Management Theory

Texaco Race Discrimination Case

Texaco is the name of an American oil retail brand; it is strong in the United States, Latin America, West Africa and Europe. Its flagship product is its fuel. It began as the Texas Fuel Company, founded in 1901 in Beaumont, Texas by Joseph S. Cullinan, Thomas J. Donoghue, Walter Benona Sharp and Arnold Schlaet when they discovered oil in Spindletop. In 1928, Texaco became the first U.S. oil company to sell its gasoline nationwide less than one single brand name in all fifty states. In 2001, Texaco merged with Chevron and began opening up gas stations in July of 2006 (Eichenwald, 2004).

In 1991, Mary Devorce, an African American accountant for Texaco, filed a complaint with the government. Her complaint stated that she had been subjected to racism at Texaco. Michael Moccio, a manager for Texaco in the Denver office assured Mary Devorce that her job was safe. He told her that she would be treated fairly, so he offered her new duties within the company and removed her from the situation where she felt she was being treated unfairly. Discussing the matter with Jim Woolly his boss in the Houston office, he could tell that his boss was unimpressed with the way he had handled the situation. According to a sworn affidavit by Michael Moccio, Jim Woolly stated that “I would have fire her black ass,” Michael Moccio responded that you can not dismiss someone for contending that she was a victim of racism. “I guess we treat niggers differently down here,” Mr. Woolly replied (The New York Times, 2008).

In 1994, Charlayne Hunter вЂ"Gault, Bari Roberts, Veronica Shinault, and three other African American employees filed a lawsuit against Texaco accusing the company of establishing a pattern of racial discrimination. The lawsuit was based on the claim that African American employees did not receive the position or the pay to which they were entitled. African Americans were significantly under-represented in high level management jobs and Caucasians employees were promoted more frequently at higher rates of pay for comparable positions within the company. Each of the six employees that started the lawsuit in 1994 had reached the “glass ceiling” in obtaining advance managerial, supervisory or professional positions. The complaint stated that these experiences were part of Texaco’s employment patterns and practices. The claim became a class action lawsuit when approximately 1500 African American employees came forward citing similar experiences (Eichenwald, 2004).

Texaco vehemently denied the allegations, stating that they never intentionally discriminated against their African American employees. Sealed documents stated that promotions programs seemed destined to keep out African American workers and a two year intense investigation proved otherwise. The investigation found that Texaco had some promotion programs that discriminated against African American employees. One program posted job openings within the company, but it excluded any jobs above pay level 16 which was the beginning point for senior executives. Jobs above that level depended on word of mouth from human resources and the majority of those positions were never held by an African American employee. Court papers also showed that Texaco used a secret job promotion program, known as the “high potential lists” that list included employees selected for grooming by management although no experience was needed; selected employees were left up to the managers (Eichenwald, 2004).

Along with the investigation findings, African American employees had several other major points to back up their allegations of racial discrimination. The first major point was known as “strength of numbers.” When the other 1400 to 1500 African American employees joined the lawsuit along with the NAACP, the employees were given power in the case. The second major point was Texaco did not have documentation to prove that the allegations were false. According to research, an employer is guilty of illegal discrimination if the employer’s government-mandated racial records do not conform to some abstract 'ideal' of promotion and advancement of people of certain colors (adversity.net). The last major point and probably the most explosive were the secretly recorded audiotapes. In August 1994, Richard Lundwall the senior coordinator of personnel in Texaco’s finance department responsible for keeping minutes recorded the meeting that he had with Robert Ulrich, the treasurer for Texaco and David Keough a senior assistant treasurer for Texaco. He recorded the meetings to make sure his minutes were accurate but he did not inform the executives