Hostile Work Environment Cases

GROW v W A THOMAS COMPANY Docket No. 209865. Submitted July 1, 1999, at Lansing. Decided August 6, 1999, at 9:00 a.m. Leave to appeal sought. Shirley A. Grow brought an action in the Washtenaw Circuit Court against W. A. Thomas Company and W. A. Thomas Company supervisor Dennis Arquette, alleging liability under the Civil Rights Act, MCL 37.2101 et seq.; MSA 3.548(101) et seq., and seeking damages for constructive discharge and emotional distress for sexual discrimination in the form of a hostile work environment. The court, Melinda Morris, J., granted summary disposition for the defendants with respect to the constructive discharge claim. A mediation panel rendered an evaluation in favor of the plaintiff. The mediation evaluation was accepted by the plaintiff, but rejected by the defendants. A jury returned a verdict for the plaintiff. The court entered a judgment consistent with the verdict, and awarded interest, costs, and attorney fees. The award of attorney fees was made pursuant to the Civil Rights Act and the mediation court rule, MCR 2.403. The defendants appealed. The Court of Appeals held: 1. The trial court did not abuse its discretion in rejecting the defendants’ proposed jury instruction regarding how an employer can avoid liability for a hostile work environment through adequate investigation and prompt and remedial action. The trial court fairly and accurately advised the jury of the applicable law by instructing the jurors to determine whether W. A. Thomas Company, once it knew or should have known of the alleged harassment by Arquette, adequately investigated and implemented prompt and appropriate corrective action. 2. The trial court did not abuse its discretion in rejecting portions of the defendants’ proposed jury instructions that dealt with unwelcome sexual conduct or communication and an employee’s participation in sexual conduct or communication. The proposed instruction concerning participation in sexual conduct or communication would have incorrectly advised the jury that such participation, standing alone, will defeat a claim of hostile work environment. The trial court’s instruction concerning unwelcome sexual conduct or communication fairly and adequately stated the applicable law. 3. The trial court properly refused to instruct the jury that the plaintiffs damages for emotional distress should be limited as of the date the defendants discovered certain false statements on the plaintiffs employment application. Evidence of employee wrongdoing acquired after the employer has illegally discriminated against the employee may limit the amount of economic damages available to the employee, but may not limit the amount of damages for emotional distress. The purpose of the after-acquired evidence rule is to ensure that an employee does not benefit from the employee’s own misconduct or misrepresentation in obtaining employment that otherwise would have been denied to the employee, a consideration not present where only damages for emotional distress are claimed. 4. The trial court did not abuse its discretion in excluding the testimony of a rebuttal witness for the defendants. Because the defendants did not file a counterclaim, they were not entitled to present rebuttal evidence after resting their defense. In any event, the proposed rebuttal testimony would have been cumulative to evidence already presented by other defense witnesses. 5. By not objecting at trial, the defendants failed to preserve their challenge to the plaintiffs testimony that she felt compelled to quit her job. The trial court properly refused to admit into evidence the order that dismissed the plaintiffs claim of constructive discharge. Such an admission could have caused juror confusion. 6. The trial court did not abuse its discretion in allowing the plaintiffs therapist to testify as an expert regarding posttraumatic stress disorder. The therapist, a certified social worker, was qualified to testify as an expert by virtue of his experience in counseling persons who suffered from the disorder. The fact that he was not a medical practitioner did not render him unqualified as an expert witness. Any limitations in his qualifications are relevant to the weight, not the admissibility, of his testimony. 7. The trial court did not abuse its discretion in awarding attorney fees to the plaintiff under the Civil Rights Act. The trial court clearly and carefully considered the results achieved and the existence of the contingent fee agreement in determining a reasonable attorney fee. 8. The trial court’s award of attorney fees under the mediation court rule, MCR 2.403, must be vacated. A prevailing party may not recover an award of attorney fees under MCR 2.403 where the party has already been compensated for reasonable attorney fees under a fee-shifting statute like the Civil Rights Act. 9. The trial court properly awarded prejudgment interest on the entire judgment, including the award of costs and attorney fees. MCL 600.6013; MSA 27A.6013, in providing that interest attributable to that part of the money judgment from which attorney fees are paid shall be retained by the plaintiff, does not render ambiguous its requirement that interest be calculated on the entire amount of the judgment, including attorney fees and costs. 10. The matter must be remanded for a determination of reasonable appellate attorney fees awardable to the plaintiff. Affirmed in part, vacated in part, and remanded. 1. Civil Rights — Sexual Harassment — Hostile Work Environment — Employees — Supervisors — Affirmative Defense. An employer is vicariously liable for a supervisor’s creation of a hostile work environment unless the employer can prove, by a preponderance of the evidence, that the employer exercised reasonable care to prevent and correct promptly any sexually harassing behavior and that the plaintiff employee unreasonably failed to take advantage of any preventive or corrective opportunities provided by the employer or to avoid harm otherwise; this affirmative defense is not available where the supervisor’s harassment culminates in a tangible employment action, such as discharge, demotion, or undesirable reassignment (MCL 37.2101 et seq.; MSA 3.548[101] et seq.). 2. Civil Rights — Sexual Harassment — Hostile Work Environment. A plaintiff employee who claims hostile work environment must establish that the employee belonged to a protected group, that the employee was subjected to communication or conduct on the basis of sex, that the employee was subjected to unwelcome sexual conduct or communication, and that the unwelcome sexual conduct or communication was intended to or in fact substantially interfered with tíie employee’s employment or created an intimidating, hostile, or offensive work environment, and must establish respondeat superior (MCL 37.2101 et seq.; MSA 3.548[101] et seq.). 3. Civil Rights — Sexual Harassment — Hostile Work Environment — Employee Participation in Sexual Conduct or Communication. A plaintiff employee’s participation in sexual behavior or comments, standing alone, does not necessarily defeat a claim of hostile work environment; such participation is merely a factor to consider when determining whether the conduct or comments were unwelcome (MCL 37.2101 et seq.; MSA 3.548[101] et seq.). 