CPR N ISTTIUTE .......... EMPLOYMENT ADR Page 157 Linda Stamato, of Rutgers University’s Center for Negotiation and Conflict Resolution in New Brunswick, N.J., uses two recent high-profile cases involving women executives-one positive, one negative-and shows how systematic ADR methods can encourage good employment practices and help eliminate bad ones. ADR ETHICS FORUM ........ Page 157 Re..:aling to a court what happened in a mediation session gone awry isn’t wrong. Or is i t ? Partner William B. Leahy and associate Karen E. Rubin of Cleveland’s Thompson Hine & Flory analyze and update mediation confidentiality law. COLLATERAL ESTOPPEL....Page 1 5 9 Orrick, Herrington & Sutcliffe partner W. Reece Bader, of Menlo Park, Calif., analyzes a recent California Supreme Court decision that says that issues decided in an arbitration cannot, without the parties’ agreement, be barred from being raised in a future litigation. CHALLENGING AWARDS. ..Page 159 The Eighth U.S. Circuit Court of Appeals has clarified its view on vacating arbitration awards. Faegre & Benson partner Terri L. Combs of Des Moines, Iowa, and Anthony DeToro, counsel at NetZero Inc. of Westlake Village, Calif., review “undue means” under the Federal Arbitration Act. ADR BRIEFS ................... Page 1 6 1 Details on Settlement Month, the National Association of Securities Dealers’ annual effort to boost mediation use. ........... CPR NEWS Page 1 6 2 The nominating process opens for the 1999 CPR Awards for Excellence in ADR. DEPARTMENTS Letter to the Editor ............ Page CPR 20 Past, 20 Future ..... Page Index Info ........................... Page ADR Briefs ......................... Page Cartoon by Cullum ............ Page CPR News .......................... Page Online Info.. Pages 161, 162 & 158 160 160 161 161 162 168 FOR DISPUTE RESOLUTION VOL. 17, NO. 9 OCTOBER’I~~~ WWW.CPRADR.ORG Lnding hex Uiscrimination at the Top: Shattering the Glass Ceiling BY LINDA STAMATO . for the post was another woman, one of many women managers, ,glison K. sdieffelin, a principal in M ~ ~ Hewlett-Packard’s whose numbers are reported at more than gan Stanley Dean Witter & cO.’s equity divi25% and sion, contends that she was passed over for 0 . . managing director because of her sex. She The contrast in the expefiled her complaint against the two women is rience of these firm with the U.S. Equal Emstriking. It invites comparison ployment Opportunity Comand analysis. mission, a necessary first step to Their stories, individufiling a suit. In July, the EEOC ally have generated a good deal took Morgan Stanley to court of national coverage. But conto force the firm to release data templating the connection in on its employment practices for counterpoint is a more producsenior female employees. Does Good Faith Avoid a Breach Of Mediation Confidentiality? BY WILLIAM B. LEAHY AND KAREN E. RUBIN Scene: A federal court-ordered mediation. ActomThe mediator; counsel for the defendant; and you, as counsel for the plaintiff. PZot; During the course of the mediation, the defendant takes a Dosition omosite to its I stance in related state court litigation. Without disclosing the name of the federal case or any mediation documents, you inform the state court about the inconsistency, to demonstrate that the defendant is “talking out of both sides of its mouth.” I I Issue: Are you subject to federal-court sanctions for breaching the confidentiality of the mediation? At least one recent case suggests that the answer is “Yes.”As mediation becomes a more common means of dispute resolution, scenes like the one above, raising significant confidentiality issues, will arise more frequently. How should mediation confidentiality be protected, and what penalty should follow when a party or counsel breaches confidentiality? In two leading decisions in 1995 and 1997, courts imposed I (continued on page 166) ~~ Ending Sex Discrimination: Shattering the Glass Ceiling (continued from front page) fully consider both in terms of (a) internal policies and practices that attract, retain and reward productive employees and (b) mechanisms and practices that provide for informal handling of potential discrimination cases within the corporation and external methods that reduce the time, cost and damage of litigating those that become formal claims and complaints. Those possibilitiesand their relation to the world of alternative dispute resolution inspire this article. In what still remains a male-dominated corporate world, women are increasing their representation in high-status occupations. In 1997, the U.S. Bureau of Labor Statistics reported that women make up 44% of managers, 56% of accountants, 30% of attorneys and 27% of doctors. They are contenders for positions at the top. Whether women will attain executive-level positions in U.S. corporations in significant numbers isn’t the question any longer. It’s now more like “What will it take for them to get there?And at what cost?” Think of it