In the wake of the Harvey Weinstein sexual assault and harassment cases, many corporations are drafting Harvey Weinstein clauses. This is an attempt to manage their risk of large sexual-harassment settlements and public relations disasters. Miami Law Professor Marcia Narine Weldon reviews several examples of companies using Harvey Weinstein clauses to try and reduce their risk by making the other side represent that sexual-harassment claims will not be an issue.
Questions in this Episode:
- What is a Harvey Weinstein clause?
- Whose definition of sexual harassment should you use?
- Where are reasonableness and knowledge defined?
- When are contractors included in the clause?
- How far back should you go?
What is the Harvey Weinstein Clause
Harvey Weinstein clauses began appearing in corporate contracts in 2018 after Harvey Weinstein was infamously accused of sexual assault, sexual harassment, and rape. The New York Times published the explosive story in October 2017 about dozens of women accusing Weinstein of rape, sexual assault, and sexual abuse over more than 30 years. Since then, more than 85 women have come forward with accusations. In 2020, he was found guilty of rape and criminal sexual assault and sentenced to 23 years in prison, and other cases against him continue.
The reverberations through the business world were vast and immediate. Many C-suite executives were getting fired or “leaving to pursue personal interests,” which are code words for getting fired. C-suite executives became potential sexual harassment liabilities for the acquiring company in company mergers and other deals.
Mergers are replete with due diligence of all kinds, including balance sheets, financials, labor issues, and more. In the past, there were never many questions about the executives or upcoming executives. But now, with the firing of very high-level executives like Les Moonves and Steve Wynn, M&A lawyers began saying they needed to start doing representations and warranties in the documents to protect the acquiring company from sexual harassment claims.
Below are sample Harvey Weinsten clauses. See how other contract drafters used them, and which ones are better than others.
Sometimes Clauses Create More Questions that Answers
The Harvey Weinstein clause in the Salesforce and Tableau merger document contains many words and undefined terms that simply raise more questions.
For example, precisely what is “sexual harassment” in this clause? Is the company looking at what the courts say as they review sexual harassment as an offshoot of sexual discrimination in Title VII cases? Are they looking at what the EEOC says? Are they looking at what the 11th Circuit says? Or, are they looking at how the company defines sexual harassment in its employee handbook or the company sexual discrimination policy?
|To the Company’s Knowledge, in the last five (5) years, (i) no allegations of sexual harassment have been made against any employee at the level of Vice President or above, and (ii) neither the Company nor any of the Company Subsidiaries have entered into any settlement agreements related to allegations of sexual harassment or misconduct by any employee at the level of Vice President or above.|
Most employee handbooks include actions that violate company policies which are much broader than the underlying law. From a legal perspective you could win a motion for summary judgment or a motion to dismiss on things that would not be cognizable under the sexual harassment law but might be a violation of the handbook or policy.
And, what does an “allegation” mean? Once the supervisor knows then the company knows, and they have a duty to investigate. But what if someone simply says, “I think this guy is harassing me.” Is that an allegation? Does it need to be written? Does it need to be investigated? What if it is an incident from years ago?
From a practical matter, the agreement does not say what the company must do, and how.
What Defines Knowledge and Reasonableness
The Salesforce document defines knowledge as inquiry of such parties who would be reasonably expected to have actual knowledge.
So what is reasonable as used here? Is it a reasonable HR professional, or a reasonable attorney, or a reasonable man or woman? It’s unclear. Also, using the term “actual knowledge” seems like a smart thing to do. Someone has to have actually known what happened.
But again, this just raises more questions. In sexual harassment cases from the Supreme Court, like Faragher v. City of Boca Raton or Burlington Industries, Inc. v. Ellerth, the Court clarifies that once someone in the company knows, it is deemed the whole company knows. If even a lower-level supervisor knows, then the company has knowledge.
What if an employee reports harassment to a lower-level supervisor and says they don’t want anything done? They just want someone to know. If the supervisor fails to raise that to higher levels for investigation, what does that mean?
What if the information comes in on a tip line and the accuser does not leave a name? As employment lawyers know, this happens quite often. Does this count as an allegation? The language used opens up a real can of worms that seems like the contract drafters did not think through these issues.
