The Third Circuit Court of Appeals in Austin v. Norfolk Southern Corp., 158 Fed. Appx. 374 (3d Cir. 2005) recently issued a decision finding that in certain situations, an employer's efforts to eradicate sexual harassment in the workplace may be considered sufficient and nondiscriminatory even if the complaining employee continues to experience harassment on a lower scale. The court also tackled the issue of successor-employer liability and whether the actions of a former employer may be imputed to the successor employer to show retaliation in violation of Title VII.
Consolidated Rail Corp. ("Conrail") employed Plaintiff Melanie Austin after Conrail took over from its predecessor in 1991. Conrail was later acquired by Norfolk Southern Railway Company in 1999. The Plaintiff claimed that beginning in 1998 through 1999, she was subjected to sexually harassing conduct by her fellow Conrail employees. The conduct complained of included offensive graffiti as well as comments she overheard on the company radio. Plaintiff reported the incidents to her superiors and they took the following measures: interviewing employees Plaintiff felt were responsible, posting and re-issuing the company's sexual harassment policy, and inspecting company property for graffiti. Despite the company's efforts, Conrail was unable to identify those responsible for the conduct through this investigation. Plaintiff further alleged she was subjected to photographs of nude women and additional offensive graffiti while employed by Norfolk Southern after the acquisition of Conrail. During Plaintiff's employment with Norfolk Southern, she was suspended without pay because she referred to another employee as a "pervert," which violated the company's sexual harassment policy. Plaintiff claimed in her lawsuit that this suspension was actually an illegal retaliation for her earlier reports of sexual harassment at Conrail. The trial court ruled in favor of the Plaintiff on her claims of sexual harassment and retaliation. The Third Circuit reversed this decision.
Effective Corrective Action
The Third Circuit found that the actions of Conrail in investigating the claims of harassment, interviewing employees, posting and re-issuing the company's policy and inspecting the property, were sufficient corrective action and that a jury could not reasonably conclude that Conrail failed to take corrective action. With respect to Norfolk Southern, Plaintiff alleged three instances of sexual harassment after Norfolk Southern acquired Conrail in June 1999. Those three instances were found insufficient for a reasonable jury to hold Norfolk Southern liable for failing to take corrective action. The court held that the district court should have granted both Conrail and Norfolk Southern's summary judgment motions on the sexual harassment claim.
Retaliation Claim
While employed by Conrail, Plaintiff called a dispatcher a pervert based on the individual's sexual orientation and the dispatcher complained. After Norfolk Southern acquired Conrail, the company confirmed that Plaintiff, in fact, had made such a statement. After a disciplinary hearing, Norfolk Southern suspended Plaintiff for violating the company's sexual harassment policy. Plaintiff's assertion was that Norfolk Southern really suspended her for complaining about sexual harassment at Conrail and the jury agreed. The Third Circuit however, found that there was insufficient evidence to support the conclusion that Norfolk's reason for suspending Plaintiff was pretext for retaliation. The court found that there was evidence that similar jokes had been made by other employees who were not disciplined in the past at Conrail, however the pretext in this case arose from the actions of two separate companies. There was no similar incident of joking at Norfolk Southern that Plaintiff could point to and thus the former employer's conduct could not be imputed to the subsequent employer to show retaliation by the subsequent employer. The court rejected Plaintiff's assertion of successor liability as the district court failed to address all three principal factors in finding successor liability in employment discrimination cases: (1) continuity in operations and work force; (2) notice to successor employer of its predecessor's legal obligations; (3) ability of predecessor to provide adequate relief directly.
Practical Significance
The Austin decision is noteworthy in that it addresses circumstances where an employer has done all it is capable of doing in investigating allegations of harassment. The Conrail employer never discovered who made the allegedly offensive comments or graffiti and the Plaintiff argued that she continued to be harassed after the company was acquired by Norfolk. Even with that background, the Third Circuit found that the corrective action taken was sufficient. Many employers struggle with investigating harassment complaints, particularly when there is no clear wrongdoer or remedy. A delicate balance must be struck between a complaining employee's expectations and an employer's capabilities in conducting investigations and implementing corrective action. The case also provided insight into a federal court review of this idea of imputing actions of a former employer onto a successor employer for purposes of liability. The Plaintiff in Austin believed that the seamless integration of the two companies (i.e. same personnel, continued operations) was enough to allow for successor liability. According to the court, successor liability in this context is typically applied where an employee is attempting to enforce a claim or judgment against a successor that he or she could not have enforced against the predecessor company. The Plaintiff in this case wanted actions by the predecessor to instead be imputed to separate actions taken by the successor, which the court would not allow even if Norfolk Southern had been subject to successor liability.
This case illustrates that employers should be more vigilant than ever about taking sufficient corrective action after they have notice of sexual harassment. While doing nothing is never an option, doing enough to satisfy the tenets of Title VII should always be a goal of any employer. Another point raised by this case is the importance of consistency of action. The Austin court may have entertained Plaintiff's argument that other people had not been disciplined for comments similar to the one she made but for the issue of the two separate companies. Employers must be consistent in discipline of employees and in the enforcement of policies if they do not want to risk making the policies they seek to enforce irrelevant.