this way: Do corporations attract, reward and retain the best employees? And, what do they do to protect them-and the company-against discrimination? LACK OF OPPORTUNITY In the extensive coverage provided to the Schieffelin case, there was a good deal of discussion about how rare it is to find a woman willing to stay and fight when “most women who think they are encountering the glass ceiling simply quit.” Abelson, “If Wall Street is a Dead End, Do Women Stay to Fight or Go Quietly?” N. Y Times, at Al, C6 (Aug. 3, 1999). Confirmation of this view is offered by Catalyst, a New York-based nonprofit group that studies women in the workplace. Catalyst’s recent study of exit interviews with more than 500 women managers who left more than 20 companies in the 1990s found nearly three-quarters reporting that “they Linda Stamato is deputy director a t the Center for Negotiation and Conflict Resolution a t Rutgers University‘s Bloustein School of Planning and Public Policy i n New Brunswick, N.J., a teaching and research institute that also provides technical assistance. She has a mediation practice that specializes i n complex matters, and does training and writing i n academic, corporate and legal contexts. were greatly influenced by their belief that there was a lack of opportunity for advancement.” Still further confirmation comes from accounting and consulting giant Deloitte & Touche, where a committee of senior partners in 1992, asked to investigate why so many women were leaving the firm, found that both those who left as well as those that stayed expressed concerns about opportunities for moving up. Evidently, Deloitte took this and related findings seriously, altering policies and talung actions that have produced a drop in the percentage ofwomen who leave annually to 18 percent, from 29 percent in 1991. Id. at C6. Perceptions about discrimination are as critical as they are problematic. If a woman is not promoted and believes she is qualified, how does she account for not making it? Discrimination is one possible explanation, but not necessarily one that many women wish to assert even if they suspect it. They hesitate to speak up because they are not sure that they are being discriminated against or they don’t like the choices for challenging decisions that their firms provide. They also may fear the potential downside impact from using their company’s or even their industry’s grievance or appeal procedures. Promotions are not assured by any means. People may be bypassed for a variety of reasons, including that their talents are unrecognized. Looking elsewhere may seem the least onerous and the more promising avenue. Unquestionably, for the corporation, retention is an important part of the picture. If there is a perception that opportunities for advancement are not available, women will look elsewhere. And good managers will be lost. Consider, in this regard, the HewlettPackard employment pattern: The company reports that it loses fewer than 5% of its employees each year, compared with an industry average that the human resources consulting firm William M. Mercer Inc. puts at 17%. Abelson, ‘XPush From theTop Shatters a Glass Ceiling,” N. Y Times, at Al, 33 (Aug. 22, 1999). But it wasn’t this way in the early 1990s. Then, the turnover for women was twice that of the men. Now that the gap has been eliminated and the rates are almost identical, the question is, why?What happened? In 1992, a new CEO, Lewis E. Platt, who is now chair- man, helped instill a serious commitment to workplace strategies that encouraged diversity. The key thing is that Platt‘s policies were not seen as simply the right thing to do but the smart thing. “hything you can do to attract and retain the best talent is really critical,”Platt was quoted as saying in the New York Times. Id. at 33. As if to confirm his point, Wall Street lent a sweet note: When Fiorina’s appointment was announced, Lucent’s stock fell, and Hewlett-Packards gained. So policies that promote and practices and commitments that encourage retention of the best employees may well raise the ceiling for women at the same time that they produce a significant return to the corporations where the women choose to work. Frequent communications about job performance and expectations are essential. Executive-level employees, as others, need to know where they stand and what they need to do to improve promotion prospects. Standards for promotion and performance expectationsalso need to be understood and followed in order to minimize the ambiguities and uncertainties that can lead to disappointments and, ultimately, either to losing good managers or to having dissatisfied, perhaps unproductive, executives remain, or, to legal contests for damages. Policies and practices along these lines are important dimensions; so are those that provide opportunities for executive level employees to sort out their reactions to potential discriminatory behavior and decide how to deal