EMPLOYMENT LAW SEMINAR: FARAGHER & ELLERTH & PROGENY

LABOR AND EMPLOYMENT LAW SECTION
STATE BAR OF NEVADA

When Does An Employee Unreasonably Fail To Take Advantage Of An Employer’s Complaint Procedure?©

The Groundwork Underlying The Second Prong.

Faragher and Ellerth established a two-pronged defense to claims based upon intangible adverse employment actions by supervisors. The first prong addresses the employer’s policies/processes in place and whether they are reasonable toward preventing discrimination and, if it occurs, toward correcting it promptly. The second prong deals with the employees’ conduct in accessing those processes.

Here, there are two obvious extremes. One, if the employee makes no report or the report is inadequate, the second prong may provide the employer with a defense to liability for a supervisor’s intangible adverse employment action. Two, if the employee complies reasonably with the employer’s processes, the defense will not be available. 

We here address the areas in between these two extremes that have been addressed in the Ninth Circuit.

The question of the reasonableness of an employee’s action (second prong) may be in part dependent upon the adequacy of the employer’s procedures for reporting and investigating (first prong). For purposes of this part of the presentation today, we assume the employer has reasonable procedures.

The second prong of the defense is intended to fulfill a "policy imported from the general theory of damages, that a victim has a duty ‘to use such means as are reasonable under the circumstances to avoid or minimize the damages’ that result from violations of the statute." Faragher v. City of Boca Raton, 424 U.S. 775, 806 (1998) (quoting Ford Motor Company v. EEOC, 458 U.S. 219, 231 n. 15 (1982)). The Supreme Court has stated that an unreasonable failure to use an employer’s complaint procedure is not the only way to establish the second prong, however, "a demonstration of such failure will normally suffice to satisfy the employer’s burden under the second element of the defense." Faragher, 524 U.S. at 807-08. The test is whether the employee unreasonably failed to take advantage of any preventative or corrective opportunities provided by the employer or to avoid harm otherwise. 424 U.S. at 807.

The defense is an effort on the part of the Supreme Court to achieve a balance, consistent with Title VII’s objectives, between the notions of vicarious liability for managerial misconduct and vicarious liability for supervisory misconduct. Absent the affirmative defense, the employer is vicariously liable for a supervisor’s misconduct. If the employer exercised reasonable care (first prong), and if the employer establishes that the employee’s conduct was unreasonable (second prong), the balance should tip in favor of saving the employer from vicarious liability for supervisor misconduct. "If the plaintiff had unreasonably failed to avail herself of the employer’s preventative or remedial apparatus, she should not recover damages that could have been avoided if she had done so. If the victim could have avoided harm, no liability should be found against the employer who had taken reasonable care, and if damages could reasonably have been mitigated no award against the liable employer should reward a plaintiff for what her own efforts could have avoided." Faragher, 524 U.S. at 807. The Court thus created the defense at hand, as follows:

When no tangible employment action is taken, a defendant employer may raise an affirmative defense to liability for damages, subject to proof by a preponderance of the evidence. . . . The defense comprises two necessary elements: (a) that the employer exercise reasonable care to prevent and correct promptly any sexually harassing behavior, and (b) that the plaintiff employee unreasonably failed to take advantage of any preventative or corrective opportunities provided by the employer or to avoid harm otherwise. . . . No affirmative defense is available, however, when the supervisor’s harassment culminates in a tangible employment action, such as discharge, demotion, or undesirable reassignment.

524 U.S. at 807-08 (internal citations omitted).

The situation that has received most judicial attention is the factor of delay in reporting.

No Report, One Year Delay, Two Year Delay Unreasonable.

In Holly D. v. California Institute of Technology, 339 F.3d 1158, 1178 (9th Cir. 2003), the report came two years after the first sexual incident and a year after the employee proclaimed that the sexual activity was unwelcome. 339 F.3d at 1178. The Court found that delay unreasonable and the second prong was met.

The Ninth Circuit found a two year delay to be unreasonable in Montero v. AGCO Corp., 192 F.3d 856, 862 (9th Cir. 1999).

The utter failure to report constitutes unreasonable conduct by the employee sufficient to establish the second prong. Kohler v. Inter-Tel Techs., 244 F.3d 1167, 1180-82 (9th Cir. 2001).

