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The two-prong federal defense applicable to claims under Title VII of the Civil Rights Act of 1964 (42 U.S.C. 2000e-2(a)(1)), first articulated in Faragher v. City of Boca Raton, 524 U.S. 775, 807-08 (1998), provides a sweeping defense to any employer that provides adequate internal complaint procedures to its work force. Although Title VII generally does not recognize liability for the individual perpetrator (see Ball v. Renner, 54 F.3d 664, 66-67 (10th Cir. 1995)), individuals are nevertheless regularly named as federal defendants in pendant state claims, including various state civil rights statutes that recognize individual liability. However, the absence of legal authority applying the two-prong federal defense to state claims within a federal lawsuit can lead to an absurd result, permitting an employer to use the defense to escape liability under Title VII, while the individual perpetrator defendant has to face a jury under state claims based on the same facts. Compounding the inconsistency is employer liability under state law agency principles, through which an employer may nevertheless become liable for the acts of its agents under state law. This conundrum is currently being explored in California. Reconciliation of two cases, one in the 9th U.S. Circuit Court of Appeals and one under submission to the California Supreme Court, will resolve the applicability of the two-prong federal defense to civil rights claims under state law and, potentially, to nonfederal harassment claims throughout the country. In Kohler v. Inter-Tel Technologies, 244 F.3d 1167 (9th Cir. 2001), a plaintiff sued her employer alleging discrimination, sexual harassment and retaliation under both Title VII and the California Fair Employment and Housing Act (FEHA) (Cal. Gov’t Code � 12900, et seq.). Despite the plaintiff’s knowledge of her employer’s comprehensive anti-harassment policy, she did not report her supervisor’s unwelcome sexual advances to the human resources department or to any person in a management position. The 9th Circuit affirmed the district court’s decision to grant summary judgment to the employer. The court undertook to predict whether the California Supreme Court would recognize any affirmative defense to a workplace harassment claim filed under FEHA, noting the absence of any California decision addressing the precise question of whether an employer is “strictly liable” under FEHA for the harassing conduct of a supervisor. The 9th Circuit determined that “the language of FEHA provides an even stronger basis for applying the federal affirmative defense than does Title VII itself” because the wording of FEHA “is more specific, both in explicitly proscribing harassment and in delineating that employers are required to make efforts to prevent harassment.” Id.at 1173. Section 12940(j) of FEHA requires that employers “take all reasonable steps to prevent harassment from occurring,” which is identical to the first prong of the Faragher/Burlington Industries Inc. v. Ellerth, 524 U.S. 742, 807 (1998), affirmative defense under which an employer must show that it “exercised reasonable care to prevent and correct promptly any sexually harassing behavior.” FORETHOUGHT COUNTS Significantly, the 9th Circuit further noted that the U.S. Supreme Court had adopted its two-prong affirmative defense “[i]n order to accommodate the agency principles of vicarious liability for harm caused by misuse of supervisory authority, as well as Title VII’s equally basic policies of encouraging forethought by employers and saving action by objecting employees.” 244 F.3d at 1175. Based on this, the court concluded that “the plain statutory language” and FEHA’s “identical policy goals” supported the application of the Faragher/ Ellerthaffirmative defense to “cases of supervisory harassment arising under FEHA where no tangible employment action was taken.” Id.at 1175-76. However, in State Dep’t of Health Servs. v. Superior Court (McGinnis), 94 Cal. App. 4th 14 (2001), a California appellate court disagreed with the 9th Circuit’s Kohlerdecision regarding the applicability of the Faragher/Ellerthaffirmative defense to hostile work environment sexual harassment claims under FEHA. McGinnisinvolved a public employee who filed for sexual harassment and discrimination against both her employer and former supervisor pursuant to FEHA. In holding that the employer could be strictly liable for the harassing conduct of a supervisor (even if it did not know of the alleged harassing conduct due to the plaintiff’s failure to make a complaint), the Court of Appeals held that the Faragherdefense was inapplicable to FEHA on multiple public policy grounds, including FEHA’s imposition of a “strict liability” standard upon employers for the harassing conduct of its supervisors. The court opined that holding employers strictly liable would provide “greater assurance that the victim will be compensated, and those costs may be more easily and appropriately borne by the employer rather than the harasser. Holding the employer automatically liable increases the likelihood that the employer will provide adequate training for its supervisors, and then monitor its supervisory staff to ensure that harassment policies are followed. A bright-line rule also avoids litigation over whether a ‘tangible employment action’ was taken against the complaining