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Assessing the Value of Assessments
A $1.8 million jury verdict won by an executive who claimed she was fired by Raytheon after critically evaluating her boss is drawing attention from business groups. They say upholding the verdict will hamper job-performance reviews.
Though the Virginia Supreme Court has yet to schedule oral argument on the appeal, business groups are already weighing in on a case they say chills the ability of companies to conduct employee performance reviews. The groups are asking the court to overturn a $1.8-million verdict against Raytheon Corp. in a suit by an executive who said she was slandered and, ultimately, fired after she made some critical statements in a supposedly confidential corporate evaluation of her boss. Last week, two strong business advocates -- the U.S. Chamber of Commerce and the conservative public interest law center, the Washington Legal Foundation -- filed ¿friend of the court¿ briefs with the Virginia Supreme Court arguing that affirming the verdict in Raytheon vs. Hyland would violate the free speech rights of employers and chill an honest exchange in employee job-performance reviews. ¿If this ruling stands, employers will be deterred from providing meaning employee performance input for fear of being sued,¿ says Robin Conrad, senior vice president of the National Chamber Litigation Center, a public policy arm of the Washington-based U.S. Chamber of Commerce. According to Richard Samp, chief counsel of the Washington Legal Foundation: ¿All too often sympathetic juries award multimillion-dollar verdicts to employees who receive negative performance evaluations. But the chilling effect of such verdicts helps no one, least of all employees, who need honest feedback to assist them in improving job performance and thereby to advance in their careers.¿ In October 2005, a Fairfax County Circuit Court jury awarded Cynthia Hyland a total of $3.5 million in damages --- $1.5 million in compensatory damages and $2 million in punitive damages later reduced to Virginia¿s $350,000 cap -- in her slander lawsuit against Raytheon¿s Raytheon Technical Services Co. unit, based in Reston, Va. Raytheon, which had offered Hyland $300,000 to settle the suit, appealed the verdict and the Virginia Supreme Court granted the appeal on Sept. 26. In 2002, Hyland, 45, was senior vice president of the Raytheon subsidiary, the culmination of a successful 21-year-career that had put her in line to succeed Bryan Even as RTSC¿s president. In preparation for the eventual boardroom change, Raytheon hired the recruiting company Heidrick & Struggles to do a corporate evaluation of Even. Hyland was one of about 10 RTSC employees asked by Heidrick & Struggles to participate in an ¿executive coaching exercise¿ to benefit Even¿s professional development and was promised that any information she provided would be confidential. Hyland¿s critique of Even contained positives and negatives but nothing, trial witnesses testified, significantly different than other participants said. However, Hyland¿s lawsuit maintained, her comments were falsely characterized and became known to Even, who, trial witnesses said, began a campaign to discredit and, ultimately, fire Hyland. After a series of glowing performance appraisals, Hyland¿s lawsuit said, she was suddenly criticizedAfter a series of glowing performance appraisals, Hyland¿s lawsuit said, she was suddenly criticized for the financial performance of her RTSC department, and was called ¿frequently verbose and vocal¿ in her opinions and unwilling to accept performance criticism from others. All allegations but Hyland¿s lawsuit claim for defamation were dismissed before trial, but that count survived and proved enough for the jury. In their amicus briefs, the Chamber of Commerce and Washington Legal Foundation argued the verdict¿s negative implications for corporate free speech and performance reviews. Other employment experts, however, say the Hyland case illustrates ways other companies can avoid such litigation. Vijay K. Mago, a lawyer specializing in employment law in the Richmond, Va., office of the LeClair Ryan firm, says companies that use outside firms to conduct executive coaching and performance reviews must ensure the integrity of the process and that promises of confidentiality to participants must be kept.
Writing in LeClair Ryan¿s Labor and Employment Newsbrief earlier this year, Mago suggested that executive-coaching exercises should be done off-site and not in group settings. (Hyland was one of 10 people in a group interview that occurred at Raytheon offices). Such interviews also should not coincide with annual reviews, especially when the review is being conducted by the subject of the interview. (Hyland's annual review by Even took place immediately after the interview.) ¿The jury¿s significant award in this case informs that stories such as this one are both compelling and easy for a jury to grasp,¿ wrote Mago. ¿The cause and effect is simple, and the leap of faith for the jury is small.¿
November 20, 2006 Copyright 2006© LRP Publications |
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