Equal Employment Opportunity Commssion v. Indiana Bell Telephone Co. 99-1155 IN THE UNITED STATES COURT OF APPEALS FOR THE SEVENTH CIRCUIT No. 99-1155 EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, Plaintiff-Appellee, v. INDIANA BELL TELEPHONE CO., INC., d/b/a AMERITECH INDIANA, and AMERITECH CORPORATION, Defendants-Appellants. On Appeal from the United States District Court for the Southern District of Indiana, Indianapolis Division Honorable Larry J. McKinney, Judge PETITION OF APPELLEE EQUAL EMPLOYMENT OPPORTUNITY COMMISSION FOR REHEARING OR REHEARING EN BANC C. GREGORY STEWART General Counsel PHILIP B. SKLOVER Associate General Counsel CAROLYN L. WHEELER Assistant General Counsel GEOFFREY L.J. CARTER Attorney EQUAL EMPLOYMENT OPPORTUNITY COMMISSION Office of General Counsel 1801 L Street, NW. Washington, D.C. 20507 (202) 663-4728 TABLE OF CONTENTS TABLE OF AUTHORITIES . . . . . . . . . . . . . . . . . . . . . ii RULE 35(B) STATEMENT REGARDING REHEARING OR REHEARING EN BANC 1 INTRODUCTION 1 THE PANEL DECISION 3 ARGUMENT 9 THIS COURT SHOULD GRANT THE COMMISSION'S PETITION FOR REHEARING OR REHEARING EN BANC A. The panel majority's opinion improperly alters the standard for determining, in a co-worker sexual harassment case, whether an employer took reasonable steps to prevent and rectify harassment of its employees . . . . . . . . . 9 B. The panel majority's opinion incorrectly holds that the district court erred in excluding Ameritech's arbitration evidence for purposes of punitive damages, and improperly indicates that an employer may justify its delay in responding to complaints of harassment by pointing to the terms of a collective bargaining agreement . . . . . . . 12 CONCLUSION 15 CERTIFICATE OF SERVICE TABLE OF AUTHORITIES CASES PAGE(S) Baskerville v. Culligan International Co., 50 F.3d 428 (7th Cir. 1995) . . . . . . . . . . . . . . . . . . . . 1, 9 10 Brooms v. Regal Tube Co., 881 F.2d 412 (7th Cir. 1989) . . . 9, 10 Eckles v. Consolidated Rail Corp., 94 F.3d 1041 (7th Cir. 1996) . . . . . . . . . . . . . . . . . . . . . . 14 EEOC v. Indiana Bell Tel. Co., ___ F.3d ___, 2000 WL 681007 (7th Cir. May 26, 2000) . . . . . . . . . . . . . . . . passim McKenzie v. Illinois Department of Transportation, 92 F.3d 473 (7th Cir. 1996) . . . . . . . . . . . . . . . . . . . . . . 9 Trans World Airlines v. Hardison, 432 U.S. 63 (1977) . . . . 14 OTHER AUTHORITIES W. Page Keeton et al., Prosser and Keeton on the Law of Torts (5th ed. 1984) . . . . . . . . . . . . . . . . . . . . . . 11 Restatement (Second) of Torts (1958) . . . . . . . . . . . . 11, 12 RULE 35(B) STATEMENT REGARDING REHEARING OR REHEARING EN BANC The Commission requests rehearing for the following reasons: 1. The panel majority's decision conflicts with this Court's decision in Baskerville v. Culligan International Co., 50 F.3d 428, 432-33 (7th Cir. 1995) and the fundamental principles that define negligence because the panel majority's decision improperly holds that an employer's state of mind must be considered when assessing the reasonableness of an employer's response to a complaint of sexual harassment. Consideration by the full court is necessary to secure and maintain the uniformity of this Court's decisions. 2. The panel majority's decision raises a question of exceptional importance because it incorrectly holds that the district court erred in excluding Ameritech's arbitration evidence for purposes of punitive damages, and improperly indicates that an employer may justify its delay in responding to complaints of sexual harassment by pointing to the terms of a collective bargaining agreement. INTRODUCTION In this case, a jury returned a verdict for the Commission and awarded compensatory and punitive damages against Indiana Bell Telephone Co., et al. ("Ameritech") for the sexual harassment of Debbie Wentland, Lori Everts, and Wendy Pollard. EEOC v. Indiana Bell Tel. Co., ___ F.3d ___, 2000 WL 681007 at *5 (7th Cir. May 26, 2000). The claims against Ameritech "stem from a course of sexually offensive conduct that former Ameritech employee Gary Amos ["Amos"] directed at several of his female co-workers." Id. at *1. From 1975 to November 21, 1991, Amos harassed at least thirteen female co-workers at Ameritech, exposing his penis to and/or rubbing his erect penis against at least nine of these individuals. See id. at *1-2. Each of these women complained to Ameritech, and almost all of their complaints were placed in Amos' personnel file. See id. Despite this history, Ameritech only issued warnings or did nothing to discipline Amos for his misconduct, except in 1990, when it suspended Amos for two weeks and revoked his sales award after six women complained