Gyulakian v. Lexus of Watertown, Inc.

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SJC-11959
EMMA GYULAKIAN vs. LEXUS OF WATERTOWN, INC., & another.1
Middlesex. March 10, 2016. - August 24, 2016.
Present: Gants, C.J., Spina, Cordy, Botsford, Duffly, & Lenk,
JJ.2
Employment, Sexual harassment. Anti-Discrimination Law, Sex,
Attorney's fees. Practice, Civil, Judgment notwithstanding
verdict. Damages, Punitive.
Civil action commenced in the Superior Court Department on
January 10, 2013.
The case was tried before Kimberly S. Budd , J., and
postverdict motions for relief were considered by her.
The Supreme Judicial Court granted an application for
direct appellate review.
Robert S. Mantell (Lori A. Jodoin with him) for the
plaintiff.
Christopher J. Sullivan (Tory A. Weigand with him) for the
defendants.
1
Post Motors, Inc., doing business as Lexus of Watertown.
2
Justice Cordy participated in the deliberation on this
case and authored this opinion prior to his retirement.
Justices Spina and Duffly participated in the deliberation on
this case prior to their retirements.
2
The following submitted briefs for amici curiae:
Rebecca Pontikes, Katherine Skubecz, Michaela C. May, &
Chetan Tiwari for Massachusetts Employment Lawyers Association &
others.
Afton M. Templin for Women's Bar Association of
Massachusetts.
Ben Robbins & Martin J. Newhouse for New England Legal
Foundation & another.
Elizabeth S. Dillon for Massachusetts Defense Lawyers
Association.
CORDY, J. In December, 2014, a jury rendered a verdict in
favor of the plaintiff, Emma Gyulakian, finding that she had
been subjected to a sexually hostile or offensive work
environment, in violation of G. L. c. 151B (c. 151B), § 4 (§ 4).3
The jury, having heard evidence tending to establish that
Gyulakian suffered relentless sexual harassment by her direct
supervisor, Emmanuel Ferreira, found that the defendants, Lexus
of Watertown, Inc., and Post Motors, Inc. (collectively, Lexus),
were liable for $40,000 in compensatory damages for emotional
distress, and, concluding that Lexus acted intentionally or with
reckless disregard for Gyulakian's rights under the
discrimination laws, also awarded Gyulakian $500,000 in punitive
damages.
Lexus filed a motion for judgment notwithstanding the
verdict (judgment n.o.v.), or, in the alternative, for a new
3
The jury returned verdicts in favor of the defendants,
Lexus of Watertown, Inc., and Post Motors, Inc. (collectively,
Lexus), on claims of retaliation and unlawful threat. Those
verdicts are not at issue in this appeal.
3
trial or a remittitur. A judge of the Superior Court allowed
the defendant's motion for judgment n.o.v. in part, denying the
motion with respect to the jury's imposition of compensatory
damages but allowing it as to the award of punitive damages.
Gyulakian appealed on the issue of punitive damages, and
Lexus cross-appealed the award of compensatory damages. We
allowed Gyulakian's application for direct appellate review and
affirm the award of compensatory damages. We also reverse the
trial judge's ruling as to the punitive damages award, because,
based on the evidence at trial, the jury could have found that,
independent of the conduct of harassment engaged in by its
supervisory employee, Lexus failed to take adequate remedial
measures after being put on notice of a sexually hostile or
offensive work environment, and that that failure was outrageous
or egregious. The jury's award of punitive damages is
reinstated, and the matter remanded for consideration of Lexus's
motion for remittitur.4
4
We acknowledge the amicus briefs submitted by the
Massachusetts Defense Lawyers Association; the New England Legal
Foundation and Associated Industries of Massachusetts; the
Massachusetts Employment Lawyers Association, the American Civil
Liberties Union of Massachusetts, GLBTQ Legal Advocates &
Defenders, the Jewish Alliance for Law and Social Action, and
the Lawyers' Committee for Civil Rights and Economic Justice;
and the Women's Bar Association of Massachusetts.
4
1. Factual and procedural background. The jury could have
found the following.5,6
a. Gyulakian's employment. Gyulakian was an employee of
Lexus from 2003 through January 4, 2012, when her employment was
terminated. Between June, 2010, and the end of her employment
at Lexus, Gyulakian acted as a finance manager, during which
time Ferreira was her direct supervisor. Ferreira, Lexus's
finance director, was responsible for assigning hours,
vacations, and work flow, and would carry out performance
evaluations for all of the finance managers. Ferreira
recommended Gyulakian for the finance manager position, and was
included in the decision to fire her.
