Durham Life Insurance v. Evans

Opinions of the United
1999 Decisions States Court of Appeals
for the Third Circuit
1-15-1999
Durham Life Ins Co v. Evans
Precedential or Non-Precedential:
Docket 97-1683,97-1712
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Filed January 15, 1999
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
NOS. 97-1683 and 97-1712
DURHAM LIFE INSURANCE COMPANY
v.
DIANNE EVANS
(E.D. Pa. No. 94-cv-00801)
DIANNE EVANS, Appellant in No. 97-1712
v.
PEOPLES SECURITY LIFE INSURANCE COMPANY
(E.D. Pa. No. 95-cv-02681)
Durham Life Insurance Company and Peoples Security Life
Insurance Company, Appellants in No. 97-1683
On Appeal From the United States District Court
For the Eastern District of Pennsylvania
Argued: September 24, 1998
Before: BECKER, Chief Judge, WEIS and GARTH,
Circuit Judges.
(Filed January 15, 1999)
DANIEL MARINO, ESQUIRE
(ARGUED)
Seyfarth, Shaw, Fairweather &
Geraldson
815 Connecticut Avenue, NW
Suite 500
Washington, DC 20006-4004
Attorney for Durham Life Insurance
Company and Peoples Security Life
Insurance Company
RAYMOND J. QUAGLIA, ESQUIRE
(ARGUED)
1313 Race Street
Philadelphia, PA 19107
Attorney for Dianne Evans
OPINION OF THE COURT
BECKER, Chief Judge.
These cross-appeals arise from the District Court's
judgment following a bench trial in favor of Dianne Evans
and against Durham Life Insurance Company ("Durham")
and Peoples Security Life Insurance Company ("Peoples") on
Evans's Title VII sex discrimination counterclaim; in favor
of Durham/Peoples on Evans's claim for punitive damages;
and in favor of Evans on Durham/Peoples' claim for
Evans's breach of a non-competition agreement. Most
importantly, the appeal of Durham/Peoples, which comes
in the wake of the Supreme Court's landmark sexual
harassment decisions last Term, Faragher v. City of Boca
Raton, 118 S. Ct. 2275 (1998), and Burlington Industries,
Inc. v. Ellerth, 118 S. Ct. 2257 (1998), requires us to
explicate several of the ways in which employers may be
held liable under Faragher and Ellerth. In the course of so
doing, we must also flesh out the notion of tangible adverse
action.
Evans was a successful life insurance salesperson
earning close to six figures with Metropolitan Life Insurance
2
Co. when she was recruited away and began working for
Durham. She enjoyed even greater success in herfirst two
years with Durham, but when Durham was acquired by
Peoples and new management took over, her situation
changed for the worse. According to Evans's trial evidence,
essentially credited by the District Court, the new
management resented her for being a successful woman
and set out to undermine her, humiliating her personally
with sexist remarks and crude sexual advances, and
stripping her of the support she needed to do her job,
support that had been a negotiated condition of her
employment at Durham. Ultimately, when her private office
was taken away and critical files mysteriously disappeared,
she resigned and began to work for a competing insurance
company. Durham thereupon sued Evans, seeking an
injunction and damages for breach of a noncompetition
agreement Evans had signed while in Durham's employ.
Evans counterclaimed, alleging sex discrimination,
defamation, and intentional infliction of emotional distress.
The District Court found that the noncompetition
agreement was no longer in effect and that Evans had
suffered a hostile work environment. It entered judgment in
her favor for $310,156 in lost earnings and fringe benefits
and $100,000 for intentional infliction of emotional
distress. It found against Evans on her defamation claim.
Durham makes numerous claims on appeal. (We will now
refer to Durham and Peoples, Durham's successor, as
"Durham.") It challenges the District Court's fact finding on
the ground that the allegedly offending incidents were so
few and far between and their veracity so suspect that we
should set the verdict aside as clearly erroneous. We
decline that invitation. Durham also disputes its liability for
the acts of its supervisory employees under Ellerth and
Faragher. We conclude that Durham is not entitled to the
affirmative defense that Evans unreasonably failed to use
an available effective sexual harassment policy because the
defense is only available in the absence of tangible adverse
employment action, and Evans suffered such adverse
action. The concept of a tangible adverse employment
action is not limited to changes in compensation, although
Evans's pay was certainly affected by the actions taken
3
against her. "Tangible adverse employment action" includes
the loss of significant job benefits or characteristics, such
as the resources necessary for an employee to do his or her
job; that Evans suffered such loss is detailed infra.
Durham also contends that it is not liable for intentional
infliction of emotional distress because Pennsylvania
workers' compensation law preempts Evans's claim.
Ultimately we need not resolve this difficult question,
because we find that the award may be upheld under Title
VII. Additionally, Evans challenges the District Court's
refusal to award punitive damages, but we find this ruling
to have been fairly within the court's discretion. Finally,
Durham takes issue with the District Court's back pay
award, but we uphold that also as within the court's
discretion, particularly given Durham's acts after Evans left
Durham's employment.
Durham alleges that Evans was bound by a covenant not
to compete and argues that the collective bargaining
agreement required her to grieve rather than sue. The
District Court found that a vice president's statement to
Evans that the covenant and the collective bargaining
agreement were no longer in force estops Durham from
enforcing them against her. This finding is not clearly
erroneous. In view of all these conclusions, we will affirm
the judgment of the District Court in its entirety.
I. Facts and Procedural History
The evidence adduced at trial, which we view in the light
most favorable to Evans, the prevailing party at trial, see
Keith v. Truck Stops Corp., 909 F.2d 743, 745 (3d Cir.
1990), showed the following facts. Evans was an extremely
successful life insurance salesperson. She worked at Met
Life for seventeen years, and in her last few years there she
consistently earned $90,000 per year. Durham recruited
her in 1991, promising her that she would have her own
office and secretary, as well as unlimited phone and mailing
costs paid for by Durham. When Evans joined Durham, she
signed a non-competition agreement, which provided that,
if she left, she could not sell insurance to Durham
customers for a limited time. At Durham, she was covered
4
by the collective bargaining agreement in place between
Durham and its agents while that agreement was in effect.
Durham was a "home service" or "debit" insurance
company whose business generally came from door-to-door
sales. Evans, however, was recruited as an "ordinary life
agent," which meant that she sold a different type of policy.
She worked almost exclusively from her office, encouraging
existing debit customers to upgrade their policies. Evans's
special skills and support system facilitated her success in
the new job. She earned $128,000 in 1991 and $119,000 in
1992, mainly from commissions.
In 1991, Capitol Holding Company purchased Durham.
In 1992, Capitol assigned the management of Durham to
Peoples Security Life Insurance Company, and Peoples
managers took over in October. Evans was the only full-
time female life insurance agent at that location; there were
thirty male agents. The collective bargaining agreement
between Durham and its agents expired in November 1992.
When it expired, Peoples unilaterally reduced the
compensation rate of the agents. At that point, Tom
Biancardi, a regional vice-president who was then
negotiating with the union, told Evans that the collective
bargaining agreement and the non-competition agreement
were no longer in force. After that time, no new collective
bargaining agreement was put in place.
The new managers, particularly William McKaskill and
Doug Sebastionelli, believed that Evans should not
continue to receive special treatment.1 They told her that
she did not fit the profile for a debit life insurance
company: Her clothes and shoes were too expensive and
she dressed too well for the job. McKaskill told her that she
"made too much money for a goddamn woman." In March
1993, William Owens, the acting agency manager, asked
Evans to go dancing "into the fields with him" and
reminded her that he had the power to fire her if she did
not behave as he wished. The next morning, he placed a
newspaper article on her desk discussing a large verdict
_________________________________________________________________
1. McKaskill and Sebastionelli were Associate Customer Service Unit
Leaders who were three levels above Evans in the hierarchy until mid-
1993, when one of those levels was eliminated.
5
that Peoples had obtained against another life insurance
company because of an agent who moved business from
Peoples to the other company. At that time, Owens told her
that if she reported the previous night's incident or if she
quit and tried to take her business with her, Peoples would
sue and "attach her house before she left the courtroom."
Evans was frightened but did nothing because she wanted
to succeed in the restructured company.
Evans suffered repeated slights from the new
management. At an awards dinner, the top-selling agents
were honored for selling more than $25,000 in premiums
during a set period of time. Evans was the top producer,
but while the exact sales numbers of the male agents were
announced, Evans was only identified as selling in excess
of the required minimum. Evans felt that she had been
humiliated in front of her colleagues and her son, who was
also present. At a training session in June 1993, she was
publicly mocked for her walk and her speech by Chuck
Gardner, an agency sales manager. Evans tried to retain
the business of an important client, the Mercy Votech
School, but the school administrators had questions that
Evans needed legal help to answer. Although she was
promised legal assistance from the home office, no one
showed up at the scheduled meeting and Evans lost the
account. Evans testified that male agents routinely received
legal help when necessary. When she tried to explain to
McKaskill what had happened, he cut her off and asked,
"What do you know about annuities, you're only a woman."
The new managers fired Evans's secretary and attempted
to get her to leave her private office. McKaskill came into
her office and began to use it as his own on several
occasions, disrupting Evans's work and ignoring her
discomfort and embarrassment. In June or July 1993,
McKaskill grabbed Evans's buttocks from behind while she
was bending over her files and told her that she smelled
good. She immediately left the office and never entered it
again when McKaskill was at her desk. She did not report
the incident because she wanted to avoid further
humiliation and because she believed that McKaskill's
position would allow him to decide her fate.
