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In one of its first forays into the recently “changed landscape” of sexual harassment law, the 7th U.S. Circuit Court of Appeals on October 2 upheld a jury verdict in favor of former school teacher Lisetta Molnar, on her sexual harassment claims against the principal at the East Chicago school where she taught. Writing for the panel in what she acknowledged was a “close call,” Judge Diane Wood concluded that Molnar had indeed suffered a “tangible employment action” in retaliation for rejecting the sexual advances of the school principal. The key faux pas committed by the principal, the jurist wrote, are that he had inexplicably withdrawn his amorous offers of certain “perks” promised to the teacher as a sort of quid pro quo — and he had suddenly given her a couple of failing grades on a subsequent evaluation. As a result, Wood concluded, it was reasonable for the jury to decide the principal’s and, therefore, the school’s treatment negatively influenced her career. The case stems from Molnar’s allegations that shortly after she was hired in 1994 as an intern at Westside Junior High School to teach art classes, Principal Lloyd Booth made a number of sexual advances toward her and suggested that he could secure for her various “perks,” such as a permanent art room and art supplies. When Molnar rejected Booth’s advances, the principal allegedly took back certain supplies he had given her and ceased all discussion of finding her an art room. Moreover, in May of 1995, Booth gave the Indiana Professional Schools Board a negative evaluation of Molnar’s internship by failing her in two categories, a move which apparently jeopardized Molnar’s chances to obtain a permanent teaching license. After Molnar instituted a formal grievance proceeding, the local school board overturned the failing grades on her internship evaluation, but failed to make any finding on Molnar’s sexual harassment charges against Booth. Nor did the school board take any disciplinary action against Booth, who continued to serve as Molnar’s principal for the remainder of that school year. Molnar filed suit against Booth and East Chicago Community School Corporation in August 1996, claiming that her civil rights had been violated under both Title VII and 42 U.S.C. sec. 1983. Following a trial, the jury awarded Molnar $500 on both her Title VII and her Equal Protection claims, as well as $25,000 in punitive damages against Booth. The court also added $65,760 in attorneys’ fees against both defendants. In upholding the jury’s verdict, Judge Wood emphasized the “changed landscape” for sexual harassment claims following the Supreme Court’s recent decisions in Burlington Industries, Inc. v. Ellerth, 524 U.S. 742 (1998), and Faragher v. City of Boca Raton, 524 U.S. 775 (1998). In those cases, which were decided after Molnar filed her lawsuit, the Supreme Court established new standards governing the liability of an employer for sexually harassing behavior by a supervisor toward a subordinate employee. Most significantly, the Court abandoned the prior distinction between “quid pro quo” harassment and hostile environment harassment for vicarious liability purposes. Instead the Court proposed a test that focuses primarily on whether or not a supervisor took a tangible employment action against a subordinate:
An employee 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 . . . . No affirmative defense is available, however, when the supervisor’s harassment culminates in a tangible employment action, such as discharge, demotion, or undesirable reassignment.

Thus, once Molnar demonstrated that she had been subjected to sexual harassment, the critical issue became whether the harassment led to a tangible employment action. If it did, East Chicago would be liable regardless of the strength of any defense. Acknowledging that it was a “close call,” Judge Wood concluded that Molnar did, in fact, show a tangible employment action: “The clearest tangible employment action shown in Molnar’s evidence was Booth’s confiscation of the art supplies he had given her — supplies the jury could have believed were necessary for her to be able to perform her assigned job. This deprivation was not something the School Board ever fixed.” The court also found that the negative evaluation Booth gave Molnar was a tangible employment action, because the jury could have believed that it spelled the end of a career for an intern. “The mere fact that the evaluation was reversed more than six months later and Molnar’s career put back on track does not diminish its importance during the time it lasted. To hold otherwise would mean that harassing supervisors could demote employees who rejected their advances with impunity, as long as they later reversed the demotion and restored the employees to their former positions.” Judge Wood then explained that even if the court found that Booth’s confiscation of supplies did not amount to a tangible employment action, and characterized his negative evaluation as threat of a tangible action instead of a present detriment, the verdict would be upheld because East Chicago had no policy specifically aimed at sexual harassment. As a result, East Chicago could not have shown that it had exercised reasonable care to prevent and promptly correct any harassing behavior.

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