Posted on: Sunday, March 31, 2002

Companies being sued for profiting from slavery

By James Cox
USA Today

They owned, rented or insured slaves. Lent money to plantation owners. Helped hunt down the runaways.

CSX owns rail lines that were built by slaves. It was one of three companies sued last week in federal court on charges of unjustly profiting from slavery. The railroad operator said the lawsuit lacks merit. Bloomberg News Service

Some of America's most respected companies have slavery in their pasts. Now, 137 years after the final shots of the Civil War, will there be a reckoning?

Last week, a powerhouse team of African American legal and academic stars began suing companies it says profited from slavery before 1865.

Reparations lawyers sued insurer Aetna, railroad operator CSX and financial services firm FleetBoston in federal court, saying the companies were "unjustly enriched" by slavery.

Aetna has admitted insuring slaves for their owners and apologized. A Fleet predecessor bank was founded by a slave trader. CSX owns rail lines built using slaves.

The initial complaint last week contains no damage figure, but puts the current value of slaves' unpaid labor at $1.4 trillion. Plaintiff Deadria Farmer-Paellmann filed on behalf of all African Americans descended from slaves, a group that includes most of the nation's 36.4 million blacks.

The lawsuit, patterned after similar actions by Holocaust survivors, is believed to be the first in which African Americans are trying to collect damages from corporations for the suffering of their ancestors.

Now reparations lawyers are readying suits against a second batch of companies they accuse of profiting from antebellum-era slavery. The second round of defendants is expected to include New York Life, J.P. Morgan Chase, Lehman Bros. investment bank and WestPoint Stevens, a textile maker.

The group says its initial aim is to use lawsuits and the threat of litigation to squeeze apologies and financial settlements from corporations. Ultimately it hopes to gain momentum for a national apology and a massive reparations payout by Congress to African Americans.

Neither goal will be easily achieved.

There is considerable evidence that proud names in finance, banking, insurance, transportation, manufacturing, publishing and other industries are linked to slavery. Many of those same companies are today among the most aggressive at hiring and promoting African Americans, marketing to black consumers and giving to black causes.

So far, the reparations legal team has identified publicly five companies it says have slavery ties: insurers Aetna, New York Life and AIG, and financial giants J.P. Morgan Chase Manhattan Bank and FleetBoston Financial Group.

Independently, USA Today has found documentation tying several others to slavery:

• Investment banks Brown Bros. Harriman and Lehman Bros.

• Railroads Norfolk Southern, CSX, Union Pacific and Canadian National.

• Textile maker WestPoint Stevens.

• Newspaper publishers Knight Ridder, Tribune, Media General, Advance Publications, E.W. Scripps and Gannett Corp., parent and publisher of The Honolulu Advertiser and USA Today.

Successive generations of African Americans, starting with slaves freed in 1865, have failed to persuade Congress to apologize and make restitution for slavery. Attempts by descendants to sue the federal government for damages have been dismissed.

By targeting corporations, the activists are opening a new chapter in black America's quest to be compensated for 2 1/2 centuries of bondage. The activists contend that major corporations today possess wealth that was created by slaves or at the expense of slaves — and that it's time for African Americans to reclaim that wealth.

Evidence against corporations sits in university libraries, historical collections and corporate archives. Slaves haunt the pages of old letters, newspapers, receipts, payroll sheets, account books, annual reports and court records.

There are insurance policies naming their masters as beneficiaries; railroad rule books prescribing 39 lashes of the whip for recalcitrant slaves; newspapers publishing ads offering rewards for the return of "my Negro boy."

The list of corporations tied to slavery is likely to grow. Eventually it could include energy companies that once used slaves to lay oil lines beneath Southern cities, mining companies whose slaves dug for coal and salt, tobacco marketers that relied on slaves to cultivate and cure leaf tobacco.

Slavery's long shadow also could fall over some of Europe's oldest financial houses, which helped finance the antebellum cotton trade.

Lloyd's of London, the giant insurance marketplace, could become a target because member brokerages are believed to have insured ships that brought slaves from Africa to the United States and cotton from the South to mills in New England and Britain.

The original benefactors of many of the country's top universities — Harvard, Yale, Brown, Princeton and the University of Virginia, among them — were wealthy slave owners. Lawyers on the reparations team say universities also will be sued.

Ties can be tenuous

But the connection between modern-day corporations and slavery can be tenuous. Records seldom show the extent to which a given company depended on slave labor or profited from sales to slave owners. Many of the companies that are potential targets for reparations lawsuits didn't exist until after emancipation, some not until the 20th century. Instead, they bought the slave histories of other companies in corporate acquisitions over the years.

Last August, insurance giant AIG, founded 54 years after the Civil War, bought another insurer, American General. With the purchase came U.S. Life Insurance, which American General had acquired in 1997. In going through U.S. Life's archives last fall, AIG discovered that the unit had insured slaves for their masters in its early years.

