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Finding that the doctrine of collateral estoppel cannot be applied in a sex discrimination case to the previous findings of the Pennsylvania Unemployment Compensation Appeal Board, a federal judge has refused to dismiss a Title VII suit brought by a worker who was denied unemployment due to the “willful misconduct” that led to her firing. In his 20-page opinion in Torres v. EAFCO Inc., U.S. District Judge Stewart Dalzell found that the federal courts were forced to guess for years about whether unemployment findings could have preclusive effect. The 3rd U.S. Circuit Court of Appeals, predicting how the Pennsylvania courts would tackle the question, twice found that it would not give preclusive effect to unemployment board findings — first in 1988′s Kelley v. TYK Refractories Co. and again in 1994′s Swineford v. Snyder County. But in 1998, Dalzell said, the Pennsylvania Supreme Court directly answered the question in Rue v. K-Mart Corp., holding that the “substantial procedural and economic disparities between unemployment compensation proceedings and later civil proceedings negate the preclusive effect of a referee’s factual findings.” As a result, Dalzell said, he would not hold that Susan Torres is precluded from challenging her firing in a Title VII suit due to the finding by the unemployment board that she was fired from EAFCO for willful misconduct. EAFCO’s lawyer, Sharon M. O’Donnell of Marshall Dennehey Warner Coleman & Goggin in Harrisburg, Pa., argued that Rue applies only where the unemployment board’s findings have never been reviewed. In Torres’ case, she said, the decision was upheld by the Pennsylvania Commonwealth Court and should therefore have preclusive effect. But Dalzell found that Rue “clearly does not distinguish between the two situations.” In Rue, a former Kmart employee sued Kmart for defamation after management told other employees that she was fired for stealing a bag of potato chips. The worker won a major ruling at the trial level when the judge ruled that Kmart was barred from asserting that she had, in fact, stolen the potato chips since the Unemployment Compensation Review Board had declared her innocent of the theft. But the Pennsylvania Supreme Court reversed, saying such unemployment findings should not have preclusive effect in later civil litigation. Dalzell found that the Rue court explicitly limited its holding to “the application of collateral estoppel in the unemployment compensation context.” As a result, Dalzell said, “because the courts of Pennsylvania no longer apply the doctrines of preclusion in the unemployment compensation context, we will not do so here.” Dalzell said he was “puzzled that EAFCO cited Rue in setting forth the elements of collateral estoppel, but failed to mention that the very issue addressed in Rue, ‘whether, in a subsequent civil action, the doctrine of collateral estoppel applies to the factual findings of an Unemployment Compensation Referee,’ was applicable here.” In the suit, Torres claims she began working for EAFCO (Eastern Foundry Co.), a company that manufactures and assembles cast-iron boilers, in October 1994 as a forklift driver. In November 1998, EAFCO split into two companies –Boyertown Foundry and EAFCO — and following the split, Torres worked under two men, Terry Detwiler, who became EAFCO’s plant manager, and Brett Downer, who continued as EAFCO’s assembly department foreperson. In April 1997, Torres won a position as boiler assembler and was promoted to Class B six months later, according to the suit. But when she asked to be promoted to Class A six months after that, Torres, the only female on the line, was denied the promotion by Downer. By December 1998, Torres was working the first shift when Michael Zangrelli began working the line. When EAFCO entered into its “slowdown” period in February 1999, Torres was removed from the line and performed other jobs around EAFCO. When EAFCO returned to full production in April 1999, Torres resumed her position on the line, but, she claims, Downer told her just a few days later that the company did not have enough work for three people. Torres claims that because two men who were junior to her stayed on the line, she filed a grievance claiming sex discrimination. According to the suit, her co-workers began harassing her in retaliation for filing her grievance. Although she reported this information to Downer, she claims that EAFCO did nothing to stop the harassment. Then, in June 1999, after an incident between Downer and Torres, EAFCO fired Torres for committing an “intolerable” offense under EAFCO’s company guidelines. Specifically, the stated reason for the termination was that Torres told