Author Archives: Finney Law Firm

You met with the patient.  You explained all the risks of the procedure.  The risks were later spelled out in the consent form and you went over it all again with the patient.  The patient accepted the risks and wanted you to perform the procedure.  You performed the procedure but the results were less than you and the patient hoped for.  Being a stand-up doctor, you explained what happened with the patient.  Genuinely sorry that it didn’t work out as planned, you expressed your sympathy to the patient and the family.  Then you got the summons and Complaint in the mail.  You’ve been sued.  They’ve even quoted—or should I say, misquoted—your apology.  Your colleagues are upset.  Your malpractice carrier is asking questions to see whether your apology affects coverage, given your duty to put them on notice and cooperate.  How can this be happening?

When something bad happens to someone we know, we express compassion.  When a person does something wrong, the natural inclination is to apologize.  You may feel it’s the right thing to do.  You may feel pressure to disclose the facts because of your personal beliefs, the ethical guidance of the American Medical Association, or the requirements of a hospital at which you have privileges.  However natural these feelings are, these statements may have legal repercussions.  Plaintiff lawyers know the power those statements have.  Although these apologies are hearsay, lawyers for patients get them into evidence with the “statement against interest” exception.  They tell the jury, “Why would Dr. Smith apologize if she did nothing wrong?”

In reaction to this, about three out of four states have enacted so-called “Apology Statutes.”  Only a handful of states, however, provide blanket protection for the doctor’s remarks and brand them inadmissible.  Most states try to make a distinction between a statement that is an admission of fault and a statement which is merely an expression of condolence.  Under Ohio Revised Code §2317.43(A), “all statements . . . expressing apology, sympathy, commiseration, condolence, compassion, or a general sense of benevolence . . .  are inadmissible as evidence of an admission of liability or as evidence of an admission against interest.”

Legislatures enact these laws because they believe that a rule protecting a doctor’s expression of sympathy promotes the physician-patient relationship after a negative outcome.  Proponents also argue that patients who sue their doctors often say that they didn’t think the physician was candid or honest about what happened, if it was explained at all.  These are all reasonable theories but no study, anywhere, concludes that patients will refrain from suing if a doctor apologizes.

Apologies of the kind protected by statute don’t deter suits.  As Apology Statutes are written by politicians, it comes as no surprise that protected statements have the ring of apologies you hear politicians make: “If anyone was offended by remarks about my opponent’s race, creed, gender, orientation, or ethnic origin, I sincerely apologize.”  These kinds of “apologies” sound hollow because the speaker doesn’t claim responsibility.

This is precisely why protected apologies are problematic in a health-care setting.  The kind of apology envisioned by the statute doesn’t get you very far.  You meet with the patient and the patient’s family and express your heartfelt sympathy.  Fine.  Now come the questions.  “What went wrong?”  “What caused the bleeding?”  “Why did her blood pressure drop?”  “Why did he lapse into a coma?”  People are grateful for the sympathy but they want the details.  In many cases, the details are not an admission of negligence.  No physician is perfect.  Many things can go wrong in a medical procedure that is performed with care that is state-of-the-art.  An adverse outcome is not synonymous with negligence.  If we didn’t acknowledge the possibility of bad outcomes despite superior care, doctors would be forced to perform only risk-free procedures.  Even so, the line between a bad result with proficient care and a bad result caused by substandard care can be a fine one and may be blurred by circumstances.  Be prepared for the possibility that you and your patient’s lawyer will draw that line differently.

In addition, keep in mind where you are.  Your group may have satellite offices throughout the tri-state area.  You may be in Kenwood one day and Covington the next.  Unlike Ohio and Indiana, Kentucky has not enacted any statute to protect a doctor’s expressions of sympathy.  Anything you say to a patient or the family is up for grabs.

Being a doctor doesn’t yet mean “never having to say you’re sorry.”  When your patient has an outcome other than what you intended, however, it pays to be cautious in your explanation about what happened.

If you would like more information about these issues, please contact Scott Thomas.   He welcomes the opportunity to help you navigate these waters.  Scott’s direct line is 859.578.3862.  You can email him at [email protected].  If there is a particular topic you would like to see addressed in a blog, please send Scott an email with your ideas.

 

You did everything right.  You negotiated a good deal.  You reduced it to a written agreement so both sides knew their obligations.  You held up your end of the bargain and delivered the goods and services you promised on time.  But now you’re not getting paid.  You call them but get no answer.  Your emails bounce back.  You drive by their office and you find they’ve gone out of business.  Finally, you catch up with one of the principals who cavalierly tells you: “Your contract was with the corporation, not with me.”  You drive home wondering how you’re going to pay for your labor and material costs.  Don’t give up hope yet.