about Amos' misconduct. See id. Amos continued sexually harassing his female co-workers after November 21, 1991. In 1992, Jennifer Rice complained that "Amos rubbed himself against her, rubbed her neck, and made inappropriate comments about her body." Id. at *2. Again, Ameritech simply warned Amos and allowed him to remain in the office. See id. Amos thus was able to sexually harass Wentland in 1992 (on one occasion rubbing his erect penis through his pants while he spoke with her), causing her to complain to Ameritech on November 25, 1992. See id. Ameritech decided to fire Amos for his misconduct, but did not do so because its employees went on vacation and missed the thirty-day limitation for taking such action. See id. at *2-3. After botching the effort to fire Amos after Wentland's complaint, Ameritech's officials "agreed that the next complaint against Amos would result in an immediate suspension pending investigation in order to avoid missing any deadlines." Id. at *3. When that opportunity came in April 1993, when Everts filed a charge of discrimination stating (among other things) that Amos "brush[ed] up against her with his penis erect," Ameritech did not investigate. Id. Instead, Ameritech concluded that Everts' complaint was without merit, and did not discipline Amos. See id. Ameritech did suspend Amos for thirty days in June 1993, when he wrote a note to supervisor Patricia Wolter that read: "Patti, you look so sexy today." Id. at *4. Again, however, Ameritech allowed Amos to return to the office, where in late 1993, he began harassing Pollard by touching and grabbing her hair and shoulders, staring at her, and showing her pictures of topless women and women in lingerie. See id. Ameritech finally fired Amos in March 1994 after Pollard saw Amos masturbating his fully exposed penis while sitting at his desk. See id.; Tr. 975. THE PANEL DECISION On February 21, 1995, the Commission filed this Title VII action against Ameritech. Id. at *4. After a jury returned a verdict for the Commission, the district court awarded compensatory and punitive damages based on Wentland's, Everts' and Pollard's sexual harassment claims. Id. at *5. The district court denied Ameritech's motions for judgment as a matter of law, new trial, and remittitur beyond the reduction in damages specified in its order. Id. Ameritech appealed. Id. By a 2 to 1 vote, a panel of this Court reversed the decision below. See id. at *11 (panel majority); id. at *23 (Rovner, J., dissenting). The panel majority began its opinion by holding that the district court properly denied Ameritech's motion for judgment as a matter of law on punitive damages and liability. The panel majority explained that, in light of Amos' history of harassment, "a reasonable jury could have concluded that Ameritech acted with 'malice or reckless indifference,'" and noted that this holding regarding punitive damages precluded any challenge to whether a reasonable jury could find that Ameritech acted negligently and was therefore liable for the sexual harassment. Id. at *6-7. The panel majority next addressed "the district court's decision to exclude evidence regarding Ameritech's obligations under its collective bargaining agreement and the effect those obligations had on the timing of Amos' dismissal." Id. at *8. Ameritech argued that the district court should have admitted this evidence as relevant to whether Ameritech (1) responded reasonably to the sexual harassment and (2) acted with the state of mind required for punitive damages. Id. In the panel majority's view, the district court excluded Ameritech's evidence about arbitration and the collective bargaining agreement as a matter of law because it believed this evidence "could not be introduced in the face of conflicting duties under Title VII." Id. The panel majority rejected that proposition, holding that Title VII does not always trump the provisions of a collective bargaining agreement. See id. at *8-9. Because the panel majority believed that the district court based its decision to exclude Ameritech's evidence about arbitration on an error of law, the panel majority concluded that the district court abused its discretion. See id. at *9. The panel majority rejected the Commission's argument that, assuming the district court erred in excluding Ameritech's arbitration evidence, the error was harmless. In the panel majority's view, although the jury heard evidence about the collective bargaining agreement's thirty-day limit on disciplinary action, Ameritech was prevented from presenting "potentially significant evidence as to [its] state of mind and to the reasonableness of its actions," including evidence of its fear that, if