Downer, “I’m going to go get a gun and shoot you and that f�- Detwiler.” Torres denied ever making that threat. Instead, she claims that she told Downer that he and Detwiler both “suck” and were not capable of performing the jobs that she handles. Again, Torres filed a grievance, but EAFCO refused to rehire her and the union did not take her case to arbitration. When Torres applied for unemployment, the Unemployment Compensation Appeal Board found that her termination stemmed from her own willful misconduct and, on appeal, the Commonwealth Court of Pennsylvania affirmed. According to the transcript of the unemployment hearing, both sides told conflicting stories of the June 9, 1999, incident between Downer and Torres. According to Torres, as she was performing physically demanding work, Downer approached her from behind and mockingly asked her, “How’s it going?” as he had done several times in the past. Downer also made a comment about Torres missing the money she used make on the line. Although she said she ignored him at first, Downer then said, in a mocking tone, “You love it here.” At that point, Torres said she got angry and yelled words to the effect of “You and Terry [Detwiler] suck and can’t do it [the job she was performing].” Nothing further happened at that time, but later in the day Downer approached her with a piece of paper and told her that she was fired. When she asked why she was being fired, Downer told her it was because she had threatened him, to which Torres claims she responded with disbelief. According to Downer’s version of events: “I was walking by the area in which she was working in, and at that time she started going on, her typical carrying on and complaining about the job and how I was screwing her by putting her on that job, which in my opinion she was the least senior person to go to that job whatever the job may have been… . And after she was going on and on complaining, the last words I heard out of her mouth was ‘I’m going to go get a gun and shoot you and that f– Detwiler,’ in them words.” The unemployment board’s referee ruled against Torres and denied her claim for benefits. The referee’s one and one-half page written order contained six findings of fact and one paragraph of “reasoning.” The referee noted the conflicting testimony and credited EAFCO’s witnesses and, therefore, resolved all relevant conflicts in favor of the employer. Torres filed an appeal with the Board of Review, which summarily affirmed the referee’s decision. Her appeal to the Commonwealth Court was also rejected. TITLE VII CLAIM Dalzell found that Torres had stated a valid claim of sex discrimination and retaliation. EAFCO argued that Torres failed to show that men were treated better than she. But Dalzell found that by pleading that two men junior to her were kept on the line, Torres “has met the burden of demonstrating that she, the only female boiler assembler, was treated less favorably than her male co-workers.” But EAFCO insisted that Torres was legitimately “bumped” by a man who was senior to her due to his work at the foundry. Dalzell disagreed, saying Torres pleaded a valid theory that the bumping was a more complex situation and would have played out differently if EAFCO had played by the rules. As a result, Dalzell said, Torres made a case that the company’s stated reason for removing her from the line was, in fact, “a pretext for sex discrimination.” EAFCO also argued that Torres has no valid claim for retaliation because the company responded to her complaints of harassment. But Torres’ lawyer, Jana R. Barnett of Wyomissing, Pa., argued that the company simply took the word of the harassers and, since there were no other witnesses, did nothing. Dalzell said Downer testified that he did “all [he] can do — question people,” and that “I can’t prove no one individual did it unless someone seen them doing it.” Downer admitted in his deposition that he tended not to discipline any employee unless there was more than one witness to an incident. EAFCO argued that Torres had not produced sufficient evidence of a causal connection between her filing the grievance and any ensuing behavior, including the incidents of harassment and her ultimate termination. But Dalzell found that “the timing and pattern of the harassment, as Torres tells it, provide the link with her filing of the grievance.” Using EAFCO’s own “no witnesses” rule against it, Dalzell said “although EAFCO apparently had a policy of never disciplining an employee based solely upon the word of one other person, it now asks us to take Downer’s word over Torres’, an invitation that Rule 56 [of the Federal Rules of Civil Procedure] requires that we decline.”

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