Tuesday, December 18, 2007

Lord of the pants - When is the right time to countersue?

This morning's USA Today is reporting that famed Irish dancer Michael Flatley has won an $11 million judgment against a woman who had accused him of raping her in a Las Vegas hotel room. According to the article, the woman threatened to sue Flatley unless he agreed to a "seven figure" settlement. When he refused, she sued him, but the case was dismissed. Flatley responded with a lawsuit against the woman and her lawyer, alleging extortion, intentional infliction of emotional distress, and defamation.

While the Flatley case does not involve an employer/employee relationship, it is nevertheless interesting to look at in relation to the Ohio Supreme Court's decision last week in Greer-Burger v. Temesi. I cautioned that employers should tread lightly in filing lawsuits against employees who have engaged in protected activity. Flatley illustrates one situation where it might make sense to file a lawsuit against an employee - where the value of one's personal reputation is harmed by the mere filing of the employee's claim. For example, a CEO or celebrity accused of sexual harassment has a lot to lose even by having a meritless claim alleging sexual misconduct filed against him or her. Another example that comes to mind, although not implicated by the Flatley case, is where an employee has stolen trade secrets. In those examples, the individual or the company has something of value to gain other than mere retribution.

The decision of whether to file a claim against an employee or ex-employee is not an easy one, and should not be undertaken without careful thought, a clear strategy of the goals to be achieved, and consideration of whether those goals are worth the risk of defending against a likely retaliation claim or the perception in court that the counter-suit is merely retaliatory. For Michael Flatley, the decision was a no-brainer, as he was being accused of rape and being extorted. For your company, the decision should be of the same degree of certainty before a similar decision is reached.