Where the Boys Are

The thin, attractive blonde stood up before a room of Rent-A-Center's top execs--the only woman in a sea of white shirts, dark suits and ties--and began delivering her report on the company's tax situation.

She didn't get far. Before Leigh had completed two sentences, Ernie Talley, crimson-faced and ready to explode, rocketed from his chair, bellowing, "That's not what I wanted!"

Leigh tried to calm the boss down, explaining why what he wanted wouldn't be meaningful.

Bad move.

Nobody questioned the chief executive officer of Rent-A-Center--especially not a woman. Pushing his face just inches from Leigh's, Talley slammed his fist on the conference-room table and shouted, "By God, you will have what I want, or I will find someone who will!"

Humiliated by the dressing-down and furious that her own supervisor, the chief financial officer, kept his lips zipped during the tirade, Leigh snatched her files, fled from the conference room and made her way back to her office. "I just sat there, and tears were streaming--and I'm a hard-core type of girl; I'm not a little prissy dame," Leigh says.

From the start, Talley seemed less than thrilled with the idea of giving 32-year-old Leigh the proverbial keys to the executive washroom. Talley had been heard to say that women belonged in the kitchen, not in the rent-to-own business.

The attitude was pervasive in the nation's largest rent-to-own company, permeating its operations from headquarters to the smallest branch office, according to a sexual discrimination suit filed against the Plano-based company.

Women were subjected to sexual and derisive comments, the suit alleges.

Work requirements were changed in an effort to induce female employees to quit and keep women from applying. Pregnant employees were summarily fired.

Women who complained about boorish or offensive behavior were ignored or punished.

What was going on at Rent-A-Center, according to hundreds of accounts, was a systemic corporate culture that drove female employees away. That culture also could prove costly to the company. The plaintiffs in the lawsuit, filed in federal court in Illinois, are seeking damages of $410 million. But the company is trying some fancy legal footwork that could let it dodge the potentially huge bill.

Leigh, a certified public accountant who asked that her surname not be published, got her first glimpse of Rent-A-Center culture and Ernie Talley when she interviewed with the company in January 1999. The gray-haired 64-year-old seemed to care more about her personal life than her qualifications, she recalls. He asked whether she was married or had children--questions that most employers know are off-limits in a job interview.

Then, she says, Talley glanced at Robert Davis, his 28-year-old CFO, and said reluctantly, "Well, I don't know if this is gonna work, but if you want to try it, fine."

The personal questions and Talley's icy demeanor made her want to turn down the job offer, but Davis later assured her that Talley was planning to leave the business. Moreover, Davis promised, Leigh's contact with Talley would be minimal; he would act as a go-between.

But Davis wasn't the best messenger, Leigh claims; he seemed more interested in popping his head into her office to ask, "I'm just wondering, did you have sex last night?"

Then one day Leigh discovered a lump in a lymph node. Her doctor wanted to see her immediately. She took the only appointment available, but when she told Davis, he insisted that she'd have to reschedule; Talley wanted her at a meeting.

Leigh canceled her appointment but says, "Not once during this 'mandatory' meeting was my presence even acknowledged." Fuming, Leigh sent Davis an e-mail: "In the future, I would appreciate advance notice of any meeting in which my involvement may be needed." Moments later, Davis stormed into her office and fired her for insubordination--the third woman in 15 months to be kicked out of the position.

Things weren't any better for Leigh's successor. Donna Smith claims that after she took the job, Davis sought her out and described the "nasty" dreams he had had about her and discussed his penis size. After Smith complained, she received an unfavorable evaluation.

A year later, Smith sent a resignation letter to Talley, stating that she could no longer work for a company whose top management tolerated "sexual harassment and discrimination."

"I do not believe that upper management promotes the advancement or enrichment of women," she wrote. "Nor do I believe that women are judged by the same standards as their male colleagues."

If the women at headquarters were complaining, they were hardly alone. As Talley's company grew, so did allegations of sexual harassment and discrimination.

Even highly regarded veteran employees felt the sting, among them Claudine Wilfong, a former store manager in Arnold, Missouri.

Wilfong had 11 years with Rent-A-Center when it was acquired by Talley's company, Renter's Choice, in 1998. Rent-A-Center had been a good place to work--that is, before the company was sold to the people she now describes as the "good ol' boys from Texas."

She proudly displayed the plaques her store had received for winning store-of-the-month and sales contests. And she expected to serve the new company as a good manager, which she did by meeting or exceeding its new sales and collections goals.