6
Management assigned Evans numerous "lapsed books,"
policies that were no longer active because the policy-
holders had switched insurance companies. The agent
assigned to a lapsed book was supposed to try to reactivate
the policies. These were debit policies rather than the
ordinary policies with which Evans was used to dealing.
Evans initially responded to the changes by working hard
on the lapsed books and performing well. However, because
of the way commissions were calculated, the assignment of
lapsed books had a severe negative impact on the
calculation of Evans's bonus. Male agents were not
assigned a similarly heavy load of lapsed books.
The problems came to a head in September 1993, when
Jim La Grossa, the agency manager, told Evans that she
was being transferred to another location. He instructed her
to clear her furniture out of her office and assemble her
files for the move. Evans complied, but when she returned
on the next work day, she was informed that she was not
moving at all. She was advised by her manager, John
Heyman, that she no longer had an office and that her
former office was now his conference room. La Grossa
testified that Owens and McKaskill had pressured him for
months to get Evans out of her office.
The "non-move" had an even more important
consequence than Evans's public loss of her office. In
preparation for the move, Evans had assembled all her
files. Her files were uniquely important to her because, in
the transition from the Durham computer system to the
Peoples system, billing problems had developed for certain
customer accounts. As a result, Evans was authorized to
open a special bank account in which she would deposit
pre-paid premiums and then pay the premiums as they
came due using money orders and small amounts of cash,
which were kept with her files. On the day she was told
that she had lost her office, she also discovered that her
files, including the money orders and cash, were gone. At
that point, Evans concluded that she had been effectively
fired because it was impossible for her to work without her
files. A few days later, Evans sent a resignation letter
stating that she was resigning based on the sex
discrimination she had suffered and that she would pursue
her legal remedies.
7
After her resignation letter, Evans three times requested
a final audit of her accounts. It is industry policy, and also
the policy of both Durham and Peoples, to allow an agent
a final exit audit upon request when he or she leaves an
insurance company's employ. It was Heyman's duty as
agency manager to assume responsibility for Evans'sfiles
after she left the company until another salesperson was
assigned her customers and "book of business." Heyman
refused her audit requests because he believed that she
was not entitled to an audit and because he was already
conducting an audit of Evans's debit book of business.
Heyman knew, however, that the debit book comprised only
a part of her accounts in view of her large number of
ordinary policies; 575 of her 1272 customers were ordinary
life accounts.
Evans then took a position at the Paul Revere Life
Insurance Company. Heyman threatened to sue her if she
moved any business from Durham/Peoples to Paul Revere.
At Paul Revere, Evans replaced sixteen Durham/Peoples
policies with Paul Revere policies. A male agent, Tom
Burke, had moved to a different insurance company and
replaced 170 Durham/Peoples policies, and Durham had
not taken any action against him. Instead, Durham had
assigned those lapsed policies to Evans.
If Heyman had conducted a final audit or allowed Evans
access to her files, the billing problems that soon developed
could have been prevented. Because he did nothing,
however, customers began to receive notices that there were
problems with their policies. Durham then wrote to all of
Evans's customers that Evans had terminated her
employment with Durham and could no longer act on
Durham's behalf. The letter precipitated numerous
inquiries about pre-payments that had been made to
Evans. Because of the billing problems, these inquiries
soon became complaints, and Durham forwarded the
complaints to the Pennsylvania Insurance Department. In
approximately three-fourths of the complaint cases, Evans
had worked with her sales manager, Tom Carl, on the
policies, and on many Carl had signed the application and
policy, but only Evans was mentioned in the complaint
letters.
8
Early in 1994, Durham sued Evans to enforce the
covenant not to compete, seeking an injunction and
damages for breach and alleging that Evans had
intentionally interfered with a contract (the non-competition
agreement). Also in 1994, Heyman sent a letter to the
Pennsylvania Insurance Department that inaccurately
stated that Evans had filed only two of five replacement
forms required to replace certain policies. Heyman knew
that failure to file replacement forms was a serious offense
that would subject Evans to investigation and probably
sanctions by the Insurance Department.
Before the events described above, Evans was in good
mental health. After Peoples took over, she began to suffer
from chest pains, severe headaches, nausea, and shortness
of breath. When she started work at Paul Revere, her health
improved, and she was in the management program at Paul
Revere. She was the leading agency producer there until
the litigation and the complaints to the Insurance
Department began. After the lawsuit began and she learned
of the complaints, her performance at Paul Revere declined
sharply. She became absentminded, unable to concentrate
on her duties, and obsessed with the litigation. According
to Paul Revere, Evans no longer met the company's
production requirements. She was dropped from the
management program in late 1994, and her income was
only $48,000 that year. In 1995, it dropped to $38,000, and
it declined further to $28,000 the next year. Paul Revere
estimated that she would only produce $15,000 in
premiums for 1997. She would have been discharged but
for the fact that she is on partial disability. Currently, she
requires continuing mental health treatment to deal with
her distress and depression.
II. Fact Finding in the District Court
In order to reject a district court's findings of fact, the
reviewing court, after examining all the evidence, must be
left with a definite and firm conviction that a mistake has
been committed. When there are two permissible views of
the evidence, the district court's choice between them
cannot be clearly erroneous. See Ezold v. Wolf, Block,
Schorr & Solis-Cohen, 983 F.2d 509, 525 (3d Cir. 1992).
9
Much of Evans's case against Durham comes down to a
credibility contest. Evans says that certain incidents
occurred and that Durham's managers had discriminatory
motives. Durham disputes those claims, and argues, even
on appeal, that Evans's factual position is so weak as to be
unsupportable. Since Title VII does not have a
corroboration requirement, Durham's attempts to resurrect
its factual claims on appeal are unavailing.2 Although
testimony on Durham's side contradicts Evans's, her story
is facially plausible, and the district judge credited it. We
see no basis for finding clear error here. See Anderson v.
City of Bessemer City, 470 U.S. 564, 575 (1985) (when a
district judge credits one of two opposed coherent and
facially plausible stories and the story is not contradicted
by extrinsic evidence, "that finding, if not internally
inconsistent, can virtually never be clear error").
Durham complains that the District Court adopted
Evans's proposed findings of fact with little alteration.
Although we do not encourage verbatim adoption of
proposed findings of fact, their review requires no greater
scrutiny on appeal than other fact finding. See Lansford-
Coaldale Water Auth. v. Tonolli Corp., 4 F.3d 1209, 1215
(3d Cir. 1993). The District Court's discussion following its
findings of fact demonstrated a keen familiarity with the
record. Moreover, the court declined to adopt all of Evans's
proposed findings, which shows that it was exercising
independent judgment.3
_________________________________________________________________
2. The McKaskill incident is an example. Evans testified that McKaskill
grabbed her buttocks from behind. No one else witnessed it and she did
not tell anyone about it until the lawsuit. Durham argues that she is
therefore not credible. Durham repeats these arguments about many of
the specific instances of harassment to which Evans testified. This
strategem fails. Credibility determinations are for the finder of fact.
See
United States v. Bethancourt, 65 F.3d 1074, 1078 (3d Cir. 1995);
Government of Virgin Islands v. Gereau, 502 F.2d 914, 921 (3d Cir.
1974). If the District Court found Evans a credible witness, it was
perfectly correct to credit Evans's account even if she told no one at the
time the harassment occurred. The only "prompt complaint" requirement
in Title VII is the statute of limitations, and Evans's counterclaim was
filed well within the statutory period.
3. Durham objects that some of the findings of fact contradict Evans's
own testimony about the timeline of events. Evans was occasionally
10
Durham's main objection to the District Court'sfindings
appears to be that the court aggregated numerous events to
support its finding of a hostile work environment. Some of
these events were apparently triggered by sexual desire,
some were sexually hostile, some were non-sexual but
gender-based, and others were facially neutral. Wefind no
error, because Title VII may be applied to all of these types
of conduct.
Title VII prohibits sex discrimination. Although"sex" has
several common meanings, in Title VII it describes a
personal characteristic, like race or religion. We generally
presume that sexual advances of the kind alleged in this
case are sex-based, whether the motivation is desire or
hatred. Likewise, hostile or paternalistic acts based on
perceptions about womanhood or manhood are sex-based
or "gender-based."
"Gender" has often been used to distinguish socially- or
culturally-based differences between men and women from
biologically-based sex differences, but we have not
considered "sex" and "gender" to be distinct concepts for
Title VII purposes. See Price Waterhouse v. Hopkins, 490
U.S. 228, 250-51 (1989) (plurality opinion) (holding that
reliance on gendered stereotypes of appropriate female
behavior is sex discrimination); cf. Sheridan v. E.I. Dupont
De Nemours & Co., 100 F.3d 1061 (3d Cir. 1996) (en banc)
(using "sex" and "gender" interchangeably), cert. denied,
117 S. Ct. 2532 (1997); Wilson v. Susquehanna Township
_________________________________________________________________
confused about when exactly certain incidents occurred, but it was
hardly unreasonable for the court to have selected one of the timelines
she offered. Moreover, Durham offers no explanation of why it would
matter whether one of her superiors made his "pass" in May rather than
June, which is the most that Durham's argument can be said to prove.
