Dulaney v. Packaging Corp. of America, No. 10-2316 (4th Cir. Mar. 12, 2012)

| Mar 14, 2012 | Daily Developments in EEO Law |

The employer’s affirmative defense to sexual harassment claims – recognized by the Supreme Court in Faragher v. Boca Raton, 524 U.S. 775 (1998), and Burlington Indus. v. Ellerth, 524 U.S. 742 (1998) – does not apply if a supervisor’s harassment culminates in a “tangible employment action,” defined as a significant adverse change in employment status. In a rare court of appeals opinion presenting this issue, the Fourth Circuit reverses summary judgment and holds that to compel an employee either to sign a severance agreement or be fired may constitute such a tangible employment action.

Dulaney v. Packaging Corp. of America, No. 10-2316 (4th Cir. Mar. 12, 2012): Ms. Dulaney was hired as a temporary hourly employee. Bobby Mills, a “lead production worker,” had the authority over employees such as Dulaney “to assign work, send employees home early without pay, and assess them points pursuant to PCA’s progressive discipline system.” Mills allegedly pressured Dulaney into a series of unwanted sexual encounters at work. At some point, Mills began spreading sexual rumors about Dulaney at the plant, such as that she transmitted venereal disease.

Dulaney’s complaints to management came to naught:

“Dulaney complained about Mills’s derogatory remarks to his direct supervisor, Mike Bourne. Bourne responded to this complaint by reminding Dulaney that she was ‘replaceable.’ J.A. 48. Dulaney complained to Bourne on one other occasion. In early 2007, she had a dispute with Jane Vars, another employee at the plant. Vars had called Dulaney a ‘nigger lover’ and spread rumors similar to the one just described. J.A. 248. Bourne ‘laughed it off.’ J.A. 247. When Dulaney and Vars expressed their intent to take their dispute to a more senior supervisor, Donnie Woodward, Bourne threatened to fire them if they went over his head.”

Eventually, on November 2, 2007, Dulaney was called into a closed-door meeting and given a severance agreement to sign:

“Critical to this appeal, an internal PCA memorandum about Dulaney explains ‘[when the separation agreement is prepared . . . payroll automatically stops the employee’s pay as of the termination date stated in the agreement . . . Payroll coding is as follows: Employment status is ‘terminated’ . . . Termination Reason should be completed as Quit with Notice.'”

When she refused to sign, Bourne escorted her from the property, demanding tha she gather up her personal belongings and to relinquish her office key. Though formally invited to return to work, ultimately – during an later unemployment hearing described her status as “terminated.”

On these facts, the district court held that no adverse employment action had been taken.

The plaintiff, with an assist from the EEOC as amicus, wins reveral on appeal. The panel sets aside such questions as whether Mills was a “supervisor” and whether this would be properly classified as a “submission case,” i.e., one in which an employee submits to sexual abuse in order to retain his or her job. Instead, it cuts right to the question whether forcing the employee to choose between severance and outright discharge constituted a “tangible employment action.” The panel makes short work of this question. The record presented disputed factual issues about whether the offered severance package was an ultimatum:

“According to Dulaney, whose testimony we must credit on summary judgment, Bright informed her that she would be fired if she did not sign the severance agreement. After she refused to do so, Bourne walked her to her locker, directed her to gather her lock and other belongings, took her key to the facility, then escorted her off the premises. Further, according to an internal memorandum, PCA stopped Dulaney’s payroll as of November 2, three days before Dulaney first saw the severance agreement. It would not be unreasonable for a jury to conclude, based upon this fact, that Dulaney had been terminated regardless of whether or not she signed the agreement.”

The court also holds that the tangible employment action needn’t be carried out by the harasser him/herself, provided that there is nexus between the harassment and the ultimate action, as arguably occurred here:

“[T]here is testimony that Bourne, the supervisor who escorted her from the premises on November 5, criticized and laughed at Dulaney first when she reported that Mills was making inappropriate sexual comments about her to her co-workers, again when she reported Mills’s physical harassment, and again when she reported that some co-workers continued to tease her about the sex-themed rumors initiated by Mills. Bourne’s treatment of Dulaney as she sought to report Mills’s sexual harassment and his subsequent involvement in her termination suggest a nexus between Mills’s harassment and her termination. Such questions are for the jury to decide.

As a postscript, it is curious that the panel could have written 17 pages on this topic without once citing (1) the most obviously pertinent authority, Pennsylvania State Police v. Suders, 124 S. Ct. 803 (2004), holding that constructive discharge may constitute a tangible employment action; or (2) the Older Workers Benefit Protection Act, which imposes the minimum 21-day acceptance/7-day cooling-off requirement for ADEA releases (29 U.S.C. § 626(f)(1)(E)(i) and (F)), causing employers to generally adopt that period as a default.

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