Hostile Work Environment Cases

summary judgment – gender discrimination – legitimate business reason – pretext – retaliation – judgment based on arguments not asserted

Single joint employer doctrine retaliatory discharge sexual harassment/hostile work environment jury interrogatories plain error closing arguments

The evidence when viewed in Appellant's favor does not demonstrate there is a genuine issue of material fact as to the third requirement of a prima facie case for hostile work environment based on sex The actions, even when viewed in her favor, were not severe and pervasive as to affect employment Appellant could not establish she was treated differently than a similarly situated person Appellees were not required to accommodate Appellant Appellees established a qualified privilege on the defamation claim Appellant's reliance on a statement by someone without authority to make it did not constitute actionable fraud Settlement agreement did not foreclose statutory claims.

Emma Gyulakian vs. Lexus of Watertown, Inc., & another. Middlesex. March 10, 2016. August 24, 2016. Present: Gants, C.J., Spina, Cordy, Botsford, Duffly, & Lenk, JJ. Employment. Sexual harassment. Anti-Discrimination Law. Sex, Attorney’s fees. Practice. Civil. Judgment notwithstanding verdict. Damages. Punitive. In a civil action alleging that the plaintiff employee had been subjected to a sexually hostile or offensive work environment, the evidence was sufficient to permit the jury to conclude that the behavior to which the plaintiff had been subjected was subjectively offensive, in that it was sufficiently pervasive to alter the conditions of her employment, causing her to suffer emotional distress and interfering with her work performance; and objectively offensive, in that the behavior to which she had been subjected would have interfered with a reasonable person’s work performance [295-296]; further, the judge did not err in instructing the jury regarding compensatory damages [297]. In a civil action, the defendant did not waive the opportunity to challenge the imposition of punitive damages, where the defendant’s motion for a directed verdict, which challenged the sufficiency of the evidence as to a finding of liability, encompassed the potential for punitive damages. [299-300] In a civil action alleging that the plaintiff employee had been subjected to a sexually hostile or offensive work environment, the imposition of punitive damages was appropriate, where the employer was on notice of the harassment, in that members of the employer’s senior management were aware of the sexually hostile or offensive work environment at the organization, and in that the employer was directly put on notice when the plaintiff, on the day of her termination, informed senior management about her supervisor’s conduct [300-301]; where the employer failed to take steps to investigate and remedy the situation, in that there was sufficient evidence on which the jury could find that members of the employer’s management failed to conduct an adequate investigation after being made aware of the supervisor’s reported harassment [301-304]; and where the employer’s failure to take adequate remedial measures after being notified of the harassing conduct was outrageous or egregious, in that, independent of the supervisor’s conduct, the employer acted intentionally or with reckless disregard for the employee’s rights under the discrimination laws [304-305], This court, having reinstated an award of punitive damages in a civil action alleging sex discrimination in employment, concluded further that the trial judge, in granting a motion for judgment notwithstanding the verdict on the issue of punitive damages, had erred in reducing the plaintiff employee’s award of attorney’s fees. [305] Civil action commenced in the Superior Court Department on January 10, 2013. The case was tried before Kimberly S. Budd, J., and postverdict motions for relief were considered by her. The Supreme Judicial Court granted an application for direct appellate review. Robert S. Mantel1 (Lori A. Jodoin also present) for the plaintiff. Christopher J. Sullivan (Tory A. Weigand also present) for the defendants. The following submitted briefs for amici curiae: Rebecca Pontikes, Katherine Skubecz, Michaela C. May & Chetan Tiwari for Massachusetts Employment Lawyers Association & others. Afton M. Templin for Women’s Bar Association of Massachusetts. Ben Robbins & Martin J. Newhouse for New England Legal Foundation & another. Elizabeth S. Dillon for Massachusetts Defense Lawyers Association. Post Motors, Inc., doing business as Lexus of Watertown. Justice Cordy participated in the deliberation on this case and authored this opinion prior to his retirement. Justices Spina and Duffly participated in the deliberation on this case prior to their' retirements. Cordy, J. In December, 2014, a jury rendered a verdict in favor of the plaintiff, Emma Gyulakian, finding that she had been subjected to a sexually hostile or offensive work environment, in violation of G. L. c. 15IB (c. 15 IB), § 4 (§ 4). The jury, having heard evidence tending to establish that Gyulakian suffered relentless sexual harassment by her direct supervisor, Emmanuel