it discharged Amos in a manner inconsistent with the collective bargaining agreement, Amos might be reinstated. Id. Believing that Ameritech could have used this evidence to "counter the jury's impression that it acted negligently or with 'malice or reckless indifference,'" the panel majority held that it could not say that "the outcome of the trial would have been the same had the jury been permitted to hear this evidence." Id. at *10. Accordingly, the panel majority concluded that the district court's erroneous evidentiary ruling was not harmless, and reversed the judgment of the district court. See id. at *11. Judge Rovner dissented from the panel majority's holding that the district court committed reversible error when it excluded "evidence of Ameritech's professed concern for the outcome of arbitration that might have ensued had the company fired Amos sooner than it did." Id. at *11. In Judge Rovner's view, the panel majority erred in holding that Ameritech was entitled to present this evidence because Title VII places an "unequivocal duty on employers to take reasonable measures to stop harassment" that cannot be modified by a collective bargaining agreement or concerns about how an arbitrator might interpret such an agreement. Id. Initially, Judge Rovner identified several flaws in Ameritech's argument that it faced a conflict between its obligations under Title VII and the collective bargaining agreement. First, Judge Rovner noted that Ameritech caused one of the purported clashes between its Title VII and labor agreement responsibilities. Id. at *13. Indeed, despite its awareness of Amos' history of harassment and the fact that (as Ameritech claims) an arbitrator would not have permitted the company to discharge Amos after the deadline, Ameritech missed the 30-day deadline for imposing discipline after Wentland's complaint. Id. Because of these circumstances, Judge Rovner explained that the only pertinent question regarding "the reasonableness of Ameritech's actions and state of mind is what Ameritech did during those thirty days." Id. at *14. It also was within the district court's discretion "to prevent Ameritech from attempting to pin the failure to discharge Amos on the likelihood that an arbitrator would order him reinstated," because such an explanation "would make Ameritech no less culpable for missing the deadline." Id. Second, Judge Rovner observed that, despite its arguments to the contrary, "Ameritech was able to explain that it did not discharge Amos in response to Debbie Wentland's complaint because it did not effectuate that decision within the thirty-day time frame specified by the collective bargaining agreement." Id. The thirty-day limit was discussed on several occasions during the trial, and because the attorneys and witnesses "uniformly presumed that the time limit was inviolable," the jury was aware that "there was no way around the thirty-day deadline." Id. "The notion that there was a compelling need for the arbitration evidence is therefore a fallacy." Id. Third, Judge Rovner questioned Ameritech's argument that the "just cause" standard for discharges under the collective bargaining agreement prevented it from firing Amos after his June 1993 "you look so sexy" note to Patti Wolter. Id. at *15. Judge Rovner agreed that the note, if viewed in isolation, probably would not provide just cause for discharging Amos, but explained that there was no evidence that an arbitrator applying the just cause standard would not consider Amos' history of harassment and "the proven ineffectiveness of all disciplinary measures short of discharge in stopping Amos' harassment" in determining whether discharge was appropriate. Id. at *16. Consequently, the "just cause" standard did not warrant discussion at trial because no evidence suggested it posed an obstacle to discharging Amos. Id.<1> Judge Rovner next explained that, even assuming that Ameritech did face an irreconcilable conflict between the collective bargaining agreement and Title VII, she was "not convinced that Ameritech's obligation to protect its employees from harassment necessarily had to yield to the constraints imposed by its contract with the union." Id. at *18. Judge Rovner acknowledged the precedent holding that Title VII and the ADA do not require an employer to interfere with the seniority rights of other employees (see id. at *18-19), but explained that the panel majority's opinion represents a significant leap from that precedent insofar as the cases discussing seniority rights do not speak to the issue of whether the provisions of a collective bargaining agreement may trump an employer's duty under Title VII to deal with sexual harassment. See