Friday, March 6, 2015

Aligning Legal Strategy With Public Positioning

Two recent examples of failures to align litigation strategy with public positioning demonstrate the ease with which a seemingly sound legal position can cause reputational harm.

The first example involves Saks Fifth Avenue, a company that has long taken pride in its support for its lesbian, gay, bisexual, and transgendered employees. Since 2001, the retailer has offered a full range of health benefits to same-sex couples, and it partners with LGBT rights advocacy groups to help it promote a culture of inclusion.

Saks’ reputation for inclusion suffered severe damage because of its legal response to a lawsuit filed by a transgender employee. A trans woman who had worked in a Houston Saks store filed a lawsuit in Texas federal court alleging violations of Title VII of the Civil Rights Act, which prohibits discrimination in employment on the basis of race, religion, or sex. She claimed that although her managers knew about her gender identity, they pressured her to dress in a more masculine fashion and instructed her to use the men’s restroom. She also claimed that her coworkers refused to use feminine pronouns when referring to her and insulted her in front of customers. Her complaints about a hostile work environment, she alleged, got her demoted and eventually fired, even though she was a successful salesperson.

In response, Saks’ legal counsel filed a motion to have the case dismissed, arguing that Title VII does not protect transgendered individuals from employment discrimination, and therefore she had no case. The motion read in part that “[a] prohibition against discrimination based on an individual’s sex is not synonymous with a prohibition against discrimination based on an individual’s sexual identity disorder or discontent with the sex into which they were born.”

While Saks’ may have had a sound legal position, as courts have come down on both sides of the question of whether transgendered individuals are protected by Title VII, the motion nevertheless was a self-inflicted wound to the company’s reputation for inclusion. A Bloomberg Business article on the filing captured the perception the motion generated: “Saks Claims It Has the Right to Discriminate Against Transgender Employees.” In 2014, Human Rights Campaign, which promotes civil rights for the LGBT community, had scored Saks 90 out of 100 on its Corporate Equality Index. As a result of the motion to dismiss, the organization announced that it was suspending Saks’ rating.

Although Saks initially stood by the motion to dismiss, eventually it relented and withdrew the motion, stating that it would fight the case on its merits.

The second example involves Cleveland, Ohio, and the city’s response to a civil rights case filed in federal court by the family of Tamir Rice, a 12-year-old boy who was fatally wounded by a Cleveland police officer who mistook the boy’s toy gun for a real one. In response to the lawsuit, the city asserted twenty defenses, one of which was that the boy died because of his own actions and not because of police department errors: “[Tamir’s] injuries, losses, and damages complained of, were directly and proximately caused by the failure of [Tamir] to exercise due care to avoid injury,” and that Tamir’s injuries “were directly and proximately caused by the acts of [Tamir], not [the City of Cleveland].”

A headline from a CBS News report captured the perception the filing generated: “Tamir Rice caused his own death, city of Cleveland argues in court doc.” As a result of the anger that grew over the filing, Cleveland Mayor Frank G. Johnson called a news conference to apologize for the filings “poor use of words,” further stating that: “We used words and phrased things in such a way that was very insensitive.”

In both examples the lawyers failed to appreciate how the legal defenses they were asserting would damage their clients’ public position. In cases like Saks’, where a company may be relying on local counsel for its defense, it falls upon the in-house counsel who supervise outside counsel to review all the pleadings to make sure that they are consistent with company policy and do not cause harm to the company’s reputation. In a case like Cleveland’s, which is being handled in-house, it falls upon the city’s chief counsel to make sure that the pleadings are sensitive to the larger issues that might be impacted.

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