Information escrows.

AuthorAyres, Ian
PositionContinuation of II. Using Allegation Escrows to Mitigate Initial Claim Aversion B. Additional Costs and Benefits of an Allegation Escrow Regime through Conclusion, with footnotes, p. 172-196
  1. Legal Issues

    Moving beyond theory, the remainder of this Part grapples with difficult questions of implementation. We begin in this Section with the relationship between allegation escrows and the antidiscrimination mandates of Title IX and Title VII, and then turn to the legal relationship between the escrow "agent," the depositor, and the sponsoring institution.

    1. Allegation Escrows in Post-Secondary Schools and Title IX

      Any mechanism for reporting sexual harassment in colleges and universities receiving federal funds operates against the background of Title IX of the Education Amendments of 1972, which prohibits gender-based discrimination in federally supported educational programs. (79) In Franklin v. Gwinnett County Public Schools, the Supreme Court interpreted gender discrimination under Title IX to include sexual harassment. (80)

      While Franklin declared that schools may be held liable when officials intentionally fail to end harassment, (81) the Department of Education ("DOE") has developed a complex regulatory scheme to ensure compliance with Title IX. (82) Specifically, school officials must (1) investigate and address harassment when they reasonably should know about the conduct, even prenotice, and (2) undertake some investigations even when victim confidentiality cannot be assured. (83) These requirements may make schools reluctant to implement escrowed reporting systems, but may also increase the potential benefits of such systems to victims. Risk-averse schools may fear that federal investigators would view any conduct related to an escrowed complaint as within those "reasonably should know" bounds, leading schools to incentivize public reporting as much as possible and to resist any "official" mechanism that fails to inform the school of alleged harassment. On the other hand, the requirement that all such complaints be investigated without guaranteeing confidentiality may heighten the concerns that keep victims silent in the first place. (84)

      Nonetheless, an allegation escrow system might help schools fulfill their Title IX obligations. The Department of Education has suggested that one "reasonable" method of identifying harassment prenotice is seeking out cases that resemble previously submitted complaints. (85) Schools could utilize escrow systems to fulfill that obligation by submitting any claim received, and in the case of a triggered complaint, contacting the users whose escrowed allegations match. Administrators might further pursue their Title IX obligations by responding to aggregate data suggesting that a particular department, fraternity, or physical location on campus repeatedly engages in misconduct. While the specifics of unmatched deposits would not be released, the interim disclosure that a certain number of allegations of sexual misconduct had been deposited relating to a particular department might provide an impetus for administrators to take corrective action.

    2. Allegation Escrows in the Workplace and Title VII

      Closely related to harassment in colleges and universities is sexual harassment in the workplace, which is governed primarily by Title VII of the Civil Rights Act. (86) While Titles VII and IX share a common goal of preventing discrimination, differences in standards of liability and affirmative defenses may make employers even more reluctant to implement information escrow systems than schools. Under Title VII, employers are required to take a much more active role than schools in the prevention and investigation of sexual harassment in the workplace. (87) Indeed, the leading cases in Title VII suits for sexual harassment, Faragher v. City of Boca Raton (88) and Burlington Industries, Inc. v. Ellerth, (89) indicate that a primary aim of Title VII is encouraging employers to prevent and quickly address sexual harassment. Much of Title VII jurisprudence focuses on whether employers have taken reasonable steps to prevent and promptly remedy harassment in their workplaces. Reasonable steps are often interpreted to mean providing harassment awareness training and reasonably accessible mechanisms for lodging harassment complaints. (90) If an employee establishes evidence of a hostile work environment (which does not rise to the level of tangible employment action), the employer can avoid both compensatory and punitive damages by establishing the affirmative defense that the employer exercised reasonable care to address sexual harassment and that the subordinate complainant unreasonably failed to take advantage of remedies available in the workplace. (91) Such a focus on the employer's actions and the get-out-of-jail-free card that reasonable, employer-provided complaint mechanisms represent understandably make employers eager to uncover as quickly as possible any cases of harassment that could lead to litigation. (92)

