Sterling Jewelers spent much of the 1990s and early 2000s building up a vast real estate empire to house the offerings of its one dozen or so jewelry brands. In a quest to adorn women across the country with middle-market engagement diamonds and Valentine’s Day jewels, the 109-year old Akron, Ohio-based jewelry giant – which owns mall staples like Zales, Jared the Galleria of Jewelry, and Kay Jewelers, among others – embarked upon a spending spree, “buying up local branches of family-owned jewelry stores and incorporating them into [its empire].”
By the time Sterling’s UK-based parent Signet Jewelers acquired Zales in 2014, the company “owned more than 3,600 stores — 7 percent of the specialty jewelry market in the United States, selling nearly $6 billion in jewelry a year,” according to the New York Times. (For comparison’s sake, the more upmarket Tiffany & Co. generated upwards of $4 billion in sales that same year).
Sterling’s sales figures have earned it the title of “the largest jewelry retailer in the U.S.,” while its prime placements in once-thriving malls and sprawling suburban shopping centers, paired with its catchy television taglines – i.e., “Every Kiss Begins With Kay” and the now-defunct “He Went to Jared” – make its jewelry properties some of the most well-known among consumers in America.
But while the behemoth was busy building its name as the go-to source for middle-of-the-road jewelry in the U.S., it was also laying the foundation to garner itself a new – and far less sparkly – reputation: one for allegedly engaging in a decade-plus scheme to pay its female employees less than their male counterparts and promote them less frequently despite them performing the same kind and quality of work as men.
Sterling’s alleged wrongdoing first began to make its way to public consciousness in March 18, 2008; one of the seemingly countless complaints filed on any given day with the U.S. District Court for the Southern District of New York contained a bombshell that late-late-winter day, and it would only become more explosive as the case progressed over a period of more than 10 years. In the lengthy complaint, 15 women accused the jewelry company of actively discriminating against them and hundreds – if not thousands – of other female employees … something it had been doing for years, thereby, running afoul of the Equal Pay Act and Title VII of the Civil Rights Act of 1964.
The plaintiffs asserted that Sterling engaged in “a pattern and practice of sex and age discrimination in its promotion and compensation decisions” in furtherance of which it “promoted and compensated male employees at a statistically significantly higher rate than similarly situated female employees.”
As would be revealed several years later by way of 249 sworn statements from individuals within Sterling’s ranks, the company’s purported wrongdoing runs much deeper than lesser pay and fewer promotions. Those some sworn statements also included claims of impropriety on the part of Sterling managers, who demeaned female employees, allegedly groped and forced themselves upon them, and propositioned them for sex, a testament to the truly sub-par working conditions and treatment of women, they asserted.
These allegations – just like the sweeping pay discrepancies at the center of the lawsuit (and a corresponding but since-settled EEOC probe and lawsuit) – had largely been obscured within the company due to its culture of “secrecy.”
Following years of arbitration proceedings, which were thrust upon the female plaintiffs as a result of the presence of mandatory alternative dispute resolution provisions in their employment agreements, a decision from arbitrator Kathleen Roberts brought the otherwise largely confidential matter to public sphere. (Unlike traditional legal proceedings, arbitrations are handled in a private capacity, meaning that most information is kept almost entirely out of the public record, and usually, protected by way of iron-clad non-disclosure agreements in connection with any settlements.)
In February 2015, Roberts ruled that a large group of current and former Sterling employees could pursue claims of pay and promotion discrimination against the jewelry giant as a class, as opposed to individually, and in doing so, certified a class of more than 40,000 women who had worked for Sterling over a certain period of time. As of March 2017, at least 10,000 of those women had “actively filed documentation of what they say was pay discrimination,” an attorney handling the case told the Washington Post.
Roberts’ determination garnered pushback from Sterling and a decision from U.S. District Judge Jed Rakoff, who held that Roberts could not include in the class employees who did not affirmatively opt in to the arbitration proceeding. Instead, he stated that only women who had previously joined the named plaintiffs’ case could join together as a class, a move that stood to eliminate thousands of women from the equation.
Fast forward to this week and a unanimous 3-judge panel for the Second Circuit Court of Appeals in Manhattan – reviewing Judge Rakoff’s decision – said, no so fast. Writing for the court, Judge Peter W. Hall held that Rakoff erred in finding that an arbitrator lacked power to enable a matter to proceed as a class action and also to determine who should be included in any certified class.
No small matter, the Second Circuit’s decision “restores [the women’s’] nationwide class action arbitration” against Sterling Jewelers. And in lieu of merely certifying a class of 44,000 women, which was the size of the pool back in February 2015, Joseph Sellers, counsel for the female employees, says that “in the more than five years since [Roberts’] certification order, the class has grown and will likely include approximately 70,000 women” all of whom were forced to sign arbitration agreements in connection with their employment with Sterling.
The case will now be sent back to Judge Rakoff, who will determine whether Roberts exceeded her authority by certifying an “opt-out” class of plaintiffs, an issue that was not part of the appeal. As for Sterling, it “likely will appeal the Second Circuit’s ruling,” David Bouffard, a spokesman for parent company Signet Jewelers, told Bloomberg on Monday.