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Sunday, June 30, 2013

Where Were The Lawyers, Chapter 25,847: The Paula Deen Fiasco

Jimmy Carter says Paula Deen has been punished enough for her use of racial epithets.  True, many people of her age and background probably used racial epithets (although many probably did not).   But that she is no worse than other people is irrelevant--she was a brand, and the brand was based on distinctive friendliness, wholesomeness, and kindness.   Her brand was destroyed--her endorsement losses include Target, Walmart, Smithfield, QVC, Sears, J.C. Penney, Novo-Nordisk, and Ceasars Entertainment--not simply because she used racial epithets, but deservedly because she forgot the importance of her image.  The deposition transcript makes her look indifferent to racial and sexual harassment by her brother at her restaurant--it was very difficult for the plaintiff's lawyer to get her to admit the inappropriateness of what seemed like an unremitting flow of crude remarks.  A purely legalistic strategy might work if you are an investment bank or a multinational, but if your stock in trade is niceness, it is a big problem if your brother and business partner admits the "use of the word n**** in the workplace" and you can't bring yourself to stop it or even admit that it is wrong.  While the client has free will, I fear that this fiasco is Martha Stewart all over again, where, somehow, a person paid large fees to talk herself into trouble while represented by distinguished lawyers.

The suit involved a former female manager at Uncle Bubba's Seafood and Oyster House, which is partially owned by Deen and managed by her brother, Earl "Bubba" Hiers, also a part owner.   The restaurant loses money and is subsidized by Paula Dean Enterprises.  Bubba is alleged to be a crude person, who, according to the allegations, showed up at work drunk, assaulted an employee, viewed pornography at work and showed it to unwilling employees, and used the N-word.  According to Paula Deen herself, Bubba stole money from the restaurant, received in-patient drug and alcohol rehabilitation, and told racial and sexual jokes to employees.  Ms. Deen hired a consulting firm to evaluate the complaints, which found them valid, but Ms. Deen rejected that opinion because she concluded that the firm she herself hired had been deceived by people  with evil motives. (Oddly, the firm has an endorsement from Paula Deen on its website)

Demonstrating great lack of curiosity, Ms. Deen testified she never asked her brother about the truth of the allegations against him, but apparently assumed that the pornography-watching and showing  could have happened ("I know that all the men in my family at one time or another they'll tell each other, look what so and so sent me on my phone, you know.  It's just men being men.", Tr. at 69), and that if it did, was unwilling to say it was improper ("You know, each situation can--can be different.  It's not black and white.  there's a lot of gray in that." Tr. at 68). 

It seems to be a case of blood being thicker than water.  She was in money-losing business with a brother who she knew was problematic, and, after she got rich and famous, instead of hardening her heart (or even writing a big check and keeping her distance professionally) she stayed in business with him.  When asked "Can you imagine your brother speaking to a female employee who had just gotten dentures that I'll bet your husband is going to like that?" She responded "I can imagine several men in my life that would have said something similar."  Tr. at  136.  

True, rich people don't like to be pushed around, but Paula Deen's participation in a deposition where everyone knew that she would say the things that she said reflects such catastrophically bad judgment that it is almost inexplicable.  Perhaps she overruled her lawyers because she was penny wise and pound foolish, perhaps she did not understand that the public would regard her toleration of racial and sexual harassment, even if she was technically not liable, as inconsistent with the warm family values associated with her personality.   Alternatively, perhaps her lawyers failed to offer their business judgment that with at least smoke, the case should be settled quietly. Obviously this is true in retrospect, but with six or more lawyers defending the case, and takeover-style discovery, I wonder if even before the implosion settlement would have cost dramatically more than defense. I sure hope that in the file there is an emphatic letter to Ms. Deen from counsel strongly advising settlement of the suit at whatever price it costs.  

Posted by Jack Chin on June 30, 2013 at 04:35 AM | Permalink

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Very well said. The "deny and defend" strategy does not work quite as well when the defendant has to defend her own behavior as well as the behavior of others. Blood was certainly thicker than water and is resulting in the demise of her brand. A part of me empathizes with her to the extent that she might have taken the path of least resistance due to some outdated cultural perspective relative to the role of men and women in the family unit (she defended the actions of her brother and husband as simply men in her family being "men"). But she also should have realized that her brand is/was bigger than any perception of a woman's worth in the family.

The problem with some defense counsel is that they would rather litigate a case up to and sometimes through depositions before considering mediation and settlement (can you say billable hours?). Yes, it might be unwise to offer to settle before knowing all of the facts, but if you know your client as well as they should have know Mrs. Deen, it is also unwise to allow her to destroy her image without strongly encouraging her to consider resolution earlier in the case. Settlement does not equate to guilt, it is business logic.

This being said, I am also aware that small businesses tend to take lawsuits of this nature very personally and would rather pay millions to their attorneys to defeat the ungrateful and defamatory ex-employee than to spend thousands to settle the dispute and reward the ex-employee for their disloyalty. Small business owners would be wise to consider the approach of many big business counterparts. A lawsuit is merely another line item on the P&L statement, nothing more. To settle or to defend through trial becomes a business decision and not an emotional one. Hopefully Mrs. Deen has learned a valuable business lesson - keep emotion out of business.

Posted by: kdi | Jun 30, 2013 9:40:13 AM

I think this hits the nail on the head. The thing that got me in the transcript was the continued assertion that all of the behavior was just OK - particularly the one naming all the groups who are targets of jokes.

Here's a Facebook post I made last week - somewhat similar to your take:

I read through several of the Paula Deen excerpts. I'm thinking:
1. She had so much hubris that she wouldn't take training OR
2. Her lawyers have never actually prepared a witness for deposition.

I'm guessing No. 1. Her answers could have remained largely the same and been far more innocuous with only minor preparation/tweaking. For example, rather than "If my brother watched pornography it was a joke" she could have said "I don't know if he watched pornography, but if he did, I would have told him to stop." Same factual content ("I don't know"), whole different take. Plus, she should have hung him out to dry if she had to - this whole restaurant has got to be a tiny drop in the bucket of what she's going to lose without her Food Network contract.

Posted by: Michael Risch | Jun 30, 2013 9:42:13 AM

I didn't read the whole transcript, but I can see a witness (other than Paula Deen) being prepared to say things like this. As I understand the facts, Bubba was the boss of the restaurant. If so, any harassment by him would be attributable to the corporate defendant. Saying "I would have told him to stop" might be a good answer for Paula Deen's reputation, but it would have been a bad answer from the point of view of corporate liability, as it would have been an admission that the alleged harasser's behavior was unacceptable.

Of course, in this instance the harm to Paula Deen's reputation is worth far more than losing the case would have been. The mistake here seems to be ignoring that extraordinary aspect of the case. In ordinary cases, aggressively withholding admissions, even at a risk to the witness's favorability ratings, can sometimes be effective. In my experience, corporate witnesses often go out on a limb to avoid admitting wrongdoing by the company.

Posted by: AF | Jul 1, 2013 1:21:58 PM

KDI, Your comment reminds me of what an unnamed source said about her publisher dropping her: "It was a business decision." Ms. Deen, in a way, should be congratulated for standing by her kin. On the the hand, what she was standing by was his abuse and denigration of other people.

AF, exactly right. Paula Deen probably has lots of ordinary business litigation which did not put her reputation at stake. She did not understand that this was different.

Jack

Posted by: Jack | Jul 1, 2013 5:54:19 PM

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