But Wilfong recalls that when Rent-A-Center Vice President Dowell Arnette spoke at a store managers' meeting in Kansas City, he joked about how the women were "probably better at selling washers and dryers" than the men.

And after the sale in 1998, the Texas owners also increased the lifting requirement for store employees from 50 pounds to 75. Managers such as Wilfong and Karen Dueker-Meyer of Farmington, Missouri, claim they were ordered to send female workers out alone to make deliveries and pickups. But Wilfong and Dueker-Meyer claim they were never encouraged to send men out alone on large deliveries.

James Weinrich, Oklahoma regional manager at the time of the 1998 acquisition, said in a sworn statement that Talley, Arnette and Arnette's brother, training director Joe Arnette, told him that the new weight-lifting requirements would "keep females from applying."

Weinrich added: "All three men made it a point that there was an unwritten rule that women employees should be sent out alone on deliveries." Weinrich said the thinking was, if you work them hard enough, they'll quit or give management a reason to fire them.

When executives from the home office came out to visit Weinrich's stores, instead of asking about a woman's job performance, executives such as Dowell Arnette and Senior Vice President Tom Lopez seemed more interested in her physical attributes. An overweight female employee was called a "fat bitch," and executives wanted to know from Weinrich whether attractive female employees "put out."

Other male managers had similar tales.

Rick Corey was an Ohio store manager for Crown TV before Talley purchased it. After the purchase, he recalls in a sworn statement, "the number of female employees in the nine-store district was reduced to a single female employee." And when Corey sent a female candidate to take a management test, he allegedly incurred the wrath of Bill Nutt, who would later rise to the rank of regional director. Nutt "came to my store in order to criticize and berate me for sending a female candidate," Corey says. Nutt allegedly told him, "In case you didn't notice, we do not employ women."

If a manager found out a woman was pregnant, she was often deemed "disabled" and fired on the spot. Teri Goodermote, who worked at a store in North Adams, Massachusetts, claims that once her manager learned of her pregnancy, he started giving her the heavy deliveries and had her load a bedroom set onto a truck by herself or face termination. The job of cleaning bathrooms became known as "woman's work" in states as far-flung as Ohio, Florida and New York.

The atmosphere also seemed to give male co-workers a license to engage in base, crude and even abusive behavior. A woman who worked as an account manager in Atlantic Beach, Florida, alleges that her store manager popped hard-core porn tapes into the store's VCRs. In El Reno, Oklahoma, the male employees found a pornographic picture of a woman with facial features similar to those of an account manager. They showed customers the photos, claiming they were actually of the account manager.

Before it became part of Talley's empire in 1998, Rent-A-Center's workforce was 20.9 percent female. That same year, Talley's company, Renter's Choice, had a female workforce of 1.8 percent. Two years after Talley bought Rent-A-Center and merged it with his company, the proportion of women in the combined workforce had fallen to 8.5 percent. At the same time, one regional manager urged his store managers in a memo to "continue to hire gents."

It wasn't any better at the top levels of the company. According to a 1999 company directory, all seven vice presidents were men, all 45 male regional directors were men, 261 men and seven women held the position of market manager and 30 men and two women were service managers. In the October 2000 company newsletter, Rental Times, the cover featured a group photo of Rent-A-Center's regional directors--all men. Inside, the headline read, "Meet the 'Suits' who try to motivate us."

The "suits" clearly motivated ex-employees such as Claudine Wilfong.

On March 15, 1999, Wilfong filed a complaint with the St. Louis office of the U.S. Equal Employment Opportunity Commission, alleging that the company "engaged in class-wide discrimination" in St. Louis and across the country.

Sparked by Wilfong's complaint, the EEOC joined with Wilfong's lawyers in a class-action lawsuit filed in federal court in East St. Louis. As the case developed, they amassed evidence from more than 270 women and 30 men in 47 states that painted a picture of a company intent on purging women from its ranks.

Faced with a mountain of evidence and a demand for damages exceeding $400 million, the good ol' boys traveled to Kansas City, where another judge, some compliant lawyers and clueless plaintiffs might just make the whole mess disappear.

J. Ernest Talley entered the rent-to-own business after opening an appliance store, Mr. T's, in Kansas in the early '60s. According to a 1991 profile in Progressive Rentals, a trade magazine, Talley noticed that banks were becoming less willing to make small loans for appliance purchases. To bridge the credit gap, Talley began experimenting with the rent-to-own concept. By 1974, he had 14 stores scattered throughout the South and Midwest. He hired men who subsequently developed into industry leaders--men such as Tom Devlin, who co-founded Rent-A-Center.