      Pennsylvania State Police v. Suders (93) gives large-scale employers even more reason to focus on demonstrable steps to prevent and correct harassment as a means of avoiding liability, and thus to fear unreported cases of harassment. Seemingly forging a middle path between the strict liability of tangible employment-action cases and the avoided liability of hostile environment cases, the Supreme Court held in Suders that Title VII allows constructive discharge claims, and that such claims can, in the most severe cases, rise to the level of tangible employment actions. (94) The Court also held, however, that in all but the most egregious constructive discharge cases, employers will have recourse to the affirmative defense that the employee unreasonably failed to take advantage of employer-sponsored steps to prevent and correct harassment. (95) This approach to constructive discharge claims broadens employee access to courts in Title VII suits, as it removes the affirmative defense as a basis for summary judgment where there is a reasonable question as to whether the employee quit in response to harassment that constituted both a hostile work environment and a tangible employment action. (96) At the same time, however, by limiting the strictest standards of liability to only the most grave constructive discharge cases, the Court also increased the importance and prevalence of the reasonable-employer-actions affirmative defense in Title VII cases. Suders thus serves to increase an employer's interest in having publicly demonstrated mechanisms for reporting harassment, but may also increase employer resistance to escrow-based reporting systems which do not automatically notify the employer of complaints.

      As with schools, employers should be able to develop allegation escrow systems that help, rather than hinder, their effort to comply with the requirements of Title VII. The escrow service would merely represent an additional option for victims who are uncomfortable bringing forward direct allegations. But as long as victims could easily bring direct complaints and had the option of subsequently converting escrow deposits into go-it-alone direct complaints, an employer sponsoring an escrow service should be able to avoid Suders liability for failure to have adequate harassment reporting mechanisms. However, given the increasingly narrow focus on an employer's reasonable efforts to prevent and correct harassment, employers may nevertheless resist implementing escrow systems for fear that they will lead to a perception of employer indifference or even that employers are actively obstructing victims' claims from seeing the light of day. These concerns might be allayed by evidence that harassment investigations increase after the introduction of the escrow option. But employers may nonetheless be concerned that courts would focus on the large proportion of orphaned complaints that would eventuate in even successful implementations of the escrow. Whether or not their reluctance to implement escrowed reporting mechanisms is reasonable, employers may ultimately find the current Title VII framework too comfortable to risk changing.

    3. The Escrow System's Relationship with Sponsoring Institutions

      Though specific requirements vary by jurisdiction and job sector, nearly all employees enjoy a legal or contractual right to review documents used by an employer in making hiring or employment decisions. (97) As a result, any escrow system should be clearly and legally distinct from the companies that it serves. Before any escrowed allegations are accepted, the escrow service should establish that the employer has no claim to any of the complaints lodged with the service. Indeed, the escrow service might not even have a contractual relationship with the companies at all. The service might only enter into contracts with depositors to forward complaints under prespecified conditions. Regardless of whether the employer sponsors the escrow service, the employer should only be granted access to complaints when the escrow service chooses, in its judgment, to forward a match generated by the system.

      The independent juridical status of the escrow service would further insulate the service from being held liable for the employer's lack of response to gender inequality in the workplace. In addition, the escrow service would benefit from making explicit its fight to use its judgment regarding matched complaints and whether they are suitable for forwarding to the employer or the authorities. Because there will inevitably be error in a process that operates in a realm of unproven allegations and vague descriptions, the escrow service should avoid any implication that it has an obligation to forward complaints that happen to meet certain criteria. Similarly, the legal independence of the escrow service can help insulate employers from potential liability for failure to respond to deposited allegations awaiting a match, since with an independent escrow service the employer will be unaware of such allegations.

      A strong separation between the sponsoring institution and the escrow...

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