From The Washington Post:
By Drew Harwell
Hundreds of former employees of Sterling Jewelers, the multibillion-dollar conglomerate behind Jared the Galleria of Jewelry and Kay Jewelers, claim that its chief executive and other company leaders presided over a corporate culture that fostered rampant sexual harassment and discrimination, according to arbitration documents obtained by The Washington Post.
Declarations from roughly 250 women and men who worked at Sterling, filed as part of a private class-action arbitration case, allege that female employees at the company throughout the late 1990s and 2000s were routinely groped, demeaned and urged to sexually cater to their bosses to stay employed. Sterling disputes the allegations.
The arbitration was first filed in 2008 by more than a dozen women who accused the company of widespread gender discrimination. The class-action case, still unresolved, now includes 69,000 women who are current and former employees of Sterling, which operates about 1,500 stores across the country.
Most of the sworn statements were written years ago, but the employees’ attorneys were only granted permission to release them publicly Sunday evening. One of the original women who brought the case, those lawyers said, died in 2014 as proceedings crawled on without resolution.
The statements allege that top male managers, some at the company’s headquarters near Akron, Ohio, dispatched scouting parties to stores to find female employees they wanted to sleep with, laughed about women’s bodies in the workplace, and pushed female subordinates into sex by pledging better jobs, higher pay or protection from punishment.
Though women made up a large part of Sterling’s sales force, many said they felt they had little recourse with their mostly male management. Sanya Douglas, a Kay sales associate and manager in New York between 2003 and 2008, said a manager even had a saying for male leaders coaxing women into sexual favors to advance their careers, calling it “going to the big stage.”
“If you didn’t do what he wanted with him,” she said in the 2012 sworn statement, “you wouldn’t get your (preferred) store or raise.”
Sterling spokesman David Bouffard told The Post in a statement Monday that company officials “have thoroughly investigated the allegations and have concluded they are not substantiated by the facts and certainly do not reflect our culture.”
The company “has created strong career opportunities for many thousands of women working at our stores nationwide” and takes allegations of pay and promotion discrimination seriously, with “multiple processes in place to receive and investigate allegations of misconduct,” Bouffard said.
Allegations of sexual harassment and discrimination “involve a very small number of individuals,” he said, adding that their claims were included in arbitration filings by employees’ attorneys “to paint a negative and distorted picture of the company.”
In arbitration, Sterling presented experts it said had reviewed some employee allegations and concluded that the company “devotes adequate resources to manage complaints of unwanted sex-related behavior,” according to a 2015 filing.
Complaints that were reported to the company were thoroughly investigated, Bouffard said, and action was taken where appropriate. He added that the company encourages all employees to report any workplace concerns so officials can investigate and respond appropriately.
Not all of the 69,000 class members are alleging sexual impropriety. Many are accusing Sterling of wage violations, arguing women were systematically paid less than men and passed over for promotions given to less experienced male colleagues.
The former and current employees are seeking punitive damages and years of back pay, though no estimate of the potential damages has been given. A class hearing, during which witnesses will be called to testify before the arbitration judge for the first time, is scheduled for early next year.
Sterling, like other U.S. companies, requires all workers to waive their right to bring any employment-related disputes against their employer in public courts. Instead, complaints must be decided in arbitration — a private, quasi-legal system where cases are guaranteed little transparency.
Since 2015, The Post has requested to review the employee statements submitted as part of arbitration, all of which were designated as confidential. Employees’ attorneys have also sought to make them publicly available. Attorneys for the employees and the company recently reached an agreement that the documents could be made public on the condition that they not identify any of the individuals to whom conduct was attributed.
More than 1,300 pages of sworn statements were released Sunday and feature company-approved redactions that obscure the names of managers and executives accused of harassment or abuse. But a memorandum by the employees’ attorneys supporting their motion for class certification, filed in 2013, revealed that top executives including Mark Light, now chief executive of Sterling’s parent company, Signet Jewelers, were among those accused of having sex with female employees and promoting women based upon how they responded to sexual demands.
Light did not respond to requests for comment, and the company did not make him available for an interview. The company declined to address detailed questions about the allegations made by former employees against Light and other managers.
Many of the most striking allegations stem from the company’s annual managers meetings, which former employees described as a boozy, no-spouses-allowed “sex-fest” where attendance was mandatory and women were aggressively pursued, grabbed and harassed.
Multiple witnesses told attorneys that they saw Light “being entertained” as he watched and joined nude and partially undressed female employees in a swimming pool, according to the 2013 memorandum.
