The Tennessee Supreme Court recently ruled against a local state university and its president on an employee’s claims of discrimination, but ruled in their favor on the employee’s retaliation claims. According to the state’s highest court, the employee who accused the president of sexual harassment could have reasonably believed that complaining about the harassment would have been futile because the university’s complaint procedure designates the president as the final decision-maker on all harassment claims. Allen v. McPhee, No. M2005-00202-SC-R11-CV, Supreme Court of Tennessee (December 4, 2007).

Factual Background

Tammie Allen was employed by Middle Tennessee State University (MTSU) as the administrative assistant to its president, Sidney McPhee. Starting in August of 2002, Allen alleged that on several occasions while the two were playing golf, McPhee inappropriately touched her, asked her explicit questions about sexual intercourse and her sexual behavior, and made unwelcome sexual advances towards her. She also claimed that on several occasions McPhee called Allen to request that she report to work on weekends and that after she arrived he asked her to dance. Although Allen complied with his request, she told McPhee that she felt uncomfortable.

On October 6, 2003, Allen filed a sexual harassment complaint against McPhee with the Tennessee Board of Regents (TBR) rather than with the Director of Equal Opportunity and Affirmative Action to whom MTSU’s anti-harassment policy requires employees to report harassment. Allen claimed that she complained to the TBR rather than the director because MTSU’s policy requires the president, in this case McPhee, to make the final determination of the appropriate resolution of harassment complaints. Moreover, Allen claimed that MTSU’s policy did not provide a procedure to follow when the president is accused of harassment. Debbie Johnson, TBR’s Assistant Vice Chancellor for Human Resources, initiated an investigation and placed Allen on administrative leave with pay through October 17. Meanwhile, McPhee was told of the allegations and instructed not to return to his office.

On October 17, the TBR told Allen’s attorney that she should report to work on October 20 in the Development Office with the same title, classification, and pay as her prior job. Allen refused the assignment and was told to remain on paid leave. On October 20, Allen refiled her complaint of sexual harassment against McPhee. In addition, she complained of retaliation and constructive discharge against McPhee, the TBR, and her immediate supervisor at MTSU. During her investigation, Johnson found that there were no witnesses or any corroborating evidence to support or disprove Allen’s allegations. Nevertheless, she concluded that McPhee created a hostile work environment. In December, the Chancellor of the TBR accepted Johnson’s report and recommendations. As a result, McPhee was placed on leave without pay for 20 days, was subjected to a $10,000 decrease in salary for one year, and was required to participate in eight hours of sexual harassment training. Allen was transferred to the position of Coordinator in MTSU’s Development Office.

Allen then filed suit against McPhee, MTSU, the TBR, the Chancellor for the TBR, and the State of Tennessee alleging unlawful gender-based discrimination in the form of a sexually hostile work environment and retaliation under the Tennessee Human Rights Act (THRA). The Circuit Court for Rutherford County granted McPhee’s and the State’s motions for summary judgment. The Court of Appeals affirmed and Allen appealed.

Legal Analysis 

The Tennessee Supreme Court first considered the hostile work environment allegation. Under the modern framework for determining an employer’s liability for hostile work environment sexual harassment, the court found that the employer may assert the Faragher/Ellerth affirmative defense if the harassing supervisor has not taken or instigated a “tangible employment action” (such as termination) against the employee. The affirmative defense requires an employer to establish that (1) it took reasonable measures to prevent and correct any discriminatory conduct, and (2) the employee unreasonably failed to take advantage of these measures. Allen argued that this defense was not available to the State because McPhee was the alter ego or proxy of the State. The court rejected this argument, noting that the Supreme Court’s explanation of the defense did not suggest that the availability of the defense was connected to whether the supervisor is an alter ego or proxy for the employer. Therefore, since McPhee did not take any tangible employment action against Allen, the court held that the State is entitled to assert the affirmative defense. 

The court then turned to the first prong of the defense to examine whether the State exercised reasonable care to prevent sexual harassment. The court found that the employer has the burden of establishing that their anti-harassment policies are reasonably published, contain reasonable complaint procedures, and are not otherwise defective. Allen argued that the harassment policy’s complaint procedure was unreasonable because it designated McPhee as the final arbiter of harassment complaints and because she was required to report the harassment to the director who in turn was required to report it to McPhee.