Codes of Conduct and Employee Handbooks
Most companies have codes of conduct and employee handbooks, but they still have to follow the law. Typically, the code of conduct is a public document, and the employee handbook is not.
A company’s employee handbook will have the company policy, how to report issues and use the hotline, ombudsman information, the procedures, and other details not usually visible in the code of conduct.
If you are a transactional lawyer drafting these documents for the company, it is good to have an employment lawyer go over them with you. The attorney will often say, “Good try. Let’s see if it works.” Later, in a quiet CYA email, they may state their uncertainty if the documents will work because the terms like knowledge, reasonable, investigation, and other conditions are not clearly defined.
What About the Next Vice Presidents?
|Merger between Genuine Parts Company, Rhino SpinCo, Inc., Essendant Inc., and Elephant Merger Sub Corp.|
|4.16||To the knowledge of GPC, in the last five (5) years, no allegations of sexual harassment have been made against any current SpinCo Business Employee who is (i) an executive officer or (ii) at the level of Senior Vice President or above.|
The GPC merger document is an example of using a Harvey Weinstein clause that raises more questions than it answers. Why do they use just the last five years? Did something happen six or seven years ago, and now it is cleared up?
Why is the cutoff line at the Vice President level? What is the succession plan of employees who will soon be promoted to Vice President? What if there is a known harasser in line to a vice presidency. And, if this is a worldwide conglomerate, how do they really know?
Many C-suite executives were getting fired or leaving to pursue personal interests, which are code words for getting fired. #ContractTeardown Click To Tweet
Defining Sexual Misconduct
The Wordstream document refers to sexual “misconduct,” but what is it?
|Agreement And Plan Of Merger By And Among Wordstream, Inc., Gannett Co., Inc., Orca Merger Sub, Inc. And Shareholder Representative Services LLC|
|(i)||The Company is not party to a settlement agreement with a current or former officer, employee or independent contractor of the Company or its Affiliates that involves allegations relating to sexual harassment or misconduct. To the Knowledge of the Company, in the last eight (8) years, no allegations of sexual harassment or misconduct have been made against any current or former officer or employee of the Company or its Affiliates.|
For example, at a festive pre-Covid Christmas party at somebody’s house, suppose people are drinking and having fun. But, someone standing under the mistletoe gets an unexpected and unwanted kiss. Is that sexual misconduct? Do you have to disclose it? Some companies have sexual harassment training and cover situations just like this. Some do not. Without a clear definition of “sexual misconduct,” the above clause is not clear at all.
Ten Years is a Long Time
As in-house counsel, you would only want to use a ten-year term if you really know the company is clean. And it isn’t easy to know. Employees come and go all the time. You might need to get affidavits from all HR people past and present for the prior ten years.
|Agreement and Plan Of Merger by and Among RLJ Entertainment, Inc., AMC Networks Inc.,Digital Entertainment Holdings LLC and River Merger Sub Inc.|
|(c)||To the Company’s Knowledge, in the last ten (10) years, (i) no allegations of sexual harassment have been made against any officer of the Company or any of its Subsidiaries, and (ii) the Company and its Subsidiaries have not entered into any settlement agreements related to allegations of sexual harassment or misconduct by an officer of the Company or any of its Subsidiaries.|
Also, companies have various document destruction protocols, so you may not have all the documents for the past ten years. So, when you see a ten-year period from a large and reputable company, you migh t assume that if they put such a long term in the contract, then their ten-year period is clean.
Are Contractors Covered?
|Merger between Cotiviti and Verscend Technologies|
|Except in each case, as has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, to the Knowledge of the Company, (i) no allegations of sexual harassment have been made against (A) any officer or director of the Acquired Companies or (B) any employee of the Acquired Companies who, directly or indirectly, supervises at least eight (8) other employees of the Acquired Companies, and (ii) the Acquired Companies have not entered into any settlement agreement related to allegations of sexual harassment or sexual misconduct by an employee, contractor, director, officer or other Representative.|
This clause includes sexual harassment and sexual misconduct by contractors, as well as directors, officers, and certain employees. Companies are responsible for protecting their employees. It is interesting to see what language they use regarding contractors. However, when there is an allegation against a contractor, companies immediately terminate the contractor’s agreement, and they are no longer present at the company.