People create corporations for a variety of reasons.  One of those reasons is to permit the owners to limit their liability to the amount of their investment.  A corporation is a separate “person” in the eyes of the law.  Typically, a shareholder of a corporation or member of a limited liability company is not held liable for the debts of the company.  Typically . . . but not always.

A court may permit a creditor to enforce a debt against the shareholders of a corporation in certain circumstances.  Courts call this “piercing the veil” of the corporation.  This is an equitable remedy that invokes the Court’s powers to do justice to the parties.  While each state has its own tests, the principles applied are similar.  The Court will look at the facts to determine whether the owners so dominate the corporation as to deem it their “alter ego.”  In such instances, courts rule that the domination by the shareholders has destroyed the separate character of the corporation, i.e., that the company was a “mere instrumentality” of the shareholders.  In addition, the Court will require evidence that allowing the corporate liability shield to stand would be to promote fraud or injustice.

In considering whether to bring a claim against the owners, you should weigh the evidence you think you can be put before the Court.  Successful veil-piercers can point to various actions that show the line between the owners and the corporation has blurred or disappeared, including:

• The owners did not “capitalize” the corporation by investing enough money to sustain its operations;
• The corporation failed to issue stock;
• The corporation failed to observe “corporate formalities,” e.g., having meetings, taking minutes, etc.;
• The corporation failed to pay dividends;
• The corporation is insolvent;
• The officers or directors of the corporation did not perform the duties associated with their office;
• The corporation failed to maintain the kinds of records required by law or those that are customarily kept by a company in that industry;
• The funds of the corporation were “commingled” or kept in the same accounts as the private funds of the owners;
• The owners diverted assets of the corporation to an owner or third party for less than fair market value, often for little or no consideration;
• The corporation engaged in transactions at less than arm’s length with shareholders or third parties;
• Shareholders made personal guarantees of corporate debts;
• The corporation was created merely to mask the unlawful activities of the owners;

• The corporation is just a “dummy” corporation for a corporate parent who pays its employees and expenses;

• The corporation does business predominantly with its corporate parent (or grandparent); and

• The parent company uses the corporation’s property as its own.

As the debtor company circles the drain, the pressure on the owners may induce them to engage in some of these activities.  The mere fact that the company has collapsed and cannot pay your bill does not mean the Court will pierce the veil.  If you can demonstrate that justice requires the debt be passed to the shareholders, however, you can pursue your claim against them.  The owners, of course, would be allowed to assert any defenses that the company would have been entitled to raise.

About Finney Law Firm, LLC

Founded in 2014, FLF has grown to 15 attorneys located in offices in Eastgate and downtown Cincinnati with five major practice areas: Corporate Law, Real Estate Law, Employment Law, Commercial Litigation and Public Interest and Constitutional Litigation.  FLF has the unique claim to three 9-0 victories at the United States Supreme Court for its public interest practice along with breakthrough class action work.

FLF also has an affiliated title insurance company, Ivy Pointe Title, LLC, that closes and insures nearly a thousand commercial and residential real estate transactions annually.

For more information about Finney Law Firm, visit finneylawfirm.com.

Media Contact: Mickey McClanahan; [email protected]; 513.797.2850.

 

Federal, state and local governments offer numerous benefits to a disadvantaged business enterprise or a “DBE.” Government projects sometimes set aside a portion of the contract value with a view toward that work being performed by a DBE. A contract awarded to a prime contractor may require a portion of the work to be subcontracted to DBEs.  The federal government created these benefits to “level the playing field” and minimize the effects of competitive advantage that may have arisen when unfair discrimination was more prevalent.

A small for-profit business can become certified as a DBE when one or more socially and economically disadvantaged people own at least a majority interest in the company and control management and business operations.  Obtaining DBE certification is valuable because it increases your chances of getting selected by a prime contractor.  The prime contractor has an incentive to hire your company because your participation will count toward the achievement of the prime’s contract goals.  Moreover, getting one opportunity may assist the new DBE in expanding or diversifying to earn more or different work in the future.  If you want to pursue DBE work in another state, you typically must be first certified in the state where you have your principal office.

The certification process is administered on behalf of the federal government by your state’s department of transportation.  The process begins with a detailed application that asserts why you believe your company is eligible for DBE certification.

