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EEOC v. Xerxes Corp., No. 10-1156 (4th Cir. Apr. 26, 2011)

Hats off to the EEOC for persuading the Fourth Circuit to remand, for a trial, a claim that a manufacturer did not act quickly enough in 2005-06 to protect African-American assembly plant employees from a racially hostile environment. The court affirms judgment for the employer, on the other hand, on claims after that period when the employer picked up the pace and started disciplining and (in one case) firing the offenders.

EEOC v. Xerxes Corp., No. 10-1156 (4th Cir. Apr. 26, 2011): The panel unanimously (though in three separate opinions) holds that there was at least a genuine issue of material fact - one fit for a jury to resolve - whether the company ignored storm warnings of trouble at the plant for three and as much as eight months before taking steps to end it.

The documented acts of harassment - all by co-workers of the black employees - are typical of the kinds of misbehavior witnessed in these cases: "the repeated use of racial slurs . . . as well as to various pranks by unknown coworkers that they believed were racially motivated." The "pranks" included "turning the lights off in the bathroom and throwing wet paper towels at [one employee], placing gel on the doorknob in the bathroom so that he could not open the door, tampering with his toolbox lock, and hiding his toolbox." The black employees testified that, in accordance with the company's anti-harassment policy, they went to their supervisor with complaints as early as June 2005, but no action was taken until the following year. (The company disputes that any complaints were made until February 2006.)

Under Title VII, to impose corporate liability for harassment by co-workers, the employer must in some way fall short of its duty to maintain a harassment-free workplace. This usually, though not always, requires that one or more employees make use of the employer's internal complaint processes to make the company officially aware of the problem. In this case Xerxes denied that the employees did so until February 2006. But the panel holds that there are two sides to that argument:

"As the direct supervisor of [black employees] Pearson and Wilson, therefore, Shifflett was specifically designated as an appropriate person to receive such complaints [under Xerxes' policy].

"Xerxes disputes that complaints of racial harassment were made to Shifflett prior to the February 3, 2006 incident with Gatrell and Myers, but a jury could reasonably credit the testimony of Pearson and Wilson and conclude otherwise. Accordingly, we hold that a reasonable juror could find that the complaints by Pearson and Wilson to Shifflett prior to February 2006 were sufficient to place Xerxes on actual notice of the racial slurs and pranks in the plant and that Xerxes' response was unreasonable."

After February 2006, after a particular alleged incident came to the company's attention, management finally reacted in earnest: new more specific reporting policies were put in place, meetings with shift employees, individual counseling  of two harassers (and a requirement that the offenders apologize), and a warning of future formal disciplinary action. In response to future complaints of harassment - in one case, a drawing of a stick figure in a noose with "KKK" added for good measure - there were immediate investigations, follow-up counseling and refresher training, unpaid suspensions for identified offenders, and final written warnings. In one instance, an offending co-worker was fired. For the noose drawing, Xerxes called law enforcement in to investigate (though the culprit was never identified).

As to the post-February 2006 period, then, the panel holds unanimously that Xerxes took steps reasonably calculated to prevent and correct racial harassment, and affirms summary judgment as to those claims. The panel also affirms summary judgment on a claim concerning another employee, who it holds was not subjected to a sufficiently severe or pervasive hostile work environment.

Two concurring opinions supplement the panel opinion (signed by Judge Traxler). Judge Wilkinson commends the balance that the panel opinion strikes, and notes:

"The undisguised ugliness of the incidents alleged here stands as a rebuke to complacency and a reminder that the task of racial reconciliation in our country remains incomplete. When judges speak of impermissible alterations of the terms and conditions of employment, what we mean is that no one should endure under law displays of racial bigotry at work."

Judge Motz places emphasis on the circumstance that none of the alleged harassers were in management, which - had that otherwise been the case - would have tilted the analysis sharply in favor of the EEOC: "If an employer's president or another management official . . . had perpetrated this harassment, it would certainly be imputable to the employer."

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