This clause covers allegations and settlements against officers, directors, and employees. But, it only covers settlements against contractors. The obvious question is – are there any allegations against any contractors?
When the General Counsel is Accused of Sexual Misconduct?
Specifically, the reporter wanted to know whether it was unusual that Chevron had added this clause into its merger documents with Noble Energy.
|Chevron and Noble Energy|
|Since January 1, 2018, to the knowledge of the Company, (i), no allegations of sexual harassment or other sexual misconduct have been made against any employee of the Company with the title of director, vice president or above through the Company’s anonymous employee hotline or any formal human resources communication channels at the Company, and (ii) there are no actions, suits, investigations or proceedings pending or, to the Company’s knowledge, threatened related to any allegations of sexual harassment or other sexual misconduct by any employee of the Company with the title of director, vice president or above. Since January 1, 2018, to the knowledge of the Company, neither the Company nor any of its Subsidiaries have entered into any settlement agreements related to allegations of sexual harassment or other sexual misconduct by any employee of the Company with the title of director, vice president or above.|
In 2020 Chevron acquired Noble Energy, and the Harvey Weinstein clause they used in their prospectus is above. As background in 2017, the general counsel of Noble Energy allegedly videotaped a female employee under his desk. Noble took swift action, and the general counsel “resigned to pursue other interests” in 2017 and took his multi-million dollar payout for vested options and other items.
At Noble, many of the hotline calls went directly into the general counsel’s office. Noble likely did an extensive company investigation because of this high-profile event. Also, when a highly ranked company official leaves for these reasons, many employees feel more comfortable coming forward. Noble probably felt very comfortable in their knowledge at that point, and using the date of January 1, 2018, makes sense.
This clause seems well thought out and clearly took into account the allegations about the former general counsel.
Guiding Principles in Drafting A Harvey Weinstein Clause
Suppose you are acquiring a company that had a major sex scandal. You definitely want a well-thought-out and well-drafted Harvey Weinstein clause. As a contract drafter, the essential principle is to stay in your lane. As a transactional lawyer, you will draft this clause to put into documents, and likely include representations and warranties to help mitigate risks.
But, it would be best if you had a well-qualified employment attorney walk through all the words with you and poke holes where they can. Decide how far back the agreement should go, who it covers, and why. Have terms that are well defined and that answer more questions than they raise
In addition to being accurate and complete, you do not want the acquirer to have a false sense of security. Know what is not covered. Sit with HR and know the employee complaint procedure.
If you are acquiring or merging with another company, the best way to protect against the unknown nightmare of a future sexual harassment claim is with a well-drafted Harvey Weinstein clause in the merger documents.
THE CONTRACT: Form 425 Nobel Energy Inc.
ADDITIONAL RESOURCES: Marcia Narine Weldon Blog Posts Part 1 & Part 2
THE GUEST: Lawyer and professor teaching/researching re civil procedure, business associations, corporate governance, compliance, CSR, business and human rights, business ethics, nonprofits, and employment law. Former deputy general counsel and chief compliance and ethics officer advising and training on legal issues pertinent to a global, publicly-traded corporation. Certified NLP practitioner and executive coach in Hogan and DISC.
THE HOST: Mike Whelan is the author of Lawyer Forward: Finding Your Place in the Future of Law and host of the Lawyer Forward community. Learn more about his work for attorneys at www.lawyerforward.com .
If you are interested in being a guest on Contract Teardown, please email us at email@example.com .
Marcia Narine Weldon [00:00:00] And the issue was that this caused the Me Too movement to come about what really more popularized it, and then you saw a slew of people in the C-suite getting fired, leaving to pursue, quote, personal interests and those kinds of things.
Intro Voice [00:00:16] Welcome to the Contract Teardown show from 英雄联盟竞猜线上下注APP v5.3. Where legal experts tear down contracts from some of the most well-known companies and high profile executives around the world,
Mike Whelan [00:00:28] in this episode, I talked to Miami law professor Marcia Narine Weldon. We cover drafting a Harvey Weinstein clause and how this clause helps companies manage the risk of large sexual harassment settlements and public relations disasters. Marcia takes us through several examples of the Weinstein clause. In practice, let’s tear it down.