The court reasoned that anti-harassment policies should set forth complaint procedures that allow employees to bypass harassing supervisors. Since MTSU’s policy failed in this regard, the court found that Allen could have reasonably believed that her complaint would have been futile or counterproductive. Thus, the court ruled that a reasonable jury could conclude that MTSU’s policy was unreasonable as applied to Allen. Since there were genuine issues of material fact with regard to whether the policy contained reasonable complaint procedure, the court held that the State failed to establish the first prong of the Faragher/Ellerth defense.

Turning to the issue of whether Allen exercised reasonable care in avoiding harm by taking advantage of MTSU’s policy, the court first pointed out that Allen waited almost 13 months from the initial incident to report the harassment. However, an employee’s failure to use an employer’s complaint procedure would be reasonable, the court found, if the failure was based on a “credible fear” that the complaint would either not be taken seriously or would result in retaliation. Given McPhee’s role in such complaints, the court concluded that a reasonable jury could conclude that Allen could have credibly believed that complaining would have been futile or counterproductive. Thus, there were material issues of fact as to whether Allen unreasonably failed to take advantage of MTSU’s policy. Thus, the court ruled that the trial court erred in determining that the State had established the Faragher/Ellerth defense and held that the State is not entitled to summary judgment on Allen’s discrimination claim.

The court next turned to the issue of whether McPhee is liable for discrimination. The court noted that individual liability may exist under the common law civil liability theory of aiding and abetting according to which the court could impose accomplice liability on a supervisor who encouraged the employer to engage in employment-related discrimination or who prevented the employer from taking corrective action. Despite the fact that McPhee did not try to inhibit the TBR’s investigation or prevent MTSU from taking remedial action against him, Allen argued that the court should adopt a rule imposing individual liability based on McPhee’s personal participation in the actions that created a hostile work environment. The court refused to adopt the new rule absent a showing that the supervisor’s conduct encouraged the employer to engage in employment-related discrimination or prevented the employer from taking corrective action. Thus, the court held McPhee was entitled to summary judgment on Allen’s discrimination claim.

The court also ruled against Allen on her retaliation claims. The court found that although she made a prima facie showing of retaliation with respect to the State, she failed to present any evidence that the State’s proffered reason for transferring her was pretexutal. She also failed to present evidence that McPhee took any materially adverse action against her. Thus, both the State and McPhee were entitled to summary judgment on Allen’s retaliation claims.

Practical Impact

According to Jonathan O. Harris, an attorney in Ogletree Deakins’ Nashville office, “The McPhee decision has a significant impact on harassment and retaliation cases brought under the THRA.

Some aspects of the McPhee decision are helpful to employers. For example, the court expressly rejected the notion that the Faragher/Ellerth defense is unavailable when the harassment was committed by a so-called ‘proxy’ of the employer, such as a president or a CEO. Thus, an employer defending a harassment claim under the THRA will be able to utilize the defense, even if the alleged harasser was a high-ranking official.

Also helpful, the court clarified what it means to ‘aid and abet’ discrimination, making that a much harder showing to prove.

However, there are several negative aspects of McPhee. First, it has made a retaliation case easier to prove. Going against the precedent of many courts, the Tennessee Supreme Court has adopted the notion that ‘temporal proximity,’ standing alone, is sufficient to show a causal connection between an employee’s engaging in a protected activity (such as reporting harassment) and her termination. Thus, if an employee is fired shortly after she complains of harassment, she can establish a prima facie case of retaliation without coming forward with any other evidence of causal connection.

Second, further making retaliation easier to prove, McPhee adopted the U.S. Supreme Court’s 2006 decision in Burlington Northern v. White. To prove retaliation, an employee need not show he was subjected to an ‘adverse employment action’ (such as a termination, demotion, etc.). Instead, all he need show was that he was subjected to a job action that a reasonable employee would have found ‘materially adverse.’ The courts are still trying to determine what exactly ‘materially adverse’ means, thus muddying the water on retaliation claims.

Third, McPhee has clarified the point that a harassment policy does not comply with Faragher/Ellerth if it does not provide alternate avenues for an employee to report harassment. If a policy does not contain such avenues, it is now unreasonable as a matter of law in Tennessee.

Lastly, through its holding that the plaintiff could be excused from her 13-month failure to report harassment because she had a ‘credible fear’ that reporting McPhee’s harassment might result in adverse action against her, the court may have provided an avenue for harassment plaintiffs to easily ‘weasel out’ of their failure to report harassment when it occurs. 

The bottom line is that this case affects THRA claims in a number of significant ways.”