Hatley v. Hilton Hotels

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 01-60289
LORI HATLEY; HABAKKUK COOPER,
Plaintiffs-Appellants,
v.
HILTON HOTELS CORP.; BALLY’S OLYMPIA L.P.,
Defendants-Appellees.
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Appeal from the United States District Court
for the Northern District of Mississippi
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October 1, 2002
Before SMITH, BENAVIDES and PARKER, Circuit Judges.
BENAVIDES, Circuit Judge:
Plaintiffs-appellants appeal the district court’s rendering of
judgment as a matter of law in favor of the defendants, on
plaintiffs’ claims of sexual discrimination under Title VII of the
Civil Rights Act of 1964, 42 U.S.C. §§ 2000(e) et seq. and 42
U.S.C. § 1981a, and intentional infliction of emotional distress
under Mississippi state law. The district court’s decision was
rendered after a jury had found in favor of plaintiffs on both
types of claims and awarded $150,000.00 in damages to each. In
addition, the plaintiffs argue that the district court erred by
refusing to instruct the jury on punitive damages. We reverse the
district court’s judgment with respect to the sexual harassment
claims, affirm with respect to the claims for intentional
infliction of emotional distress and remand for a new trial on
damages.
Plaintiffs, Lori Hatley (“Hatley”) and Habbakuk Cooper
(“Cooper”), worked as cocktail waitresses at Bally’s Olympia, L.P.
(“Bally’s”) in 1997 and 1998. At the district court, both of them
alleged that they were subjected to sexual harassment from
supervisors, and that even though they reported the harassment,
Bally’s conducted only a sham investigation that ultimately led the
two women to resign.
Judgment as a matter of law should be rendered when “a party
has been fully heard on an issue and there is no legally sufficient
evidentiary basis for a reasonable jury to find for that party on
that issue.” Fed. R. Civ. P. 50(a). “In entertaining a motion for
judgment as a matter of law, the court should review all of the
evidence in the record... [H]owever, the court must draw all
reasonable inferences in favor of the nonmoving party, and it may
not make credibility determinations or weigh the evidence.. . .
Thus, although the court should review the record as a whole, it
must disregard all evidence favorable to the moving party that the
jury is not required to believe.” Reeves v. Sanderson Plumbing
Prods., Inc., 530 U.S. 133, 150 (2000)(emphasis added).
In granting judgment as a matter of law, the district court
found that Bally’s had proven an affirmative defense under
2
Burlington Ind. v. Ellerth, 524 U.S. 742, 765 (1998) because
Bally’s had exercised reasonable care to prevent and correct the
harassment, and the plaintiffs had unreasonably failed to take
advantage of preventive or corrective opportunities offered by
Bally’s. In the alternative, the district court found that the
plaintiffs had not proven that any harassment was severe or
pervasive enough to alter the conditions of their employment.
Applying the standard of review described above, we find that
the district court erred in granting judgment as a matter of law on
the sexual harassment claims. In support of their claims, both
women testified at trial in detail as to pervasive and severe
harassment on the part of Bally’s supervisors, which consisted of
repeated inappropriate touching, vulgar comments, propositioning,
and physical aggression by Jesse Stotts (“Stotts”), their
supervisor, and Charles Perkins (“Perkins”), the Director of Food
and Beverages. The record shows that similar behavior was
described in their depositions and in the written complaints they
submitted to Bally’s. Such evidence is sufficient to support the
jury’s finding that the harassment at issue created a hostile work
environment. See Harris v. Forklift Sys., Inc., 510 U.S. 17, 21-23
(1993); Farpella-Crosby v. Horizon Health Care, 97 F.3d 803, 805-06
(5th Cir. 1996). It also suffices to support a finding that the
defendants were vicariously liable for the harassment. See
Faragher v. City of Boca Raton, 524 U.S. 775, 807 (1998) (“An
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employer is subject to vicarious liability to a victimized employee
for an actionable hostile environment created by a supervisor with
immediate (or successively higher) authority over the employee.”);
Watts v. Kroger Co., 170 F.3d 505, 509 (5th Cir. 1999).
In addition, the plaintiffs presented sufficient evidence to
support the jury’s finding that Bally’s had not made out the
Ellerth affirmative defense. The defendants presented evidence
that Davidson had interviewed numerous witnesses in the process of
conducting its investigation, and Davidson testified that she had
done everything she could to investigate the complaints. But
plaintiffs submitted evidence that contradicted Bally’s description
of the investigation. Both plaintiffs testified that after they
made formal complaints about the harassment, Bally’s failed to
effectively separate them from the harassing supervisors, and the
harassment continued until their departure. James Bostain, a
beverage supervisor at Bally’s, testified that previous sexual
harassment complaints had “fallen through the cracks” when
submitted to Davidson. And four other cocktail waitresses
testified about their own earlier complaints to Davidson of sexual
harassment, particularly with regard to Stotts’ and Perkins’
behavior, and the failure of Bally’s to respond to such
complaints.1 Such evidence supports the jury’s finding that the
1
Such statements were admissible for purposes of showing
that Bally’s was on notice that Stotts and Perkins might have
been sexually harassing employees. Green v. Administrators of
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investigation was inadequate and that Bally’s did not take
reasonable measures to correct or prevent the harassment. While
Bally’s presented evidence to the contrary, the jury was free to
choose between the conflicting versions of events. See Russell v.
