IN THE UNITED STATES DISTRICT COURT FOR THE CENTRAL DISTRICT OF EREWHON. HEALTHY, WEALTHY & WISE LLP and NAUGHTSO WISE, an individual,

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1 Civil Action No PATRICIA STRONG, Plaintiff, v. IN THE UNITED STATES DISTRICT COURT FOR THE CENTRAL DISTRICT OF EREWHON HEALTHY, WEALTHY & WISE LLP and NAUGHTSO WISE, an individual, Defendants. DEFENDANTS' ADDITIONAL BRIEF IN SUPPORT OF SUMMARY JUDGMENT Defendants Healthy, Wealthy & Wise LLP and Naughtso Wise, by and through their attorneys Gibson, Dunn & Crutcher LLP, hereby submit this additional brief in support of their summary judgment motion pursuant to the Court's May 15, 2000 Order. In sum, this brief establishes that: (1) Healthy, Wealthy & Wise is not responsible for Mr. Wise's alleged conduct under a direct, "alter ego" theory of liability because Mr. Wise is not the firm's alter ego; (2) the undisputed facts preclude a finding of sexual harassment because Mr. Wise's alleged conduct was not sufficiently pervasive or severe to alter the conditions of Ms. Strong's employment; and (3) the undisputed facts do not preclude the Faragher/Ellerth affirmative defense because the alleged harassment did not culminate in any tangible employment action against Ms. Strong by the firm or Mr. Wise, the firm had an effective anti-harassment policy, and Ms. Strong unreasonably failed to avail herself of means by which to prevent or correct the alleged harassing behavior. 1

2 I. Healthy, Wealthy & Wise LLP Is Not Legally Responsible For The Alleged Actions Of Mr. Wise Under A Direct, "Alter-Ego" Theory Of Liability. In the landmark sexual harassment cases, Faragher v. City of Boca Raton, 118 S. Ct (1998), and Burlington Industries, Inc. v. Ellerth, 118 S. Ct (1998), the Supreme Court clarified the circumstances under which an employer may be held liable for a supervisor's harassing conduct. Applying common law agency principles, the Court observed that an employer may be liable for torts committed by an employee within the scope of his employment. Ellerth, 118 S. Ct. at But the "general rule is that sexual harassment by a supervisor is not conduct within the scope of employment." Id. at In limited circumstances, employers also may be liable when employees commit torts outside the scope of employment. Id. Those circumstances include the following: (1) the employer intended the conduct; (2) the employer knew or should have known about it and failed to take remedial action; (3) the conduct violated a nondelegable duty; or (4) the supervisor used "apparent authority" or was aided in committing the harassment by the existence of his agency relationship with the employer. Id. The Court did not discuss the first of these theories, except to note that it "addresses direct liability, where the employer acts with tortious intent, and indirect liability, where the agent's high rank in the company that makes him or her the company's alter ego." Id. (emphasis added). None of the parties in Ellerth claimed that the harasser's "rank impute[d] liability under this principle." Id. Here, however, Ms. Strong apparently contends that, if the allegations against Mr. Wise are proven, Mr. Wise's rank automatically imputes liability to Healthy, Wealthy & Wise. Ms. Strong is mistaken. An employee is not considered a company's "alter ego" based on rank alone. The sexual harassment cases in which individuals have been found to be "alter egos" require more, and are easily 2

