A big ugly sex-discrimination suit is coming to the company where America buys its engagement rings

Since 2008, a dozen women employed by Signet Jewelers — which owns Zales, Kay Jewelers, and Jared's Galleria — have been suing the company. They're alleging sexual discrimination at the highest levels.

The matter, once argued in contractually mandated private arbitration proceedings, has now evolved into a class-action lawsuit, with the trial beginning next month.

The suit targets Signet's Sterling Jewelers division, which runs those big jewelry brands. Class members can include women who were sales associates, department managers, assistant managers, or store managers at a Sterling retail store in the 13 years since October 16, 2003. It's a potential class of about 44,000, filings related to the case show; already more than 10,000 have joined.

That's not all. The US Equal Employment Opportunity Commission separately filed a gender-discrimination suit against Sterling a few months after the initial complaint. An aspect of that case — whether the EEOC conducted enough of an investigation before suing — has made its way to the US Supreme Court.

In its annual report, the company can't say how much it'll have to pay if it loses, but it has told shareholders that if it loses, it will be "required to pay substantial damages."

It's another headache for the company, which over the past year has fought off accusations of diamond switching and deceptive sales practices. The company's share price has fallen by half in less than a year.

In a statement to Business Insider the company said that it has created opportunities for "many thousands of women" and that it "stands by its core values of fairness, opportunity, integrity and respect."

"We have taken the allegations of pay and promotions discrimination raised in this case seriously and investigated them thoroughly; they are not substantiated by the facts and do not reflect the culture of our company. We will continue to defend the company against these unjustified legal claims, which misrepresent our deep commitment to, and history of, equal opportunity," a representative wrote in an e-mail.

The claim

The plaintiffs claim they were paid and promoted less than their male colleagues. They also accuse executives of regarding "women at Sterling as little more than sexual opportunities to exploit," according to redacted arbitration documents.

Here's a bit from the claimant's "Motion for a Class Action":

As the substantial record plainly reveals, this evidence of conduct demeaning toward women originates with the CEO, DVPs, and VPROs and is perpetuated by similar conduct exhibited by DMs throughout the Company ...

The conduct has occurred in settings that are public and private, ranging from banter in hallways and elevators to interactions within Sterling stores and at the mandatory annual meeting of all Company managers held in Orlando, Florida.

This behavior includes frequent references to women in sexual and vulgar ways; groping and grabbing women; soliciting sexual relations with women, sometimes as a quid pro quo for employment benefits; 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 abusive treatment to which they have been subjected. It has even included sexual assault and rape.

ZalesCNBC screengrab

Arbitration documents describe a situation in which women in various states of undress entertained members of senior management poolside at a company meeting. They were subject to comments about their clothes and bodies. Those who complained were told they were "rehashing old news," in one specific case, and ignored.

In response, the company has argued that the claimants have not sufficiently proved they worked in a hostile environment, filings show.

This is contrary to what James Outtz found. He's the president of Outtz and Associates, a consulting firm brought on to do a report on Sterling's culture ahead of the arbitration proceedings.

Outtz wrote that sexual advancements from Light and other executives created a "climate and culture at Sterling in which female employees and their work are devalued when compared to male employees."

'Highly protected'

In arbitration documents, one claimant said she was fired after refusing to dance with a manager during a 2005 managers' meeting.

She was fired in 2006. When she wanted to discuss the incident, as well as her termination, the manager had words for her (from the "Motion for Class Action"):

He said: "[Y]ou will not win a sexual harassment or wrongful termination case against Sterling."

He said, "Sterling is highly protected [...] we have our own resolution program, which means you cannot hire an attorney."

He continued to tell her: "You're not going to win."

That remains to be seen. But, 10 years later, she's about to have her day in court.

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