Labor Logic

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John D. Finerty, Jr.

Holiday parties are annual events at most companies. They come in all shapes and sizes — from small lunches to full-blown catered events at the local country club.

Whether your company’s holiday party is large or small, a landmark case should remind all employers that employees don’t always behave themselves at company sponsored events.

A few precautions will help avoid liability and keep employees out of trouble. The case of Place v. Abbott Laboratories, 215 F.3d 803 (7th Cir. 2000), is certain to become a holiday chestnut and, like most Christmas stories, worth reading at least once a year.

Background

Abbott Laboratories held its annual Christmas party in December 1990, at a restaurant in Libertyville, Illinois. Linda Place, a biology research associate, and her supervisor got drunk at the party and found their way into the same hotel bed.

The two partygoers proceeded to carry on a six-month affair (both were married) that led to complaints of sexual harassment, a medical disability leave and a lawsuit for sexual harassment and retaliation after Abbott terminated Place. In its decision, the Seventh Circuit Court of Appeals identified more than 20 similar cases under Title VII that began with a proposition at a company holiday party.

The details of the holiday party encounter between Place and her supervisor are worth recalling. Abbott’s company Christmas party lasted several hours, during which, as the Court noted, “wine was flowing.” Once the party concluded, Place and her supervisor, Charles Harrington, moved the party to a co-worker’s apartment in Evanston. Place and Harrington drove together in Place’s car because she had too much to drink and Harrington was in “better shape.” More drinks followed at the after-party party, but that apparently ended when the host passed out.

Place and Harrington then returned to the restaurant where Harrington had left his car; Harrington drove Place’s car again because she “wasn’t capable of driving.” In the car on the way back to the restaurant, however, Harrington suggested that they go to a hotel. Place said she had no desire to accept Harrington’s proposition, but, nevertheless, Place and Harrington drove in their own cars to a hotel. A sexual encounter followed.

Not surprisingly, tensions between Place and Harrington grew after the relationship ended six months later. Place claimed the relationship was coercive from start to finish and that she only had sex with him because he controlled her performance evaluations.

She then complained to Abbott that Harrington was harassing her and the company transferred both Harrington and Place to other jobs where they would not have to deal with each other. Both employees, however, kept the same job titles, pay and benefits, but both considered the transfers demotions.

Place also claimed that the harassment and her job transfer (that she alleged was retaliation) caused her emotional distress that resulted in a medical leave of absence of more than one year. However, Abbott’s policy was that employees off of work in excess of one year were terminated.

Some Unexpected Developments

Place apparently could not find work as a scientist after her termination from Abbott Laboratories, so she went to law school. The Court in its decision noted that she became a successful lawyer in Waukegan, Illinois, after graduating from law school. She also filed sexual harassment, ADA and ERISA claims against Abbott.

The trial court that heard the case found it was more believable that the relationship between Place and Harrington was consensual, but it allowed a jury to determine whether or not Abbott had retaliated against Place. The jury found in her favor and awarded over $500,000 in damages. In a decision issued in June 2000 (or nearly 10 years after the Abbott Christmas party where all this began), the court of appeals reversed the verdict in favor of Place and remanded the case with instructions to dismiss the claims against Abbott Laboratories.

Lessons Learned from the Case

Understandably, most employers want to avoid these situations or limit company liability when parties get out of hand. Here are a few suggestions:

• Limit alcohol intake by offering each employee a few drink coupons or tokens, in lieu of an all-night open bar.

• Serve food to help reduce the effects of alcohol consumption, but avoid salty or greasy foods that can increase an individual’s desire to drink.

• Instruct the restaurant or host facility to refuse liquor service to anyone who has had too much to drink.

• Arrange alternate transportation, in advance, to take employees who have had too much to drink home.

• Designate at least one management employee to oversee the party and ensure that no one has too much to drink and that minors are never served alcohol.

• Review insurance policies to confirm insurance coverage for company events at which alcohol is served.

For more information on these topics or for general assistance drafting employment policies, please contact John D. Finerty, Jr. at Michael Best & Friedrich LLP at (414) 225-8269 or on the Internet at [email protected].

For more information on this case, contract John D. Finerty, Jr. at Michael Best & Friedrich LLP at (414) 225-8269 or on the internet at [email protected].