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When Workers Complain: Discrimination Lawsuits Accuse Vanguard Of Targeting Workers
FWIW - A post that contained a copy of Ted's link and hattip to Ted briefly appeared on the Bogleheads.org website on Sunday Jan 17 for several hours, but was removed by that board's administrator because it was too controversial for that board.
Thank you David (and Ted) for fostering a forum where readers can reference material that appears on the websites of (horrors, say it ain't so!) Pulitzer Prize-winning newspapers.
I was shocked at this part of the statement from the lawyer for Vanguard. A corporate lawyer NEVER concedes the possibility of potentially losing a case or even parts of it in public statements. It reflects very badly on Vanguard because to many (not the Bogleheads) it reads like "We never did anything illegal but if the courts find we did despite our denials, it is against what we normally do in good faith to comply with the laws". I think most corporations would fire their lawyer for phrasing something like that.
The lawyer laid out a textbook defense - we didn't do what was claimed, and even if we did, here's our affirmative defense. Failing to claim a defense would be reason to fire the lawyer.
“[I]n the punitive damages context, an employer may not be vicariously liable for discriminatory employment decisions of managerial agents where such decisions are contrary to the employer’s ‘good faith efforts to comply with Title VII.’”
@msf you are probably right on the legal defense strategy (I am not a lawyer) but I wasn't talking about that.
A corporate lawyer NEVER concedes the possibility of potentially losing a case or even parts of it in public statements
In cases like this, a corporation needs to manage both the PR image and the legal defense. While the strategy may be right, you don't make statements like that to the press or anywhere outside the courts because of PR reasons.
Typically, they would be worded something like
"Vanguard has been in full compliance with all applicable laws and regulations and we are confidant that this will be established in the courts. We will show that the charges have no merit"
or if for some reason you need to bring the good faith effort, say something like
"Vanguard has been in full compliance with all applicable laws and regulations and it has always been our policy to comply with all anti-discrimination statutes in good faith"
And then if they actually lose issue something like
"We are disappointed with the results in the courts. We believe we have acted in good faith with respect to anti-discrimination statutes and we will take a hard look at what more we can do. We are proud of our diversified employee force and they all are owners of the company just as the investors in our mutual funds." Or some spin like that.
Never saying "if we should lose..." in response to charges even if that contingency plan is indeed the strategy followed in court. This statement is very, very, unusual. It risks people believing that they may have thought internally that they may have done something that could be considered wrong by the courts even if that is true internally. Unnecessary.
PR 101.
If the Corp Communications actually OKed this, then they should fire the Corporate PR guy.
"If they lose the issue [say that] ... we believe we have acted in good faith ...." This sequence doesn't work.
When (and if) the court decides there was discrimination, it will also have decided whether Vanguard acted in good faith. Vanguard will be free to continue talking about what it believes it did or didn't do, but those beliefs will have already been tested.
In other words, the suggested statement (for after the ruling) comes across as: the court said we were wrong, but we still believe we were right.
If you want to spin for PR before the case, try inverting:
We believe we have acted in good faith with respect to anti-discrimination statutes and we followed our policies and procedures specifically designed to protect our employees. At all relevant times, Vanguard's conduct followed the law. We are proud of our diversified employee force and they all are owners of the company just as the investors in our mutual funds.
"If the Corp Communications actually OKed this, then they should fire the Corporate PR guy."
Now you've got the right idea; don't fire the lawyer for being lawyerly
Re: msf said: "...don't fire the lawyer for being lawyerly"
Unless, of course, the Vanguard lawyer turns out to be older than 50 or so.... (and the behavior described by the plaintiffs is effectively 'confirmed' - if that is the word - by the court.)
Sometimes a lawyer might deflect the blame to a specific party within an organization rather than implicate the entire organization itself. So I don't think the statement that any misdeeds are "contrary to Vanguard's good-faith" efforts is so foolish from a PR perspective. Consider this: If Vanguard loses in the courts, these kinds of statements actually can reaffirm that it isn't Vanguard as an entire organization that is discriminating but a few bad apples in perhaps a specific department. The value of acknowledging that Vanguard is willing to correct any realized problems is significant to its brand, perhaps more valuable than any potential damages paid in individual suits. Vanguard manages a lot of money for esteemed institutions and government agencies. Those are billions in assets that could leave the door if Vanguard's brand is damaged and it is perceived as a racist, sexist institution. University money in particular and 529 plans could be vulnerable where student bodies are known to be activist and demand divestment from racist/sexist organizations. This way Vanguard can fire the ones perpetrating the discrimination if they lose the suits and blame those individuals and the specific department. Either way, it is valuable to be seen as proactive from a branding standpoint with these highly sensitive issues.