employee. Holding both the offending supervisor and the employer liable is consistent with the Legislature’s intent to provide ‘effective remedies which will eliminate such discriminatory practices.’” Id.at 27. A STEP BACKWARD? The McGinnisanalysis could be viewed as a setback to the evolving law of the workplace. As an initial matter, unlike the deterrence objective of anti-discrimination statutes, the “compensation-related” policy arguments cited by McGinnisdo not appear to be linked to any overriding purpose supporting the enactment of FEHA. McGinnisappears to ignore the U.S. Supreme Court’s admonition that the “primary objective” of “any statute meant to influence primary conduct … is not to provide redress but to avoid harm.” Faragher, 524 U.S. at 806. Although the Legislature has declared that “it is the purpose of [FEHA] to provide effective remedies that will eliminate these discriminatory practices” (Cal. Gov’t Code � 12920), McGinnishas perhaps placed undue weight on FEHA’s objective to “provide effective remedies,” and has misconstrued this to mean that FEHA guarantees aggrieved employees compensation. In addition, the McGinnispanel’s rationale that holding the employer automatically liable will increase the likelihood that it will provide adequate training for its supervisors flies in the face of the U.S. Supreme Court’s admonition that “a theory of vicarious liability for misuse of supervisory power would be at odds with the statutory policy [exhorting employers to establish a complaint procedure] if it failed to provide employers with some such incentive [to receive credit for making reasonable efforts to discharge their duty].” Faragher, 524 U.S. at 806. Further, the McGinniscourt’s holding that “[a] brightline rule also avoids litigation over whether a ‘tangible employment action’ was taken against the complaining employee” is problematic because, in order to determine whether an employer is able to invoke the Faragher/Ellerthaffirmative defense, the threshold question of whether a tangible employment action occurred must always be determined for purposes of analyzing actionable sexual harassment. Finally, McGinnisappears to ignore the high court’s reliance upon the avoidable consequences doctrine as another basis for the Faragher/Ellerthdefense. As explained in Faragher: “[A] victim has a duty ‘to use such means as are reasonable under the circumstances to avoid or minimize the damages’ that result from violation of the statute.” 524 U.S. at 806. But what of the individual defendant? One could argue that because the individual faces personal and direct liability as opposed to the vicarious liability faced by the employer, he should not be allowed to ride on the coattails of the employer’s defensive workplace policies. Yet overriding policy rationales supporting the application of the Faragher/Ellerthaffirmative defense to an employer could also support the application of such defense to a supervisory employee sued personally under FEHA for sexual harassment. California Government Code �� 12926(d) and 12940(j)(4)(A) define an “employer” as including “any person acting as an agent or an employer, directly or indirectly.” That the state Legislature intended to align the interests of the “agents or supervisors” of an employer with the employer and to distinguish them collectively as a group from a mere co-worker is made clear by the plain language of FEHA. Cal. Gov’t Code � 12940(j)(1). Further, the law of agency allows the imposition of no greater legal duty upon the individual than that which is applicable to his principal. Restatement (2d) of the Law of Agency, � 343 (1958). Thus, assuming the employer is entitled to apply the Faragher/Ellerthaffirmative defense to avoid any liability under FEHA, then it could follow that the individual be entitled to apply such defense. The same deterrence policy rationales serving as the underpinning for the limitation on an employer’s liability under Title VII for hostile work environment sexual harassment could also be applicable to a supervisory employee. Indeed, the danger arising from the inconsistent application of the Faragher/Ellerthaffirmative defense to employers and their “agent[s] and supervisor[s],” is the creation of a double standard, confusing employees as to their obligation to report harassment, and thereby diluting the effectiveness of the Faragher/Ellerthaffirmative defense and, consequently, FEHA. Similarly, application of the Faragher/Ellerthdefense to an allegedly harassing employee does nothing to impair or otherwise detract from the general rule obligating a tort victim to avoid or minimize damages incurred. A statutory scheme that compels aggrieved employees to report perceived sexual harassment to their employer before it is “sufficiently severe and pervasive” best comports with the objectives of FEHA, just as it does with Title VII. Application of the two-prong defense to all harassment claims, regardless of whether they arise under state or federal law, is a way of providing an open dialogue in the workplace to ensure that alleged victims are both empowered and mandated to give voice to their complaints. Diana P. Scott is a shareholder in the Los Angeles office of Greenberg Traurig, www.gtlaw.com, and chairwoman of its labor and employment practice there. Richard H. Hikida is an associate in that office.

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