Means v. Shyam

• Court: District Court, D. New Hampshire
• Decided: September 17, 1998
• Docket: CV-97-212-M
• Status: Published

Opinion

Means v. Shyam CV-97-212-M 09/17/98 UNITED STATES DISTRICT COURT

DISTRICT OF NEW HAMPSHIRE

Jessica Means, Plaintiff,

v. Civil No. 97-212-M

Shvam Corporation and Charles Estes, Defendants.

O R D E R

Plaintiff, Jessica Means, brings this action seeking

compensatory and punitive damages under Title VII of the Civil

Rights Act of 1964, 42 U.S.C. § 2000e. She also seeks damages

under New Hampshire common law for intentional infliction of

emotional distress. She claims that while working at the Best

Western Hotel in Campton, New Hampshire, she was repeatedly

sexually harassed by the hotel's food and beverage manager,

Charles Estes.1

By prior order, the court dismissed plaintiff's intentional

infliction of emotional distress claim against Shyam Corporation

(which operated the hotel under a franchise agreement with Best

Western International). Means v. Shyam Corporation, No. 97-212-

M, slip op. (D.N.H. Nov. 12, 1997). Shyam Corporation now moves

for summary judgment with regard to plaintiff's Title VII claim.

Alternatively, it asserts that it is entitled to judgment as a

1 Estes was eventually incarcerated at the New Hampshire Prison, apparently as either a direct or indirect result of plaintiff's allegations of sexual assault. matter of law as to plaintiff's claim for punitive damages.

Plaintiff objects.

Standard of Review

Summary judgment is appropriate when the record reveals "no

genuine issue as to any material fact and . . . the moving party

is entitled to a judgment as a matter of law." Fed. R. Civ. P.

56(c). When ruling upon a party's motion for summary judgment,

the court must "view the entire record in the light most

hospitable to the party opposing summary judgment, indulging all

reasonable inferences in that party's favor." Griqqs-Rvan v.

Smith, 904 F.2d 112, 115 (1st Cir. 1990).

Discussion

I. An Employer's Affirmative Defense under Title VI I .

Relying upon two recent Supreme Court decisions, Shyam

Corporation asserts that it is entitled to judgment as a matter

of law with regard to plaintiff's Title VII claims. See

Burlington Industries, Inc. v. Ellerth, 118 S.Ct. 2257 (1998);

Faragher v. City of Boca Raton, 118 S.Ct. 2275 (1998). In

Burlington Industries and Faragher, the Court outlined the scope

of an employer's liability for sexual harassment committed by one

of its employees, as well as the affirmative defense available to

that employer.2

2 The affirmative defense discussed by the Court is available to the employer only when there is no adverse employment action taken against the employee/victim. See

2 An 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. When no tangible employment action is taken, a defending employer may raise an affirmative defense to liability or damages, subject to proof by a preponderance of the evidence, see Fed. Rule Civ. Proc. 8(c). The defense comprises two necessary elements: (a) that the employer exercised reasonable care to prevent and correct promptly any sexually harassing behavior, and (b) that the plaintiff employee unreasonably failed to take advantage of any preventive or corrective opportunities provided by the employer or to avoid harm otherwise.

Burlington Industries, 118 S.Ct. at 2270. See also Faragher, 118

S.Ct. at 2292-93.

Here, it is undisputed that Shyam Corporation had no written

sexual harassment policy during (and even as late as a year

following) plaintiff's employment. See, e.g.. Defendant's

memorandum (document no. 40) at 3. Nor were employees at the

hotel specifically told how they could seek to resolve sexual

harassment issues in the workplace. Nevertheless, defendant

contends that it meets the first element of the two-part

affirmative defense outlined by the Supreme Court because its

employees were instructed in a general way to contact its

corporate officers by telephone in the event that they had "any

Burlington Industries, 118 S.Ct. at 2269-70. Because she claims to have been constructively discharged as a result of the ongoing hostile work environment which Shyam allegedly permitted to exist, plaintiff asserts that this defense is not available to Shyam Corporation. At this juncture, however, the court need not rule on the doubtful proposition that constructive discharge constitutes a "tangible employment action" within the meaning ascribed to that phrase by the Supreme Court.

