Archive for the ‘Lawsuits’ Category

Massachusetts has broad statutory protection against discrimination in employment, much of which can be found in G.L. Chapter 151B.  The Massachusetts Supreme Judicial Court recently ruled on two little known provisions of the statute, the “aiding and abetting” provision, found in Section 4(5) and the interference provision, found in section 4(4A).  The most important thing about these provisions is that a person or a business can be liable for discrimination under Chapter 151B even if they are not the employer of the claimant.  The case is reported as Lopez v. Commonwealth, 463 Mass. 696 (2012).  Although the Lopez case concerns the Human Resources Division’s testing for public jobs, the reasoning of the case will apply equally in the private sector.

Discrimination for Interference With Employment Rights:

Under the words of the statute, it is unlawful for “any person to coerce, intimidate, threaten, or interfere with another person in the exercise or enjoyment of any right granted [by the statute].”  The SJC ruled in Lopez that under Section 4(4A), a person “need not be an employer to be subject to an interference claim.  Id. at 706.  Pursuant to this paragraph, in pertinent part, it is unlawful for any person to “interfere with another person in the exercise or enjoyment of any right granted or protected by [G.L. c. 151B].”  Id. 

Although its precise application is hard to define, the message is clear: if you act in a discriminatory fashion you and your company may be liable for the full amount of damages under the statute.  For example, if a salesperson called on your company from ABC Sales, you could be found liable if the complained to ABC Sales that you did not care for this salesperson because of his (race, religion, sexual orientation, etc.) if ABC Sales then took negative action against the salesperson.

In fact, you could be liable even if you did not have a discriminatory motive, so long as your actions were intentional.  Take another example, let’s say that your company hires temporary employees from BCD Temps.  If you required BCD Temps to provide you only with new college graduates, that would likely have a disparate impact on older workers.  Under the reasoning of the SJC in Lopez, you could be held liable to older workers who were not given the job with BCD Temps because of your requirements.

There can also be liability for creating a hostile work environment, even to your non-employees.  You cannot turn a blind eye to egregious discrimination or sexual harassment that is happening in your premises or a worksite you control.

Liability for Aiding and Abetting.

Chapter 151B, Section 4(5) provides in pertinent part that it is unlawful “for any person, whether an employer or an employee or not, to aid, abet, incite, compel or coerce the doing of any [forbidding discriminatory act.”.  In order to prevail on an aiding and abetting claim under Section 4(5), the SJC ruled that a claimant “must show that the defendant (1) committed ‘a wholly individual and distinct wrong … separate and distinct from the claim in main’; (2) ‘that the aider or abetter shared an intent to discriminate not unlike that of the alleged principal offender’; and (3) that ‘the aider or abetter knew of his or her supporting role in an enterprise designed to deprive [the claimant] of a right guaranteed him or her under [G.L. c. 151B].’”  Lopez, at 713, quoting Harmon v. Malden Hosp., 19 Mass. Discrimination L. Rep. 157, 158 (1997).

The biggest difference in aiding and abetting liability is the requirement of specific intent.  It is hard to imagine a case where a claimant could show aiding and abetting, if the claimant could not also show interference with its lower standard.  In the examples set forth above, a claimant would likely be able to prove aiding and abetting if he could show the intent to discriminate.  It remains to be seen whether there are applications of Section 4(5) that do not fit under section 4(4A).

In summary, you have to at least be aware of these types of issues in your business dealings.  While few modern employers intentionally discriminate, you now have to be cautious that your actions will unintentionally discriminate against non-employees.  These are serious matters.  When successful, discrimination awards can and often do range in the hundreds of thousands of dollars, and higher.  If you have any questions on how your business dealings could be putting you at risk, call me at 617.338.7000.

By Adam P. Whitney

Many employment lawyers tell their corporate clients to provide only basic information when giving a job reference.  That is, to just verify dates of employment and the position held, and nothing more.  Employers invariably think we are being too cautious.  But there is recent proof that saying too much can not only get your company sued, you can end up paying significant damages as well.  The case is reported as Timothy J. O’Brien v. Mark L. Chretien et al, (unpublished, MA Appeals Court).  From my reading of the case, the plaintiff actually sued a party who was not his employer, but was related to the plaintiff’s employment. In any event, the cautionary tale is one for Massachusetts employers.