Aetna first confronted allegations it had insured slaves two years ago. Since then, it has struggled to put the matter to rest, apologizing and pointing out that it pays for college scholarships for African Americans and for studies on racial disparities in health care. It also sponsors a national forum on race.

Antebellum-era slave polices "don't reflect what our company is today at all," said Aetna spokesman Fred Laberge. "We have a strong record of diversity and supporting causes and hiring."

On Feb. 21, USA Today contacted all the companies named in this article. Some acknowledged the evidence, others disputed it. Many declined comment. Of those that did comment, virtually all said the current company isn't liable for what happened before the Civil War.

Behind the new legal thrust is the Reparations Coordinating Committee, headed by Harvard law professor Charles Ogletree and author-activist Randall Robinson. The team includes heavyweight trial lawyers Johnnie Cochran and Dennis Sweet and scholars such as Harvard's Cornel West, Georgetown's Richard America and Columbia's Manning Marable.

"Once the record is fleshed out and made fully available to the American people, I think companies will feel some obligation" to settle, Robinson said. "Regret's not good enough. Aetna made money, derivatively at least, from the business of slavery. Aetna has to answer for that."

The legal obstacles are daunting. Slaves and their masters are dead. Company records, though sometimes damning, seldom are complete. Damages could be impossible to calculate. And, no company accused of profiting from slavery was breaking U.S. law at the time: Slavery was not a crime.

"We've never seen a case where someone who died hundreds of years ago can have a simple, common-law tort revived. The law wasn't designed for this," said Anthony Sebok, a tort expert at Brooklyn Law School.

Statutes of limitations on torts, or injury claims, typically last no longer than two or three years and have been extended in rare exceptions to only 30 years. Before broadening a tort case to a class-action lawsuit, reparations advocates must find the descendant of a slave damaged by one of the defendants. Then they must decide who qualifies as a slave descendant and who, in essence, is black.

Cases that argue that companies were "unjustly enriched" from their use of uncompensated labor often hinge on whether plaintiffs can give a clear, precise accounting of what was wrongfully taken from them and what they produced. That's easy when someone wants restitution for a lost object, such as a building. But how do you separate the output of slaves from that of other workers on, for example, a railroad?

Earlier reparations cases, targeting the government, have been dead ends.

The group wants to avoid a repeat of Cato v. the United States, a $100 million reparations case brought against the federal government in 1995. The U.S. Appeals Court in San Francisco dismissed the case after saying it could not find a cause of action or legal basis for it. The panel said descendants of slaves must go to Congress, not the courts, to get redress for crimes against their ancestors.

That's not to say there is no precedent for reparations. 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.

Public relations damage

Ultimately, the court of public opinion could be the one that matters most. That much was clear to the German, Austrian, Swiss and French companies sued by Holocaust survivors and other Europeans victimized by the Nazis.

The Holocaust cases, filed by the dozens between 1996 and 2000, were weak on the law and almost certain to be dismissed by U.S. courts. But they hurt the reputations of defendant companies while they were on court dockets.

The companies have settled for more than $8 billion at the urging of the U.S. government, which mediated.

Owen Pell, a lawyer at White & Case who represented Chase Manhattan against accusations it illegally blocked accounts held by Jews in wartime France, said dozens of U.S. companies quietly have begun searching their archives in anticipation that they could be named in slavery lawsuits.

The reparations movement can't win in court, Pell insists. "But companies have learned you don't judge a lawsuit by its merits. You judge it by the potential public relations damage. Corporate America is following this issue. They understand how nasty it could get if someone comes in and says you have blood on your hands."

It shouldn't come to that, said Willie Gary, a reparations team member and trial lawyer. He said companies tied to slavery should step forward and make amends by putting money into African American scholarships and education.

"Based on what America stands for and has stood for, it's the right thing to do. There's an opportunity to make a wrong right," he said. "This should be a negotiated matter. We shouldn't be in litigation for 20 years."

• • •

The companies:

• Aetna

The insurance company has in the past admitted insuring slaves for their owners and apologized.

Last week the company said: "We do not believe a court would permit a lawsuit over events which — however regrettable — occurred hundreds of years ago. These issues in no way reflect Aetna today."

• CSX

The railroad operator owns rail lines that were built by slaves.

Last week the company said: The lawsuit was "without merit" and should be dismissed.

• FleetBoston

A Fleet predecessor bank was founded by a slave trader.

Last week, Fleet declined comment.

What's next

Reparations lawyers are readying suits against a second batch of companies they accuse of profiting from antebellum-era slavery. The second round of defendants is expected to include New York Life, J.P. Morgan Chase, Lehman Bros. investment bank and WestPoint Stevens, a textile maker.

The companies:

• Lehman Bros. and New York Life said they couldn't comment until seeing the lawsuit.

• WestPoint Stevens couldn't be reached.

• J.P. Morgan Chase said it hired an outside research firm to look through archives. Based on that review, "we don't believe there's any basis for liability," spokeswoman Charlotte Gilbert-Biro said.