4. Civil Rights — Employment Discrimination — Employee Wrongdoing — Damages. Evidence of wrongdoing by an employee that is acquired by the employer after the employer has illegally discriminated against the employee may limit the amount of economic damages available to the employee for discrimination, but may not limit the amount of damages available for emotional distress (MCL 37.2101 et seq.; MSA 3.648[101] et seq.). 5. Civil Rights — Civil Rights Act — Attorney Fees. A court determining a reasonable attorney fee to be awarded in an action brought pursuant to the Civil Rights Act considers the skill, time, and labor involved, the likelihood, if apparent to the client, that the acceptance of the employment will preclude other employment by the lawyer, the fee customarily charged in that locality for similar services, the amount in question and the results achieved, the expense incurred, the time limitations imposed by the client or the circumstances, the nature and length of the professional relationship with the client, the professional standing and experience of the attorney, and whether the fee is fixed or contingent (MCL 37.2101 et seq.; MSA 3.548[101] et seq.). 6. Pretrial Procedure — Mediation — Attorney Fees. A prevailing party may not recover an award of attorney fees under the mediation court rule where the party has already been compensated for reasonable attorney fees under a fee-shifting statute (MCR 2.403). 7. Civil Rights — Civil Rights Act — Attorney Fees — Appellate Attorney Fees. The purpose of the Civil Rights Act provision for attorney fees is to encourage persons deprived of their civil rights to seek legal redress, to ensure victims of discrimination access to the courts, and to deter discrimination; appellate attorney fees may be awarded under the act (MCL 37.2101 et seq.; MSA 3.548[101] et seq.). Kurt Berggren, for Shirley A. Grow. Barlow & Derby (by Matthew S. Derby and Christine R. Essique), for W. A. Thomas Company and Dennis Arquette. Amicus Curiae: Clark Hill P.L.C. (by Duane L. Tamacki, J. Walker Henry, and Julie A. Lawson), for Michigan Manufacturers Association. Before: Murphy, P.J., and Doctoroff and Neff, JJ. Neff, J. Defendants W. A. Thomas Company (hereafter defendant) and Dennis Arquette appeal as of right from the trial court’s judgment for plaintiff in this sexual harassment case involving an alleged hostile work environment. We affirm in part, vacate the judgment in part, and remand for further proceedings consistent with this opinion. i Plaintiff began working for defendant in March 1994. Plaintiff testified that from the very beginning Arquette, her supervisor, subjected her to continuous sexual harassment. We do not deem it necessary to describe in detail the specific conduct described by plaintiff. It is sufficient to note that plaintiff testified that Arquette’s alleged conduct toward her included sexually explicit comments and unwanted kissing and groping; Plaintiff testified that she complained about Arquette’s conduct to another supervisor and to the plant manager, and that these men personally witnessed some of Arquette’s sexual conduct in the workplace, but that no action was taken to punish Arquette for the sexual harassment or to prevent further occurrences. Plaintiff testified that after Arquette began berating her for things such as her attitude, work output, and attendance record, she quit. Plaintiff testified that defendant sent her a copy of a newly formed sexual harassment policy and ordered her to return to work. Plaintiff complied, but found the harassment had turned from sexual to something more hostile. After four days back on the job, plaintiff quit again. She described for the jury the emotional distress she suffered, including a suicide attempt and various physical ailments. Defendants denied that plaintiff was subjected to a sexual and hostile work environment. Arquette stated that although he may have touched plaintiff, or given her a casual hug on occasion, he denied ever touching her in a sexual manner. In addition, defendant’s plant manager denied witnessing any inappropriate conduct by Arquette and denied that plaintiff ever complained of sexual harassment before quitting. Defendants presented evidence regarding their investigation of Arquette’s conduct, which failed to reveal any corroboration of plaintiff’s allegations. Defendants also presented evidence that plaintiff, rather than Arquette, was the one who made crude, sexual comments and engaged in offensive behavior in the workplace. In addition, defendants presented the testimony of some of plaintiff’s former employers, who testified that the reasons for plaintiff’s leaving previous employment were insubordination and poor attendance, contrary to plaintiff’s representations on her employment application with defendant. Plaintiff filed a complaint alleging a hostile work environment pursuant to the Civil Rights Act (cra), MCL 37.2101 et seq.; MSA 3.548(101) et seq. On defendants’ motion, plaintiff’s constructive discharge claim was summarily dismissed, thus leaving only her claim for emotional distress damages. A mediation evaluation for $125,000 was accepted by plaintiff and rejected by defendants. After a six-day jury trial, the jury found defendants liable and awarded plaintiff $80,555 in emotional distress damages. The court awarded plaintiff $43,376.66 in attorney fees and costs, and $37,827.50 in mediation sanctions, bringing the total judgment to $192,684. This appeal followed. n Defendants raise several challenges to the instructions given to the jury. A trial court’s decisions regarding jury instructions are reviewed for an abuse of discretion. Lagalo v Allied Corp (On Remand), 233 Mich App 514, 519; 592 NW2d 786 (1999). We review the instructions in their entirety and will not reverse a court’s decision regarding supplemental instructions unless failure to vacate the verdict would be inconsistent with substantial justice. Nabozny v Pioneer State Mut Ins Co, 233 Mich App 206, 217; 591 NW2d 685 (1998). A Defendants first argue that the trial court erred in its instructions regarding the effect of defendants’ investigation of plaintiff’s complaints and subsequent remedial action. We disagree. As defendants correctly note, an employer may avoid liability under the CRA “if it adequately investigated and took prompt and appropriate remedial action upon notice of the alleged hostile work environment.” Downer v Detroit Receiving Hosp, 191 Mich App 232, 234; 477 NW2d 146 (1991); see Radtke v Everett, 442 Mich 368, 396; 501 NW2d 155 (1993). However, the duty to investigate arises only if the employer has actual or constructive notice of the alleged offensive environment. Downer, supra at 234-235. In the recent cases of Burlington Industries, Inc v Ellerth, 524 US 742; 118 S Ct 2257; 141 L Ed 2d 633 (1998), and Faragher v Boca Raton, 524 US 775; 118 S Ct 2275; 141 L Ed 2d 662 (1998)—both decided after trial in the present case—the United States Supreme Court held that an employer is vicariously hable for a supervisor’s creation of a hostile environment unless the employer can prove, by a preponderance of the evidence, both elements of the following affirmative defense: (a) that the employer exercised reasonable care to prevent and correct promptly any sexually harassing behavior, and (b) that the plaintiff employee unreasonably failed to take advantage of any preventive or corrective opportunities provided by the employer or to avoid harm otherwise. [Ellerth, supra, 118 S Ct 2270; Faragher, supra, 118 S Ct 2293.] This affirmative defense is not available where the supervisor’s harassment