|
||
|
AVOIDING LAWSUITS HOW BUSINESSES CAN PREVENT January 1, 2001 Avoiding Lawsuits is a service of the employment law training and consulting firm of Counsel Consulting Group LLC and the law firm of Powell, Trachtman, Logan, Carrle, & Lombardo, P.C. MANAGEMENT TRAINING IS A NECESSITY, NOT AN OPTION: We try to stress to our clients that the right kind of management training is among the most important liability avoidance techniques any company can implement. Sometimes the experiences of others can be the best teacher and, so, to further drive that point home, consider the following cases, decided in the last few months. The "Suddenly Incompetent" Syndrome. Donna Fredrickson worked for Olsten Health Services, Inc. She managed a branch office in Youngstown, Ohio. Fredrickson worked for Olsten for 13 years, and was 68 years old. Olsten decided to merge the Youngstown, Ohio office with its Warren, Ohio office, and in-stalled the Warren office manager as the new manager of the consolidated offices. Fredrickson's job was eliminated. Fredrickson asked to be given another job with the company, but she was told that despite her 13 years of service, she was not sufficiently qualified for any other position at Olsten, and she could either retire or be terminated. She was making $50,000 a year and, after her dismissal, she found a $9 per hour sales job. Fredrickson sued Olsten for age discrimination. Olsten denied any discrimination. It claimed that the Warren branch manager was better qualified for the position, and that Fredrickson did not have the skills necessary for any other position in the company. Be seated, and take a deep breath. Fredrickson won the case. The jury awarded $675,000 in compensatory damages, and $30 million in punitive damages. The "What Have You Done For Me Lately" Syndrome. Milton Riseman was 62, and the President and CEO of Advanta Mortgage Company. He started working for Advanta in 1992. When the post of President of Advanta's parent company opened up, Riseman was passed over in favor of a 35-year old executive who had no experience in the financial industry. Over the years, Advanta had strongly praised Riseman, crediting him with having literally saved the company. However, the new President of the parent company immediately appointed a new President for Advanta, stripping Riseman of his title and responsibilities. Advanta justified this action by claiming that Riseman had refused to be a "team player" after he was passed over for presidency of the parent company, and that he disrupted the company. Even then, Advanta argued, Advanta did not fire Riseman, but offered him the post of Chairman, which he at first accepted, but later turned down. Riseman, however, disputed that he was offered another position. He claimed that he was simply terminated from the company. He further claimed that the termination came just one day after Riseman's lawyer sent Advanta a letter claiming that Riseman was a victim of age discrimination. Take another deep breath. The jury ultimately believed Riseman's version of the facts, and the verdict exceeded $6 million. Is There A Moral To These Stories? As is so often the case, both of these lawsuits boiled down to "my word against your word" battles. In the Olsten litigation, the issue was whether Fredrickson was better qualified to manage the consolidated office or, at the least, whether Fredrickson had the qualifications to fill another position at Olsten. Olsten said one thing, and Frederickson said another. In the Advanta litigation, the issue was whether Riseman had been offered another executive position with Advanta, or whether he was forced out after complaining about age discrimination. Again, a "my word against your word" dominated the courtroom. Now consider what might have happened if the Olsten and Advanta executives and managers had been trained to recognize the "red flags" inherent in these situations, and if they had been further trained to develop the ammunition necessary to clearly win the "my word against your word" battles that were eventually lost. Olsten executives and managers, if properly trained, would have had in effect a meaningful employee evaluation procedure that would have created a file documenting Fredrickson's management failures, as they occurred. This could have provided ample evidence that Olsten did not make its decisions based upon Fredrickson's age but, rather, on her qualifications. As it played out, however, Fredrickson's lawyer could make Olsten look foolish. You claim that Fredrickson was not qualified and, yet, she had been a manager of the office for 13 years, correct? Is there anything in her file that shows that she failed to do a good job during that entire time? Isn't it true that she received raises each year? Isn't it true that she was never disciplined or reprimanded in any way? Are you asking the jury to believe that you could not find any position in the company for this long term employee, who has a spot-less file? Are you asking this jury to believe that the fact that she was 68 years old did not enter into your thinking? In the Advanta case, think of what might have happened if, while Riseman was allegedly being disruptive, an Advanta executive had sent him a memo or, at least, prepared a file memo describing the problem. Those kinds of memos usually carry a lot of credibility - they are prepared at a time when there was (at least arguably) no litigation contemplated, in circumstances where the company was trying to solve a problem. Think