Despite Gyulakian's success in her role as finance manager,
her employment at Lexus was terminated at a meeting on January
4, 2012, because, as Vincent Liuzzi, Lexus's general manager,
testified, Gyulakian's relationship with her coworkers had
deteriorated. While in that meeting, Gyulakian reported to
Liuzzi and Michael O'Connell, Lexus's general sales manager,
that, during her tenure in the finance department, Ferreira
sexually harassed her and cultivated a sexually hostile or
5
Some factual details are reserved for later discussion.
6
Because we are reviewing the grant of a motion for
judgment notwithstanding the verdict (judgment n.o.v.), we
summarize the evidence in the light most favorable to the
plaintiff, Emma Gyulakian, disregarding evidence favorable to
Lexus. See Esler v. Sylvia-Reardon, 473 Mass. 775, 777 (2016).
5
offensive work environment. Gyulakian also reported the same
conduct to human resources manager Tammy Grady-Brown later that
day. Prior to the day on which her employment was terminated,
Gyulakian had not reported the harassment to Liuzzi or Grady-
Brown.7 She had, however, informed Tony Bruno, an assistant
general sales manager and Ferreira's supervisor, on multiple
occasions about various sexually offensive incidents over the
course of the previous eighteen months. After Gyulakian was
terminated, Lexus purportedly conducted an investigation, which
uncovered no corroboration of her allegations, and Ferreira was
not disciplined.
b. The sexual harassment policy. At all relevant times,
Lexus had a sexual harassment policy in place, and held
trainings for employees and supervisors on that policy.8 The
policy read: "Any employee that feels that (s)he is a victim of
sexual harassment should immediately report such actions in
accordance with the following procedure. All complaints will be
promptly and thoroughly investigated." The reporting guidelines
7
Gyulakian testified that, prior to termination of her
employment, she had not informed Liuzzi of Ferreira's harassment
because she believed that he enjoyed Ferreira's off-color jokes
and had even participated in sexually harassing her. For
instance, Gyulakian testified that Liuzzi forwarded her an
advertisement for a "goat stand" for "milking," which Gyulakian
interpreted as a comment about her breasts.
8
Gyulakian signed the sexual harassment policy to
acknowledge that she had read it.
6
instruct employees to "report the situation to either [Liuzzi]
. . . or [Grady-Brown]." The policy allows that "[i]f an
employee prefers not to discuss the matter with these
individuals, (s)he may go directly to any other member of
management." There is no definition in the policy regarding who
qualifies as "any other member of management."
c. The alleged discrimination. The jury heard evidence
that Ferreira had, since Gyulakian became a finance manager,
habitually and graphically sexually harassed her, and that she
was working in an otherwise sexually hostile or offensive work
environment. By way of example, Ferreira would often comment on
Gyulakian's "nipples," "boobs," and "ass." Ferreira asked
Gyulakian if they would one day sleep together so he could
actually see her breasts. At a sexual harassment training,
Ferreira commented to Gyulakian about how harassment sounds like
"her ass." Gyulakian testified that the sexually charged
comments would come on an almost daily basis. The assaults were
also physical in nature, as Ferreira once violated Gyulakian's
personal "no touching" rule by touching her buttocks, and, on
other occasions, Ferreira would attempt to throw coins down
Gyulakian's blouse. At one point, Gyulakian witnessed Ferreira,
O'Connell, and Bruno looking at naked photographs of Gyulakian's
coworker on the coworker's cellular telephone. On another
occasion, Robert Silvester, the former Lexus office manager,
7
circulated a memorandum regarding Ferreira's inappropriate
behavior after he heard Ferreira discussing anal intercourse in
the office.
d. Procedural background. Gyulakian commenced this action
against Lexus on January 10, 2013, asserting four claims under
G. L. c. 151B, § 4, for harassment based on sex and national
origin, on the grounds that she was subjected to a hostile work
environment because of her (1) sex and (2) national origin9; (3)
retaliation and unlawful threats for complaining of that hostile
work environment; and (4) termination on an impermissible basis.
At the close of Gyulakian's evidence, Lexus unsuccessfully moved
for a directed verdict. The motion did not specifically
challenge the imposition of punitive damages. Over Lexus's
objection, the special verdict slip presented to the jury
included a punitive damages question. The jury returned a
verdict in favor of Gyulakian on the sexually hostile or
offensive work environment claim, awarding Gyulakian $40,000 in
compensatory damages and $500,000 in punitive damages. The jury
returned verdicts in favor of Lexus on the remaining claims.10
Lexus filed a motion for judgment n.o.v. or, in the
alternative, for a new trial or a remittitur, requesting, among
9
Gyulakian dropped the hostile work environment claim based
on national origin prior to trial.
10
Gyulakian did not appeal the jury's verdicts on the
retaliation and unlawful termination claims.
