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Bar News - April 19, 2017

Labor & Employment Law: Mass. Verdict Highlights Importance of Workplace Investigations


Workplace investigations matter. They must be done right. A Massachusetts jury recently awarded $540,000 to Emma Gyulakian in compensatory and punitive damages against her former employer, Lexus of Watertown, Inc. and Post Motors, Inc. (Lexus).

On appeal, the Supreme Judicial Court (SJC) found that Gyulakian suffered “relentless” sexual harassment at the hands of her supervisor, Emmanuel Ferreira. The SJC reversed the lower court’s grant of Lexus’s judgment notwithstanding the verdict motion on punitive damages based on evidence that, independent of the harassment, Lexus failed to take adequate measures after being notified of a sexually-hostile or offensive work environment.

The SJC found Lexus’s actions to be “outrageous or egregious.” The lack of an adequate investigation was the impetus for the award. Although this case was decided under Massachusetts law, New Hampshire practitioners should follow the same standard for workplace investigations.

Gyulakian was finance manager, and her supervisor was Emmanuel Ferreira, finance director. During her employment, Gyulakian complained multiple times to Ferreira’s boss about sexually-offensive incidents that occurred almost daily over an 18-month period. Gyulakian complained that Ferreira commented on her buttocks and breasts, asked if they could sleep together, and tried to throw coins down her blouse.

Some sexually-explicit conduct of Ferreira was not directed at her, including his discussion with others of anal intercourse and his viewing naked photographs at work. Although management witnessed some of Ferreira’s graphic behavior, no investigation was conducted.

The law is clear – an employer must act upon notice or knowledge of a potentially sexually-hostile environment, which means conducting an investigation and taking remedial action, if warranted. Here, Lexus failed to investigate Gyulakian’s initial claims and, when it did investigate, that investigation was wholly deficient.

When Lexus terminated Gyulakian’s employment for alleged deteriorating relationships with colleagues, she again complained about Ferreira’s sexually-offensive conduct. Lexus investigated her complaint; however, as the SJC found, that investigation was a sham. First, Lexus’ choice of General Manager Vincent Liuzzi to investigate “marred” the investigation from the outset, because he was not fair and impartial. Early in the investigation, Liuzzi said he did not believe the allegations.

Second, Liuzzi failed to interview all potentially relevant witnesses, and never even contacted Gyulakian. Liuzzi gave an unconvincing explanation that he interviewed Ferreira, but no one else from the Finance Department, because he did not want to “undermine” Ferreira. And, one of the four individuals Liuzzi purportedly interviewed denied being questioned.

Third, Liuzzi’s determination that Gyulakian’s claims lacked merit was contrary to the evidence, including uncontroverted trial testimony corroborating the complained-of incidents, as well as a memo that had been previously circulated to the workforce about Ferreira’s inappropriate sex talk.

The SJC’s decision provides clear guidelines for counsel: an employer must: 1) respond promptly when on notice of possible inappropriate sexual behavior; 2) select an unbiased and experienced investigator; 3) interview all potentially relevant witnesses, including the complainant and person accused; 4) review documents and other potentially relevant evidence; and 5) reach well-reasoned conclusions based on the preponderance of the evidence standard.

Julie A. Moore

Marcie Vaughan

Julie Moore is president of Employment Practices Group, which she founded in 1998. She is licensed in New Hampshire and Massachusetts, focusing her practice on internal investigations, training, and counseling on workplace matters. Marcie Vaughn has been with the firm since 2011, conducting investigations and counseling employers on general employment matters.

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