what might have happened if, at the same time, an Advanta executive recognized the need to confirm Riseman's alleged resignation (as opposed to Riseman's claim that he was terminated). When the time for trial arose, Advanta would have convincing, documentary evidence supporting its version of the facts, and Riseman would only have his self-interested memories, which by then would have been years old. In the battle between documents prepared while events were unfolding, and subsequent courtroom recollections, the documents win almost every time. We have covered these topics in Avoiding Lawsuits before. See, for example, the Avoiding Lawsuits issues of August 1, 2000 (the "My Word Against Your Word" problem), September 1, 2000 ("Doing The Right Thing Is Not Enough"), and October 15, 2000 (the "My Word Against Your Word" Problem - A Continuing Series). The appropriate kind of training allows executives and managers in these situations to recognize the potential liabilities before it's too late, and teaches them how to either avoid the problem altogether, or to document the fact that they did the right thing in such a way as to dramatically increase the odds of prevailing in a "my word against your word" court-room battle. The alternative; do nothing, take your chances, and face the same prospects that Olsten and Advanta faced. How lucky do you feel? The Worm Turns - Punishing Plaintiffs Plaintiffs, too, can lose the "my word against your word" battle, and it is worth noting how a lack of documents on the plaintiff's side should affect a company's evaluation of its position and strategy. Mary Bernard sued Air Express International, a freight shipper, for racial discrimination. Bernard alleged that she was the only African-American among 1,400 employees at Air Express's Miami office. She claimed that she regularly faced discrimination and, as a result, was unfairly denied overtime compensation. She also contended that, eventually, the hostile work environment at the company forced her to resign. After she left, she file a race discrimination lawsuit. During the trial, Air Express proved - through admissible documents - that Bernard had been paid in the same fashion as similarly situated employees, and that Bernard never made a written complaint to Air Express regarding race discrimination, a hostile work place, or anything else. When push came to shove, Bernard was left with the allegation that she was discriminated against, but she could not prove that she was treated any differently in respect to her pay and, most notably, there was no written evidence that she had ever raised the race issue at any time during her employment. The result: not only did Air Express win, but it was awarded a $160,000 judgment to reimburse it for its attorney's fees. Stacking the Deck in Your Favor There are certain situations in which judges or juries expect to see documents. If they don't see the documents they believe should be there, they are likely to conclude that the events in question never took place. If an employee claims that she was racially discriminated against, and if, without credible explanation, there is no evidence of a written complaint to a superior, judges and juries tend to discount the employee's claim. So, too, if an employer claims that an employee performed incompetently and this, as opposed to age, race or gender, was the reason the employee was fired, judges or juries expect something in a personnel file that clearly documents the employer's position. Without it, the employer looks as though it is fabricating a lame excuse for a discriminatory action. So give the courts what they want and expect - documentation. In the process, you stack the deck in your favor. To do it, you need to train executives and managers to recognize the situations that merit documentation; you need to train them to prepare the documents in a way that makes the documents admissible in court; and you need to train them to prepare documents that help you, as opposed to providing "smoking guns" for your adversaries. SUMMARY: We have been training executives and managers all over the country for years, and it works - there are few liability avoidance techniques that are more powerful and effective. ___________________________________________________________________________________ Counsel Consulting Group LLC helps companies throughout the Powell, Trachtman, Logan, Carrle, & Lombardo, P.C. is a full service law firm with offices in suburban Philadelphia, PA, Harrisburg, PA and Cherry Hill, NJ. Powell Trachtman represents a variety of commercial enterprises, entrepreneurs and business executives in respect to their litigation, litigation avoidance planning, business formation, business transactions, estate and tax planning, and other needs. We are also approved defense counsel for numerous insurance carriers in matters pertaining to professional malpractice, products liability, employment practices, directors and officers liability, and many other fields. For more information, contact us at info@powelltrachtman.com and visit our website at www.powelltrachtman.com. ©Copyright 2003-2005 CCG Properties LLC. All rights reserved, except that recipients hereof are permitted, for noncommercial purposes, to provide copies or excerpts, with full attribution to us, to other interested persons for their personal use. Avoiding Lawsuits is distributed for general informational purposes only. It is not a substitute for personalized legal advice from a competent attorney. |