Arguably, the more distant in time the event was from Evans's
resignation, the less plausible is her claim that discrimination led her
to
quit, but since she alleged a continuing, long-term series of harassing
events not limited to sexual propositions, feuding over dates is
unhelpful. See Hassine v. Jeffes, 846 F.2d 169, 172 n.1 (3d Cir. 1988)
(adoption of defendant's proposed findings of fact that contained
inconsistencies with defendant's earlier admissions was legitimate and
did not "so undermine the ultimate conclusion that the district court
reached" as to require reversal).
11
Police Dep't, 55 F.3d 126 (3d Cir. 1995) (characterizing a
sexually hostile environment as evidence of gender bias).
Therefore, we will treat the sexual misconduct and the
gender-based mistreatment in this case as sex
discrimination. The facially neutral mistreatment plus the
overt sex discrimination, both sexual and non-sexual, in
sum constituted the hostile work environment. See Aman v.
Cort Furniture Rental Corp., 85 F.3d 1074, 1083 (3d Cir.
1996) (acts of harassment, if motivated by sex or race, can
constitute a hostile work environment regardless of their
content); Andrews v. City of Philadelphia, 895 F.2d 1469,
1485 (3d Cir. 1990) (overtly sexual harassment is
unnecessary to establish a sexually hostile work
environment; discriminatory treatment is the only
requirement).
As we stated in Andrews, the record must be evaluated
as a whole when we consider whether Evans proved her
case:
Particularly in the discrimination area, it is often
difficult to determine the motivations of an action and
any analysis is filled with pitfalls and ambiguities. A
play cannot be understood on the basis of some of its
scenes but only on its entire performance, and
similarly, a discrimination analysis must concentrate
not on individual incidents, but on the overall scenario.
Id. at 1484; see also Vicki Schultz, Reconceptualizing
Sexual Harassment, 107 Yale L.J. 1683 (1998) (arguing that
non-sexual harassment is often a major part of a hostile
work environment). In its appeal, Durham attempts to
disaggregate the various allegedly discriminatory acts and
endeavors to cast doubt on each one, arguing that the
overtly sexual acts did not occur and that the non-sexual
actions taken against Evans have innocent explanations.
We conclude, however, that the District Court appropriately
refused to consider each incident in a vacuum and that its
findings are not clearly erroneous.
III. Employer Liability
The next issue on appeal is whether Durham may be
held liable for its supervisors' acts. Although Durham
12
presents extensive evidence and argument about its anti-
harassment policies, we find that they are not relevant to
this case because Evans's supervisors took tangible adverse
employment action against her.4
A. Liability under Ellerth and Faragher5
_________________________________________________________________
4. We must briefly address a certain terminological confusion that
Durham uses to argue that the District Court made a mistake in finding
employer liability. At one point, the District Court stated that it did
not
see this case as a "disparate treatment" case, but as a "hostile work
environment" case. Thus, Durham suggests, only evidence of sexualized
abuse or sexual advances is relevant to Evans's claim, and that evidence
alone is insufficient. The District Court's characterization lacks
analytic
precision. Hostile work environment claims are founded in Title VII's
prohibition of unequal treatment of men and women; the hostile
environment here consisted of abuse that a man in Evans's position
would not have suffered. Perhaps the District Court simply meant that
there was no other employee who had Evans's abilities and her specially
negotiated benefits, so that there was no similarly situated person who
could have been better treated. In any event, the Supreme Court has
now made clear that labels such as "hostile work environment" are not
dispositive and that the ultimate issue is whether the plaintiff has
suffered actionable discrimination based on her sex. See Ellerth, 118
S. Ct. at 2264.
5. Although Judge Garth concurs in the result reached by Chief Judge
Becker, he cannot agree that the discussion of when and how the
affirmative defense provided by the holdings in Burlington Industries,
Inc.
v. Ellerth, 118 S. Ct. 2257 (1998), and Faragher v. City of Boca Raton,
118 S. Ct. 2275 (1998), and Chief Judge Becker's attempted clarification
of that defense, see infra, have a place in the opinion.
As Judge Garth reads the Supreme Court decisions, their holdings are
unequivocal and are directly applicable to this appeal without extending
the analysis beyond the facts of this case. Ms. Evans provided proof of
a tangible adverse employment action (i.e., she was made to leave her
job), and this action was on the basis of her supervisors' behavior. Here,
Ms. Evans was the subject of a tangible adverse employment action, the
District Court found that her supervisors were responsible for her
constructive discharge and the District Court returned a verdict
compensating her for the damages she suffered.
This being so, the initial holding in Faragher and Ellerth attaches and
binds us: "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."
13
Durham argues that the District Court applied the wrong
liability standard because the Supreme Court's recent
sexual harassment liability decisions substantially
reshaped the law. In Ellerth and Faragher, the Supreme
Court drew a line between (1) discriminatory work-related
supervisory acts, such as discriminating against women in
work assignments to placate pervasive male hostility or
reprimanding women "in harsh or vulgar terms" while
merely bantering with men for identical behavior, and
(2) expressing sexual interest "in ways having no apparent
object whatever of serving an interest of the employer."
Faragher, 118 S. Ct. at 2289.
_________________________________________________________________
Ellerth, 118 S. Ct. at 2270; Faragher, 118 S. Ct. at 2293. Judge Garth
believes that is all the Court is called upon to review through the lens
of
Ellerth and Faragher and he agrees that the District Court properly
entered judgment in favor of Ms. Evans.
However, Judge Garth takes no position and disassociates himself
from the discussion in Section III.A of Chief Judge Becker's opinion
involving situations and examples where no tangible adverse
employment action was taken, matters that concern the second holding
of Ellerth and Faragher. This second holding provides that "[w]hen no
tangible employment action is taken, a defending employer may raise an
affirmative defense to liability or damages," Ellerth, 118 S. Ct. at 2270;
Faragher, 118 S. Ct. at 2293, and specifies the elements that must be
established for the defense to prevail. (To the extent that Judge Weis in
his concurring opinion would make an affirmative defense available even
when a tangible adverse employment action resulted, Judge Garth
rejects his analysis as being contrary to and in derogation of the
explicit
holdings of Ellerth and Faragher).
In the present case, there is no issue that requires resort to the second
holding, and Judge Garth fears that unnecessary examples and
discussion, even in an attempt to enlighten the bar and bench, may only
lead to confusion when it does not clarify the standards to which this
Court must adhere. In a case such as this one, where Ms. Evans was
constructively discharged by her supervisors' action after their own
actionable behavior, the holdings and instruction of Ellerth and Faragher
are clear: the employer, Durham Life Insurance Company, is
automatically liable and no affirmative defense is available. The District
Court so held, and Judge Garth, in accordance with the separate
opinions of his colleagues, Chief Judge Becker and Judge Weis, agrees
that the District Court's judgment must be affirmed.
14
The first kind of discrimination, the Court concluded,
would automatically subject the employer to liability
because such discrimination is within the scope of the
supervisor's employment, even if the employer does not
want the supervisor to discriminate. Acts fall within the
scope of employment when they are " ``of the kind [a
servant] is employed to perform,' occurring ``substantially
within the authorized time and space limits,' and ``actuated,
at least in part, by a purpose to serve the master.' " Id. at
2286 (quoting Restatement (Second) of Agency S 228(1)
(1957) (alteration in original)). The Court further stated that
"it is accepted that ``it is less likely that a willful tort will
properly be held to be in the course of employment and
that the liability of the master for such torts will naturally
be more limited.' " Ellerth, 118 S. Ct. at 2266 (quoting F.
Mechem, Outlines of the Law of Agency S 394, at 266 (P.
Mechem ed., 4th ed. 1952)).
The Court, after citing some of the various conflicting
cases on scope of employment, and concluding that sexual
harassment by a supervisor is generally not within the
scope of employment, see id. at 2267, went on to parse the
second category more carefully. In cases of harassment
falling outside the scope of employment, the Court found,
the employer could be vicariously liable when the"tortious
conduct is made possible or facilitated by the existence of
the actual agency relationship." Faragher, 118 S. Ct. at
2290. The Ellerth/Faragher "aided by the agency relation"
test is divided into two categories:
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
15
or corrective opportunities provided by the employer or
to avoid harm otherwise. . . . No affirmative defense is
available, however, when the supervisor's harassment
culminates in a tangible employment action, such as
discharge, demotion, or undesirable reassignment.
Ellerth, 118 S. Ct. at 2270; see also Faragher, 118 S. Ct. at
2292-93.
The aided by the agency relationship test is not, however,
all-embracing. Rather, the Court discusses it only as a
"starting point." Faragher, 118 S. Ct. at 2290 & n.3. One
question is whether we should treat the supervisory acts in
this case as falling within or without the scope of
employment, for the scope of employment discussion is
where the Court began its reformulation of Title VII
jurisprudence. In a definitional sense, scope of employment
plays no role in the Ellerth/Faragher test as such. But a
sexual harassment plaintiff might still argue, in an attempt
to avoid the affirmative defense, that the harassment she
suffered falls within the scope of employment because her
harassers intended, at least in part, to serve their employer.
