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Among the nation’s big banks, Goldman Sachs in recent years has drawn unwanted attention to its insistence that employees arbitrate.
At first glance, it looked like great news for the movement to quash mandatory arbitration of employment claims.
In early June, Goldman Sachs & Co. said it would undertake a review of its practice of barring employees from suing the firm in court. It was a surprise turnaround by the company, which had fought and narrowly defeated a shareholder proposal seeking the arbitration probe.
But 49 percent of shareholders voting in favor of having Goldman investigate the controversial policy was enough to shame the company into switching gears.
Hopes immediately ran high. “This is for all women who’ve been harassed and then SILENCED,” tweeted arbitration foe and former Fox News anchor Gretchen Carlson, on the news of Goldman’s June decision. “No more! America is awake and we have a voice.”
America may be awake, but it doesn’t look like Goldman is. With its inquiry complete, the firm said in a report released on Tuesday that concerns about mandatory arbitration are simply “not applicable” to the giant investment bank. Arbitration “remains the better way to resolve disputes between employees and the firm,” the report asserts.
That might come as a surprise to the thousand-plus women who last year were thrown out of a decade-long, ongoing class action gender discrimination case, Chen-Oster v. Goldman Sachs, after Goldman convinced a federal judge they had no right to be in court. Another 700 women in the case were allowed to opt out of arbitration.
The firm said in a report released on Tuesday that concerns about mandatory arbitration are simply “not applicable” to the giant investment bank.
Given the authors of the report, its dismissal of concerns about arbitration might be expected. The law firm hired to conduct the review previously represented Jeffrey Epstein and Roman Polanski in their high-profile sexual assault cases, and the university professor the law firm hired to assist on the review is affiliated with two arbitration forums.
According to the report, Goldman hired the powerful global law firm Steptoe & Johnson to do the review and Steptoe, in turn, retained a well-known international labor scholar and law professor at New York University, Samuel Estreicher, to assist. Estreicher’s bio says he is “a member of the arbitration/mediation panels” of the American Arbitration Association and Center for Public Resources. He did not respond to an email query.
Steptoe’s many services include independent and internal investigations that have been used by clients including the oil field services company Tidewater, Inc., the travel center and diesel fuel company Pilot Flying J, and AmSouth Funds, according to Steptoe’s website.
A client who was not mentioned on the firm’s site was the University of Michigan, which hired Steptoe last year to take charge of a sexual abuse investigation, but then replaced the firm after it learned that attorneys in a different branch of Steptoe “once represented prominent clients who were accused of sexual misconduct,” according to a university press release. Steptoe, it turns out, had represented the late financier Jeffrey Epstein and director Roman Polanski. In its press release, the university said that Steptoe’s affiliations with the men had the potential to discourage abuse survivors from coming forward.
A spokesman for Steptoe declined comment. I asked a Goldman spokesman in a set of written questions why it chose Steptoe, given its affiliations with Polanski and Epstein, but he declined to respond, referring me back to the report the company posted this week.
In arbitration, the employer picks the forum; the hearings are behind closed doors; the arbitrators often are retired white, male former judges; and the legal filings aren’t public. One of the lawyers representing the women in the Chen-Oster suit, Adam Klein, said in an email to the Prospect that arbitration is a powerful impediment to change: “There’s no public accountability and no means to remedy systemic discrimination within the arbitration process.”
“The idea that they are still trying to use this system to cover up their dirty laundry is incredibly misguided. Quite honestly, the Dark Ages,” Carlson said in an interview.
Goldman won’t be dropping its arbitration policy, but that’s not to say that nothing will change. Its board of directors, which received a copy of the report in October, told management it wanted regular updates on sexual harassment matters; periodic assessments of the arbitration program; and a waiver of confidentiality on sexual harassment arbitration outcomes if an employee so desires. Laura Campos, director of corporate and political accountability at the Nathan Cummings Foundation, which initiated the proposal, said in a tweet this week that Goldman reached the wrong conclusion, “but at least they’ve decided to make confidentiality provisions optional for sexual harassment claims.”
“There’s no public accountability and no means to remedy systemic discrimination within the arbitration process.”
In fairness, Goldman is hardly alone in shutting off access to the courts. Its peers in the financial world were pioneers among American industries, fighting and winning key Supreme Court battles in the late 1980s and early 1990s that made it legal to execute contracts that would take away court rights from workers.
Among the nation’s big banks, though, Goldman in recent years has drawn unwanted attention to its insistence that employees arbitrate, engaging in a battle royal with women who sued 11 years ago. Those remaining in the class action are hoping to finally go to trial in 2022.
The new Goldman report did stand out for its decision to allow some employees to waive the firm’s confidentiality requirement, but the concession might be less than meets the eye. The carefully worded report said that the confidentiality of arbitration “decisions” in harassment cases could be waived—an ambiguous reference to something that could be as narrow as allowing a woman to say only whether she had won or lost, or as broad as permitting her to speak about details of the hearings and of the harassment she’d endured.
Among my unanswered written questions to Goldman were inquiries as to what, exactly, it would allow a sexual harassment litigant to reveal. It’s “completely unclear” what Goldman means when it talks about waiving confidentiality, said Meredith Benton, founder of the ESG consulting group Whistle Stop Capital, which assisted the shareholder activists at the Nathan Cummings Foundation with the shareholder proposal. Benton emphasized that she was not speaking on behalf of the Foundation.
Goldman has a long history of battling the women who challenge it. Rita Reid, a vice president in the firm’s investment banking division from 1987 to 1992, tried to sue Goldman for gender discrimination in court, but was sent to arbitration before a panel of three New York Stock Exchange arbitrators. In an unusual 19-page decision—arbitrators rarely explain their reasoning—the panel conceded that by 1990, there had been only one woman partner in the history of the firm; that the future U.S. Treasury secretary, senior partner Hank Paulson, had said he would not add a woman to a team if a new client didn’t want women; and that Goldman destroyed some documents used for partnership evaluations while other documents that contained no evidence of discrimination were retained. Nonetheless, the arbitration panel unanimously dismissed Reid’s claim that the firm discriminated against her when it failed to make her a partner.
Over the years, some plaintiff’s lawyers have been able to get details of harassment and discrimination into public view by filing in court, knowing full well that they’ll be detoured to arbitration. Goldman has that covered, too. In an exhibit filed in the Chen-Oster discrimination case against Goldman, a redacted copy of an employment contract signed by former chief executive Lloyd Blankfein admonishes a female managing director not only that she must use one of three approved arbitration operations for any dispute, but that she must not file a claim anywhere else.
There is “no indication that the firm’s arbitration program shields employees who engaged in misconduct—sexual harassment or otherwise,” the firm reported this week. But considering Goldman’s efforts to keep things under wraps, how would we ever know?