8
other things, that the judge set aside or decrease the awards of
compensatory and punitive damages. The motion for judgment
n.o.v. was allowed as to the award of punitive damages and
denied as to the compensatory damages. The judge concluded that
an employer "may not be vicariously liable for punitive damages"
under G. L. c. 151B based purely on the actions of its
supervisory personnel, and that the jury were not provided with
sufficient evidence of outrageous or egregious behavior by
Lexus.
Gyulakian appealed from the judge's decision to set aside
the award of punitive damages, and Lexus cross-appealed, arguing
that the evidence did not support a finding of any liability and
its motion for judgment n.o.v. should have been allowed as to
the award of compensatory damages.
2. Discussion.11 a. Lexus's cross appeal. Lexus argues
that Gyulakian's evidence was insufficient to warrant
11
Our review of the allowance or denial of a motion for
judgment n.o.v. pursuant to Mass. R. Civ. P. 50 (b), as amended,
428 Mass. 1402 (1998), considers "whether anywhere in the
evidence, from whatever source derived, any combination of
circumstances could be found from which a reasonable inference
could be drawn in favor of the nonmoving party." Esler, 473
Mass. at 780, quoting Phelan v. May Dep't Stores Co., 443 Mass.
52, 55 (2004). See Haddad v. Wal-Mart Stores, Inc. (No. 1), 455
Mass. 91, 94 n.5 (2009). That "evidence is reviewed in the
light most favorable to the plaintiff, 'without weighing the
credibility of the witnesses or otherwise considering the weight
of the evidence,'" Id., quoting Bavuso v. Caterpillar Indus.,
Inc., 408 Mass. 694, 695 n.1 (1990), and we disregard the
evidence favorable to the defendant. See Esler, supra at 777.
9
compensatory damages because it did not show that her work
performance suffered as a result of the harassment or that the
harassment altered the conditions of her employment. Lexus also
argues that the judge erred in failing to include a question on
the special verdict form asking whether the plaintiff's
suffering was caused by the harassment. We are not persuaded by
either contention.
i. Sufficiency of the evidence. It is unlawful "[f]or an
employer, personally or through its agents, to sexually harass
any employee." G. L. c. 151B, § 4 (16A). Sexual harassment is
defined as "sexual advances, requests for sexual favors, and
other verbal or physical conduct of a sexual nature when . . .
such advances, requests or conduct have the purpose or effect of
unreasonably interfering with an individual's work performance
by creating an intimidating, hostile, humiliating or sexually
offensive work environment." G. L. c. 151B, § 1 (18), as
amended through St. 1987, c. 473, § 2. Chapter 151B, § 4 (1),
"applies not only to hiring, firing, and compensation, but also
to the 'terms, conditions or privileges of employment.'"
College-Town, Div. of Interco, Inc. v. Massachusetts Comm'n
Against Discrimination, 400 Mass. 156, 162 (1987) (College-
"We do not defer to the judge's view of the evidence but examine
the case anew, following the same standard the judge is obliged
to apply." MacCormack v. Boston Edison Co., 423 Mass. 652, 659
(1996).
10
Town). Compensatory damages incurred based on the actions of
supervisory personnel who create a sexually hostile or offensive
work environment can be imputed to the employer. See id. at
165-166.
To prevail on a claim of sexual harassment based on the
creation of a sexually hostile or offensive work environment,
the plaintiff bears the burden of establishing that the conduct
alleged was both "subjectively offensive" and "sufficiently
severe and pervasive to interfere with a reasonable person's
work performance." Dahms v. Cognex Corp., 455 Mass. 190, 205
(2009), quoting Muzzy v. Cahillane Motors, Inc., 434 Mass. 409,
411, 412 n.2 (2001). See College-Town, 400 Mass. at 162. A
sexually hostile or offensive work environment is one that is
"pervaded by harassment or abuse," resulting in "intimidation,
humiliation, and stigmatization" that poses a "'formidable
barrier' to the plaintiff's full participation in the workplace"
(citation omitted). Pelletier v. Somerset, 458 Mass. 504, 523-
524 (2010).
Considering the evidence in the light most favorable to the
plaintiff, the record is rife with evidence from which the jury
could have concluded that the behavior to which Gyulakian was
subjected was both objectively and subjectively offensive.