Devlin, who sold Rent-A-Center to Wichita, Kansas-based Thorn America in 1988, describes Talley as "creative and into making money." But he doesn't recall Talley discriminating against women. "Ernie believed red, white, black, green, if they could make you money, you would hire them." In 1974, Talley decided to get out of the appliance business and began investing in apartment complexes, many in Texas. He sold his chain and jumped into state and school-district politics in Kansas before moving to Texas sometime after 1985.

In 1989, Talley re-entered the rent-to-own business by becoming a partner in Vista Rent-to-Own, which had stores in New Jersey and Puerto Rico.

In 1993, Talley formed Renter's Choice and merged Vista into the new company. Then began a series of mergers and acquisitions as Talley gobbled up smaller chains. By May 1998, Talley had amassed 700 stores throughout the United States, and that year made a bid to buy Wichita-based Rent-A-Center's 1,400 stores from Thorn America for $900 million. On August 5, 1998, the deal was consummated.

Corporate-culture clashes happen whenever businesses merge, but for the women working in the Wichita headquarters during the acquisition, the attitudes of the new regime were shocking, especially when Dowell Arnette--Talley's right-hand man--came to visit.

When Angela Turner, an administrative assistant, wore a skirt to the office, Turner claimed in a sworn statement, Arnette said, "So, how far do your legs go up?" When administrative specialist Toni Spurgeon-Coker wore red, she alleged in a sworn statement, Arnette "sized me up from head to toe as if I were in a bar. He said to me, 'Ooooh, you look good in red.'" But when Spurgeon-Coker went to the legal department repeatedly to complain about Arnette's behavior, nothing was done, she claimed.

The new regime also jettisoned Thorn's human-resources department. Jim Weinrich alleges that Dowell Arnette described the HR department as full of "namby-pamby, willy-nilly women." Renter's Choice didn't have an HR department and wasn't interested in adding one to manage the company, which now had 11,300 employees.

By the end of 1998, the Wichita headquarters was closed and everything was consolidated in Plano. One Thorn tradition the new management kept was an annual Las Vegas convention for the company's top brass, middle management and store managers. But under Talley's leadership, the convention turned into a fraternity party, complete with scantily clad female cheerleaders available for photos with employees and group outings to strip clubs.

Although some of the women who attended the convention found it offensive, St. Louis store manager Tammy Shell says it was fun. Shell, who last year earned $74,000 in salary and commissions, was one of the women Rent-A-Center's spokesman suggested as a source for this story. Shell says she didn't have a problem with the cheerleaders' booth; in fact, she agreed to have her picture taken with them. She says she had a good time at the strip clubs because the Rent-A-Center guys were "playing like they were Rams players and the strippers were all over them."

Other former female employees say, however, that just five months after the acquisition by Talley, Rent-A-Center had become a downright hostile place for women.

"No matter how hard I worked or tried, or what I did in the past, none of it mattered," says Wilfong, the Arnold store manager. "Just because I'm a female, it didn't matter."

On January 1, 1999, Wilfong quit. For a few months, she says, she lay around in her pajamas, feeling "pretty depressed, pretty sad." But then she started talking to other women, some who had left Rent-A-Center and others who were trying to "stick it out, and it wasn't going good for them." Wilfong realized, "It wasn't just me that felt betrayed, everybody did."

Wilfong contacted Mary Anne Sedey and Jon A. Ray, prominent St. Louis employment-discrimination lawyers. Wilfong brought with her the names of eight other women who had worked for Rent-A-Center. Each told a tale of discrimination or harassment that started after Talley acquired the company. Suspicious that there was more at work than just one discriminatory store manager or market manager, Sedey and Ray began calling other women around the country. As soon as the word "discrimination" was mentioned, the lawyers say, the women couldn't wait to talk about Rent-A-Center.

But before a sex discrimination lawsuit could be filed, federal law required the women to first go to the EEOC. Donna Harper, supervisory attorney at the EEOC's St. Louis office, was working as the intake attorney when the women filed complaints against Rent-A-Center. Harper searched the EEOC's national database and turned up 25 to 30 additional open charges around the country and consolidated the cases in the St. Louis office.

Harper says her office found that not only did the new owners of Rent-A-Center discharge women as a group, the company was throwing up roadblocks to keep women from being hired. Three managers admitted to the federal agency that they had destroyed women's employment applications, a violation of federal regulations. The EEOC found that there was "reasonable cause" to believe Rent-A-Center "discriminated against women."

