Friday, May 23, 2014

4th Circuit Holds Employer Liable for Racial and Sexual Harassment from a 3rd Party

As the title of this posts suggests, this is a case of somewhat peculiar facts, as evidenced by the slightly confusing introduction to the opinion of this case.

Facts and Procedural Background

Essentially, the plaintiff, Lori Freeman, began working for Defendant Dal-Tile (through their predecessor, Marble Point) as a receptionist through a temporary staffing agency.  After six (6) months, Freeman joined Dal-Tile as a permanent employee.  Freeman's position and titled changed a few times and in November 2009, her position was reclassified to Customer Service Representative.  The opinion then states, "[t]he harassment claims at issue are based on the behavior of Timothy Koester, an independent sales representative for VoStone.  Freeman usually interacted with Koester more than once a day while he was conducting business with Dal-Tile on behalf of VoStone."  Koester is the other named Defendant in the case.

Barely two weeks into the job as a temp employee, Freeman overheard Koester reference a photograph of two former employees, asking, "[H]ey, who are these two black b****es[?]".  This bother Freeman who asked her supervisor, Sara Wrenn, who Koester was and "what was his deal," to which Wrenn stated Koester is "an asshole, but I don't think he'll do it again."  Freeman confronted Koester the next day and told him how uncomfortable and demeaning she found his question and comments.  On another occasion, Koester showed Freeman a photograph of a naked woman on his cell phone and remarked: "[T]his is what I left in my bed to come here today."  On another occasion Freeman overheard Koester, talking with one of his co-workers, about that co-worker's daughters, state: "I'm going to hook up with one of your daughters," or "I'm going to turn one of your daughters out."

Koester continued to engage in outrageous and offensive behavior, all of which Freeman's supervisors either witnessed themselves or were told by Freeman through complaints.  However, Freeman's supervisors' responses to the complaints were dismissive and almost equally as insulting.  At trial, several of Freeman's co-workers testified, in-depth, about the numerous and frequency of Koester's lewd and inappropriate comments related to sex and race in the workplace.  Eventually Dal-Tile banned Koester from the workplace but that ban was lifted and then Koester was merely prohibited from communicating with Freeman.  The prospect of being forced to interact with Koester was so upsetting to Freeman that she took a medical leave of absence and received treatment for depression and anxiety.  Freeman eventually quit her job with Dal-Tile and stated it was because of her depression and anxiety and that she was "constantly worried she would encounter Koester at work."  While Freeman was on medical leave, she filed a charge with the EEOC asserting Dal-Tile had subjected her to discrimination based on her sex and race.  After receiving her right-to-sue letter, Freeman filed suit in federal district court asserting claims for racial hostile work environment under 42 U.S.C. sec 1981; racial and sexual hostile work environment under Title VII; discriminatory discharge under 42 U.S.C. sec. 1981; and obstruction of justice under common law for the destruction of emails in violation of the litigation hold.

Dal-Tile filed a motion for summary judgment and the district court granted their motion.  Among the reasons for granting summary judgment, the district court held that, "Freeman could not establish that liability should be imputed to Dal-Tile."  The district court used a negligence standard, adopted from an unpublished opinion of the court, in which "an employer is liable [for actions of a third party] 'if it knew or should have known of the harassment and failed to take appropriate actions to halt it.'"  The court then held Dal-Tile did not have actual or constructive knowledge of the harassment because "no reasonable fact-finder could conclude that plaintiff's statement[s] to Wrenn constituted a complaint, either formal or informal."  The district court then 'dinged' Freeman for not complaining further to Dal-Tile and that Dal-Tile's response was "appropriate and adequate as a matter of law."  The district court also held Freeman's resignation was a voluntary resignation and not a constructive discharge because she was "unable to show that anyone at Dal-Tile acted deliberately with an unlawful discriminatory intent in order to force her to resign either before or after she returned from medical leave."

Fourth Circuit's Reversal of Summary Judgment

Racial and Sexual Harassment/Hostile Work Environment

The 4th Circuit began their discussion by stating the burden in this case:

"For this court to reverse the district court's grant of summary judgment to Dal-Tile on her hostile work environment claims, Freeman must establish that the evidence, viewed in her favor, would allow a reasonable jury to conclude that the harassment was (1) unwelcome, (2) based on [Freeman's] gender or race, (3) sufficiently severely or pervasive to alter the conditions of her employment and create an abusive atmosphere, and (4) imputable to [Dal-Tile]."

The district court the first 2 elements easily-met.  On the Third element of "sufficiently severely or pervasive to alter the conditions of her employment and create an abusive atmosphere," the court noted that "this element of a hostile work environment claim has both subjective and objective parts."  Regarding the subjective component, the district court stated, and the 4th Circuit agreed, that the evidence supports a finding that Freeman subjectively perceived both types of harassment to be abusive or hostile as evidenced by her complaints, crying at work, generally being distracted by Koester's presence and her subsequent medial leave for anxiety and depression related to Koester's behavior and conduct.  On whether the harassment was objectively severe or pervasive, the court inventoried all of the lewd and inappropriate behavior Koester engaged in, as testified to into the record during discovery.  Thus, the 4th Circuit held that a reasonable jury could find both forms of harassment severe or pervasive.

Employer's Liability for Acts of Third Party

Regarding Dal-Tile's liability for Koester's racial and sexual harassment, the Court noted the district court used a standard not adopted by the 4th Circuit, but, the 4th Circuit then officially adopted the standard in the opinion.  Thus, using this standard cited above, the 4th circuit held that a reasonable jury could find that Dal-Tile knew or should have known of the harassment and likewise cataloged the numerous and various complaints Freeman lodged with various supervisors about Freeman's racial and sexual harassment.  Additionally, Freeman created triable issue of fact as to whether Dal-Tile's response to halt the harassment was adequate.

Plaintiff's Constructive Discharge Claim

An employee is considered constructively discharged "if an employer deliberately makes the working conditions intolerable in an effort to induce the employee to quit."  Freeman then needed to prove two elements to demonstrate constructive discharge:  "(1) the deliberateness of [Dal-Tile's] actions, motivated by racial bias, and (2) the objective intolerability of the working conditions."

The 4th Circuit held that Freeman did not present sufficient evidence to create a question of fact as to whether Dal-Tile deliberately attempted to induce her to quit, not that her working conditions at the time she resigned were objectively intolerable.  Furthermore, Freeman presented no evidence that Koester's harassment was still creating an objectively hostile work environment at the time she resigned, nor that Dal-Tile was allowing him to harass her in the deliberate attempt to force her to quit.  Thus, the 4th Circuit affirmed the district court's grant of summary judgment on this claim.

The outcome of this case is in line with reality and the expectation employees ought to have out of their employers in protecting them in the workplace, whether it's from fellow employees or those who come into the workplace.  There are lessons to be learned on both sides and it'll be interesting to see if this case goes to trial, though I suspect it will not given the facts and obscene nature of Koester's comments.  I cannot see a jury finding his conduct not harassing and Dal-Tile's response adequate, but I may be biased.

The case is Freeman v. Dal-Tile Corp., No. 13-1481 (4th Cir. May 1, 2014).

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