culminates in a tangible employment action, such as discharge, demotion, or undesirable reassignment. Id. On appeal, defendants complain that the trial court erred in refusing to give their proposed instruction regarding this subject in its entirety. We find no abuse of discretion in the trial court’s decision. Although the court’s instructions perhaps were not as detailed as defendants may have liked, they fairly and accurately advised the jury of the applicable law. The jury was instructed that it must determine whether defendant, once it knew or should have known of the alleged harassment committed by Arquette, adequately investigated and implemented prompt and appropriate corrective action. On its verdict form, the jury specifically found that defendant did not. The result of this determination by the jury, whether viewed as an element of plaintiff’s claim or as a part of an affirmative defense, is vicarious liability for defendant. Consequently, substantial justice does not require reversal of the jury’s verdict on the basis of the trial court’s failure to read instruction 36 in its entirety. B Defendants also argue about the trial court’s rulings regarding defendant’s proposed instructions 33 and 34, which focus on evidence of plaintiff’s own sexual activities in the workplace. The trial court gave the first paragraph, but not the second, of each of these instructions: 33. DEFINITION OF UNWELCOME SEXUAL CONDUCT OR COMMUNICATION The threshold for determining that sexual conduct or communication is unwelcome is that the employee did not solicit or incite it, and the employee regarded the sexual conduct or communication as undesirable or offensive. Evidence of an employee’s participation and/or initiation in the sexual conduct or communication is relevant to determining whether the employee found the sexual conduct or communication of others unwelcome. An employee’s participation and/or initiation in the sexual conduct or communication will defeat an employee’s allegation of unwelcomeness unless the employee establishes a point at which her participation and/or initiation stopped and at which she made known to her coworkers or supervisors that the sexual conduct or communication would henceforth be considered unwelcome. 34. DEFINITION OF INTIMIDATING, HOSTILE, OR OFFENSIVE WORK ENVIRONMENT Not all sexual conduct or communication constitutes hostile environment sexual harassment. To sustain a claim of hostile environment sexual harassment, the harassment must be sufficiently severe or pervasive to alter the conditions of the victim’s employment and create an abusive working environment. Evidence of an employee’s active contribution in the sexual conduct or communication is relevant to determining whether a hostile working environment existed. An employee’s active contribution in the sexual conduct or communication- will defeat an employee’s allegation of hostile work environment. In the present case, plaintiff bore the burden of establishing the following elements of a hostile work environment: (1) the employee belonged to a protected group; (2) the employee was subjected to communication or conduct on the basis of sex; (3) the employee was subjected to unwelcome seocual conduct or communication; (4) the unwelcome sexual conduct or communication was intended to or in fact did substantially interfere with the employee’s employment or created an intimidating, hostile, or offensive work environment; and (5) respondeat superior. [Radtke, supra at 382-383 (emphasis added).] Defendants presented evidence in support of their claim that plaintiff often engaged in sexual conduct herself. Plaintiffs own conduct was therefore relevant to the question whether Arquette’s alleged acts were “unwelcome.” See, e.g., Balletti v Sun-Sentinel Co, 909 F Supp 1539, 1547 (SD Fla, 1995) (“Where a plaintiff’s action in the work place shows that she was a willing and frequent participant in the conduct at issue, courts are less likely to find that the conduct was ‘unwelcome’ or ‘hostile.’ ”) However, plaintiff’s participation in sexual behavior or comments, standing alone, does not necessarily defeat a claim of hostile work environment. To the contrary, it is merely a factor to consider when determining whether the conduct or comments at issue were “unwelcome.” For this reason, the second paragraph of defendants’ proposed instruction 34 is an incorrect statement of the law and was properly rejected by the trial court. Regarding the second paragraph of instruction 33, we note that the last sentence is a reasonable paraphrase of a footnote in Loftin-Boggs v City of Meridian, 633 F Supp 1323, 1327, n 8 (SD Miss, 1986). Accordingly, had the trial court chosen to give this portion of the instruction, it would have been a proper exercise of discretion. See Radtke, supra at 381-382 (Michigan courts often turn to federal precedent interpreting title VII for guidance when interpreting the cra). However, the trial court’s refusal to give the second paragraph of ins

FRANZEL v KERR MANUFACTURING COMPANY Docket No. 201802. Submitted November 3, 1998, at Detroit. Decided March 30, 1999, at 9:00 A.M. Shirley Franzel brought an action in the Wayne Circuit Court against Kerr Manufacturing Company and Rebecca Leinen, Kerr’s vice president of human resources, alleging several claims as a result of Franzel’s second termination from employment. The court, Kay Tertzag, J., granted Leinen’s motion for summary disposition and dismissed the plaintiff’s claims of sexual harassment, hostile work environment sex discrimination, retaliation for attempting to oppose a violation of the Civil Rights Act, and intentional infliction of emotional distress. The jury considered the claims of wrongful discharge, sex discrimination in violation of the Civil Rights Act, and breach of contract for Kerr’s alleged violation of an unconditional offer to the plaintiff to return to work after her first termination from employment. The jury, specifically finding that the plaintiff was not an employee whose employment could be terminated for just cause only, found no wrongful discharge. The jury also found no sex discrimination, but did find that Kerr breached the contract between it and the plaintiff made before the plaintiff returned to work after her first termination from employment. The jury awarded the plaintiff damages but reduced the amount because of the plaintiff’s failure to mitigate her damages. Kerr appealed and the plaintiff cross appealed. The Court of Appeals held: 1. The plaintiff was entitled to only nominal damages for the breach of the at-will employment contract. The court erred in denying Kerr’s motion for remittitur, and that order must be reversed. 2. The jury did not find that the plaintiff had been an at-will employee before her first termination from employment or that following her reinstatement she was an employee whose employment could be terminated for just cause only. 3. The plaintiff was on notice when she signed the reinstatement contract that her employment was at will. 4. The court erred in admitting, over Kerr’s objection, a letter written by Kerr’s counsel to defendant Leinen. The letter was not intentionally presented to the plaintiff by Kerr’s counsel. An unprejudiced person reviewing the evidence would find no justification or excuse for the court’s decision to deny Kerr’s motion to suppress the evidence. The letter was improperly admitted and its contents created undue prejudice against Kerr. The admission of the evidence constituted error requiring reversal of the judgment with regard to the breach of contract claim. 