166 F.3d 139 (3rd Cir. 1999), 97-1683, Durham Life Ins. Co. v. Evans

Docket Nº:Insurance Company, Appellants in No. 97-1683.
Citation:166 F.3d 139
Party Name:DURHAM LIFE INSURANCE COMPANY v. Dianne EVANS (E.D.Pa.No. 94-cv-00801). Dianne Evans, Appellant in No. 97-1712, v. Peoples Security Life Insurance Company (E.D.Pa.No. 95-cv-02681). Durham Life Insurance Company and Peoples Security Life
Case Date:January 15, 1999
Court:United States Courts of Appeals, Court of Appeals for the Third Circuit

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166 F.3d 139 (3rd Cir. 1999)



Dianne EVANS (E.D.Pa.No. 94-cv-00801).

Dianne Evans, Appellant in No. 97-1712,


Peoples Security Life Insurance Company (E.D.Pa.No. 95-cv-02681).

Durham Life Insurance Company and Peoples Security Life

Insurance Company, Appellants in No. 97-1683.

Nos. 97-1683, 97-1712.

United States Court of Appeals, Third Circuit

January 15, 1999

Argued Sept. 24, 1998.

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Daniel Marino (Argued), Seyfarth, Shaw, Fairweather & Geraldson, Washington, DC, for Durham Life Insurance Company and Peoples Security Life Insurance Company.

Raymond J. Quaglia (Argued), Philadelphia, PA, for Dianne Evans.

Before: BECKER, Chief Judge, WEIS and GARTH, Circuit Judges.


BECKER, Chief Judge.

These cross-appeals arise from the District Court's judgment following a bench trial in favor of Dianne Evans and against Durham Life Insurance Company ("Durham") and Peoples Security Life Insurance Company ("Peoples") on Evans's Title VII sex discrimination counterclaim; in favor of Durham/Peoples on Evans's claim for punitive damages; and in favor of Evans on Durham/Peoples' claim for Evans's breach of a

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non-competition agreement. Most importantly, the appeal of Durham/Peoples, which comes in the wake of the Supreme Court's landmark sexual harassment decisions last Term, Faragher v. City of Boca Raton, 524 U.S. 775, 118 S.Ct. 2275, 141 L.Ed.2d 662 (1998), and Burlington Industries, Inc. v. Ellerth, 524 U.S. 742, 118 S.Ct. 2257, 141 L.Ed.2d 633 (1998), requires us to explicate several of the ways in which employers may be held liable under Faragher and Ellerth. In the course of so doing, we must also flesh out the notion of tangible adverse action.

Evans was a successful life insurance salesperson earning close to six figures with Metropolitan Life Insurance Co. when she was recruited away and began working for Durham. She enjoyed even greater success in her first two years with Durham, but when Durham was acquired by Peoples and new management took over, her situation changed for the worse. According to Evans's trial evidence, essentially credited by the District Court, the new management resented her for being a successful woman and set out to undermine her, humiliating her personally with sexist remarks and crude sexual advances, and stripping her of the support she needed to do her job, support that had been a negotiated condition of her employment at Durham. Ultimately, when her private office was taken away and critical files mysteriously disappeared, she resigned and began to work for a competing insurance company. Durham thereupon sued Evans, seeking an injunction and damages for breach of a noncompetition agreement Evans had signed while in Durham's employ. Evans counterclaimed, alleging sex discrimination, defamation, and intentional infliction of emotional distress.

The District Court found that the noncompetition agreement was no longer in effect and that Evans had suffered a hostile work environment. It entered judgment in her favor for $310,156 in lost earnings and fringe benefits and $100,000 for intentional infliction of emotional distress. It found against Evans on her defamation claim.

Durham makes numerous claims on appeal. (We will now refer to Durham and Peoples, Durham's successor, as "Durham.") It challenges the District Court's fact finding on the ground that the allegedly offending incidents were so few and far between and their veracity so suspect that we should set the verdict aside as clearly erroneous. We decline that invitation. Durham also disputes its liability for the acts of its supervisory employees under Ellerth and Faragher. We conclude that Durham is not entitled to the affirmative defense that Evans unreasonably failed to use an available effective sexual harassment policy because the defense is only available in the absence of tangible adverse employment action, and Evans suffered such adverse action. The concept of a tangible adverse employment action is not limited to changes in compensation, although Evans's pay was certainly affected by the actions taken against her. "Tangible adverse employment action" includes the loss of significant job benefits or characteristics, such as the resources necessary for an employee to do his or her job; that Evans suffered such loss is detailed infra.