For example, the District Court found that McKaskill told
Evans that she made "too much money for a goddamn
woman" and that she did not know anything about
annuities because she was "only a woman." This could
readily be interpreted as evidencing a belief that women
were not suited to Durham's business and a purpose to
serve Durham by ridding it of Evans or at least of the
qualities that made Evans stand out from other agents,
which qualities the harassers apparently regarded as linked
to her womanhood.
Although a scope of employment analysis would be
theoretically possible here, we apply the Ellerth/Faragher
aided by the agency relation test. We would have great
difficulty deciding the case on scope of employment
grounds in the absence of a specific finding by the District
Court about the harassers' intent. We therefore believe that
we can better evaluate Evans's claim by asking whether her
harassers were aided by the harassment by the agency
relation. More generally, we suggest that harassment that
could be analyzed as falling within the scope of employment
because of a supervisor's biased beliefs about a class of
16
workers--a claim that Evans might be able to make on
these facts--might be better evaluated in thefirst instance
under the more specifically delineated standards of the
Ellerth/Faragher aided by the agency relation test.6 Scope of
(Text continued on page 19)
_________________________________________________________________
6. We note that despite the Court's attempt to attain "categorical
clarity,"
Faragher, 118 S. Ct. at 2290, there is a potential overlap between
harassment falling within the scope of employment and harassment
aided by the agency relationship, for "scope of employment" and "aided
by the agency relation" are not hermetically sealed concepts. Both may
fit the facts of a case, yet point towards dramatically different
liability
standards, since only in an "aided by the agency relation" situation is
the affirmative defense potentially available.
An example will elucidate the point. If a male supervisor routinely
delivered his reprimands to female employees by way of unwelcome
remarks and touching while treating male employees with respect, the
conduct would seem to fall in both categories, since the explicit sexual
misbehavior would suggest an aided by the agency relationship analysis,
while the disparate treatment with respect to work-related activities
would put the problem within the scope of employment. Even though
unwelcome remarks and touching might be done to gratify the harasser's
own desires, this situation would fall within the scope of employment
because the harassment would be the supervisor's manner of giving out
otherwise authorized reprimands to women. Giving reprimands is clearly
within the scope of the supervisor's authority, and the law of agency
teaches that the manner of doing an authorized act may subject an
employer to liability even though the employer instructs that the act be
done differently. See Ellerth, 118 S. Ct. at 2266. Although we doubt such
situations occur with any frequency, the example helps develop the issue
analytically.
The Court's conclusion that sexual harassment will ordinarily fall
outside the scope of employment connotes an expectation that sexual
harassment is often connected only opportunistically to the work
environment--that is, that supervisors' harassment usually does not
have any inherent relationship to the fact that the women targeted are
working women. However, there may be cases in which a harasser
thinks that he is doing what is best for his workforce when he deploys
sexual harassment as a weapon to drive female workers away. See, e.g.,
Steiner v. Showboat Operating Co., 25 F.3d 1459, 1463 (9th Cir. 1994)
(finding that a supervisor used sexual harassment to reprimand a female
employee for her perceived failings as a worker rather than to fulfill his
desires). There are other cases in which sexual harassment seems
fundamentally connected to the work situation, as when it is part of a
campaign against women in nontraditional jobs. See, e.g., Annis v.
17
County of Westchester, 36 F.3d 251 (2d Cir. 1994); Bohen v. City of East
Chicago, 799 F.2d 1180 (7th Cir. 1986); see also Schultz, supra, at
1755-61 (suggesting that a desire to preserve a masculine image of work
often motivates sexual harassment). A supervisor who dislikes women for
personal reasons may be predisposed to believe, however wrongly, that
his employer would be better off without them, and his harassing acts
could therefore be thought to fall within the scope of employment.
Sexual harassment by co-workers may follow the same pattern and
create the same analytic difficulties.
The distinction between acts within and without the scope of
employment would turn on a fact finder's perception of whether the
supervisor believed that he was acting, at least in part, in his
employer's
interests, perhaps because he believed that men were better workers. Yet
it will often be difficult to distinguish personal misogyny falling
outside
the scope of employment from misogyny directed at female workers.
Does a supervisor who satisfies his sexual urges by targeting women he
perceives as worthless to his employer's business act sufficiently within
the scope of his employment?
It is therefore difficult to reconcile intent as the touchstone of "scope
of employment" with Ellerth's blunt statement that "[t]he general rule is
that sexual harassment by a supervisor is not conduct within the scope
of employment." Ellerth, 118 S. Ct. at 2267. We could, of course,
understand this as a factual prediction, particularly given the variety of
cases discussed--and not completely reconciled--in the two opinions.
See id. at 2266-67; Faragher, 118 S. Ct. at 2286-87. But we also
consider this statement in light of Faragher's cogent explanation that
"scope of employment" is ultimately a question of law, not fact,
expressing a court's conclusion that it is appropriate to hold an employer
liable for its agents' acts in a particular case. See Faragher, 118 S. Ct.
at 2287-88.
In Faragher itself, supervisors, in the course of carrying out their
supervisory duties, repeatedly subjected female lifeguards to uninvited
and offensive touching and to lewd and discriminatory remarks. See id.
at 2280. The Court rejected the argument that harassment is a risk that
employers should fairly be required to bear as a cost of doing business
and that this kind of harassment should therefore be treated as falling
within the scope of employment. See id. at 2288-89. Instead, the Court
found that it would be preferable as a matter of social policy to apply
the
aided by the agency relation test to the facts of that case. See id. at
2292. In short, "scope of employment" is not a sharply delineated
concept in law or logic, and that is what makes it so troublesome. We
18
employment remains an elusive concept, while the Supreme
Court has given us clearer instructions on how to
determine liability under the aided by the agency relation
standard. We are also mindful of the Supreme Court's
stated reason for formulating the affirmative defense, the
need to give employers incentives to establish anti-
harassment programs, see Ellerth, 118 S. Ct. at 2270, and
believe that too broad an interpretation of scope of
employment might make effective anti-harassment
programs irrelevant to employer liability in many hostile
environment cases, undermining the Court's intent.
However, we need not resolve the almost metaphysical
questions surrounding scope of employment today, for
under Ellerth and Faragher's aided by the agency relation
test, sex-based mistreatment by a supervisor--whether
overtly sexual or facially neutral and whether motivated by
lust or by dislike--creates automatic liability when it rises
to the level of a tangible adverse employment action. The
Court squarely held that, when there is a tangible adverse
employment action or the employer fails to make out its
affirmative defense, it is fair and just to hold the employer
responsible for harassment. A supervisor can only take a
tangible adverse employment action because of the
authority delegated by the employer, see Ellerth, 118 S. Ct.
at 2269, and thus the employer is properly charged with
the consequences of that delegation.7 As we will now
_________________________________________________________________
also note our belief that the aided by the agency relation test is
similarly
a product of legal and policy considerations, and the Court may yet have
occasion to revisit the issue to clarify the remaining questions.
7. Concomitantly, we observe that, if the employer does not prove that it
exercised due care and that the employee's failure to use its safeguards
was unreasonable, the harassment can fairly be said to have been
facilitated by the power delegated to the supervisor, and thus aided by
the agency relationship. Conversely, if there is no tangible adverse
employment action and the employer does prove due care and
unreasonable employee behavior, the employer's anti-harassment efforts
and the opportunities for redress it offered a harassed employee will
generally justify the conclusion that the employer should not be required
to bear the costs of supervisory harassment. That is, the aided by the
agency relation standard seems to us to reflect a value judgment, not a
19
explain, Evans suffered tangible adverse employment
action. Hence we find that the evidence here easily satisfies
the Ellerth/Faragher aided by the agency relation test.8
B. Tangible Adverse Employment Action
The Supreme Court has defined a tangible employment
action as "a significant change in employment status, such
as hiring, firing, failing to promote, reassignment with
significantly different responsibilities, or a decision causing
a significant change in benefits." Ellerth, 118 S. Ct. at 2268.
According to Durham, none of the behavior described by
Evans constitutes a tangible adverse employment action,
and thus it is entitled to prevail on its affirmative defense.
Forcing Evans to vacate her office is not tangible, Durham
posits, because no other agent had a private office, and
because she kept the office until she resigned.
We disagree. First, the District Court found, and Durham
does not dispute, that a secretary and a private office were
specific, negotiated conditions of Evans's move to
Durham/Peoples. Evans also testified that, given the way
she dealt with her accounts, a secretary was necessary to
enable her to work successfully. Durham entirely ignores
the loss of Evans's secretary, who was paid $20,000 per
year--hardly a small sum. Given Evans's need for office
_________________________________________________________________
natural category, balancing the employer's right to be free from
automatic liability against employees' right to a workplace that
discourages and redresses harassment. See Faragher, 118 S. Ct. at
2291. Thus, for actionable harassment that occurs without any tangible
employment action, the aided by the agency relation test may be
tantamount to the failure of the employer's affirmative defense, which
forms the contours of the liability test. The affirmative defense remains
a defense and not an element of the plaintiff's case because the burdens
of production and proof remain at all times on the employer, but the
liability test as a whole is expressly designed to encourage effective
anti-
harassment policies.
8. There are other bases for liability that are not relevant to our
decision
today: cases in which the harasser's high rank makes him the
employer's alter ego; cases in which the employer intended the
harasser's conduct; cases in which the employee reasonably, but
wrongly, believes that the harasser is a supervisor; and cases in which
the employer is negligent. See Ellerth, 118 S. Ct. at 2267.