The plaintiff, represented by Jeremia Pollard of Hannon Lerner, P.C. in Lee, MA, worked as a paramedic.  The appeals court determined that the evidence was sufficient for a jury to find that Berkshire Medical Center, Inc. (“BMC”) told the plaintiff’s potential employer that the plaintiff had lost his medical clearance and that a “no trespass” order had been issued against the plaintiff.  There was no evidence presented that there was truth in these statements, the Appeals Court found.  The defendant denied making these statements, but because the statements were oral, the jury apparently believed the testimony and notes of the person who heard the comments and passed them on to the potential employer.  Because of the statements made by BMC, the plaintiff was bypassed for a municipal job even though he was better qualified.

The plaintiff prevailed at trial on claims of defamation and interference with his prospective business relationship.  The Appeals Court upheld the ruling.  My research indicates that the plaintiff won $204,000 at trial.  With interest, this figure is well over $300,000.  That’s not including BMC’s own legal fees, which would likely put the total exposure north of $400,000.

There are a few ways that an employer could potentially avoid this exposure.  For one, they could follow their standard advice and provide only the dates of employment and job position held.  For another, the employer could ask the former employee for a complete waiver to allow them to speak honestly.  There is no guaranty that such a waiver would hold up, but I do not see why it wouldn’t.  Third, the employer could provide any reference in a carefully-vetted (by an attorney) written correspondence, to make sure that it is not subject to a defamatory interpretation.  In the case set forth above, BMC was in the position of defending a he said-he said situation, which put it at the mercy of the jury.

If your company needs guidance on providing a reference, give me a call at 617.338.7000.

By Adam P. Whitney

Summer is over and it’s time to get back to work.  For me, that means back to blogging and protecting my clients’ business interests.  For you business owners, consider it a good time to review your business contracts.  As a business litigator, I frequently see poorly drafted contracts that result in companies being dragged into court, or in a weakened position if they have to file suit.  You may find free contract samples on the internet, and they may be worth every penny.  Contracts need to be tailored to your industry, your state law, and to accomplish your particular goals.

While contractual language may seem routine and mundane and full of boilerplate, the language of contracts can make the difference between being sued and not sued, between losing a trial or prevailing on a summary judgment motion, and between paying triple damages or just single damages.

Here are a few of the more important provisions.  I’ll add some more provisions in later segments.  I know that the attention span for contractual clauses (at least for me) is not that long.  No one actually needs these provisions …. until things fall apart and they need these provisions.

Choice of Forum Clause

Getting sued is never pleasant, but getting sued in a state other than your home state can be even worse.  You’ll have to find an attorney in the other state to represent your company.  You’ll have to travel to the other state for depositions and trials.  You may be concerned that a judge or jury will view your out-of-state company less favorably than the local company.

This can be avoided with a very simple, commonly enforced clause.  Better yet, you can reverse this by making your opponent come to Massachusetts to sue you.  This creates a disincentive to sue you, and makes your opponent spend all the travel related expenses.

Whenever you have the bargaining power, and especially when you are contracting with an out-of-state company, insist on a choice of forum clause.  You can also insist on what law applies, which doesn’t necessarily have to be Massachusetts.

Merger/Integration Clause Plus.

Many contracts have boilerplate merger and integration clauses which essentially state that the contract contains the entire agreement and that all prior negotiations are merged into the agreement.  This gives you some protection from the other party claiming that there were different oral terms discussed.  This is fine, as far as it goes.

But you can do better.  The “plus” that I would include would be language that would protect you (to the extent possible) from claims of misrepresentation and fraudulent inducement.  This is important, because your opponent will use these claims to get around the plain terms of the contract.  Worse yet, your opponent will make a claim under Chapter 93A, which provides for potential double or triple damages, plus attorneys’ fees and litigation costs.  This area of law is very tricky.  There is a line of Massachusetts precedent that states that boilerplate language will not protect you against claims of fraud.