Ferreira's unwanted sexual attention came on a daily basis and
to such a degree that during her tenure under Ferreira,
11
Gyulakian was forced to implement a "no-touching" rule in order
to keep her supervisor at bay. From this evidence, the jury
could infer that Ferreira's conduct, over a period of eighteen
months, "was sufficiently pervasive to alter the conditions of
[Gyulakian's] employment, and thus created a sexually harassing
working environment." College-Town, 400 Mass. at 162. In any
event, the evidence was sufficient to support a finding that the
discrimination to which she was subjected caused her to suffer
emotional distress, interfered with her work performance, and
would have interfered with a reasonable person's work
performance, thus resulting in a "formidable barrier" to her
full participation in the workplace. See Esler v. Sylvia-
Reardon, 473 Mass. 775, 780 (2016), quoting Phelan v. May Dep't
Stores Co., 443 Mass. 52, 55 (2004); Pelletier, 458 Mass. at
523-524; Haddad v. Wal-Mart Stores, Inc. (No. 1), 455 Mass. 91,
93 n.3 (2009); Stonehill College v. Massachusetts Comm'n Against
Discrimination, 441 Mass. 549, 570-571, cert. denied sub nom.
Wilfert Bros. Realty Co. v. Massachusetts Comm'n Against
Discrimination, 543 Mass. 979 (2004).
ii. Jury instructions. Lexus asserts that the trial judge
committed material error in not including a separate special
question on the special verdict form regarding whether Gyulakian
12
sufficiently proved that her suffering was caused by Ferreira's
harassment.12
The jury were properly charged as to the law. The judge
instructed the jury that no damages could be awarded for
injuries not "conducted by one of the employer[']s supervisors."
The special verdict form also asked the following questions:
(1) "Do you find that Ms. Gyulakian was subjected to an unlawful
hostile work environment?" and (2) "What amount of damages, if
any, do you find were caused by the unlawful hostile work
environment?" The jurors checked the box indicating "Yes" as to
the first question, and determined that the hostile work
environment caused $40,000 worth of damages. The implication of
the trial judge's instruction, supplemented by the questions on
the special verdict form, is that Lexus could not be liable for
damages but for its supervisor causing the sexually hostile or
offensive work environment. The trial judge did not err in
denying the defendant's motion for judgment n.o.v. as to the
jury's award of compensatory damages.
b. Scope of punitive damages. This case puts at issue the
scope of an employer's liability for punitive damages when its
employee creates a sexually hostile or offensive work
12
Before the jury were charged, the defendant proposed a
special jury question that would have asked whether "sexual
harassment of the plaintiff [was] a substantial legal cause of
the plaintiff's injury." The judge denied the proposed
question.
13
environment.13 Gyulakian argues that punitive damages are
warranted against Lexus on two grounds: first, that Lexus
should be punishable based on the actions of its supervisory
13
The punitive damages jury instruction given by the trial
judge was in accord with our decision in Haddad, 455 Mass. at
110-111. The instruction was distributed to the jury, and read:
"If you find that the defendant has intentionally
discriminated against the plaintiff, you may consider
whether punitive damages are warranted. To sustain an
award of punitive damages, a finding of intentional
discrimination alone is not sufficient. An award of
punitive damages requires a heightened finding beyond
mere liability and also beyond a knowing violation of
the statute. Punitive damages are warranted where the
conduct is so offensive that it justifies punishment
and not merely compensation. Unlike compensatory
damages, which compensate the plaintiff for the harm
she has suffered, the purpose of punitive damages is
to punish the defendant for conduct that is outrageous
or egregious because of the defendant's evil motive or
reckless indifference to the rights of others.
Punitive damages are appropriate where the defendant's
misconduct is extraordinary and warrants condemnation
and deterrence.
"In making an award of punitive damages you
should consider:
"(1) The character and nature of the Defendant's
conduct;
"(2) The amount of money needed to deter any future
acts of discrimination;
"(3) The actual harm suffered by the Plaintiff; and
"(4) The magnitude of any potential harm to other
victims if similar future behavior is not deterred.
"If you do award punitive damages, you should fix
the amount by using calm discretion and sound reason
and make sure that such damages are not overlapping."
14
personnel, regardless of whether Lexus was aware of that
conduct; and, second, that, after being notified of the
harassment, Lexus's failure to take sufficient steps to remedy
the discrimination should be punishable.
As to Gyulakian's first proposed source of punitive
damages, we are not persuaded that a supervisor's creation of a
sexually hostile or offensive work environment alone is
sufficient to warrant the imposition of punitive damages on the
employer. Punitive damages are intended to fulfil a
prophylactic purpose, and serve little benefit when imposed on
an employer for the actions of a supervisory employee where that
supervisor's discriminatory transgressions were unknown to the
employer. See Haddad, 455 Mass. at 110-111 (punitive damages
only imposed for knowing violations and "outrageous or
egregious" conduct); Pine v. Rust, 404 Mass. 411, 415 (1989)
("Punitive damages are not favored in Massachusetts . . .");
Restatement (Second) of Agency § 217C (1958). In determining
whether to impose punitive damages against an employer based on
its supervisory employee's creation of a sexually hostile or
offensive work environment, the scope of our inquiry is
independent of the direct actions of that employee, and
considers whether the employer's response, once it is on notice
of the offensive behavior, was sufficient to address the
complained-of harassment.