20
support to sustain her successful way of doing her whole
life insurance business, depriving her of a secretary and an
office could constitute a tangible adverse action even if
none of the other agents had negotiated for those benefits.
Cf. Marzano v. Computer Science Corp., 91 F.3d 497,
510-11 (3d Cir. 1996) (rejecting the claim that the
uniqueness of an employee's position created an extra
burden on the plaintiff to prove discrimination). Finally,
Evans resigned when her office was stripped from her and
her files went missing. The fact that she kept the office
until she quit does not make the deprivation of the office
meaningless. Under Durham's theory, any substantial
adverse action, such as a demotion in authority and pay,
would not be a tangible adverse employment action if it led
the affected employee to quit before the demotion took
effect. This is contrary to Title VII doctrine, which
recognizes a constructive discharge under such
circumstances. See Goss v. Exxon Office Sys. Co., 747 F.2d
885 (3d Cir. 1984).
Durham also asserts that Evans's missing files cannot be
an adverse employment action. The District Court, by
contrast, found that it was impossible for Evans to work
without her files. If the files were vital to her work, the
District Court could find that their disappearance under
suspicious circumstances was a tangible adverse
employment action.9 Although direct economic harm is an
important indicator of a tangible adverse employment
action, it is not the sine qua non. If an employer's act
substantially decreases an employee's earning potential and
causes significant disruption in his or her working
conditions, a tangible adverse employment action may be
found. See Booker v. Budget Rent-a-Car Sys., 17 F. Supp.
2d 735 (M.D. Tenn. 1998).
_________________________________________________________________
9. After Evans left, Heyman had possession of money orders and cash
that he could only have gotten from Evans's files. In view of the other
evidence in the case, Durham's control over thefiles would support the
conclusion that their disappearance was evidence of discrimination. Cf.
Aman, 85 F.3d at 1083 (missing time cards, false accusations of
wrongdoing, and others' refusal to cooperate with the plaintiff in doing
her job helped prove discrimination); Andrews, 895 F.2d at 1473
(unexplained loss of files was an important element of the plaintiffs'
harassment claims).
21
Durham further contends that Evans's alleged harassers
had no control over giving her lapsed books of business.
Durham states that male agents also had to take lapsed
books and that Evans ultimately received "lapse relief,"
which meant that her pay was not decreased as much as
the normal rules would have mandated based on her large
number of lapsed policies. In addition, Evans had the
highest guaranteed salary in the agency. As a result,
Durham argues, the lapse assignments did not constitute
tangible adverse action. The record suggests, however, that
lapse assignments came from one or two levels above Evans
--that is, precisely the levels at which she argues the
managerial staff was biased against her. The record also
supports Evans's contention that she was assigned more
lapsed policies than other (male) agents, so that she was
treated less favorably than others. As a result of the lapse
assignments, her earnings were cut almost in half. A
decrease of that magnitude is surely significant enough to
be a tangible adverse action.10 We conclude that the loss of
Evans's office, the dismissal of her secretary, the missing
files, and the lapse assignments that led to afifty percent
pay decrease are tangible adverse employment actions
under Ellerth and Faragher.
On its face, this conclusion would appear to preclude any
affirmative defense for Durham. Yet Durham makes an
interesting claim: It contends that the first time someone
made a discriminatory remark to Evans, she ought to have
reported it, using the sexual harassment policy. At that
time, there was as yet no tangible adverse action against
her. Durham asserts that, if Evans had reported the
harassment at that point, it would have investigated and
stopped the problem, and that it should therefore prevail on
its affirmative defense. However, we decline to investigate
_________________________________________________________________
10. Evans hotly disputed the claim that she was offered lapse relief, and
the district judge was entitled to credit her testimony. Evans's high
guaranteed salary is also less relevant than Durham claims. Most of her
earnings were expected to come from commissions; from the testimony,
it seems that no one expected agents to subsist on the salary guarantee.
Moreover, the guarantee seems to have been a result of the negotiations
that brought her to Durham/Peoples, before the management changed
and those who ultimately harassed her assumed positions of power.
22
whether, if Evans had complained early on, the sexual
harassment policy at Durham would have prevented the
tangible adverse actions that occurred afterwards. The
difficulty of making such a counterfactual inquiry counsels
against injecting this question into already-complex
discrimination cases, particularly at the appellate level with
a closed record. While we need not decide the question
now, we are fearful that, were we to allow an affirmative
defense every time an employer could argue that the
plaintiff had some non-tangible notice of discrimination
before adverse action was taken against her, the
Ellerth/Faragher distinction between cases with tangible
adverse action and cases without such action would
become hopelessly confused.
We note in this regard that it seems untoward to give an
employer whose supervisors first signal their bias and then
act on it more protection than an employer whose
supervisors begin with tangible adverse action. This is
particularly true because the plaintiff's evidence that
adverse action was sex-based will often include evidence of
prior discriminatory behavior; Durham's proposed standard
would have the perverse effect of putting a greater burden
on plaintiffs who had extensive evidence of discrimination.
It would also make the affirmative defense applicable in
quid pro quo cases, since threats generally are made before
they are acted upon and put their recipients on notice of
what is coming next. Yet that is exactly the opposite of the
holding of Ellerth. The Ellerth/Faragher rule is clear: When
harassment becomes adverse employment action, the
employer loses the affirmative defense, even if it might have
been available before. See Faragher, 118 S. Ct. at 2293 ("No
affirmative defense is available, however, when the
supervisor's harassment culminates in a tangible
employment action . . . ." (emphasis added)); Ellerth, 118
S. Ct. at 2270 (same); id. at 2269 ("When a supervisor
makes a tangible employment decision, there is assurance
the injury could not have been inflicted absent the agency
relation. . . . Whatever the exact contours of the aided in
the agency relation standard, its requirements will always
be met when a supervisor takes a tangible employment
action against a subordinate."). If there is some scenario
23
that will permit such a legal strategem, it does not appear
in this case.
1. Supervisory Authority
Durham contests the District Court's finding that
McKaskill was Evans's supervisor. If he was not a
supervisor, his acts cannot subject Durham to automatic
liability. Although we think that the other evidence of
harassment is sufficient to hold Durham liable, we reject
Durham's interpretation of McKaskill's supervisory
authority. The District Court could reasonably have relied
on witnesses, including McKaskill, who testified that
McKaskill was part of the ruling "triumvirate" in Evans's
office. As an associate Customer Service Unit Leader, he
was two levels above Evans according to Durham's own
chart. He was part of the three-person team that decided to
get Evans's direct supervisor to strip her office from her
and to instigate Durham's lawsuit against her. In general,
complete authority to act on the employer's behalf without
the agreement of others is not necessary to meet Title VII's
agency standard for supervisor liability. See Bonenberger v.
Plymouth Township, 132 F.3d 20, 23 (3d Cir. 1997). That
McKaskill might not have had the authority to act alone did
not mean that he was without supervisory authority over
Evans.
C. Pervasiveness and Severity of the Harassment
Durham next claims that, as a matter of law, the
incidents described by Evans do not rise to the level of
severity and pervasiveness needed to find a hostile
environment. Durham characterizes the events to which
Evans testified as "sporadic misbehavior." However, it is
settled law that courts should not consider each incident of
harassment in isolation. See Andrews, 895 F.2d at 1484.
Rather, a court must evaluate the sum total of abuse over
time. Evans has done more than identify isolated incidents
of what Durham characterizes as "horseplay." She has also
testified to discriminatory statements and actions that the
court found to be sex-based. As a whole, the facts support
the District Court's finding of a hostile work environment.
Durham also claims that most of the conduct of which
Evans complains occurred after her employment ended and
24
thus cannot sustain a hostile work environment claim. We
understand the District Court to have found that
harassment took place on the basis of Evans's sex, both
before and after she left Durham. See Durham Life Ins. Co.
v. Evans, Nos. 94-801 & 95-2681, slip. op. at 16 (E.D. Pa.
Aug. 4, 1997) ("The intimidation and harassment did not
end with her resignation."). At all events, the sexual
misconduct, sexist remarks, loss of Evans's negotiated
privileges, and other events that took place before Evans
left Durham are themselves sufficient to sustain a hostile
work environment claim. Taken as a whole, the District
Court's findings indicate an environment that rises to the
level of pervasiveness and severity required tofind a hostile
work environment. The post-employment actions are also
significant; we address them infra Subsection IV.A.3.
IV. Back Pay
A. Evans's Entitlement to Back Pay
Title VII allows back pay awards when an employee does
not leave her employment voluntarily. In this case, Evans
must establish that she did not quit voluntarily; that is,
that she was constructively discharged because a
reasonable person would have found her working
conditions intolerable. Durham contends that any
actionable harassment occurred five to seven months before
Evans left and thus that Evans deserves no back pay. The
District Court found otherwise. According to itsfindings,
the disappearance of Evans's files and the deprivation of
her office right before she left constituted the culmination
of a series of harassing events, making a formerly
unpleasant job unbearable.
