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In a ruling that will surprise many employers, the 8th U.S. Circuit Court of Appeals ruled that juries-not employers-get to decide whether an employee’s report of harassment is false, if the employer takes an adverse employment action against the reporting employee. In Gilooly v. Missouri Dep’t of Health & Senior Servs., 421 F.3d 734 (8th Cir. 2005), a divided panel allowed a terminated employee’s retaliation claim to proceed to trial after the employee was fired for making what the employer determined, following an investigation, to be a false report of harassment. Because the employer lacked “independently verifiable evidence” to support its conclusion, the court ruled that a jury must decide whether the report of harassment was indeed false, and therefore whether the employee should have been terminated. The plaintiff, Randy Gilooly, a male employee of the Missouri Department of Health and Human Services, had been suspended for misconduct. He filed a grievance review of his suspension, alleging that he had been sexually harassed by two female co-employees at work and that his suspension was actually in retaliation for making a report of that harassment. He also filed a charge of discrimination with the Missouri Commission on Human Rights. An investigator from the Office of Civil Rights of the Missouri Department of Social Services was assigned to the case and investigated Gilooly’s claims by interviewing Gilooly and several other witnesses, including the two alleged harassers. The Office of Civil Rights issued a report determining that Gilooly’s allegations were unsupported, and Gilooly’s employment was terminated. The termination letter informed Gilooly that he was fired because he “made false statements during the investigation and grievance hearing which followed [his] accusations against two former co-workers.” Id. at 737. Gilooly filed suit against the department, among others, alleging a hostile work environment and retaliation in violation of Title VII of the Civil Rights Act of 1964. The district court entered summary judgment in favor of the defendants, finding that there was no causal connection between Gilooly’s report of harassment and his termination. A divided panel of the 8th Circuit reversed. The majority opinion, authored by Judge Michael J. Melloy, held that the investigator’s belief that Gilooly was lying during the investigation could not “legally be grounds for discharge.” Id. at 740. The investigator’s decision, Melloy wrote, was “founded solely on the statements of other employees and witnesses.” Id. The termination letter “contained no independently verifiable evidence that contradicted Gilooly’s allegations,” he continued. Id. at 740-41. The majority ruling concluded that “[w]ithout such additional corroboration, the statements in the termination letter amount to little more than a description of conflicting stories with the employer disbelieving Gilooly’s version of the events.” Id. at 741. Assessing witness credibility, the court reasoned, is the province of a jury, not the employer. Were it otherwise, the court continued, an employer could easily short-circuit any employee’s retaliation claim by simply stating that it did not believe the employee’s story. In dissent, Judge Steven M. Colloton argued that the majority had departed from the general rule that federal courts will not review the business judgments and personnel decisions of employers. Colloton argued that employers should be allowed to make credibility determinations during harassment investigations, reasoning that “not every personnel decision involving a false statement (or a cover-up) has to be treated as something like a trial for perjury.” Id. at 743 (Colloton, J., dissenting) (quoting EEOC v. Total Sys. Servs. Inc., 221 F.3d 1171, 1176 (11th Cir. 2000)). In Colloton’s view, the determinative issue should be whether the employer was motivated by a good-faith belief that the employee made false allegations of harassment. Warning sign for employers The Gilooly ruling will affect employers nationwide. For employers operating within the 8th Circuit, Gilooly is binding. It means that employers that take adverse action against an employee for making a false report of harassment, without independently verifiable evidence to prove it, will face the expense of a jury trial. This is a striking exception to the ordinary rule, reiterated by the 8th Circuit only one week following the Gilooly ruling, that an employer can discipline or terminate an employee for any other type of misconduct so long as the employer has an “honest belief” that the employee is guilty of the misconduct. See Johnson v. AT&T Corp., 422 F.3d 756, 762-63 (8th Cir. Sept. 7, 2005) (granting summary judgment in favor of an employer that terminated the plaintiff because it honestly, but mistakenly, believed that he had made phone calls threatening to bomb the building). This is true even if the employer has no “solid proof” that the employee is guilty of the misconduct. But where the misconduct at issue is a false report of harassment, Gilooly means that employers do need solid proof to avoid a retaliation judgment. For employers outside the 8th Circuit, Gilooly is a warning sign. Other federal circuits may follow Gilooly‘s lead. Most employers would prefer to steer clear of a potential retaliation suit than take that risk. After Gilooly, a litigation-averse employer will be reluctant to discipline an employee reporting harassment, even if it conducts an investigation and determines that the employee’s allegations are false, unless the employer has necessary independently verifiable evidence to prove it. But what did the 8th Circuit mean by independently verifiable evidence? The court did not define that concept, but left some clues that may help guide employers. One obvious source of corroboration in a harassment case is testimony of neutral witnesses that contradicts the reporting employee’s version of events. The 8th Circuit never squarely addressed whether this would be sufficient corroboration to support an employer’s conclusion, but suggested in a footnote that it might be. “It may be argued that independent corroboration can be provided by testimony from neutral non-parties,” the court said. “Assuming