Abercrombie Folds

Upscale retailer Abercrombie & Fitch has settled a class action federal discrimination lawsuit brought by black, Hispanic and Asian employees and job applicants, who alleged that the company promoted whites at the expense of minorities. The settlement will cost Abercrombie $40 million.

The settlement, approved Tuesday morning by U.S. District Court Judge Susan Illston, requires the company to adhere to a consent degree that calls for the implementation of new policies and programs to promote diversity and prevent discrimination in its workforce. Abercrombie & Fitch also must pay about $10 million to monitor compliance and cover attorneys' fees, although the agreement contains no admission of wrongdoing by the company.

Abercrombie's chairman and CEO, Mike Jeffries, denied the accusations of discrimination and said the company settled to avoid "a long, drawn out dispute" that would have hurt the company. This sort of comment usually means the company determined that it would likely lose in court and didn't want to face potentially larger damage awards.

But the suits brought against Abercrombie & Fitch reveal a larger cultural agenda than a simple virtuous stand against racial discrimination in employment:

The lawsuit originally was filed last June in San Francisco by Hispanic and Asian groups charging that Abercrombie & Fitch, known for its "classic casual American" clothing styles, hires a disproportionately white sales force, puts minorities in less-visible jobs and cultivates a virtually all-white image in its catalogues and elsewhere.

This raises serious questions about the over-reach of federal anti-discrimination law. If Abercrombie & Fitch has determined that its products strongly appeal to a particular ethnic demographic and thus targets its marketing and branding to cater to that demographic, should that be illegal? Is it inherently racist? Apparently, if that market demographic happens to be college-aged whites, the answer to both questions is yes. Note that Abercrombie's marketing campaigns have long raised the ire of social conservative and religious groups, which considered them too explicit, but have consistently proven highly successful for the company and its overpriced wares.

Laws prohibiting racial discrimination in employment practices may have seemed reasonable and fair, despite the infringement on property rights, but if those laws are now to be used as a means to tell companies which demographics they may target, or dictate the content of marketing campaigns, then perhaps the time has come for Americans to reconsider those laws and the motives behind them. It is improper for the courts or the federal government to force companies to alter their corporate "image" for the benefit of any government endorsed cultural objective. The marketplace should be the ultimate guide and arbiter of corporate strategies.

And what about companies, who discover that their products are most consumed by different ethnic market segments. Are they to be prevented from adjusting their marketing and corporate image to cater to those segments? Has anyone sued "hip-hop" magazines and clothing producers, arguing that their urban black image they cultivate is equally racist? What about catalogues that sell products designed to appeal to specific ethnic groups? Will the U.S. Equal Employment Opportunity Commission (EEOC) file suit against these companies, demanding they adopt "diversity" programs and alter their advertising campaigns to reflect consumers who do not purchase their products? One doubts it.

"This agreement promises to tranform this company, whose distinctiveness will no longer stem from an all-white image and workforce," said Thomas A. Saenz, vice president of litigation at the Mexican American Legal Defense and Educational Fund.

Mr. Saenz's remarks inadvertantly reveal the true goal of this suit. Employment discrimination merely served as the weapon with which Abercrombie & Fitch could be forced to change its "white" image. Apparently, the strategy worked. Expect to see more of these suits. Also expect to see Abercrombie's sales decline under its new diversity campaign.