Executive accused of sexual harassment recovers $52m in defamation case

In this episode of Law, disrupted, John is joined by Tom Clare, founder of Clare Locke LLP. Clare Locke specializes in defamation cases and was recently in the news for representing Daniel Michalow in his claim against Wall Street hedge fund, D.E. Shaw & Co. This episode delves into Mr. Michalow’s case in which Mr. Michalow was accused of sexual harassment. The case resulted in a $52 million FINRA award against de Shaw and Co. 

John starts the conversation by asking why more claims similar to Mr. Michalow’s aren’t asserted. When Tom responds, he explains in detail the burdens an individual plaintiff faces in bringing such a claim, including protracted litigation (in this case, four years) and enormous costs that most individuals cannot afford. Tom also provides the listener with a background to FINRA and arbitration under FINRA’s rules.

John and Tom then dive deep into the case, first discussing the factual background, with Tom noting how D.E Shaw terminated Mr. Michalow’s contract at the hedge-fund firm citing allegations of inappropriate conduct in the workplace. Tom notes that this was not an employment case; Mr. Michalow did not dispute his termination. Rather, Mr. Michalow objected to the hedge fund’s statements to Business Insider that Mr. Michalow had engaged in gross violations of the firm's standards and values and that his employment was swiftly terminated as a result. These statements were made after Mr. Michalow had written to the head of the firm and asked that the firm tell the truth about his situation. John and Tom discuss that while the firm’s statements did not explicitly say that Mr. Michalow engaged in sexual misconduct, that is what the public understood the statements to mean.

The discussion turns to the arbitration process itself, including the 25 days of hearings and extensive discovery conducted by the parties. Tom describes the burden of proving that his client did not engage in sexual misconduct as well as the differences in proving defamation claims for public figures as opposed to private figures. He also explores the importance of suggesting why a defendant was motivated to act as it did, even when that is not strictly an element the plaintiff must prove to make a claim.

John and Tom turn to the role expert witnesses play in defamation cases. They explore the interplay between experts who testify to the linguistic history of the words at issue and those who testify to the real-world interpretation of words and how the latter now use social media comments to show the way people in the real world react to certain terms. They then turn to the results of the arbitration including the $52.1 million award and the findings posted on FINRA’s website.

John and Tom then engage in a conversation about the role of reputation in today’s society in the workplace, within a professional community, at church, at home and in neighborhoods. They also discuss the legal obstacles to bringing a defamation claim, including that name calling, hyperbole and opinions are not actionable. 

Finally, the two discuss Tom’s decision to found his own firm devoted to bringing defamation claims, other high profile cases his firm is handling and his recommendations to individuals who find themselves facing defamatory statements.  Tom explains the importance of creating a written record, warning the defaming party of the consequences of its actions and promptly demanding retractions of defamatory statements.

Podcast Link: Law-disrupted.fm
Host: John B. Quinn
Producer: Alexis Hyde
Music and Editing by: Alexander Rossi