When I first saw the headline in The Philadelphia Inquirer —  “Greene suit says PHA ruined reputation” — I thought: has Carl Greene lost his mind?

I interpreted the “ruined reputation” as referring to a defamation claim, and I could not see how Greene could possibly sue the Board of the Philadelphia Housing Authority for defamation. The primary allegations are indisputable: Greene was accused of several instances of sexual harassment, the accusers brought suit, and Greene authorized the PHA and their insurer to settle those cases. The PHA Board is now investigating how those claims were handled and has not reached any conclusions. Without more detail, there’s nothing defamatory there.

More to the point, as John M. Elliott said with a bit more color:

“I’d like to get Carl Greene under oath in court as soon as possible. It’s absolutely incredible that someone who engages in a pattern of predatory sexual misconduct . . . would have the chutzpah to file that kind of lawsuit.”

If Greene is a “predator,” then it’s like the lawsuit over the Facebook movie — if you have something to hide, the last thing you want to do is bring a defamation lawsuit.

But the Complaint isn’t about Greene’s reputation, at least not directly. Instead, it’s over his employment agreement, which includes:


(a) Termination by PHA for Cause. This Agreement may be terminated immediately for cause upon written notice to MR. GREENE to such effect. Cause as used in this Section is defined to mean only:

(i) A material act or acts of dishonesty on MR. GREENE’S part, which is criminal in nature, intended to result directly or indirectly to MR. GREENE’S substantial gain or personal enrichment at PHA’S expense, and which results in demonstrable material injury and damage to PHA;

(ii) MR. GREENE’S willful and intentional misconduct, recklessness, gross negligence and failure to substantially perform his duties hereunder, other than a failure resulting from MR. GREENE’S incapacity or illness, if MR. GREENE’S willful and intentional misconduct, recklessness, gross negligence and failure results in demonstrable material injury and damage to PHA; or

(iii) Lack of funding.

(c) Termination Without Cause. Either party to this Agreement may terminate the Agreement without cause, but only upon ninety (90) days’ notice to the other party.

Greene’s complaint alleges in essence that, even if he did sexually harass someone, that doesn’t give PHA “cause” to fire him, and so can only be terminated without cause, entitling him to two more years of his salary, pursuant to this section:

(a) In the event MR. GREENE terminates the Agreement under Section 8(b), or PHA terminates the Agreement under Section 8(c), PHA shall pay MR. GREENE for twenty-four (24) months worth of the base salary and benefits set forth in paragraphs 2 through 5 of this Agreement. PHA will also provide MR. GREENE with any vested or accrued benefits to which he would otherwise be entitled. It is understood and agreed that in the event MR. GREENE applies for and receives unemployment compensation, the amount of severance due to MR. GREENE shall be reduced on a dollar-for-dollar basis by the amount of unemployment compensation received by MR. GREENE. Such severance pay shall not be reduced, however, by any compensation MR. GREENE receives from other sources, including employment by another Employer after termination.

Before we discuss the merits, an important issue needs to be raised: the lawyers who represented the PHA in negotiating Greene’s employment agreement plainly dropped the ball. Let’s assume the PHA knew they were giving Greene a sweetheart deal that made him essentially impossible to fire unless he outright stole money from the organization or deliberately stopped coming to work, a contract so sweet that Greene could potentially harass employees without consequence.

Even if that’s the case, I guarantee you PHA did not mean to agree that Greene could only be fired for “willful and intentional misconduct, recklessness, gross negligence and failure to substantially perform his duties.” That word was most certainly supposed to be an “or” — you can’t both intentionally “and” negligently do something.

But now they’re stuck with it. There’s good odds a court will interpret the contract to mean “or” instead of “and” because it’s a patent ambiguity (here’s an example of the law on that), but, really, the issue could be avoided by a little bit more diligence in preparation.

Once we get to the merits of the case, Greene first claim is for a violation of his right to due process. It’s common for government employees to allege due process claims alongside ordinary breach of contract claims arising from their employment agreements, because, in essence, the breach involved the government taking their property interest in the contract.

That said, I don’t know if his claim has any legs just yet. Although he was suspended, he was suspended with pay, and he deliberately removed himself from any involvement with the investigation by going on leave to pursue unspecified medical treatment. He can’t just stop the PHA Board from doing its normal work by making himself unavailable.

That leaves us with Greene’s other claim, for breach of contract. Assuming that Greene either will be fired or has been effectively fired by way of the suspension, would the harassment itself constitute “willful and intentional misconduct, recklessness, gross negligence [or] failure to substantially perform his duties?”