As a lawyer, it’s frustrating that the courts disregard tried and true contractual language by simply dismissing it as “boilerplate.”  But we have to play the hand we are dealt.  There is another line of cases that allow sophisticated business entities to set forth the entirety of the representations that they are relying upon.  There is no one-size-fits-all provision that works here.  You’ll need to spend a few dollars in legal fees to protect yourself from a potentially big judgment.

Limitation of Liability/Damages Clause

Parties can agree to a maximum limit of the amount and type of damages for which they will be liable.  This is more important if you are the party who is more likely to be sued for consequential or punitive damages.  For example, if you are providing services, you may want to have a provision that your liability is limited to the total amount that you are being paid.  If you are providing goods, you may want to limit any remedy to replacing the goods.

You can have a provision that precludes punitive and exemplary damages, and provides that the parties will pay their own attorneys’ fees.  There are dozens are variations, depending on your particular industry and your goals.  Not every provision will be enforceable for every industry, which is why you should not just pluck some provisions from the internet and hope for the best.

If your business contracts need a tune up, give me a call at 617.338.7000.

Adam P. Whitney

It sucks when your company gets sued.  But it’s part of operating a successful business.  No one wants to sue a business that has no money and no assets.  The more successful you are, the bigger the target you have on your back.  Lawsuits are not fun.  They are risky.  And very expensive.  No lawyer can change any of that, but there are certain things that you should do, and not do, as soon as you receive lawsuit papers, including the following.

 

  1. Don’t Ignore It.  Although some threatening letters from lawyers are empty threats (you should not ignore these either; some require a response by statute) that you may choose to ignore, a summons and complaint notifying you of a lawsuit will not go away on its own.  In fact, there can be grave consequences, including a default judgment against the named defendants, or, in some cases, an immediate injunction (court order) against your company.  Although a default can sometimes be vacated if you take swift action, you don’t want to leave that to chance.  This leads to the second point …

 

  1. Call Your Lawyer Immediately.  I know this sounds self-serving, and no one likes to pay legal fees, but you need legal advice, and fast.  If your business is a legal entity, such as a corporation or LLC, you cannot represent it in court in Massachusetts (with the exception of small claims).  One of the consequences of incorporating is that your business is a separate legal entity from its owners; unless one of the owners is a licensed lawyer, you will need to hire an attorney or else face default.

 

  1. Choose the Right Lawyer.  All lawyers are not the same.  There are different specialties, different personalities and styles, and different hourly rates.  Your ideal lawyer will have some experience in the type of case at issue, will have a reasonable rate, and will have a personality and style that you can work with.  Don’t be shy about asking tough questions about the lawyer’s experience.  Consider asking for references.  Investigate the lawyer on-line (www.avvo.com is a good starting point).  Ask the lawyer for a litigation budget, a general defense strategy, and the lawyer’s thoughts on alternative dispute resolution.  You will not offend the lawyer by being a smart consumer of legal services.  If you do, then you are probably talking to the wrong lawyer.

 

  1. Check for Insurance Coverage Immediately.  Even if you think that your policy, be it a general liability policy, directors and officers policy, or other insurance does not cover the claim, check with your insurance agent anyway.  You may be pleasantly surprised.  If you are fully covered, the insurer will assign a lawyer and will pay the lawyer, subject to any deductible, and will likely pay for any settlement or judgment.  Sometimes insurers agree that they have a duty to defend your company, subject to a reservation of rights.  This usually means that you can pick your own lawyer, and the insurer will pay the reasonable and necessary legal fees, at least until and unless it or a court determines that there is no coverage.

 

  1. Preserve Electronic and Paper Information.  Put any normal document destruction or e-mail purging programs on hold.  You have a duty to preserve information, which could help you or the other side.  If you destroy information, that fact can be used against you, which may look like you are trying to hide something even when you are not.

 

  1. Be Careful What You Say or Write.  Other than communications with your attorney, almost everything you say about the plaintiff or the lawsuit is discoverable.  That includes internal e-mails with your staff.  It likely includes investigations or interviews that you take without a lawyer (sometimes, it makes sense for companies to do their own investigations).  Your best bet is to let your lawyer handle it.  A meeting with you and your key personnel is not protected from discovery if your lawyer is not there.  E-mails and memoranda can be especially devastating.  Don’t put something in an e-mail unless you want it blown up on a giant poster-board in front of a judge and jury.  If you have any doubt, check with your lawyer.