15
Whether a plaintiff is entitled to punitive damages from
his or her employer on the basis of being exposed to a sexually
hostile or offensive work environment created by one of its
employees is therefore a two-step inquiry. We consider first
whether the employer was on notice of the harassment and failed
to take steps to investigate and remedy the situation; and,
second, whether that failure was outrageous or egregious. See
Haddad, 455 Mass. at 110.14,15
i. Waiver. Before we reach the issue whether Lexus is
liable for punitive damages, we must consider if Lexus waived
the opportunity to challenge the imposition of punitive damages
when it did not specifically move for a directed verdict on the
issue. The trial judge concluded that the issue was not waived
because Lexus raised the propriety of imposing punitive damages
14
While the punitive damages instructions fashioned from
Haddad, see note 13, supra, are fundamentally correct, in
circumstances where punitive damages are sought against an
employer arising out of the sexually offensive behavior of an
employee (even one with some supervisory responsibility), the
instructions should clarify that it is the actions of the
employer, not the actions of that employee, that are the
appropriate focus, and that it is the employer's conduct that
must be found to be outrageous or egregious, thereby justifying
punishment and not mere compensation.
15
The trial judge and parties label these two sources of
potential punitive damages liability as "vicarious" and
"direct," respectively. We note that all liability against
entities for the creation of sexually hostile or offensive work
environments is imputed, or "vicarious."
16
on an imputed basis under G. L. c. 151B while challenging the
availability of such damages on the special verdict form.
Motions for judgment n.o.v. are governed by Mass. R. Civ.
P. 50 (b), as amended, 428 Mass. 1402 (1998). They are allowed
"only when a motion for directed verdict has been made at the
close of evidence." Bonofiglio v. Commercial Union Ins. Co.,
411 Mass. 31, 34 (1991). A motion for a directed verdict must
"state the specific grounds therefor." Mass. R. Civ. P. 50 (a),
365 Mass. 814 (1974). Because a motion for judgment n.o.v. is
"technically a revised motion for a directed verdict, no grounds
for the motion for judgment [n.o.v.] may be raised which were
not asserted in the directed verdict motion." Bonofiglio,
supra. This requirement "is an important one," as it "allows
the judge knowingly to rule on the question before him [or her],
and it allows the opposing party an opportunity to rectify any
deficiencies in its case -- or, more precisely, an opportunity
to seek leave from the court to do so." Id. at 34-35.
The trial judge's disposition as to the waiver issue was
appropriate. Lexus's motion for a directed verdict, which
challenged the sufficiency of the evidence as to a finding of
liability, encompassed the potential for punitive damages, as
they were subsumed in the G. L. c. 151B claims, and any chance
for the return of punitive damages would have been nullified had
the trial judge granted the motion. See Bain v. Springfield,
17
424 Mass. 758, 761-762 (1997) (defendant's motion for directed
verdict on ground that evidence was insufficient for liability
preserved issue, raised for first time on appeal, that punitive
damages were excessive). This is particularly the case where
Lexus lodged a timely objection regarding punitive damages to
the proposed special verdict form, and it therefore successfully
preserved the issue for appeal.
ii. Lexus failed to take adequate remedial measures after
learning of Ferreira's sexually harassing conduct. Where the
employer is aware of a sexually hostile or offensive work
environment, the potential for punitive damages against the
enterprise is triggered and an inquiry into the response by the
employer is warranted. See Trinh v. Gentile Communications,
LLC, 71 Mass. App. Ct. 368, 376-377 (2008). The first step in
our analysis therefore is to consider whether Lexus was notified
of -- and failed to remedy -- the sexually hostile or offensive
work environment to which Gyulakian was subjected. Gyulakian
maintains that (1) she made complaints to management personnel
during her tenure at Lexus, (2) Lexus failed to respond
adequately to her complaints, and (3) Lexus's purported
investigation was a sham.
A. Lexus was on notice of Ferreira's behavior. There is
no bright line rule delineating who must be notified before an
employer has been put on notice of harassment in the workplace.
18
Suffice it to say, if an employee complains to the officials
identified in the employer's sexual harassment policy,16 the
employer would be put on sufficient notice to trigger an
obligation to investigate and take remedial action if the
complaint proves to be well founded. The failure to do so opens
the door to the potential imposition of punitive damages if the
jury conclude that the employer's failure was sufficiently
outrageous and egregious. Of course, an employer can become
aware of sexually harassing conduct engaged in by its employees
by means other than a complaint made in accord with the
employer's sexual harassment policy. Here, the evidence was
sufficient to support a jury finding that Lexus was on notice of
the sexually harassing conduct of its employee (Ferreira), well
before Gyulakian was terminated.