Mike Whelan [00:00:48] Now, Marcia, what we’re going to talk about today is something that’s been on your mind. I’m going to share my screen here for a second because this is a bit unusual. Usually with a contract tear down. Shall we just run down a contract? In this case, we’re going to focus around an issue that seems to have been bugging you specifically. You wrote a couple of blog posts on this issue, the Harvey Weinstein clause, they call it. But specifically, we’re going to end up going through this prospectus. It comes from a merger between Noble Energy and Chevron, if I’ve got that right. Right. And specifically, we’re going to go down to these clauses, these representations about sexual harassment down here on page 22. We’ll make sure that you guys have access to those documents. So if that sounds like a plan, Marcia, that is what we’re going to do. What is this Harvey Weinstein clause? When are we going to run into it? Why does it matter to lawyers? Why should we pay attention to it?
Marcia Narine Weldon [00:01:49] OK, so the Harvey Weinstein clause came about twenty, seventeen, twenty, eighteen, twenty eighteen after Harvey Weinstein infamously was accused of sexual assault, harassment, rape by I don’t know at this point, probably hundreds of women, but at the time fewer. And the issue was that this caused the Me Too movement to come about or really more popularized it. And then you saw a slew of people in the C Suite seats getting fired, leaving to pursue, quote, personal interests and those kinds of things. So the question was, in the context of leaving to pursue personal interest is really code for fired. But as a former employment lawyer, I can say that, but. The issue was people were getting into deals and they weren’t really sure about the background. So when you get into a deal, you’re going to merge, you’re going to do an acquisition, you do a whole lot of due diligence, you know, about the balance sheet, the financials, the cash flow statement, environmental issues, you know about labor issues. You know, whatever strikes, you know, how many Harapan cases you are, they are. But they don’t really ask a lot about the executives. You may see who’s in the succession plan, you know, their CVS, that that kind of stuff. But this really raises the issue of what about harassment in the C suite or those that might get to the C suite because you saw people like Les Moonves all see when so many high profile people, founders of companies having to leave. So some M&A lawyers started saying we’re going to do some reps and some warranties in these documents to make sure that we’re protected. So just like you’re going a rep, that there is no outstanding material litigation other than what’s disclosed on the schedule, no environmental litigation, those kinds of things. You’re also going to say there’s been no allegations of harassment.
Mike Whelan [00:03:30] But, yeah, I mean, as soon as that risk became present to people, companies started to pay attention to how to how to adjust to that risk. So this bit comes from that I’m sharing now. Marcia comes from a document between Salesforce and Tablo that you pointed to. It says to the company’s knowledge in the last five years, no allegations of sexual harassment have been made against any employee at the level of vice president or above. And neither the company nor any of the company’s subsidiaries have entered into any settlement agreements related to allegations of sexual harassment or misconduct by any employee at the level of vice president above. What about this, Drew you to this issue? What in this language really drew your attention?
Marcia Narine Weldon [00:04:16] There’s a bigger picture, so I’m a law school professor now, but I’ve also been an employment lawyer since nineteen ninety six on the defense side from an employment law perspective. I’ve done training on harassment. I’ve written policies, I’ve defended litigations. So there’s so many different words in there that could cause questions. So what is the sexual harassment? It depends. Are we looking at what the courts say when they’re looking at Title seven by Title seven talks about sex discrimination, sexual harassment as an offshoot of sex discrimination? Are they looking at what the EEOC says? Are they looking at the 11th Circuit says or are they looking at the employee handbook says now, if you’re writing an employee handbook, going to add a whole lot of things. That might be what you call violations of your company policy. You’ll have the language about sexual harassment, discrimination, but you’re going to get a lot of things that from a legal perspective, I can win on a motion for summary judgment or motion dismiss. That wouldn’t be cognizable sexual harassment under the law, but might be a violation of the policy. And the policy is always going to be broader. We’re generally going to be broader. So what does it mean for sexual harassment? What is an allegation mean? All right. So companies are required to take any allegation, no matter what the channel is. What’s the supervisor knows? The company knows. So if I say to you, hey, I think this guy’s been harassing me, is that an allegation? What if it’s not recorded? What if it’s not? What if you have a document destruction policy? This is the allegation that happened 10 years ago. The employees now left the company. So how do you look at all of those things, practically speaking? And how do they actually know? Do they then go out and quit a newsletter out saying, by the way, we need to know if McQuillen has ever harassed you, if you never reported it before, let us know or if you reported it and you thought it got swept under the rug. Let us know if you reported it. You didn’t like the investigation. Let us know because you might be a serial harasser. We just can never prove it.