In August 2000, Wilfong and 18 other women filed their lawsuit against Rent-A-Center in the federal court in East St. Louis. In May 2001, the EEOC joined the lawsuit as a plaintiff, arguing that the case was "of general public importance."

Rent-A-Center hired a team of four law firms, led by Dallas-based Winstead, Sechrist & Minick, to defend the case. Asked about the lawsuit and the claims made by the women, Rent-A-Center executives referred questions to the company's outside public relations firm, which issued a statement describing allegations of harassment and discrimination as untrue:

"There has been no finding in any court of law that any of these allegations are true. In many cases, they are nothing more than third-party recollections of something that somebody thought that they might have overheard." In the statement, Rent-A-Center says the company is committed to a "discrimination-free workplace and to assuring equal opportunity for all of its employees."

Talley, who retired from the company October 8 and has since sold his shares in it for about $60 million, did not return phone calls. In a deposition, Talley denied saying that women didn't belong in the business and stressed that he thinks that some of Rent-A-Center's female managers are "the best we have." As for the other top execs, the spokesperson said that the company's blanket denial of wrongdoing also applied to them.

Once Rent-A-Center filed its response to the East St. Louis lawsuit, the case took some odd procedural twists.

When the women's attorneys sent discovery requests for documents to Rent-A-Center, the company refused to answer.

Then the women's attorneys discovered that computer tapes containing seven years' worth of monthly payroll information had been destroyed. Moreover, several monthly "promotable" lists identifying individuals eligible for promotion couldn't be found.

What information the company finally provided under court order was analyzed by outside experts hired by the plaintiffs' lawyers. Dr. David Peterson, a statistician, found that a disproportionate number of women, compared with men, left the company after Talley took over.

Dr. James Misner, an expert on human motion, examined the 75-pound lifting rule and concluded it wasn't a genuine requirement because Rent-A-Center didn't test the applicants on it; its real effect, he said, was to discourage women from applying.

Armed with their sworn statements and expert reports, the women in the East St. Louis case were set to file their motion to have their case certified as a class action on the court's deadline date of November 1. But on October 31, Rent-A-Center's lawyers announced a $12.25 million settlement of a class-action sex discrimination lawsuit in Kansas City.

There wasn't even a class action pending against Rent-A-Center in Kansas City at the time, and yet, if a federal judge approves the settlement there, it will 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 fought the request, and U.S. District Court Judge Ortrie Smith in Kansas City ordered the two sides into arbitration--a blow to the women because arbitration awards are typically smaller than those set forth by juries.

But one day before the Wilfong class-certification motion was supposed to be filed in East St. Louis, the plaintiffs' Kansas City lawyers and Rent-A-Center's lawyers marched into federal court together and asked Smith to certify the two women's suits as a class and approve a $12.25 million settlement that would apply to 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.

Under the terms of the Kansas City settlement, women could expect to receive anywhere from $1,000 to $7,000 each, depending on how long they worked for the company. Rent-A-Center is not required to admit any wrongdoing, and the Kansas City plaintiffs' lawyers could earn fees totaling as much as $2.6 million. The Kansas City 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. The judge initially denied their requests.

Bunch and Levings, the Kansas City plaintiffs, refused to be interviewed for this story, citing instructions from their lawyers; the lawyers did not return repeated calls.

Back in federal court in East St. Louis, Rent-A-Center's lawyers asked U.S. District Judge David R. Herndon to delay ruling on the plaintiffs' 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 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 urged female employees to participate. On the other side, the EEOC and the lawyers in the East St. Louis case are fighting back, asking the women to opt out of the Kansas City settlement.

When Wilfong found out about the Kansas City shuffle, she wasn't surprised.

"I just felt like they were trying to get one over on the women again," Wilfong says. "They're looking for any way to get rid of us." The amount the company wants to pay would just be "a slap on their hands, and it was really nothing compared to what they did and how many women's jobs are gone."

Leigh, the former exec who had an unhappy run-in with Talley, says she doesn't know much about the Kansas City settlement, but, judging from what her lawyer tells her, she agrees: It's an attempt by Rent-A-Center to screw its ex-employees.

It took Leigh nearly a year to line up new work after she was let go. It was hard enough to understand why she'd been fired, let alone explain the situation to new employers. Even if she wins, Leigh says, she'll always be haunted by the fear that she carries "the taint that goes along with women who complain about sexual harassment."

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Geri L. Dreiling