5. The court abused its discretion in permitting an expert witness to testify that the plaintiff is a credible witness and in permitting the witness to testify with regard to matters outside the witness’ field of expertise. The expert witness should not have been allowed to testify with regard to evidence that was subject to the attorney-client privilege and that was erroneously admitted into evidence. 6. The court did not err in finding either no genuine issue of material fact regarding the claims of intentional gender discrimination, sexual harassment, retailiation for opposing a violation of the Civil Rights Act or the failure to state a claim regarding sexual harassment, gender discrimination by defendant Leinen, or intentional infliction of emotional distress. Those orders of summary disposition must be affirmed. Affirmed in part, reversed in part, and remanded. 1. Contracts — Employment at Will — Breach of Contract — Damages. The measure of damages for an employer’s breach of an employment contract involving an at-will employee is nominal damages. 2. Contracts — Damages. Neither mental distress damages nor exemplary damages are available in an action for breach of contract, even if the breach was malicious or wilful. 3. Master and Servant — Employment at Will. An at-will employment relationship is presumed where an employment agreement is silent regarding the type of employment relationship intended. 4. Witnesses — Experts — Opinion Testimony — Appeal. Whether a witness is qualified to render an expert opinion and the admissibility of an expert’s testimony are matters within a trial court’s discretion; an abuse of discretion will be found only if an unprejudiced person, considering the facts on which the trial court acted, would say there was no justification or excuse for the ruling. 5. Witnesses — Experts. The subject matter of an expert’s testimony should be directly related to and within the immediate scope of the witness’ expertise; a prerequisite to the admission of an expert’s testimony is a showing that the expert has knowledge in a particular area that belongs more to an expert than to the common man; an expert should not be permitted to express an opinion where the jury is in as good a position as the expert to determine intelligently the issue involved without enlightenment from the expert (MRE 702). 6. Witnesses — Experts — Work-Product Privilege. Facts known and opinions held by an expert are not work product, but the expert’s arrangement of those facts and opinions in a report, made in direct response to the inquiries of an attorney, is work product protected by the work-product privilege (MCR 2.302[B][4]). 7. Trial — Witnesses — Jury Trial — Witness Credibility — Expert Testimony. The jury is the sole arbiter of witness credibility in a jury trial; expert testimony regarding the credibility of a witness is improper in a jury trial. Allen J. Counard, P.C. (by Allen J. Counard), for the plaintiff. Kell & Lynch, P. C. (by M. V. Kell and Margaret A. Lynch), for Kerr Manufacturing Company. Before: Hood, P.J., and Griffin and Markey, JJ. Per Curiam. Kerr Manufacturing Company (hereafter defendant) appeals by right the jury verdict finding that while defendant did not wrongfully discharge plaintiff Shirley Franzel or commit sexual discrimination against her, defendant did breach the parties’ contract that formed the basis for plaintiff’s return to work in January 1987. Plaintiff cross appeals to determine whether the trial court erred in summarily dismissing plaintiff’s claims under the Civil Rights Act (cra) of intentional gender discrimination, MCL 37.2202(1); MSA 3.548(202)(1), hostile work environment sexual harassment, MCL 37.2103(1); MSA 3.548(103)(i), retaliation for attempting to oppose a violation of the CRA, MCL 37.2701; MSA 3.548(701), gender discrimination by defendant Rebecca Leinen, Kerr’s vice president of human resources, and her claim of intentional infliction of emotional distress. Plaintiff also cross appeals from the trial court’s refusal to enter an order of judgment including costs, attorney fees, or mediation sanctions. We vacate the judgment in favor of plaintiff and affirm regarding the cross appeal. FACTS Plaintiff worked as a sales representative, district manager, and metro market manager for defendant, a dental products manufacturer, from 1981 through July 1986, and again from January 1987 through May 1987. Plaintiff aspired to the position of regional manager, but allegedly defendant and a host of its employees were committed to preventing a woman from reaching upper management. Plaintiff claims that defendant began discriminating and conspiring against her after three January 1986 incidents at a national sales meeting in Marco Island, Florida, where two comments were made during a slide show that insinuated plaintiff had slept her way to her current position, and where another manager, who was vying for the same regional manager promotion, pinched her on the buttocks. Rick Amos, plaintiff’s supervising regional manager, terminated her employment in July 1986 for failing to satisfy the requirements of a February 1986 “performance improvement plan” (pip), also known as probation. In August 1986, plaintiff filed her complaint in state court against defendant Kerr, asserting claims of sexual harassment and sexual discrimination in violation of the CRA, breach of contract, wrongful discharge, negligent evaluation, and retaliatory treatment for filing the lawsuit, but the action was removed to the United States District Court for the Eastern District of Michigan on diversity grounds. After a lengthy trial before Judge Barbara K. Hackett, the federal court jury found that plaintiffs employment could be terminated for just cause only, but issued a verdict of no cause of action. The federal case was subsequently dismissed, however, when plaintiff filed a posttrial challenge to diversity jurisdiction and defendant did not oppose it. Thus, the parties refiled their pleadings in the Wayne Circuit Court and the instant lawsuit proceeded. Rebecca Leinen was also added as a defendant in the state court action. While her federal lawsuit was pending, however, defendant made plaintiff an unconditional offer to return to work. After negotiations, plaintiff agreed and signed a December 11, 1986, letter setting forth the conditions of her reinstatement, including the geographical territories she would service (which did not include the same successful Michigan accounts she had in the past), that Amos would no longer oversee her work, and that she was subject to annual reviews like all other district managers. From the outset, the problems that had plagued plaintiff before her first termination involving extremely late paperwork and expense reports began to reoccur, and plaintiff was again placed on a pip. When plaintiff refused a direct order to (1) retrieve from home some “documentation” that she claimed existed to rebut the allegations in her pip (and support many of the allegations she made against other employees who allegedly sexually harassed her and conspired against her), and (2) return to work with the documentation on the same day, she was suspended. Plaintiff then informed defendant that she could not return to work for medical reasons at the direction of her psychologist, but she refused to submit