DOING THE RIGHT THING IS NOT ENOUGH - IN THE EYES OF THE LAW,
IF YOU CAN'T PROVE IT, YOU DIDN'T DO IT
A CONTINUING SERIES...
A continuing theme of Avoiding Lawsuits is the simple truth that in our legal system, doing the right thing is not enough. To avoid liabilities, you must be able to prove you did the right thing. Our system depends on legal proof - evidence that is admissible in a court room. If you don't have the admissible evidence that proves you complied with the law, you can be just as liable as those who did not comply with the law.
Through our law firm and our training firm, we spend a huge amount of effort making certain that our clients know how to assemble the legal ammunition they will need in the event they are charged with wrongdoing. Very little we do is more important in our effort to minimize the potential liabilities of our clients. Here is another recent example of why we think this must be a focus of every business executive.
A few months ago, the Supreme Court clarified how a company charged with age discrimination can be skewered - whether or not the company really did unlawfully discriminate. As with all Supreme Court decisions, you can be sure that the reasoning in this case will reverberate through a wide expanse of business contexts.
Age discrimination cases usually involve situations where a plaintiff claims that he or she was fired or not hired based on age. The company, in response, says it could have cared less about the plaintiff's age, and that it made its decisions based on other lawful factors, such as the plaintiff's qualifications. The case becomes a "my word against your word" court room battle.
The courts have established a procedure by which this battle is fought. It unfolds like a tennis match, with the plaintiff serving first. According to the law, the plaintiff only has to prove the following to get the ball into the company's court: he or she is at least 40 years old, qualified for the job, and the job was filled by a significantly younger person. Once the plaintiff proves that much, the company loses unless it can hit the ball back. To do so, the company must prove that it had some valid reason for firing or not hiring the plaintiff, such as the fact that plaintiff was not qualified, or the plaintiff had done a poor job, or some other person was more qualified. Once the company does that, the ball is back in the plaintiff's court, and the plaintiff will lose unless he or she hits it back.
Now here's the rub. Some courts had decided that once the company returns the plaintiff's serve by introducing proof that it had a valid reason for firing or not hiring the plaintiff, the plaintiff then had to produce some proof showing that what the company said was just a ruse and that, in reality, the company's real motivation for firing or not hiring the plaintiff had to do with the plaintiff's age. Other courts, however, had decided that the plaintiff could, indeed, just stand pat, baldly claim that the company was lying, and seek huge damages. In essence, these latter courts found that a plaintiff in an age discrimination case did not have to prove that the company was lying. Instead, the plaintiff could simply point at the company, say "liar, liar, pants on fire," and if the company could not prove to the jury's satisfaction that it was telling the truth, the plaintiff could collect big money.
The Supreme Court was called in to resolve this conflict among the courts. To the amazement of many in the business community, it accepted the "liar, liar, pants on fire" position, and ruled that all a plaintiff had to do to collect against a company was convince the jury to disbelieve the company's explanation for its actions. If the jury did so, it could find in favor of the plaintiff even though the plaintiff's case was nothing more than "I'm over 40, qualified, and a younger person got the job."
Here's how this plays out in the real world.
Fast and Loose, Inc. fires a 50 year old employee, Collin Sihk, for poor work performance, and replaces him with a 25 year old employee. Mr. Sihk brings an age discrimination case. Before trial, Mr. Sihk's attorney subpoenas Mr. Sihk's personnel file. The personnel file includes no warnings to Mr. Sihk, no adverse performance evaluations, and no other documents showing poor work performance.
The trial begins. Mr. Sihk testifies that that he is over 40 and qualified. His cronies back him up, and testify to his diligence and skill. It is not disputed that he was replaced by an employee half his age. The ball is in Fast and Loose's court.
Fast and Loose's president testifies that age had nothing to do with the decision to fire Mr. Sihk but, rather, Mr. Sihk was a poor employee who deserved to be terminated, and the fact that a younger employee replaced him merely reflects the fact that the younger employee was the most qualified applicant.