In Holly D., supra, the plaintiff explained that she did not feel comfortable reporting the conduct because she was dissatisfied with how HR had handled her prior disability discrimination complaint. Critical to the outcome in Holly D. was the fact that the employee did not offer evidence as to why she did not report the harassment to other contacts within the employer "specifically identified by Cal Tech’s written policy materials as equipped to offer assistance in cases of sexual harassment". 339 F.3d at 1178-79. But later in the opinion, it appears that the employee did offer evidence of faculty bias that dampened her enthusiasm for going to these other contacts within the school. This was not sufficient for the Court. 339 F.3d at 1179. From the language employed by the Court, it appears that, had the employee offered proof that her depression or financial circumstances contributed to her decision to forego reporting, that may have sufficed to demonstrate that her decision was not unreasonable. Id. However, the Court did not make this a holding. The Court also noted that it did not believe that the plaintiff’s hesitation to engage HR was reasonable (based upon her explanation of a prior negative experience), but the panel did not explain this belief. Judge Rhinehardt authored this opinion with O’Scannlain and Paez on the panel.

In Montero, the employee knew about the anti-discrimination and anti-harassment policies and had received several copies of them, and knew who to contact if she was being subjected to sexual harassment. 192 F.3d at 863. Yet she waited almost two years to complain to HR and when she "finally complained, AGCO’s response was swift and certain. Therefore, AGCO successfully established the second prong of the Faragher defense by showing that plaintiff unreasonably failed to take advantage of the company’s preventative and corrective opportunities earlier, although she knew of their existence." Id.

In Kohler, supra, the plaintiff was admittedly aware of the policy; she had received it and reviewed it two times; and she knew the offender’s supervisor and human resource personnel and believed them to be professional and competent. "Nonetheless, Kohler did not complain about [the offender’s] behavior to the management or the human resources department at Inter-Tel. Prior to initiating this lawsuit, Kohler never told anyone that she was quitting because of sexual harassment, nor did she attribute her resignation to [the supervisor’s] behavior. Therefore, Inter-Tel successfully satisfied the second prong of the affirmative defense as a matter of law by showing that Kohler unreasonably failed to take advantage of the preventative and corrective opportunities provided by Inter-Tel, although she knew of their existence." 244 F.3d at 1181-82 (citing Montero).

One Week To Three Week Delay Reasonable.

In Craig v. M&O Agencies, Inc., 496 F.3d 1047, 1057-58 (9th Cir. 2007), the Court rejected the employer’s argument that the employee’s delay of 19 days after the incident before reporting was unreasonable. The Court reasoned: "[A]n employee in Craig’s position may have hoped the situation would resolve itself without the need of filing a formal complaint, and she justifiably may have delayed reporting in hopes of avoiding what she perceived could be adverse - - or at least unpleasant - - employment consequences." Id. The supervisor’s behavior continued during that 19 day period up to 7 days before the report was actually made. The Court observed: "We cannot see how a delay of a mere 7 days (including the weekend) rises to the level of being ‘unreasonable.’ Craig’s delay is markedly different from cases where victims have allowed the harassment to continue for a period of months or years before finally reporting it to the appropriate authority," Id., citing the Holly D., Montero and Kohler cases. In reversing summary judgment on the affirmative defense, the Court noted that "Craig’s minor delay in reporting the behavior did not meet the stringent standard outlined in Faragher." Judge Bybee wrote the opinion, joined by Goodwin and Milan Smith, Jr. on the panel.

Second Prong Applies In Constructive Discharge Cases.

The second prong must be established in constructive discharge cases when the Faragher/Ellerth defense is asserted. In Pennsylvania State Police v. Suders, 542 U.S. 129, (2004), the Court reasoned that a constructive discharge is not an actual termination, and thus not a tangible adverse employment action. Instead, it is a culmination of a hostile working environment, a "worse case" harassment scenario; harassment racheted up to the "breaking point." 542 U.S. at 147. In Suders, the majority reversed a Third Circuit holding that (1) a constructive discharge is always a tangible employment action, and (2) thus the Faragher/Ellerth defense would never be available in a constructive discharge case. The Court in Suders held specifically that this is not always the case. But the Court did not indicate where the line is to be drawn. Justice Thomas’ dissent may provide some indication.   Justice Thomas pointed out, in his dissent, "If a supervisor takes an adverse employment action because of sex that directly results in the constructive discharge, the employer is vicariously liable" citing Burlington Industries, Inc. v. Ellerth, 524 U.S. 742, 768 (1998) (Thomas, J., dissenting).  The Suders majority found that there were genuine issues of material fact regarding both the existence of a constructive discharge and the affirmative defense.