3 distinguished from this case. For example, in Santiago v. Lloyd, 33 F. Supp. 2d 99 (D. Puerto Rico 1998), the court found that the alleged harasser, Lloyd, was a 50% stockholder and president of the defendant employer, and that he was "always physically there 'supervising' the business." Id. at 104. The court noted that Lloyd's "role [was] more than that of a mere supervisor but [was] actually identical to that of the employer"; thus he was an "alter ego." Id. at (emphasis added). Similarly, in Janopoulos v. Harvey L. Walner & Assoc., Ltd., 835 F. Supp. 459 (N.D. Ill. 1993), the court found that individual defendant Harvey Walner was the only partner of the defendant law firm, and the only person with his amount of authority and responsibility. Id. at 462. In concluding that he was an "alter ego," the court noted, "Walner is the law firm." Id. (emphasis added). Here, Mr. Wise is not the law firm. He is merely one of its 40 partners worldwide. (See Undisputed Fact No. 17.) Mr. Wise is not the only person with his amount of authority and responsibility within the firm. At a minimum, Mr. Healthy and Mr. Wealthy share equal responsibility with him. "[I]n the alter-ego cases, the individual defendant was, in fact, the employer because, among other factors, the supervisor invariably left no avenue for his employees to object to his conduct." Canabal v. Aramark Corp., 48 F. Supp. 2d 94, 98 (D. Puerto Rico 1999). By contrast, Ms. Strong had the opportunity to complain about Mr. Wise's alleged conduct pursuant to the firm's sexual harassment policy, which provided multiple avenues of complaint and an assurance of non-retaliation. (Undisputed Fact No. 16.) Because Mr. Wise is not the "alter ego" of Healthy, Wealthy & Wise, the firm cannot be held liable for his alleged conduct under a direct, "alter-ego" theory of liability. 3

4 II. The Undisputed Facts Preclude A Finding That Sexual Harassment Occurred. To establish a sexual harassment claim, a plaintiff must prove four elements: (1) unwelcome conduct; (2) based on the plaintiff's gender; (3) sufficiently pervasive or severe to alter the conditions of employment and to create a hostile work environment; and (4) some basis for imputing liability to the employer. See Patterson v. County of Fairfax, No , 2000 U.S. App. LEXIS 11009, at *9-10 (4th Cir. May 18, 2000). With regard to the third element, the Supreme Court has made it "abundantly clear that... isolated incidents (unless extremely serious) will not amount to discriminatory changes in the terms and conditions of employment.'" Id. at *12 (quoting Faragher). "Not all offensive workplace behavior violates the law." Smith v. Sheahan, 189 F.3d 529, 532 (7th Cir. 1999). When determining whether alleged harassment is sufficiently pervasive or severe to alter the conditions of employment and create a hostile work environment, courts must examine all the circumstances, including "the frequency of the discriminatory conduct; its severity; whether it is physically threatening or humiliating, or a mere offensive utterance; and whether it unreasonably interferes with an employee's work performance." Harris v. Forklift Sys., Inc., 510 U.S. 17, 23 (1993). The duration of sexually offensive conduct is not conclusive. Indest v. Freeman Decorating, Inc., 168 F.3d 795, 802 (5th Cir. 1999) (Weiner, J., concurring). However, "[i]f a single incident can ever suffice to support a hostile work environment claim, the incident must be extremely severe." Brooks v. City of San Mateo, No , 2000 U.S. App. LEXIS 12165, at *13 (9th Cir. June 5, 2000). See, e.g., Al-Dabbagh v. Greenpeace, 873 F. Supp. 1105, 1111 (N.D. Ill. 1994) (a single incident was actionable where the assailant "slapped [plaintiff], tore off her shirt, beat her, 4

5 hit her on the head with a radio, choked her with a phone cord and ultimately forced her to have sex with him"); see also Lockard v. Pizza Hut, Inc., 162 F.3d 1062, 1072 (10th Cir. 1998) (a "single incident of physically threatening conduct" in which a customer pulled his waitress by the hair, grabbed her breast, and placed his mouth on it was actionable). In Brooks, the plaintiff was a telephone dispatcher for the City of San Mateo U.S. App. LEXIS 12165, at *1-2. One evening, senior dispatcher Steven Selvaggio approached Brooks as she was taking a 911 call and placed his hands on her stomach, commenting on its sexiness. Id. at *2. Brooks told Selvaggio to stop touching her and forcefully pushed him away. Id. Undaunted, Selvaggio later positioned himself behind Brooks' chair, boxing her in, and forced his hand underneath her sweater and bra to fondle her bare breast. Id. Brooks removed Selvaggio's hand and told him he had "crossed the line." Id. Selvaggio responded, "You don't have to worry about cheating [on your husband], I'll do everything." Id. He approached her as if he would fondle her again, but another dispatcher arrived at that time and Selvaggio stopped. Id. A short time later, Selvaggio took a break and left the building. Id. Brooks reported the incident immediately and the city took prompt corrective action. Id. at *2-3. Selvaggio resigned from his job as he was being fired and pled no contest to misdemeanor sexual assault charges, spending 120 days in jail. Id. at *3. Brooks had trouble recovering from the incident and eventually resigned her employment as well. Id. at *3-4. She filed suit, but the district court held that the sexual harassment was not sufficient to create a hostile work environment. Id. at *6. The Ninth Circuit Court of Appeals, relying on the Supreme Court's decision in Harris v. Forklift Systems, Inc., agreed: 5

