MINIMIZING AN EMPLOYER’S LIABILITY TO
ALLEGED SEXUAL HARASSERS – HERE’S HOW

By Julie A Moore, Esquire
Reprinted with permission of the Massachusetts Lawyers Journal Vol. 6, No. 9, May 1999

Victims of sexual harassment have been receiving record high verdicts both in Massachusetts and around the country. These victims include employees who have been sexually harassed, witnesses to hostile environment sexual harassment, and those accused of sexual harassment. Employers are more vulnerable than ever of being found liable for sexual harassment, following the United States Supreme Court’s decisions last year in Faragher v. City of Boca Raton and Burlington Industries, Inc. v. Ellerth.

The Importance of Conducting Investigations

Employers, of course, can escape liability in certain instances by showing both (1) that they acted reasonably to prevent and correct promptly any sexually harassing behavior; and (2) that the complaining party unreasonably failed to mitigate her harm by using the employer’s internal grievance procedure. Focus on the first element has heightened the need for employers to implement preventative strategies in dealing with sexual harassment. Equally important is an employer’s response once a claim has been raised. This response is the investigation that the employer is duty-bound to conduct once it notified (directly or indirectly) that sexual harassment has occurred.

The Dangers of Not Being Sensitive to an Accused’s Rights

Employers must not overreact and neglect to consider the rights of the accused in response to sexual harassment complaints. Employers have been known to summarily terminate employees accused of sexual harassment, some with high-ranking positions and some that have been employed for many years. Employers are scared – and with good reason. These days, courts and juries take sexual harassment seriously. They also, however, are cognizant and protective of the rights of the accused.

A celebrated case exemplifying this proposition involved a former executive with Miller Brewing Company, Jerold Mackenzie, who was terminated for discussing with a female co-worker a sexually-explicit episode of television’s "Seinfeld." A Wisconsin jury awarded him an astonishing $26.2 million after finding that the company improperly terminated him. This message should be enough to give employers pause – and shudder.

Many employers terminate employees who they believe committed sexual harassment in violation of company policy and state and federal law. Faced with the reality of coming home to their families and admitting that they have been fired for sexual harassment, many discharged employees go on the offensive and deny that the misconduct ever took place. They may also say that their rights have been violated in the process. Alleged harassers bring suits under a number of different theories, including wrongful termination, defamation, breach of implied covenant of good faith and fair dealing, breach of contract, promissory estoppel, and statutory claims under state and federal discrimination laws. Indisputably, alleged harassers’ rights are clearly discernible and must be respected.

Leading Decision Protecting Employers

The California Supreme Court, in Cotran v. Rollins Hudig Hall Int’l, Inc., strikes a socially-engineered balance between an accused’s rights and an employer’s obligations to investigate sexual harassment complaints and take appropriate corrective action, although other courts, including Massachusetts, have not. There, the issue was whether: (1) the jury should be determining if the accused/plaintiff in fact committed the sexual harassment; or (2) the employer had a good-faith belief that the accused committed sexual harassment and fired him for that reason.

This decision received national attention because of its implications for every employer. What disciplinary action is appropriate when an investigator concludes that harassment took place?

In this case, Ralph Cotran ("Cotran") was a senior vice-president and manager for Rollins Hudig Hall International, Inc. ("Rollins"), an insurance brokerage firm. In March 1993, a Rollins employee reported to the company’s human resources (HR) director that Cotran was sexually harassing two female employees. This report triggered Rollins’ investigation. Let’s review the thorough and prompt steps the company took in response to the complaint.

The Investigation

The HR director began the investigation by interviewing both women, who confirmed the sexual harassment. Two days later, the women furnished statements (and later sworn affidavits) stating that Cotran had exposed himself, masturbated in their presence, and made repeated obscene telephone calls to them.

Next, the president of Rollins, together with two equal employment opportunity (EEO) managers, met with Cotran and discussed the accusations against him and the investigative process. Cotran was silent as to any past relationships with his accusers. He was suspended pending completion of the investigation.

