We employment lawyer types proudly boast that no one has better legal stories to tell than we do (if only we could tell all of our stories). Some of our best stories were thrust into the media during the first quarter of 2015. Not only are these stories juicy, but they are cautionary tales and a learning experience for employers.
On February 5, 2015, a jury in Manhattan found the law firm of Faruqi & Faruqi, LLP, and one of the firm’s partners, partially liable for creating a hostile work environment. A former associate claimed that the partner, a reputed rainmaker, repeatedly spoke to her using crude and vulgar language, kissed her and touched her breasts without her consent, and propositioned her. She alleged his conduct culminated in a sexual assault following an office holiday party. The partner testified that the former associate voluntarily returned to the office with him, but that no sexual encounter ever occurred. Following a highly publicized three week trial, the jury found that the law firm and the partner did not violate the federal anti-harassment law. However, the jury did award the former associate $140,000 in damages, representing $90,000 in lost compensation, $45,000 in punitive damages against the partner, and $5,000 in punitive damages against the firm.
The back story is as interesting as the facts. The former associate had sought a $2 million judgment. After the trial, the law firm revealed that she had rejected a $425,000 settlement offer — far more than the jury awarded her at trial. The parties are now fighting over attorney’s fees, with both sides claiming victory. The court already awarded the law firm more than $10,000 in costs. The former associate claims that she should be awarded $1.4 million in fees.
The Faruqi case was then topped by a law suit filed by the Reddit Inc. interim CEO Ellen Pao against the investment firm Kleiner Perkins Caufield & Byers LLC, her former employer. The judgment sought by Ms. Pao was staggering: she sought $16 million in compensatory damages (actual damages), and the judge authorized her to claim $100 million in punitive damages. However, on March 27, 2015, a California jury found the investment firm did not discriminate against Ms. Pao by failing to promote her, nor did they terminate her employment because she complained about the firm both internally and by filing a lawsuit. Similar to the Faruqi case, the Kleiner Perkins case commanded front page coverage in the press and in legal publications.
Other than providing good gossip, what can employers learn from these two highly publicized cases?
- In the case of sensational publicity generating claims, settlement may be superior to a public trial. Few people generally recall the verdict; the allegations, however, are memorable. Particularly in harassment and discrimination cases, while a jury might reject a claim, the underlying facts are off-putting.
- Engage a public relations firm early in the process. Employers need to control the message.
- Sometimes a case needs to be tried — especially when the plaintiff’s settlement demand far exceeds the combined value of the monetary payment and the adverse publicity.
In light of the employers’ results at trial in these sensationalized cases, particularly as compared to the judgments sought, it might be hard to argue with their decisions to take the cases to trial. But it would also be hard to argue that the results came with a significant public relations price tag. An employer confronted with allegations that have a risk of sensationalized publicity should thus consider, from the outset of a dispute, the public relations impact against what might be exorbitant financial demands, and craft a strategy to account for both possibilities.