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N.C. steel company, once run by Trump trade adviser, settles racial discrimination suit

Former Nucor CEO and now Trump trade adviser, Dan DiMicco, talked about international trade, Trump and why he supports him.
Former Nucor CEO and now Trump trade adviser, Dan DiMicco, talked about international trade, Trump and why he supports him. jsimmons@charlotteobserver.com

[Update: This story has been updated to reflect the Feb. 15 settlement.]

A North Carolina-based steel company once headed by a Trump administration trade adviser has agreed to pay out more than $22 million to settle a racial discrimination lawsuit involving one of its South Carolina plants.

The agreement, finalized on Feb. 15, ended litigation relating to charges of misconduct against the Nucor Company that were first revealed in 2002 — litigation that Nucor never disclosed to investors in mandatory annual reports.

Dan DiMicco — an adviser to President Donald Trump on trade issues — is a former CEO at Nucor whose tenure with the company overlapped with the years when the alleged abusive treatment of employees occurred. He is not named as a party in the lawsuit.

DiMicco, who continues to hold the title of chairman emeritus, is a member of Trump’s Advisory Committee on Trade Policy and Negotiations and served as a senior trade adviser during the presidential transition period in 2016. At one point, DiMicco was in the running to be nominated for U.S. Trade Representative.

When reached by McClatchy, DiMicco said the lawsuit involves the company and not him.

“This is a matter for Nucor, not me,” he said in an email.

DiMicco was Nucor’s CEO from 2000 to 2012, when allegations were made regarding hostile work conditions, along with denials of promotions based on race, at the Huger, S.C., plant outside Charleston.

In Huger, black employees were allegedly called, among other things, “porch monkeys,” “bologna lips” and “yard apes.” They were reportedly sent emails depicting African-Americans with nooses around their necks. One employee recalled being shown an actual noose by a white co-worker with the insinuation of a threat.

Court documents cited an instance where a white supervisor stated he would never promote a black colleague to a managerial position. In another episode, a white employee supposedly “draped a white sheet over his head with eyes cut out in the form of a KKK hood.”

Before the scheduled Feb. 15 hearing in a Charleston courtroom, Nucor spokeswoman Katherine Miller confirmed that the company and plaintiffs in the Huger case were prepared to settle.

“The party voluntarily agreed to resolve a dispute that has been pending for more than a decade and agreed to the settlement based on the costs associated with a trial and subsequent appeals,” Miller said.

“Nucor continues to deny the allegations made by the class representatives, and further continues to be committed to a harassment free workplace,” she continued.

Democrats have pounced on the lawsuit as further evidence of a White House that has had very strained relations with the African American community.

Last month, the president came under fire for referring to “shithole” countries in Africa and elsewhere. Recently, Trump’s press secretary was asked to defend the president’s predominantly white senior staff.

Sen. Ron Wyden of Oregon, the top Democrat on the Senate Finance Committee, said DiMicco could become a liability for Trump.

“Given that the sordid history of DiMicco’s time at Nucor is well known, his selection for an important trade advisory position raises additional questions about the president’s views on race and his seriousness about obtaining trade outcomes that deliver results for all workers, regardless of their backgrounds,” Wyden said in a statement to McClatchy.

“Someone who engages in the behavior described by the plaintiffs clearly lacks the judgment and decency needed to serve in such an important role,” Wyden added.

DiMicco was appointed in December to a four-year term on the administration’s Advisory Committee for Trade Policy and Negotiations. It meets two to three times a year and provides input on related matters to U.S. Trade Representative Robert Lighthizer.

Committee members, chosen from the private sector, don’t have decision-making authority, but DiMicco and his fellow appointees could have had some sway in Lighthizer’s recent recommendation that Trump impose sanctions on imports of solar panels and large residential washing machines. DiMicco is the chairman of the board of directors at the Coalition for a Prosperous America, a free-trade advocacy group which praised the controversial decisions.

Two former Trump campaign and transition staffers told McClatchy that while DiMicco and Trump are not personally close, DiMicco has ties to top White House policy adviser Stephen Miller.

The first allegations of hostile working conditions at Nucor plants go back 16 years ago from employees in four separate states: Texas, Alabama, Arkansas and South Carolina. They all alleged similar incidents involving white employees humiliating their black co-workers with vulgar racial epithets, monkey noises over company loudspeakers and displays of Confederate flags.

While no lawsuits in Alabama and Texas were ultimately filed, suits in Arkansas and South Carolina were formalized in 2003. In 2009, a jury in Arkansas found Nucor liable for presiding over a hostile work environment at its Blytheville plant, ordering a payout of $1.2 million to the plaintiffs.

DiMicco was the Blytheville manager at the time of the allegations. During the trial, multiple plaintiffs testified that they went directly to DiMicco with their concerns, but they were not addressed. They said under oath DiMicco promised harassed employees they would no longer have to work with their alleged harassers, but that promise was not kept. Plaintiffs also said the harassers were never reprimanded.

Before the settlement agreement in the South Carolina case, plaintiffs were prepared to go to trial, alleging hostile working conditions plus denials of promotion based on race.

An attorney who works on employment discrimination cases told McClatchy that while some federal courts have imposed personal responsibility on supervisors under specific circumstances, the Supreme Court has not ruled on the question of whether individual supervisors are ultimately culpable for hostile work environments within their organizations.

That would mean DiMicco could not be held personally liable for the conduct of his employees. But the attorney said she, and many of her clients, were eager for legal precedent that would make it so "the chief officer of a company would have some direct responsibility."

DiMicco’s culpability is not the only subjective element hovering over the Nucor cases.

The company never disclosed nearly 16 years of racial discrimination litigation in annual mandatory reports to the Securities and Exchange Commission. While SEC experts told McClatchy that Nucor probably should have mentioned the proceedings in these filings, given that some investors would have deemed that information relevant, Nucor might not have broken the law in failing to do so.

According to SEC regulations, companies are not required to disclose any legal matter that doesn’t result in payment of damages exceeding 10 percent of the business’s assets.

Though $22.5 million — the payout to qualified plaintiffs in the Huger, S.C., case, plus up to $10 million more in plaintiffs’ attorney fees — is a considerable sum, it’s relatively small for a Fortune 500 company such as Nucor, whose total revenue in 2016 was $16.2 billion.

“If the company is being cynically realistic, it may say to itself: ‘No one can sue us unless the stock price plummets, and it won't,’” said John Coffee, director of the Center on Corporate Governance at Columbia Law School and frequently asked by Congress to testify on matters of securities law.

“It gets into a policy judgment,” added James Cox, a professor at the Duke University School of Law.

Back in Charlotte, DiMicco is a longstanding fixture in the local business community, even since leaving Nucor in 2012.

In 2013, the Charlotte Chamber gave DiMicco its “Citizen of the Carolinas” award, its most prestigious honor, and in 2015, he was inducted into the North Carolina Business Hall of Fame. He’s a regular at industry conferences and panels on manufacturing and trade issues, and last week announced he would be acquiring Charlotte’s minor-league soccer team, the Charlotte Independence.

Ely Portillo of the Charlotte Observer and Anita Kumar and Kevin Hall of the Washington bureau contributed to this report.

Emma Dumain: 202-383-6126, @Emma_Dumain

William Douglas: 202-383-6026, @williamgdouglas

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