Five lessons from the David Jones sexual harassment case

In the end, the sexual harassment battle between David Jones, it’s former chief executive Mark McInnes and its former junior publicist Kristy Kirk-Fraser ended with more of a whimper than a bang.

While Fraser-Kirk had sought up to $37 million in damages from David Jones, its board and McInnes, the case was settled late on Friday with a confidential payment of an estimated $850,000, of which it has been reported that the company will pay $470,000 and McInnes will pay the rest.

As is typical with confidential settlements, statements released this morning from both sides have been brief.

This morning, Fraser-Kirk released a short statement thanking her support team and expressing hope that her case would make a difference.

“The case has lead to real debate taking place which I am confident will lead to change,” she said. “That is part of what the punitive damages claim was intended to achieve, and it has.”

McInnes used his statement to continue to defend his position and take a swipe at Fraser-Kirk’s legal tactics.

“I have repeatedly said that the vast majority of the allegations are simply untrue and the nature of the court proceedings was an abuse of legal process.”

Like many aspects of this case, the outcome will divide opinion. While some will say Fraser-Kirk’s settlement falls well short of her original claim, it is worth noting that at $850,000 this would still be one of the biggest sexual harassment claims in Australian corporate history.

And while McInnes may feel he disappointed he has not been given his day in court and his chance to respond to Fraser-Kirk’s allegations, the conclusion of the case will allow him to get on with the task of rebuilding his shattered career.

Here are the five big lessons from the case:

1. Companies must have robust sexual harassment complaints procedures

Perhaps the greatest legacy of Fraser-Kirk’s sexual harassment is the impact it had and is having on managers and entrepreneurs around the country, who were forced to review their complaints handling procedures to ensure employees felt comfortable making a claim and confident claims would be handled correctly.

One of the best examples of complaints handling procedures we saw came from cosmetics company Heat, which has recently faced a harassment claim that was dismissed. Under the Heat model, a number of employees from different parts of the company, different managerial levels and of different genders have been nominated to receive complaints from staff to ensure workers can find someone they are comfortable talking to.

2. Harassment IS a board issue

Fraser-Kirk’s controversial decision to include the entire board of David Jones in her punitive damages claim may have been designed for maximum shock value, but it did raise questions about what knowledge a board should have of these matters, particularly where a CEO has accusations made against them. The answer would seem to be that boards do need to at a very minimum have a working knowledge of a company’s policies in this area, and should continue to push to ensure the policies and procedures are working and are being reinforced to staff.

3. The push towards US-style litigation continues

When Fraser-Kirk first launched her case in August, IR lawyer Peter Vitale described it as another example of US-style litigation, where juries have awarded large sums for punitive damages in sexual harassment cases (even though many of these sums were greatly reduced on appeal). He was right – Fraser-Kirk’s legal team did go for a large amount of punitive damages, and did want the trial heard before a jury. We’ll never know if the strategy would have succeeded, but it does appear to have given Fraser-Kirk a much stronger negotiating position.

4. The media is a weapon

While a case involving one of Australia’s top CEOs was always going to be high-profiled, the way the legal and communications teams of the parties have used the media has meant that publicity has become something of a weapon. Both sides have employed veteran PR experts to prod, push and shape media coverage – a fact that the judge in the case, Geoffrey Flick, was clearly unimpressed with.

5. The personal cost of sexual harassment cases is huge

This should never be underestimated. Fraser-Kirk may have got $850,000, but once legal fees are taken out she will be left with about $500,000 – hardly enough for a 27-year-old to retire on. Like McInnes, Fraser-Kirk is also unemployed, and might not find it easy to find work. Let’s hope these personal costs do not stop other victims from coming forward.