Fox Allowed to Sue TV Executive for Violating Sexual Harassment Handbook

Rupert Murdoch - Getty - H 2018
John Phillips/Getty Images

Although Fox Broadcasting isn't exactly known for leading the charge against sexual harassment, the company has gained an advantage in court against former executive Cliff Pozner in a case that could heighten the liability for those who engage in sexual misconduct in the workplace. This past week, a New York judge determined that a Fox handbook spelling out policies on sexual harassment and other matters was incorporated into Pozner's employment agreement, and thus, he must face a claim for breaching contract. On the other hand, the judge won't allow Fox to pursue its former executive for breaching fiduciary duties.

Pozner worked for Fox for 22 years and rose to executive vice president of pricing, planning and inventory management. The ad exec says he contributed to the broadcaster's bottom line by creating things like "NFL Pre-Kick," which he estimates generated about $300 million in revenue for his employer.

But in the wake of the Roger Ailes scandal and a subsequent investigation into sexual harassment at 21st Century Fox, he was fired on Sept. 10, 2016.

Pozner then filed a lawsuit against Fox for breaching his employment agreement and discriminating against him on the basis of religion. According to Pozner's complaint, anti-Semitism was widespread at Fox and he personally witnessed a "purge of Jewish executives," and it was "condoned by executives at the highest levels of Fox, including its Chairman, and is reflected in Mr. Rupert Murdoch's well documented anti-Semitic statements."

The fired executive acknowledges that he was subject of complaints to Human Resources, yet alleges the women who reported him had been silent for years, concocted allegations to save their jobs, and that the only ones being let go upon sexual harassment claims were Jewish executives.

In response, Fox filed counterclaims against Pozner and detailed the results of an investigation into his conduct. According to the broadcaster's court papers, Pozner engaged one female subordinate concerning the size of her husband's penis, asked a female subordinate to expose her breasts and vagina for his "whacking" material, asked another female colleague to open her legs during a one-on-one budget meeting and more.

Fox alleged that Pozner had breached an agreement to abide by the policies set forth in a handbook on employment standards and had also violated a fiduciary duty of care and loyalty which meant he had to refrain from conduct inconsistent with its policies.

Pozner challenged whether the handbook could serve as the basis for a contract claim.

"[I]t is clear that the Handbooks were created by Fox without any input by, or consideration to, Pozner," stated a dismissal brief. "It is equally clear that Pozner was not provided either of the Handbooks until after he accepted employment with Fox. As per Fox's own allegations, copies of such Handbooks were provided to Pozner periodically. While Fox has not provided any, much less all, versions of such Handbooks, it is beyond question that Fox, and only Fox, could, and likely did, amend the Handbooks over the years — again, all without any additional consideration to Pozner. Moreover, even from the cherry picked sections of the Handbooks quoted by Defendant, it is clear that, under New York law, Defendant's remedy for any alleged violation by an employee of any Handbook policy is to terminate the employee."

New York Supreme Court Justice Saliann Scarpulla rejects the argument.

"Pozner expressly agreed to comply with the Standards and Fox Facts, both of which were incorporated into his employment contract," she writes, later adding, "Contrary to Pozner's contention, the fact that he had no input in the drafting of the Standards and Fox Facts does not allow him to avoid their application. According to the allegations in the counterclaim, as an executive employee, he was familiar with Fox's workplace expectations, and he was provided with copies of the Standards beginning as early as 1998, and the Fox Facts as early as 2006."

Pozner, however, is able to escape Fox's claim of breaching fiduciary duties.

The judge says that Pozner did owe a duty of loyalty to Fox, but such duty has only been extended to cases where the employee acts directly against the employers interests. Examples given are embezzlement, improperly competing with the employer, or usurping business opportunities.

"Fox has failed to present, and I haven't found any New York case, in which sexual harassment by an executive, without more, forms the basis for a breach of the duty of loyalty claim, resulting in the employer's recovery of the employee's salary for the entire term of such conduct," writes Scarpulla. "Rather, Fox relies only on cases in other non-controlling jurisdictions, that are clearly distinguishable on their facts."

Here's the full decision.