New York Employment Lawyer Blog

This month, a Federal racial discrimination case filed by the U.S. Equal Employment Opportunity Commission (EEOC) against retailer Target Corp. in Wisconsin concluded with a settlement of $510,000 and additional terms.

The EEOC’s suit claimed that in 2000 and 2001,Target improperly denied management jobs to four African-American applicants. Three applicants were not interviewed, and one who had interviewed but did not get the job, despite testing well on Target’s own leadership ability test. The EEOC also claimed that Target failed to make and preserve records relevant to the determination of whether the company had engaged in unlawful employment discrimination practices.

The U.S. District Court for the Eastern District of Wisconsin granted Target’s motion for summary judgment. On appeal, the U.S. Court of Appeals for the Seventh Circuit in 2006 reversed and remanded, finding in its opinion that, although Target revised its record keeping policy, nothing in Target’s new policy clearly prevented bad faith destruction of resumes or other employment application documents. The Court of Appeals also found that, with regard to Target’s decision not to hire the applicant who took the leadership test, Target presented “an ostensibly objective nondiscriminatory reason but failed to articulate what criteria informed this reason.”

With regard to the other three applicants, the court found that “the EEOC did present sufficient evidence to establish a genuine issue of material fact as to whether Target’s reason for not interviewing [the three applicants] was a pretext for race discrimination,” The court also noted that although Target argued that its hiring manager could not have discriminated against the three applicants because he did not know their race, but the EEOC presented evidence that created a genuine issue of material fact as to whether the manager indeed knew the applicants’ race. In a press release, the Director of the EEOC’s Chicago District Office said that the appeals court decision was “noteworthy for its ruling that the trial court could admit into evidence expert testimony to the effect that the employer may have racially identified the applicants as African American on the basis of their names or accents heard during telephone conversations.”

Following the U.S. Court of Appeals' reversal, the EEOC and Target settled the suit by way of a consent decree. According to the EEOC release, under the 30-month consent decree, Target agreed to pay a total of $510,000 to the four applicants and to revise its document retention policies, provide training to supervisors on employment discrimination and record-keeping, report on hiring decisions, and post a notice about the decree to employees in its District 110 stores and offices.

This month, Anucha Browne Sanders and Madison Square Garden settled Sanders’ sexual harassment suit for $11.5 million. This development comes some two months after Sanders was awarded $11.6 million in punitive damages by a New York federal jury.

Before the settlement, the case was to enter into another damages phase where Judge Gerard E. Lynch was to hear arguments and decide on the outstanding question of Sanders’ compensatory damages, which would include back pay. This additional damages phase would potentially have added millions to the jury’s verdict.

Even though the Sanders case has been settled, Madison Square Garden has not resolved all of the sexual harassment claims made against it. Former New York Rangers cheerleader Courtney Prince filed a sexual harassment lawsuit against Madison Square Garden in New York federal court in 2004.

It is unclear what effect Sanders’ trial and subsequent settlement will have on the Prince matter. Sanders’ case may have made it more difficult for the plaintiffs and defendants in the Prince case to arrive at an agreement. In the wake of the $11.5 million settlement, the stakes are considerably higher and Madison Square Garden had previously rejected the recommendation of the Equal Employment Opportunity Commission to settle the matter for about $800,000.

A New York federal jury handed down an $11.6 million verdict in October 2007 in the Isiah Thomas sexual harassment case. On Thursday, December 6, 2007 a California state court jury awarded a former Fresno State women’s basketball coach just over $19 million in damages on her gender discrimination, sexual harassment and retaliation claims.

Many civil verdict awards are comprised of both economic and non-economic components, both of which are sometimes broken down even further. In the case of the Fresno coach, plaintiff Stacy Johnson-Klein’s award broke down into four components: Past economic losses, future economic losses, past non-economic losses and future non-economic losses.

Ms. Johnson-Klein’s past economic losses component of the award ($634,254) covers the period between the coach’s firing in 2005 until the commencement of the trial. Past economic losses typically include lost wages and benefits. Ms. Johnson-Klein’s future economic losses component ($4,440,419) projects the plaintiff’s losses if she had not been fired, and typically includes lost wages and benefits measured from the trial through the plaintiff’s work-life expectancy. This point is usually the plaintiff’s retirement age, typically between age 65 and 70.

The non-economic components are awarded to the plaintiff for pain and suffering that she experienced as a result of the defendant's conduct, independent of economic damages. Ms Johnson-Klein was awarded $3 million for past non-economic losses and $11 million for future non-economic losses. In some cases, the jury may award the plaintiff punitive, or exemplary, damages in order to punish the defendant's willful misconduct which led to the suit. However, in the Johnson-Klein case, there was no punitive damages award against Fresno state because in California, punitive damages may not be recovered by a plaintiff against a defendant that is a public entity.