The applicant must own at least 51 percent of the company.  African Americans, Hispanics, Native Americans, Asian-Pacific and Subcontinent Asian Americans, and women are presumed to be socially and economically disadvantaged.  Other individuals can also qualify as socially and economically disadvantaged on a case-by-case basis.  To be regarded as economically disadvantaged, an individual must have a personal net worth that does not exceed $1.32 million.  The applicant’s ownership of a residence and equity in the company are excluded from the determination of whether the personal net worth ceiling has been broken.

To be seen as a small business, a firm must meet the size criteria of the Small Business Administration.  The size of the applying organization will be evaluated on the basis of gross receipts or the number of employees, judged from an industry specific standard.  Typically, the company must have average annual gross receipts less than $22 million.  In addition, the company must not be affiliated with, or dependent on, another firm.  The applicant company must have the ability to stand on its own without external support.  Officials reviewing the application will scrutinize areas such as personnel, facilities, equipment, financial assistance, and bonding support to evaluate whether the business is truly independent.

The state transportation officials will examine the application and ensure all the requirements are met.  The application will be reviewed to ensure the individuals on whom the DBE is based are qualified to run the business and not mere placeholders for others who run the operation.  The majority DBE owner must possess the power to direct the management and set the policies of the company, as well as make day-to-day and long-term business decisions.  If the state requires the owner to have a particular license or other credential to own a certain kind of business, the applicant must possess that license or credential to obtain DBE certification.

In addition to reviewing your application and supporting paperwork, the state Department of Transportation is required by regulations to visit your company and further evaluate the application.  The DOT official will interview the principal officers of the company, review the resumes of key employees, visit job sites, and generally investigate the accuracy and completeness of the information provided in your application.  The official may also ask to see evidence of stock ownership, equipment, bonding information, etc.

The time from application to certification will vary from business to business.  Some states, including Ohio, are contracting out the heavy lifting in the certification process to expedite decisions.  If an application is denied, the state’s decision can be appealed to the U.S. Department of Transportation.  That process can be time-consuming and expensive so it’s preferable to make the initial application as compelling as possible.

Once you obtain your DBE certification, you must update the information you provided every year.  You give the Department of Transportation an affidavit representing that there have been no changes in the company’s ability to meet the DBE criteria.  In the fifth year update, you may be asked to provide additional information showing you still are under the personal net worth cap.

About Finney Law Firm, LLC

Founded in 2014, FLF has grown to 15 attorneys located in offices in Eastgate and downtown Cincinnati with five major practice areas: Corporate Law, Real Estate Law, Employment Law, Commercial Litigation and Public Interest and Constitutional Litigation.  FLF has the unique claim to three 9-0 victories at the United States Supreme Court for its public interest practice along with breakthrough class action work.

FLF also has an affiliated title insurance company, Ivy Pointe Title, LLC, that closes and insures nearly a thousand commercial and residential real estate transactions annually.

For more information about Finney Law Firm, visit finneylawfirm.com.

Media Contact: Mickey McClanahan; [email protected]; 513.797.2850.

 

If you want to own a suppressor (a silencer) or any firearm regulated by the National Firearms Act of 1934 (“NFA”), you have to submit an application to the Bureau of Alcohol, Tobacco, Firearms, and Explosives.   These items are serialized and the Bureau keeps track of who owns what.  You submit your application on BATFE Form 4, along with your check for $200 to pay for the tax stamp.  The application requires a fingerprint sample, a passport-style photograph, and the approval of the chief law enforcement officer in your community.   Of course, the possession of the item has to be permissible under state law.  Possession of suppressors is legal in Ohio, Kentucky and Indiana.

Huntertown Arms “Guardian” on an HK P9s.

For people in many communities, however, getting the approval of local law enforcement was a problem.  While suppressors have many advantages in terms of hearing protection, reduced recoil, and diminished disturbance of game, many law enforcement officials saw suppressors as the tools of assassins in Hollywood movies and refused to sign applications submitted for their approval.  Enter the “gun trust.”

A trust is a relationship where one person—the Trustee—holds property for the benefit of another person—the Beneficiary.  The person who creates the trust is usually called the Grantor.  Trusts have been around for centuries.  People use them for a wide variety of purposes, to provide for children or people with special needs, for charitable reasons, to facilitate the transfer of assets at death, etc.  A trust can also be created to take ownership of NFA items and firearms—the “gun trust.”