Over the next two weeks, Rollins’ manager for EEO compliance interviewed twenty-one (21) people who had worked with Cotran, including five individuals whom he had asked the manager to interview. This manager concluded that both accusers were credible. The investigation also revealed the following: that Cotran had no prior history of engaging in alleged sexual harassment while at Rollins but that there were incidents of sexual harassment involving him and former Rollins employees. As a result of the company’s findings, Cotran was fired. He then sued for wrongful termination.

The Trial

At trial, a dramatically different story about Cotran’s relationship with his two accusers emerged. Cotran testified about prior consensual sexual relationships he had with both accusers. He produced credit card receipts to evidence liaisons that took place at a hotel. He also offered corroborating testimony from witnesses as to his personal relationships, and presented motives for why the women would make the accusations. He testified that he did not previously tell his employer the nature of his relationships because he was "frightened" and felt "ambushed" by Rollins. Of significance, Cotran began an intimate relationship with his wife-to-be at the same time he continued having an affair with one of his accusers. As we know too well, lying about extra-marital sexual relations is not unusual.

Now, faced with some evidence that perhaps Cotran did not engage in unwelcome or offensive behavior toward these two women, Rollins mounted a defense at trial by saying that it reached its decision honestly and in good faith. Moreover, it argued that it was not required to prove that the acts of sexual harassment in fact occurred in order to justify Cotran’s termination. The trial court rejected Rollins’ argument. The court, in an instruction that was determinative of the case’s outcome, advised the jury that Rollins had the burden of proving that Cotran committed the acts of sexual harassment that led to his dismissal and "whether [Rollins] in good faith believed Cotran did it is not at issue." Not surprisingly, the jury rendered a verdict in Cotran’s favor and awarded him $1.78 million.

The Appeal

On appeal, the California Supreme Court reversed. The jury’s role, it explained, is to assess the objective reasonableness of the employer’s factual determination of misconduct by the alleged harasser under the circumstances known to the employer at the time the decision was made. According to the court, the jury is remote from the everyday reality of the workplace. The factfinders must give deference to organizational judgment, which turns, in part, on "intractable factual uncertainties," the Court ruled. The court notes that the workplace is not an adjudicatory arena and, if it were turned into one, effective and necessary corporate decisionmaking would be thwarted. Moreover, if juries were allowed to substitute their opinions for those made by a reasonable employer acting in good faith, an employers’ willingness to act when faced with charges would be hindered.

Though the California Supreme Court failed to define under what circumstances an employer acts in good faith, responsibly, and with objective reasonableness, this decision offers defense counsel guidance on how to position their business clients faced with a tough personnel decision like in Cotran. Here are some guidelines:

• Promptly initiate an investigation into all sexual harassment complaints.
• Take remedial action to separate the complaining party and the accused; depending on the circumstances, consider suspending the accused.
• Utilize an experienced, trained investigator and collaborate with human resources and EEO managers, when appropriate.
• Interview the complaining party and obtain a signed statement, if possible, about the
• Interview the accused and listen to any explanations that may be offered; solicit the names of any witnesses that may corroborate a defense; explain the investigative process and the rights of both parties.
• Interview co-workers and other persons who may have knowledge of the alleged misconduct or defenses.
• Follow up on any information revealed during the course of the investigation that tends to corroborate or cast doubt on the allegations.
• Assess the credibility of all involved.
• Reach a conclusion.
  

Acting with respect to these considerations will go a long way toward shielding employers from liability for either under- or over-investigating a claim. There should be no rush to judgment but, rather, an orderly, comprehensive, and timely process by which the employer can assess the actions of both the accused and accuser.

Julie A. Moore, Esquire of Employment Practices Group in North Andover, Massachusetts, specializes in risk-management, workplace training and internal investigations on sexual harassment and other employment issues. She is admitted to practice law in Massachusetts and New Hampshire. She can be reached at jmoore@employmentpg.com or 978-975-0080.