Legal Affairs

Jeff Feuquay, Associate Editor

News From Middle America

I am sometimes stricken by the differences in posture, for want of a better word, among the various Federal Circuit Courts. As probably all of you know, divergence at the Circuit level is often cause for the U.S. Supreme Court to step in and clarify the "law of the land." We in middle America are wont to look to the coasts to determine what trends will reach us in the next few years. But, this approach has failed us locals as regards Circuit Court opinions. In recent years, it seems 10^th Circuit has been the bellwether, its opinions have often let us see a little farther down the path than have the opinions of other Circuits. So, a couple of recent cases from "my" judges…

By now, we all know that an organization is accountable for harassment by a supervisor that results in a tangible employment action, i.e., a significant change in employment status. And, we know that an organization has an affirmative defense when harassment by a supervisor does not result in a tangible employment action. {Review: That defense is (1) the employer exercised reasonable care to prevent and promptly correct any harassment; and (2) the employee unreasonably failed to take advantage of any preventive or corrective opportunities provided by the employer or to avoid harm otherwise.}

But, is an organization accountable for the actions of non-employees, for example, customers? Maybe so, and it appears the standard for liability is reflected in the affirmative defense stated above. If a manager knew about the harassment, and failed to take action, the employer is liable. Poorly trained supervisors are the bane of employers and a godsend for Plaintiffs' attorneys.

Rena Lockard was a waitress at Pizza Hut in Atoka, Oklahoma. She had complained to her supervisor when two men had come into the restaurant on previous occasions and made sexually harassing comments. When the men came in again, none of the wait staff wanted to wait on them. However, the manger ordered Lockard to do so. After one of the men grabbed her hair, she again refused and the manager ordered her to wait on them anyway. When she went back to deliver a pitcher of beer. one of the men pulled her hair and grabbed her breast. She told Jack she was quitting and left the restaurant.

Consistent with the 10^th Circuit decision in this case, EEOC regulations and at least three other courts have held that employers may be responsible for the actions of non-employees when the employer (or a supervisor) knows or should know of the harassment and fails to take immediate and appropriate action. Here, the employer had a policy in place that the supervisor failed to follow - he should have intervened, even to the point of ejecting the customers. Also note that the court said the employer is liable for the damages the employee actually suffers not the damages an average person would suffer. Lockhard had a history of sexual abuse which made this incident particularly traumatic for her, requiring her to he out of work for years. On appeal, the $200,000 jury award was upheld. Rena Lockard v. Pizza Hut, Inc., et al. (10^th Cir. 1998).

While public-sector employers avoid punitive damages under Title VII, the 10^th Circuit's recent analysis of the standard for awarding "punies" in the case of EEOC vs. Wal-Mart Stores, Inc. (10^th Cir. 1999) is instructive. In 1991, Wal-Mart hired Eduardo Amaro, with the knowledge that he was hearing-impaired and would need an interpreter in certain circumstances, including training sessions and meetings. Yet, when Amaro left a mandatory training session requiring viewing of a video tape because there was neither closed-captioning nor an interpreter, and he consequently could not understand the presentation, Amaro's supervisor ordered him to return. A non-certified "ASL" interpreter was offered but Amaro rejected this suggestion.

The next day Amaro was transferred from the receiving department to the maintenance department to perform janitorial duties. Amaro questioned the transfer and again requested an interpreter, but Wiggins responded with a note accusing him of refusing to perform his job. On the following day, Amaro was given a written note that the transfer was necessary for two reasons: because payroll reductions had reduced the staff in the receiving department, while creating an opening in the maintenance department; and because the maintenance position would "involve less communications and be more simple for you." To no avail, Amaro requested an interpreter to explain the transfer, which he viewed as a demotion, and threatened to file a complaint with the EEOC. Dunn thereupon suspended Amaro. About a week later, with an interpreter present, the supervisor met with Amaro, in the presence of two other managerial employees, and again insisted on transferring him to the maintenance crew. Claiming that he was being assigned a dead-end job because he had refused to attend the video training session, Amaro refused the transfer. Dunn immediately terminated Amaro.

Proving once again that poorly trained supervisors put an organization at serious risk, the jury returned a verdict for the plaintiffs, awarding Amaro $3,527.79 in compensatory damages and $75,000 in punitive damages. The district court granted Amaro's motion for attorneys' fees, awarding him a total of $41,063.72 as fees. Wal-Mart appealed the award of punitive damages and attorneys' fees.

The 10^th Circuit followed the guidance recently provided by the U.S. Supreme Court in Kolstad v. American Dental Ass'n, 119 S. Ct. 2118 (1999). There, the high Court addressed "the circumstances under which a jury may consider a request for punitive damages under § 1981a(b)(1)" (Kolstad, 119 S. Ct. at 2123), requiring a showing that the defendant engaged in discriminatory conduct "'with malice or reckless indifference to the federally protected rights of an aggrieved individual.'" Kolstad, 119 S. Ct. at 2124 (quoting 42 U.S.C. § 1981a(b)(1)). The high Court also modified the common law rules of vicarious liability to protect employers who make good faith efforts to comply with Title VII, intending to encourage "employers to adopt antidiscrimination policies and to educate their personnel on [federal] prohibitions" against workplace discrimination. Kolstad, 119 S. Ct. at 2129.

While Wal Mart asserted a generalized policy of equality and respect for the individual, the testimony of Wal-Mart supervisors indicated a serious lack of understanding of the requirements of the ADA. The 10^th Circuit found a broad failure on the part of Wal-Mart to educate its employees, especially its supervisors, on the requirements of the ADA, and to prevent discrimination in the workplace. Simply, to enjoy protection from vicarious punitive liability for the conduct of its managerial agents, it is not enough for an organization to have a policy; the policy must be implemented.

So, the moral of the stories is: Train your supervisors - they are an integral part of the foundation of an effective organization and a weak foundation is a bad thing. See you in court.

Jeff may be reached at P.O. Box 706, Perry, OK 73077-0706; Phone: (580) 336-4908; Fax (580) 336-5366; Net: jeff@feuquay.com. If there is a topic that you would like to see addressed in this column please let him know.