Mike Whelan [00:06:18] So you’ll never catch me fast as fast can be. Well, and relatedly, you know, in the sales and tableau document, it gives this definition of knowledge, which is really interesting because some of the things we’ll talk about later talk about like standards of investigation and reasonableness, which is interesting. But in this case, they say knowledge refers to the actual knowledge of a bunch of individuals that are listed out elsewhere in the document. In each case, after reasonable inquiry of those employees of such party and its subsidiaries who would reasonably be expected to have actual knowledge of the matter in question. A lot of qualifiers in there.
Marcia Narine Weldon [00:06:57] There’s a lot of qualifiers. And of course, I also teach contract drafting. So reasonableness is of course, every lawyer knows that, that be vague wiggle room. What is the reasonable? Is it a reasonable age or professional? Is it a reasonable outside counsel? Is it a reasonable man or the reasonable woman? I’m not sure what that means. Again, what’s the reasonable inquiry? Actual knowledge. I like that. I think that’s smart, right? Because actual knowledge, we actually have to have known it. You know, if I were on the other side, had one constructive knowledge. But here’s the thing. If you look at what the legal standards are right from the cases that come from the Supreme Court, Farragher, Burlington, those cases make it very clear that once somebody in the company or a supervisor knows that the entire company knows that’s knowledge. So if you Mike Whelan, you’re no longer the serial harasser, you’re now the supervisor, you’re the low level supervisor, just trying to keep your job. You’re not trying to get involved anything. Somebody says, hey, look, Prestons been harassing me, but I don’t want to do anything about it. We’re in a pandemic. I just keep my job. I just want somebody to know you look good. I don’t want nobody that’s good. You know, is that actual knowledge for this company? Even if you don’t do anything about it, if you fail to follow what you’re supposed to do and raise that up to the higher authorities, to H.R., to whomever, what does that mean? What if they’re allegations that go through the company hotline? They’re anonymous. They can’t be investigated. Does the company then have to disclose that we had these allegations are saying my is a harasser? I’m not going to tell you my name, please investigate, because if there’s any employment lawyers on on this watching this video, they know that happens often more often than you would think. Is that count as an allegation? So then what’s the reasonable inquiry then look back at every hotline claim that’s ever come in. Do I go back and reinvestigate allegations to see if they were really plausible, if maybe there was shoddy investigation going on? So it kind of opens up a real can of worms that I’m not sure that people really thought through.
Mike Whelan [00:08:59] Well, and one of the things that we wanted to talk about a bit was the vagaries of employee handbooks and codes of conduct. This comes from Noble’s code of conduct. Remember, we’re going to end up talking about Noble and Chevron’s merger. And if you look over this and even Chevron’s code of conduct policy, it’s it’s sort of vague. It talks about, hey, don’t do sexual harassment. And everybody’s like, good idea, you know, so it’s hard to turn this into to something enforceable. What’s the relationship between documents like codes of conduct and employee handbooks for standards that then turn into a duty for the company to investigate? Does that make sense? Like what’s the connection between what they say and what they have to do?
Marcia Narine Weldon [00:09:45] They regardless of whether they have a code of conduct or a policy, they still have to follow the law. The issue is that the code of conduct is typically a public document, specially for a public company. You have to have it as a public document. The employee handbook typically is not. So Chevron, Mobil, all of these companies likely have a or hopefully have a much more detailed policy about harassment, discrimination. Where do you report issues, what the investigation processes, all of those kinds of things? There’s a hotline, a helpline ombudsman that may not be visible in the code of conduct. So, again, we’re talking about sexual harassment. Is it sexual harassment? As for the code of conduct, sexual harassment as per what they were trained on in the training deck, you know, all of those different kinds of things come into play. That, again, from a transactional lawyers perspective, if I don’t have an employment lawyer walk you through it, employment lawyer probably say something like this. Good. Try to see if it works, but probably better to have it than not what I would say. But just so you know, in some kind of quiet email, I’m not sure this is really going to hold up because somebody else is going to come by and say, what do you mean by reasonable? What do you mean by investigation? What do you mean by knowledge? You don’t define knowledge because some of the clauses, they don’t actually define knowledge, which is does that mean it’s constructive knowledge again? And because of sexual harassment, law works. You know, you are presumed Mike Whelan floor supervisor is the company as it comes to person reporting harassment. Even if that person says don’t do anything about it, please don’t do anything.
