The Blame Game: #MeToo Edition

In 2013 in San Diego, California, a harbinger of the #MeToo era began hitting the national headlines, involving San Diego Mayor Bob Filner. On July 11, 2013, three of Filner’s long-time supporters held a press conference to call for Filner’s resignation as mayor, based on numerous, unspecified but credible allegations that he had sexually harassed women. By August 2013, 19 women had publicly claimed that Filner had sexually harassed them, including, among others, a retired admiral, a Marilyn Monroe impersonator who appeared at one of his fundraisers, a 67-year-old great grandmother who worked for the city, and a nurse who said Filner demanded a date in exchange for helping a Marine who had suffered a brain injury and post-traumatic stress during service in Iraq.

The allegations rocked San Diego. How had it been possible for such activities to have been taking place in a big city government? For many San Diegans, it seemed that reality shifted. Local government was not the professional, ethical institution that the citizens thought it was. If it could happen there, it could happen anywhere. And if it could happen to a retired admiral, then who was safe? What we didn’t know then was that there were more stories—many more than we ever imagined.

In 2017, the #MeToo movement was ushered in. What had previously been a campaign among sexual abuse survivors launched into a national crusade. Since then, numerous high-profile women have leveled allegations of sexual harassment at men in the highest levels of society; men who previously were considered untouchable. The #MeToo movement has had a ripple effect, unleashing a significant increase in sexual harassment claims, according to the U.S. Equal Employment Opportunity Commission. These claims have hit the insurance industry as well, and that is why this edition of “The Blame Game” focuses on sexual harassment claims.

As we know, one of the most important things that claims professionals, risk managers, and defense counsel do is evaluate the verdict potential of cases that are headed for trial. As a trial date approaches, we schedule roundtable meetings in which key members of the claims and defense team convene with their most experienced personnel to discuss key issues in a case. We take out our crystal balls and make our best estimates about the odds of winning a case, the likely outcome at trial, and other variables like the risk of runaway verdicts and the idiosyncrasies of a judge or jury pool.

With all of this in mind, below are summaries of three #MeToo cases from around the country with as much detail as could be obtained from jury verdicts and news reports concerning liability and damages. As each case is reviewed, consider the probable outcomes. Should the case end in a plaintiff or defense verdict? If you expect a plaintiff verdict, how much do you think the verdict will be? Are punitive damages a risk? If so, how much? Lisa Unger, director of casualty claims at Hallmark Financial Services Inc., will pitch in and share her assessment of the outcome of each case before the actual verdict is revealed. Let’s play “The Blame Game!”

Case One: Hold the Sugar

Our first verdict comes from the Southern District of New York and deals with allegations of sexual harassment by a mid-50s female storeroom attendant who had worked for a sugar refinery company for over 20 years. It was alleged that a new supervisor began regularly commenting on her looks, soliciting romantic attention from her, and, on one occasion, grabbing her behind in a closed-door meeting. The supervisor also allegedly made inappropriate and sexually suggestive comments in front of other workers frequently.

According to the lawsuit, the worker complained to at least two supervisors about the new supervisor’s behavior. Prior to filing suit, the employee claimed that she called the company’s harassment hotline and went to the company’s human resources department, where she received no support. The employee also claimed that she was the only female worker in the storeroom, that she was constantly passed over for overtime assignments that went to less-senior male coworkers, that her manager constantly delayed her paycheck by submitting paperwork late, and that her manager once transferred her to the sanitation department—which she categorized as a demotion—as a form of retaliation after she rejected him and complained about the harassment. According to news articles, the employer did not conduct an investigation for four years, and when it was conducted, the investigation was allegedly inadequate.

The verdict report does not provide information about the employee’s special damages. From news articles, it appears that the employee incurred expenses in the form of seeing a psychiatrist for the emotional distress she experienced. No information is provided about lost wages. From reports, it appears that the employee continued to work for the employer through and after trial, so future lost wages do not appear to have been incurred. For these reasons, special damages appear to have been minimal.

Evaluation and Verdict: “The company erred on several fronts by not investigating immediately, and by apparently not taking the complaints seriously when they were first made,” says Unger. “According to the jury verdict report, the employee complained to supervisors, to the human resources department, and to a hotline, yet no investigation was conducted until much later. Workplace harassment, especially in the #MeToo era, needs to be taken seriously immediately. The lack of investigation suggests that, for this employer, the behavior gets pushed under the carpet, which won’t go over well with a jury. Unfortunately, this fact pattern is fairly common, and not at all shocking. What is very unusual is the loyalty of the employee, who continued working for the employer.