with their perceptions and unfulfilled expectations. CO N FLICT M A N AG EM ENT CHOICES Much has been written about employee grievance procedures and the need for integrating informal, problem-solving opportunities at early stages. This observation is no less vital to those at executive levels, but special considerations also are warranted, given the needs and interests- and difficulties -that are more likely to surface there. The organizational ombuds model offers an attractive means to satisfy these concerns not only because individuals may be more willing to avail themselves of the service, and may benefit from the assistance it can provide, but because constructive organizational change, where needed, is more likely to result. (continued on next page) Glass Ceiling (continued from previous page) (For a succinct and solid account of the evolution of the Swedish ombuds model and what it can offer to a corporation, see Waxman and Gadlin’s article, ‘X Breed Apart,” in the ABA Section of Dispute Resolution’s special issue of Dispute Resolution Magazine on Innovations in Process: New Applications for ADR (Summer 1998).) In cases of imagined or actual discrimination, what can an ombuds do? The ombuds can serve as (a) a counselor, to listen and identiQ options for dealing with, say, a denial of promotion; (b) a negotiator, to mentor and coach and guide a person through to an acceptable result; (c) a mediator, to help create integrativesolutions among the parties; or (d) a “risk manager,” an essential corporate link that brings attention to issues that might present serious liabilities or, less grave, might warrant policy or procedural changes to improve conditions generally. These activities can be taken without a formal grievance filing, a step, as noted above, many women managers don’t want to take. Having a high-ranking person to talk with, one who-and this is critical-is knowledgeable about the organization and is thus in a position to assess possible “interventions” in light of that knowledge, and who is also neutral, independent and committed to confidentiality, may be an attractive prospect to a woman who wants to assess her situation, weigh her options, decide, with advice and counsel, whether and how to proceed, and, generally, craft an informed and secure decision about what to do. Moreover, the ombuds model allows this process to take place in a safe way, affording an avenue for individuals who, according to the Waxman and Gadlin article noted above, “for reasons of organizational politics, personal animosity or past history, might be worried about the prospect of reprisal if they pursue their concerns through the formal administrative hierarchy.” With the ombuds, they have a way to raise sensitive concerns, such as suspicions of sex discrimination, and because it is clearly in the corporation’sinterest to encourage such concerns to be raised early and managed effectively, the independence, confidentiality and informality offered by the ombuds ofice has primary and protected status and importance. Id. at 23. The ombuds has the flexibilityto construct approaches to situations that take into ac- count the nature of the problem, the circumstances in which it occurs, and the underlying needs and interests of the parties involved. At the same time, the ombuds understands that he or she intervenes not merely to address individual conflicts and problems but to take account of the corporation as well so that if systemic problems-patterns of abuse or discriminatorypractice-are identified, the ombuds has the responsibility and authority to bring these matters to the appropriate management level and to recommend changes in policy, practice or personnel to rectify them. The strength of the ombuds office as an alternative to leaving a job, bringing a formal grievance, or filing a suit, rests with the status of the ombuds office and the creative and effective functioning of the individual serving as a corporate ombuds. This is a critical role: the ombuds is “in,” but not “of,” the corporation. The ombuds is neutral and independent, but also networks and collaborates to establish good working relationships throughout the corporation. An ombuds program, well designed and executed, can go a long way to providing a meaningful outlet, producing an end, or an informed “next step,” for a woman who believes she may be experiencingdiscrimination. For the corporation, the benefit is clearly in providing a means to uncover practices its policies do not condone and to retain employees that add value to its bottom line. THE MEDIATION ALTERNATIVE Statistics suggest that effective, internal processes reduce litigation and that ombuds programs have a good record in this regard. One recent study is illustrative: A Texaco Inc. ombuds program launched in February 1998, yields the following data: EEO allegations at Texaco declined to 34 last year from 83 in 1997. Litigation activity shows a similar finding, with 56 new cases