Testimony at trial tended to show that members of senior
management were aware of the sexually hostile or offensive work
environment at the organization. By way of example, O'Connell
(the Lexus general sales manager) witnessed Ferreira attempt to
throw coins down Gyulakian's blouse; Gyulakian testified that
she complained on several occasions to Bruno (the assistant
16
General Laws c. 151B, § 3A, requires that employers
establish a sexual harassment policy, including a list of
"persons to whom complaints should be made."
19
general sales manager) concerning Ferreira's conduct;17 and
Silvester, the former Lexus office manager, heard Ferreira
discussing anal sex in the office.18 Lexus was again put on
notice of the harassment on the day Gyulakian's employment was
terminated when she directly informed Liuzzi, O'Connell, and
Grady-Brown of Ferreira's conduct.
B. Lexus failed to adequately remedy the discrimination.
Because Lexus had been notified in at least two ways of the
sexual harassment in its workplace, we consider its remedial
efforts after those notifications. First and foremost, where a
conduit for sexual harassment notifications, as delineated in
the employer's sexual harassment policy, fails to appropriately
report or in any way investigate a sexual harassment complaint,
17
While there appears to be conflicting testimony regarding
whether the sexual harassment policy requires direct reporting
to the general manager or HR manager, the plain language of the
policy, corroborated by the HR manager at the time, Grady-Brown,
confirmed that it was acceptable to report harassment to any
member of management. The jury could have concluded that Bruno,
the assistant general sales manager and Ferreira's direct
supervisor, was an appropriate conduit for such complaints.
Whether notice by means of a complaint communicated in accord
with the employer's sexual harassment policy is necessary when
the alleged harasser is a member of senior management at the
company, and in such capacity may virtually stand in its shoes,
is not a question we need reach in this case.
18
After hearing this conversation, Silvester told Ferreira
that he believed that such conduct was inappropriate, drafted a
memorandum to that effect, and circulated it to his direct
supervisor, Joe Tieuli, the office comptroller. When O'Connell
and Liuzzi read Silvester's memorandum, they laughed and ignored
it. Ferreira was never punished.
20
that lack of response is per se evidence of a failure to
adequately remedy the purported discrimination. Here, because
there was evidence presented that Bruno failed to make any
remedial efforts after hearing reports that his supervisee was
creating a sexually hostile or offensive work environment, the
jury were entitled to conclude that Lexus did not adhere to its
own sexual harassment policy and failed to take any action to
remedy the discrimination.19
Second, the failure to remedy alleged discrimination also
can arise where the employer purports to investigate the
discrimination, but does so in an inadequate manner. Here, once
Liuzzi and Grady-Brown sought to look into Gyulakian's
complaint, the jury could have found their investigation to be
wholly insufficient. Liuzzi testified that, on learning of
Ferreira's sexual harassment during the meeting at which
Gyulakian reported Ferreira's conduct to him, he "honestly
didn't believe [Gyulakian]." Liuzzi told Gyulakian that there
might be a job opportunity at Toyota of Watertown (Toyota), a
sister company to Lexus, but then warned her that reporting the
sexual harassment to Grady-Brown (which she ultimately did)
might jeopardize that opportunity. Despite his reservations,
given his role in the company, Liuzzi was responsible for
19
Bruno denied receiving such complaints. The jury, having
observed the witnesses, were entitled to credit Gyulakian's
testimony.
21
conducting an adequate and impartial investigation into
Gyulakian's claims.
With respect to that investigation, Liuzzi testified that
he interviewed Ferreira, O'Connell, Bruno, and Joe Tieuli, the
Lexus comptroller. Liuzzi did not interview anyone besides
Ferreira in the finance department because he did not want to
undermine Ferreira. Liuzzi further testified that after Tieuli,
who had worked with Ferreira for twenty years, told him that
there had never been another allegation against Ferreira, Liuzzi
concluded his investigation. When Tieuli testified during the
trial, however, he denied that he had been questioned with
regard to Gyulakian's allegations.20 Grady-Brown also testified
during trial that she conducted her own investigation into
Gyulakian's complaints, but the jury saw no notes from any of
her or Liuzzi's investigative interviews.
Three cases, Haddad, 455 Mass. at 106-109; College-Town,
400 Mass. at 167-168; and Trinh, 71 Mass. App. Ct. at 377-378,
inform our inquiry into whether the investigation was adequate.
