Hair Today, Gone Tomorrow

Andre Chreky apparently is the reigning king of hair stylists to the Washington, DC power elite.  Or perhaps that should be "was" the reigning king.  The recent settlement of two sexual harassment cases filed by two of his former employees will set him back, in theory, about $9.3 million.  Here's the story from the Washington Post. The story is not completely clear on the facts, but it is clear that there was actual or attempted sexual contact. 

We say "in theory" because Chreky is already in bankruptcy, so the plaintiffs may see only a small portion of the settlements.  There's no word on whether Mr. Chreky remains in business.

The Lawyer Didn't Do It!

From the left coast comes a different kind of story, involving an attorney and his paralegal employee.  Here's the story.  

In short, the parties agreed that there was a sexual relationship between the two.  After the paralegal was fired, she claimed that she was pressured into the relationship and was fired when she tried to break it off.   She also claimed that the attorney was a sexual predator.  She sued him for wrongful termination and sexual harassment.

Here's where things get interesting.  The attorney filed a counterclaim for defamation and won. 

The jury found for the attorney rejecting the paralegal's claims and awarding him $1.25 million on his counterclaim, of which $10,000 was awarded for punitive damages.  Extensive evidence of  electronic communications between the two, such as text message transcripts, had much to with with the final outcome.

The Moral of the Stories?

Well, to state the obvious, employer - employee relationships are inherently risky.  And the high dollar value of these cases demonstrates that there is potentially life-changing financial impact if the relationship goes bad and turns into a litigation.  But there has to be a recognition that the financial risk is not all on the employer's side, so spurned lovers need to think hard before deciding to use the failed relationship as a ticket to financial security.  Sometimes they may find that they are providing for someone else's financial security.

The legal news today just seemed to be filled with sexual harassment cases that illustrate the ways that office dalliances can affect the work environment, so say nothing of the dallier's (if that's a word) personal fortunes.

Consider this case, reported by Law.com, in which an attorney had a multi-year affair with a paralegal he employed.  He made the curious decision to participate in taking her deposition in the "inevitable sexual harassment case."  (His words, not mine.)  The case is being tried as this is written, but it doesn't sound like the attorney's position is very good.

Or this one, where the employer won in the end but still created all kinds of business problems because a supervisor's boyfriend made life miserable in his girlfriend's office by actually injecting himself into office business.  And she (the supervisor/girlfriend) let him!  And, by the way, they were both married to other people at the time.  Got all that? 

Which disposes of the sex and leads us to the cinema! 

We offer as an antidote to the kinds of problems noted above the timeless advice of the singing, dancing co-workers of J. Pierpont Finch in 1967's "How to Succeed in Business Without Really Trying."   Herewith, "A Secretary Is Not a Toy."  Enjoy.

(And for those of you who don't get the concept of this whole sexual harassment thing, learn!)

That's why, in these posts, we often discuss current court decisions.  By analyzing what the courts have done in the past, we can make educated guesses about what they will do in a similar future situation.  The lessons of these decisions can be applied not only by lawyers, but also by people in a business environment as a guide to arranging corporate policies and practices.  Sometimes it helps to have a law degree to figure this stuff out; other times the ability to read and a little common sense works just fine.

Which brings us to today's illustration of self-destructive corporate lunacy, courtesy of the always-vigilant Professor  Mitchell Rubenstein of the Adjunct Law Prof Blog.  My educated guess is that the company did not have legal advice when it established its unique corporate culture.

The case is Julie Gallagher v. C.H. Robinson Worldwide, Inc.  The full court opinion is here.

