GROUP 5 - THE ETHICS OF JOB

DISCRIMINATION
SHOULD KROGER PAY NOW FOR WHAT A RALPH’S EMPLOYEE DID IN THE PAST?
ABOUT KROGER COMPANY
• Based in Cincinnati, Ohio
• Founded by Bernard Kroger in
1883
• One of the largest supermarket
retailers in US
ABOUT KROGER COMPANY

1998

• Kroger acquired Ralphs Grocery chain of 450

supermarkets after buying Fred Meyer Inc.
• Fred Meyer Inc. had bought Ralphs a year before
(1997)
ABOUT KROGER COMPANY

The Kroger Co.

Policy Concerning Sexual Harassment And
Other Forms Of Harassment

Sexual harassment is defined as: Unwelcome

sexual advances, requests for sexual favors, or
other verbal or physical conduct if (1) submission
to such conduct is made either explicitly or
implicitly a term or condition of an individual's
employment, (2) submission to or rejection of
such conduct by an individual is used as the basis
for employment decisions affecting such
individual, or (3) such conduct has the purpose or
effect of substantially interfering with an
individual's work performance or creating an
CHRONOLOGY OF EVENTS
• Roger Misiolek, a Ralphs store manager was accused of
1995 – harassing 6 female employees at a Ralph’s supermarket
1996 in Escondido, California

• Harassment suit was filed in 1996 by the 6 women

against Ralphs : Dianne Grober, Sarah Lange, Terri
Flinton, Peggy Noland, Suzanne Pipiro and Tina Swann

• Accusations : Inappropriate touching, Verbal abuse –

profane language; Throwing of objects – telephones,
clipboards, 30 pound mailbag

• Complaints were made to Ralphs management.

Complaining women were moved to other stores.
CHRONOLOGY OF EVENTS

• April 1996, Misiolek grabbed and threw Dianne Grober into a

1995 – chair. She made complaints to the Senior VP of HR at the
1996 company’s HQ

• Company disciplined Misiolek and transferred him to another

nearby Ralphs store in Mission Viejo

1997 – • Fred Meyer Inc acquired Ralphs in 1997 and Kroger acquired
1998 Fred Meyer Inc in 1998.

• Trial – April to June 1st 1998

CHRONOLOGY OF EVENTS

1999 • Misiolek demoted to working on a loading dock after a

guilty verdict in 1998

• Ralphs management sent Misiolek a disciplinary letter

2000
on new allegations resulting is his suspension and
Misiolek subsequently quit
CASE SUMMARY

The Verdict

AWARDS
Compensation Punitive Total Award
TRIAL 1 June 1998 $ 3.3 million $ 19.8 million $ 23.1 million

TRIAL 2 July 2002 $550K per

$ 3.3 million $3.3M per
$ 30 million $ 33.3 million
plaintiff plaintiff
$550K per $5M per Jury
plaintiff plaintiffMisconduct!

Judge Anello set aside the verdict concluding it was

“grossly excessive” and not reasonable
CASE SUMMARY

The Verdict

AWARDS
Compensation Punitive Total Award
TRIAL 2 July 2002 $ 3.3 million $ 30 million $ 33.3 million

Reduced to $8.25 million – Punitive damages

received by each woman should not be more than
15 times the compensation award of $550K
($550,000 x 15 – $8.25 million)
 CASE SUMMARY

The Verdict

• Judge Anello gave the women 10 days to accept a reduced award or agree to a 3 rd
trial
Punitive Award Decision

Dianne Grober $ 3M Accepted

Tina Swann $ 1.5M Accepted
Terri Finton $ 934,500 Rejected
Sarah Lang $ 934,500 Rejected
Peggy Noland $ 750,000 Rejected
Suzanne Papiro $ 1.125M Rejected
Total Punitive Damages $ 8.25M
CASE SUMMARY
The Verdict

Final Ruling – March 2006

• Court of Appeal ruled the four women were entitled to only 6 times
the compensatory damages awarded in the first trial

Punitive Damages – 1st Trial Punitive Damages – Final Trial

Terri Finton $ 934,500 $ 375,000 ( 59.87% )

Sarah Lang $ 934,500 $ 375,000 ( 59.87% )
Peggy Noland $ 750,000 $ 300,000 ( 60% )
Suzanne Papiro $ 1.125M $ 450,000 ( 60% )
 CASE STUDY FINDINGS
1. Assuming that the store and district managers of Ralphs received
complaints about Misiolek’s behavior starting in 1985, but that these
complaints did not reach Ralphs’ headquarters in Compton, do you
believe that the judge is right in holding that the company as a whole
should not be held responsible for his actions?

Answer : No, we believe Ralphs as a whole should be held responsible for

Misiolek’s actions. Ralphs’ management continued to maintain the
employee in the company despite being aware of the facts. It is clear that in
April 1996, several women had already made complaints against Misiolek to
Ralphs management but the company did not take any action to discipline
Misiolek. Furthermore, Misiolek was not removed from his position as store
manager, but instead moved the complaining women to other stores. Ralphs
 CASE STUDY FINDINGS
Should the company be held responsible for policies that prevent
complaints from reaching headquarters?

