Merrill Lynch Settles Bias Case

Merrill Lynch & Co. has settled a class-action lawsuit over sex discrimination by agreeing to allow female brokers to pursue millions of dollars in damages individually before private arbitrators.

The settlement announced late Monday would make Merrill the second securities firm to allow its employees to side-step industry sponsored arbitration panels that critics have called too pro-company.

The pact doesn't call for the company to pay the 2,500 women covered by the lawsuit a lump-sum cash payment similar to Texaco Inc.'s $176 million accord in its racial-discrimination lawsuit.

However, the eight female brokers who were the plaintiffs in the lawsuit will split a $600,000 payment. They are also free to pursue additional claims through the arbitration system being set up by the company.

Merrill Lynch also announced that starting in July it planned to give employees the opportunity to take discrimination claims to court if arbitration fails, a ground-breaking move in the securities industry.

However, the court option does not not apply to claims arising under the the settlement agreed to Monday. The settlement will cover 2,500 women who are current or former brokers for Merrill Lynch will be able to bring claims dating back as far as Jan. 1, 1994, before the panel beginning in July

Panel members will be experts in gender bias laws and will be selected from a pool of lawyers for both the company and the plaintiffs.

"Currently, these employees and virtually every employee on Wall Street are compelled to go through a rather one-sided binding arbitration process that prohibits them from going to court," Linda Friedman, one of the plaintiff's attorneys, said in a written statement.

Merrill Lynch spokeswoman Susan Thomson said the company was planning implement changes in the way it handled employee complaints regardless of a settlement.

The company said in a statement that it "remained committed to investigating promptly all employee claims" and that it "does not tolerate any form of discrimination."

The deal was to be presented to U.S. District Judge Ruben Castillo Tuesday for his approval.

Other terms of the settlement include Merrill Lynch agreeing to more aggressively recruit women and minorities and to provide diversity training at various levels within the firm.

The lawsuit was brought in February 1997 by one current and seven former female financial consultants for the New York-based Merrill Lynch, which employs about 14,000 brokers and 55,000 total employees worldwide.

"The women who were victims of discrimination and who courageously brought this lawsuit have achieved a tremendous result not just for themselves and their colleagues, but for all Merrill Lynch employees," said Mary Stowell, another of the plaintiffs attorneys.

Talks had been going on for months and hit a snag in late January only hours before the two sids were to present the deal to Castillo.

Last fall, Smith Barney, now Salomon Smith Barney, a unit of the Travelers Group, settled a sexual-harassment lawsuit filed by more than 20 women who contended there was gender discrimination at that firm. Their class action resulted in the company agreeing to use private mediation instead of industry arbitration, to pay lawyers' fees for the plaintiffs and to make a commitment to spend $15 million on diversity training.

Stowell and Friedman also represented the Smith Barney women.

"It will no longer be business as usual and we hope that other Wall Street firms will take their cue from Merrill Lynch and Smith Barney, and end the mandatory binding arbitration system once and for all," she said.

By MARIO FOX