07 November 2011


This has been a bad week for the Cain campaign. They handled the report about some 1995 alleged sexual misconduct (of an unspecified nature, involving anonymous complainants) poorly, allowing the press and his opponents to speculate at will and interview each other, keeping the story alive. Yesterday, for instance, Christiane Amanpour asked former Secretary of State Rice a question to this effect: “Well, although we have no concrete information, assuming that there was some serious misconduct, is his candidacy over?” Yeah, he’s in trouble.

At least one report I heard revealed that the campaign had 10 days notice before the story broke. Why weren’t they prepared?

Instead, when it did break, in the space of one day, Cain denied the story, then “recalled” some of it, then more of it. He quibbled over whether there had been a “settlement” or “only an agreement” to pay one woman $35,000 and another $45,000 “severance packages.” By the end of the week, the “cover up” had become the story. No details of the events are available and the anonymous complainants refuse to speak publicly. A real mess!

This got me to thinking about how two other crises were handled by a presidential or campaign staff.

GENNIFER FLOWERS: During Bill Clinton's 1992 Presidential election campaign, it was revealed that Clinton and a model and actress named Gennifer Flowers engaged in a 12-year sexual relationship while Clinton was Governor of Arkansas. His team quickly arranged for Clinton to appear on the CBS news program 60 Minutes. Clinton denied having a relationship with Flowers, and his wife, now Secretary of State Clinton, “stood by her man.” The Flowers accusation was generally accepted by the voting public as a publicity stunt on Flower's part and Clinton avoided any serious threat to his campaign. (Clinton was deposed in January 1998, at which time he admitted that, indeed, he had a sexual encounter with Flowers, but by then he was already in his second term.)

WATERGATE: In June 1972, during Richard Nixon’s second campaign, a burglary was committed in the offices of the Democratic National Committee (DNC)headquarters at the Watergate office complex in Washington, D.C. Five men were apprehended in the DNC’s offices, apparently attempting to bug, or remove bugs from, the offices of DNC Chair Lawrence O’Brien and others. O’Brien, one of JFK’s “Irish mafia” of political advisors, was then serving his second term as DNC Chair.

It was later determined that the burglars had been paid from a to a slush fund maintained in the Committee to Re-Election the President (CREEP). Evidence developed by the FBI, soon pointed to the inside of the White House.

The Senate established a Committee, chaired by Senator Sam Ervin (D.NC) to investigate. Counsel for the committee included Sam Dash (majority counsel) and Fred Thomson (minority counsel. In the course of the hearing, it was revealed that President Nixon had a tape recording system in his offices and that he had recorded many conversations. A conspiracy to cover up the break-in, between President Nixon and his two top aides, Robert Haldeman and John Ehrlichman, as well as other aides, was revealed by the tapes. Nixon resisted a Committee subpoena to turn over the tapes, resulting in a protracted series of court battles regarding the President’s claim of executive privilege. The U.S. Supreme Court ultimately ruled unanimously that the President had to comply with the subpoena. He resigned the presidency shortly thereafter.

WARNING: Shameless name-dropping follows.

Samuel Dash, the majority counsel of the Watergate Committee, was a legendary lawyer. In his 53-year legal career, he helped draft the independent counsel statute to correct the abuses of that system during the Watergate prosecution, served as ethics counsel to the Whitewater independent counsel Kenneth Starr, and was an expert on the law of electronic surveillance.

Mr. Dash joined the Philadelphia district attorney's office in 1952 and was appointed district attorney in 1955 at age 30. He went into private practice the next year and conducted a nationwide investigation of wiretapping, resulting in a 1959 book, "The Eavesdroppers," that is credited with helping change the Supreme Court's position and federal and state laws on electronic surveillance.

Beginning in 1965, he was a a professor at Georgetown University's law school where he also served as director of its Institute for Criminal Law and Procedures.  In the 1970s, he helped Chief Justice Warren E. Burger devise the American Bar Association's ethical standards for prosecutors and criminal defense lawyers. He had a well-deserved reputation for independence and was an advocate for legal ethics throughout his career.

After a scandal arose in 2002, Mr. Dash served on a task force to reform the ethical standards and organization of the United Way of the National Capital Area.

In the 1990s, he was ethics counsel for a case I was involved in with respect to federal election law. One Saturday morning as we waited for a new draft of a pleading to be prepared, we sat in a conference room and talked about some of his experiences.

