Diversity & Inclusion

A story with legs: Fox News’ $20 million settlement provides warnings for employers

by Mark I. Schickman

Fox News understands the life of a news story. It knew that former anchor Gretchen Carlson’s claims of sexual harassment against its former CEO and chairman Roger Ailes would draw headlines for months, as would the ultimate resolution of the claims. In news parlance, Carlson’s claims had “legs.” So, too, would reports of a major settlement of the action. On September 6, Fox News compressed the story of Carlson’s suit with news of the $20 million settlement of her claims—hoping both stories would rise and fall over Labor Day and become a dim memory long before election night.  Sexual harassment

Fox News acted quickly to jettison Ailes, the actor prominently named in Carlson’s lawsuit. It also announced new sexual harassment policies and now touts a culture that no longer tolerates the type of blatant harassment reported by numerous women after Carlson’s story broke. It issued a public apology “that Gretchen was not treated with the respect and dignity that she and the rest of our colleagues deserve.”

Now when other women inevitably come forward with similar stories of demands for sex, Fox News will use its corrective measures to try to block the claims. For example, it is using that approach in response to sexual harassment claims made by Andrea Tantaros, who describes her 5:00 p.m. Fox News program as “the second highest rated show on cable.” Fox News’ court filings describe Tantaros’ sexual harassment claims against high-ranking personnel, including host Bill O’Reilly, as “unverified,” adding that her allegations didn’t mention Ailes until Carlson’s claims came out. Indeed, Fox News now has a tightrope to walk: It must settle the high-profile claims without encouraging 100 other female employees to file claims against it.

The $20 million question

As any litigator will tell you, we are not interested in what happened. We care about what we can prove happened—it is a question of evidence, not fact. When Carlson first raised her claims, Ailes responded that they were “false,” “offensive,” “wholly without merit,” and a contract negotiation ploy. Because almost every harassment claim comes down to “he said, she said,” the final outcome is generally in some doubt, and lawsuits settle for less than full value.

However, Carlson displayed some investigative journalism chops, reportedly making between six and 10 cell phone recordings of Ailes’ sexual overtures to back up the allegations in her complaint. In many states, including California, making secret recordings might violate the law, so I can’t recommend that tactic to either side of a dispute. But the existence of damning recordings usually trumps the possibility of criminally prosecuting the recording party, and if a recording is allowed into evidence, a jury will not get too hung up over its legality. In short, Carlson appeared to have a slam dunk case that Fox News was willing to pay $20 million to avoid.

Will the case truly lead to a change in the ogling culture of Fox News, the inventor of the beauty queen anchor? Ailes left the company with a $40 million payment, a departing payday twice as big as Carlson’s. 20th Century Fox reported $567 million in profits in its last quarter, meaning the settlement cost it three days’ profit—and if the kerfuffle adds to ratings, it might be a bargain at the price. So $20 million is a lot, but it need not signal a change in how Fox News does business.

When all is said and done, Fox News responds to what its viewers want. And for the past 14 years, it has been the reigning champion among all cable news channels in total audience and viewers in the coveted 25- to 54-year-old demographic. Does a company policy that promotes big hair, pretty faces, and short skirts lead to Fox News’ ratings championship? Fox News sure thinks so! It’s hard to argue with the numbers. Fox News might consider an occasional $20 million settlement a small price to pay to keep its formula for success.

We are all Fox News

What does the settlement mean for you? First, a sexually active work culture that was created over decades cannot be changed overnight. Settling the employee’s claim, issuing an apology, and terminating the most visible miscreant provide a good start to remedial action, but a change in culture must be pushed through every level of an organization to be effective. We expect the new CEO of Fox News to avoid quid pro quo come-ons. It takes more effort to make sure that new talent throughout the organization doesn’t have to endure the casting couch from mid-level managers as well.

Second, don’t be surprised if things get worse before they get better. After you settle a high-profile claim of any kind, expect more claimants to come out of the woodwork. Your first settlement will not necessarily be your last—a factor you need to consider before settling a claim. But the correction process is necessary before you reach the final goal of an environment that is relatively free of employment claims.

Finally, the price to settle sexual harassment claims just got higher because claimants will try to use Carlson’s settlement as the new benchmark. Of course, every case is different, and her claim is not necessarily representative of any other. But her claim is similar to stories occurring across America every day, life imitating art once again.

We think of celebrities’ problems as different from ours, but they are not. They just have more people talking about them, that’s all. Fox News’ $20 million payment is like $9,000 to a company making $1 million a year. Monica Lewinsky could have been any intern propositioned by her supervisor, Kelly Ripa any headshotdepartment head undermined by secretive managers, Nicollette Sheridan any overly assertive, self-important performer who would not back down from a bullying boss. Your workplace problems and solutions are not as famous, but they are no less important. Maybe the Fox News headlines will shine some light on the types of issues that occur within your bandwidth every day.

Mark I. Schickman is a partner with Freeland Cooper & Foreman LLP in San Francisco. You may contact him at schickman@freelandlaw.com.