Suffice it to say that C.H. Robinson had an uninhibited work environment.  As the court described things:

Gallagher describes the atmosphere at the Cleveland office of
CHR during her four-month tenure as being much like “a guys’ locker
room” characterized by unprofessional behavior on the part of both males
and females, and an environment that was hostile to women. She
testified to the prevalent use of foul language by mostly male coworkers
who openly and loudly referred to female customers, truck drivers, coworkers
and others as bitches, whores, sluts, dykes and cunts. She
testified that male and female co-workers viewed sexually explicit
pictures on their computers (although the only incident she could
specifically recall was a sexually explicit picture on co-worker Angela
Sarris’ computer during the Christmas holidays), and that male coworkers
left pornographic magazines lying open on their desks.
Gallagher testified that, on several occasions, Starosto brought in nude
pictures of his girlfriend in different sexual poses and shared those
pictures with several of his male co-workers who occasionally brought
in, and shared, pictures of their own with him. She testified that her male
co-workers traded sexual jokes and engaged in graphic discussions about
their sexual liaisons, fantasies and preferences in her presence on a daily
basis.

All of this was too much for Gallagher, who sued  for sexual harassment on the basis of a hostile work environment.  She lost.  The trial court decided that since the sexually offensive conduct was not directed specifically at her, and was engaged in by some women so as not to have been "based on" sex.

On appeal the 6th Circuit Court of Appeals reversed the trial court.  The substance of the decision can be summarzied as "gimme a break."  "It is obvious," said the court, that the work environment was based upon gender, was more offensive to women than men, and was degrading to women.  That was enough to prove Gallagher's case.

So if you run a business, don't be lulled into a false sense of security by the fact that you curse at women and men with equal gusto.  The "equal opportunity abuser" defense is on the way out.  And don't think that the work environment is not hostile to women just because some women are acting like the boys.

Lesson learned?  Anyone care to prophesy about where the law of sexual harassment is headed?

Here are the facts in brief.  Priscilla Huston worked at P&G's Mehoopany  plant on a team of technicians that ran large paper manufacturing machines.  Huston, who had a disciplinary history, was fired for falsifying machine data logs.  She sued, claiming that she was the victim of hostile work environment sexual harassment and retaliation.  The trial court ruled against her.

The issue on appeal to the 3rd Circuit was narrow: whether P&G knew of the alleged harassment through the machine supervisors who were aware of it and nonetheless failed to take prompt remedial action.  The court held that the machine supervisors --- despite having limited supervisory functions --- were not of a level sufficient to impute knowledge of the harassment to P&G.  To put it plainly, knowledge of facts pertaining to aleged sexual harassment was not  material to their jobs, which were limited to supervising work on the machines.  

Thus, the court found that "an employee's knowledge of sexual harassment will be imputed to the employer where the employee is specifically employed to deal with sexual harassment.  Typically such an employee will be part of the employer's human resources, personnel, or employee relations group or department."

There are a couple of lessons here.  If you are an employer, and especially a small employer without a well-defined corporate structure, publish a policy that defines who in the management structure is authorized to deal with harassment.  If not, you're leaving it to an unknown court to make the decision for you, and you may not be happy with the result. 

If you are an employee with a harassment complaint, be sure to get the facts to someone in management who indisputably has the responsibility, as part of his or her job function, to deal with such things.  Fail to do so and an effort to vindicate your rights in court will probably fail. 

The case is Cerdeira v. Martindale-Hubbell.  We'll be paying more attention to this over the next week.  For now, here's our initial impression.

The case involves four significant factors.  First, it involves harassment by a co-worker rather than a supervisor.  Second, the defendant had a "Code of Conduct" that spoke generally about the impropriety of harassing conduct but went no further.  Third, the defendant claimed that memos about harassment were circulated in the past, but plaintiff said that she did not receive them and defendant could not prove otherwise.  And fourth, plaintiff delayed for two years before reporting the harassing conduct to management.

The trial court threw out plaintiff's complaint, but the Appellate Division reversed.  Significantly, the App. Div. confirmed that plaintiff may have a valid claim based upon the notion that Martindale-Hubbell (ironic aside: a publisher of legal directories) was negligent in failing to provide its employees with a protective mechanism through an "effective" sexual harassment policy.  Although it did not decide the issue directly, it seems clear that the "Code of Conduct" did not cut it.  The case now returns to the trial court.