In Haddad, supra at 108, a case regarding gender discrimination,
we concluded that the defendant-employer's purported
investigation was a "sham," in that no male employees were
20
A response to Gyulakian's pretrial interrogatory asking
for a description of Lexus's investigation of Gyulakian's sexual
harassment report was read to the jury, and it included that
during his investigation, Liuzzi only interviewed Ferreira,
Bruno, O'Connell, and Silvester.
22
investigated or disciplined for infractions similar to those for
which the plaintiff's employment was terminated. We likewise
concluded that the defendant-employer in College-Town, supra,
was liable for a failure to investigate because "[the plaintiff]
was never informed about the staff meeting [at which the
investigation took place], while [the alleged harasser] was
present throughout. The staff were never questioned
individually. [The plaintiff] was never provided an opportunity
to confront [the alleged harasser], nor was she interviewed
after [the alleged harasser] and the staff had been approached."
Finally, in contrast, the Appeals Court reasoned in Trinh, supra
at 377-378, that punitive damages were not appropriate because
the defendant-employer's investigators interviewed all the
relevant personnel, took interview notes that reflected the
questions asked of their interview subjects, and gave the
plaintiff an opportunity to participate in the investigation.
In sum, based on our review of the trial record, we are
persuaded that there was sufficient evidence on which the jury
could find that members of Lexus management failed to conduct an
adequate investigation after being made aware of Ferreira's
reported harassment. There were several apparent discrepancies
and shortcomings in the alleged investigation: no members of
the finance department, who would have been most likely to
witness the alleged conduct, were interviewed, purportedly
23
because Liuzzi did not want to undermine Ferreira, see College-
Town, 400 Mass. at 167-168; Gyulakian was never contacted during
the course of the investigation, see id.; and the investigation
was marred from the beginning, as it was carried out by a member
of management who admitted to carrying a bias against the
plaintiff. See Haddad, 455 Mass. at 106-109. It is
particularly concerning that the purported investigation
uncovered no corroboration of Gyulakian's allegations regarding
the sexualized workplace even though a former office manager had
previously circulated a memorandum regarding Ferreira's
inappropriate behavior. It is also noteworthy that many of
Gyulakian's allegations were corroborated at trial by members of
the Lexus staff, none of whom was contacted as part of Lexus's
internal investigation.21 See College-Town, supra.
21
Taylor Benson, a former title clerk at Lexus, testified
that Ferreira made a comment regarding anal sex (which she
reported to Silvester), that she witnessed Ferreira threatening
to violate Gyulakian's "no touching" rule on several occasions,
and that Ferreira personally made an inappropriate comment to
her regarding her shirt. Ferreira told Benson that Gyulakian
wore "stripper shoes." Benson was not interviewed as part of
the investigation. Scott Polivy, a former salesperson at Lexus,
confirmed that Ferreira had commented on Gyulakian's breasts at
the office. Polivy was not interviewed as part of the
investigation. Adam Skolnick, the former general sales manager
who supervised Ferreira, heard him making comments about female
coworkers' breasts and buttocks that would not have been
acceptable at "church or temple." Skolnick was not interviewed
as part of the investigation. Michael Berube, a former sales
consultant, testified regarding Ferreira's daily "vulgar
profanity" relating to women, including their female coworkers.
24
In any event, given that the breadth of Lexus's
investigation was a disputed issue at trial, the jury could have
found that any such investigation was abbreviated and colored by
Liuzzi's belief that Gyulakian's claims were false. See Esler,
473 Mass. at 780, quoting Phelan, 443 Mass. at 55; Haddad, supra
at 94 n.5.
iii. Lexus's failure to take adequate remedial measures
after being notified of Ferreira's conduct warranted the
imposition of punitive damages. Where the employer's failure to
remedy the discriminatory conduct is "outrageous or egregious,"
Haddad, 455 Mass. at 110, punitive damages may be imposed.22 In
Haddad, we fashioned a list of factors appropriate in
determining whether punitive damages are appropriate. Id. at
111. We look to (1) "whether there was a conscious or
purposeful effort to demean or diminish the class of which the
plaintiff is a part (or the plaintiff because he or she is a
member of the class)"; (2) "whether the defendant was aware that
the discriminatory conduct would likely cause serious harm, or
22
Our punitive damages analysis requires a "knowing
violation of the statute." Haddad, 455 Mass. at 110. Where
employers are required by statute to adopt a policy against
sexual harassment, G. L. c. 151B, § 3A, we are satisfied that an
employer that is aware of workplace harassment and fails to
remedy that harassment has committed a "knowing violation of the
statute." Haddad, supra at 108, 110 (evidence that employer has
policy prohibiting harassment sufficient for showing that it was
aware that gender discrimination was not legally permitted).