 

  1. Don’t Just Let the Lawyers Handle It.  Although you want to continue to focus on your business, it would be a mistake to turn the defense of the suit over to your lawyers and then not monitor it.  You want to be involved, because you know your business and the facts better than the lawyers.  There is so much at stake.  Think of yourself as part of the defense team.  If you have no insurance coverage, you can also keep a better handle on legal fees and expenses.

 

  1. Consider Alternative Dispute Resolution.  First, check to see if a contract at issue requires arbitration.  In some circumstances, arbitration can be quicker and cheaper than litigation (but not always).  It’s also more private.  Also consider, after consultation with your attorney, pursuing early mediation.  If there is some exposure on the claim and the plaintiff and plaintiff’s lawyer appear to be reasonable, you may be able to save tens of thousands in legal fees and eliminate the risk of a judgment in an indeterminate amount.  Consider that, in Massachusetts, interest runs at 12% per annum from the date of the breach of contract or the date of filing.  Do the math; it adds up.  If handled correctly, a request for mediation is not a sign of weakness.

If you or your company have been sued, or you know a lawsuit is on the horizon, and you need assistance, give me a call at 617.338.7000.

You may have signed many contracts with boilerplate language whereby your company agreed to indemnify and “hold harmless” the other contracting party.  Most people have some concept of what this means, but really do not think through the ramifications of such an agreement.  Whenever possible, delete these provisions from any contract provided by the other party.  If you are forced to agree to indemnity clauses, have your lawyer suggest reasonable changes and explain your company’s risk.  Also, check with your insurance agent to see what will be covered.

The word “indemnify” is usually thought to refer to claims by third parties who are not parties to the contract.  If your company agrees to indemnify ABC company, your company will pay any judgment as well as the cost of defense.  Hold harmless, in the opinion of some legal minds, is slightly different; this could mean that you will not sue ABC company if a third party sues your company for something that ABC company allegedly did wrong.  Both indemnity and hold harmless agreements are subject to judicial review for public policy and reasonableness, and certain statutes apply, both of which can temper their literal interpretations.  However, your best option is either to not sign them at all, or insist on some reasonable parameters.

Even lawyers do not completely understand all of the complexities of indemnity and hold harmless provisions.  Often, these are inserted as boilerplate provisions, with little thought by the lawyer about what they mean.  Many lawyers who draft such provisions are contractual lawyers, not trial lawyers, so they do not fully appreciate the practical implications of indemnity and hold harmless provisions.

Vague indemnity and hold harmless provisions create a lot of unanswered questions.  Do you have to indemnify ABC company if it was negligent?  If it committed an intentional act?  If it sexually harassed someone?  If one of its drivers caused a fatal auto accident?  Can ABC company hire any lawyer it wants to defend it from a third-party claim?  A law firm that charges $500 an hour?  Can the firm engage in a scorched earth defense on your dime?  Can ABC settle the claim for any amount and make you pay it?  Do you have any say in the selection of lawyers and defense of the case?  Does the indemnity provision prohibit you from suing ABC company if it harms your company? Will you have to pay ABC’s legal fees if you sue it?

If you do not know the answers to these questions, or the provisions are simply silent, you need a lawyer to write better provisions.  Plain English is preferable to archaic language that lawyers and courts interpret differently.

The same applies if the coin is flipped and you require ABC company to indemnify you and hold you harmless.  You don’t want to have to rely on vague provisions.  Get the protection you need specified in clear language.

If you have a question about any indemnity and/or hold harmless provisions, call me at 617.338.7000.

By Adam P. Whitney

It’s only mid-January, but Francesco Schettino has made a strong case for Rogue Employee of the Year as a result of the crash of the Concordia, the cruise ship that capsized off Tuscany. You can find the full story here: http://www.huffingtonpost.com/2012/01/16/costa-concordia-ceo-capain-crash-disaster-cruise-ship_n_1208791.html?ref=business&ir=Business

The Captain apparently thought his personal judgment was superior to that of his company, which had a programmed course for the ship. The result was a crash against a reef that capsized the boat, the deaths of at least six people (with sixteen more unaccounted for), and the risk of 500,000 gallons of fuel leaking into pristine waters. It has also been alleged that the Captain abandoned ship before the passengers had been evacuated.