In a gun trust, the Grantor creates the trust and transfers the NFA items to it.  The gun trust becomes the legal owner of the NFA item.  The document that creates the trust will name the Trustee and the Beneficiaries.  The Trustee and Beneficiaries are lawfully permitted to possess and use the items owned by the trust.

The gun trust was useful in the past primarily because the approval of the chief law enforcement officer was not required.  But even if your local Sheriff or Chief of Police is willing to approve a Form 4 submitted by a law-abiding citizen, the gun trust still offers several advantages compared to the purchase of an NFA item.

On an administrative level, the gun trust dispenses with some of the red tape associated with an individual application.  With a trust, for example, no photographs and fingerprints need be submitted.  More importantly, the gun trust protects your family in the event of your untimely death.  For example, if a person who lawfully purchased a suppressor later dies, the spouse or roommate could be deemed to have “constructive possession” of the suppressor in the house because they have “dominion and control” over it.  The BATFE calls such people “accidental felons.”  Possession of a suppressor without a tax stamp is a felony punishable by up to ten years imprisonment.

A gun trust enables you to avoid that risk.  Gun trusts should be created with multiple beneficiaries so that the “survivor” who “constructively possesses” the NFA item will be possessing it legally.  The Beneficiary can then decide whether to dispose of the item legally by transfer or otherwise.  In the alternative, the gun trust can be amended to adapt to the change in circumstances.

All that said, the rules are changing.  Last month, President Obama announced his plan to implement gun control measures using his executive powers.  One of those measures was the promulgation of “Rule 41F” by the BATFE.  This Rule becomes effective on July 13, 2016.  Without attempting to recite the 248 pages that appeared in the Federal Register, suffice it to say that Rule 41F makes some significant procedural changes.

Rule 41F creates obligations for “Responsible Persons” under the trust.  A Responsible Person is broadly defined to include any person who has a right to possess the NFA item.  Since possession is the whole purpose of the gun trust, the Grantor, the Trustee and all the Beneficiaries will likely be deemed “Responsible Persons” under the Rule.  After July 13, 2016, when a gun trust acquires an NFA item, each Responsible Person in the trust will be required to do the kinds of things that individuals must now do: submit fingerprint cards, photographs, etc.  While the approval of the chief law enforcement officer will no longer be required, the Responsible Person must still give that officer a copy of the application.

The good news is that Rule 41F is not retroactive.  Any application that is approved—or pending at BATFE—before July 13, 2016, will be grandfathered in under the former rules.  Accordingly, if getting a suppressor or NFA item (pre-1986 automatic weapon, short-barreled rifle, etc.) is on your bucket list, now is the ideal time to get a gun trust and put that plan in motion.

There are gun trusts that are offered for sale on the internet.  Be wary.  There’s a reason they publish a small-print disclaimer along the lines of “GunTrustsЯUs does not offer legal advice, recommends you consult an attorney, and will not be responsible for the use of this form by any person.”  For example, most of these online purveyors will claim “Valid in All 50 States.”  Really?  Good luck trying to use your gun trust in the 11 states that prohibit private possession of a suppressor.  If there’s a state law that’s the same in all 50 states, I don’t know what it is; but I’m willing to bet it has nothing to do with gun trusts.

So recognize that the gun trust is an important legal document that will protect you, your family, and your significant investment in NFA items.  This is not the place to cut corners with a generic, one-size-fits-all document prepared by someone you’ll never talk to.

About Finney Law Firm, LLC

Founded in 2014, FLF has grown to 15 attorneys located in offices in Eastgate and downtown Cincinnati with five major practice areas: Corporate Law, Real Estate Law, Employment Law, Commercial Litigation and Public Interest and Constitutional Litigation.  FLF has the unique claim to three 9-0 victories at the United States Supreme Court for its public interest practice along with breakthrough class action work.

FLF also has an affiliated title insurance company, Ivy Pointe Title, LLC, that closes and insures nearly a thousand commercial and residential real estate transactions annually.

For more information about Finney Law Firm, visit finneylawfirm.com.

Media Contact: Mickey McClanahan; [email protected]; 513.797.2850.

 

Do you get bombarded with questions from employees about the same topics, over and over again?  Are you plagued with situations where information given by one supervisor conflicts with that given by another supervisor?  Are you summoned to referee disputes between employees who claim that someone is being treated differently? If so, peace awaits.  The answer is your Employee Handbook.

Many employers resist the idea of creating an Employee Handbook.  To be sure, putting it together is a lot of work.  But that work pays dividends, year in and year out.  And it can even act like an insurance policy!  First, let’s consider the advantages.