Durham argues that Evans was not constructively
discharged when she was forced to follow an office policy
forbidding agents from having their own offices, the event
that precipitated her departure. We disagree, for essentially
the same reasons that we conclude that Evans suffered
adverse employment action. Constructive discharge exists if
"the conduct complained of would have the foreseeable
result that working conditions would be so unpleasant or
difficult that a reasonable person in the employee's shoes
25
would resign." Goss, 747 F.2d at 887-88. Goss found that
a reassignment to a less lucrative territory could constitute
a constructive discharge, based on the substantial pay cut
involved and the employee's loss of confidence in herself
and her employer. See id. at 888-89. The facts here are
quite similar. Although there is no need for a "straw that
broke the camel's back" when the discrimination has
continued over an extended time, see Aman, 85 F.3d at
1084, the loss of Evans's office and files constituted a
substantial worsening of her working conditions at
Durham. The District Court found that she could hardly
have continued work at all without her files and money
orders. Thus, the facts as determined by the District Court
support the conclusion that Evans was constructively
discharged.
B. The Back Pay Calculation
Back pay calculations are reviewed for abuse of
discretion. See Booker v. Taylor Milk Co., Inc., 64 F.3d 860,
867 (3d Cir. 1995). Back pay may be awarded even if an
exact dollar calculation is impossible. See Christopher v.
Stouder Mem'l Hosp., 936 F.2d 870, 880 (6th Cir. 1991).
The court may estimate what a claimant's earnings would
have been without discrimination, and uncertainties are
resolved against a discriminating employer. See Wooldridge
v. Marlene Indus. Corp., 875 F.2d 540, 549 (6th Cir. 1989);
Taylor v. Central Penn. Drug & Alcohol Servs. Corp., 890 F.
Supp. 360, 370 (M.D. Pa. 1995).
1. Evans's Base Salary
Durham argues that the District Court used the wrong
base salary for Evans because it used Evans's 1992 salary
even though she left in 1993. This meant the difference
between $119,000 and $66,000, or $53,000 per year.
Durham cites to other cases that used a plaintiff's salary on
the last day of employment to calculate back pay, even
though the harassment had preceded that last day.
Durham's precedents are easily distinguishable, because
they concern cases of harassment that did not have a
tangible impact on plaintiffs' compensation. See, e.g., Virgo
v. Riviera Beach Assoc., Ltd., 30 F.3d 1350 (11th Cir. 1994).
If Durham's argument were to be accepted, then it would be
26
to a discriminator's advantage to increase its mistreatment
from a hostile environment to a decrease in pay, so that
any ultimate penalty would be minimized. Evans's attempts
to deal with the discrimination without quitting, despite the
negative effects on her salary, should not be held against
her.
The District Court did not abuse its discretion when it
used Evans's salary from 1992, the last full year before the
discrimination began, as the benchmark. Because Evans's
salary when she left was less than a nondiscriminatory
salary would have been, it should not be used as the
benchmark. See EEOC v. Delight Wholesale Co., 973 F.2d
664, 668, 670 (8th Cir. 1994); cf. Gunby v. Pennsylvania
Elec. Co., 840 F.2d 1108, 1119 (3d Cir. 1988) (back pay
should be the difference between actual wages and the
wages the plaintiff would have earned absent
discrimination). Evans consistently earned $90,000 per
year in the last few years before she came to Durham, and
she was a leading producer at Durham, earning $128,000
and then $119,000. It was reasonable to conclude that, but
for the discrimination, Evans would have continued her
outstanding performance. Cf. Goss, 747 F.2d at 889
(upholding the District Court's calculation of commissions
lost through discrimination because the estimates were
reasonably based on the plaintiff's past performance);11
Gallo, 779 F. Supp. at 808 (calculating back pay on a
commission basis and taking into account plaintiff's
demonstrated ability to get commissions).
2. Evans's Earnings at Paul Revere
According to Durham, Evans made $65,955 in 1993, of
which she earned $15,000 at Paul Revere. At $5000 per
month, this was more than the $4200 per month she made
at Durham. Ordinarily, there is no entitlement to back pay
_________________________________________________________________
11. Goss is particularly apposite, because in that case, as here, the
employer was undergoing some turmoil that arguably exerted downward
pressure on everyone's commissions. Exxon objected to the District
Court's choice of a base year because, it argued, that year was not
representative of the new order. See Goss, 747 F.2d at 889. The court
rejected Exxon's claim because the wrongdoer should bear the risk of
uncertainty, not the victim. See id.
27
when the claimant makes more money at another job than
she could have made at her former job. Durham suggests
that Evans is therefore not entitled to any back pay.
There are two reasons that Durham's claim fails. First,
because we find that the District Court did not abuse its
discretion when it chose 1992 as the benchmark year, it
follows that Evans was earning almost $10,000 per month
in the absence of discrimination, and so she did not get a
"better-paying" job for back pay purposes. Second, Evans's
success at Paul Revere was short-lived, and ended in
February 1994. After that, she made substantially less per
month, and it would be both unfair and illogical--in the
absence of a finding that she unreasonably failed to
mitigate her damages--to reduce her award by the sums
that Durham projects that she could have earned.
Significantly, the court found that her decline was caused
by Durham's actions against her, which ultimately led her
to take disability leave from Paul Revere. Because
Durham's conduct affirmatively impaired her ability to
mitigate her damages, it would be inequitable to reduce her
back pay award in this case.
3. Durham's Post-employment Actions Against Evans
Anticipating this response to Durham's back pay
argument, Durham contends that there is no support in the
record for the proposition that adverse actions against
Evans after her employment ended justify continuing the
back pay award. In particular, Durham notes that there are
no findings that it retaliated against Evans for engaging in
a protected activity.
The District Court apparently did not discuss retaliation
because it treated the post-employment actions as
continuing discrimination. Post-employment actions by an
employer can constitute discrimination under Title VII if
they hurt a plaintiff's employment prospects. See Passer v.
American Chem. Soc'y, 935 F.2d 322, 331 (D.C. Cir. 1991)
(ADEA case); London v. Coopers & Lybrand, 644 F.2d 811,
816 (9th Cir. 1981); Shehadeh v. Chesapeake & Potomac
Tel. Co., 595 F.2d 711, 719-21 (D.C. Cir. 1978); Daley v. St.
Agnes Hosp., Inc., 490 F. Supp. 1309, 1313 (E.D. Pa. 1980).
The lawsuit against Evans and the complaints to the
28
Insurance Department had the potential to affect her ability
to sell insurance, and the District Court found that she was
powerfully affected because of the anxiety created by the
investigation. This kind of threat to Evans's livelihood is
sufficiently employment-related to be an employment
action. See Charlton v. Paramus Bd. of Educ., 25 F.3d 194,
198 (3rd Cir. 1994) (post-employment threat to a teacher's
license constituted employment action). The conclusion that
the post-employment actions were a continuation of the
initial discrimination seems plausible in light of the finding
that, during her employment with Durham, her agency
manager impliedly threatened to file a lawsuit against
Evans if she were to quit after the discrimination began.
Furthermore, Durham's conduct in filing suit against Evans
for replacing sixteen policies while ignoring the conduct of
a man who transferred 170 policies could support the
inference that the lawsuit was filed for discriminatory, not
simply retaliatory, reasons.
Evans further argues that the evidence would support
upholding the District Court on a claim of post-employment
retaliatory conduct. Title VII prohibits retaliation against
employees who engage in a protected activity such as
stating a claim of discrimination (as Evans did in her
resignation letter) and filing suit. See 42 U.S.C.
S 2000e-3(a). We agree that the facts found by the District
Court would support a retaliation claim. Durham, citing Bill
Johnson's Restaurants, Inc. v. NLRB, 461 U.S. 731, 741
(1983), responds that filing a lawsuit against Evans for
breach of her non-competition agreement cannot form the
basis of a retaliation claim unless the lawsuit lacked a
reasonable basis because of Durham's First Amendment
right to take disputes to the courts. Bill Johnson's, however,
construed a specific, ambiguous provision of the NLRA
defining unfair labor practices. Its reasoning has not been
extended to Title VII, in part because the prohibition on
retaliation is so explicit and the public policy behind the
retaliation provision so compelling.
In addition, Durham took other post-employment actions
besides filing the lawsuit against Evans, and we need not
rely on the lawsuit to find retaliatory conduct. John
Heyman, an agency manager, failed to conduct a full audit
29
of Evans's accounts, contrary to industry custom and to
Durham's own policies. Because Evans's accounts were left
up in the air, policyholders made inquiries that ultimately
became complaints when payments that should have been
prepaid were not made.
Durham states that the "evidence is clear" that the
complaint letters about Evans came from policyholders and
were not solicited by Durham. Yet the evidence supports
the conclusion that it was Durham's unusual inaction that
set the entire process in motion. Rather than acting in its
own self-interest and keeping Evans's former clients
satisfied with their Durham policies, the record shows that
Durham allowed record-keeping problems to escalate into
complaints. Durham also sent letters to all of Evans's
clients that arguably encouraged such complaints. The
complaints only targeted Evans despite the concurrent
involvement of a man in 75% of the relevant cases. 12
Most importantly, as a result of the complaints, the
Pennsylvania Insurance Department investigated Evans.
Durham contends that the investigation occurred without
Durham's urging. But that is a disputed issue and, at all
events, it could be inferred that the investigation would not
have happened but for Durham's arguably discriminatory
failure to audit Evans's accounts properly. In addition,
unprompted by the Insurance Department, Heyman sent it
information mistakenly indicating that Evans had
committed a serious offense. Evans testified to the
seriousness of the resulting charges and the negative
effects this series of events had on her ability to continue
her insurance work.