to an independent medical or psychological examination that defendant requested. Defendant once again terminated her employment, this time for insubordination. In the state court action, the trial court granted defendant Rebecca Leinen’s motion for summary disposition and dismissed plaintiffs claims of sexual harassment, hostile work environment sex discrimination, retaliation, and intentional Infliction of emotional distress. The jury was instructed with regard to the claims of (1) wrongful discharge, (2) sex discrimination in violation of the CRA, and (3) breach of contract for defendant’s alleged violation of the unconditional offer to return to work. The jury found no wrongful discharge (specifically finding that plaintiff was not an employee whose employment could be terminated for just cause only) and no sex discrimination, but it did find that defendant breached the contract between the parties that formed the basis for plaintiff’s return to work in January 1987. The jury awarded plaintiff $425,000 in damages but reduced that amount by $200,000 for failure to mitigate. Defendant appealed, and plaintiff cross appealed to this Court. i A First, defendant Kerr asserts that the trial court committed error requiring reversal in refusing to reduce the jury’s damage award to a nominal amount Defendant argues that the jury’s damage award was purely speculative and that plaintiff was entitled to only nominal damages under Sepanske v Bendix Corp, 147 Mich App 819; 384 NW2d 54 (1985), and Environair, Inc v Steelcase, Inc, 190 Mich App 289, 293; 475 NW2d 366 (1991). These cases support the proposition that even if defendant breached its contract with plaintiff regarding her return to work, nothing in the contract ensured her continued employment because, as the jury found, she was an at-will employee, not an employee whose employment could be terminated for just cause only. Notably, neither mental distress damages nor exemplary damages are available in an action for breach of contract, even if the breach is malicious or wilful. Walker v Consumers Power Co, 824 F2d 499, 504-505 (CA 6, 1987); Valentine v General American Credit, Inc, 420 Mich 256, 259-263; 362 NW2d 628 (1984). We find that plaintiff was entitled to only nominal damages for breach of the at-will employment contract and the trial court erred in denying defendant’s motion for remittitur. In Sepanske, supra at 828-829, this Court affirmed the proposition that the breach of an at-will employment contract entitles the employee to receive only nominal damages because, regardless of the contract terms, the employee had no reasonable expectation of continued employment. In that case, plaintiff Sepanske returned to work after taking a company-approved social service leave of absence but was placed in a different job in a different department, contrary to company policy guaranteeing reinstatement to a former position or one of equal or greater responsibility. The defendant’s personnel manager had also given Sepanske a letter stating that Sepanske was “ ‘scheduled to return to [his] former position’ ” upon completion of his social service leave. Id. at 823. The jury found that Sepanske’s responsibilities regarding his new job were neither greater than nor equal to those regarding his former job, and awarded him $75,206 in damages for future lost earnings. Id. at 824-825. This Court vacated the jury’s damage award and remanded to the district court for entry of a judgment in Sepanske’s favor “for nominal damages only.” Id. at 829. The Court stated: We take an entirely different approach [than the parties] on the issue of damages. We think that plaintiff was entitled to nominal damages only for defendant’s breach of the employment contract. This is not a case of wrongful discharge. Plaintiff’s expectation under the contract was to be restored to his old job or to an at-will position which was equivalent to or better than his position in pension and payroll, but he had no actionable expectation that any such restoration would be permanent. The position was still at will—one which the employer was free to alter or terminate without consequence. The fact that defendant historically had not arbitrarily reclassified positions or terminated employees does not change its right to do so. . . . The jury’s damage assessment in such a situation amounts to pure speculation. There is no tangible basis upon which damages may be assessed where plaintiff’s eccpectation was for an at-will position which could have been changed or from which he could have been terminated without consequence. See Sax v Detroit, G H & M R Co, 129 Mich 502, 506; 89 NW 368 (1902). [Id. (emphasis added).] This Court recently reiterated that Sepanske should not be extended beyond breach of contract actions where at-will employees are entitled to only nominal damages. Hord v Environmental Research Institute of Michigan, 228 Mich App 638, 643-644; 579 NW2d 133 (1998). In Environair, supra at 293-294, we stated that while Sepanske involved an employment relationship, its holding regarding the speculative nature of damages was equally applicable to nonemployment, at-will contractual relationships (e.g., exclusive sales contracts). Our Supreme Court has not affirmatively endorsed Sepanske, but the Court has discussed its holding, if only to distinguish it from a case being considered. In Phillips v Butterball Farms Co, Inc (After Second Remand), 448 Mich 239, 251, n 31, 253; 531 NW2d 144 (1995), the Supreme Court found Sepanske inapplicable where the plaintiff sued her employer in tort for worker’s compensation retaliatory discharge. After quoting pertinent parts of the Sepanske opinion as set forth above, the Supreme Court merely stated that “[t]he claim in Sepanske, however, was premised on breach of contract, not a separate tort.” Id. at 253. Accord Sax, supra at 506; Mallory v Jack, 281 Mich 156; 274 NW 746 (1937) (future damages may not be awarded under employment contracts terminable at will). Notably, the Sax Court stated: There is no foundation for even a guess by a jury upon either question of fact [regarding when the employment contract would end and when it in fact ended], because either could terminate the contract at will, and it was equally impossible to tell how much of the time [the plaintiff, a train brakeman who was injured and subsequently rehired,] would be employed. The jury were [sic] turned, loose into afield of pure speculation and conjecture, without any practical or tangible basis upon which to assess damages. Under such circumstances, none can be assessed. [Sax, supra at 506 (emphasis added).] Plaintiff offers no case law support contrary to Sepanske; rather, she merely emphasizes Judge Shepherd’s position in his dissenting opinion in Sepanske that because the defendant could have fired the plaintiff at any time, it did not mean that the defendant was likely to fire him. Sepanske, supra at 832. In his dissent, Judge Shepherd also argued that public policy and fairness favor placing the burden of proof on the defendant to show that in fact the plaintiff would have been discharged, particularly given that the plaintiff in Sepanske was providing a public service on the defendant’s behalf while on leave before the employment relationship ended. Id. at 833. We find these arguments unpersuasive. B Plaintiff also argues that the reinstatement “contract” between plaintiff and defendant dated December 11, 1986, constituted an employment contract