Survey of Eighth Circuit Employment Decisions

• Jurisdiction: United States,Federal
• Citation: Vol. 34
• Publication year: 1999

34 Creighton L. Rev. 369. SURVEY OF EIGHTH CIRCUIT EMPLOYMENT DECISIONS

Creighton Law Review

Vol. 34

MICHAELA M. WARDEN(fn+)

INTRODUCTION

The United States Court of Appeals for the Eighth Circuit's 2000 employment docket was predictably active. The court decided fortythree cases under the Americans with Disabilities Act ("ADA")(fn1) in 2000, nine of which were notable because the court either (a) applied new standards from the United States Supreme Court in complex factual situations;(fn2) (b) decided significant issues that the Supreme Court has not yet considered;(fn3) or (c) provided a consistently pragmatic approach in analyzing the ADA to cases, which on their facts might have as easily been affirmed as reversed.(fn4)

The United States Courts of Appeals for the Seventh and Eighth Circuit invalidated Department of Labor regulations covering the Family Medical Leave Act ("FMLA")(fn5) in decisions that have triggered similar results throughout the circuit courts.(fn6) Meanwhile, EleventhAmendment immunity issues have engaged the courts at all levels, including the Eighth Circuit, with respect to anti-discrimination legislation other than Title VII.(fn7)

The court reviewed many cases related to discrimination and harassment under Title VII.(fn8) In several of those cases the Eighth Circuit applied the affirmative defenses that the United States Supreme Court articulated in Burlington Industries, Inc. v. Ellerth(fn9) and Faragher v. City of Boca Raton.(fn10) The Eighth Circuit, however, has yet to articulate a strategy for applying the issues that the Supreme Court raised in 1999 when the Supreme Court modified the Restatement (Second) of Torts section 909,(fn11) as it applies in the statutory employment context in Kolstad v. American Dental Ass'n.(fn12) This article reports on several of these cases in detail while limiting its discussion of others to a review of a particular issue or fact situation.(fn13)

EIGHTH CIRCUIT DECISIONS THAT APPLIED THE SUPREME COURT'S DEFENSES IN ELLERTH, FARAGHER AND KOLSTAD

In 1998 and 1999, the United States Supreme Court defined two defenses for employers in discrimination cases. Both defenses relate to imputing liability for damages to employers for the conduct of employees. Ellerth and Faragher concerned vicarious liability for supervisory harassment, whereas Kolstad considered the circumstances under which the conduct of an employee can be imputed to his em-ployer for liability for punitive damages.(fn14) In 2000, the Eighth Circuit discussed the Ellerth/Faragher affirmative defense ("Ellerth/Faragher") in four cases of interest, with two of the discussions involving evidentiary issues.(fn15) The Eighth Circuit applied various aspects of the Kolstad punitive damage analysis in three statutory employment cases.(fn16)

In Ellerth and Faragher the Supreme Court announced that employers are vicariously liable when supervisory personnel harass their employees.(fn17) The Supreme Court made an affirmative defense available to employers in situations of supervisory harassment. The defense ("Ellerth/Faragher" defense) has two elements: first, the employer must exercise "reasonable care to prevent and correct promptly any sexually harassing behavior[,]"(fn18) and second, the plaintiff employee "unreasonably failed to take advantage of any preventive or corrective opportunities provided by the employer or to avoid harm otherwise."(fn19) The Ellerth/Faragher defense is not available when the supervisor's harassment results in a "tangible employment action."(fn20) The Ellerth/Faragher defense is a three-part analysis, determining whether (1) the plaintiff suffered any adverse employment action, (2) the plaintiff complained about the harassment, and (3) the employer exercised reasonable care (a negligence standard) in preventing harassment in the workplace and correcting harassment which the employer knew or should have known existed.

