Abstract

Excerpted From: Veronica Root Martinez, Reframing the DEI Case, 46 Seattle University Law Review 399 (Winter, 2023) (72 Footnotes) (Full Document)

In 2000, the Coca-Cola Company (“Coke”) entered into a landmark settlement to resolve a lawsuit brought by black employees alleging that the company had discriminated against them. The settlement terms required Coke to pay $192.5 million. At the time, it was the largest settlement arising out of a U.S. race-discrimination lawsuit. The settlement was unusual, in part, because Coke agreed to allow “an outside panel, appointed by Coke and the plaintiffs' lawyers, limited authority to revise company personnel policy.” The “panel [was] charged with ensuring that Coke's record of paying and promoting all minority workers and women improve[d]. Unless granted an exception by a judge, the company [was required to] adopt the suggestions.” For many, this settlement, particularly when paired with another significant employment discrimination settlement involving Texaco a few years prior, seemed like a watershed moment. It was finally time for corporate firms to take concerns surrounding discrimination seriously, but it was also seen by some as an opportunity for firms to establish effective diversity and inclusion programs.

Whether it was Coke, Texaco, or a number of other organizations, corporate firms have long embraced the need to dedicate time and resources to diversity and inclusion efforts within their ranks. Coke, for example, hired Deval Patrick to serve as its General Counsel shortly after its 2000 discrimination settlement. Patrick had previously “spearheaded efforts to improve diversity at Texaco” and was expected to use his experience in employment law and civil rights to assist the company in “improv[ing] its record on diversity.” It was understood by many that his appointment was meant to spur a moment of transformational change not only at the firm, but also throughout corporate America more generally.

The circumstances that unfolded at Coke are a wonderful example of the two challenges firms have often focused upon--the legal case for diversity and the business case. Those making the legal case for firms to adopt diversity and inclusion programs often focus on the importance of (i) complying with regulatory and legal mandates and (ii) minimizing legal liability. By settling the lawsuit with its employees and by allowing the outside panel to assist it in revamping its policies and procedures, Coke was addressing two concerns that are commonly associated with the legal case for diversity. Coke, however, also appeared to understand the business case for diversity. The business case for diversity “offers a connection between increased diversity and inclusion and positive performance outcomes.” When Coke decided to settle the discrimination case, a move that surprised many, it appeared to consider, at least in part, the ways the discrimination suit was impacting its reputation, which could have an impact on its overall business. Then Chief Executive Officer Douglas N. Daft “ordered officials to settle the matter swiftly,” while Coke simultaneously “stepped up efforts to heal rifts with minority groups, particularly in Atlanta, where it [had] donated money to schools and churches attended by some of the plaintiffs.” Additionally, the hiring of Patrick was understood by many to be an intentional signal to the business community that Coke was committed to improving diversity and inclusion efforts throughout its business.

On the academic front, scholars have written about diversity efforts within corporate firms for many years. Legal scholars have written in favor of both the business and legal case for implementing diversity and inclusion efforts. There is disagreement in the literature as to whether the business or legal case should be the predominant view by which firms structure their diversity programs. This Article, however, suggests that firms and scholars cease disputing whether the business or legal case is the better way forward for those committed to improving diversity, equity, and inclusion within firms.

Instead, this Article argues that in addition to pursuing the business and legal cases for diversity when crafting diversity, equity, and inclusion (“DEI”) programs, firms should also focus on employing insights from behavioral ethics literature. In particular, this piece focuses on insights from behavioral ethics that discuss the concept of moral awareness in decision making. The behavioral ethics literature argues that how you frame a question can prompt an individual to identify the topic as one that does or does not impact morality or ethics. Importantly, utilizing a business or legal frame, often does not trigger moral awareness. By utilizing insights from behavioral ethics literature, firms can better prompt decisionmakers to recognize that DEI questions--whether under the business or legal case for diversity--are questions that should be evaluated from an ethical perspective. Part I of this Article outlines the importance of the business and legal cases for diversity, demonstrating that both are necessary to focus upon for those charged with creating and implementing effective DEI programs. Part II outlines why reframing discussions of the business and legal cases for DEI efforts through a behavioral ethics lens could be beneficial. Part III explains how reframing the business and legal cases for DEI efforts to include ethical considerations could change the way decisionmakers implement DEI initiatives. Part IV then addresses questions raised by this Article, to help clarify the parameters, reach, and boundaries of the argument.

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Corporate firms have recognized the importance of pursuing DEI strategies for decades, yet much more progress is needed to create demographically diverse organizations with equitable and inclusive organizational cultures. This Article contributes to scholarly conversations about how best to implement and structure DEI initiatives. In particular, it argues that in addition to pursuing the business and legal cases for diversity when crafting DEI programs, firms should also employ insights from behavioral ethics literature so that firms can better prompt decisionmakers to recognize that DEI questions are questions that should be evaluated from an ethical perspective. When the business and legal cases for DEI are reframed to encourage ethical concerns as well, it may help change the tenor of decision making from questions related to what is legally required or what might create better profitability for the firm, to questions about what is the right decision to make in the DEI space.

Professor of Law, Duke University School of Law.