Korn Ferry States Rights

Korn Ferry States Rights

When Marti Smye sold her executive coaching business to a senior-level headhunting company in 2005, she consented to sign two contracts. Through a legal clause known as “choice of law,” one agreement specified that California law would govern any disputes that arose over the Los Angeles–based Korn/Ferry’s purchase of Smye’s Florida business. But since Smye was not only selling her business to Korn/Ferry but also coming on board as an employee — who would help establish the new coaching business within the larger company — she was asked to sign an employment agreement. That contract’s “choice of law” provision stipulated that legal issues concerning Smye’s employment would be governed by Florida law.

Smye, fired from Korn/Ferry in December 2008, is now suing the company for antigay discrimination. Last month the Los Angeles superior court refused to hear her case because of the “choice of law” provision, and Smye doesn’t want to bring the case to Florida because it offers no recourse to workers terminated for being gay. Smye believes Korn/Ferry orchestrated the contracts as a cushion against a possible lawsuit.

Korn/Ferry vehemently denies both this and Smye’s accusations that an antigay animus runs through its corridors of power. Korn/Ferry wouldn’t speak on record regarding the lawsuit, but Michael Distefano, Korn/Ferry’s chief marketing officer, issued the following statement:

“The matter that we have pending with Marti Smye is, at its core, a business dispute regarding financial issues related to her departure from our company. After our business dispute developed, Marti filed a lawsuit against the company alleging discriminatory behavior. We have investigated those claims and found them to be without merit. We made a motion for summary judgment, which was granted by court, and that case was dismissed. Korn/Ferry's internal practices, codes of conduct and employee benefit programs fully support strong human rights values and practices.”

Korn/Ferry, a publicly traded company, does indeed offer domestic-partner benefits to its 2,300 employees. But Smye says the company has a culture of homophobia that became apparent before she was even hired — before coming on board, Smye’s business had a contract with Korn/Ferry, and the company invited her to a conference where she says Korn/Ferry employees talked pejoratively about a speaker because of his perceived sexuality.

Smye then came out to the corporation’s chairman and asked if her sexual orientation would be an impediment at the company.

“When I went to the chairman, he said this was a one-off, unfortunate situation that would not get in the way of my success,” Smye says. “But because of that I wanted to raise the issue that I was gay. I didn’t want any surprises; I didn’t want to be hidden.”

Soon after, Korn/Ferry purchased Smye’s company, she was hired full-time, and the contracts were presented to her. Korn/Ferry management didn’t explain why there were two separate contracts, and Smye didn’t question the “choice of law” provisions.

“You don’t think you’re going to be discriminated against and you don’t think about whether you’re protected,” Smye says. “I hadn’t felt discrimination until that point in my life. I think it’s very important for LGBT people to be aware and make sure it does cross their mind what their protections are.”

The alleged discrimination against Smye accelerated when she began dating another woman in the company. Though the woman worked in another division and the relationship was not against company policy, Smye believes that was the beginning of the end.

“When [the relationship] came out I started hearing stories of people being outed and others not being hired full-time because they were gay,” Smye says. “Ultimately, [Smye’s partner] Denise did get fired. She went from her boss giving her the highest rating to the lowest rating on her review. From then on, we were on red alert.”

Smye says the company denied her a bonus and then fired her. Korn/Ferry officials take issue with Smye’s description of events, though they wouldn’t speak on the record aside from the aforementioned statement.

“Choice of law” provisions are certainly not new, and they’re sensible arrangements for big corporations, admits Smye’s attorney Gary Gorham. General counsels don’t want to be forced to learn the laws of other jurisdictions and almost always prefer home turf legal battles.

Gorham says he’s not clear how often gay people have been affected in the workplace by “choice of law” provisions, but he’s hoping publicity about this case — he and Smye are in the process of appealing the Los Angeles superior court decision — brings those stories to light.

“Whether or not they discriminated against Smye based on her sexual orientation is really not the issue,” Gorham says. “Even if they did discriminate against her, they contracted around it.”

In her ruling, superior court judge Lisa Hart Cole acknowledged that Smye “does not have an adequate remedy for her discrimination claim in that Florida does not prohibit discrimination based upon her sexual orientation.” Since there’s a conflict between Florida and California law, though, Cole said the onus is on Smye to show California has a significant interest in applying its laws to someone who doesn’t live there. Cole didn’t believe a material interest was exposed.

The potential for this case to resonate nationally is huge, and Gorham and Smye know it. They acknowledged that they’re in discussions with national gay advocacy groups that could help in their appeal. They declined to say which groups they’re zeroing in on, but the San Francisco-based National Center for Lesbian Rights is paying attention to the case.

“The Smye v. Korn/Ferry International case underscores the urgent need for consistent and uniform laws protecting LGBT people from employment discrimination,” NCLR senior staff attorney Amy Todd-Gher wrote in a statement to The Advocate. “While California has passed strong laws prohibiting discrimination based on sexual orientation or gender identity, the laws of at least 29 other states permit an employer to fire an LGBT employee explicitly because of who they are. Until Congress passes an inclusive Employment Non-Discrimination Act, LGBT employees’ rights to be free from discrimination will continue to vary arbitrarily from state to state.”

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