Mike Whelan [00:11:17] Well, what we’re going to do now, because on this show, we like to talk about specific language. You gave a bunch of examples in one of your blog posts, and I want to go through some of those. And then we’re going to end with the piece, the Noble and Chevron example, and then try to pull some principles from all of these different samples. So let me start with the first sample. I’ll read it to you and you tell me what you think about it. This comes from a merger between genuine parts company, Reino SpinCo, et cetera. It says, To the knowledge of GPC in the last five years, no allegations of sexual harassment have been made against any current SpinCo business employee who is an executive officer or at the level of senior vice president or above. Good, bad. What do you see there?
Marcia Narine Weldon [00:12:04] So, again, I don’t know how deep the vice president, executive vice president ranks go. Right. So if there’s only five of those people, hopefully you don’t put that out there without doing some social due diligence. Right. You have to go out and kind of ask some questions. Have there been any murmurs, any rumors, those kinds of things? Because otherwise you’re not really you’re going to get slapped in the face. What I always wondered, when they put positions, especially very high positions, is why they limit that way. And do they have a succession plan? So what happens? I also used to be an HR professional in a succession plan. What happens if Mike Whelan gets hit by a bus? Who’s going to take over. So you typically go a few levels down. What if you have a bunch of harassers at the levels below that you haven’t been taken care of either the superstar employees, so what do you do in terms of that? So are you limiting that that line because it’s just easy or is because you know something else? You talk about the last five years, I hope you thought about that, is that something happened six years ago and you did you did you clean up and so your short last five years and again, depending on how big the company is, if it’s a worldwide conglomerate, how do you know? Right. Yeah. How do you really know?
Mike Whelan [00:13:14] Yeah, to the best of our knowledge. So I’ve got another sample here I want to read to you. This one comes from Word Stream Ginnette Konarka merger. It says the company is not party to a settlement agreement with a current or former officer, employee or independent contractor of the company or its affiliates that involves allegations relating to sexual harassment or misconduct to the knowledge of the company. In the last eight years, no allegations, eight years, no allegations of sexual harassment or misconduct have been made against any current or former officer employee of the company or its affiliates. Its longer. Does that make it better?
Marcia Narine Weldon [00:13:56] You know, sometimes the longer it is, the more you have to talk about, right, so I don’t know what sexual misconduct is. Do they define that? So sexual misconduct. There is a Christmas party. Let’s do a pre covid land Christmas party. You know, people are drinking at somebody’s house. There’s a mistletoe, somebody kissing somebody they didn’t want to get kiss. Is that sexual misconduct? Might be you’ve got to disclose it maybe if you don’t define it. Right. So because, by the way, for a lot of companies that sexual misconduct, they have training about around the holidays, you know, don’t drink too much, no mistletoe, all kinds of things will go out because they know people do stupid things when they’re drinking at a holiday party, end of the year, that kind of stuff. Does that count?
Mike Whelan [00:14:39] Yeah, just if I told you at the beginning of our conversation we were going to see if my kids and animals would zip it for another 20 minutes, I hear them stirring. It’s twenty, twenty people. So forgive me if you hear any exotic birds squawking in the background. Here’s another example. This is an agreement and plan, a merger among RJ Entertainment, AMC Networks, etc. It says to the company’s knowledge, in the last ten years, no allegations of sexual harassment have been made against any officer of the company or any of its subsidiaries. The company, its and its subsidiaries have not entered into any settlement agreements related to allegations of sexual harassment or misconduct by an officer of the company or any of its subsidiaries. The language is starting to repeat itself. I mean, as is often true in these things, we copy contract lawyers often copy paste. So is there something new in this or are we starting to establish.
