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Gunther's Millions Part II: Super Sizing your HR and Corporate Problems

February 24, 2023

Marie Ignozzi

Don Walsh

For those unfamiliar, last week’s article discussed some of the odder aspects of the Gunther’s Millions Netflix docuseries from an employment perspective. One of the many twists in the docuseries involved the fact that the Trust created an environment where it expected those who were assembled to work for the Trust would engage in “more amorous behavior.”

At some point, it was suggested by the Trust that this was part of a grand social experiment and even shared reenacted clips involving one of the presumptive officers or “advisors” of the Trust observing this behavior.  Although this may not have been bothersome to the strange interests of an eccentric millionaire, the HR and corporate world was shocked, and rightfully so, in light of a recent shareholder case working its way through the Delaware Courts involving McDonald’s.

In re McDonald’s Corporation Stockholder Derivative Litigation, (Del. Ch. Jan. 26, 2023), involved derivative claims by McDonald’s stockholders against the company’s board of directors and certain officers, including the former Chief People Officer.  Like many states, Delaware recognizes that corporations have duties to ensure that corporations have implemented proper reporting systems and to appropriately address “red flags” suggesting wrongdoing.  This means that those officers managing day-to-day business operations must be vigilant and identify, address, and report potential red flags.  When an officer consciously ignores these red flags, the bell rings that a violation of the officer’s duties to the corporation has occurred.

The court noted that the Chief People Officer in McDonald’s had ignored numerous red flags including complaints by employees, employee protests of sexual harassment, EEOC complaints, and employee lawsuits. Permitting the case to go forward, the Court concluded that “[i]t is not reasonable to infer that [the defendant] acted in good faith and remained loyal to the Company while committing acts of sexual harassment, violating company policy, violating positive law, and subjecting the Company to liability.”

As we saw in Gunther’s case, the advisors or presumptive officers of Gunther’s Trust observed, encouraged, and knew what was going on in Gunther’s abode among the “employees” of the Trust as well as between some of those individuals with other trust advisors. Adopting the same analysis as used by the Court in McDonald’s, the Trust and the individuals involved could be stuck with some “super-sized” problems and exposure for sexual harassment claims.

The biggest takeaway, even for those of us not having a small fortune to spend on our pets, is that companies need to examine their policies officers’ and directors’ practices to ensure that they are taking their jobs seriously, are appropriately addressing complaints of misconduct, and are proactively seeking to stop illegal conduct when they become aware of it. This includes regular training, reliable reporting methods and ownership, and management’s commitment to providing a positive, inclusive, and legal workplace.

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