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You’re the chief executive officer of a large company, and you’ve just received an anonymous letter claiming that your company discriminates against its employees. What do you do? You take a deep breath, and you call your general counsel and let your lawyers figure it out. But what if the person accused is the GC and the alleged victims are in-house lawyers? What do you do then? The scenario may sound far-fetched, but the CEO of Mount Olive, N.J.-based BASF Corp., one of the largest chemical companies in North America, found himself in just such a dilemma in September 2000. How well BASF handled the situation is a question The National Law Journal posed to several experts, who raised concerns about some decisions the company made. Meanwhile, it’s unlikely that the CEO, Peter Oakley, is pleased with the result. His company, general counsel and deputy general counsel were sued by a former paralegal who claims she was the victim of discrimination and then retaliation. THE SUIT In February, General Counsel Thomas Y. Allman, Deputy GC David F. Ryer and BASF were sued by Debra A. Russenberger in New Jersey Superior Court in Union County. Russenberger v. BASF Corp., No. UNN-L-1023 01. In her complaint, Russenberger claims that the defendants violated New Jersey’s law against discrimination by “failing to compensate females equally for performing work equal to or greater than their male coworkers; promoting males over females who have equal or greater credentials; and treating females in a hostile and abusive manner.” The document goes on to say that nearly two years earlier, in March 1999, Russenberger had complained to her superiors, including Ryer, about “compensation disparities” — to no avail. Then, last September, the company received the anonymous letter that, according to Russenberger’s complaint, alleged “gender discrimination” and a “hostile work environment in BASF’s legal department.” In response, the company hired a law firm to investigate. Russenberger was among those interviewed. She told investigators that she agreed with the allegations. About six weeks later, she was fired — “in retaliation,” she contends. In their answers to the complaint, Allman, Ryer and BASF deny the allegations. Both Allman and Ryer declined requests to be interviewed. The NLJ received the same anonymous letter — later authenticated by BASF — that was sent to CEO Oakley. Employees have complained for years that Allman is biased against women and minorities, the letter said. “Even complaints to the hotline are covered up and not investigated.” It names five female lawyers Allman allegedly fired. Three lawyers with expertise in legal ethics and internal investigations readily agreed that, under these circumstances, a company ought to hire an independent investigator. If, like BASF, the company chooses a lawyer at a firm, “it should be a counsel from a firm that has no business relationship with the company and no expectation of one,” suggested Stephen Gillers, a New York University law professor and expert on legal ethics. Merrick T. Rossein, a professor at the City University of New York School of Law, agreed. Rossein, who specializes in employment law, has a private practice in which he has investigated similar allegations himself. So has Robert B. Fitzpatrick of Washington, D.C.’s Fitzpatrick and Associates. As a consultant, however, he often recommends an ex-police detective rather than a lawyer. He prefers an experienced investigator who is clearly independent and won’t speak legalese if the case goes to trial. These lawyers also agreed that employees interviewed by the investigator must be assured that they won’t suffer retaliation as a result of their statements. The GC should also be informed that recriminations will not be tolerated, they added. Fitzpatrick would say so orally and possibly in writing. Rossein would encourage interviewees to contact the investigator if they are subject to retaliation, at which point the investigator ought to intervene. Finally, two of them believed the investigator should interview former employees — at a minimum, those named in the letter. Rossein was adamant: “Absolutely.” Failing to do so, he said, would result in “a highly flawed investigation.” Fitzpatrick echoed the sentiment: “I can’t think of a reason why I wouldn’t want to.” Gillers wasn’t so sure. He would expect the investigator to review the personnel files of the five and base the decision on what these reveal. These experts did not give BASF high scores. The company hired a lawyer from a firm it had used before, the state’s oldest and largest: Newark, N.J.’s 250-lawyer McCarter & English. Tim Andree, BASF’s vice president for corporate communications, explained that the firm was chosen for its reputation and because BASF did not represent a majority of the firm’s billings. Nor, he added, did the company have active cases with the firm at the time. The lawyer hired to head the investigation was Rosemary Alito, who is now a leading candidate to become U.S. Attorney in New Jersey and was chosen, Andree said, because she is well-respected in employment law. [Alito chairs the editorial board of the New Jersey Law Journal, a paper affiliated with The NLJ.] Though the experts interviewed had serious reservations about the firm BASF chose to hire, they approved of the company’s willingness to cooperate fully with Alito and give her a free hand. But there is also a question about the protection extended to employees that Alito interviewed. Andree claimed that at the time the investigation was announced, the company offered the legal department assurances that there would be no recriminations. Further, he said, Allman had no contact with the investigation and to this day has no idea who spoke to Alito. In an interview, Russenberger said that she recalled no such assurances and, when she met with Alito, was asked only if she wanted her statement to be anonymous (she did). Finally, Alito did not speak with former employees — not even the five named in the letter. Andree said the choice was hers alone. Alito declined to comment on any aspect of her investigation. After her inquiry, Alito wrote a report that Oakley, Allman and other BASF officials discussed with the legal unit at a meeting in December 2000. Andree would not provide a copy of the report, but he summarized some of its findings. It completely exonerated Allman and Ryer, he said. During the six years of Allman’s tenure, 33 lawyers were hired by the legal department — 16 men and 17 women (four were minorities); 51 lawyers were promoted — 23 men and 28 women (six minorities); and five men and five women were fired (two minorities). Andree read the conclusion of Alito’s report: “The law department of BASF is more diverse than any other law firm I’ve seen in the state of New Jersey.” Russenberger is not alone in disagreeing with this conclusion. Four female lawyers who requested anonymity insisted in interviews that Allman discriminated against women. Women in the legal department “had a higher bar,” one said. One who worked for BASF for 12 years, the last three under Allman, complained, “It was like working for an enemy.” Although this woman wasn’t fired, she was asked to leave. The other three said they left to take jobs where they are treated better and paid more. They said that they were glad somebody investigated but they didn’t understand why Alito never spoke to them.

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