Marcia Narine Weldon [00:15:33] And years is a long time. There’s a long time. So I’m only going to do something for ten years because I’ve also been an in-house lawyer, a deputy. Do you see those kinds of things? I’m only doing something for ten years if I really know that we’ve been clean, which means I’m interviewing. I’m doing basically I’m happy doing a deposition of all the H.R. people past and present for the past ten years, because, you know, if something was ten years ago and we’ve got new people here now who would know about it, I’m going to find out because again, a lot of copies also have document destruction protocols. Persons been gone for ten years. If you don’t need that person’s personnel file, you don’t look at state and federal law. But at some point you start getting to files. So how do they know ten years is a long time? So I can assume I’m going to assume good faith that these people have the best lawyers in the world. So I’m going to assume that they said ten years. They really know ten years.
Mike Whelan [00:16:27] One last example. And again, we’re getting longer, so it must be good. So whatever patterns we’re finding in this and then we’ll talk about the Chevron and the Noble Peace, let me get rid of this first bit of the language. But it says to the knowledge of the company, no allegations of sexual harassment have been made against any officer or director in the acquired companies, any employee, the acquired companies who directly or indirectly supervises at least eight other employees, which apparently is their standard for a supervisor of the acquired companies. And the acquired companies have not entered into any settlement agreement related to allegations of sexual harassment by any employee, contractor, director, officer or other representative. So in a weird way, they’re like going up the ladder and down the ladder. What are you seeing in this one?
Marcia Narine Weldon [00:17:14] It’s interesting. I mean, eight employees is kind of random, but. I’m sure they had a reason for the contractor language is always interesting to me because so companies are responsible. If contractors harass their employees, they’ve got to protect people and contractors. The question would be, are any contract still there that’s been accused of allegations? Let’s say, again, let’s assume there’s been no suit or no settlement. And by the way, people often settle even when there’s no liability, they settle for nuisance value. They settle, they settle because they don’t know if they can win the case. They settle because they say, you know what, Preston’s a good guy, but he’s going to look like a liar in his deposition. And Mary Jane is going to look like a saint. We’re going to settle this case. So sometimes people settle regardless of the merits just because they want to get rid of the case. If there’s contractors or contractors or employees, if the contractors will ask people to end their contract immediately, so the minute there is an allegation by the contractor about a contractor, you get rid of that contractor. So it’s always interesting to me when they have the contractor language in again, unless it’s the kind of business that depends very heavily on contractors and independent contractors, which itself leads to other employment law issues, which is the subject of another showdown, right?
Mike Whelan [00:18:29] Yeah, it sounds like a lot more risk with a lot less control. All right. What we’re going to do now is identify the one that you talked about as the good example. As good as it gets here,
Marcia Narine Weldon [00:18:40] that’s the better example.
Mike Whelan [00:18:41] The better example. Well done. Good qualifier, Professor. And again, it’s the longest. So so this is coming from the perspective between Chevron and Noble in their merger. And they they go back to January twenty eighteen. So just a just a couple few years to the knowledge of the company, no allegations of sexual harassment or other sexual misconduct have been made against any employee of the company with the title of director, vice president or above to the companies. Anonymous hotline mentions the hotline or any formal human resources communication channels at the company. So formal is interesting and there are no action suits. Investigations are proceeding pending or the to the company’s knowledge threatened related to any allegation of sexual harassment or other sexual misconduct with the title director, et cetera. To the knowledge of the company. Since January, neither the company nor any subsidiaries have entered into any settlement agreements related to sexual harassment allegations with any of those ranks. Why is this one better?
