Cotran v. Rollins Hudig Hall International, Inc.

Insurance-brokerage firm Rollins Hudig Hall International, Inc. (Rollins) (defendant) hired Ralph Cotran (plaintiff) for a senior position in 1988. Implicit in Cotran’s employment with Rollins was an agreement that Rollins would not fire Cotran except for good cause. In 1993, two female employees complained that Cotran had exposed himself, masturbated in their presence, and made obscene telephone calls to their homes. Cotran denied the allegations. Susan Held, Rollins’s manager for equal-employment-opportunity compliance, conducted an investigation of the employees’ allegations and interviewed 21 people who had worked with Cotran. Two female interviewees told Held that Cotran had also made obscene or strange phone calls to them. None of the 21 interviewees told Held that it was impossible to believe the sexual-harassment allegations against Cotran. Held confirmed that Cotran had called the original complaining employees at home, and she obtained sworn affidavits from the original complaining employees. After the investigation, Held concluded that it was more likely than not that Cotran had sexually harassed the employees. Held informed Rollins’s president of her findings, and the president fired Cotran. Cotran sued Rollins for wrongful termination. At trial, Rollins argued that it reached the termination decision honestly and in good faith. However, the judge instructed the jury that Rollins could only prevail if it proved that the alleged sexual harassment had actually occurred. The jury found that Cotran had not sexually harassed the employees and awarded Cotran lost compensation of $1.78 million. The appellate court reversed the judgment, and the California Supreme Court granted review.