These facts resemble those in other cases in which courts
have found retaliation when an employer instigates
_________________________________________________________________
12. Heyman and others testified that they refused to return phone calls
when anyone called to ask about Evans's policies after she left. Durham
apparently reads this testimony to suggest that its employees did not
instigate any complaints. After the somewhat disturbing letter they sent
to Evans's former customers, however, policyholders might well be more
likely to write out a complaint, and to name the only person whose name
they knew, at least if no one else at the insurance company would
answer questions about the policies.
30
government action against a former employee. See Berry v.
Stevinson Chevrolet, 74 F.3d 980, 985 (10th Cir. 1996)
(encouraging a person to report the suspected crime of a
former employee can be retaliation); Beckham v. Grand
Affair, Inc., 671 F. Supp. 415, 419 (W.D.N.C. 1987)
(reporting a former employee for criminal trespass can be
actionable retaliation); see also EEOC v. Virginia Carolina
Veneer Corp., 495 F. Supp. 775, 777 (W.D. Va. 1980) (filing
a state law defamation claim against an ex-employee is
impermissible retaliation), appeal dismissed, 652 F.2d 380
(4th Cir. 1981). These cases reasoned that such instigation
could constitute a retaliatory adverse employment action
because government investigation can hurt a person's
employment prospects. The same reasoning would support
a finding that post-employment attempts to get a person
investigated can be employment discrimination. Cf.
Charlton, 25 F.3d at 198 (suggesting that post-employment
action might sustain a claim of discrimination as well as of
retaliation).
In sum, we conclude that Durham's post-employment
acts against Evans at the very least prevent Durham from
arguing that Evans unreasonably failed to mitigate her
damages, which is the only way Durham could avoid a back
pay award under these circumstances.13
_________________________________________________________________
13. Evans argues that the District Court erred by miscomputing her
back pay. Durham responds that she should have made a post-trial
motion to correct the judgment under Fed. R. Civ. P. 52(b). Rule 59(e)
would be more appropriate, as Rule 52(b) concernsfindings and their
effects on the judgment rather than errors in the judgment alone, but
the general point is well taken. See Perez v. Cucci, 932 F.2d 1058, 1059
(3d Cir. 1991) (Rule 59(e) should be used to challenge inclusion of back
pay award). The miscomputation alleged is a bit confusing, since Evans
argues that the court attributed too much to her in employer matching
pension funds and then too little in lost compensation, resulting in a
figure that was in total too low. It is not clear how she derived this
calculation, because the District Court's award does not set forth
amounts for specific categories of loss. This does not seem to be a
clerical mistake, which would be correctable under Rule 60(a). Back pay
is within the discretion of the District Court, and we do not have reason
to conclude that the District Court abused its discretion.
31
V. The Collective Bargaining Agreement and the
Covenant Not To Compete
Durham appeals the dismissal of its claim against Evans
for breach of her noncompetition agreement, which was
part of her employment contract under the former collective
bargaining agreement. Durham also contends that the
agreement required Evans to pursue a grievance rather
than litigating her harassment complaint as a counterclaim
in the lawsuit against her. We reject these arguments
because they are contradicted by the District Court's fact
findings, which are not clearly erroneous.
A. The Covenant Not To Compete
The District Court found that Biancardi, the regional vice
president who was handling the negotiations with the
union, told Evans and others that the covenant not to
compete was abrogated and that the union contract, which
had incorporated the noncompetition covenant, was not in
effect. This finding was not clearly erroneous. The District
Court further concluded that Biancardi, as a regional vice
president and an official negotiator with the union, had
authority to bind Durham by his statement. Evans was
entitled to rely on his representation that the covenant no
longer bound her. Although Durham argues that the
collective bargaining agreement (CBA) was in effect, it does
not contest this latter finding. Given Biancardi's position of
authority, we agree with the District Court that Durham
was estopped from enforcing the covenant not to compete
against Evans.
B. Grievance Under the Collective Bargaining Agreement
Durham argues that the CBA remained mostly in effect
during the new contract negotiations. Even though the CBA
had formally expired, Durham avers, Evans was required to
grieve instead of filing suit because both the company and
the union treated the CBA as if it were still in effect. The
District Court found that the CBA had been abrogated
when Durham unilaterally decreased agents' compensation.
Durham argues that the union acceded to the change and
suggests that, if the District Court had been correct, the
union certainly would have filed an unfair labor practice
32
charge.14 There are many reasons the union might not file
a charge or grievance it was legally entitled tofile; in the
midst of the upheaval caused by Durham's management
changes, the union might have preferred to attempt to
resolve disputes amicably. The important point is that the
District Court did not clearly err when it found that the
compensation was not changed by mutual agreement, even
though the union ultimately acquiesced.
We are also satisfied that the District Court did not
clearly err in finding that Biancardi had the authority to
bind Durham when he told Evans that the CBA was no
longer effective. Employer repudiation generally estops an
_________________________________________________________________
14. Paradoxically, this seems to be a concession that the arbitration
clause was no longer in effect, since only then would an unfair labor
practice charge be the appropriate remedy for a compensation change.
Under Litton Financial Printing Div. v. NLRB, 501 U.S. 190 (1991), an
arbitration clause does not generally continue in effect after a CBA
expires. If the employer makes a unilateral change in benefits instead of
bargaining, a union must generally file an unfair labor practice charge
rather than arbitrating. The issue is complicated by Luden's Inc. v. Local
Union No. 6, 28 F.3d 347, 355-56 (3d Cir. 1994), not cited by the parties.
Under Luden's, an arbitration clause in a lapsed CBA will continue in
effect until one side clearly indicates through words or conduct that it
no
longer wishes to be bound. The termination of the CBA does not
generally signal an intent to abandon arbitration, and discontent with
other aspects of the CBA (such as compensation provisions) does not
mean that an arbitration obligation ends when the CBA terminates. See
id. at 356. Biancardi's acts take this case out of the ambit of Luden's.
We also point out, although the parties have not done so, that it is not
clear that the CBA, even if it remained in effect, would require Evans to
grieve instead of filing suit. See Alexander v. Gardner-Denver Co., 415
U.S. 36 (1974). Alexander has been limited by Gilmer v.
Interstate/Johnson Lane Corp., 500 U.S. 20 (1991), but that decision did
not address the situation in which a CBA, negotiated to enforce collective
rights, requires arbitration; it concerned an agreement directly between
employer and employee limiting individual statutory rights. See Nieves v.
Individualized Shirts, 961 F. Supp. 782, 790-92 (D.N.J. 1997). The
Supreme Court recently declined to decide whether an explicit waiver of
federal statutory rights could be enforced, see Wright v. Universal
Maritime Serv. Corp., 119 S. Ct. 391 (1998), and, as we resolve the
arbitration issue on other grounds, we decline to address the issue
today, especially as the parties have devoted no argument to the law in
this area.
33
employer from claiming that a plaintiff should have grieved
first. See Hendricks v. Edgewater Steel Co., 898 F.2d 385,
388 (3d Cir. 1990); Garcia v. Eidal Int'l Corp., 808 F.2d 717,
722 (10th Cir. 1986) (where, as company ownership was
changing, the new company did not explicitly repudiate
arbitration but did indicate that the contract no longer
existed, an inference of repudiation was justified); Kaylor v.
Crown Zellerbach, Inc., 643 F.2d 1362, 1366 (9th Cir. 1981)
(company's lawyer denied that company was bound by
CBA; company was estopped from demanding that plaintiffs
grieve before litigating); Smith v. Pittsburgh Gage & Supply
Co., 464 F.2d 870, 975-76 (3d Cir. 1972) (when the
employer first stated that it was working under the old
contract and then said no contract existed, it had
repudiated the contract and grievance was not required).
VI. Intentional Infliction of Emotional Distress
Durham argues that the $100,000 awarded for
intentional infliction of emotional distress ("IIED") is
preempted by Pennsylvania worker's compensation law,
which provides that worker's compensation is the exclusive
remedy for injuries arising in the course of a worker's
employment. See 77 Pa. Cons. Stat. Ann. S 481(a). The
worker's compensation law excepts from its preemptive
scope employee injuries caused by the intentional conduct
of third parties for reasons personal to the tortfeasor and
not directed against him as an employee or because of his
employment. See id. S 411(1). Cases interpreting
Pennsylvania law are split on the propriety of allowing IIED
claims for sexual harassment on the job. Courts have
allowed such claims where the injury arose from
harassment "personal in nature and not part of the proper
employer-employee relationship." Hoy v. Angelone, 691 A.2d
476, 482 (Pa. Super. Ct. 1997), aff'd on other grounds, 720
A.2d 745 (Pa. 1998); see also Schweitzer v. Rockwell Int'l,
586 A.2d 383, 391 (Pa. Super. Ct. 1990) (harassment is
personal and not part of the legitimate employer/employee
relationship).
