In a case that offers valuable lessons for employers, a federal court upheld a $1.4 million jury verdict awarded to an African-American supermarket employee who was denied a promotion to a management job.

The Facts

John O’Quinn worked for Raley’s Supermarkets in California.  After more than 30 years without a promotion, he applied for a customer service manager position.  He testified that the job was his “lifelong dream.”  He passed a written manager’s exam required by the company.  He volunteered to take a finance course during his vacation to boost skills needed for the position.

O’Quinn went through several rounds of interviews but ultimately was rejected.  The all-white interview panel awarded management positions to four white employees instead.

O’Quinn eventually resigned because he “felt his career was going nowhere” and then sued the company.

The Result

The jury awarded O’Quinn $455,500 in compensatory damages and $900,000 in punitive damages.

What was the tipping point in the case that led the jury to award significant damages?  More than anything else, it appeared to be the company’s distinct lack of diversity at the management level.  In its decision to uphold the verdict, the court repeatedly referenced the all-white interview panel, the all-white pool of successful candidates and the all-white store management.

As the court stated:  The evidence adduced at trial established that [O’Quinn] worked for [Raley’s] for decades, that [he] was not promoted despite evidence of his qualifications (including passing the manager’s exam), that only white employees were promoted to the positions [he] sought, and that [Raley’s] lacked any African-American store directors.  Given the above, the jury’s conclusion that [Raley’s] acted with malice, fraud, or oppression is a reasonable conclusion . . . .

The Lessons

Companies that lack diversity at the management level operate at their own peril.  Besides being sitting ducks for discrimination lawsuits, they are far more likely to make bad decisions.  Studies show that diversity among decision-makers leads to a greater variety of viewpoints, a more complete analysis of relevant factors and, ultimately, better decisions.

On a more granular level, the “panel” approach used by the company in this case can be a useful tool.  However, if it’s not diverse and not conducted properly it actually increases the chances of a successful lawsuit.

In short, diversity is not only the right thing to do — it’s an absolute business necessity.

This entry was posted on Thursday, March 20th, 2008 at 9:19 am and is filed under Employment Law News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.