Employers, there's a message for you in this decision.  If you don't have an effective sexual harassment policy, you need to get one.  Now.  

What's an "effective" policy?  That's a subject for another post.  For the moment, as with most things related to employment law in NJ, we offer this advice: don't try to create a policy by yourself.  Find a NJ lawyer who knows employment law and get some help.  There's simply too much at stake for your business to run the risk of a homemade job.  And canned forms are dangerous because a good policy needs to fit the requirements of your particular business as much as it needs to fit the law.

One final caution: don't think that because you have just a few employees that you don't need this protection.  Even if you're too small to be covered by the federal anti-discrimination laws, you are subject to the New Jersey Law Against Discrimination [LAD]. 

This morning I ran across Virginia Polytechnic Institute v. Quesenberry, a case from the Virginia Court of Appeals that helps to illustrates the difference.

The plaintiff was a college employee who served as a volunteer coach for a non-profit youth boxing club.  His group wanted to create a promotional photo calendar of attractive young women in boxing poses.  He asked a female co-worker to pose in "short shorts" or a bathing suit.  After she complained to the employer, the volunteer coach was fired for alleged violation of  the university's sexual harassment policy. 

So was the young woman the victim of sexual harassment in the colloquial sense?  Based upon her reaction to the request, one might argue that she was harassed.  But under the legal definition of sexual harassment, she was not.  Here's why.

In court, the coach argued that he did not violate either the university's policy or any sexual harassment law since he engaged in no conduct that a reasonable person would consider to be sexual in nature.  The court agreed, finding as a matter of law that the coach did not violate university policy.

Quesenberry reminds us of three general rules: (1) sexual harassment cases are fact-sensitive, and broad-brush analysis usually will not help employers to resolve them; (2) a defendant's conduct will always be judged by an objective or "reasonable person" standard; and (3) claims of a sexually hostile work environment typically require an accumulation of unlawful conduct over a period of time. 

We note, as a caution to New Jersey employers, that New Jersey case law suggests that a single instance of harassment, if sufficiently severe, might be be found to create a hostile work environment.  But this situation would clearly be the exception rather than the rule.

~  Carly Simon, "You're So Vain"

Coffee was a nightmare, not a dream, for Tamara Klopfenstein, a short-tenured, part-time receptionist and clerk for National Sales & Supply, LLC. 

Klopfenstein took offense at being asked to bring the bosses coffee, claiming that it wasn't in her job description and was based on an outdated gender-specific stereotype.

By the fateful day on which Klopfenstein was terminated, the court noted that "the controversy was really  brewing."  (OK, so it's an obvious joke.  You still have to love a judge who has a sense of humor and doesn't mind showing it.) 

The court found that the plaintiff could not prove either hostile environment or quid pro quo sexual harassment and entered summary judgment for defendant, which appears to have been the right decision.  The standard for sexual harassment includes the requirement that the allegedly harassing conduct be offensive to a reasonable woman.  You can read the opinion here, and an article from Law.com here, and decide for yourself, but it seems to us that Klopfenstein worked herself into a froth over some pretty innocuous behavior.

The plaintiff is considering an appeal.  We wouldn't expect a different result there.

Now the NY Times reports that the restaurant has settled with the EEOC for $2.2 million.  Ouch.

The settlement avoids the assessment of compensatory damages, and also the potential for a court-ordered award of attorney's fees that alone could have run into millions of dollars.

Employment discrimination cases are a species of what lawyers call "fee-shifting" cases.  That is, the loser can be ordered to pay the winner's attorney's fees.  Usually that means that losing defendants pay winning plaintiffs, and seldom the other way around.  In smaller discrimination cases, where less money may be in play in terms of compensatory and punitive damages, attorney's fees can become the "gorilla in the room."  Defendants must always be aware of the potential for an award of fees to a successful plaintiff.  It is quite possible that, depending on the cases, the fees could be greater than the damages awarded to the plaintiff.  Thus, a realistic evaluation of the likelihood of complete success should always be a part of the defense strategy and should be evaluated on a continuing basis.