Routine sexual “preying” at company events “was done out in the open and appeared to be encouraged, or at least condoned, by the company,” Melissa Corey, a manager of Sterling stores in Massachusetts and Florida between 2002 and 2008, said in her declaration.
Ellen Contaldi, a Sterling manager in Massachusetts between 1994 and 2008, said in her declaration that male executives “prowled around the (resort) like dogs that were let out of their cage and there was no one to protect the female managers from them.”
“I didn’t like being alone, anywhere. I used to dread going” to the meetings, Contaldi told The Post in an interview. “If you were even remotely attractive or outgoing, which most salespeople are, you were meat, being shopped.”
“It was like nobody knew right from wrong, and there was nobody trying to show anybody right from wrong,” Contaldi added. “There was no discipline. There was no consequence. You were on your own.”
Former employees who sought help or reported abuse through an internal hotline alleged in their declarations that they were verbally attacked or terminated. Kristin Henry, a five-year Sterling employee who said she was 22 when an older district manager tried to kiss and touch her at a managers event, told The Post she was falsely accused of theft and quickly fired after reporting his advances to superiors at Sterling.
The case, Jock et al. v. Sterling Jewelers, was filed before the American Arbitration Association, one of the nation’s largest arbitration organizations. Kathleen A. Roberts, the case’s arbitrator and a retired federal magistrate, is forbidden by association rules from speaking with the media. Like other arbitrations, the case before Roberts is conducted in private and is legally binding. While arbitrator decisions are appealable, there are very limited grounds on which decisions can be overturned. The confidential nature of the case has made it difficult to determine why it has taken so long to resolve.
In a 2015 decision to grant class-action status to the women, Roberts wrote that the testimony includes references to “soliciting sexual relations with women (sometimes as a quid pro quo for employment benefits), and creating an environment at often-mandatory Company events in which women are expected to undress publicly, accede to sexual overtures and refrain from complaining about the treatment to which they have been subjected.”
“For the most part Sterling has not sought to refute this evidence,” Roberts wrote. Instead, she wrote, “Sterling argues that it is inadmissible, irrelevant and insufficient to establish a corporate culture that demeans women.”
The case could deeply tarnish a business that sells billions of dollars worth of jewelry a year through romance-centered marketing campaigns such as “Every Kiss Begins with Kay.” Signet told shareholders in an annual report last year that it would have to “pay substantial damages” if it lost the case.
Sterling’s mall outlets and storefronts account for a large chunk of America’s jewelry market, as well as more than 18,000 jobs across all 50 states. Its parent company, Signet, which is domiciled in Bermuda but headquartered in Ohio, is the world’s largest retailer of diamond jewelry, selling more than $6 billion of jewelry, watches and services in 2015, company filings show.
Joseph M. Sellers, a partner at the Cohen Milstein law firm and lead counsel for the case, told The Post in an interview that the former employees’ statements provide “breathtaking evidence of ways in which women were mistreated in the workplace.”
“It was terribly demeaning to them as women,” Sellers said, “not just because they themselves were mistreated but because they saw how their co-workers were treated as sexual objects.”
‘Backed into a corner’
When Heather Ballou left her job at a small jewelry store and moved to a Kay retail outlet in Pensacola, Fla., in 2000, she believed she had made the right move to advance her young career. Sterling seemed to offer high standards, a professional atmosphere and managers willing to groom and mentor new employees, Ballou, a class member in the arbitration, said in an interview with The Post.
As she worked her way up to store manager, though, she said, she became increasingly disturbed at the frequency of sexual harassment from the company’s crude “boys club.” At a managers meeting in 2005, a district manager promised to help transfer her to a better store if she had sex with him, she said in her sworn statement. That night, she did, believing she was “backed into a corner” and had no other way to advance.
“Looking back, I can’t believe I did some of the things I had to do,” Ballou, 41, told The Post, adding that in the moment she thought: “You suck it up and do what you have to do for your family. You need this job.”
Ballou attended four of Sterling’s multi-day managers meetings, where attendance was mandatory for managers at company stores nationwide. The events, which were mostly held in Orlando, included daytime work seminars but were infamous for their wild parties at night, employees said. It was common practice, former employees said, for executives and high-level managers to ply subordinates with alcohol.