Having an employee who causes injury or death to customers or members of the public is the worst thing that can happen to a company. In addition to the tragic loss of human life in the Concordia crash, the company expects to lose $85 million to $95 million. That’s before the lawsuits start flying, which could conceivably double or triple that number.

There are two lessons here for employers. The first lesson is that employers have to take reasonable precautions to prevent tragic accidents. This it obvious to employers who have company vehicles, and for employers in inherently dangerous fields, such as construction. You may have to drug test and have a strict policy on drugs and alcohol (but, see my post on having employees pee in a cup https://damnedif.com/2011/03/21/you%e2%80%99re-damned-if-you-don%e2%80%99t-get-legal-advice-before-having-your-employees-pee-in-a-cup/).

Even if you have a safe office environment, you still have to be careful about employee drinking and driving (see my post on holiday parties https://damnedif.com/2011/09/27/you-may-be-damned-if-your-drunk-employee-leaves-the-company-party-and-kills-someone-in-a-car-accident/).

The second lesson is that employees who do not follow company guidelines will get your company in trouble, no matter what industry you are in. Off-the-course employees can get you into trouble with government regulators, expose you to lawsuits, alienate customers, etc. It’s up to you to identify the danger areas and take safeguards to protect your company. In the case of the Concordia, the company had its set course, but it’s not clear if the company adequately trained the Captain in the specific dangers off the coast of Tuscany. As you read this, someone in your company is cutting corners, or veering off your set path, and they may not even appreciate the risks. You can’t always prevent rogue employees from doing this, but you can at least educate all of your employees on the consequences of their actions.

By Adam P. Whitney

This week I have had a rash of clients dealing with ex-employees behaving badly. Employees who feel that they have been unfairly fired may want to cause harm to your company. And they know how to hit you where it hurts. A favorite devious tactic is to harm your business relationship with your clients or customers by badmouthing you, or by undermining your credibility. They do other devious things too. Once it gets to that point, or you see it about to get to that point, your options are merely brute force and damage control, which are certainly not mutually exclusive. Below, I’ll discuss how to handle these options. In a later post, I’ll discuss how to avoid getting to the point where you are left with these unenviable options.

The Brute Force Option

Clients often come to me after an employment relationship has ended badly and the ex-employee has gone rogue to harm the company. In my world, lawyers can write letters and file lawsuits, but there is not much else that they can do to stop the misbehavior of a rogue ex-employee. In appropriate circumstances, law enforcement can be involved.

I generally opt for the stern letter first. Some of my colleagues call these “nastygrams” because they are usually pretty threatening; some call them “cease and desist” letters. I call them “stop the nonsense” letters. A well-written stop the nonsense letter can actually be very effective. If the rogue ex-employee is told the specific legal exposure that he is creating for himself, many will realize that they are being self-destructive more than they are actually hurting the company. This letter has to be written very carefully (for a variety of reasons) to both show the employee the exposure he is creating for himself, as well as show the employee the way to avoid further exposure.

The brute force option of last resort is a lawsuit against the rogue ex-employee. In rare cases, these are necessary, but no one really wins these lawsuits, other than the lawyers collecting fees (I like collecting fees too, but only if the client has a fair chance to get a good result). Even if the employer obtains a total victory, it is very unlikely that the employer will collect significant damages. These cases can be bitter, hard-fought and expensive. No one will be happy in the end unless the employer has such significant resources that vindication is priceless. I usually try to talk clients out of these suits, but I will and have pursued them if they have merit. The fruitlessness of suits can also be true for many types of suits against rogue ex-employees, including embezzlers and trade secret thieves, but it is not always the case. I have some nice judgments against ex-employees, but a judgment is just a very expensive piece of paper that gives you some rights to collect from the assets of the ex-employee, if any.