Greene’s employment agreement twice spells out his job only as “leading and managing PHA to achieve those certain goals and objectives set forth in PHA’s Strategic Operating Plan (“SOP”)” and “serv[ing] as Executive Director of PHA and lead[ing] PHA in the accomplishing the goals and objectives of the PHA’s SOP.” There’s nothing about any Code of Conduct or the like he should follow. The complaint nonetheless eludes past the question as to whether “cause” includes sexual harassment, and emphases that the clause also requires Greene’s wrongdoing “result[ ] in demonstrable material injury and damage to PHA.”

Frankly, I don’t think that will be too hard to show: in addition to the institutional harm caused by sexual harassment, there’s also the harm to PHA’s reputation.

But let’s step back for a moment. One would think his “duties” as an Executive Director include not harassing employees. Indeed, if Greene was merely an employee of the PHA, and not its Executive Director, there would be no question that the PHA could fire him “for cause” if he sexually harassed a co-worker. Only a few years back the Pennsylvania Commonwealth Court decided a case that’s exactly on point, in which the PHA was sued by an employee it fired for sexually harassing a co-worker:

[T]he employer’s unfettered right to discharge an employee for certain types of misconduct does not necessarily hinge on whether the employee’s job responsibilities are critical to the performance of an important governmental responsibility, or whether the actual misconduct was criminal or caused harm to a party that the government entity sought to protect. Rather, the focus of the inquiry is whether the misconduct at issue interferes with the public employer’s “control over its enterprise” or impedes the public employer’s powers, which are essential to its ability to accomplish its functions. In other words, if the employee’s misconduct interferes with the public employer’s ability to ensure proper operation of its organization, then it cannot bargain away the ability to terminate an employee for such misconduct.

The application of these principles in the above described cases direct us to a multi-part test. First, where serious misconduct is of a sort which has a direct negative impact on the public function of the employing agency, such as preying upon or otherwise putting at risk those persons the agency is charged to serve, there is no question that the core function test has been satisfied. On the other hand, where the conduct is of a type which will have only an indirect or potential impact on the agency’s public duties, such as embezzlement or a breach of trust, two conditions must be met. The misconduct must be work-related and must involve dishonesty or other misconduct so egregious that if the agency is unable to curtail such behavior it risks relinquishing control of the orderly functioning of its operations. As in cases like ISSU, City of Easton or Allegheny County, it is not necessary that the particular act(s) of the discharged employee, standing alone, impairs or threatens the agency’s operation, but rather that it is the type of conduct which, if left unchecked, may lead to such a result.

We believe that sexual harassment of the sort involved here, at least where it involves physical assaults, falls into this category. It is difficult to imagine how an agency can maintain orderly operations if its employees cannot be assured of a safe workplace in which their duties are not impeded by the fear, or actuality, of unrestrained sexual assaults. Moreover, as the Authority points out, to allow such behavior would place the agency itself in violation of both state and federal law. It is simply not rational to conclude that the Authority bargained for such a result; indeed, it lacks the power to bargain away its duty to protect its workforce from the type of conduct found by the arbitrator to have occurred here.

Philadelphia Hous. Auth. v. AM. FED., 900 A.2d 1043 (Pa. Commw. Ct. 2006)(emphasis added).

That last line deserves another look. It may not even matter if Greene’s employment agreement didn’t include sexual harassment — the precedent out there suggests that the PHA couldn’t bargain away its right to fire people for sexual harassment even if it wanted to:

Both the Pennsylvania Supreme Court and this court have held that a government employer cannot bargain away its power to fire for misconduct bearing directly upon the performance of its essential functions; this incapacity (referred to as contractual incapacity) imposes a legal restriction on an arbitrator’s interpretation as to what the parties meant by “just cause.”


And it gets worse for Greene. The PHA already has a response:

Suspended Philadelphia Housing Authority chief Carl R. Greene undertook a deliberate “cover-up” to hide four sexual harassment complaints filed against him, the agency’s board chairman, John F. Street, said today.

Deceiving the PHA Board would most certainly amount to “willful and intentional misconduct, recklessness, gross negligence [or] failure to substantially perform his duties.”

One more question, too: this story says two of the sexual harassment cases settled in 2004, three years before Greene’s latest employment agreement. If Greene had a duty to disclose those allegations and settlements to the Board but didn’t, then his whole contract might be void as having been fraudulently induced. Indeed, the Board could sue Greene to get back their money paid under the contract.

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