that to be true, that is not our case. Co-workers who were not the subject of the complaint were interviewed. However, their statements tended to corroborate some of [the plaintiff's] allegations . . . .The ‘contradictions’ dealt with minor, inconsequential details. The eyewitness testimony as related in the termination letter does not rise to the level of independent corroboration.” Id. at 741, n.2. Thus, the 8th Circuit left open whether an employer can rely on the statements of neutral witnesses to discipline an employee it believes made a false report of harassment without facing a jury trial. Presumably, the more neutral witnesses who contradict the reporting employee, and the more directly contradictory their testimony, the more likely it is that a court will accept their testimony as sufficient corroboration to avoid a jury trial. Nevertheless, an employer that takes adverse action against a reporting employee for making a false report of harassment, based solely on the testimony of neutral witnesses, is taking a risk after Gilooly. To be certain to avoid a jury trial, an employer will need even more corroboration. Proving a negative Another potential source of independent corroboration is documentary evidence. If there is persuasive documentary evidence that the reporting employee’s allegations of harassment are false, it becomes less risky for the employer to take disciplinary action. Clear and independent documentary evidence showing that the allegations of harassment are false probably would be sufficient to obtain summary judgment under Gilooly. This is not to suggest that employers will obtain summary judgment by finding one piece of paper that tends to support their conclusions. Gilooly‘s requirement that the corroborating evidence be “independently verifiable” would likely rule out internal investigative documents that merely summarize witness statements or report the investigator’s subjective impressions or conclusions. Instead, the documentary evidence must be independent of the investigation process, and must clearly contradict the facts as alleged by the reporting employee. In practice, it seems unlikely that an employer will have this type of independent documentary evidence to prove that the alleged harassment did not occur. The burden on the employer under Gilooly is to find some proof of a negative. Allegations of harassment usually involve undocumented spoken words or physical actions. Short of an e-mail containing a threat or admission of making a false report of harassment, or attendance records showing that the employees involved were not even in the same room at the time of the alleged harassment, it is difficult to imagine what independent documentary evidence could exist to disprove allegations of harassment. Without the proverbial smoking gun document to prove that the reporting employee is lying, employers that suspend or terminate that employee for making false allegations of harassment now find they risk a retaliation judgment. Unfortunately, allegations of harassment in the workplace will often boil down to a he said/she said dispute, with no neutral witnesses and nothing even approaching this level of independent documentary corroboration. No matter which person the employer believes, under Gilooly the employer in such cases cannot take any adverse employment action against the reporting employee without risking a retaliation judgment. One possible consequence may be that an employer will opt to transfer or reassign the alleged harasser, even if the employer honestly believes that he or she did nothing wrong, in order to keep the two employees away from each other. The ruling in Gilooly sets up the possibility of yet another unenviable dilemma for employers: What happens if two employees accuse each other of harassment, and there are no neutral witnesses or independent documents to disprove either of their claims? Under Gilooly, neither employee could be terminated or suspended without risking a retaliation judgment. No good options Even transferring or reassigning one of the employees in order physically to separate the two employees involved might result in a retaliation judgment, if the transfer or reassignment results in a material change in the terms or conditions of employment. See, e.g., Meyers v. Nebraska Health & Human Servs., 324 F.3d 655, 659-60 (8th Cir. 2003) (holding that reassignment to a less-skilled position with a smaller workload could constitute an adverse employment action sufficient to support a retaliation claim); Keeton v. Flying J Inc., No. 04-6023, 2005 WL 3068199 (6th Cir. Nov. 17, 2005) (holding that laterally transferring a reporting employee to a different location, which resulted in a longer commute, constituted an adverse employment action). Employers facing this sticky situation will need to carefully consider what steps to take to redress the situation, paying special attention to what acts constitute an actionable adverse employment action under the law of their jurisdiction. Some guidance may be coming soon for employers. In the next term, the U.S. Supreme Court will consider whether a transfer or reassignment can constitute an adverse employment action sufficient to support a Title VII retaliation claim. See Burlington Northern Santa Fe Railway v. White, No. 05-259, 74 U.S.L.W. 3334 (Dec. 5, 2005) (granting certiorari). Ordinarily, employers are free to discipline employees for misconduct so long as they honestly believe that the employee is guilty of the misconduct. In Gilooly, the 8th Circuit recognized an exception to that rule in order to ensure that employees who have reported harassment have their day in court without having their retaliation claims short-circuited by employers. But the ruling leaves many difficult and unanswered questions for employers that must handle complaints of harassment. Going forward, employers will need to gear their internal investigations of alleged harassment toward uncovering and carefully evaluating any independently verifiable evidence that may exist. Jason R. Bent is a principal and founder of the law firm Smith & Bent in Chicago, where he practices employment law and complex commercial litigation. He can be reached via e-mail at [email protected].

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