Hatley v. Hilton Hotels

• Court: Court of Appeals for the Fifth Circuit
• Decided: October 1, 2002
• Docket: 01-60289
• Status: Published

Opinion

IN THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT

No. 01-60289

LORI HATLEY; HABAKKUK COOPER,

Plaintiffs-Appellants,

v.

HILTON HOTELS CORP.; BALLY’S OLYMPIA L.P.,

Defendants-Appellees.

--------------------

Appeal from the United States District Court for the Northern District of Mississippi -------------------- October 1, 2002

Before SMITH, BENAVIDES and PARKER, Circuit Judges.

BENAVIDES, Circuit Judge:

Plaintiffs-appellants appeal the district court’s rendering of

judgment as a matter of law in favor of the defendants, on

plaintiffs’ claims of sexual discrimination under Title VII of the

Civil Rights Act of 1964, 42 U.S.C. §§ 2000(e) et seq. and 42

U.S.C. § 1981a, and intentional infliction of emotional distress

under Mississippi state law. The district court’s decision was

rendered after a jury had found in favor of plaintiffs on both

types of claims and awarded $150,000.00 in damages to each. In

addition, the plaintiffs argue that the district court erred by

refusing to instruct the jury on punitive damages. We reverse the

district court’s judgment with respect to the sexual harassment claims, affirm with respect to the claims for intentional

infliction of emotional distress and remand for a new trial on

damages.

Plaintiffs, Lori Hatley (“Hatley”) and Habbakuk Cooper

(“Cooper”), worked as cocktail waitresses at Bally’s Olympia, L.P.

(“Bally’s”) in 1997 and 1998. At the district court, both of them

alleged that they were subjected to sexual harassment from

supervisors, and that even though they reported the harassment,

Bally’s conducted only a sham investigation that ultimately led the

two women to resign.

Judgment as a matter of law should be rendered when “a party

has been fully heard on an issue and there is no legally sufficient

evidentiary basis for a reasonable jury to find for that party on

that issue.” Fed. R. Civ. P. 50(a). “In entertaining a motion for

judgment as a matter of law, the court should review all of the

evidence in the record... [H]owever, the court must draw all

reasonable inferences in favor of the nonmoving party, and it may

not make credibility determinations or weigh the evidence.. . .

Thus, although the court should review the record as a whole, it

must disregard all evidence favorable to the moving party that the

jury is not required to believe.” Reeves v. Sanderson Plumbing

Prods., Inc., 530 U.S. 133, 150 (2000)(emphasis added).

In granting judgment as a matter of law, the district court

found that Bally’s had proven an affirmative defense under

2 Burlington Ind. v. Ellerth, 524 U.S. 742, 765 (1998) because

Bally’s had exercised reasonable care to prevent and correct the

harassment, and the plaintiffs had unreasonably failed to take

advantage of preventive or corrective opportunities offered by

Bally’s. In the alternative, the district court found that the

plaintiffs had not proven that any harassment was severe or

pervasive enough to alter the conditions of their employment.

Applying the standard of review described above, we find that

the district court erred in granting judgment as a matter of law on

the sexual harassment claims. In support of their claims, both

women testified at trial in detail as to pervasive and severe

harassment on the part of Bally’s supervisors, which consisted of

repeated inappropriate touching, vulgar comments, propositioning,

and physical aggression by Jesse Stotts (“Stotts”), their

supervisor, and Charles Perkins (“Perkins”), the Director of Food

and Beverages. The record shows that similar behavior was

described in their depositions and in the written complaints they

submitted to Bally’s. Such evidence is sufficient to support the

jury’s finding that the harassment at issue created a hostile work

environment. See Harris v. Forklift Sys., Inc., 510 U.S. 17, 21-23

(1993); Farpella-Crosby v. Horizon Health Care, 97 F.3d 803, 805-06

(5th Cir. 1996). It also suffices to support a finding that the

defendants were vicariously liable for the harassment. See

Faragher v. City of Boca Raton, 524 U.S. 775, 807 (1998) (“An

3 employer is subject to vicarious liability to a victimized employee

for an actionable hostile environment created by a supervisor with

immediate (or successively higher) authority over the employee.”);

Watts v. Kroger Co., 170 F.3d 505, 509 (5th Cir. 1999).

In addition, the plaintiffs presented sufficient evidence to

support the jury’s finding that Bally’s had not made out the

Ellerth affirmative defense. The defendants presented evidence

that Davidson had interviewed numerous witnesses in the process of

conducting its investigation, and Davidson testified that she had

done everything she could to investigate the complaints. But

plaintiffs submitted evidence that contradicted Bally’s description

of the investigation. Both plaintiffs testified that after they

made formal complaints about the harassment, Bally’s failed to

effectively separate them from the harassing supervisors, and the

harassment continued until their departure. James Bostain, a

beverage supervisor at Bally’s, testified that previous sexual

harassment complaints had “fallen through the cracks” when

submitted to Davidson. And four other cocktail waitresses

testified about their own earlier complaints to Davidson of sexual

harassment, particularly with regard to Stotts’ and Perkins’

behavior, and the failure of Bally’s to respond to such

complaints.1 Such evidence supports the jury’s finding that the

1 Such statements were admissible for purposes of showing that Bally’s was on notice that Stotts and Perkins might have been sexually harassing employees. Green v. Administrators of

4 investigation was inadequate and that Bally’s did not take

reasonable measures to correct or prevent the harassment. While

Bally’s presented evidence to the contrary, the jury was free to

choose between the conflicting versions of events. See Russell v.

