Volume 40,   Issue 6                             June  2005

LegalEase

Shhh!
    What You Say Now Can Hurt You Later

by David L. Barron

While watching various television programs, we have all probably heard these familiar words: “You have the right to remain silent. What you say can and will be used against you in a court of law. You [also] have the right to an attorney.” These warnings, called “Miranda rights” in criminal cases, are not offered to companies during civil investigations by agencies such as the Equal Employment Opportunity Commission (EEOC). During such investigations, companies do not have Miranda rights. Whatever the company says, or does not say, during an investigation can and will be used against it later in front of a judge or jury. 

Recent court cases have made it easy for employees to get their cases in front of juries rather than dismissed before trial. Most significantly, employees have been able to obtain substantial verdicts or overturn pre-trial dismissals based on what a company said, or did not say, in a position statement or other preliminary responses to agency complaints. Companies, particularly those without large legal and human resources departments, may pay a hefty price during litigation if they do not consider the impact of initial responses. 

Position Statements Are Crucial
During an investigation of a discrimination complaint, for example, the EEOC requests what is typically called a “position statement.” A position statement is a company’s pre-lawsuit response to an employee’s allegations. Although the position statement ideally results in the charge being dismissed, position statements, and any supporting documents provided by the company, also can become crucial pieces of evidence the company can create against itself during a subsequent lawsuit. 

Employees often use position statements to gain tactical advantages during litigation and trial. For example, position statements can be given to the media for leverage purposes against a media-wary company. They can be used by an employee’s attorney to help develop other claims against the employer. Position statements are also used by the EEOC to find probable cause—a damaging endorsement by the EEOC that a company violated the law. A probable cause finding can be used as additional settlement leverage by creating the threat of persuading a jury that the company violated the law. 

Furthermore, employees often use position statements to highlight inconsistencies in the explanations for employment decisions upon which their lawsuits are based. For example, in a disability case against a community college in the San Antonio area, an appellate court remanded a case to trial because the reasons offered in the college’s position statement about an employee’s termination directly controverted the reasons offered during the depositions from the decision-makers.

A jury in Massachusetts awarded more than $800,000 in damages and attorneys fees in an age discrimination case because the employer stated in its position statement that an employee was not re-hired because of poor performance. It had given different reasons for such a decision during a deposition of the decision maker, none of which included performance. 

Preventing Unfavorable Evidence
These examples demonstrate that initial responses to government agencies can have significant ramifications during subsequent lawsuits. Consequently, companies must effectively prevent them from becoming unfavorable evidence. Suggested steps for human resources professionals to avoid this negative impact include:

• Realize that you may be required to explain the reasons later to a jury. Ask yourself if the reasons you provide are true, believable and fair. 

• Understand the specific allegations in the complaint. Never assume that you know what an employee’s vague allegations are referring to.

• Investigate the allegations thoroughly. A position statement should not be prepared until a reasonably thorough investigation into the relevant facts and allegations has been completed. Giving bad information is worse than giving no information.

• Ensure that the position statement accurately reflects the decision maker’s true rationale for the decision and advise that person that he will have to testify consistently during litigation, under oath. 

All companies, regardless of size, must realize that position statements and other initial responses to complaints are, in reality, pre-trial testimony, which can shape the outcome of future litigation. They cannot be “corrected” later. 

The Author:
David L. Barron is an attorney at Alaniz and Schraeder  in Houston.  He represents employers in employment-related matters.


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