Cheryl A. DAVIS, Appellee, Thomas R. Davis, Plaintiff, v. CITY OF SIOUX CITY, Appellant

115 F.3d 1365

• Court: Court of Appeals for the Eighth Circuit
• Decided: August 11, 1997
• Docket: 96-2194
• Status: Published

Opinions

BEAM, Circuit Judge.

The City of Sioux City appeals from a jury verdict in favor of Cheryl Davis on her claims of retaliation and hostile environment sexual harassment. We affirm in part and reverse in part.

I. BACKGROUND

Cheryl Davis began working for the City of Sioux City (City) in the City Clerk’s Office in 1977. In 1984, Davis became a Deputy Clerk. From 1982 to 1992, Bill Gross was the City Clerk and Davis’s supervisor. Gross, in turn, reported directly to the City Council, which had sole responsibility fqr hiring, firing and disciplining him.

During the first nine years that Davis worked under Gross, Davis claims Gross engaged in some inappropriate behavior toward her. However, Davis did not feel that this behavior was sufficiently egregious to report. In January 1991, however, Gross suffered a heart attack. Following his return from medical leave, and especially in late 1991 and early 1992, Gross’s inappropriate behavior toward Davis escalated. Such conduct included, but was not limited to: (1) spreading rumors that Davis was having extra-marital affairs; (2) following Davis to the restroom to make sure she was using the restroom and not talking to men instead; (3) calling the head of another department to see whether Davis was on the phone with men from that department; and (4) commenting that Davis’s work attire was inappropriate, e.g., that her skirts were too short. Although Davis discussed this behavior with Gross, the situation did not improve and the behavior did not cease.

Pursuant to the City’s sexual harassment policy that had been in effect since 1988, Davis made a formal complaint about Gross’s behavior on February 12, 1992. In the course of an investigation by city personnel, Gross denied Davis’s allegations. Later, the investigators’ findings were submitted to the City Council. Davis was neither apprised of the investigation nor of the substance of the report. After discussing the report on March 16, 1992, the City Council voted to suspend Gross for one day and put a letter in his file. Davis was not informed of this action at the time.

On the morning of March 25, 1992, Davis submitted a letter of resignation and left her office. That same day, a letter was prepared by the City Council notifying Davis about Gross’s one-day suspension. Later that afternoon, Davis met with an attorney for the City and informed him that she had obtained some of Gross’s personal notes which suggested Gross had lied to investigators. On March 30, 1992, these notes were presented to the City Council. On review of this evidence, the City Council negotiated and concluded a severance agreement with Gross, who left city employment on April 3, 1992.

Davis was then asked to withdraw her resignation. Due to reorganization of city offices, however, Davis’s prior Deputy Clerk position had been eliminated. Davis was offered a new job as a property officer in the Community Development Department. The beginning annual salary at this new position was slightly more than Davis’s previous salary. However, Davis testified that the opportunities for pay increases and job advancement were fewer than in her prior role and that the new position was not a supervisory one, in contrast to her Deputy Clerk responsibilities. Additionally, Davis claims the new position ended within two years unless she successfully completed a civil service exam. Davis accepted the appointment, however, and continues to work in that capacity.

In June 1994, Davis filed sexual harassment and retaliation claims against the City and several of its officers.¹ Davis claimed that Gross’s behavior had created a hostile work environment and that her transfer to a new position was in retaliation for complaining about Gross’s behavior. The claims proceeded to trial by jury. The jury rendered a verdict in favor of Davis on both claims. It awarded damages for back pay, front pay, emotional distress and medical expenses.² The district court then entered final judgment for Davis in the amount of $102,440.00, with interest and costs. The City appeals.