One function of the Employee Handbook is to serve as a repository for all the answers to the questions employees like to ask.  “Do we get Arbor Day off?”  “Can I take off a quarter of a sick day to go to a doctor’s appointment?”  “Why does Jeff get ten days’ vacation and I get only five?”  The Employee Handbook can be your storehouse of all the information employees need to understand the benefits they have.  Employees want to know about holidays, sick days, vacation days, outside employment, jury duty, funeral leave, breaks, meal breaks, inclement weather, paydays, and everything else you can imagine.  Put it all in one place and your knee-jerk response can be: “What’s the Employee Handbook say?”  The amount of questions you have to answer on the fly will plummet.

The Employee Handbook is a living document.  Have you ever gotten a question from an employee premised on some past action the company took, e.g., “Are we going to be let off early for Halloween like we were last year?”   Properly maintained, the Employee Handbook can grow with you and your company.  Many employers keep a log of issues that come up that were not addressed in the Employee Handbook.  The company then studies these items and decides whether the issue is likely to crop up again down the road.  If the question is likely to resurface, or there’s a benefit to memorializing the decision, it makes sense to amend the Employee Handbook to include the new policy.

All that said, the Employee Handbook is not an Employee Bill of Rights.  Of course, the Employee Handbook tells the employees things they want to know.  But it also tells them the things you want them to know: telephone courtesy, the difference between full time and part time, cell phone usage, personal appearance, etc.  If it’s important to you, put it in there.

“Must,” not “may.”  Your Employee Handbook is not the place for wiggle room.  If you want an employee to do something, phrase that task as an obligation.  Some handbooks express the employer’s desire with a gentle “should,” as in “The employee ‘should’ call the supervisor as soon as he knows he will be absent or late.”  If you want the employee to do it, phrase the obligations not as a “should do” but a “must do.”  If it’s important enough to you that you want it in the manual, make it mandatory.  If the employee falls short of the requirement, you can always decide whether—as a matter of your discretion—you want to let the employee slide.  But keep all the discretion on your side of the table, not the employees’.

“May, not “will.”  When it comes to your obligations, on the other hand, give yourself some latitude.  You don’t want to set your own obligations in concrete.  For example, there is no law that requires you to set out in an Employee Handbook such as “Every November 1, the Company will provide each employee with a written performance evaluation on which any compensation adjustments will be made.”  Say you put that burden on yourself and then an unforeseen circumstance makes it impossible to make the requirement.  A few weeks later, you get a complaint from a disgruntled employee: “The Company was supposed to give me a written performance evaluation but failed to do so; if the Company evaluated my performance, I would have gotten a raise.”  You don’t need that aggravation.  Better to say: “From time to time, the Company will evaluate your performance to give you feedback on how you’re doing” and “From time to time, the Company will adjust an employee’s compensation based on the employee’s performance, attendance, attitude, and the needs of the Company.”

Perhaps the best benefit of creating an Employee Handbook is its service as insurance policy of sorts.  A comprehensive Employee Handbook will include a section on the Company’s policy of no toleration on sexual harassment.  That section will explain what an employee needs to do if she feels she may be the victim of sexual harassment.  You tell the employee to whom a report may be made, without fear of retaliation, and with the assurance that the Company will conduct a thorough investigation and take appropriate action.  If a sexual harassment situation later becomes a full-blown lawsuit, merely having this section in your Employee Handbook will help the company establish an affirmative defense to liability.  Given that many actual insurance policies exclude coverage for sexual harassment claims, this may be the best protection available.  And the best part: you don’t have to pay any premiums.

So if you have an Employee Handbook, dust it off and make sure it says all the things you want it to say, the way you want them said.  If you don’t have one, start typing!

About Finney Law Firm, LLC

Founded in 2014, FLF has grown to 15 attorneys located in offices in Eastgate and downtown Cincinnati with five major practice areas: Corporate Law, Real Estate Law, Employment Law, Commercial Litigation and Public Interest and Constitutional Litigation.  FLF has the unique claim to three 9-0 victories at the United States Supreme Court for its public interest practice along with breakthrough class action work.

FLF also has an affiliated title insurance company, Ivy Pointe Title, LLC, that closes and insures nearly a thousand commercial and residential real estate transactions annually.

For more information about Finney Law Firm, visit finneylawfirm.com.

Media Contact: Mickey McClanahan; [email protected]; 513.797.2850.