Other cases, however, have found preemption in similar
circumstances. See, e.g., Hicks v. Arthur, 843 F. Supp. 949,
958 (E.D. Pa. 1994) (harassment of a group of black
34
employees did not stem from "personal animosity" and any
black would have been discriminated against, so IIED was
preempted). In Winterberg v. Transportation Insurance Co.,
72 F.3d 318 (3d Cir. 1995), we concluded that egregious
misbehavior in handling a worker's compensation claim
was preempted because the Pennsylvania law has a broad
intent to preempt common law torts "in matters arguably
connected with work-related injuries." Id. at 322. The
attempt to harm Evans, a "successful woman," was
arguably directed at Evans as an employee, since it
stemmed from Evans's success at Durham.15
Evans responds that her IIED claim is not preempted
because many of the acts she found so devastating
occurred after she left Durham. The District Court
considered this quite relevant. Claims for damages arising
from post-employment conduct have been found not to be
preempted by workers' compensation laws in other
jurisdictions.16 We are not convinced, however, that the
_________________________________________________________________
15. We thus suspect that a claim of Evans's sort would be preempted.
We understand Pennsylvania law to extend worker's compensation
preemption to personal animosity that develops from work-related
events. See Hammerstein v. Lindsay, 655 A.2d 597, 601 (Pa. Super. Ct.
1995) (where animosity develops because of work-related disputes,
worker's compensation is the exclusive remedy); Shaffer v. Procter &
Gamble, 604 A.2d 289 (Pa. Super. Ct. 1992) (where an employee was
injured on the job and wrongfully denied treatment, IIED was preempted
because it could have happened to any employee who got injured); cf.
Konstantopoulos v. Westvaco Co., 112 F.3d 710, 723 (3d Cir. 1997)
(discussing the Delaware Supreme Court's determination that similar
IIED suits are preempted under Delaware worker's compensation law).
Sexual harassment is a well-recognized workplace problem, the kind of
thing employers must be prepared to combat. Because it is like other
workplace hazards, we suspect that Pennsylvania would find IIED claims
based on this kind of harassment to be preempted. But we cannot be
sure, and we express no opinion as to whether an IIED claim for
harassment more disconnected from the work situation would be
preempted, for example where a supervisor sexually assaulted an
employee or stalked her outside of work. Ellerth and Faragher may also
have an impact on this area of the law, as those cases to some degree
render the distinction between employment-related and purely personal
discriminatory motives irrelevant to employer liability.
16. See Caldwell v. Federal Express Corp., 908 F. Supp. 29, 33 (D. Me.
1995); Kroger Co. v. Willgruber, 920 S.W.2d 61, 64 (Ky. 1996); Cagle v.
35
post-employment actions in this case, distinguished from
what went before, are sufficiently egregious on their own to
rise to the level of IIED, although Durham did not raise this
issue in its papers.
We need not rule on the sufficiency of the post-
employment conduct, however, because we hold that the
emotional distress award may be sustained under 42
U.S.C. S 1981a(b)(3), which authorizes compensatory
damages under Title VII for "emotional pain, suffering,
inconvenience, mental anguish, loss of enjoyment of life,
and other nonpecuniary losses." The District Court's
findings are adequate to meet the standard for recovery of
damages for emotional harm under Title VII.17 At oral
argument, counsel for Durham conceded as much. See
Murray v. United of Omaha Life Ins. Co., 145 F.3d 143, 157
(3d Cir. 1998) (where the jury's implicit findings were
consistent with the correct legal standard despite incorrect
instruction, its verdict could be upheld on appeal). 18
Conclusion
For all the foregoing reasons, the judgment of the District
Court will be affirmed. Costs shall be taxed against
Appellant/Cross-Appellee Durham.
_________________________________________________________________
Burns & Roe, Inc., 726 P.2d 434, 439 (Wash. 1986). But see Bertrand v.
Quincy Market Cold Storage & Warehouse Co., 728 F.2d 568, 572 (1st
Cir. 1984) (where most of the offensive conduct took place before
employment ended, IIED was preempted under Massachusetts law); Ely
v. Wal-Mart, Inc., 875 F. Supp. 1422, 1429 (C.D. Cal. 1995) (IIED for
post-employment acts was preempted).
17. Although we are skeptical that the facts of this case are sufficiently
egregious to establish IIED, see Hoy v. Angelone, 720 A.2d 745 (Pa.
1998), Durham does not contest the adequacy of Evans's claim on
appeal, only its legal availability.
18. Evans also appeals the decision not to award punitive damages
against Durham. This was not an abuse of the District Court's discretion
and we will not overturn it on appeal. See East Coast Tender Serv. v.
Robert T. Winzinger, Inc., 759 F.2d 280, 284 (3d Cir. 1985).
36
WEIS, Circuit Judge, concurring.
Relying on language in Burlington Industries, Inc. v.
Ellerth, 118 S. Ct. 2257 (1998) and Faragher v. City of Boca
Raton, 118 S. Ct. 2275 (1998), the majority concludes that
because the harassing supervisors took adverse
employment action, defendant Durham may not present a
defense based on the plaintiff's failure to utilize the
employer's grievance procedure.
The majority correctly observes that the Ellerth and
Faragher opinions distinguish between situations in which
tangible adverse employment action occurred and those in
which it has not (i.e., a sexually hostile environment but no
tangible adverse action). See Ellerth, 118 S. Ct. at 2270;
Faragher, 118 S. Ct. at 2292-93. This distinction, used in
the context of defining the scope and imposition of
vicarious liability, is understandable and readily applied.
The case before us, however, has elements of both a hostile
environment claim and a claim for discriminatory adverse
employment action and may appropriately be termed a
"mixed" one. In these circumstances, it is insufficient
simply to point to the distinction; Ellerth and Faragher
compel discussion of other considerations.
Faragher emphasized that Title VII's primary objective "is
not to provide redress, but to avoid harm." 118 S. Ct. at
2292 (citing Albemarle Paper Co. v. Moody, 422 U.S. 405,
417 (1975)). The Court observed that a defense structured
to recognize the employer's affirmative obligations would
implement clear statutory policy by rewarding employers
who make reasonable efforts to discharge their duty and
help prevent sexual harassment. See id. (discussing Title
VII, and the regulations and policies of the Equal
Employment Opportunity Commission).
Similar language appears in Ellerth. There, the Court
reiterated that Title VII encourages the creation of anti-
harassment policies and effective grievance procedures. See
Ellerth, 118 S. Ct. at 2270. As the Court observed, "[w]ere
employer liability to depend in part on an employer's effort
to create such procedures, it would effect Congress'
intention to promote conciliation rather than litigation in
the Title VII context." Id. Moreover, "[t]o the extent limiting
37
employer liability could encourage employees to report
harassing conduct before it becomes severe or pervasive, it
would also serve Title VII's deterrent purpose." Id.
Both opinions also expressly endorse, as consistent with
Title VII, a framework that places some onus on the victims
of sexual harassment to report it to their employers. Ellerth
recognized that "Title VII borrows from tort law the
avoidable consequences doctrine." Id. (citing Ford Motor Co.
v. EEOC, 458 U.S. 219, 232 n.15 (1982)). Faragher echoed
this proposition: "[i]f the plaintiff unreasonably failed to
avail herself of the employer's preventive or remedial
apparatus, she should not recover damages that could have
been avoided if she had done so." 118 S. Ct. at 2292.
Affording employers an affirmative defense serves two
purposes. First, it supports the imposition of vicarious
liability when a supervisor subjects a subordinate to a
hostile environment. Second, it prevents litigation by
encouraging the creation of effective grievance procedures
and the settlement of cases, as well as discouraging would-
be plaintiffs who have failed to take advantage of preventive
procedures.
Allowing the defense in hostile environment cases serves
both purposes, but denying it in mixed cases defeats the
second, arguably where the defense is most needed. Both
types of harm could be avoided if employers created
effective procedures and employees utilized them. In a case
where tangible adverse actions could have been avoided
had the plaintiff-victim reported the escalating pattern of
harassment, preclusion of the defense lacks a logical
foundation.
In this case, the plaintiff experienced harassment over a
period of many months before any adverse employment
action occurred. Without belaboring the details, it appears
that the various harassing incidents occurred in March,
April, May, June and July 1993. The tangible adverse
employment actions discussed by the majority, however,
occurred later: plaintiff's secretary was not discharged until
July 1993 and the plaintiff did not lose her office or her
files until September 1993.
38
Defendant Durham argues that had the plaintiff reported
the harassing conduct that took place before July 1993, it
would have had an opportunity to correct the situation and
thereby forestall the later adverse actions taken by the
plaintiff's superiors. Given Ellerth and Faragher's exposition
of the rationale underlying the defense, that argument has
some force. Unlike the majority, I do not discount that
argument but believe that the employer has failed to
establish a right to the defense on an entirely different
ground.
I would affirm the judgment in this case because Durham
did not show that its grievance procedure was adequate to
satisfy the standards set out in Ellerth and Faragher. The
District Court found that "Evans was never given any
literature or provided any information about the procedure
to report sexual harassment and had no idea where such
information could be obtained." An effective employer
policy, however, is one that has been disseminated to all
employees and that provides an assurance that the
harassing supervisor can be bypassed in registering a
complaint. See Faragher, 118 S. Ct. at 2293. Durham's
policy met neither of these requirements. Therefore, having
failed to establish the most basic requirement for invocation
of the affirmative defense, i.e., an effective grievance
procedure, Durham was not entitled to its protection.
Because I join in all other portions of the majority
opinion, I would affirm.
A True Copy:
Teste:
Clerk of the United States Court of Appeals
for the Third Circuit
39