"Inflated" Atty Fees Too Much for Boeing Settlement

November 29, 2002 (PLANSPONSOR.com) - Lawyer's fees and an uneven damages award process have led a federal appeals court to toss out a 1999 $15 million class action settlement between Boeing and about 15,000 black workers.

A three-judge panel of the 9th US Circuit Court of Appeals took issue with the settlement’s nearly $4 million in lawyers’ fees, as well as the agreement’s “two tiered” structure of awarding damages.   In an 85-page opinion, the court ordered the parties to either justify the settlement or renegotiate it.

The deal concerned a suit filed in 1998 in which some black Boeing workers claimed the firm’s pay and promotion policies were “systematically discriminatory” and that Boeing fostered and tolerated a racially hostile work environment.

Case History

In September 1999, Boeing agreed to pay $14.2 million to settle discrimination charges brought by African-American employees, including $6.5 million to some 3,600 workers – a disparity that led a group of plaintiffs to appeal the terms of the settlement to a higher court.    That appeal claimed that the lower court abused its discretion – allowing some plaintiffs to collect as much as 16 times more than others in the class, and awarding money to some not included in the original class of workers.

The appellate court found the payment disparity unjustified based on the facts before it.   In addition, the court also said the way the lawyers’ fees were calculated “allowed too much leeway for the lawyers representing a class to spurn a fair, adequate, and reasonable settlement in favor of inflated attorneys’ fees.”

Settlement Status

The discrimination case is one of several brought by women and minorities against Boeing and McDonnell Douglas, which Boeing bought in 1997, over allegations that the companies had allowed racial and sexual discrimination against employees.   Also in 1999, Boeing struck a deal with the US Labor Department to pay $4.5 million to female and minority workers who claimed they were paid less than white male colleagues.

Boeing has denied official discrimination in those cases but agreed to pay millions and conceded some mistreatment may have occurred, noting the difficulty in ensuring legal compliance in a company with nearly 200,000 workers.