Answer : Yes, the company should take responsibility for policies that
prevent complaints from reaching headquarters. Ralphs’ management failed
to address the complaints made by the women in 1996 and instead moved
the complaining women to different stores and retained Misiolek in his
position as store manager. Furthermore, there were more than 80
harassment complaints filed against Misiolek at four different stores since
1985. Ralphs failed to conduct an adequate investigation into these
allegations of sexual harassment even though California law requires
employers to take reasonable steps to prevent sexual harassment. (
http://www.dfeh.ca.gov/Publications_StatLaws_SexHarrass.htm)
 CASE STUDY FINDINGS
2. What kind of penalty do you believe would be appropriate for Ralphs?

Answer : Ralphs should be penalized not only by financial means

(compensation and punitive damages) but should be given a strict sanction
in failing to ensure a sexually- harassment free work environment as the
management was ignorant and failed to address and investigate these
complaints and continued to retain Misiolek as store manager.

In your view, was the $33.3 million penalty excessive? Explain.

Answer : This depends on how much the cost to rehabilitate the victims and
how much the victims were aggrieved by Misiolek. We conclude that $33.3
million penalty was excessive because the psychological impact for some of
the women was not the same. For example, Diane Grober may have
suffered more with his actions of throwing her into a chair and would require
 CASE STUDY FINDINGS
Was the final 2006 judgement fair? Explain.

Answer : In our point of view, the final 2006 judgement was fair. Though the
punitive damages awarded were significantly lower, we believe it did serve
as a deterrent to ensure other companies have proper polices in place
prohibiting harassments and the consequences of disregarding the victim’s
complaints.
 CASE STUDY FINDINGS
3. Should Kroger have to pay for events that happened before it took
over the chain of supermarkets?

Answer : In our opinion, Kroger should not have to pay for injustices that
happened before Ralphs’ acquisition. The sexual harassment occurred
during Ralphs management between 1995 and1996 and Kroger had only
acquired Ralph in 1998. Moreover, Kroger has a well-known reputation with
progressive and exemplary employee policies. This is proven further with
Kroger’s written policy prohibiting sexual harassment since the 1980s which
is 18 years before Kroger acquired Ralph in 1998. This policy enables its
employees to point out any concerns to the company. Hence, ethically
Kroger should not pay for the events that happened before acquisition and
Ralphs should be held accountable. However, this all depends on the
acquisition contract between Kroger and Fred Meyer as well as the contract
 CASE STUDY FINDINGS
4. What can a company do to make sure that a situation like Misiolek’s
does not occur?

Answer : 5 suggested ways to ensure a sexual harassment free workplace :

i. Companies should adopt a clear sexual harassment policy and anti

retaliation policies. This can be clearly addressed in the employee handbook
and should include :
- define sexual harassment
- consequences of sexually harassing another employee
- clear procedures for filing sexual harassment complaints

ii. Train employees. Conduct training sessions for employees at least once a
year. These sessions should teach employees what sexual harassment is,
 CASE STUDY FINDINGS
iii. Train supervisors and managers. Conduct training sessions for
supervisors and managers that are separate from the employee
sessions. These sessions should educate the managers and supervisors
about sexual harassment and explain how to deal with complaints.

iv. Monitor emails & other electronic communication. To have the means
scan for harassing content and to monitor behavior.

v. Have a clear process for investigating any complaint of harassment. If a

complaint comes in, look into it immediately and, if necessary, take
steps to ensure the behavior stops while the investigation is ongoing.
Take every complaint seriously.
 CASE STUDY FINDINGS
Why do you think Ralphs allowed Misiolek to continue managing
stores?

Answer : Ralphs allowed Misiolek to continue managing stores because of

his capability to achieve profits at the stores that he managed and of
achieving excellent bottom line figures at those stores. According to Philip
Kay, a San Francisco attorney who represented the women said “Ralphs was
accused of helping to cover up the actions of the store director, who worked
in several locations, because he was good at boosting sales” (Girion, L.
(2002). 6 Women Win Suit Against Employer Ralphs. Retrieved from http
://articles.latimes.com/2002/apr/06/business/fi-ralphs6). We believe Ralphs
was more concerned of achieving excellent bottom-line figures in its stores
and knew that Misiolek was an asset to the company.
 REFERENCES
The Kroger Co. (2015). Retrieved from
http://www.thekrogerco.com/about-kroger/operations/locations
The Kroger Co. (2014). The Kroger Co. Policy On Business Ethics. Retrieved from

http://www.thekrogerco.com/docs/default-document-library/business-ethics-policy-april
-2014.pdf?sfvrsn=6

Pheng, L.M., & Detta, I.J. (2014). Business Law. Oxford University Press.
Girion, L. (2002). 6 Women Win Suit Against Employer Ralphs. Retrieved from
http://articles.latimes.com/2002/apr/06/business/fi-ralphs6
Maharaj, D. (1998). Ralphs Fight Record Award Over Sexual Harassment. Retrieved from
http://articles.latimes.com/1998/jul/23/business/fi-6248
Barreiro, S. Preventing Sexual Harassment in the Workplace. Retrieved from

http://www.nolo.com/legal-encyclopedia/preventing-sexual-harassment-workplace-2985
1.html
Q&
Thank You