The Rollins Lesson: The importance of a thorough workplace investigation

By: Kimberly Horiuchi

The value of an effective workplace investigation by a knowledgeable and skilled investigator cannot be overstated.?A thorough, prompt, and, impartial investigation can provide an important, and even case dispositive defense, if a terminated employee files a lawsuit challenging the termination. This is the important lesson of the Rollins case, where a jury verdict in favor of the terminated employee lawsuit was reversed.

The Rollins tale began when. Rollins offered Ralph Cotran, a Vice President at a competitor insurance brokerage firm, an executive position managing its West Coast offices. Cotran commenced employment with Rollins in January 1988 and his employment agreement created an implied condition that he could only be terminated for “good cause.”

Several?years later, in the late 1990s, two employees made serious allegations of sexual harassment against Cotran, including that he exposed his genitals, engaged in sexual acts in front of them, and made obscene calls to their homes on multiple occasions. The situation was complicated by the fact that Cotran’s employment agreement created an implied condition he could only be terminated for “good cause” instead of the more flexible, common, and presumed standard of at-will employment. To establish good cause for termination Rollins had to establish the sexual harassment occurred or terminating his employment would breach the “good cause” requirement.

The Rollins’ Human Resources Department commenced an investigation into the sexual harassment allegations and placed Cotran on leave. The Human Resources professional conducting the investigation spoke to multiple individuals about the complaining employees’ allegations but ultimately, like in many workplace investigations, the issue came down to credibility – did the Investigator find the complainants’ version of events believable in light of all the evidence? The Investigator’s answer to that question was, yes.

?After Rollins reviewed the investigative findings – it terminated Cotran. Cotran then promptly filed a lawsuit alleging he was entitled to due process and there was no evidence of sexual harassment. ?Cotran claimed he never “harassed” anyone and therefore, Rollins did not have “good cause” to terminate his employment. At trial, Cotran ?claimed – for the very first time - that between 1991 and 1992, he engaged in consensual sexual relationships with both complainants (which both complainants vehemently denied) and that the allegations against him were simply about Complainants being angry he was “two-timing” them with a third woman. Cotran also claimed one of the complainants manufactured a sexual harassment complaint to extort him and Rollins into paying her a higher salary.

The trial court judge instructed the jury to determine whether, by a preponderance of evidence, the underlying harassment had occurred. The jury found Cotran did not harass the complainants and therefore Rollins did not have good cause to terminate his employment. Rollins appealed and the Court of Appeal for the Second District reversed the jury’s verdict, finding the trial court issued the wrong instructions to the jury. Not to be outdone, Cotran, appealed to the California Supreme Court.

The California Supreme Court, in a very important decision, decided that the trial court should have instructed the jury to determine whether Rollins had a good faith basis for making its decision to terminate Cotran based on the outcome of the investigation report. The California Supreme Court held the role of a jury is to determine the “objective reasonableness” of the employer’s decision – not whether the underlying conduct actually occurred. The role of a jury in these matters is to “check the subjective good faith of an employer with an objective reasonable belief standard.”

The California Supreme Court noted that the Rollins’ Human Resources Investigator interviewed multiple witnesses, including the complainants, reviewed documents, prepared a detailed report of her findings, and made credibility assessments based on the complainants’ statements, the lack of explanation from Cotran, and the existing evidence. Therefore, the Court ruled, Rollins had a good faith basis to believe Cotran committed harassment and his termination was supported by good cause.

This case illustrates quite clearly, and even dramatically, the value of a professionally-conducted, thorough, and impartial workplace investigation.?A well-conducted investigation and well-reasoned findings can quite literally change the outcome in litigation and at an operational level, provide California business and other employers’ confidence when making important and sometimes difficult personnel decisions.?