6 Brooks did not allege that she sought or required hospitalization; indeed, she did not suffer any physical injuries at all. The brief encounter between Brooks and Selvaggio was highly offensive, but nothing like the ordeal suffered by the unfortunate young woman in Al-Dabbagh [supra], who was held captive from evening until early the next morning. Utilizing the Harris factors of frequency, severity and intensity of interference with working conditions, we cannot say that a reasonable woman in Brooks' position would consider the terms and conditions of her employment altered by Selvaggio's actions. Brooks was harassed on a single occasion for a matter of minutes in a way that did not impair her ability to do her job in the long-term, especially given that the city took prompt steps to remove Selvaggio from the workplace. Id. at * Thus, the court concluded, "no reasonable woman in Brooks's position would consider that Selvaggio's misconduct had altered the terms or conditions of her employment." Id. at *18. See also, e.g., Minor v. Ivy Tech State College, 174 F.3d 855, (7th Cir. 1999) (no sexual harassment where the Chancellor of the college where the plaintiff worked called her almost every day, used a sexy voice, stated that he had been watching her through a window and knew what she was doing, called her at home and, finally, put his arms around her, kissed her, and squeezed her); Koelsch v. Beltone Elec. Corp., 46 F.3d 705, 708 (7th Cir. 1995) (no sexual harassment where the company president rubbed plaintiff's leg, grabbed her buttocks, and asked her for dates); Saxton v. American Tel. & Tel. Co., 10 F.3d 526, (7th Cir. 1993) (no sexual harassment where plaintiff's supervisor put his hand on her leg and kissed her until she pushed him away, and on another occasion lurched at her and tried to grab her); Weiss v. Coca- Cola Bottling Co. of Chicago, 990 F.2d 333, 337 (7th Cir. 1993) (no sexual harassment where supervisor asked plaintiff for dates, called her a "dumb blond," put his hand on her shoulder several times, placed "I love you" signs in her work area, and attempted to kiss her). If the allegations in Brooks, Minor, Koelsch, Saxton, and Weiss do not rise to the level of actionable sexual harassment, then neither do Ms. Strong's allegations of 6

7 her encounter with Mr. Wise. Ms. Strong claims that, on one occasion, following an after-hours Independence Day celebration, Mr. Wise embraced her, requested "sexual favors" and, when she refused, shouted that she would be "very, very sorry." (Undisputed Fact Nos ) As in Brooks, this brief encounter, if proven, was "highly offensive." 2000 U.S. App. LEXIS 12165, at * But it was nothing like the ordeal suffered by the plaintiff in Al-Dabbagh. Ms. Strong does not allege that she required hospitalization. She does not even claim that she suffered any physical harm. Like Brooks, Ms. Strong "was harassed on a single occasion for a matter of minutes in a way that did not impair her ability to do her job in the longterm." Id. Indeed, Ms. Strong contends that, throughout her employment, she maintained a "spotless work record." See Scusa v. Nestle U.S.A. Co., 181 F.3d 958, 967 (8th Cir. 1999) (despite the alleged harassment, the plaintiff "was able to work full shifts and perform all of her duties"). As the Patterson court stated, "'We cannot construe Title VII to 'provide a remedy for every instance of verbal or physical harassment in the workplace,'" nor can we "forge 'a federal guarantee of refinement and sophistication in the workplace.'" 2000 U.S. App. LEXIS 11009, at *12 (citation omitted). To hold that the single incident about which Ms. Strong complains amounted to a hostile work environment would stretch Title VII beyond permissible limits. III. The Undisputed Facts Do Not Preclude But Instead Establish A Faragher/Ellerth Affirmative Defense. To merit an instruction on the Faragher/Ellerth affirmative defense, an employer must establish that: (1) the supervisor's harassment did not culminate in a "tangible employment action," such as a discharge, demotion, or undesirable reassignment; (2) there is some evidence that the employer reasonably attempted to 7