Damage Control

You should know best how to perform damage control and protect your valuable relationships with your clients. Cut off the rogue ex-employee,s access to your e-mails, cell phones, computers, etc., etc. If possible, cut off all chains of communications that the ex-employee can have with your client (the stop the nonsense letters can direct the employee to not trespass onto your property or your clients’ property and to not contact your clients). If appropriate, inform the client in advance that you have a rogue ex-employee who may try to defame you. Apologize in advance and assure the client that you are dealing with it. The client will appreciate and understand this, and may even be an ally.

If you have a rogue ex-employee who you need help dealing with, call me at 617.338.7000.

By Adam P. Whitney

That’s the lesson learned by a Massachusetts business owner in a case that just came down from the Massachusetts Appeals Court, A.C. Vaccaro, Inc. v. Anthony Vaccaro, ___ Mass. App. Ct. ___ (Oct. 13, 2011). The business owner lost the case, in part, because the buyer showed that he lacked “business integrity,” by not filing tax returns and by misrepresenting revenues to the buyer.

The case involved the purchase of a small business by the plaintiff from the defendant. After the purchase, the plaintiff alleged that the defendant had misrepresented the volume of business that the plaintiff could expect, and sued for damages. The plaintiff also alleged that the defendant violated the spirit and letter of an accompanying non-compete agreement by referring customers away from the plaintiff.

The plaintiff prevailed on claims for breach of contract and violation of Chapter 93A and was awarded damages and attorneys’ fees of $119,200. Presumably, that number will go up significantly if attorneys’ fees on appeal are awarded, and interest is added to the judgment. The judgment will be pushing $200,000, which incidentally was the purchase price of the business.

An interesting wrinkle arose during the litigation when the plaintiff discovered that the defendant had not paid its federal income taxes for the three years prior to the sale and had not even filed returns. The defendant was allowed, over the plaintiff’s strong objection, to present this evidence at trial. The Appeals Court affirmed this ruling, reasoning that the defendant had made specific representations in the purchase and sale agreement that taxes had been paid in accordance with the representations as to the volume of business.

Additionally, the Appeals Court reasoned that the failure to pay taxes or file tax returns “undermine generally [the defendant’s] credibility in a case challenging his business integrity.” One wonders how wide this opens the door to show a defendant’s lack of business integrity in business tort cases.

That question remains to be answered, but what is certain is that failing to play by the rules will eventually come back to bite you. If you don’t pay your taxes, you will be exposed eventually. You can’t fire employees for fear that they will turn you in. You will have to fear all litigation for fear that your actions will be exposed in court. The same is true if you misclassify your employees, if you don’t provide worker’s comp. insurance, etc., etc. In Massachusetts especially, there is a large push for businesses to follow a variety of laws that protect the public and benefit the government. Not following these rules will impact your business integrity and subject you to lawsuits, government sanctions, etc. You take shortcuts and violate these laws at your peril.

If you have any questions about your obligations as a business or employer, call me at 617.338.7000.

By Adam P. Whitney

The time of year is soon enough coming when employers hold holiday parties or open houses. It’s easy to get caught up in the spirit(s) of the season and to overdo it on the alcohol. Are you putting your firm at risk if an employee or guest drinks too much and causes an auto accident and injures himself or a third person? It depends (that catch-all lawyer answer).

There are a variety of options for employee parties, from providing the liquor yourself at the company premises, having a professional caterer on the premises, renting a function hall, or going to a bar or restaurant. Some of these are safer options than others.

The safest option is a bar or restaurant where the employees and guests are buying their own drinks (the employer could hand out bonus cash that day). Even if the company is picking up the tab, the risk is still low. The crucial issue is control of the liquor. If the restaurant wait staff is in control of serving, your risk of liability for an accident is low. Employers do not have a general duty to act as big brother or sister to employees, especially after work hours. That doesn’t mean that a manager should be forcing shots on employees, as even this safe option has logical limits.

Also generally safe would be to hire a professional caterer either at a function hall or your place of business. But there are a few more guidelines to follow. First, make sure that the caterer is reputable and that the staff has experience serving alcohol. Make sure that the caterer obtains the permits. Make sure that the caterer is properly insured, and get an indemnity agreement from the caterer. Also, find out the plan of service. For example, you would not want employees and guests to have free access to liquor; they must order drinks from trained staff which has the authority to refuse drinks to someone underage or visibly intoxicated. You also should not ignore if drinking is getting excessive, such as drinking games organized by an employee. Check with your own insurance agent to see what coverage you have if you do get sued (speaking with your insurance professional is always a good idea).