"If they lose the issue [say that] ... we believe we have acted in good faith ...." This sequence doesn't work.
What you say after the case depends on how you lost not whether you did. So, if the companies lost on a technicality or if it was a close one that could have gone either way, companies will more often than not put out a statement that they beieved they were in the right even if they lost. The guiding principle here would be what can can they get away with credibly (given HOW the case went) and the strongest wording in favor of the company. So you cannot say what ought to be said until the trial is done. I just gave one example which would be right if the case decision was ambiguous or could have gone either way.
Haven't you seen such wordings from companies that maintain their belief in innocence even after losing a case? Apple is fantastic at this. Very common. You are thinking like a lawyer not a PR person.
"If the Corp Communications actually OKed this, then they should fire the Corporate PR guy."
Now you've got the right idea; don't fire the lawyer for being lawyerly
Your defense of the lawyer is cute but making that statement as done was not being lawyerly at all even if it was the right strategy. Their job would be to make public statements only if necessary to help the case and nothing more. "If we were to lose..." almost never helps a case, at best neutral from a legal fight perspective but hurtful in a PR perspective.
So, someone needs to take responsibility for that boneheaded statement. Typically, in corporations PR companies look after the image/message in public statements and lawyers look after the legal implications. So, if the PR department was consulted and they were OK with it, then yes they ought to own up. But if the lawyer shot off his mouth without consulting PR or was trusted (depends on the company) to make statements without necessarily consulting PR and made that statement without realizing the implication, then he/she ought not to be so trusted, the judgment would be in question to consider his suitability for the job that involves making public statements.
... it is valuable to be seen as proactive from a branding standpoint with these highly sensitive issues
Typically, one takes a proactive stand with a statement that suggests the possibility of being in the wrong or being judged so only if that possibility is almost a certainty as damage control as when for example, your oil rig exploded or your drugs killed people or anything where the outrage would be aginst you to start with because of the circumstance.
This case is far from that certainty (Vanguard may even prevail as far as public opinion is concerned) and it is exactly because of the above that making such a "if we lose..." scenario would be bad from PR perspective. It would be perceived as the company knowing that they have done something wrong.
Yes, it would be a judgment call based on the potential positive and negative perception but if you look up any such proactive statements of being done admitting the possibility of being wrong you will see that the events would have been such that you would already be or have been judged guilty in the court of public opinion and even then only if you believe you are most likely to lose the case.
@maurice, if you have dealt with enough PR people you start to think like them! Same thing with lawyers. Perhaps, they have been skimping on PR or lawyer fees as well to keep costs low.
But seriously, in this day and age with social media and access to Internet, corporate image is taken very seriously, especially when any weakness will be exploited by competitors and/or haters (any company that is large and successful WILL have haters) via guerilla campaigns.
That is not suit against Vanguard for charging too much. It is a suit against a plan administrator (Anthem) in part for using investor class shares (rather than institutional shares) of Vanguard funds. That part of the suit seems like a winner given there was just a Supreme Court ruling on this.
There are other aspects of the suit as well, but the key points are that the suit is against the administrator, not against Vanguard, and it is for using the wrong Vanguard vehicles, not for a given Vanguard vehicle charging too much.
That is not suit against Vanguard for charging too much. It is a suit against a plan administrator (Anthem) in part for using investor class shares (rather than institutional shares) of Vanguard funds.
@msf, I am confused. What suit are you refering to in this thread on the discrimination charges and who are you responding to?
Been occupied a few days, so I'll try to be relatively brief:
Lawyer was stating only what had already been stated in Vanguard's answer (legal filing) to complaint. An answer is a filing where all the defenses are laid out - we didn't do it; yes, but; etc.
I wasn't reading the statement like a lawyer, but as a literate person who understands subjunctive mood: we deny allegations, but even if we had done what was claimed it would have been in good faith. English Grammar for Dummies:Using the Subjunctive Mood in English
Maurice made reference to a suit against Vanguard for charging high 401(k) fees. That suit was not against Vanguard, as I clarified.