8 correct and prevent sexual harassment; and (3) there is some evidence that the employee unreasonably failed to use the avenues presented to prevent or correct the harassment. Savino v. C.P. Hall Co., 199 F.3d 925, 933 (7th Cir. 1999). Defendants address these three requirements in turn. A. The Alleged Harassment Did Not Culminate In A Tangible Employment Action. A tangible employment action must cause a "substantial detriment to the plaintiff's employment relationship." Savino, 199 F.3d at 933. A tangible employment action constitutes 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 See also Savino, 199 F.3d at 933 (tangible employment action is "akin to an adverse employment action, as courts have used the term"); Hill v. American Gen. Fin., Inc., No , 2000 U.S. App. LEXIS 8775, at *14 (7th Cir. May 4, 2000) (adverse employment action "occurs when an employee is fired or demoted, suffers a decrease in benefits or pay, or is given a significantly lesser job"). "A tangible employment action in most cases inflicts direct economic harm." Ellerth, 118 S. Ct. at Significantly, the tangible employment action must be the culmination of the alleged harassment. As the Supreme Court explained in Ellerth, the agency rule that permits an employer to be held vicariously liable for a supervisor's harassing conduct requires that the supervisor was "aided in accomplishing" that conduct "by the existence of the agency relation." 118 S. Ct. at The Court went on to state the "mere existence of the employment relation aids in commission of the harassment... when a supervisor takes a tangible employment action against the 8

9 subordinate." Id. Likewise, in Faragher, the Supreme Court stated that no affirmative defense is available "when the supervisor's harassment culminates in a tangible employment action." 118 S. Ct. at In other words, the tangible employment action must have been taken by the alleged harasser. Thus, the Fourth Circuit Court of Appeals in Brown v. Perry found it significant that the alleged harasser, William Boyd, "was not directly involved with any employment decisions concerning Brown." 184 F.3d 388, 390 (4th Cir. 1999). The court stated, "Brown suffered no tangible employment action at Boyd's hands. Boyd simply took no part in any decision to hire, fire, discharge, transfer, or reassign Brown, or in any way to alter her employment benefits." Id. at 395 (emphasis added). Id. Similarly, in Hooker v. Wentz, the district court observed that "Susie Dameron, rather than [defendant] Wentz, was the supervisor who refused to consider Hooker for the job" and "her decision was not related to the alleged sexual harassment by Wentz." 77 F. Supp. 2d 753, (S.D. W.Va. 1999). The company's "refusal to promote Hooker to a part-time supervisory position was therefore not the culmination of Wentz's sexual harassment." Id. at 757. See also Vandermeer v. Douglas County, East Fork Fire Dist., 15 F. Supp. 2d 970, 983 (D. Nev. 1998) ("There is no question but that Vandermeer suffered a 'tangible employment action' she was clearly fired. However, it is not clear that her termination was the 'culmination' of Stangle's harassment."). Here, even if Ms. Strong's failure to make partner in 1999 is considered a tangible employment action, it was not a tangible employment action taken by Mr. Wise and Mr. Wise's alleged actions respecting Ms. Strong did not culminate in the decision to defer partnership consideration for another year. It is undisputed, and corroborated by contemporaneous firm records, that Mr. Wise abstained from the 9

