans to continue defending itself against the allegations.

"We want to reiterate that we take the allegations raised in this lawsuit very seriously," he said. "We are confident that these charges do not reflect the culture of this company. Fairness, opportunity, integrity and respect are core values at Sterling. When these allegations first surfaced, we investigated those claims. That investigation failed to substantiate the allegations. Therefore, we do not believe these charges are valid. We will defend ourselves vigorously against such allegations."
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