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There wasn't even a class-action pending against Rent-a-Center in Kansas City at the time, and yet, if a federal judge approved the settlement there, it would shut down the East St. Louis case.
The Kansas City end run grew out of two individual discrimination suits, filed by Tracy Levings and Margaret Bunch. Although each woman initially asked for a class certification, Rent-a-Center, through the Dallas-based Winstead, Sechrist & Minick, fought the request, and Kansas City's U.S. District Court Judge Ortrie Smith sided with the company.
Rent-a-Center then asked Smith to enforce an arbitration agreement the women had signed. The women opposed the request because arbitration awards are typically much smaller than the awards set forth in jury verdicts. Again Smith sided with the company. He stayed -- or stopped -- their federal lawsuits and sent the women off to arbitration.
But one day before the Wilfong class-certification motion was supposed to be filed in East St. Louis, the Kansas City lawyers and Rent-a-Center's lawyers marched into federal court together and asked Smith to lift the arbitration stay, certify the two women's suits as a class and approve a $12.25 million settlement that would cover 4,800 women, including Claudine Wilfong and most of the women covered by her case. Smith agreed and entered a conditional approval of the settlement. A final hearing on the settlement proposal was set for March 6, 2002.
Under the terms of that settlement, women could have expected to receive anywhere from $1,000 to $7,000 dollars each, depending on how long they had worked for the company. Rent-a-Center was not required to admit any wrongdoing, and the Kansas City plaintiffs' lawyers -- led by the firms of White, Allinder & Graham and Klamann & Hubbard -- could have walked away with fees totaling as much as $2.6 million dollars. The proposed settlement order would have barred any of the women from discussing their claims with any other lawyers, but to his credit, Smith refused to approve that language. The settlement also provided an escape hatch for Rent-a-Center: If more than 92 women opted out of the settlement, the company could walk away from the deal.
As soon as the EEOC and the lawyers in the East St. Louis case found out about the settlement, they tried to intervene. Smith initially denied their requests. A prominent California discrimination lawyer who wasn't involved in the Rent-a-Center matter filed an affidavit with the court, blasting the settlement as "collusive." Others have referred to the tactic as a "reverse auction," in which the women's claims were sold to the lowest bidder.
Bunch and Levings, the Kansas City plaintiffs, refused to comment for this story, citing instructions from their lawyers; the lawyers did not return repeated calls.
Back in federal court in East St. Louis, Judge Herndon demanded an explanation from Rent-a-Center's lawyers. They insisted that Sedey, Ray and Schlichter had been invited to talk about a settlement, a claim the women's lawyers say is untrue. Rent-a-Center's lawyers also asked Herndon to delay ruling on the motion for class certification until March 6, the final approval-hearing date scheduled in Kansas City, but Herndon refused to stop his case; on December 27, he granted Claudine Wilfong and the other women's request, in effect creating a second, competing class of Rent-a-Center women.
Rent-a-Center sent a memo to its employees informing them of the Kansas City settlement and urging female employees to participate. The Kansas City lawyers did the same. On the other side, the EEOC and the lawyers in the East St. Louis case fought back, asking the women to opt out of the Kansas City settlement.