10 partnership vote. (Undisputed Fact No. 21.) He effectively recused himself. Although there is ample evidence in the record that Mr. Wise had concerns about Ms. Strong's job performance and commitment to the firm (see Undisputed Fact Nos. 6-8), he evidently concluded there might be an appearance of conflict if he were to participate in the partnership vote. Because Mr. Wise abstained, the decision not to make Ms. Strong a partner in 1999 was not the culmination of the alleged sexual harassment by Mr. Wise. For this reason, Defendants are entitled to a Faragher/Ellerth defense here. Moreover, no tangible employment action was taken. Although Ms. Strong was not made a partner in November 1999, Mr. Wealthy told Ms. Strong that the firm intended to review her record again in 2000 with the expectation that, with renewed commitment and fine effort, she would then make partner. No evidence controverts this stated intention. (Undisputed Fact No. 23.) Under these circumstances, Ms. Strong's failure to make partner in 1999 was not a "significant change" in her "employment status." Ellerth, 118 S. Ct. at In fact, it did not represent a "change" at all; Ms. Strong remained a partnership-track associate with Healthy, Wealthy & Wise until she voluntarily resigned. (Undisputed Fact No. 24.) B. Healthy, Wealthy & Wise Reasonably Attempted To Prevent Sexual Harassment When crafting this first prong of the Faragher/Ellerth affirmative defense, the Supreme Court sought to give effect to Title VII's deterrent purpose. See Faragher, 118 S. Ct. at 2292; Ellerth, 118 S. Ct. at Thus, the Supreme Court implied that an employer could meet its initial burden to show it had exercised reasonable care to prevent sexual harassment by proving it had an appropriate anti-harassment policy. See Faragher, 118 S. Ct. at 2293 (while an appropriate anti-harassment policy with 10

11 complaint procedure is not always necessary to sustain the defense, it is a relevant consideration). In addition, the employer would be required to show that it had disseminated the policy among its employees. See id. And any such policy would have to be both reasonably designed and reasonably effectual. Brown v. Perry, 184 F.3d 388, 396 (4th Cir. 1999) (citing Faragher, 118 S. Ct. at ). The court was confronted with the question of the reasonableness of a defendant's anti-harassment policy in Madray v. Publix Supermarkets, Inc., No , 2000 U.S. App. LEXIS 6681 (11th Cir. 2000). The Madray plaintiff challenged the policy on the ground that its complaint procedures identified only one person in each store who could be contacted regarding sexual harassment, the store manager. Id. at *20. The court noted that the Supreme Court in Ellerth and Faragher provided "guidance regarding the minimum requirement for an anti-harassment policy's complaint procedures to be considered effective." Id. Specifically, the Supreme Court referred to a 1990 policy statement from the EEOC encouraging employers to establish a complaint procedure that did not require a victim to complain first to the offending supervisor. Id. at *21 (citing Faragher, 118 S. Ct. at 2292). The Madray court found that the defendant's policy met the standard described by the EEOC. Although the store manager was the only designated company representative within a store, the policy also designated several individuals outside an employee's store to whom the employee could complain. Id. These other individuals were accessible to employees; for example, "District Manager Rhodes visited store 118 at least once each week and phone numbers, including a toll-free number, were provided for other appropriate company representatives." Id. at * Because the court could find no "inherent defect" in the defendant's anti-harassment policy, nor any evidence that it was administered 11

