Employer may be liable for hostile environment created by CFO but not vicariously liable for his torts
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Wednesday, September 4, 2019

Employer may be liable for hostile environment created by CFO but not vicariously liable for his torts

By Robert Margolis, J.D.

The court also held that assault and battery allegations stated claims against the CFO who "forcibly" hugged and grabbed employees.

A federal district court in Virginia has denied Infused Solutions’ motion to dismiss Title VII hostile work environment claims against it, finding that two female employees who alleged that for several months the company’s CFO and part-owner forcibly hugged and grabbed them despite their requests that he not do so, pleaded conduct that was sufficiently severe and pervasive. The court, however, granted the employer’s motion to dismiss the employees’ Title VII retaliation claims as well as several state law claims based on respondeat superior. It also denied the CFO’s motion to dismiss claims for assault and battery, while dismissing several other state law claims (Dao v. Faustin, August 29, 2019, Ellis, T.S., III).

Unwanted advances. The employees’ claims arose out of alleged recurring, frequent, and unwanted "hand grabbings and forced hugs" by the CFO. They brought several Virginia state law claims against him—including assault and battery, intentional infliction of emotional distress, negligent infliction of emotional distress, breach of fiduciary duty, and negligence. They also sued the employer for vicarious liability under respondeat superior for several of the state law claims, as well as for direct liability for hostile work environment and retaliation under Title VII and negligent retention under Virginia law. The defendants moved to dismiss the claims.

Timeliness of CFO claims. The lawsuit was filed on June 27, 2018, and the parties agreed that state law claims are governed by a two-year limitations period. The CFO’s alleged conduct spanned many months, some of which occurred more than two years before the complaint was filed but continued within the limitations period. Though the CFO argued that the claims should be time-barred in their entirety because the conduct began outside of the limitations period, the court disagreed. It held, instead, that to the extent the claims were based on conduct occurring after June 27, 2016, those claims were timely. Only claims based on conduct before that date would be time-barred.

Assault and battery. The court denied the CFO’s motion to dismiss assault and battery claims, holding that allegations of forced hugs and unwanted touching met the Virginia law criteria of assault ("offensive conduct" that brings with it a "reasonable apprehension of imminent battery"), as well as battery ("unwanted touching" that is "offensive" and "done in a rude, insolent, or angry manner"). The allegations included that the hugs and hand grabbings were "forcible" and that both women had told the CFO that they did not want him to touch them and resisted his attempts to do so.

One of the women alleged that she had told the CFO "she does not like to be touched, especially by men, due to past sexual abuse." The other alleged that "each day" the CFO instructed her to come close to him and then would "forcibly hug her," and on numerous occasions she tried to resist and told him to leave her alone. The court rejected the CFO’s reliance on a Fourth Circuit decision holding that a defendant did not commit assault or battery by hugging a plaintiff after she had given him a Christmas gift, noting the different "social usages" of that situation and the ones alleged in this case. And while the CFO argued that he intended to be friendly and express his caring for the women, the court noted that a finder of fact could reach a different conclusion, so that argument was not proper on a motion to dismiss.

Emotional distress. After noting that claims for intentional infliction of emotional distress are not favored in Virginia law, the court dismissed the employees’ claims, finding that the conduct, while "offensive, unacceptable, and wrongful," did not reach the level of being "outrageous and intolerable" to "go beyond all possible bounds of decency," as is necessary for such a claim.

Negligent infliction of emotional distress requires "physical impact" or, in the absence of that, a "physical injury" suffered as a "natural result of fright or shock" proximately caused by the defendant’s negligence. One of the employees, who alleged migraine headaches, could not meet this "physical injury" standard, based on Virginia law that "such an ailment is merely a physical manifestation of emotional distress, not a physical injury," the court held. The other employee, who alleged that the harassment caused her to suffer colds, sinus infections, upper respiratory infections, and "severe knots in her back" did meet the standard.

Fiduciary breach. Because Virginia courts have held that an employer owes no fiduciary duty to its employees, the court dismissed the claims alleging breach of fiduciary duty against the CFO.

Negligence. The court also dismissed the employees’ claims that the CFO was negligent in breaching the duty to provide a safe working environment. The court held that such a duty under Virginia law is owed by the employer, not an individual (even if the individual is a part owner and supervisor).

Vicarious liability. The employees claimed that the employer was vicariously liable for the CFO’s assault, battery, intentional infliction of emotional distress, and negative infliction of emotional distress under a respondeat superior theory. The court rejected such liability, holding that the facts alleged point "persuasively" to the conclusion that the CFO was not acting within the scope of his employment when he engaged in the unwanted hugs and touching. That conduct was for his own personal gratification, not in any way in furtherance of the employer’s business. The fact that it occurred at work and was facilitated by the CFO’s position of authority did not make the conduct within his scope of employment, the court held.

Negligent retention. Claims for negligent retention under Virginia law require "contemporaneous physical injury" to an employee, not just emotional disturbance, which results from the conduct of an employee retained by an employer despite information putting the employer on notice of the employee’s dangerous propensities. For the same reasons as stated above as to the negligent infliction of emotional distress claim, the employee who suffered migraines could not meet the "physical injury" element, while the other employee could. However, neither employee could allege that the employer was on notice because the CFO’s knowledge of his own conduct could not be imputed to the employer. Only where the tortfeasor is a sole owner or alter ego of the employer will such imputation follow.

Hostile work environment. The court first rejected the employer’s argument that the Title VII claims were time-barred because, while the employees alleged generally that conduct occurred within the preceding 300 days of their filing of EEOC charges, they did not specify exact days on which they were harassed by the CFO. Such specificity is not required, the court held.

The court also rejected the employer’s argument that the conduct alleged was not sufficiently severe or pervasive to support a hostile work environment claim. One employee alleged that the various types of unwanted conduct occurred "on a near daily basis," "often," and "on several occasions." The other alleged that the forced hugging occurred "at the end of each day" and comments about her appearance were "constant." Further, the court found that the "physically threatening and humiliating nature of the alleged conduct and its severity are not inconsiderable." The physical contact with the employees’ bodies was "forcible" and the CFO disregarded their pleas that he not touch them, even after being told by one of prior sexual abuse. The court also found it significant that given his position at the company, the CFO exercised significant authority over them. The employees also alleged that due to the conduct, it became impossible to work for the employer, and they eventually had to work from home and then take leaves of absence.

Finally, the court held that the employer could not satisfy the elements of a Faragher-Ellerth defense, which would preclude imputing the offending conduct to the employer in a hostile work environment case. Such a defense is unavailable to employers where the offending employee is sufficiently high-ranking, and a CFO and part-owner meets that threshold, the court held.

Retaliation. The court dismissed the retaliation claims, finding that the decision to allow the CFO to return to work after he was put on administrative leave did not satisfy the "adverse employment action" element of a retaliation claim. That decision did not result in the employees’ discharge or demotion, a reduction in their pay or benefits, deprivation of job title or supervisory responsibility, or reduce their opportunities for promotion.

The case is No. 1:19-cv-00649-TSE-IDD.

Attorneys: Peter Charles Cohen (Charlson Bredehoft Cohen & Brown) for Melaney Dao. Gregory David Grant (Shulman Rogers Gandal Pordy & Ecker) for Paul M. Faustin. Edward Lee Isler (Isler Dare) for Infused Solutions, LLC.

Companies: Infused Solutions, LLC

Cases: SexualHarassment Discrimination StateLawClaims TortClaims VirginiaNews

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