II. DISCUSSION

A. Hostile Environment Jury Instruction

On appeal, the City argues that the district court erred in instructing the jury on the hostile environment sexual harassment claim because the instruction allowed the jury to find for Davis upon a mere finding of agency, without regard to whether Gross’s actions were properly imputed to the City.³ The City argues that the district court should have instructed the jury that liability was only imputed to the City if the City knew or should have known of Gross’s harassment and failed to take proper remedial action. In response, Davis argues that by virtue of Gross’s supervisory position, liability for the harassment should be imputed to the City, regardless of the City’s actual or constructive knowledge of the harassment.

We review the district court’s jury instructions for an abuse of discretion. Sherbert v. Alcan Aluminum Corp., 66 F.3d 965, 968 (8th Cir.1995). Our review must consider whether, when taken as a whole, the instructions fairly and adequately submitted the issues to the jury. Id. In this case, we find they did not.⁴

In the situation of quid pro quo sexual harassment by a supervisor, where thé harassment results in a tangible detriment to the subordinate employee, liability is imputed to the employer. Meritor Sav. Bank, FSB v. Vinson, 477 U.S. 57, 76, 106 S.Ct. 2399, 2410, 91 L.Ed.2d 49 (1986) (Marshall, J., concurring in judgment). In situations such as the present case alleging hostile environment sexual harassment by a supervisor, however, the standard for imputed liability is less clear. See, e.g., Meritor, 477 U.S. at 72, 106 S.Ct. at 2408 (declining to issue a definitive rule on employer liability in such cases and instructing courts to look to agency principles for the appropriate standard); see also Gary v. Long, 59 F.3d 1391, 1398 (D.C.Cir.) (if employer has policy in place which prohibits sexual harassment and puts employee on notice that supervisor lacks authority to engage in such conduct, employer is insulated from liability for supervisor’s actions), cert. denied, — U.S. -, 116 S.Ct. 569, 133 L.Ed.2d 493 (1995); Karibian v. Columbia Univ., 14 F.3d 773, 780 (2d Cir.1994) (employer is liable for supervisor’s harassment when supervisor uses his actual or apparent authority to further the harassment and noting differences between high and low supervisors in this regard); Sauers v. Salt Lake County, 1 F.3d 1122, 1125 (10th Cir.1993) (if employer gives supervisor significant control over plaintiffs hiring, firing and employment conditions, employer is liable for supervisor’s actions without regard to knowledge or recklessness). In our circuit, we have applied the knew or should have known standard to supervisor-induced hostile environment sexual harassment claims. See, e.g., Smith v. St. Louis Univ., 109 F.3d 1261, 1264 (8th Cir.1997); Kinman v. Omaha Pub. Sch. Dist., 94 F.3d 463, 469 (8th Cir.1996); Callanan v. Runyun, 75 F.3d 1293, 1296 (8th Cir.1996); Burns v. McGregor Elec. Indus., Inc., 955 F.2d 559, 564 (8th Cir.1992). Therefore, we reverse and remand for a new trial on Davis’s hostile environment claim.

In Smith v. St. Louis University, we used the knew or should have known standard in a case of supervisor-caused hostile environment sexual harassment. Smith, 109 F.3d at 1264. In Smith, an anesthesiology resident alleged she was harassed by the chairman of the anesthesiology department at the university hospital. In reversing the district court’s grant of summary judgment for the university, we recited the prima facie elements of a hostile environment sexual harassment claim.⁵ One of those elements is that the employer knew or should have known of the harassment yet failed to take proper remedial action. Despite the fact that the plaintiffs supervisor had been the source of the harassment, we did not automatically impute liability to the hospital or alter the knew or should have known language typically used in hostile environment cases.

The Smith ease is consistent with our other decisions. See, e.g., Callanan v. Runyun, 75 F.3d at 1296 (using knew or should have known standard where United States Postal Service employee sued the United States Postal Service for hostile environment sexual harassment caused mainly by her supervisors); Burns v. McGregor Elec. Indus., 955 F.2d at 564 (using knew or should have known standard where plant employee sued employer for hostile environment sexual harassment caused by the president/owner of the company).