Durham also contends that it is not liable for intentional infliction of emotional distress because Pennsylvania workers' compensation law preempts Evans's claim. Ultimately we need not resolve this difficult question, because we find that the award may be upheld under Title VII. Additionally, Evans challenges the District Court's refusal to award punitive damages, but we find this ruling to have been fairly within the court's discretion. Finally, Durham takes issue with the District Court's back pay award, but we uphold that also as within the court's discretion, particularly given Durham's acts after Evans left Durham's employment.

Durham alleges that Evans was bound by a covenant not to compete and argues that the collective bargaining agreement required her to grieve rather than sue. The District Court found that a vice president's statement to Evans that the covenant and the collective bargaining agreement were no longer in force estops Durham from enforcing them against her. This finding is not clearly erroneous. In view of all these conclusions, we will affirm the judgment of the District Court in its entirety.

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I. Facts and Procedural History

The evidence adduced at trial, which we view in the light most favorable to Evans, the prevailing party at trial, see Keith v. Truck Stops Corp., 909 F.2d 743, 745 (3d Cir.1990), showed the following facts. Evans was an extremely successful life insurance salesperson. She worked at Met Life for seventeen years, and in her last few years there she consistently earned $90,000 per year. Durham recruited her in 1991, promising her that she would have her own office and secretary, as well as unlimited phone and mailing costs paid for by Durham. When Evans joined Durham, she signed a non-competition agreement, which provided that, if she left, she could not sell insurance to Durham customers for a limited time. At Durham, she was covered by the collective bargaining agreement in place between Durham and its agents while that agreement was in effect.

Durham was a "home service" or "debit" insurance company whose business generally came from door-to-door sales. Evans, however, was recruited as an "ordinary life agent," which meant that she sold a different type of policy. She worked almost exclusively from her office, encouraging existing debit customers to upgrade their policies. Evans's special skills and support system facilitated her success in the new job. She earned $128,000 in 1991 and $119,000 in 1992, mainly from commissions.

In 1991, Capitol Holding Company purchased Durham. In 1992, Capitol assigned the management of Durham to Peoples Security Life Insurance Company, and Peoples managers took over in October. Evans was the only fulltime female life insurance agent at that location; there were thirty male agents. The collective bargaining agreement between Durham and its agents expired in November 1992. When it expired, Peoples unilaterally reduced the compensation rate of the agents. At that point, Tom Biancardi, a regional vice-president who was then negotiating with the union, told Evans that the collective bargaining agreement and the non-competition agreement were no longer in force. After that time, no new collective bargaining agreement was put in place.

The new managers, particularly William McKaskill and Doug Sebastionelli, believed that Evans should not continue to receive special treatment. 1 They told her that she did not fit the profile for a debit life insurance company: Her clothes and shoes were too expensive and she dressed too well for the job. McKaskill told her that she "made too much money for a goddamn woman." In March 1993, William Owens, the acting agency manager, asked Evans to go dancing "into the fields with him" and reminded her that he had the power to fire her if she did not behave as he wished. The next morning, he placed a newspaper article on her desk discussing a large verdict that Peoples had obtained against another life insurance company because of an agent who moved business from Peoples to the other company. At that time, Owens told her that if she reported the previous night's incident or if she quit and tried to take her business with her, Peoples would sue and "attach her house before she left the courtroom." Evans was frightened but did nothing because she wanted to succeed in the restructured company.

Evans suffered repeated slights from the new management. At an awards dinner, the top-selling agents were honored for selling more than $25,000 in premiums during a set period of time. Evans was the top producer, but while the exact sales numbers of the male agents were announced, Evans was only identified as selling in excess of the required minimum. Evans felt that she had been humiliated in front of her colleagues and her son, who was also present. At a training session in June 1993, she was publicly mocked for her walk and her speech by Chuck Gardner, an agency sales manager. Evans tried to retain the business of an important client, the Mercy Votech School, but the school administrators had questions that Evans needed legal help to answer. Although she was promised legal assistance from the home office, no one showed up at the scheduled meeting and Evans lost the account. Evans...

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