This is particularly important for small and mid-sized companies, which may not have the financial resources to absorb an attorney's fees judgment.

Local reports from the Newark Star-Ledger bring news of the criminal conviction of a former Immaculata High School girls basketball coach as a result of having what apparently was a "consensual" sexual relationship with a player.  Patricia Balogh was convicted on four of five counts, although she avoided the most serious, which charged aggravated first degree sexual assault.  A conviction on that charge could have landed her in prison for 40 years.  As it is, she's looking at 10.  There's no word whether the victim's family plans to pursue an action for civil relief against the coach or the school.

Educational employers must be vigilant.  Inappropriate relationships between players and coaches are not common, but neither are they rare.  When they occur they have the potential to cause significant liabilities and, just as important, reputational damage. 

The plaintiff reported the conduct to a supervisor but, according to the article, the company "did not have a sexual harassment policy" and wrote off the events as "horseplay."   You can buy a pretty good horse for the $250,000 verdict and (doubtless) six figure defense cost that this mistake in judgment cost the defendant.

We've said it before and doubtless will have the opportunity to make the point again, since companies continue to make the same silly mistakes.  If you don't have a harassment policy, get one.  Today.  It's some of the cheapest insurance you'll ever buy.

Once you have the policy, follow it.  Rigorously. 

Taking those two simple steps will help to avoid potentially catastrophic judgments.  Which in the case above probably have some corporate executives feeling like the south end of a horse going north.

And the damage to the team will just get worse.  Compensatory damages still have to be decided, which could tack millions more onto the judgment.

For the record, the defendants deny the allegations.

They had better be right, since the complaint is looking for seven figure money.  That's a lot of meals served to tourists.

The point of this little tale is one that we frequently make: businesses must be vigilant to guard against unlawful mistreatment of employees by other employees, and especially managers.  There's likely not a business around that actually condones the kind of conduct in which the manager here allegedly engaged.  But people sometimes do bad or stupid things that can spill over onto an employer that is trying to comply with the law.

And, as this case shows, unlawfully discriminatory conduct can occur where it might not be expected.  Every employer needs to keep a sharp eye out for such conduct, and when it is found, it must be dealt with swiftly and firmly.  

The jury agreed.  It awarded her $120,000 in compensatory damages, $250,000 in punitive damages against the airline, and $140,000 in punitive damages against the pilot personally.  That's $510,000 plus attorney's fees and court costs.

We tell this to our clients and friends all the time, but it's worth repeating here.  Every claim of sexual harassment should be taken seriously and investigated impartially.  Failure to follow this simple rule can cost businesses a lot of money and embarrassment, as the defendants here learned the hard way.

The Supreme Court's decision leaves in place an appeals court ruling that since the sex involved a minor and thus was statutory rape, by definition the male's advances could not have been welcomed.

But the best enforcement policy is only as sound as the person who is on the firing line of the investigation. We are all human, and we all bring unique perspectives, preconceptions, and biases to our roles as investigator and decision maker. The same is true for those who bring complaints and information to investigators.

How can you protect against these biases in an investigation? One way is to be cognizant of your own biases, and sensitive to those of witnesses. These can arise from gender, race, educational level, power, and many other factors.

Another way is to involve more than one person in the investigation. Ensure that a variety of perspectives are brought to bear upon asituation and you will help to prevent internal complaints from blossoming into lawsuits.

So what's a business owner to do? One answer: get sexual harassment training for your employees. It's good, cost-effective insurance against harassment lawsuits. And it will help to define appropriate standards of conduct in your business and contribute to a more harmonious workplace.