“You know, Professor,” I said, “if I had been advising the Nixon Whitehouse in June of 1972, I would have done two things. First, I would have advised the President to destroy all of those darned tapes that very day, before anyone knew they existed and before the inevitable subpoenae were issued when their existence was revealed.  There would be no obstruction of justice (at least under 1972 law) because there was no order to preserve or produce them.  I would have told the President, ‘You can’t be a party to unilateral electronic surveillance of people who come into your office expecting confidentiality. It sets a bad example. If you are ever questioned about why the tapes were destroyed, you can cite your concerns for the Bill of Rights.’”

“Well,” he replied, “you just ended our investigation.”

I continued.  “‘Second,’ you need to fire anyone, including Haldeman and Ehrlichman, who might have had anything to do with the break-in. Then, call a press conference to announce right there the firings. Say something like this:

My fellow Americans. One of the things about being president is that everyone wants to please you. If I were to mutter to myself at 2 am that I would like a strawberry baked Alaska, one would appear momentarily.

Now, a few weeks ago, I was talking with my staff about the upcoming election. As you know, after the primary elections, the Senator from South Dakota appears to be the presumptive nominee of the other party. I mused to myself, “I sure would like to be a fly on the wall of Larry O’Brien’s office right now to see how he and the rest of the old Kennedy hands plan to take the nomination away from Senator McGovern and give it to Teddy Kennedy.”

I now believe that those staffers—misguidedly and improperly—took my musing as an order. I have, sadly but necessarily, asked for their resignations and they have tendered them. It is now a matter for the police and the courts to resolve.

But I still do wonder how Mr. O’Brien plans to take the nomination from Mr. McGovern and give it to Mr. Kennedy.

Thank you and good night.

Professor Dash grinned and shook his head. “I’m glad you weren’t there,” he said. “The whole story thereafter would have been about an attempt to overturn the primary results by the old guard in the Democratic Party.”

I will never forget that conversation.

Fast forward to last week. Here is what I would have had Cain do as soon as the story broke—or preemptively, as soon as I heard that Politico was going to run it.

Background: In the last quarter of the 20th Century, sexual harassment in the workplace became an issue. Several high dollar claims were settled in the late 1980s and early 90s that made more employees aware of the “benefits” of alleging sexual harassment as a basis for dismissal. For instance, between 1997 and 2009, the EEOC dismissed roughly half of all harassment claims filed as “no reasonable cause” claims. In 2010, that percentage rose to nearly two-thirds.

In the 1990s, sexual harassment claims were popular with employees who were being terminated because the claim itself was damaging to a company and thus, the employee had a good bargaining chip. The spectre of bad publicity led many employers and their insurers to be more likely to settle claims early in the process for the “nuisance value” of the claim, i.e., the potential cost of investigation and defense of a suit dwarfed the settlement amount.

In Cain's case, the settlement amounts appear to me to be nuisance value settlements.

All that being said, I would have recommended that Cain say something like this.

In the mid-1990s, while I was CEO of the National Restaurant Association, I became aware that a couple of soon-to-be-dismissed employees were alleging that I had somehow improperly harassed them. While I deny that claim now and denied it then, I knew that the mere allegation was serious and could affect both the morale of the Association’s employees and the reputation of the Association itself.

I promptly recused myself from taking any further part in the matter, assigning it to the director of our human resources department and our general counsel.

I seem to recall that the claims were deemed to be of no substance, but to avoid any damage to the Association, it was decided by those responsible for making the decision (and perhaps our insurers) to “settle” the claims for the value of a few month’s salary for each of the terminated employees. In business, these low dollar settlements (each was around $40,000) are known as “nuisance value settlements.” That means that the company, association, or insurer thinks the claim is meritless, but the cost of investigating the claim and litigating it would far exceed the amount of the settlement.

I had no part in making any settlement decision, but, as an experienced businessman, I think that it is better to spend a few dollars to settle unfounded claims such as these rather than 10 or 20 times the amount to win a legal “victory.”

I do recall that when settling claims such as this, our counsel often suggested that the settlement amount be easily divisible by 3 so that the attorney’s one-third share of the claim could be easily determined.
The filing of unfounded suits or claims such as these, often as a revenue-generating action by trial lawyers, continues to be a real problem in American business. That is why I support tort reform and other reforms to cut the costs of such trivial litigation in American business and medicine, even as the trial lawyers seek more ways to make their fortunes on the backs of plaintiffs who have no real claim.

Thank you and good night.


Quotidian Grace said...

I hope someone from Cain's campaign reads your advice!

Alan said...

Good insight and VERY practical advice. Thanks for the sharing.