The issues in Kolstad, however, are more complicated, particularly those involving imputing liability for punitive damages. The Supreme Court accepted certiorari in Kolstad to resolve a conflict among the courts of appeals on the issue of the quality of conduct required to submit a request for punitive damages to a jury.(fn21) The Supreme Court decided that a jury may consider punitive damages in cases inwhich the conduct at issue was malicious or recklessly indifferent and in intentional disregard of the employee's federally protected rights.(fn22)

The Court also addressed the standards necessary to impute liability for punitive damages to an employer under agency theories,(fn23) and modified Restatement (Second) of Agency section 217(C) to provide the test.(fn24) The Restatement provides that punitive damages may be awarded against a principal,

if, and only if,

(a) the principal or a managerial agent authorized the doing and the manner of the act, or

(b) the agent was unfit and the principal or a managerial agent was reckless in employing or retaining him, or

(c) the agent was employed in a managerial capacity and was acting in the scope of employment, or

(d) the principal or a managerial agent of the principal ratified or approved the act.(fn25)

The Supreme Court modified section 217(C) because the Court believes that the Restatement's "scope of employment" rule is counterproductive to Title VII's objectives. The Supreme Court correctly analyzed the "perverse incentives" that the "scope of employment" rule creates in the Title VII context,(fn26) and stated:

[a]pplying the Restatement of Agency's "scope of employment" rule in the Title VII punitive damages context, moreover, would reduce the incentive for employers to implementantidiscrimination programs. In fact, such a rule would likely exacerbate concerns among employers that § 1981a's "malice" and "reckless indifference" standard penalizes those employers who educate themselves and their employees on Title VII's prohibitions.(fn27)

The Supreme Court modified the "scope of employment" rule by creating a defense for employers who can demonstrate a "good-faith effort" to comply with Title VII. The Kolstad defense has two parts: (1) whether the employee whose actions are at issue is a "managerial agent acting in the scope of employment" for purposes of binding the corporation, and (2) whether the employer can demonstrate that the "managerial agent" acted contrary to the employer's "good-faith efforts" to enforce Title VII.(fn28) The Supreme Court did not define "goodfaith efforts," leaving that to the lower courts.

OGDEN V. WAX WORKS, INC. - ELLERTH/FARAGHER DEFENSE; KOLSTAD'S "GOOD-FAITH EFFORT"

In Ogden v. Wax Works, Inc.,(fn29) a Title VII sexual harassment case, the Eighth Circuit addressed the Ellerth/Faragher defenses and the Supreme Court's holding in Kolstad.(fn30) Wax Works reached the Eighth Circuit after a jury returned a verdict for plaintiff Carrie Ogden against her employer Wax Works. Chief Judge Mark Bennett of the United States District Court for the Northern District of Iowa denied Wax Works' motion for judgment as a matter of law or new trial. The Eighth Circuit affirmed.

Facts and Holding

The facts recited in the Eighth Circuit's opinion support the existence of a hostile work environment. Ogden was a store manager for Wax Works. During the last two years of her employment, Ogden's district manager, Hudson, made unwelcome physical advances, propositioned Ogden, mistreated her at work, and finally withheld her annual raise because Ogden would not succumb to his numerous advances.(fn31) Ogden complained directly to Hudson's immediate supervisor, regional manager Klem, who admitted knowing about Hudson'saffairs with other employees and agreed to investigate.(fn32) A vice president also admitted that he had heard "rumblings" of Hudson's inappropriate relationships with other employees.(fn33) In the investigation that ensued, Hudson characterized Ogden's complaints as a "personality conflict,"(fn34) and the investigation focused upon Ogden's performance, which had never been questioned before, rather than Hudson's conduct.(fn35)

Wax Works' sexual harassment policy encouraged employees to report any alleged violations of the policy to a member of management or directly to the Director of Human Services.(fn36) The policy promised a "thorough" investigation of "[a]ll such complaints."(fn37) Wax Works also had signs posted which encouraged employees to call the home office and provided a toll-free number for them to do so.(fn38)

The district court questioned, however, whether Wax Works was entitled to the affirmative defense from Ellerth and Faragher. Nevertheless, the district court instructed the jury on the affirmative defense as applied to Ogden's hostile environment claim, but not to her quid pro quo claim. The Eighth Circuit analyzed the Ellerth/Faragher defense while acknowledging that the defense is not available in situations in which there has been a tangible employment action.(fn39) Since the jury found that Wax Works constructively discharged Ogden, the defense did not apply.(fn40)

In affirming the district court's denial of plaintiff's motion for judgment as a matter of law on the issue of punitive damages, the Eighth Circuit relied on Kolstad's clarification of "[t]he precise burden a plaintiff must carry to prove malice or recklessness for purposes of 42 U.S.C. §...