Originally published in August, 1997

Last month, Jerold Mackenzie was awarded an astounding $26.6 million by a Milwaukee jury who said he'd been wrongfully terminated. Mackenzie was fired by Miller Brewing Company because he'd discussed a "Seinfeld" episode with a female co-worker. Although the "Seinfeld" anecdote in fact accounted only for a small portion of the phenomenal verdict, this case provides some important insights into the handling of sexual harassment complaints.

The Facts

This case actually turned more on the misrepresentations made to the plaintiff about his position with Miller Brewing Company and his "grade level " than about sexual harassment.

Jerold Mackenzie began his employment with Miller in 1974. In 1987, as a result of a company reorganization, one of the three departments that Mackenzie managed was assigned to another manager. Mackenzie's boss, Robert Smith, assured him that his grade level (14) was not affected by the restructuring.

In 1992, however, Mackenzie was informed that his grade level had in fact been downgraded to a 13 back in 1987. According to Mackenzie, being downgraded was the "kiss of death" at Miller Brewing Company. Had he known of the downgrade when it occurred, Mackenzie argued, he would have sought other employment years earlier. Mackenzie also claimed that Smith intentionally interfered with a promotion recommended for Mackenzie.

In addition, in late 1992 a co-worker, individual defendant Patricia Best, lodged a complaint of sexual harassment against Mackenzie based upon Mackenzie's discussion of an episode of "Seinfeld" at the office. In the episode, Jerry Seinfeld could not remember the name of a woman he was dating, but did recall that her name (Delores) rhymed with a female body part. Apparently, when Best did not understand the reference to the female body part, Mackenzie copied the dictionary definition of "clitoris" and showed it to Best. Mackenzie claimed that Best was not, in reality, offended by the conversation, but subsequently complained in order to have him fired, improving her own position in the company.

The Claims and the Verdict

Based on these facts, Mackenzie sued not only Miller Brewing Company, but also Smith and Best individually. Three of Mackenzie's claims went to trial: intentional misrepresentation by Miller and Robert Smith, based upon their failure to disclose his change in grade level; tortious interference with prospective contract by Smith, for his alleged interference with Mackenzie's promotion; and tortious interference with Mackenzie's employment contract by Best, due to her complaint.

The jury awarded Mackenzie $501,500.00 against Smith and $24,501,500.00 against Miller Brewing for his claim of intentional misrepresentation; $100,000.00 against Smith for Mackenzie's claim of tortious interference with his proposed promotion; and $1,500,000.00 against Best for tortious interference with Mackenzie's employment contract, based upon her complaint of sexual harassment. Of these amounts, a total of $20,000,000.00 was punitive damages, including the entire award against Best.

An Aberration or a Trend?

One reading of the Mackenzie verdict is that the "sexual harassment wave" has gone too far. The case certainly highlights potential creative causes of action against employees who complain of harassment- and employers who take action based on those complaints. But the vast majority of the $26.6 million figure had absolutely nothing to do with the allegation that Patricia Best fraudulently complained that she was offended by Mackenzie in order to get him fired. Additionally, jury verdicts of this proportion rarely survive an appeal. In all likelihood, this figure will be reduced by either the trial court or the state appellate court as excessive.

How Should an Employer Respond to a Complaint of Sexual Harassment?

The lesson of Mackenzie v. Miller Brewing Co. should not be to refuse to discipline an alleged perpetrator of sexual harassment out of fear that he or she will sue. Employers have a duty to take "prompt and appropriate remedial action" in response to a sexual harassment complaint. That usually includes an investigation, and may mean possible discipline of a perpetrator if sexual harassment is found. Here are factors to consider at that point:

Depending upon the facts, the appropriate action could range anywhere from informing the complaining employee that his or her complaint could not be substantiated, to an oral reprimand, a written warning, suspension or termination of the harasser.

The other lesson from this case: don't try to hide changes in an employee's title, status, grade or compensation package. If you have a good reason to make the change, make it, and explain your reasons to the employee.

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