Finally, we note the case of Kinman v. Omaha Public School District, 94 F.3d at 469. In Kinman, we were asked to determine the appropriate standard for a school district’s imputed liability under Title IX for a teacher’s hostile environment sexual harassment of a student. Id. at 467. Borrowing what we believed to be the appropriate institutional liability standards from Title YII cases dealing with hostile environment sexual harassment, we used the knew or should have known language.⁶ We stated:

The Supreme Court in Meritor Savings declined to set out a generally applicable standard of liability for employers under Title VII. Instead, the Court suggested that common law agency principles should guide courts in determining employer liability on a case-by-case basis. For example, when a supervisor uses the power delegated specifically to him by his employer to discriminate on the basis of sex, that employee’s actions should be imputed to the employer. On the other hand, in a hostile environment sexual harassment ease, the usual basis for a finding of agency will often disappear. In such cases, the em/ployer should not be held liable unless the employer itself has engaged in some degree of culpable behavior. For example, the employer could be held liable if it knew or should have known of the harassment and failed to take appropriate remedial action.

Id, at 469 (citations and quotations omitted) (emphasis added).⁷

Therefore, we find that the district court abused its discretion in not instructing the jury on the knew or should have known employer liability standard. Consequently, we reverse and remand for a new trial on this issue. On retrial, the jury may well reach the same verdict, but must do so after being instructed on the appropriate liability standards.

B. Retaliation Claim

To prove unlawful retaliation, Davis must show that she complained of discrimination, the City took adverse action against her, and the adverse action was causally related to her complaint. Marzec v. Marsh, 990 F.2d 393, 396 (8th Cir.1993). At trial, Davis argued that her previous position as Deputy Clerk was eliminated, and her transfer to the less desirable property officer position was effectuated, in retaliation for filing her complaint about Gross. The jury agreed and awarded sizable damages. On appeal, the City argues that Davis’s transfer was not sufficiently adverse to support the jury’s verdict.

On review of the jury’s verdict, we view the evidence in the light most favorable to the prevailing party. Elliott v. Byers, 975 F.2d 1375, 1376 (8th Cir.1992). Applying this standard, we find that Davis’s transfer was sufficiently adverse to support the jury’s verdict on the retaliation claim. The City points to Davis’s salary increase as evidence that the job transfer was not adverse. The jury apparently put more weight on Davis’s evidence that the new position lacked supervisory status, had fewer opportunities for salary increases, and offered Davis little opportunity for advancement. The jury was free to credit this evidence and we will not disturb its verdict.

We have considered the remainder of the City’s arguments and find them to be without merit.

III. CONCLUSION

Because the district court erred in instructing the jury on Davis’s hostile environment sexual harassment claim, we reverse and remand that claim for a new trial. Finding no error in the jury’s verdict for Davis on the retaliation claim, we affirm as to that claim. The case is remanded to the district court for proceedings consistent with this opinion.

1 . The individual officers were later dismissed from suit. Additionally, several other claims originally filed by Davis and her husband were dismissed. Davis’s hostile environment sexual harassment and retaliation claims were the only claims that proceeded to trial and are the only claims at issue in this appeal.

2 . On the sexual harassment claim, the jury awarded $4,100 for back pay, $4,090 for medical expenses and $20,000 for emotional distress damages. On the retaliation claim, the jury awarded $4,250 for back pay, $40,000 for front pay and $30,000 for emotional distress damages.

3 .The jury was instructed that its verdict must be for the plaintiff if the following elements were met: (1) plaintiff was subjected to sexually offensive conduct; (2) such conduct was on account of plaintiff's gender; (3) such conduct was sufficiently severe or pervasive so that a reasonable woman would find the work environment to be hostile; (4) plaintiff believed her work environment to be hostile; and (5) "The alleged harasser, Bill Gross, who was the supervisor of the plaintiff, was an agent of the City of Sioux City as described in the next instruction.” The following explanatory instruction was then provided:

