Court Upholds Employer's Corrective Action And Dismisses Lawsuit

A federal appellate court has ruled that an employer should not be held liable for fostering a racially hostile work environment in violation of Title VII of the Civil Rights Act. According to the court, the company promptly disciplined the workers for their initial misconduct and the employee did not adequately report the alleged resumption of the harassment. The worker's failure to put the company on notice of the renewed harassment, the court found, was "fatal to his claim of employer liability." Wilson v. Moulison North Corp., No. 10-1387, First Circuit Court of Appeals (March 21, 2011).

Factual Background

Arthur Ray Wilson was hired by Moulison North Corporation (MNC) on May 22, 2006. MNC is a Maine-based electrical utility contractor that specializes in the installation and repair of large lighting systems.

Wilson, who is African-American, was assigned to a project at the Portland Jetport. He worked alongside William Stineford, Dale Small and Ryan Polley (all of whom are white). Polley was the lead worker and made the daily work assignments when their supervisor, Bill Rowe, was not on the job site.

Shortly after joining the company, Wilson claimed that Stineford used derogatory racial slurs to refer to him. On one occasion, Polley overheard the comments and asked both Stineford and Small to refrain from such expressions.

When the remarks continued, Wilson called and complained to company owner Ken Moulison. The next day, Moulison visited the job site and spoke with Stineford and Small (who did not deny the allegations). Moulison told each of them that any further incidents of harassment would result in their immediate termination. Moulison also apologized to Wilson for their behavior and told Wilson to immediately report any further problems to him.

The company's anti-harassment policy directed employees to report harassment either to a "supervisor or to Ken Moulison." The policy further stated, "Disciplinary measures may include oral or written warnings, suspension or termination depending on the severity of the offense."

Despite Moulison's warning, Stineford allegedly continued to use racial epithets. According to Wilson, he again complained to Polley to no avail. During this time period, Moulison frequently visited the job site. Wilson did not discuss the recent incidents with either Moulison or Rowe.

Shortly thereafter, the company reassigned Wilson. The next month, Wilson injured his back while at work. He took a disability leave of absence and never returned to work.

Wilson sued MNC under Title VII alleging that he was subjected to a racially hostile work environment and retaliation based on his complaints. The trial judge dismissed the suit and Wilson appealed only his hostile work environment claim to the First Circuit Court of Appeals.

Legal Analysis

Wilson first argued that MNC should be held liable for the initial harassment because Moulison imposed "inadequate, slap-on-the-wrist discipline" on Stineford and Small. The First Circuit disagreed, finding that the company's response was both swift and appropriate. After hearing Wilson's complaint, Moulison immediately visited the job site and reprimanded the workers.

In response to Wilson's assertion that the verbal reprimand and warning was "too mild," the First Circuit found that employers must be afforded some flexibility in imposing discipline for employee misconduct. The record shows that racial discrimination was not a long-standing problem for this employer and the discipline imposed in this instance conformed generally to the company's anti-harassment policy.

Wilson next argued that MNC should be liable for the subsequent acts of harassment because his complaints Polley put the company on notice of the renewed harassment and no additional corrective action was taken. In addressing the issue of employer liability, the court refused to impute Polley's knowledge of the alleged harassment to the company. The court found that Polley was not a "de facto" supervisor and that Wilson's subjective belief alone was "insufficient to create a triable issue of material fact about a co-worker's status." The court also noted that a solitary reference to Polley as a "foreman" in a company memorandum does not "transmogrify a line employee into a supervisor for Title VII purposes."

Finally, Wilson argued that Mouli-son expressly directed that he report any further harassment to Polley - thus, creating employer liability based on delegated authority. The court rejected this argument as well. "To impute Polley's knowledge to the company on a delegation theory," the court held, "the plaintiff would have to show, through competent evidence, that Moulison designated Polley to receive harassment complaints on the company's behalf." Because no such evidence existed, the court refused to reinstate his harassment claim.

Practical Impact

According to Michael Clarkson, a shareholder in Ogletree Deakins' Boston office: "This decision is remarkably practical in that it both reflects the value of prompt remedial action, even where that action was something less than termination, and stopped short of imposing de facto strict liability for the continuing harassment. Employers should be cautious, however, as the employee's failure to complain of the continuing harassment to the owner (despite the opportunity to do so) and the court's finding that the employee's `foreman' was not a supervisor may narrow the applicability of the decision to the facts presented in Wilson."