Second Prong Applies In One Incident Hostile Environment Cases.

The second prong must be established in hostile working environment situations. Short of the "worse case" scenario of constructive discharge, the types of hostile working environments range in frequency, severity and forms of hostility across a grand scale. But a single severe incident can provide the basis for a claim of hostile working environment. The Fifth and Eighth Circuits have eliminated the second prong in such cases, reasoning it would be impossible to prevent such an incident or take corrective measures even if reported. Indest v. Freeman Decorating, Inc., 164 F.3d 258 (5th Cir. 1999); McCurdy v. Arkansas State Police, 375 F.3d 762 (8th Cir. 2004). The Tenth Circuit retained it in such cases. Harrison v. Eddy Potash, Inc., 248 F.3d 1014 (10th Cir. 2001). The Ninth Circuit has not weighed in on this issue. Our district court judges would not allow an employer to forego the second prong in light of the clear language in Faragher/Ellerth, but the issue could be preserved by an employer for appeal. Attorneys representing employees, of course, would want to retain the two prong burden for the employer. 

Lower Courts Weigh In On The Second Prong.

A review of some district court decisions rounds out our discussion.

In Picouto v. Western Star Truck Plant Portland, LLC, 2010 U.S. Dist. LEXIS 95355, *90-92 (D. Or. 2010), the employer tried to establish the defense with evidence that it did not learn of the behavior until the employee brought a note left on his car to HR. The employee rebutted this, and thus created an issue of fact for trial, by attesting in his declaration that he began reporting the supervisor’s behavior more than a year earlier, that these reports were ignored, and that the conduct continued.

In Ortiz v. Potter, 109 Fair Employment Practice Cases (BNA) 113, 2010 U.S. Dist. LEXIS 40115, *16-19 (E.D. Cal. 2010) (Newman, M.J.), the plaintiff sought to discover evidence concerning a supervisor’s prior incidents with other employees. The employer sought a protective order, which was denied based upon the broad standard of discovery-relevance (as opposed to admissibility at trial); such discovery could possibly be probative of the employer’s notice of the supervisor’s propensity, i.e., a repeat offender. In so ruling, the district court noted that in Tennison v. Circus Circus Enterprises, Inc., 244 F.3d 684, 689-90 (9th Cir. 2001), the Court noted the evidence was probative of management’s notice that the supervisor was a "repeat offender". Employers wishing to assert the defense might thus consider that a plaintiff’s lawyer may seize upon the defense to justify such discovery in a case. If there are prior incidents lurking in a supervisor’s past, putting the Faragher/Ellerth defense in an answer is reason to justify a plaintiff’s attorney engaging in discovery of the supervisor’s prior bad acts with the ostensible purpose of rebutting the second prong. Although this does not go directly to the second prong, it appears from Ortiz that a district court could allow such evidence to show that on the prior occasion the employer failed to take prompt corrective action. Although this has nothing directly to do with a current plaintiff’s conduct, an argument could be made for trying to expand the employer’s burden of proof on the second prong so the employer must show the second prong met as to the earlier employee(s) as well.

In Taekker v. Potter, 2009 U.S. Dist. LEXIS 61055 (D. Or. 2009), in September of 2006, the supervisor began calling the plaintiff "sweetie" and patted or hugged her when she relieved him for breaks. She did not complain. The conduct escalated in January of 2007, when he began giving her "frontal sideways hugs" in which he would "draw his harm and hand across her breasts". Plaintiff told her immediate supervisor that she did not want to be assigned to relieve him any further, that he was too "touchy-feely", and that his touching was becoming more aggressive and making her uncomfortable. Despite this report, nothing was done and the groping continued. Plaintiff went to her supervisor’s manager, but was told on two occasions that the manager was too busy. On February 5, 2007, the supervisor put his hands on the plaintiff’s hips, pressed his waist against her and said "oh baby." According to the employer, plaintiff reported the conduct on February 13, 2007. Plaintiff was reassigned and an email was sent to management reporting the incident. The court denied summary judgment on the defense because the employer had not established that the plaintiff unreasonably failed to take advantage of the corrective opportunities available.