McKinney Hosp. Venture, 235 F.3d 219, 225 (5th Cir. 2000). The

district court could not substitute its own determination of the

witnesses’ credibility for that of the jury; in doing so, it erred.

The district court did not err in rendering judgment as a

matter of law on the state claims for intentional infliction of

emotional distress. The standard for intentional infliction of

emotional distress in Mississippi is very high: the defendant's

conduct must be "wanton and wilful and [such that] it would evoke

outrage or revulsion." Leaf River Forest Prods., Inc. v. Ferguson,

662 So.2d 648, 659 (Miss. 1995). “A Mississippi federal court

defined the necessary severity as acts so outrageous in character,

and so extreme in degree, as to go beyond all possible bounds of

decency, and to be regarded as atrocious, and utterly intolerable

in a civilized community.” Speed v. Scott, 787 So.2d 626, 630

(Miss. 2001)(citations omitted). As this Court has noted in

relation to Texas law, “even though conduct may violate Title VII

as sexual harassment, it does not necessarily become intentional

infliction of emotional distress[.]” Prunty v. Arkansas

Freightways, Inc., 16 F.3d 649, 654 (5th Cir. 1994). As a matter

Tulane Educ. Fund, 284 F.3d 642, 660 (5th Cir. 2002).

5 of law, Davidson’s failure to respond adequately to the plaintiffs’

complaints, while negligent, does not rise to the level of

outrageousness necessary to establish intentional infliction of

emotional distress. While the jury could reasonably have

determined that the evidence of Perkins’ and Stotts’ behavior

reached the requisite degree of outrageousness, there was no basis

for finding Bally’s vicariously liable for intentional infliction

of emotional distress. Under Mississippi law, “an employer is not

liable for an employee's intentional or criminal acts unless the

employer either authorized or ratified the act.” Tichenor v. Roman

Catholic Church of Archdiocese of New Orleans, 32 F.3d 953, 959

(5th Cir. 1994); McClinton v. Delta Pride Catfish, Inc., 792 So.2d

968, 976 (Miss. 2001).2 The plaintiffs presented no evidence that

Bally’s authorized the harassment, and the only evidence of

ratification was that Bally’s did not fire the harassers - a fact

that is insufficient on its own to establish ratification. Craft

v. Magnolia Stores Co., 138 So. 405, 406 (Miss. 1931).

Finally, the district court did not err in failing to instruct

the jury on punitive damages. “An employer is liable for punitive

damages in a Title VII action if (1) its agent is employed in a

position of managerial capacity, (2) the agent acts within the

scope of employment, and (3) the agent acts with malice or reckless

2 As stated previously, Bally’s could be held vicariously liable for the sexual harassment itself. Faragher, 524 U.S. at 807.

6 indifference towards the federally protected rights of the

plaintiff. However, such liability may not be imputed if the

agent's actions are contrary to the employer's good faith effort to

comply with” Title VII of the Civil Rights Act. Green, 284 F.3d at

653 (2002)(citing Kolstad v. Amer. Dental Ass’n., 527 U.S. 526

(1999)). Indeed, the Supreme Court has stated that “in the

punitive damages context, an employer may not be vicariously liable

for the discriminatory employment decisions of managerial agents

where these decisions are contrary to the employer's good-faith

efforts to comply with Title VII.” Kolstad, 527 U.S. at 545. In

the present case, Bally’s made out the “good faith” defense to

punitive damages. Davidson was arguably an agent in a managerial

capacity, and she may have acted with malice or reckless

indifference to the rights of the plaintiffs within the scope of

her employment. However, these actions were contrary to Bally’s

good faith effort to prevent sexual harassment in the workplace, as

is evidenced by the fact that Bally’s had a well-publicized policy

forbidding sexual harassment, gave training on sexual harassment to

new employees, established a grievance procedure for sexual

harassment complaints, and initiated an investigation of the

plaintiffs’ complaints. These actions evidence a good faith

effort on the part of Bally’s to prevent and punish sexual

harassment. As a result, an instruction on punitive damages was

not required.

7 The jury verdict awarded each plaintiff $150,000 in

compensatory damages for both the Title VII claims and the claims

for intentional infliction of emotional distress. Given that it is

impossible to determine what portion of the damages corresponds to

the sexual harassment claims, we remand for a new trial solely on

the issue of compensatory damages for the sexual harassment.

CONCLUSION

The evidence presented at trial was such that a reasonable

juror could conclude that the plaintiffs had been sexually harassed

and that the defendants had not established an affirmative defense.

Consequently, the district court erred in granting judgment as a

matter of law on the sexual harassment claims. However, the

district court did not err in granting judgment as a matter of law

on the state law claims for intentional infliction of emotional

distress or in refusing to instruct the jury on punitive damages.

Consequently, the district court’s decision is REVERSED in part,

AFFIRMED in part, and REMANDED for a new trial solely to determine

the amount of compensatory damages for the sexual harassment claims.