The U.S. Supreme Court Rules that the Ellerth/Faragher Defense May Be Available to Employers in Constructive Discharge Cases

In recent years, many employers have instituted anti-harassment policies and grievance procedures. They have been encouraged to do so in part by the United States Supreme Court opinions which have provided employers in certain circumstances with a defense to employee claims of harassment if the employer has such policies and procedures in place. Recently, in Suders v. Pennsylvania State Police, 124 S. Ct. 2342 (2004), the Supreme Court reexamined these decisions in light of a claim of “constructive discharge” brought by a female employee who claimed she resigned as a result of sexual harassment. The court of appeals held, in essence, that when such a claim is brought the employer’s anti-harassment policies are irrelevant and cannot shield the employer from liability. The Supreme Court reversed, holding that under the circumstances of the case the employer was entitled to demonstrate that it should not be liable because of the plaintiff’s failure to take advantage the employer’s grievance procedure. In the course of its opinion, the Court attempted to provide guidance on the circumstances when an employee who resigns as the result of alleged harassment can assert a claim of “constructive discharge” and on when the employer’s anti-harassment policies can be asserted as a defense to such a claim.

The plaintiff was hired as a police communications operator for the Pennsylvania State Police (“the PSP”). She alleged that her three male supervisors subjected her “to a continuous barrage of sexual harassment” and that the PSP’s Equal Employment Opportunity Officer had been “insensitive and unhelpful” when she had complained about the harassment. Plaintiff also alleged that 2 days after her complaint, she was arrested by her supervisors on a false charge of theft. She then resigned her position; theft charges were never brought against her. Subsequently plaintiff brought a claim of “constructive discharge” against the PSP under Title VII of the Civil Rights Act of 1964, 42 U.S.C. Section 2000e-1 et seq. (Title VII).

A “constructive discharge” occurs when an employee resigns because the employer has made working conditions so intolerable that a reasonable person would not be expected to continue to work. The courts first recognized the concept of “constructive discharge” in the context of labor union organizing activities in the 1930’s when employees were subjected to retaliation for engaging in collective bargaining activities. The courts have consistently applied the concept to claims of harassment based on race, sex, national origin, or religion brought under Title VII. A victim of harassment who is justified in resigning is entitled to all the damages, both economic and compensatory, that would be available had he or she actually been terminated for a discriminatory reason.

In defending against plaintiff’s harassment claim, the PSP asserted the so-called Ellerth/Faragher defense. In Burlington Industries, Inc. v Ellerth, 524 U.S. 742 (1998), and Faragher v. City of Boca Raton, 524 U.S. 775 (1998), the Supreme Court held that an employer is vicariously liable under Title VII for the discriminatory harassment committed or condoned by its supervisory employees. But when the discrimination does not result in or involve a “tangible employment action” taken against the victim of the discrimination, the employer can avoid liability by demonstrating (1) that it “exercised reasonable care to prevent and correct promptly any sexual harassing behavior” and (2) that “the plaintiff employee unreasonably failed to take advantage of any preventive or corrective opportunities provided by the employer or to avoid harm otherwise.” Thus, if sexually harassing conduct culminates, for example, in the victim’s termination, reduction in salary, failure to receive a promotion or some other “tangible employment action” the Ellerth/Faragher defense is unavailable to the employer. But when the harassing conduct does not result in or involve a “tangible employment action” the employer can avoid liability for damages for emotional distress or other relief sought by the plaintiff by demonstrating that it had an effective grievance procedure in place and that the plaintiff unreasonably failed to take advantage of it.

The issue before the court in Suders was whether the plaintiff’s alleged “constructive discharge” by itself constituted a “tangible employment action” so as to preclude the PSP from asserting the Ellerth/Faragher defense. In the court below, the United States Court of Appeals for the Third Circuit had held that a constructive discharge is, in fact, a “tangible employment action” and thus the Ellerth/Faragher defense was unavailable to the PSP. The Supreme Court noted that two other circuit courts of appeals had reached the opposite conclusion.

In addressing the issue, the Supreme Court first discussed the quantum of proof necessary for the alleged victim of harassment to establish a claim of constructive discharge. The Court made a clear distinction between the severity of the harassment that would justify an employee to resign and pursue a claim of constructive discharge from the severity of the harassment that would give rise to a violation of Title VII in general. The Court ruled: “For an atmosphere of sexual harassment of hostility to be actionable . . . the offending behavior ‘must be sufficiently severe or pervasive to alter the conditions of the victim’s employment and create an abusive working environment.’ . . . A hostile-environment constructive discharge claim entails something more: “a plaintiff who advances such a compound claim must show working conditions so intolerable that a reasonable person would have felt compelled to resign.” The Court cited with approval a 1997 court of appeals decision holding that “unless conditions are beyond ‘ordinary’ discrimination, a complaining employee is expected to remain on the job while seeking redress” Perry v. Harris Chernin, Inc., 126 F.3d 1010, 1015 (7th Cir. 1997). The Court, understandably, did not articulate a bright line test to distinguish “ordinary” harassment from harassment so intolerable that a reasonable person would be justified in resigning, thus relegating that issue to case-by-case determinations. The Court did hold, however, that plaintiff’s allegations in the case before it made out a claim for constructive discharge. (The evidence showed that plaintiff’s supervisors continually brought up the subject of having sex with animals, made comments about oral sex, and made demeaning and vulgar remarks directly to the plaintiff and ultimately falsely accused her of theft.)

The Supreme Court, however, rejected the Third Circuit’s holding that plaintiff’s constructive discharge constituted a “tangible employment action under the circumstances presented so as to preclude the PSP from asserting the Ellerth/Faragher defense. The essence of the Court’s holding is that when the employer has taken no “tangible employment action” against the employee/victim before she resigns, the employer can attempt to demonstrate that the employee failed to mitigate her damages by unreasonably failing to take advantage of an effective grievance procedure that the employer had in place. Although the employer has the burden of proof on this issue, it appears from the Court’s opinion that if the employer meets this burden, the plaintiff will be precluded from recovering damages of any type, whether economic damages or damages for emotional distress resulting from the alleged harassment. On the other hand, if the plaintiff can demonstrate that the intolerable working conditions to which she was subjected included a tangible employment action, such as transferring her to an undesirable job, the employer will not be permitted to assert the Ellerth/Faragher defense.

This aspect of the Court’s holding is somewhat troublesome. It is not entirely clear why an employee who unreasonably fails to take advantage of her employer’s grievance procedures, thus depriving the employer of the opportunity to reverse the “tangible employment action,” as well as to remedy the hostile environment, should be permitted to resign and proceed with a claim for damages based on “constructive discharge.” Nevertheless, the Suders decision, on the whole, is a favorable for employers, as it places a heavier burden on plaintiffs alleging constructive discharge than on plaintiffs in “ordinary” harassment cases and permits employers to assert the Ellerth/Faragher defense when the employer has taken no “tangible employment action” against the plaintiff. How the lower courts apply Suders in future cases will be closely watched.