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Putting a price on corporate America's sins of slavery

By ROBERT TRIGAUX, Times Business Columnist

© St. Petersburg Times, published April 14, 2002

Attention: big American companies. If you have roots, however indirect, in the early days of this country, get ready for a knock on your door from 36-year-old Deadria Farmer-Paellmann.

Attention: big American companies. If you have roots, however indirect, in the early days of this country, get ready for a knock on your door from 36-year-old Deadria Farmer-Paellmann.

A few stunned companies know her already. Insurance giant Aetna. Banking heavyweight FleetBoston. Railroad titan CSX. Last month, Farmer-Paellmann sued these three U.S. corporations in a Brooklyn court on behalf of black Americans descended from slaves. It is the first class action seeking reparations from companies for profiting from slavery.

By this fall, another 60 to 100 corporations should be hearing from Farmer-Paellmann, a New York law school graduate and the great-granddaughter of slaves. Her plaintiff's message is not sugar-coated.

"These are corporations that benefited from stealing people, from stealing labor, from forced breeding, from torture, from committing numerous horrendous acts, and there's no reason why they should be able to hold on to assets they acquired through such horrendous acts," she says.

Which companies are next to be targeted? That's not clear yet, but here's a good guess. Investment banks, including J.P. Morgan Chase. U.S. and European insurance companies, including Lloyd's of London. Railroad companies such as Norfolk Southern.

One way or another, these kinds of businesses aided or profited from slavery, lawyers for the Farmer-Paellmann case contend. And these are the types of companies with deep financial pockets and a profound interest in avoiding bad public relations that may be willing to offer a financial settlement to avoid a messy, high-profile lawsuit.

Not that Farmer-Paellmann is some modern extortionist or Quixote-esque figure seeking reparations for something that happened so long ago. As a plaintiff (she is not legally representing herself), she is part of a larger, powerful and organized group of black lawyers, academics and activists who first want to win apologies and monetary awards from dozens of corporations.

The ultimate goal, even if the corporate class action falters, is to achieve a national apology and a hefty reparations payout by Congress to African-Americans. That legislative effort, pursued for years, has languished.

The players building the broader reparations case include, among others: Harvard University professors Charles Ogletree and Cornel West (soon bound for Princeton); and Randall Robinson, author of the book, The Debt: What America Owes to Blacks. The group boasts other veterans who fought to isolate apartheid-era South Africa in the 1980s and successfully pressured U.S. companies to stop doing business there.

Then there are the hotshot attorneys. Among them: Florida's own Willie Gary (his firm won a $240-million judgment against Walt Disney Corp. and a $500-million jury verdict against the Loewen Group); Alexander Pires (who won a $1-billion settlement from the U.S. Department of Agriculture for discrimination against black farmers); Dennis Sweet (who won $400-million in a fen-phen diet pill case against American Home Products); and last but hardly least, Johnnie Cochran of O.J. Simpson fame.

Is corporate America ready to take on such a dream team?

* * *

As much as U.S. corporations now decry slavery, they also are most eager to point out that in much of early America, slavery was legal. Other companies targeted for reparations lawsuits did not even exist until after the Civil War, but happened to acquire older companies with ties to slavery.

So why, they ask, pick on us now?

Two years ago, Farmer-Paellmann publicized Aetna's ties to slavery. In response, Aetna acknowledged that in the 1850s it insured Southern farmers against the deaths of their slaves. The company, headquartered in Hartford, Conn., apologized: "We express deep regret over any participation at all in this deplorable practice," Aetna said in a statement.

That apology did not stop last month's lawsuit. Aetna has toughened its stand. "We do not believe a court would permit a lawsuit over events which, however regrettable, occurred hundreds of years ago," Aetna says.

In Boston, FleetBoston is the successor to Providence Bank, which was founded by Rhode Island businessman and shipping owner John Brown. The Farmer-Paellmann lawsuit argued the bank helped finance and thus profit from Brown's slave trade.