Marcia Narine Weldon [00:19:46] So this one is interesting because so the Noble and Chevron story is interesting for a number of reasons. And this was a stock sale, if I’m not mistaken. But being in twenty seventeen, the general counsel of Noble resigned to pursue personal interests after allegedly videotaping a female employee under his desk to Noble’s credits. Noble took action after they heard of this allegation. Very swift action. He left in twenty seventeen. He left with a nice payout, you know, a lot of vested options and those kinds of things. The company did not do a clawback as the company had the right to do, but it’s likely that after that happened, the company did a really thorough investigation. I don’t know. I’m just speaking from what I would assume would happen, because that is a company where many of the hotline calls went into that general counsel’s office. So I have to assume that Noble, again, I have no personal knowledge, would have done a very thorough investigation so that they could say, as of twenty eighteen, we’re good. The other thing is when somebody at that high level leave the company, it also gives a lot more comfort for other employees to go for. Look at McDonald’s and the CEO and the people that came forward about other things. So they likely feel we’ve got everything because if we show we can if we show that the general counsel can leave to pursue personal interests after this allegation that other people probably came forward. So that didn’t really make sense. And I think they that that Chevron would have wanted that because, again, that’s a very high personal leadership who’s in charge of the ethics and the legal work of the company. So that’s why I think this one is a better one. It looks like it’s more well thought out. It clearly took it took into account the allegations about the former CEO. So this one is better. I think it has to do with a lot more. They don’t it seems like they took a lot more care on it.
Mike Whelan [00:21:58] Right. So what about that distinction before we get to principles between actual knowledge because Supervisor Joe knew versus somebody went through formal communication channels. You like that language better
Marcia Narine Weldon [00:22:13] as a defense lawyer? Of course I like that language better because. Right. Because the formal communication, they talked about their hotline. And so I need to see the employee handbook to see what their formal communications are like, because a formal process might also be talking to your supervisor, because the case law has to make that very clear if you have to have some kind of way for people to raise complaints. So can they go through the chain of command? Does that count? So the word formal is interesting to me because without saying what their handbook says, without seeing what they’re open door policy and all those things are, it’s hard to know why they put the word formal there. But that’s clearly a deliberate choice.
Mike Whelan [00:22:52] Well, I like it. And so to wrap up, what’s the principle here? I mean, we talked a little bit about definitions and those vagaries. We talked about how deep you dig into these things. I’m thinking as a transactional lawyer who’s drafting these things sort of on both sides of one of these mergers. If I’m the person trying to avoid the risk or I’m trying to be the person who doesn’t sign off on will absorb all the risk in my representations. What kind of principles can we draw from this in terms of drafting?
Marcia Narine Weldon [00:23:20] I think if you’re dealing with a company that’s had a major sex scandal, you definitely do this right. These aren’t as common as as I would have thought. And it’s probably because people think, well, how are you going to prove all that if it comes up and then what’s the indemnification? All those kinds of things. But the biggest principle is that. You stay in your lane. So if your transactional lawyer, if you’re going to put this in, you’ve got to make sure the Employment Council walks you through all the words that you’re doing and pokes all the holes and then says, all right, we’re going to put this in there, because obviously, if you have a rep warranty, those kinds of stuff, it’s to mitigate risk. So you don’t want the company, the acquirer, to have a false sense of security, to say these are the words that you did and we told you the 10 things. This is not going to cover or let’s make sure we’ve sat down with their head of H.R. or whomever it is and said how the complaints get made. How many of you guys had what your positivity rate in terms of anonymous claims? What’s the corroboration to make those kinds of things? That’s perfect.
Mike Whelan [00:24:21] What the lesson is, talk to smart people just like we did. Thank you, Marcia. If people want to follow up with you and maybe connect with you on social media or whatever, to talk about some of these issues, if they want to dig deeper on it, what’s the best way to get in touch with you?
Marcia Narine Weldon [00:24:34] You can find me on LinkedIn, Marcia Narine Weldon, and I’m happy to talk to you. I love talking about this stuff. I blog every every other Friday on the business law professor blog. And this actually came to me because someone from the Financial Times and the article came out a couple days ago, reached out to me because you don’t see a lot of these. And the question was, why would Chevron do this? They didn’t do this with other companies that they bought. Why do Noble Energy? And that’s how this came about.
Mike Whelan [00:24:59] We’ll make sure that at LawInsider.com/Resources, where we’re going to post this video and on YouTube, that you guys will have the links to Marcia’s posts, as well as any of the documents that we talked about. So you can access those will continue having teardowns like this. Just go to lawinsider.com/resources. You can look those up and if you want to be a tear down-er, you’re one of the smart people we talked to. Just go send us an email at Community@LawInsider.com. We’ll see you guys next time. Thanks again.
Marcia Narine Weldon [00:25:32] Thank you.