Indemnification
In General
From time to time, Stanford employees (both faculty and staff) might find themselves named as defendants in civil litigation in connection with their work at Stanford. Examples are in lawsuits alleging negligence, defamation, and violations of statutes such as those prohibiting discrimination, harassment, and/or retaliation.
The following two sources set forth the basis for Stanford’s provision of defense and indemnification when employees are named as defendants in such litigation. The first is Stanford’s Administrative Guide Memo 2.4.6, which states that the University is to provide defense and indemnification for the employee as follows:
1. Indemnification Policy
Stanford's policy is to indemnify and defend its faculty and staff in compliance with California Labor Code Section 2802 or (in the University’s discretion) when indemnification and defense is appropriate in defense of academic freedom or other important values of the University.
If there is a request from a faculty or staff member for defense and indemnity in connection with their duties at Stanford, it should be directed initially to the Office of the General Counsel to look into the request. If the OGC has concerns about approving the request, it should refer the matter to the Provost, who may (though is not required to) seek advice from whomever the Provost desires, including individuals or an existing faculty body; the Provost shall make the final decision.
2. Sources For More Information
Any questions regarding indemnification should be referred to either the Office of the General Counsel or the Office of Risk Management. See also the Office of the General Counsel website [on indemnification]. [For contact information, see the Office of the General Counsel website Main page or the Office of Risk Management website Main page .]
The second is the referenced California Labor Code Section 2802, which in turn provides:
(a) An employer shall indemnify his or her employee for all necessary expenditures or losses incurred by the employee in direct consequence of the discharge of his or her duties, or of his or her obedience to the directions of the employer, even though unlawful, unless the employee, at the time of obeying the directions, believed them to be unlawful. (emphasis added)
“Necessary expenditures or losses” include those incurred by the defendant in litigation.
Thus, when such defense and indemnification is provided, Stanford will pay for counsel to represent the employee, and will pay a resulting judgment or settlement. Important note: Each request for defense and indemnification, however, requires a careful examination of the claim and of the facts and circumstances. This is in order to determine (for example) whether the act out of which the claim arises was performed in the course and scope of the employee’s Stanford duties, or instead was performed in the employee’s personal capacity.
Having said this, it is relatively rare that a Stanford employee named as a defendant in civil litigation is not defended and indemnified.
Here is a chart illustrating some of the types of matters that are and are not generally covered for defense and indemnification, though (once again) each matter must be examined on its own facts.
FREQUENTLY ASKED QUESTIONS:
Q: How does defense and indemnification work procedurally?
A: If named as a defendant in litigation, an employee must bring that to the attention of the Office of the General Counsel (“OGC”) immediately.
The OGC will then determine if defense and indemnification is available under Stanford’s policy – though the final decision is the Provost’s.
Even if such coverage by the University is determined to not be available, in some cases there might be other avenues for representation -- such as through an employee’s personal insurance, pro bono representation, or third party coverage. These options can be discussed with the OGC.
If a lawsuit or claim has not yet been filed but is anticipated, the OGC should likewise be contacted as early as possible to discuss the matter.
Q: Will the University provide defense and indemnification in a civil lawsuit where a claim alleges that the employee committed an act in violation of (for example) a statute prohibiting discrimination, or a University policy?
A: As a general proposition, an act done by an employee in violation of a civil statute or of a University policy would not be in the course and scope of their employment or in the discharge of their duties. See for example the University Code of Conduct (Administrative Guide Memo 1.1.1) which states that “[m]embers of the Stanford Community must transact University business in compliance with applicable laws, regulations, and University policy and procedures.”
Nonetheless, the University recognizes that a plaintiff’s allegations may turn out to be unfounded or unsubstantiated. After looking into the facts and circumstances surrounding the claim, the University may proceed to provide a defense under a reservation of rights (including the right to withdraw from the defense should that become appropriate as facts come to light). This can be discussed with the OGC.
Q: Will the University provide a defense and indemnification where criminal charges are brought against a Stanford employee – such as where the charges are alleged to arise out of a faculty member’s research activities?
A: The analysis here is similar to that under the question above in regard to a civil lawsuit. Under the particular facts and circumstances and though infrequent, a defense under a reservation of rights may be considered.
Q: Will the University provide representation for an employee who is named as a respondent in a governmental proceeding (such as a claim before the federal Equal Employment Opportunity Commission (EEOC) or the State of California Civil Rights Department (CRD))?
A: Although each case will likely depend on the claim, the facts, and the agency involved, the analysis is frequently similar to that described above in regard to a civil lawsuit. In some circumstances, no representation by counsel may be necessary, or representation may be provided by the OGC. In other circumstances and under the particular facts and circumstances, representation under a reservation of rights may be appropriate.
Q: What if a claim arises out of a faculty member’s activities as an editor for a professional journal?
A: Under the particular facts and circumstances, a faculty member should look to the journal (or its insurer) for defense and indemnification.
Q: What if a claim arises out of the publication of a book, the rights to which are owned by the faculty member under contract with a publisher?
A: Under the particular facts and circumstances, the faculty member might look to the publisher of the book, or to the faculty member’s personal insurance policy.
Q: When a defense is provided, does an employee get to choose which attorney will provide it?
A: No. When the University provides representation and/or a defense, counsel is selected by the OGC. See the OGC website's section on Retention of Counsel. An employee is of course free to retain their own counsel at their own expense. But employees are not permitted to hire their own counsel and then seek indemnification from the University for those costs and expenses.
Q: Will an employee be defended and indemnified for their litigation-related expenses when they initiate litigation as a plaintiff?
A: No. Stanford’s policy and Labor Code Section 2802 are designed to provide defense and indemnification for an employee who is a defendant in litigation, and not where an employee chooses to file litigation as a plaintiff. Only the General Counsel can authorize the initiation of litigation by Stanford, the employing of counsel by Stanford, and the use of University resources to prosecute litigation.
If an employee chooses to initiate litigation as a plaintiff – such as in connection with a research-related dispute – they are free to do so in their personal capacity and at their own expense. But Stanford will not pay for or reimburse the litigation-related expenses incurred.[1]
Q: What if an employee is sued for something they said on social media?
A: Stanford’s Social Media Guidelines currently state that a University employee is responsible for what they post on their personal social media accounts:
“Unless your job duties entail the use of your personal media accounts on behalf of the University and such use is explicitly authorized in writing by a school dean or department head, an employee’s personal use of social media shall be deemed not in furtherance of their employment responsibilities on behalf of Stanford, and any postings from personal accounts shall not be considered a direct consequence of the discharge of his/her/their duties. Consequently, Stanford will not be liable for and will not indemnify an employee for any liability that results from postings from personal social media accounts.”
Important Note: The Social Media Guidelines are currently under consideration for revisions at the recommendations of the Faculty Senate’s Ad Hoc Committee on Faculty Legal Representation and the Faculty Senate’s Ad Hoc Committee on University Speech. Contact the OGC for further information.
[1] It is also worth noting the following statement of the Faculty Senate’s Ad Hoc Committee on Faculty Legal Representation: “The Committee strongly believes that litigation is not a proper venue for discussing differences in academic conclusions.”
updated 7/29/2024