that was terminable for just cause only. Plaintiff asserts that the jury’s special verdict form evidences that the jury found plaintiff to be an at-will employee during her first term of employment but not during her reinstatement. A quick review of the jury’s special verdict form disproves this argument. The following are the questions and the jury’s responses to the special verdict form: Count i: Do you find that Plaintiff has proven by a preponderance of the evidence that the employment relation ship between the Plaintiff and Defendant was such that Plaintiff would not be discharged except for just cause? NO Count n: Do you find that Plaintiff has proved by a preponderance of the evidence that one of the reasons she was discharged was because of her sex? no Count III: Question 1: Do you find that Plaintiff has proved by a preponderance of the evidence that Defendant breached the contract which Plaintiff and Defendant entered into upon her return to work? yes Question 2: Do you find by a preponderance of the evidence that Plaintiff suffered damages as a result of the breach of contract? yes Damages: Question 1: If plaintiff suffered damages, what is the amount of damages you award to Plaintiff? Count ill, Breach of Contract, $425,000 Question 2: Did Plaintiff make a reasonable effort to minimize her damage? NO By what amount do you find the award of damages will be reduced? $200,000 [Emphasis added.] Cleaxly, nothing in the language of the special vexdict foxm xegaxding count I limited the question of at-will ox just-cause employment to eithex plaintiffs first ox second period of employment. c Plaintiff further argues that the language of the reinstatement contract itself establishes the just-cause nature of the employment relationship. A review of the pertinent language in the reinstatement contract that plaintiff signed supports a contrary view: 1. Kerr will unconditionally reinstate you to the position of District Manager within the Michigan market effective January 5, 1987. 2. You will be reinstated at your former salary of $35,000.00 per year. 3. You will be entitled to the normal bonus arrangement available to District Managers. 4. You will be provided with all fringe benefits available to District Managers. 5. You will be subject to annual reviews the same as is provided to all other District Managers. 6. For a period of six (6) months, you will be assigned the following accounts: A. University of Michigan B. Healthco C. Either Patterson or Bignall While the

CHAMBERS v TRETTCO, INC Docket No. 202151. Submitted June 10, 1998, at Lansing. Decided November 20, 1998, at 9:10 A.M. Leave to appeal sought. Robyn Chambers brought an action in the Washtenaw Circuit Court against Trettco, Inc., and ADP, Inc., alleging that Trettco, her former employer, is vicariously liable under the Civil Rights Act, MCL 37.2101 et seq,] MSA 3.548(101) et seq., for workplace sexual harassment of the plaintiff by her Trettco supervisor. The court, Donald E. Shelton, X, denied a motion by Trettco for a directed verdict and thereafter entered judgment on a jury verdict for the plaintiff. Trettco appealed. The Court of Appeals held: 1. The evidence presented at trial supported a finding of hostile work environment based on several severe or pervasive acts of harassment by the supervisor. 2. An employer is subject to vicarious liability to a victimized employee for a hostile work environment created by a supervisor. When no tangible employment action is taken against the employee, the employer may raise an affirmative defense to liability or damages by showing that the employer exercised reasonable care to prevent and correct promptly any sexually harassing behavior and that the employee unreasonably failed to take advantage of any preventive or corrective opportunities provided by the employer or to avoid harm otherwise. In this case, the jury, on the basis of ample evidence, found that Trettco failed to take prompt remedial action after it knew or should have known of the hostile work environment created by the supervisor. 3. Any error made by the trial court in instructing the jury that an employer is strictly liable if a supervisor sexually assaults or molests an employee through the exercise of supervisory power was harmless in view of the ample evidence of hostile work environment supportive of a finding of vicarious liability on the part of Trettco, and in view of the fact that the jury did not specifically find strict liability. Affirmed. O’Connell, X, dissenting, stated that vicarious liability of an employer for sexual harassment in the form of hostile work environment requires a showing by the plaintiff that a recurring problem existed or a repetition of an offending incident was likely and the employer failed to rectify the problem upon adequate notice. In this case, a telephone conversation between the plaintiff and a Trettco regional director did not constitute actual or constructive notice of the claimed sexual harassment. The conversation did not alert the regional director that the plaintiff was being sexually harassed, but only that she had an unspecified problem at work. The plaintiff also failed to establish quid pro quo sexual harassment. Accordingly, Trettco should not be held liable for sexual harassment. Civil Rights — Sexual Harassment — Hostile Work Environment — Supervisors — Employer Liability. An employer is subject to vicarious liability to a victimized employee for a hostile work environment created by a supervisor; when no tangible employment action is taken against the employee, the employer may raise an affirmative defense to liability or damages by showing that the employer exercised reasonable care to prevent and correct promptly any sexually harassing behavior and that the employee unreasonably failed to take advantage of any preventive or corrective opportunities provided by the employer or to avoid harm otherwise; no affirmative defense is available when the supervisor’s harassment culminates in a tangible employment action, such as discharge, demotion, or undesirable reassignment (MCL 37.2101 et seq.; MSA 3.548[101] et seq.). Garris, Garris, Garris & Garris, P.C. (by Steven Z. Garris'), for Robyn Chambers. MacDonald and Goren, P.C. (by Cindy Rhodes Victor and Lawrence C. Atorthy), for Trettco, Inc. Before: Jansen, P.J., and Markey and O’Connell, JJ. Jansen, RJ. Defendant appeals as of right from a jury’s verdict in favor of plaintiff in this sexual harassment case. We affirm. Defendant, a corporation engaged in managing food service operations for various businesses, hired plaintiff as a temporary cook in June 1995, intending to use plaintiff in various locations pending possible placement in a permanent position. Defendant initially assigned plaintiff to take the place of a cook at ADP, Inc., in Ann Arbor. During this assignment, while the regular on-site supervisor was on vacation, defendant assigned a temporary supervisor, Paul Wolshon. According to the evidence at trial, Wolshon immediately commenced a pattern of sexually harassing plaintiff. Plaintiff filed suit against defendant, alleging assault, sexual assault, sexual harassment, and retaliatory discharge. Plaintiff agreed to dismiss her claims of assault and sexual assault at the close of her proofs at trial, and she withdrew her claim of retaliatory discharge before closing argument. The jury found in plaintiffs favor with respect to her claim of sexual harassment. This appeal