Employer May Be Liable for Firing Orchestrated by Amorous HR Manager

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By Patrick Dorrian

May 28 — A shopping center management company in Puerto Rico may be liable to a former regional general manager for firing him for alleged performance deficiencies asserted by a human resources manager whose sexual advances he repeatedly resisted, the U.S. Court of Appeals for the First Circuit ruled May 23 in an apparent case of first impression.

Reviving Antonio Velazquez-Perez's discriminatory termination claim under Title VII of the 1964 Civil Rights Act, the appeals court drew on recent U.S. Supreme Court precedent in holding that Developers Diversified Realty Corp. may be liable given the role played by Velazquez's “jilted” co-worker, Rosa Martinez, in the events leading to his discharge.

According to Daniel B. Klein of Seyfarth Shaw in Boston, it appears to be the first time a federal appeals court has applied the Faragher/Ellerth negligence test in a quid pro quo harassment context.

The decision also expands the types of workplace bias for which employers potentially may be held liable, Klein, who represents employers, told Bloomberg BNA May 28. Quid pro quo harassment has always been about the action of a supervisor, he said, and this case seems to expand the reach of quid pro quo liability to nonsupervisors.

From that standpoint, the decision “increases the potential claims out there,” at least in the First Circuit, especially in situations where the plaintiff cannot prove the existence of a hostile work environment, Klein said.

HR Manager Made Threats

Velazquez joined Developers as an operations manager in June 2007, and by November 2007, the company had promoted him to the position of regional general manager. He reported directly to Rolando Albino and indirectly to Francis Gonzalez.

Velazquez also “interacted extensively” with Martinez, who was the human resources representative for Developers' Puerto Rico operations. During the first 10 months they worked together, the two enjoyed a good working relationship and would sometimes flirt with each other.

However, according to Velazquez, whenever Martinez explicitly expressed a romantic interest in him, he gently rebuffed her. Then, in April 2008, while the two were traveling together on business, Velazquez allegedly threatened to call security after Martinez tried to force her way into and stood outside the door to his hotel room.

That led to a series of angry e-mails between Velazquez and Martinez, with the latter telling Velazquez, among other things, that “I don't have to take revenge on anyone; if somebody knows your professional weaknesses, that person is me.”

Complaint Allegedly Laughed Off

Velazquez complained to Albino, who told Velazquez he should send Martinez a conciliatory e-mail because otherwise, “[s]he's going to get you terminated.” Albino also allegedly joked that Velazquez should just have sex with Martinez.

Velazquez also later complained to both Albino and Gonzalez. He never filed a written complaint, but Developers didn't have a formal complaint procedure, the court said.

In addition to her e-mails, Martinez also began discussing Velazquez's job performance with Albino and Gonzalez. Albino, who had his own criticisms of Velazquez's performance, also confirmed Velazquez's alleged deficiencies with his subordinates.

Albino concluded that Velazquez needed to be disciplined and perhaps fired. However, Gonzalez believed that Velazquez instead should receive a formal warning and be placed on a performance improvement plan. Martinez responded that she was “obligated to refer this” matter to senior company officials in Ohio.

Before doing so, however, Martinez made another sexual advance toward Velazquez—again at a hotel while on business travel—telling him that she didn't love her husband and wanted to have a romantic relationship with him. Velazquez replied that he wasn't interested.

That night, Martinez sent an e-mail to the senior officials in Ohio. Four days later, Gonzalez told Velazquez he was fired.

Velazquez sued under Title VII, but the U.S. District Court for the District of Puerto Rico ruled for Developers. Partially reversing, the First Circuit said a jury could find that Martinez threatened Velazquez when she allegedly said that if he didn't engage in a romantic relationship, “I will manage to undercut you at work and get you fired.”

A jury also could find that Martinez carried through on her threats, and it could view her “persistent and forceful lobbying” against Velazquez to be a proximate cause of his discharge, the court said.

Advice for Employers

Klein said although the decision would seem to expand employers' potential liability for quid pro quo harassment, the Supreme Court has set helpful guideposts for employers to shield themselves from such liability in its 2011 decision in Staub v. Proctor Hospital,131 S. Ct. 1186, 111 FEP Cases 993 (2011). Staub recognized potential “cat's paw” liability in a case brought under the Uniformed Services Employment and Reemployment Rights Act based on the actions of two allegedly biased intermediate supervisors.

As here, Klein said, the Staub court found that if management has reason to know that an employment decision is infected by bias, it should break the causal chain and make its own decision based on its independent investigation.

Staub's holding is limited to supervisors, but the Supreme Court indicated that the outcome might not have been different if a nonsupervisor was the biased actor, Klein said.

But regardless of whether it is concerned about potential cat's paw liability or the sort of direct negligence liability the First Circuit recognizes here, the advice to employers is the same, he said.

“Don't draw the line at supervisors” when guarding against biased influences. “Remove the taint anyway,” he said, by conducting an independent verification of the facts.

To contact the reporter on this story: Patrick Dorrian in Washington at pdorrian@bna.com

To contact the editor responsible for this story: Susan J. McGolrick at smcgolrick@bna.com

Text of the opinion is available at http://www.bloomberglaw.com/public/document/VelzquezPrez_v_Developers_Diversified_Realty_Corp_No_122226_2014_.