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Originally published in The New York Times February 23, 2005

Copyright 2005 The New York Times Company

Memo Emerges As a Key Part Of Bias Lawsuit

By JONATHAN D. GLATER

At Johnson & Johnson, the director of equal opportunity was worried. The company, she warned in a memo written in the late 1990's -- the exact date is unclear -- had ''areas of vulnerability'' to employment discrimination lawsuits.

As it turned out, she was right. And the memo, written by Marion HochbergSmith and intended to prod Johnson & Johnson, the giant drug company, into making improvements, could now end up serving as an unintended legal weapon against it.

That memo, along with other documents submitted to a federal court in New Jersey, emerged publicly yesterday in support of a motion to certify a lawsuit filed in 2001 by several African-American and Hispanic employees as a class action. The documents open a rare window into the workings of a big company coping with how to hire and promote fairly.

In the memo, Ms. HochbergSmith expressed concerns about inadequate tracking of promotions, reports of unequal salaries and insufficient outreach to recruit women and minorities. Possibly in response to her recommendations, the drug maker formed a diversity task force, but few of the proposals, executives later conceded in legal depositions, ended up being put into practice.

A company spokesman, Marc Monseau, emphasized that the criticism in the memo should be considered in the larger context of continual self-examination at Johnson & Johnson.

''We engage in critical self-analysis because we are always looking to improve our processes and our performance,'' Mr. Monseau said. ''That reaches to all aspects of our business, including diversity.''

The company, he added, would continue to defend itself against the plaintiffs' accusations, which it considers groundless.

The suit does not claim that the company simply refused to hire the employees who are the plaintiffs, but that executives knew years ago that they were missing their targets for promoting such employees -- and did little to solve the problem.

The employees who sued (some have since left the company) claimed that they were unfairly passed over for promotions and that they unfairly received lower pay and smaller bonuses than their white colleagues. They also contended that they were hired into positions earning less than their experience and education justified, and that they were steered into less prestigious business lines at the company.

The kind of information disclosed in this case does not often become public, employment lawyers say, because most companies settle discrimination suits before they reach the class certification stage. One reason settlements are attractive, of course, is to keep potentially embarrassing information confidential.

If the Johnson & Johnson case is not settled, a judge could rule on the class certification motion by the end of the year. If the motion is granted, evidence gathering would follow and, eventually, a trial.

The lawsuit essentially claims that Johnson & Johnson executives knew of the problems identified in Ms. HochbergSmith's memo and did not take adequate steps to remedy them. In addition to the claim that the company maintained a ''glass ceiling'' that unfairly blocked some minority employees from advancement, the complaint asserts that the company maintained internal ''glass walls'' that tended to confine black and Hispanic employees to career paths within less prestigious businesses.

It also put black and Hispanic employees into lower-paying positions when they first joined the company, the lawsuit contends, ensuring that they would never close wage gaps with white peers of comparable qualifications.

''We believe that both prior to and after the filing of the lawsuit, there have been voices in the company that have wanted to address the issue of disparities on the basis of race, but those voices have largely been silenced,'' said Cyrus Mehri, whose law firm of Mehri & Skalet is representing the plaintiffs. ''My view is that they are a company in desperate need of statesmanship on the issue of race.''

According to lawyers for the plaintiffs, the percentage of Johnson & Johnson senior executives who were African-American or Hispanic actually fell in the years before the lawsuit was filed.

If the company knew of such a change in the numbers, it should act, said Barry Goldstein, who is counsel at Goldstein, Demchak, Baller, Borgen & Dardarian in Oakland, Calif.

''If you see a problem, you're not supposed to ignore it,'' Mr. Goldstein said. ''If you had falling sales in stores of a product, would executives do something about it?''

After the lawsuit was filed, the percentage of African-American executive hires rose from zero in 2000 to 12.5 percent in 2002, according to testimony by a company executive.

But the percentages vary considerably from year to year and are not related to any one event, said Mr. Monseau, the company spokesman.

''We take the allegations raised in this lawsuit very seriously,'' Mr. Monseau said. ''But we strongly believe that the plaintiffs' allegations of a companywide pattern or practice of racial discrimination are just not true and we will defend against those allegations.''

Nilda Gutierrez, who worked in the human resources department of one of Johnson & Johnson's operating companies in North Brunswick, N.J., left the company in 2002 after almost five years. Ms. Gutierrez, one of the plaintiffs, said she raised concerns about her salary after hearing colleagues talking about their raises and bonuses.

''There are people in the office that used to brag about the increases: 'I'm getting a house, I'm getting a new car,''' said Ms. Gutierrez, who is now a public-school teacher. ''Something's wrong when I can say, 'I can get a dress or a suit.'''

Ms. Gutierrez took her concerns to her supervisor and on up the chain, she said in a recent telephone interview. She said that she did not want to leave the company -- it was her ''dream job'' -- but that she decided she had no choice.

Johnson & Johnson did take some steps to respond to the concerns about its treatment of African-American and Hispanic employees. A diversity task force was formed, and held various meetings in 1998 and 1999. The task force considered several proposals, including mandatory training for executives on how to improve employment opportunity, mandatory posting of job openings, and requiring executives to consider members of minority groups for open positions.

According to testimony of senior executives at the company, these steps were not made mandatory.

Consider this exchange, between a lawyer for the plaintiffs and Michael Carey, who received Ms. HochbergSmith's memo as vice president of human resources. The lawyer, Mr. Mehri, asked whether equal employment opportunity training had been made mandatory.

''The human resources leaders know that I and the H.R. leaders expect the companies to send appropriate people to our training and it's well attended,'' Mr. Carey said.

The lawyer responded: ''My question is not whether it's well attended. My question is, since the time that you received Marion HochbergSmith's memo, has E.O. training become mandatory?''

Mr. Carey said: ''No, I have not made it mandatory. It has not been made mandatory.''

One telling lesson from the documents is that steps that may seem minor -- like posting open jobs, for example -- can be incredibly important, said Pamela Karlan, who teaches civil rights law at Stanford Law School. The more informally news of opportunities circulates, the more vulnerable a company may be to a charge of discrimination, she said.

''If you don't post a job, then it may turn out that one white guy tells another white guy, 'There's a job open in my section,''' she said.

Ms. Karlan said that companies were not necessarily better off if they were ignorant of racial disparities in hiring and promotion, because the disparities alone could support a lawsuit. In other words, even without the memo, Johnson & Johnson might still face the suit based on claims about its employment practices. ''Any large corporation is better off not being blindsided,'' she said.

The lawsuit has novel aspects, according to employment lawyers. There are not as many suits on behalf of Hispanic employees as one might expect, for example, Mr. Goldstein said. ''The Latino community is an underserved community,'' he said, ''underserved by the civil rights laws.''