Ferreira, found that the defendants, Lexus of Watertown, Inc., and Post Motors, Inc. (collectively, Lexus), were liable for $40,000 in compensatory damages for emotional distress, and, concluding that Lexus acted intentionally or with reckless disregard for Gyu-lakian’s rights under the discrimination laws, also awarded Gyulakian $500,000 in punitive damages. Lexus filed a motion for judgment notwithstanding the verdict (judgment n.o.v.), or, in the alternative, for a new trial or a remittitur. A judge of the Superior Court allowed the defendant’s motion for judgment n.o.v. in part, denying the motion with respect to the jury’s imposition of compensatory damages but allowing it as to the award of punitive damages. Gyulakian appealed on the issue of punitive damages, and Lexus cross-appealed from the award of compensatory damages. We allowed Gyulakian’s application for direct appellate review and affirm the award of compensatory damages. We also reverse the trial judge’s ruling as to the punitive damages award, because, based on the evidence at trial, the jury could have found that, independent of the conduct of harassment engaged in by its supervisory employee, Lexus failed to take adequate remedial measures after being put on notice of a sexually hostile or offensive work environment, and that that failure was outrageous or egregious. The jury’s award of punitive damages is reinstated, and the matter remanded for consideration of Lexus’s motion for re-mittitur. 1. Factual and procedural background. The jury could have found the following., a. Gyulakian’s employment. Gyulakian was an employee of Lexus from 2003 through January 4, 2012, when her employment was terminated. Between June, 2010, and the end of her employment at Lexus, Gyulakian acted as a finance manager, during which time Ferreira was her direct supervisor. Ferreira, Lexus’s finance director, was responsible for assigning hours, vacations, and work flow, and would carry out performance evaluations for all of the finance managers. Ferreira recommended Gyulakian for the finance manager position, and was included in the decision to fire her. Despite Gyulakian’s success in her role as finance manager, her employment at Lexus was terminated at a meeting on January 4, 2012, because, as Vincent Liuzzi, Lexus’s general manager, testified, Gyulakian’s relationship with her coworkers had deteriorated. While in that meeting, Gyulakian reported to Liuzzi and Michael O’Connell, Lexus’s general sales manager, that, during her tenure in the finance department, Ferreira sexually harassed her and cultivated a sexually hostile or offensive work environment. Gyulakian also reported the same conduct to human resources manager Tammy Grady-Brown later that day. Prior to the day on which her employment was terminated, Gyulakian had not reported the harassment to Liuzzi or Grady-Brown. She had, however, informed Tony Bruno, an assistant general sales manager and Ferreira’s supervisor, on multiple occasions about various sexually offensive incidents over the course of the previous eighteen months. After Gyulakian was terminated, Lexus purportedly conducted an investigation, which uncovered no corroboration of her allegations, and Ferreira was not disciplined. b. The sexual harassment policy. At all relevant times, Lexus had a sexual harassment policy in place, and held trainings for employees and supervisors on that policy. The policy read: “Any employee that feels that (s)he is a victim of sexual harassment should immediately report such actions in accordance with the following procedure. All complaints will be promptly and thoroughly investigated.” The reporting guidelines instruct employees to “report the situation to either [Liuzzi] ... or [Grady-Brown].” The policy allows that “[i]f an employee prefers not to discuss the matter with these individuals, (s)he may go directly to any other member of management.” There is no definition in the policy regarding who qualifies as “any other member of management.” c. The alleged discrimination. The jury heard evidence that Ferreira had, since Gyulakian became a finance manager, habitually and graphically sexually harassed her, and that she was working in an otherwise sexually hostile or offensive work environment. By way of example, Ferreira would often comment on Gyulakian’s “nipples,” “boobs,” and “ass.” Ferreira asked Gyu-lakian if they would one day sleep together so he could actually see her breasts. At a sexual harassment training, Ferreira commented to Gyulakian about how harassment sounds like “her ass.” Gyulakian testified that the sexually charged comments would come on an almost daily basis. The assaults were also physical in nature, as Ferreira once violated Gyulakian’s personal “no touching” rule by touching her buttocks, and, on other occasions, Ferreira would attempt to throw coins down Gyulakian’s blouse. At one point, Gyulakian witnessed Ferreira, O’Connell, and Bruno looking at naked photographs of Gyulakian’s coworker on the coworker’s cellular telephone. On another occasion, Robert Silvester, the former Lexus office manager, circulated a memorandum regarding Ferreira’s inappropriate behavior after he heard Ferreira discussing anal intercourse in the