id. at *20. Judge Rovner also expressed concern that the panel majority "articulate[d] no limits on what types of collective bargaining agreement provisions trump an employer's obligation to remediate discrimination," thereby allowing Ameritech and any other unionized employer to "hold up the collective bargaining agreement as a fig leaf for its own inaction," irrespective of the importance of the provision in question to the collective bargaining process. Id. at *21. Last, Judge Rovner stated that, "even if the district court did err in excluding evidence as to the collective bargaining agreement and Ameritech's fears of unfavorable arbitration, that error does not require us to overturn the jury's verdict." Id. at *22. First, "[o]verwhelming evidence supports the jury's finding that Ameritech's response to the harassment was negligent," as Ameritech, despite its knowledge that it had a dangerous employee on its hands, was "half-hearted, bumbling, and wholly ineffective" in its response. Id. Second, the jury's punitive damages award should stand because Ameritech displayed "a reckless indifference to the plight of the company's female workers" with its failure to check Amos' employment history, increase the discipline from what had been imposed before, and impose discipline after Wentland's complaint before the deadline passed. Id. at *22. ARGUMENT THIS COURT SHOULD GRANT THE COMMISSION'S PETITION FOR REHEARING OR REHEARING EN BANC A. The panel majority's opinion improperly alters the standard for determining, in a co-worker sexual harassment case, whether an employer took reasonable steps to prevent and rectify harassment of its employees It is well established that "[w]hen an employee is harassed by a co-worker, the employer may be held responsible only if 'the employer knew or should have known about an employee's acts of harassment and fails to take appropriate remedial action.'" McKenzie v. Illinois Dep't of Transp., 92 F.3d 473, 480 (7th Cir. 1996) (quoting Brooms v. Regal Tube Co., 881 F.2d 412, 421 (7th Cir. 1989)). Under this standard, an employer in a co-worker sexual harassment case may fulfill its legal duty under Title VII if it "takes reasonable steps to discover and rectify the harassment of its employees." McKenzie, 92 F.3d at 480 (citing Baskerville v. Culligan Int'l Co., 50 F.3d 428, 431 (7th Cir. 1995)). Specifically, "[a]n employer's response to alleged instances of employee harassment must be reasonably calculated to prevent further harassment under the particular facts and circumstances of the case at the time the allegations are made." Brooms, 881 F.2d at 421. See also Baskerville, 50 F.3d at 432 (explaining that "what is reasonable depends on the gravity of the harassment," as all other things being equal, "an employer is required to take more care . . . to protect its employees from serious sexual harassment than to protect them from trivial harassment"). The panel majority's opinion in this case must be corrected because it improperly alters this framework for assessing the reasonableness of an employer's response to a complaint of harassment. In reversing the judgment of the district court, the panel majority held that Ameritech's state of mind is relevant to the question of whether it acted negligently in failing to respond adequately to the complaints it received about Amos' sexual misconduct. See Indiana Bell, 2000 WL 681007 at *8 n.5, 10 (holding that the district court erred when it prevented Ameritech from presenting evidence about its fears concerning arbitration to "counter the jury's impression that it acted negligently"). This Court now should correct the panel majority's reasoning on this issue because it cannot be reconciled with this Court's pre-existing case law and the definition of negligence.<2> The panel majority's holding that Ameritech's state of mind is relevant to the question of whether it acted reasonably in response to the various complaints of harassment conflicts with this Court's decision in Baskerville, 50 F.3d at 432-33. In Baskerville, this Court confronted an issue similar to the one in this case when it addressed the question of whether it could be "reasonable" in a sexual harassment case for an employer simply to ignore charges of sexual harassment if the charges were made against one of the employer's "highly valued" employees. Id. at 433. Although it is conceivable that an employer might act with such a state of mind, this Court rejected the proposition that the employer's subjective motivations for its inaction warrant consideration in assessing the reasonableness of its response to harassment. See id. Instead, this Court compared the employer's proffered subjective