12 in bad faith, the court concluded that the defendant exercised reasonable care to prevent sexual harassment. Id. at *24. See also, e.g., Montero v. Agco Corp., 192 F.3d 856, 862 (9th Cir. 1999) (policy that only allowed harassment complaints to be made to the employee's supervisor and the Human Resources Department met the requirement that the employer exercise reasonable care to prevent harassment); Ritchie v. Stamler Corp., No , 2000 U.S. App. LEXIS 568 (6th Cir. Jan. 12, 2000) (policy that only allowed harassment complaints to be made in writing to the president of the company was reasonable). Here, it is undisputed that Healthy, Wealthy & Wise had in place a standard sexual harassment policy in (Undisputed Fact No. 16.) Moreover, it was published internally to all lawyers and staff, and it provided multiple avenues of complaint and an assurance of non-retaliation. (Id.) The fact that the law firm's policy allegedly did not prevent sexual harassment by Mr. Wise is not evidence that the policy was unreasonable. As the court noted in Brown v. Perry, "Sometimes... an employer's reasonable attempt to prevent future harm will be frustrated by events that are unforeseeable and beyond the employer's control. The law requires an employer to be reasonable, not clairvoyant or omnipotent." 184 F.3d at 396. Because Healthy, Wealthy & Wise had in place and had published internally an appripriate anti-harassment policy, substantial uncontroverted evidence establishes that it reasonably attempted to prevent sexual harassment. C. Ms. Strong Unreasonably Failed To Use The Avenues Presented To Prevent Or Correct The Harassment The final element of the Faragher/Ellerth affirmative defense asks whether the employee took advantage of opportunities provided to prevent or correct the harassment. It is "incumbent" upon the employee to "utilize the procedural 12

13 mechanisms established by the company specifically to address problems and grievances." Farley v. American Cast Iron Pipe, 115 F.3d 1548, 1554 (11th Cir. 1997). The problem of workplace discrimination cannot be corrected without the victims' cooperation. Coates v. Sundor Brands, 164 F.3d 1361, 1366 (11th Cir. 1999). Thus, "failure to use any complaint procedure provided by the employer... will normally suffice to satisfy the employer's burden" under this element of the Faragher/Ellerth defense. Faragher, 118 S. Ct. at Here, it is undisputed that Ms. Strong failed to use the complaint procedure provided by Healthy, Wealthy & Wise. She has admitted that she did not discuss the July 4, 1999 incident with any of the firm's 40 partners, including its five female partners. (Undisputed Fact No. 17.) Although Ms. Strong asserts that she did not report the alleged harassment because she feared retaliation, "apprehension does not eliminate the requirement that the employee report harassment: 'an employee's subjective fears of confrontation, unpleasantness or retaliation do not alleviate the employee's duty under Ellerth to alert the employer to the allegedly hostile environment.'" Hill v. American Gen. Fin., Inc., No , 2000 U.S. App. LEXIS 8775, at *12 (7th Cir. May 4, 2000) (quoting Shaw v. Autozone, Inc., 180 F.3d 806 (7th Cir. 1999), cert. denied, 120 S. Ct. 790 (2000)). This evidence alone is sufficient to show that Ms. Strong unreasonably failed to use the avenues presented to prevent or correct the alleged harassment. See, e.g., Savino, 199 F.3d at 933 (evidence that Savino failed to complain about harassment for four months and did not report all of the alleged incidents even then satisfied the final criterion of the Faragher/Ellerth defense). Furthermore, although Ms. Strong had been warned by a co-worker in the London office to "be careful" of the named partners, particularly Mr. Wise, when they 13

14 "came to London on their own," she permitted Mr. Wise to walk her to her flat following the Independence Day celebration. (Undisputed Fact No. 13.) This undisputed fact constitutes evidence that Ms. Strong failed to "avoid harm otherwise." See Brown v. Perry, 184 F.3d 388, 397 (4th Cir. 1999) (plaintiff failed to "avoid harm otherwise" when, less than six months after rebuffing the 14

15 alleged harasser's advances, she "unnecessarily put herself in a situation that permitted repetition of precisely the same kind of advances."). Accordingly, the uncontradicted facts establish a Faragher/Ellerth affirmative defense. Dated: June 28, 2000 Respectfully submitted, DAVID A. CATHCART JESSICA LEE GIBSON DUNN & CRUTCHER LLP 333 South Grand Avenue, Suite 4600 Los Angeles, CA (213) Attorneys for Defendants HEALTHY, WEALTHY & WISE LLP and NAUGHTSO WISE 15