opened in 1998, down from 1 10 a year earlier. There were no adverse determinations by the EEOC or state agencies against Texaco in 1998. Cases that were resolved in court decreased to 10 in 1998, is less than half the level of the previous two years. Ninety-three court matters remained unresolved at the end of 1998, down from 125 matters at the end of 1997. Texaco Task Force on Equality and Fairness, Second Annual Report to the U.S., District Court; Business Wire (Aug. 2, 1999). Still, some cases will proceed to formal, adversarial processes, and here too, dispute resolution offers promise. Many women reject bringing lawsuits that allege discrimination, even if they believe they have grounds, because they question whether the result is worth it. Litigation can make life even more difficult for women by making the workplace even less friendly. Janet Hanson, who spent 14 years at Goldman, Sachs & Co. before founding her own investment firm, told the New Erk Times that “it was hard enough to be part of the inner sanctum,” but “I think it is going to be much, much harder” ifwomen turn increasingly to the courts for relief. See Abelson, Aug. 3, 1999, at C6. And companies are making it increasingly difficult to get there, requiring employees as a condition of employment, to mediate and/ or arbitrate their grievances before proceeding to court. In view of the negatives associated with litigation, and the reluctance of women to go there, this limitation can also be seen as a potential benefit. Why mediation? Paradoxically the attractiveness of alternatives to formal litigation gain in proportion to the seriousnessaccorded an offense by law. Congress and the federal courts raised the ante with respect to discrimination, both by the Civil Rights Act of 1991, and subsequent decisions allowing workers the right to a jury trial and punitive as well as compensatory damages. Plaintiffs have recovered significant damages for acts of discrimination. (Recent decisions, however, provide companies with greater protection against punitive damages if they have solid policies against discrimination and act in good faith. See, for example, the U.S. Supreme Court‘s recent decision in Kolstad u. American Dental Association, 119 S.Ct. 21 18 (June22,1999).) The stage is set, then, to advance the proposition that mediation is a viable means to satisfy interests with respect to potential discriminatory practices; with discrimination accorded serious attention by courts, meeting interests through informal mechanisms is more likely to be achieved. The EEOC‘s use of mediation has cut its backlog of pending cases-to slightly more than 52,000 this year, from a high of 111,451 in June 1995-as a result of a pilot program inaugurated two years ago. Holmes, “Jobs Discrimination Agency Lightening Its Load,” N.Y Emes, a t A l , 15 (Feb. 22, 1999). But at the same time, the agency has vigorously pursued a series of high-profile class(continued on following page) (continued from previous page) ENTER AS AN EQUAL action discrimination lawsuits. It negotiated a $34 million settlement in a sexual harassment suit against Mitsubishi Motor Corp.’s U.S. subsidiary last year, and in 1997 a $183 million settlement in an age discrimination complaint that had been filed against Lockheed Martin Corp.’s predecessor, Martin Marietta Corp. And now it is taking on Morgan Stanley on behalf ofAllison Schieffelin.The agency’s director, Ida Castro, says that by diverting cases into mediation, “we can invest our resources to go after the really bad actors, those companies that simply refuse to adhere to the law.” Id. at A1 5. By pursuing such cases, and thus clarifying and establishing precedents in federal employment discrimination law, the agency makes the argument for mediation more compelling. Mediation doesn’t exist solely to offer quicker, easier resolutions and relieve the burden on individuals, institutions, agencies and courts, but, certainly, with respect to potential discrimination cases, it helps individuals achieve better, more lasting resolutions of value to themselves and to assist corporations in meeting and protecting their interests as well. In this light, consider the process qualities and the remedies or outcomes that are likely to be sought in a situation of potential sex discrimination. Why might a woman choose mediation? She may want to avoid a protracted investigatory process and obtain immediate relief; preserve her privacy and avoid the stress of formal, adversarialproceedings; confront the situation, and possibly the person or persons involved, in a way that provides both an opportunity to relate directly what she feels and why so as to educate rather than to accuse and to preserve future working relationships should they continue. Given that subjectivity and ambiguity may enter the picture, raising doubt about whether discrimination did take place, a woman may wish to avoid being twice victimized, both by “the discriminator” and by the