office. d. Procedural background. Gyulakian commenced this action against Lexus on January 10, 2013, asserting four claims under G. L. c. 15IB, §4, for harassment based on sex and national origin, on the grounds that she was subjected to a hostile work environment because of her (1) sex and (2) national origin; (3) retaliation and unlawful threats for complaining of that hostile work environment; and (4) termination on an impermissible basis. At the close of Gyulakian’s evidence, Lexus unsuccessfully moved for a directed verdict. The motion did not specifically challenge the imposition of punitive damages. Over Lexus’s objection, the special verdict slip presented to the jury included a punitive damages question. The jury returned a verdict in favor of Gyulakian on the sexually hostile or offensive work environment claim, awarding Gyulakian $40,000 in compensatory damages and $500,000 in punitive damages. The jury returned verdicts in favor of Lexus on the remaining claims. Lexus filed a motion for judgment n.o.v. or, in the alternative, for a new trial or a remittitur, requesting, among other things, that the judge set aside or decrease the awards of compensatory and punitive damages. The motion for judgment n.o.v. was allowed as to the award of punitive damages and denied as to the compensatory damages. The judge concluded that an employer “may not be vicariously liable for punitive damages” under G. L. c. 15 IB based purely on the actions of its supervisory personnel, and that the jury were not provided with sufficient evidence of outrageous or egregious behavior by Lexus. Gyulakian appealed from the judge’s decision to set aside the award of punitive damages, and Lexus cross-appealed, arguing that the evidence did not support a finding of any liability and its motion for judgment n.o.v. should have been allowed as to the award of compensatory damages. 2. Discussion. a. Lexus’s cross appeal. Lexus argues that Gyulakian’s evidence was insufficient to warrant compensatory damages because it did not show that her work performance suffered as a result of the harassment or that the harassment altered the conditions of her employment. Lexus also argues that the judge erred in failing to include a question on the special verdict form asking whether the plaintiff’s suffering was caused by the harassment. We are not persuaded by either contention. i. Sufficiency of the evidence. It is unlawful ‘“[f]or an employer, personally or through its agents, to sexually harass any employee.” G. L. c. 15 IB, § 4 (16A). Sexual harassment is defined as ‘“sexual advances, requests for sexual favors, and other verbal or physical conduct of a sexual nature when . . . such advances, requests or conduct have the purpose or effect of unreasonably interfering with an individual’s work performance by creating an intimidating, hostile, humiliating or sexually offensive work environment.” G. L. c. 15 IB, § 1 (18), as amended through St. 1987, c. 473, § 2. Chapter 15IB, § 4 (1), “applies not only to hiring, firing, and compensation, but also to the ‘terms, conditions or privileges of employment.’ ” College-Town, Div. of Interco, Inc. v. Massachusetts Comm’n Against Discrimination, 400 Mass. 156, 162 (1987) (College-Town). Compensatory damages incurred based on the actions of supervisory personnel who create a sexually hostile or offensive work environment can be imputed to the employer. See id. at 165-166. To prevail on a claim of sexual harassment based on the creation of a sexually hostile or offensive work environment, the plaintiff bears the burden of establishing that the conduct alleged was both “subjectively offensive” and “sufficiently severe and pervasive to interfere with a reasonable person’s work performance.” Dahms v. Cognex Corp., 455 Mass. 190, 205 (2009), quoting Muzzy v. Cahillane Motors, Inc., 434 Mass. 409, 411, 412 n.2 (2001). See College-Town, 400 Mass. at 162. A sexually hostile or offensive work environment is one that is “pervaded by harassment or abuse,” resulting in “intimidation, humiliation, and stigmatization” that poses a “ ‘formidable barrier’ to the plaintiff’s full participation in the workplace” (citation omitted). Pelletier v. Somerset, 458 Mass. 504, 523-524 (2010). Considering the evidence in the light most favorable to the plaintiff, the record is rife with evidence from which the jury could have concluded that the behavior to which Gyulakian was subjected was both objectively and subjectively offensive. Ferreira’s unwanted sexual attention came on a daily basis and to such a degree that during her tenure under Ferreira, Gyulakian was forced to implement a “no-touching” rule in order to keep her supervisor at bay. From this evidence, the jury could infer that Ferreira’s conduct, over a period of eighteen months, “was sufficiently pervasive to alter the conditions of [Gyulakian’s] employment, and thus created a sexually harassing working environment.” College-Town, 400 Mass. at 162. In any event, the evidence was sufficient to support a finding that the discrimination to which she was subjected caused her to suffer emotional distress, interfered with her work performance, and would have interfered with a reasonable person’s work performance, thus