In Ramirez v. Salvation Army, 2008 U.S. Dist. LEXIS 17480, *66 (N.D. Cal. 2008), the employee failed to complain to anyone other than the harassing supervisor himself and did not take advantage of the Salvation Army’s complaint procedure. This sounds like it would spell doom for the employee on the second prong, but the employee testified at his deposition that he did not know of any complaint procedure. For this district court, that created an issue of fact to bypass summary judgment on the second prong.

Judge Kent Dawson granted summary judgment to University Medical Center where the plaintiff was aware of the policy for making complaints to the Clark County Equal Opportunity Division, yet failed to make such a complaint. Judge Dawson rejected the employee’s argument that a union steward’s advice not to make such a complaint excused the failure. The steward had an experience that led him to the conclusion that the complaint would not be considered fairly. This advice, Judge Dawson noted, contradicted the policy, which provided that members bring complaints to the Division rather than having the union pursue such matters with management personnel at UMC. Under the CBA, UMC management was not authorized to deal with discrimination complaints, and therefore any meetings or complaints with UMC hierarchy "were meaningless." Mohammadkahani v. Anthony, 2007 U.S. Dist. LEXIS 59496, *2-3 (D.Nev. 2007). The court analogized to the excuse offered in Holly D., where the plaintiff was dissatisfied with the manner in which her prior disability discrimination complaint had been handled by HR. Anthony and Holly D. teach that a lack of optimism about a complaint procedure is not an excuse for not using it.

Second Prong Practice Tips

The employee who consults regarding ongoing harassment in the workplace should be advised to follow company guidelines for reporting. If the employer falls down in its response, the potential case can only be strengthened for the employee. See Fuller v. City of Oakland, 47 F.3d 1517, (9^th Cir. 1995)(independent Title VII duty to promptly and reasonably remedy discrimination, which includes duty to investigate).

The employee in litigation who has signed an acknowledgment of receipt of company policy regarding reporting and/or who has received training in the policy will want to be prepared to testify to reasonable steps taken to comply with the policy. Deposition preparation should include a review of these steps, including any steps covered, not covered, or steps down-played by the employer. The employee’s step-by-step compliance should be at the ready for the deposition questioning that is so predictable once defense counsel marks the handbook acknowledgment form as an exhibit to the deposition.

Fear of retaliation and hopes for improvement have been shown to be excuses for a delay of 7-19 days. Craig, supra. Defense counsel will want to test such excuses at deposition. The employee should be prepared to state specific facts that support fear of retaliation, as defense counsel will endeavor to establish the fear is based upon speculation. Prior acts of retaliation against the employee or others is probative here, as are threats to the employee or others. The employee should likewise be prepared to itemize facts supporting a contention that asking the supervisor to "stop" would be futile. An example would be times when "stop" did not work.

As discussed, a perception that the policy is futile is not an excuse for not reporting. Anthony, supra. Nevertheless, facts graver than a shop steward’s bad experience with the resolution process may make such an excuse workable in the right case. The non-reporting or late-reporting employee should thus be prepared to testify to specific, concrete knowledge of prior instances where the employer failed to respond properly to a complaint, or, even better, where the employee or others experienced retaliation for reporting. Prior breaches of confidentiality would also be important information in this regard.  Such evidence of prior failures tend to show routine practice and absence of mistake, FRE 404(b), 406, NRS 48.045(2), and 48.059(1), and may be relevant to punitive damages as well.

The employee will want to obtain through initial disclosures and/or requests for production policies regarding sexual harassment, discrimination, retaliation, and termination, as well as procedures regarding internal complaints and discipline. HR manuals regarding investigating and remedying complaints, the investigation file, the harasser’s personnel and training files, and prior complaints concerning the harasser should be obtained as well.  Employers relying on the defense should always disclose handbooks and policies.

The employee will always want to depose the HR or outside investigator to determine policies applied to the employee’s complaint. As to the second prong, the employer’s knowledge of the fact of and timing of the employee’s reporting activity will be important to confirm from the employer’s perspective.