When Harassment Investigations Go Bad

A recent example of how not to conduct an investigation of a complaint of sexual harassment comes to us from Massachusetts. This week, Massachusetts' highest court reinstated a $540,000 jury verdict for a Lexus dealer finance manager who alleged sexual harassment by her supervisor, finding the dealership inadequately investigated when she reported the conduct (Gyulakian v. Lexus of Watertown, Inc., Mass., No. SJC-11959, 8/24/16).

What did the Lexus dealership do wrong in its investigation?

• The finance manager complained to the general manager, who testified at trial that he "honestly didn't believe" her. In other words, the investigation was carried out by a member of management who admitted to carrying a bias against the plaintiff.
  
• The manager did not interview the finance manager's finance department colleagues because he didn't want to undermine the supervisor. This failure to interview co-workers "who would have been most likely to witness the alleged conduct" was sufficient for the jury to conclude the company conducted an inadequate investigation. The investigation "was marred from the beginning, as it was carried out," the judge said.
  

In addition, the Court found that Lexus was on notice when members of senior management became aware of specific incidents. The general sales manager saw the supervisor attempt to throw coins down the finance manager's blouse. An office manager overheard the supervisor discuss anal sex with the finance manager. In response, the general sales manager circulated a memo to the staff that a conversation like this wasn't appropriate for the workplace. In both of these situations, however, the members of management should have done more to stop the inappropriate actions of the supervisor and they should have taken further steps to ensure that such behavior did not happen again.

Thus, the Court concluded that punitive damages in the amount of $500,000 were justified because the dealership failed to take adequate remedial measures.