resulting in a “formidable barrier” to her full participation in the workplace. See Esler v. Sylvia-Reardon, 473 Mass. 775, 780 (2016), quoting Phelan v. May Dep’t Stores Co., 443 Mass. 52, 55 (2004); Pelletier, 458 Mass. at 523-524; Haddad v. Wal-Mart Stores, Inc. (No. 1), 455 Mass. 91, 93 n.3 (2009); Stonehill College v. Massachusetts Comm’n Against Discrimination, 441 Mass. 549, 570-571, cert. denied sub nom. Wilfert Bros. Realty Co. v. Massachusetts Comm’n Against Discrimination, 543 U.S. 979 (2004). ii. Jury instructions. Lexus asserts that the trial judge committed material error in not including a separate special question on the special verdict form regarding whether Gyulakian sufficiently proved that her suffering was caused by Ferreira’s harassment. The jury were properly charged as to the law. The judge instructed the jury that no damages could be awarded for injuries not “conducted by one of the employer[’]s supervisors.” The special verdict form also asked the following questions: (1) “Do you find that Ms. Gyulakian was subjected to an unlawful hostile work environment?” and (2) “What amount of damages, if any, do you find were caused by the unlawful hostile work environment?” The jurors checked the box indicating “Yes” as to the first question, and determined that the hostile work environment caused $40,000 worth of damages. The implication of the trial judge’s instruction, supplemented by the questions on the special verdict form, is that Lexus could not be liable for damages but for its supervisor causing the sexually hostile or offensive work environment. The trial judge did not err in denying the defendant’s motion for judgment n.o.v. as to the jury’s award of compensatory damages. b. Scope of punitive damages. This case puts at issue the scope of an employer’s liability for punitive damages when its employee creates a sexually hostile or offensive work environment. Gyulakian argues that punitive damages are warranted against Lexus on two grounds: first, that Lexus should be punishable based on the actions of its supervisory personnel, regardless of whether Lexus was aware of that conduct; and, second, that, after being notified of the harassment, Lexus’s failure to take sufficient steps to remedy the discrimination should be punishable. As to Gyulakian’s first proposed source of punitive damages, we are not persuaded that a supervisor’s creation of a sexually hostile or offensive work environment alone is sufficient to warrant the imposition of punitive damages on the employer. Punitive damages are intended to fulfil a prophylactic purpose, and serve little benefit when imposed on an employer for the actions of a supervisory employee where that supervisor’s discriminatory transgressions were unknown to the employer. See Haddad, 455 Mass. at 110-111 (punitive damages only imposed for knowing violations and “outrageous or egregious” conduct); Pine v. Rust, 404 Mass. 411, 415 (1989) (“Punitive damages are not favored in Massachusetts . . . ”); Restatement (Second) of Agency § 217C (1958). In determining whether to impose punitive damages against an employer based on its supervisory employee’s creation of a sexually hostile or offensive work environment, the scope of our inquiry is independent of the direct actions of that employee, and considers whether the employer’s response, once it is on notice of the offensive behavior, was sufficient to address the complained-of harassment. Whether a plaintiff is entitled to punitive damages from his or her employer on the basis of being exposed to a sexually hostile or offensive work environment created by one of its employees is therefore a two-step inquiry. We consider first whether the employer was on notice of the harassment and failed to take steps to investigate and remedy the situation; and, second, whether that failure was outrageous or egregious. See Haddad, 455 Mass. at 110., i. Waiver. Before we reach the issue whether Lexus is liable for punitive damages, we must consider if Lexus waived the opportunity to challenge the imposition of punitive damages when it did not specifically move for a directed verdict on the issue. The trial judge concluded that the issue was not waived because Lexus raised the propriety of imposing punitive damages on an imputed basis under G. L. c. 15 IB while challenging the availability of such damages on the special verdict form. Motions for judgment n.o.v. are governed by Mass. R. Civ. P. 50 (b), as amended, 428 Mass. 1402 (1998). They are allowed “only when a motion for directed verdict has been made at the close of evidence.” Bonofiglio v. Commercial Union Ins. Co., 411 Mass. 31, 34 (1991). A motion for a directed verdict must “state the specific grounds therefor.” Mass. R. Civ. P. 50 (a), 365 Mass. 814 (1974). Because a motion for judgment n.o.v. is “technically a revised motion for a directed verdict, no grounds for the motion for judgment [n.o.v.] may be raised which were not asserted in the directed verdict motion.” Bonofiglio, supra. This requirement “is an important one,” as it “allows the judge knowingly to rule on the question before him [or her], and it allows the opposing party an opportunity to rectify any deficiencies in its case — or, more p