One night, Ballou told The Post, she saw a top executive watching as female managers in varying stages of undress splashed in a hotel pool. “He had a drink in one hand and a cigar in the other, just taking it all in, like, ‘I am the king and this is my harem,’ ” she told The Post. She was prevented by her attorneys from naming which executive was involved, because of the condition of the arbitration documents’ release. The 2013 class-action motion states Light took part in a pool-related incident similar to the one Ballou described.
Henry, who attended the 2005 meeting, said she was retrieving her shawl from a hotel room when a male district manager who was her father’s age, and whom she had been told to treat like a mentor, forcibly tried to kiss and touch her. Stunned, she left immediately afterward and called her parents for advice.
“I was so embarrassed,” she told The Post. “I was afraid of what would happen next, how I would be treated, if it was something he would tell other employees about.”
A few days later, she called an internal hotline to report the encounter, believing her identity would be protected. But within days of her report, a regional boss visited her store for two days, interviewed her co-workers and reviewed surveillance video before accusing her of stealing a gold necklace and $100 in cash. She told The Post she showed the boss evidence that she had not stolen anything, but Sterling fired her, a few days before she was set to receive an annual commission payment worth roughly $30,000, she alleged.
Because she was fired and accused of theft, she told The Post, she was unable to find a job at another jewelry store. Now 34, she works as a nurse in Florida.
“Friends to this day ask: What ever happened to that job? And it’s one of those situations: Do I tell the truth? Or do I say I just moved on, to save myself the embarrassment?” she told The Post. Seeing Kay commercials, she said, continues to unnerve her.
“They’re still hiring younger women, and I worry about those women,” she told The Post. “I worry about what might happen to them.”
Julia Highfill, a nine-year Sterling manager in Florida, Louisiana and Mississippi, said in her sworn statement that the company “did not have an effective or serious mechanism by which female employees could complain about their mistreatment.” After calling the company to report that a district manager had arrived to work late and reeking of alcohol, she alleged that he called soon after to warn her against calling again. He told her, “Anything you say, I’m going to know,” she recalled in an interview.
Men who are not part of the class also filed sworn statements alleging Sterling was a hostile workplace for women. Richard Sumen, who worked for Sterling in Ohio from 1992 until 2005, said in his declaration that a group of managers and officers commonly known as the “good ole boys” was infamous for “protecting and promoting their friends, and wild escapades of sex, drugs, excessive drinking and womanizing.” He recalled one former Ohio-based executive saying, “Why pay women more when they just get pregnant and have families?”
In his sworn statement, Sumen also recounted an incident at corporate headquarters in which an executive pointed to a female secretary and asked a district manager, “Are you doing her?” The secretary looked visibly uncomfortable, Sumen said, but the executive said again, louder, “I want to f---ing know if you are f---ing doing her.”
Sumen told The Post that he remained troubled by what he called Sterling’s discriminatory corporate climate. He wrote in his 2008 declaration, “This culture of sexism and womanizing was so prevalent that female management employees were pressured to acquiesce and participate.”
Like ‘an abusive relationship’
This culture seemingly arose in a company whose sales force was mostly women. More than 68 percent of Sterling’s store managers are women, the company told The Post. Three of Signet’s 10 executive officers are women. A job-recruitment video calls Sterling “your place to shine” and promises an “exciting and fulfilling career.”
Light was made Sterling’s chief executive in 2006 and presided over an eight-year growth streak during which the company’s sales more than tripled. Light, now 54 and chief executive of Signet, earned about $7.4 million in salary, stock and bonuses in fiscal 2016, up from $2.4 million in 2014, company filings show.
Signet, the parent company of Sterling, Zales and other jewelry brands, has struggled in recent months because of disappointing holiday sales, investors’ worries over how much of its jewelry is bought on credit, and a scandal during which Kay customers alleged diamonds they had brought in for cleaning were swapped for lesser-quality stones. The company denied the diamond-swapping allegations. Its share price has dropped by half since its late-2015 peak.
Since 1998, Sterling has forced all employees to agree to arbitration — a no-judge, no-jury resolution system that allows companies to keep potentially embarrassing labor disputes and case records mostly confidential.
The nonprofit American Arbitration Association, where the Sterling case is being heard, allows companies to refuse arbitrators they believe will not fairly rule on their case.
Some companies have argued that arbitration allows them a quicker path to resolving employee disputes beyond traditional courts. Workers effectively consent to the rules when they sign agreements requiring arbitration as a condition of their employment, as seen with Sterling’s contracts.
The Equal Employment Opportunity Commission said in a report last year that mandatory arbitration policies “can prevent employees from learning about similar concerns shared by others in their workplace.”
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