In Richmond, Va., CSX is a successor to several railroad lines that were constructed or run in part by slave labor, the lawsuit says. CSX, in response, says the suit is off target. "The claimants named CSX because slave labor was used to construct portions of some U.S. rail lines under the political and legal system in place more than a century before CSX was formed in 1980," the company says. "The courtrooms are the wrong setting for this issue."

Other companies have handled their past ties to slavery in various ways.

The Hartford Courant, Connecticut's largest newspaper, published a page one apology in 2000 because it used to advertise slave sales and rewards for the capture of runaways.

A recent USA Today analysis shows other companies whose pasts have been tied to the slave trade range from investment banks Brown Bros. Harriman and Lehman Bros. and the railroads Union Pacific and Canadian National to textilemaker WestPoint Stevens and newspaper publishers Knight Ridder, Media General (owner of the Tampa Tribune) and (USA Today's parent company) Gannett through their ownership of older publications.

Other types of business with likely slavery ties: energy companies that used slaves to lay oil pipes; mining companies whose slaves dug for coal and salt; and tobacco companies that tapped slaves to harvest tobacco.

No doubt, many others could join the list if this litigation gains steam.

But will it?

One of the lawyers behind the Farmer-Paellmann slavery complaint is Ed Fagan. He was a major force behind the legal efforts forcing German industry to pay a $6-billion settlement for profiting from Nazi-era slave labor.

People thought Fagan was crazy when he filed against Volkswagen and Deutsche Bank, argues Anthony J. Sebok, a law professor at Brooklyn Law School. But Fagan's strategy worked.

Farmer-Paellmann's class-action complaint relies on the same idea Fagan used in the Nazi suit. Labor is property. Wrongdoers who take property produced by slaves should give it up.

But big differences divide the lawsuit. The Nazi case was brought on behalf of all living survivors of German slave labor. Some 8-million African slaves were brought to what is now the United States before slavery was abolished in 1865. But no African-American alive today was ever a slave.

* * *

Still, there is a broader history of reparations.

Japanese-Americans were paid for having been held in detention camps during World War II. Museums all over the world are trying to return art works stolen by the Nazis to their rightful owners or the deceased owners' heirs. The U.S. and Canadian governments started paying Eskimos and American Indians in the 1980s for the wrongs done to their ancestors by the ancestors of white Americans.

And since 1995, the state of Florida has paid about $2-million in reparations to the victims of a 1923 race riot in the black settlement of Rosewood. Eight blacks were killed by a white mob in the small town, which was north of the Tampa Bay area in Levy County.

The Nazi-Holocaust cases, lawyers note, were legally weak but very damaging to the reputations of German corporations. The result? The companies settled without going to court for more than $8-billion, at the urging of the U.S. government, which helped mediate.

If enough U.S. companies are named in suits such as Farmer-Paellmann's, is a similar out-of-court outcome possible? Clearly, there's an uphill struggle ahead.

Farmer-Paellmann first pondered the issue of reparations 14 years ago, in her early 20s, when she was recruited to help preserve a slave burial ground in New York. By 1997, at the New England School of Law in Boston, she began to consider a campaign against major U.S. corporations.

In 1999, Farmer-Paellmann finished her law studies at Manhattan's Benjamin N. Cardozo Law School, part of Yeshiva University. It was at Cardozo that she caught the excitement over settlements being paid to Holocaust survivors. She felt empowered to pursue her own slavery reparation goals.

Her complaint against Aetna, FleetBoston and CSX does not contain a monetary damage figure. But it does estimate the current value of slaves' unpaid labor as $1.4-trillion.

For perspective, that figure represents 14 percent of the U.S. gross domestic product last year. Now that's a number large enough, sooner or later, to capture the attention of the biggest U.S. company.

-- Robert Trigaux can be reached at trigaux@sptimes.com or (727) 893-8405.

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