 

Few things have a more costly and damaging effect on all aspects of a business than a sexual harassment complaint.  Legal costs are incurred to respond to inquiries from the Equal Employment Opportunity Commission.  If the matter is not resolved there, costs escalate as the matter proceeds to litigation.  Even with federal limits, exposure under state law claims can be high, as plaintiffs plead their claims in alternative ways such as assault and battery, infliction of emotional distress, negligent supervision, etc.  Many of these claims carry the specter of punitive damages.  On top of that, most insurance policies exclude sexual harassment claims from the scope of coverage so the Company is totally exposed.  The litigation creates significant indirect costs associated with the loss of productivity of having company personnel appear in court, sit for depositions, meet with counsel, etc.   If the claim garners media attention, the cost to the business can be devastating. For all of these reasons, it becomes critical to investigate the claim properly from the moment it is made.  A good investigation will position the company for optimum results in every forum at every stage.  A shoddy investigation, on the other hand, will make matters worse and perhaps increase the company’s exposure.

Do it Now.  Since the courts require the employer to take prompt remedial action, it is imperative that the employer respond immediately to a claim of sexual harassment. Prompt investigation must be taken. In one case a supervisor delayed an investigation for one day, 24 hours, and a court held that was not quick enough. “Prompt” apparently means less than 24 hours; “prompt” means “right now.” Managers and supervisors will most often state that they have other things to do, such as get production out, respond to customer complaints, whatever, but as far as the courts are concerned, once a complaint of sexual harassment is lodged, the supervisor must take immediate action to respond.

Just Do It.  A Company who receives a complaint of harassment against must proceed to investigate the complaint, even if the complaint is believed to be false.   The investigator’s personal views on whether a factual basis for the complaint exists does not factor into the equation.  Conversely, the victim doesn’t get to call off the investigation.     The Company has an affirmative duty to investigate whenever a complaint is made, regardless of whether the victim has agreed to the investigation.   When the Company learns of sexual harassment, an investigation must be conducted even if no complaint is made.  In some cases, the victim may say they only wanted the Company to know about it but don’t want to make a “formal complaint,” whatever that is.  The victim has no veto power.  When the Company learns the facts, it must investigate.  Explain this to the victim.  This alleged violation of federal and state law must be addressed.  Understand that plaintiff lawyers know this rule and will bury a Company that ignores a sexual harassment report at the victim’s request.

Do it by the Book.    By “the book,” I mean your Company’s  Employee Handbook.  If you don’t have one, set aside the time to write one.  The Employee Handbook should set forth the Company’s policy that sexual harassment in any form will not be tolerated.  The policy should also state the procedures that a victim of sexual harassment can follow to report the incident without fear of retaliation so that the conduct can be investigated and the Company can take appropriate corrective action.   The U.S. Supreme Court has encouraged employers to take this step by giving them an affirmative defense to liability for a supervisor’s misconduct in certain circumstances.  If the Company has no policy, the defense is unavailable.  At any rate, the investigation should follow the pattern outlined in the Company’s policy.

 Make an Appointment.  The investigation should be initiated with an “appointment letter.”   The appointment letter should say that the Company is appointing the person to conduct an investigation into the complaint of sexual harassment made by Jane Smith on January 10, 2016.  If the complaint was made in writing, the complaint should be attached to the appointment letter.  Most important, the appointment letter should state: “The Company anticipates that this matter will result in litigation.  This investigation is being conducted for the purposes of assisting the Company’s attorney and provide a factual basis for counsel’s legal guidance to the Company.”  This will ensure that the fruits of the investigation will be covered by the attorney work product privilege.  That way, if litigation does not ensue, the Company will have grounds to contest turning over the investigation materials to opposing counsel.  Put the date and time on this appointment letter.  That will help the Company later show that the investigation was begun “promptly.”

 First Things First.  There are a few things that need to be done straight away.  In no particular order, these “first things” should be accomplished as soon as possible after getting the complaint.  Gather all documents that pertain to the event.  This may be a police report, a performance evaluation, an email string.  The initial intake of evidence may also include physical evidence, e.g., defaced personal property of the victim.  Collect these materials and safeguard them throughout the investigation.

