New Jersey Employment Law Blog - Current Information on Employment Law and Business/Civil Litigation

The last couple of days have brought news of sexual harassment cases that yielded big dollar awards but wildly contrasting results. 

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 great Supreme Court Justice Oliver Wendell Holmes once defined "law" as "the prophecies of what the courts will do in fact."  So in one sense lawyers are prophets, soothsayers, predictors of an uncertain future.  Lawyers try to figure out what courts will do when confronted with a unique situation that litigants present for decision.

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?

A hat tip to Professor Mitchell Rubenstein at the Adjunct Law Prof Blog, who twice this week has blogged on important recent court decisions in our backyard, first from the 3rd Circuit, and now from the NJ Appellate Division.

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]. 

"I had some dreams, they were clouds in my coffee, clouds in my coffee . . ."

~  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.

The sexual harassment case against Madison Square Garden and New York Knicks General Manager Isaiah Thomas has been settled on the eve of the compensatory damages phase of the trial.  The terms of the settlement were not disclosed in this report from the AP.  For background, here and here are our previous posts on the case.

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.

It's not New Jersey, but here's an article from The Birmingham (Alabama) News about a recent verdict of $250,000 in a same-sex harassment case.   The plaintiff claimed that "he was subjected to offensive touching and foul, vulgar and sexually explicit language in the workplace [and] saw other employees engaging in the activity."

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.

Sexual harassment can be a problem anywhere, including the "classiest" of places.  New York's famous eatery, Tavern on the Green, has been sued by the EEOC for severe and pervasive sexual harassment of employees.  According to the complaint, as quoted in the New York Times, the manager got a little grabby with some of the waitresses. Guess that's what can happen when boys and girls work together on the sidewalks of New York.  And for good measure he threw in racial epithets directed at blacks and Hispanics.  While the worst allegations target the restaurant's manager, the business itself is potentially liable because, the EEOC charges, it knew or should have known what was happening.

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 Supreme Court has declined to review a sexual harassment case filed by a 16 year old girl who was employed as an ice cream scooper.  Summary by the Workplace Prof Blog here.  The issue was whether the girl could "welcome" the advances of an older male co-worker with whom she had "consensual" sex.  If the advances could be "welcomed," a sexual harassment charge would not stick. 

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.

Whatever you may think about the now infamous backrub that President Bush gave to German Chancellor Angela Merkel, it has some people talking about how much physical contact is appropriate in the workplace. Forbes.com has a recent article that defines three acceptable touch zones: upper back, forearm, and wrist. But even these are not free from controversy. Some think they're too lenient, others too strict.

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.