You can imagine the cross examination. Mr. Sihk's attorney asks the president why, if Mr. Sihk's work performance was serious enough to justify termination, he was never given so much as one written warning telling him that he must improve? He is asked why there is not even an internal document from a supervisor regarding poor performance? He is asked why, if these were the real issues, there are no documents of any kind showing that Mr. Sihk's work performance was a real concern?
The president will have his awkward explanations, all of which may be absolutely true. "We gave oral warnings," he'll claim. Of course, Mr. Sihk will deny having received such a warning. Or, "We just don't keep those kinds of records," which will produce a knowing smirk toward the jury from Mr. Sihk's counsel.
Will this be enough to convince the jury that Fast and Loose was not motivated my Mr. Sihk's age? Keep in mind that juries are almost always comprised of individuals who identify more with an employee than an employer. And most of the people who serve on juries have a stereotypical belief that companies keep records on anything that is important. You can almost hear the summation from Mr. Sihk's attorney. "Here is a company, members of the jury, with computers and e-mail and secretaries and memos and file cabinets. They keep records about anything and everything. And yet they want you to believe that the performance problems of my client were so significant as to justify termination - the ultimate penalty - and there isn't one credible document that proves that it's so. And, as if that weren't enough, they want you to believe that it's just a coincidence that he was replaced with an employee half his age. In short, members of the jury, they think you're stupid and naive enough to believe almost anything."
Thanks to the Supreme Court, Mr. Sihk can win his case by doing nothing more than throwing these kinds of stones at Fast and Loose's explanation. It's just as likely as not that the jury will wonder how, in a case involving a termination, there could be anything less than a well-documented paper trail. And if Mr. Sihk appears at all sympathetic, the desire to inject some "young blood" into the work force becomes just as likely an explanation for Mr. Sihk's termination as anything else. Time to get out the checkbook.
Now, consider what happens if, during its part of the case, Fast and Loose's president shows the memos that went to Mr. Sihk a year before his termination, six months before his termination, and a month before his termination, detailing his poor performance, and warning that unless he improved he would be subject to termination. Or, perhaps, he shows the last three semi-annual employee evaluation forms that were completed by Mr. Sihk's manager and given to Mr. Sihk. Hopefully, he shows the employee manual, which instructs any employee who disagrees with a warning or evaluation to fill out a company-provided form, and stresses that Mr. Sihk never contested the company's view of his poor work performance.
In this case, the jury gets just what it expects from Fast and Loose - documentation that supports the company's version of the facts. Cross examination of Mr. Sihk is like shooting fish in a barrel. "You got these warnings, knew about the problems and, still, the documents show you did nothing to improve, isn't that right Mr. Sihk? The company provided you with an easy procedure to contest these warnings and evaluations, and you never did, did you Mr. Sihk? Is it your position that your age entitles you to lifetime employment, even though you continue to do a poor job?"
We understand that it can be problematic to create and retain documents (although we can show you how to do it with a minimum of inconvenience). We understand that keeping documents can also come back to haunt you if, in fact, they prove the wrong thing (highlighting the need for employee training). But none of that negates the reality that if you want to avoid liability, you need to be able to prove that you're not liable. We will repeat this mantra, over and over again, in these newsletters: in the "my word against your word" battle that characterizes most business litigation, the right kind of documents are the ultimate weapon.
SUMMARY - In the law, as a matter of practicalities, the truth is not as important as what you can prove. For purposes of proof, the creation of legally-admissible documents as part of your routine business practices remains one of the most important things any business interested in avoiding liabilities can do.
Powell, Trachtman, Logan, Carrle & Lombardo, P.C. is a full service law firm with offices in suburban Philadelphia, PA, Harrisburg, PA and Cherry Hill, NJ. Powell Trachtman represents a variety of commercial enterprises, entrepreneurs and business executives in respect to their litigation, litigation avoidance planning, business formation, business transactions, estate and tax planning, and other needs. We are also approved defense counsel for numerous insurance carriers in matters pertaining to professional malpractice, products liability, employment practices, directors and officers liability, and many other fields. For more information, contact us at info@powelltrachtman.com and visit our website at www.powelltrachtman.com.