essentially concerns an employer’s vicarious liability (respondeat superior) in a sexual harassment case brought under the Civil Rights Act, MCL 37.2101 et seq.; MSA 3.548(101) et seq. The arguments made by the employer in this case have been squarely rejected by the United States Supreme Court in Burlington Industries, Inc v Ellerth, 524 US 742; 118 S Ct 2257; 141 L Ed 2d 633 (1998), and Faragher v Boca Raton, 524 US_; 118 S Ct 2275; 141 L Ed 2d 662 (1998). The Supreme Court held that the labels “quid pro quo” and “hostile work environment” are not controlling for purposes of establishing employer liability. Ellerth, supra, 141 L Ed 2d 648, 655. However, for any sexual harassment preceding the employment decision to be actionable, the conduct must be severe or pervasive. Id., p 648. Further, an employer can be liable for a supervisor’s sexual harassment where the employer’s own negligence is a cause of the harassment. Id., p 651. An employer is negligent with respect to sexual harassment if it knew or should have known about the conduct and failed to stop it. Id. First, defendant’s claim that plaintiff failed to establish a claim of sexual harassment in the form of hostile work environment is meritless. During a one-week period in July 1995, Paul Wolshon, a “float manager” (but not plaintiff’s full-time manager) engaged in numerous incidents of sexually harassing plaintiff. There was evidence that Wolshon rubbed plaintiff’s buttocks, grabbed her breasts, asked plaintiff to go to a hotel and have oral sex with him, and rubbed whipped cream on plaintiff’s hands and stated, “Now tell everybody you were creamed by Paul.” One of plaintiff’s co-workers also testified that Wolshon stated that he would like to put whipped cream on his tongue and put it between plaintiff’s legs and lick plaintiff’s breasts. The same co-worker also saw Wolshon grab plaintiff’s breasts. Plaintiff also testified that these types of harassing incidents occurred every day of the week that Wolshon was her supervisor. Defendant’s claim that plaintiff’s allegations are “a discrete, singular set of occurrences” that were not sufficiently outrageous to form a single incident of hostile work environment is incorrect and meritless. The evidence preferred by plaintiff was clearly sufficient to establish a hostile work environment claim of sexual harassment because it was severe or pervasive. Therefore, the jury’s finding that Wolshon sexually assaulted or molested plaintiff through the use of his supervisory powers over her is entirely supportable by the evidence presented. Accordingly, the trial court did not err in denying defendant’s motion for a directed verdict on this basis. Further, defendant’s claims that the terms of plaintiff’s employment were not affected by her rejection of Wolshon’s overtures and that plaintiff did not believe that any terms of her employment would be affected by accepting or rejecting the sexual overtures are likewise without merit. Plaintiff was discharged from her position on September 11, 1995. Defendant claimed that she was discharged because of her failure to arrive for work or call regarding her absence. Plaintiff claimed that she was never told why she was discharged. Even if the discharge was not related to the sexual harassment incidents, the terms of plaintiff’s employment were clearly affected; that is, Wolshon’s harassment toward her was severe or pervasive and created an intimidating, hostile, or offensive work environment. Id., p 648; Faragher, supra, 141 L Ed 2d 675; Harris v Forklift Systems, Inc, 510 US 17, 21; 114 S Ct 367; 126 L Ed 2d 295 (1993); Radtke v Everett, 442 Mich 368, 382-383; 501 NW2d 155 (1993). It is not necessary that a plaintiff suffer economic harm or tangible discrimination. Harris, supra, p 21. All that was necessary was that plaintiff show that the supervisor created a hostile work environment, which the evidence at trial showed that she did. Thus, we turn to the question of the employer’s vicarious liability. With respect to the question of vicarious liability, the Supreme Court held: An employer is subject to vicarious liability to a victimized employee for an actionable hostile environment created by a supervisor with immediate (or successively higher) authority over the employee. When no tangible employment action is taken, a defending employer may raise an affirmative defense to liability or damages, subject to proof by a preponderance of the evidence .... The defense comprises two necessary elements: (a) that the employer exercised reasonable care to prevent and correct promptly any sexually harassing behavior, and (b) that the plaintiff employee unreasonably failed to take advantage of any preventive or corrective opportunities provided by the employer or to avoid harm otherwise. ... No affirmative defense is available, however, when the supervisor’s harassment culminates in a tangible employment action, such as discharge, demotion, or undesirable reassignment. [Ellerth, supra, 141 L Ed 2d 655; Faragher, supra, 141 L Ed 2d 689.] In the present case, the jury found that defendant failed to take prompt remedial action after it knew or should have known that plaintiff had been sexually harassed. This finding is supportable by the evidence presented at trial. Plaintiff testified that she spoke to Kevin McLaughlin, the regional director of operations for HDS, on the telephone on July 6, 1995. McLaughlin asked plaintiff if something was wrong, and McLaughlin testified that he could sense that something was bothering plaintiff. Plaintiff indicated that she could not express her complaints of Wolshon at that time because Wolshon was standing next to her. McLaughlin told plaintiff that he would be at ADP, Inc., on July 8, 1995, and would speak to her at that time. It is disputed whether McLaughlin went there on July 8. He testified that he went there, but plaintiff made no attempt to talk to him. However, plaintiff testified that McLaughlin never went to ADP that week. When plaintiffs regular supervisor, Jennifer Hostutler, returned to work on July 11, 1995, plaintiff reported her specific complaints regarding Wolshon. Hostutler asked plaintiff to write down her allegations, which plaintiff did. Plaintiff also testified that she spoke to McLaughlin, who told her that he would investigate the matter. Plaintiff testified that McLaughlin never asked her what happened regarding Wolshon and that no one from HDS ever contacted her or informed her of any results of the investigation. In reviewing the evidence and all legitimate inferences drawn from the evidence in a light most favorable to plaintiff, Mason v Royal Dequindre, Inc, 455 Mich 391, 397; 566 NW2d 199 (1997), plaintiff has satisfied the requirements of Ellerth and Faragher. That is, defendant is subject to vicarious liability for an actionable hostile environment created by Wolshon, plaintiffs immediate supervisor. Assuming that plaintiff was not discharged for reporting Wolshon’s actions, although there is no tangible employment action, defendant may raise the affirmative defense that it exercised reasonable care to prevent and correct promptly any sexually harassing behavior and that plaintiff failed to take advantage of any preventive or corrective opportunities provided by defendant or to otherwise avoid harm. Here, the jury could have, and apparently did, reject McLaughlin’s testimony and accept plaintiff’s testimony regarding defendant’s attempts to prevent or correct Wolshon’s