In February I wrote about the decision of Vicki Phillips, superintendent of Portland Public Schools, to fire Steve Goldschmidt, the director of human resources and brother of a former politician. Mr. Goldschmidt's contract required PPS to pay him a substantial severance benefit if he was terminated without cause, and his contract defined "cause" narrowly. (I had predicted on December 17, 2004 that she would terminate him within a year.)
Superintendent Phillips announced in February that PPS would not pay Mr. Goldschmidt's severance benefit and he could sue (actually, demand arbitration) if he wanted it. It seemed unlikely to me that PPS could bring his termination within the narrow definition of "cause" described in his contract, and I recommended that the district simply pay his termination fee -- several hundreds of thousands of dollars, to be sure -- and blame Canada (not in the Southpark way, but former superintendent Ben Canada, who had negotiated Mr. Goldschmidt's contract).
Mr. Goldschmidt filed for arbitration, to no one's surprise.
A correspondent informs me that today the arbitrator ruled in favor of Mr. Goldschmidt on most of his claim against the district. Except for certain minor items, the arbitrator has ordered the district to pay Mr. Goldschmidt's severance pay, and to pay him a further $250,000 as damages for defaming him. The arbitrator did give the district the small solace of not ordering it to pay the fees of Mr. Goldschmidt's attorney, but I figure that what the district will pay its own attorneys (taking a reasonable guess at the number) fees and the $250,000 in additional damages -- not including the severance pay prescribed by contract -- is going to cost it the equivalent of about six teachers for the year. It's not an auspicious start to the school year.
I've clipped some of the arbitrator's decision in the continuation below. The whole decision will undoubtedly be out on the street tomorrow, and it offers some useful if expensive guidance to PPS on how not to fire people.
Respondent’s publication of information about the reasons for Claimant’s termination: Claimant seeks recovery for defamation and the arbitrator has concluded that he is entitled to a substantial award on this claim. The parties agree that Claimant is a “public figure” for purposes of the defamation claim. They disagree over whether the information published was capable of defamatory meaning and, if so, whether Respondent abused the privilege to publish false information about a public figure. To succeed, Claimant had to prove that the publication was false, was capable of a defamatory meaning and was published with actual malice, among other elements of the defamation claim.
Superintendent Phillips had no reasonable basis to believe that her termination was for the stated reason of gross neglect of duty. She failed to inform herself of the meaning of “gross neglect of duty” under the employment agreement, although she was aware that this was the applicable contractual standard. If not guilty of gross neglect of duty, the only other implication from a reading of the statement Respondent caused to be published was that he had committed acts involving moral turpitude. Respondent has never asserted that Claimant had, in fact, committed any acts involving moral turpitude.
The implication that Claimant was terminated for conduct involving moral turpitude or gross neglect of duty, as related to the press by Respondent, was false. Respondent was under no legal obligation to publish this information when it had not expended public funds in the form of severance or payment of other benefits on account of the termination.
Oregon’s public records law allows the fact of Claimant’s termination to be made public. Yet, the information that Respondent falsely published to the effect that Claimant was guilty of either acts of moral turpitude or gross neglect of duty concerned personnel matters, exempt from disclosure. ORS 192.501(12).
Respondent has failed to provide clear and convincing evidence that the public interest required it to publish information concerning the reasons for termination and has also failed to prove that publication did not constitute an unreasonable invasion of Claimant’s privacy. ORS 192.502(2).
The evidence was clear that the manner in which Claimant’s termination was publicized was designed to benefit Respondent in its public relations efforts. A former school board member testified at the hearing that the manner in which Claimant was terminated was “designed to maximize his humiliation.” At the same time it could be expected to inflict damage to Claimant’s reputation. Readers of the newspaper articles quoting Respondent’s representatives learned that Respondent was only entitled to severance payments if terminated without cause. He could only be terminated for cause if guilty of acts of moral turpitude or gross neglect of duty. Thus, the reader could only conclude that Claimant was guilty of gross neglect of duty or had committed acts of moral turpitude (as three witnesses testified they concluded, knowing that Claimant’s work ethic precluded him from neglecting his job duties).
Respondent knew that Claimant was highly vulnerable to any statement implying acts of moral turpitude given the pervasive publicity that had attached to his family’s name as the result of his brother’s recent, widely publicized and admitted conduct involving moral turpitude.
It is difficult to fix an amount that is appropriate as a damage award under this claim. However, Claimant’s acceptance in his chosen profession is highly dependent on maintenance of a strong reputation. Respondent’s statements were published in the most widely circulated newspaper in the state.
Evidence from Claimant and other witnesses provided ample proof that his reputation in his profession has been damaged by Respondent’s publication of the statements concerning his termination. He no longer gets return phone calls from those with whom he had prior good working relationships. In the words of one witness, no school district can risk the adverse publicity that could come from hiring Claimant to consult on labor issues so long as there remains the damage to his reputation from the implications naturally drawn from Respondent’s statements concerning the reasons for his termination. An award of $250,000 is justified by this proof.