This is a paper I presented at the Lexis Nexis 5th Annual Industrial and Workplace Relations National Conference 2011 Venue: PARKROYAL Hotel Darling Harbour

1. A star from the early Hollywood movies, Mae West was once asked “What is the problem with today’s youth?” To which she lasciviously answered, “The problem with today’s youth is that he doesn’t arrive until four  this afternoon.”   Under the Commonwealth’s Sex Discrimination Act 1984 that joke might be unlawful. That answer perhaps sums up the dilemma in the workplace of what is okay and what isn’t to discuss or do in the workplace in modern Australia

The definition of sexual harassment under the just mentioned Act is found in section 28A.

Meaning of sexual harassment

(1)  For the purposes of this Division, a person sexually harasses another person (the person harassed ) if:

(a)  the person makes an unwelcome sexual advance, or an unwelcome request for sexual favours, to the person harassed; or

(b)  engages in other unwelcome conduct of a sexual nature in relation to the person harassed;

in circumstances in which a reasonable person, having regard to all the circumstances, would have anticipated that the person harassed would be offended, humiliated or intimidated.

(2)  In this section:

“conduct of a sexual nature” includes making a statement of a sexual nature to a person, or in the presence of a person, whether the statement is made orally or in writing.

1. Cases involving allegations of sexual harassment are not new and regularly occupy significant  space, not just in the law reports, but most particularly in the newspapers and the electronic media.  High profile cases, whether it be involving an ex- President of the United States of America, the President of the International Monetary Fund or the Prime Minister of Italy reveal the problem.  Courts are often called upon to deal with such issues.  What might be acceptable in one era or in one workplace may not be acceptable at another time or elsewhere.  Sometimes the line between behaviour which is acceptable and that which isn’t is difficult to determine.  The criminal law, common law principles relevant to the workplace, such as the duty to provide a safe workplace are relevant, as are the statutory prohibitions against discrimination and harassment.
2. Despite recent cases to which I shall refer in a moment, the identification of unwelcome behaviour of a sexual nature has been around for quite some time.  A celebrated case in the USA dealt with one of the world’s largest law firms ,that is Baker & McKenzie.  A claim was brought by a legal secretary against one of the firm’s superstars, Martin Greenstein.  Mr Greenstein, at the time, was one of the firm’s top income producing partners.  His new secretary was failing in her work.  However, a few weeks into her mistake ridden employment, both she and Mr Greenstein attended lunch at a Sizzler restaurant.  It was alleged by Ms Weeks that outside the restaurant Mr Greenstein grabbed her breast while dropping M&M candies into the pocket of her blouse.  He is then alleged to have held her arms behind her back, thrust her chest forwarded and demanded to know which one of her breast’s was larger.  These charges were denied.  Ms Weeks’ lawyer, in the opening statement to the California Court said that Mr Greenstein had a pattern of harassing women which behaviour was well known amongst the Baker & McKenzie offices, whose  partners and executives tolerated him and on occasions covered up his behaviour.  It was alleged his behaviour was not only well known, but also had been  getting worse and virtually nothing was done to stop it by the firm.  Mr Greenstein’s lawyer, in his opening address said many of the claims against his client “were the result of men and women reviewing the same event from different perspectives”, part of the recent “uncertainty” about “what is okay and what is not okay in the workplace.”  He said the charges were brought by Ms Weeks because of her panic at failing at her new job and that she was “bra less” on the day of the departmental lunch.  Baker & McKenzie, in its defence said the firm dealt appropriately with all the allegations, transferred Ms Weeks to another department and sent Mr Greenstein to counselling.  However, once the court case had commenced other women who had been the subject of Mr Greenstein’s unwelcome attention stepped forward.  However, prior to this happening the firm had described Ms Weeks as a “bounty hunter” with “an extraordinary imagination” and had “irrationally misunderstood behaviour that others had found to be perfectly normal.”  However, this defence fell apart according to internal memoranda kept by the firm about Mr Greenstein’s behaviour over a prolonged period of time.  Punitive damages in the matter of $US6.9 million were awarded against Baker & McKenzie.  The case  not only  in America, but internationally, provoked considerable comment, particularly keeping in mind this was a legal firm which in itself had a set of sexual harassment policies, and advised their clients about such matters.
3. In an article in the New York Times published in July 1994, strategies were discussed as to how to nip such problems in the bud.  The head of a Boston-based consulting firm, Fraeda Klein who conducts retreats for law firms, says she often starts with this rhetorical question to partners at such events, “If you heard tomorrow that you were being sued for sexual harassment, who would you guess the charges were against?”  Such a question was meant to shock, but was also to set in train questions which should be continually asked amongst senior managers and partners, not just at law firms but in all places of employment.  She suggests that the people at such conferences know who is crossing the line, to which she has the obvious follow up question, “Why haven’t you dealt with it?”  To which she hears such answers as, “That’s his style. That’s none of my business.  He had a hard year because his wife left him.  Our clients love him.  We haven’t had a complaint.  Or that really isn’t sexual harassment, is it?” Sexual harassment cases in the US have become significant area of employment law practice with one Californian firm of attorneys with a web site simply called www.nosexualharassment.com . The web site lists some of its more spectacular verdicts in such matters.
4. The old adage of those who forget the past are doomed to repeat its mistakes certainly has currency when one considers the two most recent high profile sexual harassment cases in Australia.  Both of these settled, not without considerable publicity generated prior to resolution.  The allegations in each of the cases revealed similarities to the Greenstein case involving ignorance of how the modern workplace has changed, acceptance of  high-flying executives’ behavioural quirks, and how on one view innocuous events might be misinterpreted or be used to challenge legitimate  performance issues.
5. The first case I look at is Christina Rich v PricewaterhouseCoopers.  Ms Rich was one of PwCs’ most senior female partners, earning close to $1million  a year when she took the extraordinary step in 2005 of suing the firm for $11million in the Federal Court.  After a lot of interlocutory skirmishing and a marathon mediation the parties in October 2009 released a joint statement which read,