“This case is ripe for punitive damages because of the multiple failures to investigate,” continues Unger. “In a New York court, the outcome could be $500,000, or it could be $5 million. Given all of the facts, I estimate that the outcome would fall somewhere between $1.25 million and $1.75 million to compensate largely for general damages suffered over several years. Punitive damages could range from $2 million or more. There is a high potential for a runaway verdict.”

The verdict here was indeed significant. Compensatory damages of $1 million were awarded, plus $11.7 million in punitive damages. Unger’s assessment was spot on, and the employer took a hard hit as predicted.

Case Two: Fighting More Than Fires

Our second case takes place in the Southern District Court of Ohio and involves a 38-year-old female firefighter who was the first female firefighter in the history of an Ohio town. The employee claimed a variety of actions taken against her were sexual harassment. For instance, once she was hired, it took four years for her to receive her custom firefighting gear—something that usually only takes a few months. She also recalled a long history of a hostile sexual environment in the fire department. Her gear was vandalized (holes were cut in it), and, in one particularly repugnant event, a coworker urinated in her shampoo bottle. She cited a plethora of other sexual remarks and pranks, including someone placing bodily fluid on her blanket in her firehouse bunk, having holes cut in her t-shirts, her fire-fighting equipment tampered with, her firefighter gloves and hoods repeatedly taken, and her communications radio hidden for months. When she complained to the chief, nothing was done. She ultimately sued the department, and was fired the next year. At trial, the employee presented a variety of claims that included disparate treatment related to failure to promote, retaliation, and hostile environment.

The fire department defended on the theory that the fire department was a fun place to work and pranks were a part of that; however, there was no gender bias attached to those pranks because male firefighters were regularly pranked, too. The fire department characterized this more as a case of personal conflict between the employee and the chief of the department as opposed to a sexually hostile environment.

Evaluation and Verdict: “I predict this case will not go well for the employer,” says Unger. “This type of inappropriate environment in traditionally male-dominated workplaces is not uncommon to claims professionals who handle employment claims. Females subjected to these environments find it justifiably insulting and offensive. I estimate that the verdict will total $3.5 million, including punitive damages. The Ohio venue is a factor keeping a lid on damages, which could go much higher in other venues.”

The jury found for the employee on all claims and awarded $3.25 million in compensatory damages. The jury also assessed just $100,001 in punitive damages for a total verdict of $3.35 million. This total does not include attorneys’ fees, which are awarded to a prevailing party and can be expected to add a minimum of $250,000 to the total.

Case Three: Folly in the Fields

Our third case, from the Texas Western District Court, involves a pregnant and newlywed woman who was hired as a sales associate by an oil field inspection company in Midland. The woman was told by the personnel manager in an interview that a “little birdie” told him she was pregnant. Soon after she was hired, the personnel manager told the woman during an orientation tour that she was attractive and that they would date. The personnel manager later expressed surprise that the employee had continued her pregnancy. The employee confirmed she was pregnant and also disclosed that she was married. The manager’s advances were refused and, a few days later, the employee was told the company could not afford to bring on another salesperson, after all. The manager said the decision was not performance-related. The woman worked just four days on the job.

Evaluation and Verdict: “This type of termination can legitimately happen early in the relationship when the employer realizes a new hire is not going to work out for appropriate reasons,” says Unger. “Generally speaking, the employment relationship should be at will, so no reason would be required for the termination. Here though, the manager’s extraneous comments created an impression of a hostile work environment, whether accurate or not. The case value is very hard to estimate given the short-lived employment; the highest element of damages will likely be the punitive damages. I estimate a verdict of $250,000 to $500,000, including punitive damages. Since the case is in a Texas venue, there is an expectation that punitive damages will be kept in check, but with these facts there is a potential for a very large verdict. Moreover, if the plaintiff was a very good witness, given very few other facts in the case over a four-day employment period, that could be a major factor. An excellent plaintiff’s witness in this case could generate a verdict closer to $1 million or even more on the high end.”

The employee was awarded $167,000, plus $841,625 in punitive damages for a total verdict just over $1 million.

#MeToo Verdicts in Context

As we can see, sexual harassment verdicts in the era of #MeToo create significant exposures. It would not be exaggerating to say these verdicts can reach and even exceed levels of single plaintiff wrongful-death verdicts. In some states, the prevailing party in a sexual harassment case may recover attorney’s fees, which serves to significantly increase the downside of taking such cases to verdict.

These outcomes serve as a reminder that when complaints of sexual harassment are made, the employer should immediately investigate and, if called for, take corrective action. Documentation of the investigation is critical, and a timely response is key. Responding immediately can help reduce the exposure to punitive damages, which was the largest component of each of these verdicts.

Most importantly, workplace cultures that foster environments of respect and collegiality will dramatically reduce the exposure to #MeToo claims. Targeted training and a commitment to a professional workplace can go a long way to preventing #MeToo claims before they develop into legal problems.