 Protect the Victim.  This is an easy one but terribly important.  The last thing the Company wants is for someone to take action that could be perceived as a retaliation against the victim for making the report of sexual harassment.  Obviously, the alleged harasser has to be warned in no uncertain terms not to have any contact with the victim or communicate with the victim about the complaint.  In addition, other personnel need to be notified to suspend any action relating to the victim.  If the Company had been planning to cut the victim’s hours, put that on the back burner.  If the Company had decided to transfer the victim to another office before this sexual harassment claim broke, put it off till the dust settles.  You don’t want to strengthen a sexual harassment claim by taking action that can arguably be made to look adverse to the victim.  Trust the victim’s attorney to make it look like a punishment for reporting the misconduct.  This is the stuff punitive damages are made of.

 No Penalty for Holding.  Another first few hours action is to prepare what we call a “Litigation Hold.”  This is a simple letter instructing the appropriate personnel that all documents that may have some bearing on the investigation must be preserved.  The things to be preserved may vary with the circumstances of the particular case.  What must be avoided at all costs is the destruction, intentional or inadvertent, of any document, file, quest, thing, that turns out later to be relevant to the inquiry.  Lawyers call this “spoliation of evidence.”  That’s a fancy term to describe the concept that the judge or jury will be entitled to assume that the evidence that got destroyed would have been unfavorable to the party that failed to preserve it.  In some circumstances, this spoliation inference can give a lame case new legs.  Nothing good comes of lost evidence.  Get this letter out to supervisors, managers, human resources, the alleged harasser, the IT, and anybody who might possess something useful to the investigation.

 Freeze!  Ten minutes into any good cop show and you’ll hear the protagonist shout this command.  This is also a powerful tool at the Company’s disposal.  The Company wants to “freeze” the situation for purposes of the investigation.  You don’t want the challenged conduct to continue.  You don’t want the victim’s work to be interrupted.  Consider other interim corrective action that should be taken.  You may want to consider interim action should not appear to punish either the victim or the alleged harasser.  On the contrary, explain that the Company is taking this action to protect them both.  Such actions could include a non-disciplinary separation, potential leave with pay, temporary transfer of the alleged harasser (not the victim!), etc.  If the incident involves other misconduct or a violation of Company policy on the part of the harasser, e.g., drug use, drunkenness, immoral or indecent conduct, you could consider disciplinary action for those violations—separate and apart from any future determination of whether the conduct constituted sexual harassment.

 Call for Reinforcements.   Legal representation is expensive.  The Company wants to balance the cost of an attorney with the risk of going it alone.  Every Company has to make a personal decision in this regard.  I suggest the Company ask itself whether it’s likely that the complaint turns into a lawsuit.  If it seems likely to blossom into litigation, the Company is better off getting a lawyer sooner rather than later.  In my experience, if the victim accuses a senior member of management, or the allegations involve physical touching, you’re going to court.  Best to get an attorney at the earliest possible stage.

 Make No Promises.  An investigator will frequently tell the victim or a witness that statements made in the investigation are confidential.  This is a promise the investigator can’t keep.  The Company is not going to broadcast the investigation on the internet but lots of people have a need to know the information.  The most glaring example is that the Company must necessarily advise the harasser of the grounds for any discipline that flows from the investigation.  The investigator means well but the unkeepable promise creates unrealistic expectations.   When the promise is ultimately broken, the victim feels violated again and resents the Company, fueling a desire to take it to another level.  The investigator must tell the victim that disclosure of the information will be kept to the smallest group of Company personnel having a need to know.

 Talk to Me.  The guts of the investigation is the interview.  The investigator must interview every person with personal knowledge affecting the determination of whether sexual harassment occurred.  I recommend starting with the victim.  This may be done in one session or multiple sessions.  Get the victim to put the complaint in writing.  You need it as detailed as possible.  That will set the parameters.  Conclude the interview with a closer: “Have you told me all the facts regarding your complaint of sexual harassment against John Smith?”  Keep asking that question until you get it all.  Remember to put the date and time on every statement.

Keep in mind that some victims regret making a complaint and want it to end.  They don’t have the power to turn off the investigation.  They do, however, have the power to withhold information and cripple the investigation.  You still must go through with the investigation.  If the victim refuses to cooperate, however, that refusal must be documented in the report.  Make a note of questions the victim refused to answer.  Make the victim sign off on a statement that says she declined to provide additional information to aid the Company’s investigation.

Then move to the witnesses.  Don’t go straight to the alleged harasser.  Do that interview last, when your brain is full of all the knowledge imparted to you by the victim and all the witnesses.

Make each witness prepare a written statement.   Accurate records created during the investigation carry much more weight than deposition or trial testimony years later. Right or wrong, juries tend to give more weight to something that’s been reduced to writing.