“After a mediation with PwC on March 20, 2008, Christina Rich has withdrawn the legal action initiated against PWC in the Federal Court by Ms Rich in October 2005.

Ms Rich’s intention in pursuing her complaints was never to cause stress or concern to any individual, including Mr Stuart Edwards, and she regrets if any such individual has suffered such distress.  Ms Rich accepts Mr Edwards denies the allegation against him, including his denial he placed notes under the door at the Santa Monica conference and accepts that it was his belief that the kisses on the cheek were platonic.  Equally, PwC regrets that this has been a stressful time for Ms Rich.”

1. In an article in The Australian of 29 March 2008, it notes that Mr Edwards was Ms Rich’s boss.  Among the claims made by her was that he had adopted the practice of kissing her hello and goodbye – against her objections and suggested to her that when problems arose, “I just want to give you a big hug to make it better.”  Ms Rich had made other more serious allegations against other partners at the firm.  It was stated in The Australian article that the case, despite confidentiality terms, settled for many millions of dollars, considering her potential earnings per annum, the number of years she had been out of work, together with general damages.  It was clear that legal fees would have amounted to millions of dollars for both the parties, as the case had been going for four years.
2. The more recent case brought by Kristy Fraser-Kirk v David Jones against its CEO, Mark McInnes was also settled, not before it had been exposed to newspaper headlines over many months.  The attention no doubt not only was engendered by the size of the punitive damages claimed, but also the senior position held by Mr McInnes in probably Australia’s most important retail company.  Mr McInnes was the company face of David Jones as its CEO.  He was on  the A List of the social pages . Probably not helpfully to David Jones or to Mr McInnes Fashion designer, Alannah Hill,  reputively had described the $37million David Jones sex harassment case as a “glitch”, saying that she would have gone back to the flat of “hotstuff” former CEO, Mark McInnes “in a heartbeat”.  Like the allegations made against Baker & McKenzie’s, Mr Greenstein, it was alleged against Mr McInnes that he was a player which was known by David Jones which  put up with it on the basis that he was their star attraction.  The case settled  in a blaze of publicity although it is strongly suggested that  the punitive damages claim  formed no part of the case’s resolution.
3. These two cases, whilst not providing much by way of decided principle, do identify that such cases capture  the intense  interest of the media on the principle that sex sells and are  therefore often strategically  fought out  on court steps, by media release or background articles. I might add that a number of such cases are very  quietly  pursued outside the curial system on the basis that publicity ,for abundantly clear reasons, is not sought by any of the parties.
4. However, one recent case which has gone to hearing identifying some of the principles which may come into play was a Full Court  of the Federal Court decision called Employment Services Australia v Poniatowska [2010] FCAFC 92 a decision of 27 July 2010 with the majority judgment written by their Honours Stone and Bennett.  Ms Poniatowska had made a complaint that she had been the victim of sexual discrimination, racial discrimination and sexual harassment.  She had made internal complaints about these and alleged she received no satisfactory response or any investigation  carried out in relation to the complaint about offensive conduct.  A claim had been brought under the Sex Discrimination Act.  This was on the basis that the employer by dismissing her, had treated her in a discriminatory way, rather than what the employer would have done had she been male.  The trial judge found that the employer was confronted with a female who would not accept the behaviour of some co-workers, whose behaviour constituted sexual harassment in what is described as a robust work environment.  