McKinney Hosp. Venture, 235 F.3d 219, 225 (5th Cir. 2000). The
district court could not substitute its own determination of the
witnesses’ credibility for that of the jury; in doing so, it erred.
The district court did not err in rendering judgment as a
matter of law on the state claims for intentional infliction of
emotional distress. The standard for intentional infliction of
emotional distress in Mississippi is very high: the defendant's
conduct must be "wanton and wilful and [such that] it would evoke
outrage or revulsion." Leaf River Forest Prods., Inc. v. Ferguson,
662 So. 2d 648, 659 (Miss. 1995). “A Mississippi federal court
defined the necessary severity as acts so outrageous in character,
and so extreme in degree, as to go beyond all possible bounds of
decency, and to be regarded as atrocious, and utterly intolerable
in a civilized community.” Speed v. Scott, 787 So. 2d 626, 630
(Miss. 2001)(citations omitted). As this Court has noted in
relation to Texas law, “even though conduct may violate Title VII
as sexual harassment, it does not necessarily become intentional
infliction of emotional distress[.]” Prunty v. Arkansas
Freightways, Inc., 16 F.3d 649, 654 (5th Cir. 1994). As a matter
Tulane Educ. Fund, 284 F.3d 642, 660 (5th Cir. 2002).
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of law, Davidson’s failure to respond adequately to the plaintiffs’
complaints, while negligent, does not rise to the level of
outrageousness necessary to establish intentional infliction of
emotional distress. While the jury could reasonably have
determined that the evidence of Perkins’ and Stotts’ behavior
reached the requisite degree of outrageousness, there was no basis
for finding Bally’s vicariously liable for intentional infliction
of emotional distress. Under Mississippi law, “an employer is not
liable for an employee's intentional or criminal acts unless the
employer either authorized or ratified the act.” Tichenor v. Roman
Catholic Church of Archdiocese of New Orleans, 32 F.3d 953, 959
(5th Cir. 1994); McClinton v. Delta Pride Catfish, Inc., 792 So. 2d
968, 976 (Miss. 2001).2 The plaintiffs presented no evidence that
Bally’s authorized the harassment, and the only evidence of
ratification was that Bally’s did not fire the harassers - a fact
that is insufficient on its own to establish ratification. Craft
v. Magnolia Stores Co., 138 So. 405, 406 (Miss. 1931).
Finally, the district court did not err in failing to instruct
the jury on punitive damages. “An employer is liable for punitive
damages in a Title VII action if (1) its agent is employed in a
position of managerial capacity, (2) the agent acts within the
scope of employment, and (3) the agent acts with malice or reckless
2
As stated previously, Bally’s could be held vicariously
liable for the sexual harassment itself. Faragher, 524 U.S. at
807.
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indifference towards the federally protected rights of the
plaintiff. However, such liability may not be imputed if the
agent's actions are contrary to the employer's good faith effort to
comply with” Title VII of the Civil Rights Act. Green, 284 F.3d at
653 (2002)(citing Kolstad v. Amer. Dental Ass’n., 527 U.S. 526
(1999)). Indeed, the Supreme Court has stated that “in the
punitive damages context, an employer may not be vicariously liable
for the discriminatory employment decisions of managerial agents
where these decisions are contrary to the employer's good-faith
efforts to comply with Title VII.” Kolstad, 527 U.S. at 545. In
the present case, Bally’s made out the “good faith” defense to
punitive damages. Davidson was arguably an agent in a managerial
capacity, and she may have acted with malice or reckless
indifference to the rights of the plaintiffs within the scope of
her employment. However, these actions were contrary to Bally’s
good faith effort to prevent sexual harassment in the workplace, as
is evidenced by the fact that Bally’s had a well-publicized policy
forbidding sexual harassment, gave training on sexual harassment to
new employees, established a grievance procedure for sexual
harassment complaints, and initiated an investigation of the
plaintiffs’ complaints. These actions evidence a good faith
effort on the part of Bally’s to prevent and punish sexual
harassment. As a result, an instruction on punitive damages was
not required.
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The jury verdict awarded each plaintiff $150,000 in
compensatory damages for both the Title VII claims and the claims
for intentional infliction of emotional distress. Given that it is
impossible to determine what portion of the damages corresponds to
the sexual harassment claims, we remand for a new trial solely on
the issue of compensatory damages for the sexual harassment.
CONCLUSION
The evidence presented at trial was such that a reasonable
juror could conclude that the plaintiffs had been sexually harassed
and that the defendants had not established an affirmative defense.
Consequently, the district court erred in granting judgment as a
matter of law on the sexual harassment claims. However, the
district court did not err in granting judgment as a matter of law
on the state law claims for intentional infliction of emotional
distress or in refusing to instruct the jury on punitive damages.
Consequently, the district court’s decision is REVERSED in part,
AFFIRMED in part, and REMANDED for a new trial solely to determine
the amount of compensatory damages for the sexual harassment claims.
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