For the most part, I agree with Lewis' observations, except to the extent that while an employer can escape some culpability by throwing individuals under the bus, it cannot escape liability. That is, if someone is fired (or pushed out, i.e. constructively fired) for being too old, that person must be made whole - job reinstated with back pay. Blaming rogue actors may mitigate this in the public eye, but it isn't going to erase it. Especially since real money, real damages, and real people are involved.
@msf, thanks for getting back. I went back and read the article again to refresh myself and it would appear we have been misinterpreting the situation. The lawyer made no public statements, it is not something he wrote to the media as I interpreted nor did he repeat what he had written in the briefings. The article dug it out of the briefings from a case and was a bit ambiguous about it. So I take back my comment that someone needs to get fired!
As I said before I have no opinion on it being the defense strategy and you cannot avoid newspapers digging that up but I stand by my PR implications of it if he had made it as a direct statement written or oral to the media. A competent lawyer would never do that (kind of a statement to the media even if it is already in the filings). If you believe otherwise, then I beg to disagree. It just becomes a matter of opinion based on our experiences (or lack of it).
In fact, lawyers often construct their legal briefings with PR awareness. The construct I was objecting to is a very common one in PR to avoid. For example, from
I quote a similar opinion on the Tom Brady deflategate filing.
It’s why, for example, Tom Brady and the NFL Players Association resisted couching the argument against a four-game suspension this way: “Even if he did it, they can’t suspend him for it.” Although it’s common in legal filings for lawyers to make assumptions for the sake of argument, the average non-lawyer would look at that and say, “So he’s admitting he did it.”
That is exactly the point I was making here.
And this is precisely the difference between thinking like a lawyer and a PR person. A lawyer often makes a case that an average person will think the way he/she does to prevail in his viewpoint. The PR person does just the opposite, it is not what he thinks or knows to be true but what an average Joe on the street who doesn't have a clue about subjunctive moods or even be literate thinks when they read a statement. Very different ball games.
It has been a fun discussion. Thanks for your usual well thought out inputs.
Comments
Thank you David (and Ted) for fostering a forum where readers can reference material that appears on the websites of (horrors, say it ain't so!) Pulitzer Prize-winning newspapers.
May wonders like MFO never cease.
Note that good faith is a defense against punitive but not compensatory damages. See, e.g. this 2011 ABA meeting paper (look for "good-faith defense"):
http://www.americanbar.org/content/dam/aba/administrative/labor_law/meetings/2011/annualmeeting/004.authcheckdam.pdf
“[I]n the punitive damages context, an employer may not be vicariously liable for discriminatory employment decisions of managerial agents where such decisions are contrary to the employer’s ‘good faith efforts to comply with Title VII.’”
Typically, they would be worded something like
"Vanguard has been in full compliance with all applicable laws and regulations and we are confidant that this will be established in the courts. We will show that the charges have no merit"
or if for some reason you need to bring the good faith effort, say something like
"Vanguard has been in full compliance with all applicable laws and regulations and it has always been our policy to comply with all anti-discrimination statutes in good faith"
And then if they actually lose issue something like
"We are disappointed with the results in the courts. We believe we have acted in good faith with respect to anti-discrimination statutes and we will take a hard look at what more we can do. We are proud of our diversified employee force and they all are owners of the company just as the investors in our mutual funds." Or some spin like that.
Never saying "if we should lose..." in response to charges even if that contingency plan is indeed the strategy followed in court. This statement is very, very, unusual. It risks people believing that they may have thought internally that they may have done something that could be considered wrong by the courts even if that is true internally. Unnecessary.
PR 101.
If the Corp Communications actually OKed this, then they should fire the Corporate PR guy.
This sequence doesn't work.
When (and if) the court decides there was discrimination, it will also have decided whether Vanguard acted in good faith. Vanguard will be free to continue talking about what it believes it did or didn't do, but those beliefs will have already been tested.
In other words, the suggested statement (for after the ruling) comes across as: the court said we were wrong, but we still believe we were right.
If you want to spin for PR before the case, try inverting:
We believe we have acted in good faith with respect to anti-discrimination statutes and we followed our policies and procedures specifically designed to protect our employees. At all relevant times, Vanguard's conduct followed the law. We are proud of our diversified employee force and they all are owners of the company just as the investors in our mutual funds.