Our analysis is therefore limited to whether that failure was
"outrageous or egregious." Id. at 110.
 25
recklessly disregarded the likelihood that serious harm would
arise"; (3) "the actual harm to the plaintiff"; (4) "the
defendant's conduct after learning that the initial conduct
would likely cause harm"; and (5) "the duration of the wrongful
conduct and any concealment of that conduct by the defendant."
Id.
In considering whether Lexus's failure to remedy the
discrimination warrants the imposition of punitive damages, we
again examine its conduct at both of the junctures at which we
determined it was on notice of Ferreira's conduct. The analysis
therefore takes into account the fact that Lexus both failed to
comply with its own sexual harassment policy and also failed to
make an adequate inquiry once an investigation began.
Lexus was aware, through Bruno, that Gyulakian had made
multiple complaints regarding Ferreira. It was also aware, as
evidenced by its sexual harassment policy, that sexual
harassment in the workplace is unlawful. Therefore, when Bruno
failed to proceed with any investigation, as was required by the
sexual harassment policy, this failure was made with Lexus's
knowledge that such conduct would cause continued discriminatory
harm. Haddad, 455 Mass. at 111 (second factor). The fourth and
fifth Haddad factors, both concerning the defendant's conduct
after learning of the discrimination, also strongly weigh in
26
favor of Gyulakian, given that the jury were entitled to find
that Lexus's investigation was woefully insufficient. See id.
Based on the foregoing, we conclude that the jury were
warranted in finding that, independent of Ferreira's harassing
conduct, Lexus acted intentionally or with reckless disregard
for Gyulakian's rights under the discrimination laws, and that
its actions were outrageous or egregious. See id. The trial
judge's allowance of Lexus's motion for judgment n.o.v. as to
the award of punitive damages is therefore reversed, and the
jury award is reinstated. However, because the trial judge did
not consider Lexus's motion for remittitur as to those punitive
damages, instead opting to vacate them entirely, the case is
remanded for consideration of that issue.23
c. Attorney's fees. The trial judge allowed Gyulakian's
motion for attorney's fees but, after also granting Lexus's
motion for judgment n.o.v. as to the punitive damages award,
concluded that "[t]he vacated award of punitive damages
represented a significant portion of the plaintiff's award."
She therefore reduced the award of attorney's fees by twenty-
five per cent. Having reinstated the punitive damages award, we
also conclude that the judge's reduction in the plaintiff's
23
The motion for remittitur is only remanded to consider
the award of punitive damages, not compensatory damages.
27
attorney's fees is inappropriate, and remand the case to the
Superior Court for a calculation of the amount to be paid.24
3. Conclusion. The judge's order granting judgment n.o.v.
as to the punitive damages award is reversed, the jury's verdict
is reinstated, and the case is remanded for calculation of
Gyulakian's attorney's fees and consideration of Lexus's motion
for remittitur as to the award of punitive damages.25 In all
other respects, judgment for the plaintiff is affirmed.
So ordered.
24
A prevailing party on a G. L. c. 151B claim is entitled,
"irrespective of the amount in controversy," to reasonable
attorney's fees and costs, "unless special circumstances would
render such an award unjust." G. L. c. 151B, § 9. The amount
of attorney's fees "is largely discretionary with the judge, who
is in the best position to determine . . . the fair value of the
attorney's services." Fontaine v. Ebtec Corp., 415 Mass. 309,
324 (1993).
25
Gyulakian asserts that postjudgment interest should be
calculated from the date of the verdict (December 19, 2014)
rather than from the date judgment was entered (March 31, 2015).
See Mass. R. Civ. P. 58 (a), as amended, 371 Mass 908 (1977)
("clerk . . . shall forthwith prepare, sign and enter judgment
without awaiting any direction by the court"; "[e]ntry of the
judgment shall not be delayed for the taxing of costs");
Fontaine, 415 Mass. at 328 ("plaintiff is entitled to
postjudgment interest on the liquidated damages award . . . from
. . . the date of the jury's verdict"). "The court, however,
retains power to order otherwise where, for example, the court
has before it a motion for judgment n.o.v. (Rule 50 [b]) and
directs that the clerk not enter judgment . . . immediately."
1973 Reporters' Notes to Rule 58, Mass. Ann. Laws Court Rules,
Rules of Civil Procedure, at 1108 (LexisNexis 2015). Here, the
judge did not rule on the defendant's motion for judgment n.o.v.
until March 24, 2015, and judgment on the jury's verdict was not
entered until March 31, 2015. We leave the disposition of the
interest matter to the trial court, to be determined as part of
the defendant's motion for remittitur.