explanation to "saying it might be reasonable for an automobile driver to drive without regard to the hazards of pedestrians because he was in a hurry," and then explained that the reasonableness of the employer's conduct in the sexual harassment context must be assessed in relation to the legal duty of care it owes to employees victimized by a co-worker's sexual harassment. Id. The panel majority's holding that Ameritech's state of mind is relevant to negligence conflicts with this analysis in Baskerville. The panel majority's reasoning also conflicts with the definition of negligence. As defined in the Restatement (Second) of Torts § 282 (1958), "negligence is conduct which falls below the standard established by law for the protection of others against unreasonable risk of harm." As is evident from this definition, "[n]egligence is conduct, and not a state of mind," and thus may result from either inadvertence (e.g., lack of awareness of the possible consequences of one's actions) or a considered, but ill advised, decision. W. Page Keeton et al., Prosser and Keeton on the Law of Torts § 31, at 169 (5th ed. 1984). The essence of negligence, therefore, "is not necessarily the absence of solicitude for those who may be adversely affected by one's actions but instead behavior which should be recognized as involving unreasonable danger to others." Id. See also Restatement (Second) of Torts § 283 (explaining that an actor must conform to the standard of conduct "of a reasonable man under like circumstances" to avoid being negligent). The panel majority's analysis undermines these fundamental principles, because it improperly characterizes negligence as a state of mind, rather than (as the treatises indicate) a type of objectively unreasonable conduct. Because the panel majority's ruling on the relevance of Ameritech's state of mind to the question of whether it responded reasonably to the various complaints it received about Amos' misconduct conflicts with this Court's decision in Baskerville and the definition of negligence, it must be corrected. B. The panel majority's opinion incorrectly holds that the district court erred in excluding Ameritech's arbitration evidence for purposes of punitive damages, and improperly indicates that an employer may justify its delay in responding to complaints of sexual harassment by pointing to the terms of a collective bargaining agreement As Judge Rovner observed (see supra pp. 5-7), the panel majority's conclusion that Ameritech should have been allowed to present evidence of its fears about arbitration to a jury for purposes of punitive damages is marred by several flaws. First, Ameritech's arbitration evidence is not relevant to whether a jury could find that Ameritech acted with malice or reckless indifference when it missed the thirty-day deadline for discharging Amos after Wentland's complaint despite being aware of Amos' history of harassment. Indeed, Ameritech's supposed fears about arbitration did not develop until after it missed the deadline. Second, to the extent that the panel majority believed that Ameritech was not able to explain why it did not discharge Amos after Wentland's complaint (see id.), it is grossly mistaken. Through testimony at trial, the jury was well aware that Amos could not have been discharged after the thirty-day deadline. Ameritech's case, therefore, was not harmed by the omission of evidence that at most would have reiterated that fact. Third, to the extent that Ameritech's arbitration evidence might have been relevant to why it did not discharge Amos after he wrote the "you look so sexy today" note to Wolter, the evidence has no bearing on Ameritech's state of mind in failing to discharge Amos because: (1) the Wolter incident occurred after Ameritech missed the earlier opportunities to address Amos' misconduct after Wentland's and Everts' complaints; and (2) the evidence would not have altered the jury's finding that Ameritech acted with malice or reckless indifference to Pollard's Title VII rights in allowing Amos to stay in the office despite at least two opportunities (both before the Wolter incident) to discharge him. In addition, rehearing or rehearing en banc is necessary because the panel majority improperly indicates that an employer may justify its delay in failing to respond to known sexual harassment in the workplace by pointing to the terms of a collective bargaining agreement. In reversing the district court's decision, the panel majority asserted that "it is incorrect to hold, as the district court did, that obligations under Title VII always trump obligations under valid labor agreements." Indiana Bell, 2000 WL 681007 at *9. While that general