process, and choose the informality and confidentiality that mediation affords. Moreover, establishing blame is seldom high on the list of outcomes sought by the person who suspects discrimination. Why use a system-like litigation or variations on the fact-finding or arbitration theme-that seek to find fault and levy costs or impose sanctions? Discrimination, much like harassment, is often clouded by different perceptions ofwhat took place and of what was expected or intended. Ordinarily, one would anticipate that parties holding different, even clashing, perceptions of a pattern, an occurrence, a problem, a conflict, or a complaint, would draw different conclusions as to how to deal with it; voluntary agreement would seem unlikely. Different perceptions may be genuine; in those situations, mediation affords an opportunity for the alleged discriminator to put his intentions aside and see what the woman who alleges that practice occurred believes she experienced. Often, however, the question is not a difference in perception, but denial or intentional misrepresentation of what occurred. In both cases, though, mediation affords each party an opportunity to see the other’s perspective without having to agree with it, and presumably, to reach an agreement that satisfies future needs and interests, again, without having to share the same view of what took place or didn’t take place. Sex discrimination is also often about power. Thus a process that allows a woman to enter as an equal, which encourages dealing with discrimination and violations of trust, is essential. Mediation allows for respectful communication, and, because solutions and remedies are voluntarily and mutually arrived at, compliance rests on, and makes responsible and accountable, both parties. Thus, mediation can be empowering. Unlike most other systems, in mediation, the way the problem is defined, interpreted, or “framed,” rests with the parties; so does control over the process and crafting remedies or solutions. (There are additional values to mediating employment disputes, many of which are particularly well described by Jean R. Sternlight in her article, “Lawyers’Representation of Clients in Mediation,” 14 Ohio St. J. Disp. Res. 269-366 (1999); see, especially in this regard, pages 332-345.) There are many “external mediation providers” who offer services to individuals and corporations, Alterndtiver publisher CPR Institute for Dispute Resolution and the American Arbitration Association prominent among them. Many smaller firms and individual mediators provide this service. Availability is not a problem. Indeed, a “National Employment Dispute Resolution Act of 1999” has been proposed to establish a national program of directed mediation for certain employment disputes“a process of structured negotiation, assisted by a qualified mediator, designed to achieve a full, fair and voluntary resolution.” A draft was distributed at an American Bar Association Conference in Boston last spring. The critical thing in malung mediation an attractive option, is the context in.which it occurs. Commitment by the corporation to a discrimination-free workplace is essential, requiring both policies and practices that sensitize managers and employees to what may constitute discrimination; provide services for employees (counseling, education, training); encourage employees to raise concerns about advancement opportunities, among other things; and include appropriate sanctions for failure to comply with core corporate values. Mediation can be effectivein a corporation (or used externally to the corporation) only if the workplace in which the dispute arises values freedom from discrimination. THE FUTURE The corporation of the future will enhance its competitive position by attracting and retaining the best talent, and, for women, opportunities for advancement are critical among the factors likely to make a difference in this regard. Along the way, though, stand significant obstacles not the least of which are persistent patterns of discrimination. How pervasivea problem is gender discrimination? The first of six regions studied with respect to this issue, Washington state, found that one of every four workplaces discriminates against women. By industry and by job category, women in Washington face a 17% chance of being discriminated against each time they seek employment or promotion. Alfred Blumtosen, interim report to the Ford Foundation, 1999. As women attempt to shatter glass ceilings, corporations should minimize the collateral damage by putting effective dispute resolution mechanisms in place. Organizational ombuds programs and external mediation options can aid the effective management of individual cases but also assist the corporation in identifying policies or practices (or people) that are having discriminatory results. The way to the future, then, will be less hazardous, and, at the same time, prospects may be enhanced for arriving there sooner.