On December 3, 2007 the U.S. Supreme Court heard oral argument on an age discrimination case, Sprint/United Management Company v. Mendelsohn, No. 06-1221 - the so-called “Me Too” case. The central issue in the case is whether a plaintiff may properly introduce testimonial evidence of other former employees to prove discriminatory intent of an employer, notwithstanding the fact that these other employees worked under different supervisors than the plaintiff.

In Sprint/United, Ellen Mendelsohn, who was discharged at age 51 by Sprint, sought to prove that she was terminated on account of her age in violation of the Federal Age Discrimination in Employment Act during a company-wide reduction in force (RIF). Mendelsohn attempted to support her allegations by introducing the testimony of five other former employees around the same age. Sprint moved to exclude the evidence, arguing that any reference to alleged age discrimination by any other supervisor other than Mendelsohn’s was irrelevant to the issue of whether Mendelsohn’s termination was motivated by her age. The U.S. District Court for the District of Kansas granted Sprint’s motion to exclude the testimony and the jury later returned a verdict for Sprint. However, on appeal, the U.S. Court of Appeals for the Tenth Circuit found that the lower court erred in excluding the testimony of the employees working under different supervisors. Sprint appealed that decision, and the matter is now before the Supreme Court.

The crux of Sprint's argument before the Supreme Court was that such testimony from other employees should be excluded under the Federal rules of evidence. “An employment decision is made by the person who made it...,” Sprint maintained. “If some other person harbors bias, that’s unfortunate -but it’s not probative of claims by a plaintiff who is not affected by it.” Justice David Souter at one point seemed to agree with Sprint’s argument, and said that such testimonial evidence was very close to being “substantially misleading or prejudicial.”

In contrast, the Court of Appeals had made the following observation: “This case...is not about individual conduct but about a company-wide policy of which all Sprint’s supervisors were allegedly aware.” As such, if the supervisor did not make the allegedly discriminatory decision in a vacuum, and allegedly made it as part of a larger, odious scheme handed down from upper management, shouldn't the jury be permitted to hear testimony that involved other supervisors’ discriminatory conduct that arguably originates from on high? Such evidence would clearly be probative, even vital, in this scenario.

As the appellate court pointed out, applying a limited "same supervisor" rule in the context of a company-wide reduction in force would in many cases make it difficult, if not impossible, for a plaintiff to prove a case of employment discrimination based on circumstantial evidence. To apply the same supervisor rule in these types of cases would, as the appellate court insightfully pointed out, “create an unwanted disparity between those cases where the plaintiff is fortunate enough to have other RIF’d employees in the protected class working for her supervisor, and those cases where the plaintiff is not so fortunate.” It will be interesting to see what the Supreme Court decides.

In October 2007, Dentsu America and its CEO were named as defendants in a sexual harassment and discrimination lawsuit, Biegel v. Dentsu Holdings USA, Inc., filed by one of its former creative directors in New York federal court. Plaintiff Steve Biegel alleges, among other things, that while in Tokyo on business, he and his co-workers were compelled to attend a work outing at a Japanese bath house with one of his superiors at Dentsu, CEO Toyo Shigeta. In court papers, Biegel alleges that while at the bath house, he and his co-workers were “expected to climb naked” into a bath with Shigeta. In his complaint, Biegel claims that he was “offended and humiliated by this outrageous, sexually degrading experience imposed upon him as a condition of his employment.”

The defendants in their court papers do not deny that Biegel was taken to the Japanese bath house by Shigeta. Instead, the defendants challenge his allegation by claiming that Biegel waited over a year-and-a-half after purportedly visiting the bath house before he allegedly spoke to Shigeta about it. Further, the defendants maintain that the bath house is not “objectively offensive.” In moving to dismiss the complaint, the defendants argue that “well-known tourist guides such as Time Out Tokyo, Frommer’s Tokyo, Lonely Planet Tokyo and Rough Guide to Tokyo depict the Bathhouse as a classy, clean and traditional family venue...” The court papers also note that bath house patrons are provided with robes during their experience.

The defendants’ arguments with respect to the bath house may pose some challenges. Plainly, the disclaimer-like assertion, that bath robes are provided to patrons, fails to address the simple fact that the robes eventually are meant to come off, when one is stepping into the communal bath. Also, it is not effective for defendants to argue that bath houses have been a major part of Japanese culture and tradition, since today the bath house appears to be in decline. According to web-japan.org and japan-guide.com, the Japanese bath house, or Sento, has been decreasing in numbers in recent decades as private baths have become prevalent in Japanese homes.

Further, U.S. employment discrimination laws rely on the perspective of a reasonable person to determine what constitutes sexual harassment. In our experience, international companies with offices in the U.S. may encounter issues where American social norms and broad human rights laws leave less room for conduct that may otherwise be considered acceptable in other countries.

When it comes to sexual harassment and the workplace, the maxim, “It’s all fun and games until someone loses an eye” sometimes becomes conventional wisdom. Corporate outings at bathhouses, brothels (also alleged in Biegel’s complaint) and strip clubs are activities that can become the genesis of sexual harassment and discrimination claims, regardless of which country these outings occur in.