"If the Corp Communications actually OKed this, then they should fire the Corporate PR guy."
Now you've got the right idea; don't fire the lawyer for being lawyerly
Unless, of course, the Vanguard lawyer turns out to be older than 50 or so.... (and the behavior described by the plaintiffs is effectively 'confirmed' - if that is the word - by the court.)
Haven't you seen such wordings from companies that maintain their belief in innocence even after losing a case? Apple is fantastic at this. Very common. You are thinking like a lawyer not a PR person.
So, someone needs to take responsibility for that boneheaded statement. Typically, in corporations PR companies look after the image/message in public statements and lawyers look after the legal implications. So, if the PR department was consulted and they were OK with it, then yes they ought to own up. But if the lawyer shot off his mouth without consulting PR or was trusted (depends on the company) to make statements without necessarily consulting PR and made that statement without realizing the implication, then he/she ought not to be so trusted, the judgment would be in question to consider his suitability for the job that involves making public statements. Typically, one takes a proactive stand with a statement that suggests the possibility of being in the wrong or being judged so only if that possibility is almost a certainty as damage control as when for example, your oil rig exploded or your drugs killed people or anything where the outrage would be aginst you to start with because of the circumstance.
This case is far from that certainty (Vanguard may even prevail as far as public opinion is concerned) and it is exactly because of the above that making such a "if we lose..." scenario would be bad from PR perspective. It would be perceived as the company knowing that they have done something wrong.
Yes, it would be a judgment call based on the potential positive and negative perception but if you look up any such proactive statements of being done admitting the possibility of being wrong you will see that the events would have been such that you would already be or have been judged guilty in the court of public opinion and even then only if you believe you are most likely to lose the case.
@ibartman, funny! Double jeopardy for the lawyer?
@maurice, if you have dealt with enough PR people you start to think like them! Same thing with lawyers. Perhaps, they have been skimping on PR or lawyer fees as well to keep costs low.
But seriously, in this day and age with social media and access to Internet, corporate image is taken very seriously, especially when any weakness will be exploited by competitors and/or haters (any company that is large and successful WILL have haters) via guerilla campaigns.
There are other aspects of the suit as well, but the key points are that the suit is against the administrator, not against Vanguard, and it is for using the wrong Vanguard vehicles, not for a given Vanguard vehicle charging too much.
Lawyer was stating only what had already been stated in Vanguard's answer (legal filing) to complaint. An answer is a filing where all the defenses are laid out - we didn't do it; yes, but; etc.
I wasn't reading the statement like a lawyer, but as a literate person who understands subjunctive mood: we deny allegations, but even if we had done what was claimed it would have been in good faith.
English Grammar for Dummies: Using the Subjunctive Mood in English
Maurice made reference to a suit against Vanguard for charging high 401(k) fees. That suit was not against Vanguard, as I clarified.
For the most part, I agree with Lewis' observations, except to the extent that while an employer can escape some culpability by throwing individuals under the bus, it cannot escape liability. That is, if someone is fired (or pushed out, i.e. constructively fired) for being too old, that person must be made whole - job reinstated with back pay. Blaming rogue actors may mitigate this in the public eye, but it isn't going to erase it. Especially since real money, real damages, and real people are involved.
As I said before I have no opinion on it being the defense strategy and you cannot avoid newspapers digging that up but I stand by my PR implications of it if he had made it as a direct statement written or oral to the media. A competent lawyer would never do that (kind of a statement to the media even if it is already in the filings). If you believe otherwise, then I beg to disagree. It just becomes a matter of opinion based on our experiences (or lack of it).
In fact, lawyers often construct their legal briefings with PR awareness. The construct I was objecting to is a very common one in PR to avoid. For example, from
http://profootballtalk.nbcsports.com/2015/11/04/washingtons-federal-trademark-defense-good-legal-strategy-bad-p-r-move/
I quote a similar opinion on the Tom Brady deflategate filing. That is exactly the point I was making here.
And this is precisely the difference between thinking like a lawyer and a PR person. A lawyer often makes a case that an average person will think the way he/she does to prevail in his viewpoint. The PR person does just the opposite, it is not what he thinks or knows to be true but what an average Joe on the street who doesn't have a clue about subjunctive moods or even be literate thinks when they read a statement. Very different ball games.
It has been a fun discussion. Thanks for your usual well thought out inputs.