3 concerns or complaints." Id. See also Defendant's memorandum at

11 ("[I]t is undisputed that Mr. Bhakta, Mr. Patel and Ms. Estes

were open to employee concerns. All were available either in

person or by telephone. There is no dispute that Ms. Means was

aware of this policy and failed to take advantage of it.") .

The "policy" implemented by Shyam Corporation likely fails

to constitute "reasonable care to prevent and correct promptly

any sexually harassing behavior." Burlington Industries, 118

S.Ct. at 2270. To be effective, an employer's efforts to prevent

and promptly correct sexually harassing behavior must be

meaningful. On this undeveloped record, Shyam Corporation's

efforts in that regard appear to fall short of the mark. In any

event, putting the best face on it, whether Shyam Corporation's

"policy" (i.e., providing employees with telephone numbers at

which they could reach corporate officers in the event of any

problems) constitutes a "proven, effective mechanism for

reporting and resolving complaints of sexual harassment,

available to the employee without undue risk or expense,"

Faragher, 118 S.Ct. at 2292, presents an issue of material fact.

Having failed to demonstrate on undisputed facts and as a matter

of law that it meets the first element of the two-part

affirmative defense, Shyam Corporation is not entitled to summary

judgment.

II. Punitive Damages.

4 To prevail on her claim for punitive damages, plaintiff must

demonstrate that Shyam Corporation engaged in discriminatory

practices with malice or with reckless indifference to her

federally protected rights. See 42 U.S.C. § 1981a(b)(1).3 See

also McKinnon v. Kwonq Wah Restaurant, 83 F.3d 498, 507 (1st Cir.

1996) ("Although compensatory damages are available to victims of

intentional discrimination under Title VII, a plaintiff must

demonstrate that the defendant acted with malice or reckless

indifference before he or she can receive punitive damages.").

Shyam Corporation claims that plaintiff cannot, as a matter

of law, carry that burden. It contends that, at most, it had

constructive knowledge of Estes' unlawful work-place behavior

and, therefore, at worst its conduct amounted to nothing more

than simple negligence. It argues that mere constructive

knowledge of workplace harassment, or even negligence, on the

part of an employer is insufficient to support an award of

punitive damages. See, e.g., Splunqe v. Shonev's, Inc., 97 F.3d

3 The 1991 amendments to Title VII of the Civil Rights Act provide that a prevailing plaintiff may, under certain limited circumstances, recover punitive damages.

A complaining party may recover punitive damages under this section against a respondent (other than a government, governmental agency, or political subdivision) if the complaining party demonstrates that the respondent engaged in a discriminatory practice or discriminatory practices with malice or with reckless indifference to the federally protected rights of an aggrieved individual.

42 U.S.C. § 1981a (b) (1) .

5 488, 490-91 (11th Cir. 1996) ("Therefore, considering the plain

language of the statute and the limited case law, we conclude

that, at least ordinarily, constructive knowledge alone is

insufficient to authorize the award of punitive damages under

section 1981a."). The Shonev's court did, however, suggest that

an employer with constructive knowledge of ongoing sexual

harassment in the workplace may be liable for punitive damages if

its conduct may fairly be viewed as more than mere negligence

and, instead, falls into the realm of "willful blindness." Id.,

at 491.4

In response to Shyam Corporation's legal arguments,

plaintiff points to several factual allegations from which she

claims a reasonable trier of fact could conclude that defendant

acted with the reguisite reckless disregard for her federally

protected rights. First, she relies heavily upon the fact that

Shyam Corporation had no sexual harassment policy in place during

her employment. Plaintiff also points to her allegation that she

was never advised of her federally protected rights and that she

was never specifically told that a complaint against her

immediate supervisor would be promptly and fairly investigated

4 The Shonev's court, like most other courts that have addressed this issue, also held that the state of mind of the harassing employee would not be imputed to the employer. Id., at 491. Instead, the plaintiffs were reguired to demonstrate that the employer itself acted with malice or reckless disregard for their federally protected rights. Again, this holding reinforces the notion that, at least ordinarily, simple negligence on the part of an employer is insufficient to support an award of punitive damages.

6 without any adverse action against her. Additionally, plaintiff

says that it is relevant that Shyam Corporation allegedly

conducted no sexual harassment awareness training for its

employees and failed to properly supervise its management

personnel regarding sexual harassment.

