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On December 1, 2016, Parker Hannifin Corporation and CLARCOR Inc. announced that the companies have entered into a definitive agreement under which Parker will acquire CLARCOR for approximately $4.3 billion in cash, including the assumption of net debt. The transaction has been unanimously approved by the board of directors of each company. Upon closing of the transaction, expected to be completed by or during the first quarter of Parker’s fiscal year 2018, CLARCOR will be combined with Parker’s Filtration Group to form a leading and diverse global filtration business. Bass, Berry & Sims has served CLARCOR as primary corporate and securities counsel for 10 years and served as lead counsel on this transaction. Read more here.

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Securities Law Exchange BlogSecurities Law Exchange blog offers insight on the latest legal and regulatory developments affecting publicly traded companies. It focuses on a wide variety of topics including regulation and reporting updates, public company advisory topics, IPO readiness and exchange updates including IPO announcements, M&A trends and deal news.

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Labor Talk Blog: Seemingly "Right" Process Cannot Save "Wrong Result"

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April 16, 2013

An employer received a report of a manager harassing his subordinates. The employer appears to take all the right steps: 1) conducting an investigation; 2) involving several higher-level managers in the decision-making process; and 3) even hiring an outside law firm to assist it in deciding what discipline to impose.

BUT, months later, after the manager had been suspended and had his pay docked (a "fine"), the employer has fired the manager (yet he still qualified for a large bonus), the manager's assistant has resigned, the manager's supervisor has resigned, another high ranking official with the employer has resigned and the employer is in the midst of a public relations nightmare.

You might recognize that the employer is Rutgers University. The "manager" is head basketball coach Mike Rice. The others who have resigned are an Assistant Coach, the Athletics Director and the University's General Counsel. The University President also is feeling some heat.

Readers of this blog might remember from a previous post the adage that how an employer does what it does (i.e., process) is sometimes as important as what it does. However, this is a good example of how a seemingly strong process came to the wrong conclusion.

So what went wrong?

Based on the public reports of what occurred, here are a few observations:

The University President says he never actually viewed the video evidence against Coach Rice.

Practical Tip

If you are participating in the decision of what discipline to impose, personally review all of the basic evidence, especially any objective evidence such as video, photographs or email messages. The objective evidence is very difficult to refute and will have to be explained – either by the manager who engaged in the behavior when questioned during the investigation or by the employer if it comes to a conclusion that does not appear to "fit" the misconduct observed.

The University did not recognize the message its more limited discipline sent to players, other coaches and the public.

Practical Tips

  • In deciding what discipline to impose, look not just at the offending manager and his subordinates but also at the larger constituency groups impacted.
  • Evaluate whether a manager who has behaved in such a manner can ever recover a platform from which to instill professionalism. You can hold high level managers to a higher standard, especially if those same managers are charged with instilling such decorum and professionalism in the persons they supervise (or coach).
  • Remember that in today's world, pictures, videos and emails make their way into the public domain. Will your choice of discipline appear reasonable in light of the evidence or will it appear to be protective of the "overclass?"

The University appears to have allowed a concern with the "legalities" to over-ride its mission focus and its practical judgment.

Practical Tips

  • Unfortunately, in today's world, an employer sometimes must decide which lawsuit it would rather defend. Here, the University appears to have chosen not to risk a lawsuit with Coach Rice by terminating him, for fear such a termination would violate his contract. While this reader has not examined Coach Rice's contract, I cannot imagine that Coach Rice's contract was so narrow in defining "cause" as to allow him to engage in such behavior. And, if it were that narrow, why was the University able to terminate him months later on essentially the same basis?
  • Do not let the litigation-avoidance "tail" wag the operations "dog." The employer must remain mindful of what provides the only job security – satisfied customers. Job security is the only thing that keeps any of us employed, and that goal requires efficient operations, which develop a product or service a consumer wants to buy, at a price the consumer can afford.
  • Of course, here, a more cynical observer could conclude the University was not concerned with legalities but rather with the damage to its basketball program if it changed coaches in mid-season. Any such calculus appears woefully wrong now. Some employers will choose to "look the other way" when a "ne-er do well" manager or salesperson acts out, rationalizing that the person is "making the Company way too much money to get rid of." Any such rationale, however, is premature until you later see how much money (or publicity damage) that bad actor's conduct actually costs the Company when brought to light.

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