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An employer is automatically liable where a supervisor bases decisions affecting a subordinate’s employment on the subordinate’s submission to sexual demands, the 2nd U.S. Circuit Court of Appeals has ruled. Reaffirming the state of the law in the 2nd Circuit in the wake of two U.S. Supreme Court cases on Title VII sexual harassment, the court said Metropolitan Life Insurance Co. should be held liable where a jury finds a company employee, fearing she would lose her job, submitted to a supervisor’s quid pro quo demands. The 2nd Circuit, in an opinion written by Senior Judge Wilfred Feinberg, overturned a magistrate judge’s decision finding no liability for MetLife, and the 2nd Circuit remanded the case, Jin v. Metropolitan Life Insurance Co., 01-7013. Min Jin filed suit claiming that her supervisor, Gregory Morabito, subjected her to crude remarks and unwanted sexual advances, all the while threatening to fire her if she did not submit. She also alleged that Morabito punished her for reporting the harassment by denying her automatic paycheck deposit privileges and withholding her paychecks if she continued to refused to attend the Thursday evening meetings where she was often molested. Magistrate Judge Douglas F. Eaton overruled Jin’s objections to proposed jury instructions. Jin had argued that the jury should be able to consider, as a “tangible employment action” the practical result of Morabito’s ongoing harassment: that she was afraid to come to work and changed her schedule to avoid being alone with him. The jury went on to find that Jin was subjected to sexual harassment and that her work environment was hostile or abusive. But the jury also found that Morabito’s actions did not result in a “tangible adverse action impacting on the terms and conditions of her employment.” It also found that MetLife exercised reasonable care to prevent and correct promptly any sexually harassing behavior, and that Jin failed to take advantage of preventative or corrective opportunities provided by the company. Because MetLife had prevailed on those last two questions, which constituted an affirmative defense, Eaton entered a “no liability” judgment for the company. On the appeal, Feinberg turned to two Supreme Court cases that addressed employer liability for the sexually harassing conduct of a supervisory employee: Burlington Industries Inc. v. Ellerth, 524 U.S. 742 (1998) and Faragher v. City of Boca Raton, 524 U.S. 775 (1998). In Ellerth, he said, the Supreme Court “tackled the question of an employer’s liability under the aided in the agency relation standard when a supervisor’s harassment does not culminate in a tangible employment action.” Where no tangible employment action is taken, the Supreme Court said, “a defending employer may raise an affirmative defense to liability or damages” by showing the company exercised reasonable care to prevent and correct the offending behavior promptly, and that the employee, as the jury found in Jin’s case, failed to take advantage of corrective opportunities. That affirmative defense is not available, Feinberg said, where the harassment culminates in a tangible employment action. But Feinberg said the 2nd Circuit agreed with Jin that “the district court defined tangible employment action too narrowly.” “Requiring an employee to engage in unwanted sex acts is one of the most pernicious and oppressive forms of sexual harassment that can occur in the workplace,” he said. “It is hardly surprising that this type of conduct — a classic quid pro quo for which courts have traditionally held employers liable — fits squarely within the definition of ‘tangible employment action’ that the Supreme Court announced in Faragher and Ellerth.” EARLIER 2ND CIRCUIT CASE Predating the Faragher and Ellerth decisions was the 2nd Circuit’s ruling in Karibian v. Columbia University, 14 F.3d 773 (1993). There the court was confronted with a lower court’s decision to grant summary judgment to an employer where a supervisor changed an employee’s conditions at work and implicitly threatened to fire her if she did not submit to a sexual relationship. The 2nd Circuit reversed, stating that an employer is strictly liable for quid pro quo sexual harassment “because the quid pro quo harasser, by definition, wields the employer’s authority to alter the terms and conditions of employment.” The Karibian court, Judge Feinberg said Thursday, “then held the district court erred when it required the plaintiff to present evidence of actual, rather than threatened, economic loss.” MetLife, he said, argued that Karibian is no longer good law “because of the new employer liability framework announced in Faragher and Ellerth, which focuses on agency principles and the existence of a ‘tangible employment action,’ is at odds with Karibian‘s reliance on the ‘quid pro quo’ terminology to impose strict liability on the employer.” “We disagree,” he said. “Despite the differences in terminology, Karibian‘s essential holding that an employer is liable in a submission case is sound even under the Supreme Court’s new liability analysis.” Metlife, he said, “points to Ellerth for the proposition that an unfulfilled threat is not a tangible employment action.” KEY DIFFERENCE “The key difference in this case is the claim that Jin was required to submit to sexual acts and that Morabito used that submission as a basis for granting her a job benefit (her continued employment),” Feinberg said. “This is substantially different from the type of unfulfilled threat alleged in Ellerth, where no job benefit was granted or denied based on the plaintiff’s acceptance or rejection of her supervisor’s advances.” In any event, he said, “[b]ecause Faragher and Ellerth support our earlier holding in Karibian that economic harm is not required to hold an employer liable in a submission case, we see no persuasive reason to abandon our prior judgment on that issue.” MetLife argued that a statement in Ellerth required a “tangible employment decision” to be an official act of the company. “But, assuming Jin’s allegations to be true,” Feinberg said, “Morabito’s use of his supervisory authority to require Jin’s submission was, for Title VII purposes, the act of the employer.” “Thus, under Faragher and Ellerth, Karibian‘s rule that an employer is automatically liable when a supervisor bases decisions affecting the terms and conditions of a subordinate’s employment on the submission to sexual demands remains good law,” he said. “Because Jin presented evidence that Morabito, as her supervisor, explicitly threatened to terminate her if she did not submit to sexual acts and then allowed her to keep her job after she submitted, the jury should have been instructed to consider the conditioning of her continued employment on her submission as a possible tangible employment action.” The court, he said, was reaffirming “the view stated in Karibian that Title VII should not be read to ‘punish the victims of sexual harassment who surrender to unwelcome sexual encounters.’” “It would be anomalous to find an employer liable when an employee was able to stand up to a supervisor’s sexual demands, and therefore provoke an action such as termination, but to find no liability when the employee was unable to refuse and was actually subjected to sexual abuse,” he said. Senior Judge James L. Oakes and Judge Fred I. Parker joined in the 2nd Circuit opinion. Peter G. Eikenberry represented Jin. Steven E. Obus and Allen I. Fagin of Proskauer Rose represented MetLife. The National Women’s Law Center and the National Employment Lawyers Association/New York filed amicus briefs in support of Jin. The Chamber of Commerce of the United States filed an amicus brief in support of MetLife.

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