Plaintiff also says that despite the fact that the

principals of Shyam Corporation have had substantial experience

in forming corporations which own and operate hotels, they

apparently never inguired into their legal obligations under

Title VII (or, alternatively, then "disregarded" those

obligations). See, e.g.. Exhibit A to plaintiff's memo

(Deposition of Ravi Bhakta) at 78-79 (acknowledging that he first

learned of Title VII during televised Senate confirmation

hearings, but to date none of his corporations or partnerships

have adopted sexual harassment policies). Finally, and perhaps

more to the point, plaintiff claims that Shyam failed to conduct

any meaningful independent investigation into her complaints

after she reported Estes' conduct, and never offered to bring her

back to work with assurances that Estes would be removed from his

position.5

5 Although plaintiff says that defendant conducted no meaningful "independent investigation" into her allegations (which she apparently only disclosed after she guit her job), Shyam Corporation claims to have contacted the local police department and learned that police were conducting a criminal investigation into Estes' conduct. Mr. Bhakta and Mr. Patel say that they offered the corporation's cooperation. They also say that they were counseled by local law enforcement officers to defer making any decision as to Estes' continued employment with

7 There is, of course, no affirmative obligation imposed by

Title VII requiring employers to implement sexual harassment

policies, conduct sexual harassment awareness training, or inform

employees of their federally protected rights. Based upon the

factual record as it presently stands, and crediting plaintiff's

properly supported allegations as true, it is perhaps possible

that a reasonable trier of fact could conclude that Shyam's

conduct (largely in the form of inaction) constituted a "reckless

indifference to the [plaintiff's] federally protected rights."

42 U.S.C. § 1981a. See, e.g., Harris v. L & L Wings, Inc., 132

F.3d 978, 983 (4th Cir. 1997) (identifying three factors relevant

in an inquiry into whether an employer acted with malice or

reckless indifference). Plaintiff's factual allegations do paint

a picture of a corporation largely ignorant of Title VII

concerns, but which nevertheless took some modest steps to insure

that its employees were aware of direct avenues by which they

could report any difficulties relating to the conditions of their

employment.

To be sure, at least at this juncture, it appears doubtful

that Shyam Corporation's conduct was sufficiently egregious or

outrageous to justify an award of punitive damages. See, e.g.,

McKinnon, 83 F.3d at 508 ("That the defendants' acts 'were

patently offensive' and repeated, as the plaintiffs argue, may

the company until after police had completed their investigation. In May of 1994, following Estes' guilty plea to charges of criminal assault, the corporation terminated his employment. provide cause for compensatory damages but do not necessarily

mandate a finding of punitive damages. . . . Punitive damages are

assessed as punishment or as an example and warning to others.

They are therefore not favored in the law and are allowed only

with caution and within normal limits."). Nevertheless, the

undeveloped nature of the factual record counsels in favor of

allowing plaintiff an opportunity to present relevant evidence to

a jury. While plaintiff's evidence of malice and/or reckless

indifference on the part of Shyam Corporation as presently

revealed is, at best, weak, it is barely sufficient to avoid

summary judgment (perhaps viewing it in an overly generous way at

this point).

At trial, after plaintiff has introduced and fully developed

all her evidence of Shyam Corporation's alleged malice and/or

reckless indifference, the court will be in a better position to

determine whether, as a matter of law, she is entitled to an

instruction on punitive damages. Accordingly, defendant's motion

for judgment as a matter of law with regard to plaintiff's claim

for punitive damages is, for now, denied. Defendant is, of

course, free to renew its motion at the close of plaintiff's

evidence or in the context of the charging conference.

Conclusion

Because defendant has failed to demonstrate that it

"exercised reasonable care to prevent and correct promptly any sexually harassing behavior," Burlington Industries, 118 S.Ct. at

2270 (emphasis supplied), it is not entitled to judgment as a

matter of law as to plaintiff's Title VII claim. And, viewing

the pleadings in the light most favorable to plaintiff, it is

conceivable that a reasonable trier of fact might conclude that

defendant's conduct constituted more than simple negligence and,

instead, amounted to a reckless disregard for plaintiff's

federally protected rights. Accordingly, defendant's motion for

summary judgment (document no. 40) is denied.

SO ORDERED

Steven J. McAuliffe United States District Judge

September 17, 1998

cc: Steven M. Latici, Esg. John F. Bisson, Esg. Charles Estes