AVOIDING LAWSUITS

HOW BUSINESSES CAN PREVENT
EMPLOYMENT CLAIMS AND LIABILITIES

June 1, 2002

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.

WHAT DO YOU DO WHEN YOU'RE THE ONE
ACCUSED OF SEXUAL HARASSMENT?

Let's assume that, as a leading executive in your company, you have read Avoiding Lawsuits over the years, and you have taken our advice to heart. You have incorporated the latest lawsuit avoidance techniques into the fabric of your business, and you have hired us to train your managers in order to make certain that they know how to minimize claims, and how to deal with claims when they do arise. You have demonstrated a zero tolerance policy toward offenders, sending a clear message that your company's culture has to adapt to changing laws and norms of behavior. You have made lawsuit avoidance, particularly in the employment law field, a prime directive.

And now, despite all of this, you, personally, have been sued by one of your employees for sexual harassment. You know you didn't do anything wrong, but the accusation is there for all to see, like a stain that just won't go away.

Managing this kind of situation takes tremendous self-discipline. In all likelihood, your anger and natural defense mechanisms will take you in precisely the wrong direction. You need to prepare for this eventuality, both procedurally, and emotionally. It can happen to you. Consider these suggestions.

Make sure your complaint procedure is part of the solution, not the problem. As we have stressed in the past, the law absolutely requires that every company design, implement and publicize a legally-compliant mechanism through which employees can effectively communicate complaints regarding sexual harassment or other employment issues. Companies without such complaint mechanisms are playing with anthrax. (For example, see the March 1, 2002 issue of Avoiding Lawsuits, particularly the article entitled, "Failure to Train Management to Properly Administer Sexual Harassment Complaint Procedure Leads to $8 Million Punitive Damage Award.")

A key aspect of any viable complaint procedure is the designation of a responsible individual to field employee complaints, and many companies designate a member of senior management for that purpose. But what happens if the designated head of the complaint department (in this case, you) is the subject of the complaint? Unless there is a back up, your complaint procedure will, itself, become a major issue in the lawsuit - the complaining employee will assert, and likely prove, that your complaint procedure was worse than having no procedure at all.

The cure for this disease is to set up your complaint procedure so that it provides some pre-approved and clearly-expressed alternatives for a complaining employee. At the least, the procedure must provide a back-up person to receive the complaint in the event that the person who normally fills that role is the claimed wrongdoer. If at all possible, there should be three or four different persons who are designated as management representatives for receiving and processing complaints, thereby foreclosing an oft-heard employee argument - "it was pointless for me to make a complaint, because I knew that the person I had to talk to was (biased) (insensitive)(controlled by the person who harassed me)...

You can't investigate yourself. Once an employee complaint is made, an employer has the legal obligation to investigate the charge thoroughly and objectively. If the employer does not honor the employee's complaint, you can bet that the employee will charge that the investigation was, at best, cursory, and, more often, rigged. Once that allegation is made in litigation, a court will place the investigation under a microscope.

The investigation of employee complaints is a complex topic well beyond the scope of this article, but the linchpins of any complaint investigation are thoroughness, fairness and objectivity. Whether an investigation satisfies these criteria can often be a subject of honest debate, but one thing is for certain: if it appears that the accused influenced the content or nature of the investigation, even indirectly, the accuser's case will be made. You cannot thoroughly, fairly and objectively investigate the merits of a complaint made against yourself.

Many executives, while they know this to be true, cannot resist the urge to become part of the process through which they hope to be vindicated. They will often justify their involvement by explaining that they are only trying to insure a competent investigation - they know what did and did not occur, they know what witnesses should be asked what questions, they know the significant facts on which the spotlight ought to be focused. What such executives do not know, however, is how their involvement will play out in a courtroom. Lawyers who try employment cases become positively ecstatic over the fun factor involved in cross examining executives who become even obliquely involved in the investigation of their own alleged misconduct. Consider the usual line of questioning, and how you would answer if put on the hot seat:

• Would you agree with me, Mr. Jones, that sexual harassment allegations must be treated seriously?
• Would you also agree with me that sexual harassment allegations need to be investigated in an unbiased way?
• You understood that if you were found to have sexually harassed my client, that could result in significant adverse consequences to your career and your bank account, didn't you?
• You certainly didn't want those kinds of adverse consequences to be visited on you, did you? It would be better for you if the investigation concluded that the sexual harassment allegations were baseless, than if they were found to be true, isn't that right?
• Would you agree with me that the definition of "unbiased" in this context requires that the investigator not have a preference for which way the investigation comes out?
• That definition didn't apply to you in this case, did it?
• So despite knowing that the investigation should be conducted only by people who are unbiased, and despite knowing that you were the most biased about this investigation, you decided to become involved in this investigation, didn't you?

