Fourth Circuit Revives EEOC's Lawsuit For Harassment of Employee by Third Party

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An employer could be liable under Title VII of the 1964 Civil Rights Act for the harassment of a worker who allegedly was stalked, called names, and questioned about his sexual orientation by employees of its biggest client, the U.S. Court of Appeals for the Fourth Circuit ruled March 3, reversing a lower court in a novel case (EEOC v. Cromer Food Servs. Inc., 4th Cir., No. 10-1476, unpublished opinion 3/3/11).

Reviving the Equal Employment Opportunity Commission's lawsuit on behalf of Homer R. Howard against Cromer Food Services Inc., a unanimous panel said in an unpublished opinion that the court had not yet considered whether an employer can be liable for the activities of nonemployees in a case alleging sexual harassment.

Other circuits have addressed the issue and adopted a negligence standard, it said, citing Dunn v. Washington Cnty. Hosp., 429 F.3d 689, 96 FEP Cases 1647 (7th Cir. 2005) (222 DLR A-12, 11/18/05). The standard is “very similar” to the one used by the court in co-worker harassment cases, it noted, citing Ocheltree v. Scollon Prods. Inc., 335 F.3d 325, 92 FEP Cases 433 (4th Cir. 2003) (142 DLR A-1, 7/24/03).

CFS is a food-stocking company that sells snacks and beverages in vending machines placed on its clients' premises. Howard claimed he was harassed daily by two employees of the Greenville (S.C.) Hospital while he was servicing the hospital for CFS.

Howard complained but CFS purportedly told him that nothing could be done because the harassers were not under its control. A federal trial court granted summary judgment to CFS, finding that, under Title VII, the company lacked the requisite details to take action.

“Because Howard has articulated sufficient facts to show that it would be reasonable to conclude his employer had actual or constructive notice of the harassment and failed to take any corrective action, we vacate and remand for trial,” Judge Roger L. Gregory wrote on appeal. Howard, he noted, allegedly was called “Homo Howard” and other epithets every day and claimed he reported the problem to three supervisors, a manager, directly to the hospital, and eventually to C.T. Cromer, chairman of the board of directors of CFS, but nothing ever was done.

For Purposes of Instant Case.

“For the purposes of the instant litigation, and because both parties urge us to do so, we adopt a negligence standard commensurate with the above precedents,” Gregory said, citing also Galdamez v. Potter, 415 F.3d 1015, 96 FEP Cases 102 (9th Cir. 2005) (138 DLR A-5, 7/20/05), Watson v. Blue Circle Inc., 324 F.3d 1252, 91 FEP Cases 609 (11th Cir. 2003), and Turnbull v. Topeka State Hosp., 255 F.3d 1238, 86 FEP Cases 569 (10th Cir. 2001) (131 DLR A-1, 7/10/01).

“Thus CFS is liable if it knew or should have known of the harassment and failed to take appropriate actions to halt it,” Gregory wrote. That conclusion also was supported by EEOC regulations, he noted.

The trial court found that the complaints Howard made were “vague and insufficiently detailed for CFS to take action,” Gregory said. In addition, it observed that Howard failed to follow the company's sexual harassment protocol, which required employees to inform the company president, he noted.

“But such reasoning ignores the clear evidence that Howard tried to communicate the nature and extent of the harassment and was effectively ignored by all levels of CFS management who scoffed at him and told him to quit being such a 'crybaby,' ” Gregory stated. For example, he noted, Howard allegedly could not get a “word in edgewise” with Cromer. It was the company's “own decision not to listen to him,” he said.

In Ocheltree, Gregory noted, the court held that harassment claims cannot be avoided “through the adoption of a 'see no evil, hear no evil' strategy.” Instead, knowledge can be imputed to an employer if a “reasonable [person], intent on complying with Title VII, would have known about the harassment,” he said.

Protocol Fell by Wayside.

Although company policy required individuals who became aware of harassment to report it up the chain of command, that protocol fell by the wayside, Gregory said.

The company's policy itself was “somewhat questionable” in requiring employees to report directly to the president, Gregory added. An employee easily might be intimidated, he said, or, as was the case here, “lack knowledge of the higher-ups.”

CFS argued that it acted promptly to protect Howard as soon as it had sufficient knowledge. It offered to transfer him from the second to the first shift but he declined because the first shift interfered with his child care obligations. There also was a dispute on whether his pay decreased, although his hours increased, the court recounted.

Because the offer was take-it-or-leave-it, CFS terminated Howard, the court said. “ 'A remedial measure that makes the victim of sexual harassment worse off is ineffective per se,' ” Gregory wrote, quoting Guess v. Bethlehem Steel Corp., 913 F.2d 463, 53 FEP Cases 1547 (7th Cir. 1990).

Noting the “many alternatives that may have been available,” the court decided that CFS could have asked the hospital to investigate and, if necessary, discipline the employees. Alternatively, it could have petitioned second-shift employees to see if anyone would switch routes with Howard, it said.

CFS argued that its decision to transfer was not an adverse action. However, Gregory noted, in Burlington N. & Santa Fe Ry. v. White 548 U.S. 53, 98 FEP Cases 385 (2006), the U.S. Supreme Court defined “adverse action” as an action that might dissuade a reasonable employee from making or supporting a bias charge.

“Here, a jury could easily conclude that the actions taken by CFS were adverse,” Gregory wrote. Given the salary issue and Howard's child care responsibilities, someone in his position could have found the material effects of the new shift adverse, he stated.

Judges Diana G. Motz and Robert B. King joined the unpublished opinion.

Corbett Anderson, P. David Lopez, Carolyn L. Wheeler, and Lorraine C. Davis of EEOC in Washington, D.C., represented the commission. Sarah G. Drawdy of Drawdy Law Firm in Anderson, S.C., represented CFS.