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Written Testimony of Kathleen M. McKenna Proskauer Rose LLP

Good morning Acting Chair Lipnic, Commissioner Feldblum, other members of the Commission and the Select Task Force. My name is Kathleen McKenna and I am a partner with the law firm of Proskauer Rose where I have practiced law for 28 of the almost 40 years I have been practicing. Proskauer has been practicing labor and employment law for more than 75 years. During those 75 years we have represented hundreds of employers in industries and sectors spanning our economy: from entertainment to manufacturing; for profit and not-for -profit; brand names and start up enterprises. We have been actively involved in the development of the law under Title VII and the numerous other federal, state and local statutes addressing discrimination in the workplace. We thank you for the opportunity to participate in today's panel discussion.

Two years ago when the Co-Chairs of the Select Task Force on the Study of Harassment in the Workplace issued its report in June 2016, it urged the launch of an It's On Us campaign in the workplace to encourage all employment constituents to play a role in combatting harassment. Without question it is on all of us to work to address discrimination and harassment in the workplace. I am grateful for the opportunity to give voice to the concerns of some employers about the current state of the problem. I do not purport to speak for any or all of Proskauer's clients, nor do I claim to speak on behalf of the management defense bar. Nevertheless, as a litigator that has been handling sexual harassment claims since before the Supreme Court's decision in Meritor Savings Bank v. Vinson, 477 U.S. 57 (1986), there are some observations I am grateful to have the opportunity to share with you.

There can be little doubt that we are at an important inflection point of the subject of sexual harassment. Since Time magazine chose the Silence Breakers as its "person" of the year for 2017, there has continued a seemingly daily report of revelations about sexual abuse and sexual harassment. It is understandable why the Commission and the Select Task Force in particular is focusing again on this important subject. However, I come to bring a request for thoughtfulness and care in addressing the problem; that you work with the maxim in mind that "bad facts can make bad law."

That risk is particularly true with respect to the two subjects I have been expressly invited to address; the use of arbitration and non-disclosure agreements in sexual harassment cases. After the launch of the #MeToo movement, there was a rise in voices asserting that mandatory arbitration of harassment claims and resolution of such claims with non-disclosure agreements are acts of secrecy - with sinister connotations- that facilitate harassers insulating themselves from the consequences of their actions. Respectfully, these conclusions and their underlying assumptions, generally speaking, are incorrect.

Arbitration Is an Effective Venue for Resolving Sexual Harassment Claims

As the Commission and the Select Task Force are undoubtedly aware, our nation's courts are significantly overburdened and, in our federal courts, employment cases are a large component of the docket and often a disproportionate share of the matters that go to trial. The delays in getting to a merits determination and the cost involved in getting to that determination are factors in the rise of alternate dispute resolutions mechanisms including arbitration. At the federal level we have long had a policy favoring arbitration agreements and many state courts have also recognized the value of a faster, more informal and cheaper venue for dispute resolution. Just last week the Supreme Court reinforced the enforceability of arbitration agreements in Epic Systems Corp. v. Lewis. None of the cases consolidated before the Court in that decision were sexual harassment claims and the decision addressed the enforceability of class action waivers. The vast majority of sexual harassment claims involve individual and not class claims. Consequently, the precise holding of Epic is likely not be pertinent to most sexual harassment claims except insofar as the Court has given appropriate deference to the use of arbitration as a dispute resolution vehicle.

It is important to remember that we are talking about resolution of disputes. There are almost always significant fact disputes in sexual harassment cases. It is also important to keep in mind that all sexual conduct in the workplace is not per se unlawful. Rather, the law makes unlawful unwelcome sexual conduct. Further under federal law, and the law in many other jurisdictions, the conduct at issue must be "severe or pervasive" in order to impose liability on employers. Human relations are, as they say, "complicated." The question of whether sexual comments or conduct were in fact welcomed is very often at the center of sexual harassment disputes. Often a finder of fact cannot discern whether conduct is sufficiently severe or pervasive without a full hearing on the merits.

Those that are now critical of arbitration as a forum to address the merits now label as a "secret" forum that which we previously and appropriately called a confidential process. Exploring the continuums of sexual conduct in the workplace presents the opportunity for discomfort and worse for both the accuser and the accused. Corporations and partnerships that face vicarious liability for the acts of their employees run the risk of public reputational damage for conduct that they almost invariably prohibit and work to guard against. The truth of the matter is that there are clear personal and professional motivations to air such disputes in a confidential legal process.

This is probably an appropriate juncture to call to task those voices that accuse arbitral forums of being employer-friendly. That assessment does a great disservice to distinguished arbitral agencies like the American Arbitration Association, JAMS and many others which are comprised of highly ethical and distinguished professionals many of whom are increasingly former jurists. Further, members of the employment bar on both the plaintiff and defendant side usually both have a role in the selection of the arbitrator. Professional arbitrators know that their neutrality is prized equally with their intellect and experience and they work with that in mind.

Carving sexual harassment claims out of mandatory arbitration programs based upon these criticisms is unfair. Additionally, one should think long and hard about elevating the protections of sexual harassment claimants above those who raise other claims of discrimination.

Non-Disclosure Agreements Serve a Beneficial Purpose

Settlement agreements that resolve employment claims commonly contain a commitment that the parties will keep confidential the facts and circumstances of leading to the agreement and the terms of the agreement. Such provisions are commonly called non-disclosure agreements ("NDAs"). Against the revelation that such NDAs were used to perpetuate serial harassers, there has been a call to make such provisions unlawful. I respectfully submit that this proposed solution to the issue of sexual harassment is likely to be counterproductive.

When parties agree to resolve rather than litigate their disputes that should allow a legitimate device to achieve a definitive end to the dispute. Continuing to discuss the merits of the claims that have been resolved is contrary to resolution. We should keep in mind that settlement proceeds are usually paid by a corporate entity that is vicariously liable for the acts of a supervisor or manager. Most employers neither condone nor facilitate harassing behavior. In fact, we commonly hear that our clients are very frustrated at the accused employee who has engaged in conduct that the enterprise considers wrong, and a threat to good order, morale, reputation and business, whether or not that behavior rises to the level of "severe or pervasive" conduct. It is certainly atypical for an employee accused of harassment to escape consequences even when the conduct does not meet the legal standard of harassment.

As we are all well aware, sexual harassment is not about the imposition of a "civility code." However, the truth is that many complaints involve uncivil behavior that should be and often is extinguished and then settled without need for litigating whether the conduct was actually unwelcome or severe or pervasive. If employers cannot achieve the quietude that has typically come with dispute resolution then there is a real risk that they will conclude that there is not as much benefit in the bargain. That will increase the number of matters that will be litigated rather than resolved. As a litigator I might welcome that opportunity. As a counselor, I think resources are better spent on education and resolution.