At this point, a trial lawyer's thoughts inevitably drift towards punitive damages.

Your goal has to be to distance yourself from any investigation, and you should work with your counsel to create an unassailable, documentary record proving that you did so. At the least, there should be a memo setting forth who will conduct the investigation, pursuant to what procedures, making plain that you will have no role in the investigation, other than being interviewed as a witness.

Everything you say can and will be held against you. When a false accusation of this type is made, your natural and understandable urge will be to fight back - you will want to issue denials, you will want to explain what really happened to your colleagues, and so on. You spent years building a reputation, and you are not going to allow it to be smeared without a contest.

Fight that urge. Statements that may seem completely innocuous to you often have legal significance that you, as a non-lawyer, will have no way to foresee. You may be providing cross examination fodder, without even knowing it. For instance:

• Your statement: "Our relationship was completely innocent." Cross examination: Aha, so you had a "relationship," did you?
• Your statement: "I never touched that woman." Cross examination: I note in your denial that you say you never touched her, but you specifically did not say that you never made any suggestive remarks, or that you never asked her to have dinner with you, or that you never told her that she would do better in her career if she went out with you. You left those denials out, because you can't truthfully deny that those things happened, right?

A common scenario familiar to trial lawyers involves a situation in which the accused executive provides a detailed, oral explanation to a meeting involving five or ten other executives. Unfailingly, when the executives who attended the meeting are subjected to separate depositions, often a year or more after the meeting, one or two of them will get it all wrong, and will unwittingly testify that you said something you never said, which will be damaging to your case. And, of course, the dangers multiply if one or two of those in attendance at the meeting leave the company before the trial in negative circumstances, and now have an incentive to twist the truth against you.

This is a situation in which you must deal in a world of prepared, written statements. You can credibly blame your lawyer for your recalcitrance. "I would love to talk to you about this further, but the lawyers have instructed me that I am not permitted to comment at this time. I am hopeful that, later, I will have an opportunity to tell you the truth about these allegations." Most people know that lawyers give this kind of advice, and few suspicions will be raised if you convey the message that you really do have some things to say, but the only reason why you are not saying it is because the lawyers have instructed you that you are not permitted to do so. Fight the urge to conclude that if given free reign, you will, by the powers of your persuasion and your obvious sincerity, convince all those who are listening that you are right and your accuser is wrong. From Bill Gates to Bill Clinton, it seldom works that way.

Recognize your lack of objectivity. Finally, the time will come to make a decision on what to do with the case. It may turn out that when the facts are objectively analyzed by counsel, you may have, inadvertently, done something wrong. That will be a difficult pill for you to swallow. You may also be presented with an even more distasteful pill: you may have done nothing wrong, but the proofs may be lining up such that you will be unable to prove your rectitude, and it will be just as likely as not that, albeit unjustly, the accuser may prevail in a courtroom. Settlement decisions will have to be made.

There is much truth to the hackneyed maxim that a lawyer who represents himself has a fool for a client. Few people can make sound, business-like decisions in a context where your emotions are likely to trump your logic. The same reasoning applies to a wrongly-accused and very angry executive. In a sexual harassment or other employment liability suit, your company, and not just you, will likely be on the hook for not only the costs of litigation, but for any eventual verdict. A good lawyer who is more that a sniveling sycophant will insist that you involve other responsible persons in the company when it comes time to make the difficult settlement and strategy decisions. If that does not happen, and you let yourself, emotions and all, be the sole decision-maker, your lawyer will have a fool for a client, and you will have a fool for a lawyer.

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Counsel Consulting Group LLC helps companies throughout the United States avoid employment and HR-related claims and liabilities.  CCG assesses existing policies, procedures and problem areas; it provides customized liability-avoidance training to managers and executives; and it designs and implements business techniques that reduce employment liability risks on a long term basis.  CCG also offers specialized workshops for managers and HR executives, customized consulting in focused employment-related areas, and CD-ROM and web-based training alternatives.  For more information, contact us at info@counselconsulting.com and visit our website at www.counselconsulting.com.      

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.

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