Further, the employer had not addressed her legitimate concerns. The trial judge Justice Mansfield in Poniatowska v Hickinbotham [2009] FCA 680 awarded damages which claims for pain and suffering ,$90,000[353],past loss of earning capacity $200,000[355].future loss of earning capacity $140,000 [356] future medical expenses $3000[357] and $30,000 for interest [360] plus costs [364]Leave was granted to either the applicant or to ESA to apply to have  the compensation or  have part of the paid by one or more of the other respondents[364] .No order was made for exemplary or aggravated damages[361] On a number of bases, the majority dismissed the employer’s appeal both on the challenge to the factual findings and the principles used by the trial judge.  The majority also found that it was apparent from the judge’s description of this working environment that on the evidence it was an environment in which women would be targeted and would be uncomfortable and accordingly, more likely to complain than would men.  That it was said would lead to a situation that a male employee of this company would not have been sexually harassed in the first place, nor would have found the work environment intolerable.  He would not therefore have been a complainant.  That is, Ms Poniatowska became a complainant because of her sex [112].
5. Another very important aspect and potentially expensive result of someone being affected by sexual harassment at the workplace comes under common law damages for negligence and/or under workers compensation legislation.  If someone is a known sexual harasser left unchecked and that person continues to act unlawfully towards employees that may establish common law negligence rights with tortious damages flowing.  In any event, workers compensation legislation does not require there to be negligence, but merely requires there to be an injury.  This issue was dealt with by Chief Justice Spigelman in State Transit Authority of NSW v Fritzi Chemler [2007] NSWCA 249 when he was dealing with an argument as to whether the perception of the events were real and could cause injury, even though the resulting injury may  not have  occurred  to a person of normal fortitude.  His Honour said this at [40]:

“In this area of law, as in negligence, the talem qualem principle is applicable. That is employers take their employees as they find them.  With respect to psychological injury there is a “egg shell psych”  principle which, like the equivalent “egg shell skull” principle is a rule of compensation not of liability.”

1. The element of foreseeability required by the law of negligence is not the basis of the “egg shell psyche principle” which  applies to claims for compensation under the Workers Compensation Act.  In that case, there was found to be no erroneous perception based on the conduct in the workplace which was found to have been proven at [47]-[49], where it was said:

“It also recognised that the evidence as found established conduct at work which could and was held to be causally linked with the perception of the respondent to psychological injury.”  [48]

1. Accordingly, in sexual harassment cases if there are grounds to establish that the alleged conduct did occur, notwithstanding the level or intensity of the conduct, if the perception ultimately causes psychological injury, then in workers compensation law and  in negligence where there is forseeability, the employer is liable for compensation and/or damages.However the statutory route set out in Poniatowska may be easier and potentially more remunerative for an applicant.
2. In advising your clients or your partners one needs to not only to have policies in relation to sexual harassment which identify it for what it is but also training as to how to detect it ,properly investigate it and stop it. If there is someone in the organisation or someone who deals with the organisation who could be a cast member on Sex Rehab with Dr Drew or someone  who  is a throwback to the era portrayed by the series Mad Men you could have a problem.