If the witness created a document you collected earlier, make sure that witness’ statement notes that “the attachment is a true copy of the letter I received from the customer on July 2, 2015.”

The investigator’s questions should be open-ended.  Let the witness tell the story rather than putting words in the witness’ mouth.  What happened? What was said?  Where did it occur?  How was your work affected?  Are there any witnesses I should talk to?  Has this ever happened before?  Details?  How did you reacted to John Smith’s behavior/remarks?  Did you discuss this with anyone else?  Do you have any other evidence relating to the incident?  Are you aware of any reason for the conduct?  The witness’ statement must be reduced to writing.  Do not attempt to filter out what the witness wants to say.  You can evaluate later what weight to give to portions of a statement that you think may be unreliable, e.g., facts reported to the witness by another person but not personally observed.

The investigator should develop a checklist that can be used for each witness.  The checklist should end with a note to remind the witness that the matter is not to be discussed with anyone and that no retaliatory action against the victim will be tolerated.

The alleged harasser should be interviewed last.   You will then have the most information to evaluate whether the alleged harasser is providing truthful responses.  The alleged harasser may provide additional information that raises questions that must be put to the victim or other witnesses.  If the alleged harasser invokes the Fifth Amendment privilege against self-incrimination, have the person record that in writing.

Search and Seizure.  The investigator may consider searching areas in which the person—victim, witness, or alleged harasser—has no expectation of privacy.  Hopefully, these areas are spelled out in the Employee Handbook.  These areas typically include spaces like the employee’s locker, desk, work phone, work computer, or other cubby hole.   The Fourth Amendment’s warrant requirement only restricts the government, not private actors.  Depending on your Employee Handbook, you may also be able to search purses, back packs, briefcases, and other containers, provided the Company has given employees notice via the Employee Handbook or otherwise.

Turn over the Stones.  A good investigator will turn over stones looking for information that relates to the complaint.  In our times, many of these stones are electronic.  The investigator should examine whether the people involved have communicated regarding the events at hand using email, texts, Twitter, FaceBook, or other social media.

 Make the Call.   The investigator needs to document the investigation, summarize it, and draw conclusions.  This record is important because the Company can later use it to prove the employer acted responsibly and took prompt action.  In many circumstances, the case will boil down to the victim’s word against the alleged harasser’s word.  In lay terms, this “he said/she said” situation results in an impasse.  Wrong.  People go to prison every day based on the testimony of one person against another.  The investigator has to make the call.  If the claim of sexual harassment is proved, the investigator so concludes.  If not, the investigator so concludes.  That said, the investigator is not the final authority.  The Company, not the investigator, is the final arbiter of what happened.  The Company always has the authority to make a different determination based on the evidence collected by the investigator.  The Company has the power, not the investigator.

Slap the Wrists or Drop the Hammer.  If the investigator finds that sexual harassment occurred, appropriate sanctions must be imposed.  The conduct cannot be ignored.  Appropriate sanctions do not necessarily mean discharge. The punishment should fit the crime. A warning may be sufficient in some cases, particularly for a first offense. Under other circumstances, discharge may be necessary.   The Company’s prompt, remedial action to protect those rights when a violation has occurred will provide a powerful deterrent and enable the Company to maintain a successful defense if litigation follows.  The Company may consider: the harasser’s employment record; whether the harasser was aware of the Company’s policy; whether the harasser ignored the victim’s request that the harasser stop; what discipline, if any, has been imposed in the past.

Tie Up the Loose Ends.  The victim should be told that the matter has been investigated and what the Company has decided to do.  The investigation record is not considered a personnel file and should be maintained separately and confidentially.   Neither the victim nor the alleged harasser is entitled to a copy of the report.  The Company has an ongoing duty to insure that the harassment has stopped.  Even if the complaint is not sustained, the alleged harasser should be counseled to get his act together.

About Finney Law Firm, LLC

Founded in 2014, FLF has grown to 15 attorneys located in offices in Eastgate and downtown Cincinnati with five major practice areas: Corporate Law, Real Estate Law, Employment Law, Commercial Litigation and Public Interest and Constitutional Litigation.  FLF has the unique claim to three 9-0 victories at the United States Supreme Court for its public interest practice along with breakthrough class action work.

FLF also has an affiliated title insurance company, Ivy Pointe Title, LLC, that closes and insures nearly a thousand commercial and residential real estate transactions annually.

For more information about Finney Law Firm, visit finneylawfirm.com.

Media Contact: Mickey McClanahan; [email protected]; 513.797.2850.