With respect to the fifth element of Instruction 9, which is whether or not Bill Gross, who was a supervisor of the plaintiff, was an agent of the City of Sioux City, you should apply the following principles. Defendant City of Sioux City is a corporation. A corporation may act only through natural persons as its agents or employees and, in general, any agent or employee of a corporation may bind the corporation by his or her actions done and statements made while acting within the scope of his or her authority as delegated to him or her by the corporation or within the scope of his or her duties as an employee of the corporation. An employee acting outside his or her delegated authority or outside the scope of his or her duties of employment may not bind the corporation. However, even though an act is forbidden, such as sexual harassment in this case, it may still be within the scope of employment so as to impose liability on the corporation. In deciding whether the act complained of was within the scope of employment you should consider such factors as where the acts took place and all of the other evidence before you.

Addendum to Appellant's Brief at 6-7.

4 . We recognize those cases cited by the dissent which impute liability to an employer for a supervisor's hostile environment sexual harassment of an employee, regardless of the employer's actual or constructive knowledge of the harassment. We decline to follow such reasoning in this case because there is contrary binding precedent in this circuit. Furthermore, imputation of liability to the City in this cáse, without regard to City decision makers’ knowledge of Gross’s acts, would be inappropriate. As the dissent makes clear, the knowledge requirement may be dropped where “someone at the decision-making level in the coiporate hierarchy has committed the wrong." Infra at 1370-71 (quoting Hunter v. Allis-Chalmers Corp., 797 F.2d 1417, 1422 (7th Cir.1986) (emphasis added)). On this record, there is insufficient evidence that Gross was such a person.

Although the record is replete with examples of the decision-making responsibility of the City Council, little is said of Gross’s responsibilities. The City Council ordered an investigation into the harassment; forced Gross to resign; and transferred Davis to a new position. These are but a few examples of the fact that the City Council, not Gross, was vested with control over the City Clerk’s Officé. Indeed, after Gross resigned from the City Clerk position, the entire City Clerk Office was relegated to being one of many departments under the supervision of the City Manager. Such reorganization further demonstrates the relative'powers of the City Clerk and the City Council.

Therefore, notice to the City’s decision-making hierarchy, whether actual or constructive, of Gross's actions should be required. -Any other rule would render the Cily's attempts to prevent sexual harassment, such as its anti-harassment policy and training, a waste of time. Even if the rule urged by the dissent were appropriate for some cases, this is not such a case.

5 . The elements include: (1) plaintiff is in a protected group; (2) plaintiff was subjected to unwelcome harassment; (3) the harassment was based on plaintiff’s sex; (4) the harassment affected a term, condition, or privilege of plaintiff’s employment; and (5) the employer knew or should have known of the harassment and failed to take proper remedial action. Hall v. Gus Constr. Co., 842 F.2d 1010, 1013 (8th Cir.1988).

6 . The dissent uses the Kinman case in support of its position. Omitted from its quoted Kinman text, however, is important prefatory language which explains the Kinman court’s reasoning. After quoting Kinman for the proposition that "when a supervisor uses the power delegated specifically to him by his employer to discriminate on the basis of sex, that employee’s actions should be imputed to the employer,” the dissent then concedes, “[t]he [Kinman] opinion does add that "in a hostile environment sexual harassment case, 'the usual basis for a finding of agency will often disappear.’ ” ” Infra at 1370 (quoting Kinman, 94 F.3d at 469). In the Kinman opinion, however, the second quoted sentence begins with the important phrase, "On the other hand." Kinman, 94 F.3d at 469. The use of this phrase makes clear that the initial language refers to a quid pro quo sexual harassment situation. The "On the other hand” language clearly signals that the following language, unlike the prior language, refers to a hostile environment claim. Consequently, we find the Kinman case supportive of, if not determinative of, our decision today.

7 . Meritor suggests that another example of an employer’s culpable conduct could be the absence of an anti-sexual harassment policy with a supervisor-bypass provision. 477 U.S. at 72, 106 S.Ct. at 2408. Because such a policy was in effect in this case, however, we need not address this issue.