Employers cannot avoid Title VII liability when their customers harass their employees by adopting a “see no evil, hear no evil” strategy.  That was the message this month from the Fourth Circuit in Freeman v. Dal-Tile Corp.  In a decision written by Judge Shedd and joined by Chief Justice Traxler, a divided panel formally adopted a negligence standard to determine when an employer is liable for the harassing acts of third-parties, including customers, directed at its employees.  The Court stated: “[A]n employer is liable under Title VII for third parties creating a hostile work environment [for its employees] if the employer knew or should have known of the harassment and failed to take prompt remedial action reasonably calculated to end the harassment.”  This standard is in accord with those set down by the 7th, 9th, 10th, and 11th circuits, and a prior unpublished opinion by the 4th circuit (EEOC v. Cromer Foods Servs., Inc., 414 F. App’x 602, 606-607 (4th Cir. 2011).

The Fourth Circuit found that Dal-Tile was on notice of at least two harassing comments from the customer.  In the first, the customer referred to the Plaintiff as a “black b*tch.”  In the second, he said he was out partying the night before and was as “f**ed up as a n***r’s checkbook.”  In addition, the customer often made sexually charged statements about his exploits in the Plaintiff’s presence.

Dal-Tile’s principal defense was that it could not be held liable for the conduct of its customer and that it lacked knowledge of the customer’s conduct.  But, as the Court found, the above comments were allegedly made in the presence of the Plaintiff’s supervisor, an agent of the company.  The Court stated “this evidence, if proven true, shows that Dal-Tile, through its agent Wrenn, had actual knowledge of the harassment and that [the Plaintiff] found it offensive, as shown by [her] frequent complaints and her negative reaction to his behavior.”

Given how clear it was that the Plaintiff offered evidence that the offending comments took place in the presence of her supervisor, it is surprising that this decision drew a dissent.  But Judge Niemeyer dissented from the Court’s opinion, noting that for a portion of the time period at issue the customer’s conduct had been “coarse, crude, and ugly” but not illegal, and that the customer was “the outlier in an otherwise harmonious and harassment-free office environment.”  He also pointed out that Dal-Tile did take at least some steps to prevent the customer’s offensive conduct from re-occurring.  Therefore, Judge Niemeyer would have held that Dal-Tile, as a matter of law, could not be liable for the customer’s conduct.

With due respect to a highly regarded jurist, Judge Niemeyer’s dissent (and the district court’s decision below) badly misses the point.  The procedural posture of this case — summary judgment — requires that all inferences be drawn in the Plaintiff’s favor.  The issue is not whether Plaintiff WAS subjected to a hostile work environment or whether Dal-Tile IS liable for the act of it’s customer.  The issue is whether “NO reasonable jury” could find Dal-Tile liable under these facts. When a customer repeatedly uses the phrases “n*gger” and “black b*tches” and engages in other horribly offensive conduct in an office environment in front of an employer’s supervisors, the company’s response is tepid at best, and “coarse, crude, and ugly” (at a minimum) conduct is permitted to go on for years, a reasonable jury could find that the company was negligent.  Indeed, Dal-Tile may find that it has a tough road to hoe in convincing a jury that it was not negligent.

Kudos to Anne King, Peter Klym, Cain Norris, Garrett Thomas, and Professor Brian Wolfman of the Institute for Public Representation at Georgetown Law School for their excellent work on this case.  That the appeal was briefed and argued by law students is certainly an impressive feat.

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