sexually harassing behavior. Accordingly, the jury could reasonably infer that defendant was vicariously liable for Wolshon’s sexually harassing behavior because defendant failed to exercise reasonable care to prevent and correct promptly Wolshon’s behavior. The facts of the present case are as compelling as those in Ellerth or Faragher to support a finding in favor of the plaintiff. In Ellerth, the plaintiff did not allege that she suffered a tangible employment action at the hands of her supervisor, but the Supreme Court held that this was not dispositive. Rather, the employer is still subject to vicarious liability for the supervisor’s activity, but the employer has the opportunity to assert and prove the affirmative defense to liability. Ellerth, supra, p 655. In Ellerth, the plaintiff clearly alleged that she was subjected to a hostile work environment created by the supervisor, but she did not inform anyone in authority about the supervisor’s conduct, despite knowing that the employer had a policy against sexual harassment. Id., p 645. Summary judgment against the plaintiff was reversed, and the district court was given the opportunity to decide whether to allow the plaintiff to amend her pleadings or supplement discovery. Similarly, in Faragher, the plaintiff was subjected to a hostile work environment created by two supervisors, and the plaintiff reported the behavior to another supervisor, who took no action against the other two supervisors. Further, the employer failed to disseminate its policy against sexual harassment among its employees and its officials made no attempt to keep track of the conduct of supervisors, such as the two involved in this case. The employer also failed to include any assurance that the harassing supervisors could be bypassed in registering complaints. Faragher, supra, p 689. The Supreme Court held, as a matter of law, that, under those circumstances, the defendant could not be found to have exercised reasonable care to prevent the supervisors’ conduct Id., p 690. Therefore, the district court’s judgment in favor of the plaintiff was reinstated by the Supreme Court. Accordingly, the trial court did not err in denying defendant’s motion for a directed verdict on the basis of respondeat superior. The jury could properly find that defendant was vicariously liable for the acts of its supervisor. Finally, defendant argues that the trial court’s instruction to the jury that an employer is strictly liable if a supervisor sexually assaults or molests an employee through the exercise of his supervisory powers was erroneous. We find that any error in the trial court’s instruction regarding strict liability was harmless, MCR 2.613(A), because there is ample evidence of a hostile work environment sufficient to establish defendant’s vicarious liability, and the jury specifically found that defendant failed to take prompt remedial action after it knew or should have known that plaintiff had been sexually harassed, a finding that is supported by the evidence presented at trial. Moreover, there was no specific finding by the jury that defendant was strictly liable. Affirmed. Markey, J., concurred. Because defendant Trettco, Inc, doing business as HDS, is the only defendant involved in this appeal, the use of the term “defendant” will refer solely to Trettco. Our Supreme Court has noted that “[o]ur courts have consistently relied on the federal judiciary for guidance when addressing the Michigan Civil Rights Act.” Koester v Novi, 458 Mich 1, 11-12; 580 NW2d 835 (1998). Moreover, to the extent that defendant argues that plaintiff failed to establish a prima facie case of quid pro quo sexual harassment, we need not address that claim because the Supreme Court has made clear that the labels “quid pro quo” and “hostile work environment” are not controlling for purposes of establishing employer liability- Thus, we only address whether Wolshon’s conduct was severe or pervasive enough to be actionable. O’Connell, J. {dissenting). I respectfully dissent. A prima facie case of hostile-workplace sexual harassment under the Civil Rights Act, MCL 37.2101 el seq.; MSA 3.548(101) et seq., includes among its requirements that the plaintiff show that the employer bears responsibility for the alleged harassment under the doctrine of respondeat superior, which ordinarily requires a showing that either a recurring problem existed or a repetition of an offending incident was likely and that the employer failed to rectify the problem upon adequate notice. Radtke v Everett, 442 Mich 368, 382, 395; 501 NW2d 155 (1993). Plaintiff in the instant case has failed to satisfy this requirement. An employer has a duty to investigate and take remedial action in response to a claim of sexual harassment only upon actual or constructive notice of the offensive environment. Downer v Detroit Receiving Hosp, 191 Mich App 232, 235; 477 NW2d 146 (1991). In denying the motion for a directed verdict, the trial court stated that the jury could reasonably conclude that plaintiff communicated to the regional director of operations that there was a problem and that the latter failed to respond as promised, and that those conclusions could support a finding that the employer sanctioned a continuing hostile environment. However, I conclude that plaintiff’s general indication to the regional director over the telephone that something was wrong did not sufficiently alert him to the problem as to constitute actual or constructive notice on defendant’s part that sexual harassment was taking place. It is not reasonable to infer from the regional director’s vague understanding that something was amiss that he had notice of sexual harassment. Because plaintiff presented no evidence that she complained about the problem to anyone with supervisory responsibility before she spoke to her normal supervisor upon the latter’s return and the offender’s departure, or that anyone with authority to act otherwise had notice that sexual harassment was taking place, the facts as plaintiff alleges them simply did not trigger defendant’s duty to take action to alleviate the problem. Further, because the offender was no longer situated at plaintiff’s work location when defendant did learn of a sexual harassment complaint, defendant breached no duty to take remedial action as regarded plaintiff once defendant had notice of a complaint. Plaintiff likewise failed to establish a prima facie case of quid pro quo sexual harassment. The Civil Rights Act provides that discrimination on the basis of sex includes where the employee’s submission to or rejection of sexual overtures “is used as a factor in decisions affecting such individual’s employment . . . .” MCL 37.2103(i)(ii); MSA 3.548(103)(i)(ii). A party pressing a claim under this provision must establish that the party was the subject of unwanted sexual conduct or communication and that the employer used the party’s submission to or rejection of the improper conduct as a factor in a decision affecting the party’s employment. Champion v Nation Wide Security, Inc, 450 Mich 702, 708-709; 545 NW2d 596 (1996). In the instant case, plaintiff has failed to show that any terms or conditions of her employment were affected by her rejection of the temporary supervisor’s advances. Plaintiff does not allege that the temporaiy supervisor ever suggested that plaintiff’s job would be affected, for better or worse, by her response to his overtures. Instead, plaintiff argues that