The biggest risk is when the employer provides the alcohol and serves the alcohol. This fully opens the door to liability if you over serve someone who causes an accident. Although this may be a money-saving option, I would advise against it. It’s very easy for employees to get carried away at these events, and you don’t want to be in a position of either being the wet blanket or worry about liability.

Of course, you should remind employees ahead of time to be responsible and to designate a driver. Better yet, if the company could possibly provide drivers or promise to reimburse cab fare, that’s all the better all the better. In addition to preventing liability, you should of course care about the well-being of employees and innocent third parties. You don’t want to be sued, and you don’t want your company name in the paper because your employee killed someone after a wild party. Also think about the devastating effect on morale if something happened.

A topic for another day is the risk of sexual harassment at firm parties (or even “date rape”, as was alleged in one case).

If you have any questions on dealing with liability issues for an open house or company party, call me at 617.338.7000. As always, the above is general information, not legal advice.

By Adam P. Whitney

They say that the cover up is worse than the crime. It’s equally as true that retaliation is worse than the original alleged discrimination. The City of Cambridge, Massachusetts learned this lesson the hard way, according to a recent reported decision, Monteiro v. City of Cambridge, Mass. Appeals Court, 10-P-1240 (August 15, 2011). How hard was the lesson? The total award that was affirmed by the Appeals Court was roughly $6.7 million. By some estimates, that City’s total exposure will be $10 million when additional interest and attorneys’ fees and the City’s own attorneys’ fees are added.

In 2011, virtually every employer knows and appreciates that discrimination based on race, national origin, etc. is prohibited and will subject the company to suit and damages. I have never met a manager or owner of a company who thinks that such discrimination is okay. It is obvious to all fair-minded people that such discrimination is wrong and has no place in our society.

What is less obvious to employers is that retaliation claims are at least as great a concern as discrimination cases, even where no discrimination has actually taken place. You read that right; an employer can be liable for significant damages for retaliation of a complaint, even when the original complaint itself could not be proven. Another surprising thing to employers is that an employee could recover for retaliation even if they did something else wrong prior to their termination.

You may now be scratching your head and asking, how can this be? Let’s back up a bit. Employees of employer’s of six or more employees have a right to make both internal and external (to the MCAD or EEOC) complaints about perceived discrimination. By law, employers must take those complaints seriously and they cannot retaliate against the employee for making the complaint. So long as the employee has a good faith basis for the complaint, which is a low standard, the complaint is protected activity. The complaint does not need to be ultimately meritorious. This makes sense because, in fact, most discrimination cases result in a finding of no liability. The employee still has every right to make a good faith complaint and cannot be punished for doing so.

In the Monteiro case, the jury never determined that the City engaged in prohibited discrimination, but it did find that there was retaliation that led to Ms. Monteiro’s termination. A complete description of the trial is not readily available, but based on one news report the City alleged that Monteiro falsified timesheets. Surely, if true, that would give the City a right to fire Monteiro, right?

Wrong. Monteiro’s attorney presented evidence where other employees (who did not file a complaint) committed comparatively equal wrongful acts and were not punished or terminated. This together with other evidence allowed the jury to determine whether the adverse employment actions were the result of Monteiro’s alleged wrongful acts or the result of prohibited retaliation. The jury determined the latter.

The takeaway should be obvious. You want to avoid any actions or an atmosphere that could lead to discrimination complaints in the first place, but if you do get complaints, take them very seriously. It’s important to tell your managers and maybe even co-workers not to take any adverse employment action until you consult with counsel. You may need to err on the side of giving a poorly performing employee more breaks because they filed a discrimination complaint, even if bogus. Do employees abuse the complaint procedure to avoid an expected termination? Sure, some do. But get counsel involved and tread cautiously when you have any discrimination complaints. If you have any questions about how to respond to discrimination complaints, call me at 617.338.7000.

By: Adam P. Whitney