statement is true, it does not follow that the line of cases establishing that principle should apply in a sexual harassment case such as this one. As Judge Rovner recognized, the Supreme Court's decision in Trans World Airlines v. Hardison, 432 U.S. 63 (1977) "holds simply that Title VII does not require an employer to interfere with the seniority rights of some employees in order to accommodate the religious needs of others." Indiana Bell, 2000 WL 681007 at *19. See also id. (explaining that the decision in Eckles v. Consolidated Rail Corp., 94 F.3d 1041, 1051 (7th Cir. 1996) "sounds the same theme" in the context of reasonable accommodation under the ADA). Unlike the TWA and Eckles decisions, however, the federally protected statutory rights of Amos' female co-workers to work in an environment free of sexual harassment did not conflict with any countervailing right (certainly none comparable to the seniority rights at issue in TWA and Eckles) that the collective bargaining agreement bestowed on Amos. At most, the only terms at issue were the thirty-day limit for imposing discipline, which was entirely within Ameritech's capacity to avoid, and the just cause provision, which, as Judge Rovner noted, may be voided if an arbitrator invokes it in a manner that conflicts with the public policy against workplace harassment. See Indiana Bell, 2000 WL 681007 at *20 (collecting cases). Notwithstanding these differences from the seniority rights cases, the panel majority held that Ameritech should be allowed to introduce evidence of its purported concern about the collective bargaining agreement and arbitration as a justification for its delay in discharging Amos, a known serial harasser. The panel or the full court should correct the panel majority's decision because, if accepted, it would allow employers to put to the trier of fact the improper question of whether, due to the terms of a contract, an employer was justified in knowingly violating federal law by allowing sexual harassment to continue. The Commission is not aware of any case that countenances such a defense, for purposes of punitive damages or otherwise. In addition, the panel majority's decision is devoid of any standards that identify when this defense should be available, and thus opens the door for similar arguments based on any contractual provision, no matter how trivial. Again, such a result would be unprecedented and damaging to the Title VII rights of countless employees. CONCLUSION For the foregoing reasons, the Commission respectfully requests that this Court grant this petition. Respectfully submitted, C. GREGORY STEWART General Counsel GEOFFREY L.J. CARTER Attorney PHILIP B. SKLOVER Associate General Counsel EQUAL EMPLOYMENT OPPORTUNITY COMMISSION CAROLYN L. WHEELER Office of General Counsel Assistant General Counsel 1801 L Street, NW Washington, D.C. 20507 June 29, 2000 (202) 663-4728 CERTIFICATE OF SERVICE I, Geoffrey L.J. Carter, hereby certify that on this 29th day of June, 2000, two copies of the attached petition, and one copy of the attached petition on digital media, were sent by first class mail, postage prepaid, to the following counsel of record: Kenneth J. Yerkes, Esq. Michael A. Moffatt, Esq. Stanley C. Fickle, Esq. Blake J. Burgan, Esq. Barnes & Thornburg 11 South Meridian St. Indianapolis, IN. 46204 GEOFFREY L.J. CARTER Attorney EQUAL EMPLOYMENT OPPORTUNITY COMMISSION Office of General Counsel 1801 L Street, NW Washington, D.C. 20507 June 29, 2000 (202) 663-4728 1 Judge Rovner also noted that, even if an arbitrator ordered Amos' reinstatement, Ameritech could have: (1) challenged such a ruling in court based on the public interest in eliminating sex discrimination; and/or (2) terminated him in the future if and when he resumed his harassment. See id. at *17 (collecting cases). 2 The panel majority may have been relying on the language in Brooms, 881 F.2d at 421, that states that the reasonableness of an employer's response should be determined according to whether it was "reasonably calculated to prevent further harassment under the particular facts and circumstances of the case at the time the allegations are made." See also Indiana Bell, 2000 WL 681007 at *8 (quoting this passage). It is clear enough that the reasonableness of the employer's response depends on facts such as the nature of the harassment (see Baskerville, 50 F.3d at 432), but the Commission is not aware of any case holding that the employer's state of mind should be considered when assessing whether the employer acted reasonably. Consequently, the panel majority's decision represents a substantial departure from the law as stated and applied in other sexual harassment cases.