Cooke v. Stefani Management Services

• Decision Date: 14 May 2001
• Docket Number: Nos. 00-1265,s. 00-1265
• Citation: 250 F.3d 564
• Court: U.S. Court of Appeals — Seventh Circuit
• Parties: (7th Cir. 2001) KENNETH COOKE, Plaintiff-Appellee, Cross-Appellant, v. STEFANI MANAGEMENT SERVICES, INC., and TUSCANY RESTORANTE, INC., Defendants-Appellants, Cross-Appellees. & 00-3189

Page 564

250 F.3d 564 (7th Cir. 2001)

KENNETH COOKE, Plaintiff-Appellee, Cross-Appellant, v. STEFANI MANAGEMENT SERVICES, INC., and TUSCANY RESTORANTE, INC., Defendants-Appellants, Cross-Appellees.

Nos. 00-1265 & 00-3189

In the United States Court of Appeals For the Seventh Circuit

Argued March 30, 2001

Decided May 14, 2001

Appeals from the United States District Court for the Northern District of Illinois, Eastern Division. No. 97 C 7604--David H. Coar, Judge.

Before FLAUM, Chief Judge, and POSNER and EVANS, Circuit Judges.

EVANS, Circuit Judge.

In February 1998 Kenneth Cooke was hired as a bartender at Tuscany Restorante, an upscale restaurant in Chicago's Wrigleyville neighborhood. Tuscany, along with a dozen or so other restaurants, is owned and operated by Stefani Management Services, Inc.¹ At the time Cooke was hired, Tuscany was managed by Fred Lagon. As general manager, Lagon possessed the power to hire, fire, and promote Cooke, as well as schedule his shifts. Cooke claims that almost immediately after he began working at Tuscany, Lagon, a homosexual, subjected him to a litany of sexual propositions, inappropriate touching, and nonverbal gestures of a sexual nature. According to Cooke, this treatment was unwelcome, offensive, and degrading, and created an oppressive working environment. He complained numerous times to Lagon and to Jennifer Wilson, the assistant manager of Tuscany, to no avail. Finally, after Lagon propositioned him on June 21, 1998, Cooke "basically got really forceful with [Lagon]," and told him "no means no . . . and if you ask me again, there's going to be some serious problems." The next day, Lagon fired Cooke, purportedly for "inappropriate interactions with coworkers, superiors, and a neighborhood restauranteur." Cooke then brought this single-count, sexual harassment claim pursuant to Title VII of the Civil Rights Act of 1964, 42 U.S.C. sec. 2000e et seq. The case was tried before a jury.

Stefani's case contesting liability consisted mainly of calling a number of Cooke's coworkers to testify that they had never witnessed any harassment. Joy Soulier, Cooke's girl friend at the time, also testified that Cooke shared many personal matters with her but never mentioned any inappropriate conduct by Lagon. In addition, Stefani tried to cast doubt on Cooke's assertion that he was uncomfortable at Tuscany by demonstrating that he came to the restaurant on his days off to eat, drink, or socialize with friends. According to Stefani, this occurred once or twice per week, but Cooke maintains he visited Tuscany on his days off only occasionally, at the request of Soulier. On at least one occasion, Cooke went out socially with Lagon and others. Finally, Stefani introduced an April 27, 1998, note from Cooke to Lagon thanking him for a gift of a bottle of wine, which read: "Fred Just a note to say 'thanxs' [sic] for all you have done. Here's looking at many more fun days to come. Thanks again for the vino! K."

Stefani also presented evidence concerning its sexual harassment policy. The policy when Cooke began working at Tuscany prohibited sexual harassment and directed victims of harassment to report it to Steven Hartenstein, Stefani's chief financial officer. In April 1998 the policy was changed as part of an overall revision of the company's employee handbook. The new policy required the victim of sexual harassment to "immediately contact [his or her] manager and/ or general manager." Stefani held a management training seminar on sexual harassment and its new policy, which Lagon attended.

As we see it, this was not a slam dunk case for either side. Stefani's case-- aided in no small part by Cooke's "thank you for the vino" letter--was strong and could have been accepted by the jury (and by us, if Cooke were appealing the result), but Cooke's version of the events was not unbelievable as a matter of law. And what did the jury do? It returned a general verdict in favor of Cooke, giving him fairly meager awards of $7,500 in back pay and lost benefits and $10,000 in punitive damages. The jury rejected Cooke's request for compensatory damages for humiliation and past and present emotional suffering. Finally, after reviewing Cooke's attorneys fee petition and Stefani's objections, the district court awarded Cooke attorneys fees of $49,835.38 and $519.80 in costs. Stefani appeals the court's denial of its motion for judgment as a matter of law on liability and punitive damages, and Cooke cross-appeals the court's attorneys fee award, which gave him significantly less than he sought.

A hostile work environment is created by conduct which has "the purpose or effect of unreasonably interfering with an individual's work performance or creating an intimidating, hostile, or offensive working environment." Meritor Sav. Bank, FSB v. Vinson, 477 U.S. 57, 65 (1986) (quoting 29 C.F.R. sec. 1604.11(a)(3) (1985)). For hostile work environment sexual harassment to be actionable under Title VII, the conduct "must be sufficiently severe or pervasive 'to alter the conditions of [the victim's] employment and create an abusive working environment.'" Id. at 67 (citation omit ted). The employee must subjectively perceive the harassment as sufficiently severe and pervasive to alter the terms or conditions of employment, and this subjective perception must be objectively reasonable. Harris v. Forklift Sys., Inc., 510 U.S. 17, 21-22 (1993). A plaintiff, however, is not required to prove that the harassment caused psychological injury. Id. at 22.

In order successfully to challenge the jury's liability finding, Stefani must demonstrate that no reasonable jury could have found for Cooke, even when viewing the evidence in the light most favorable to him. See Gile v. United Airlines, Inc., 213 F.3d 365, 372 (7th Cir. 2000). To that end, Stefani first argues that no witnesses corroborated Cooke's allegations of sexual harassment, so the jury was unreasonable to believe his account of his interactions with Lagon. We give short shrift to this argument because it asks us to evaluate the credibility of the witnesses and assess the weight of the evidence, two tasks better left to the jury that heard the testimony given in court. See Tincher v. Wal-Mart Stores, Inc., 118 F.3d 1125, 1129 (7th Cir. 1997). Suffice it to say that the fact that Lagon did not sexually harass Cooke in the presence of other Tuscany employees does not negate the possibility that he did so in their absence. The jury was entitled to credit Cooke's detailed testimony concerning the numerous incidents of harassment perpetrated by Lagon.

Stefani next contends that even if Cooke's account of the harassment is accurate, his actions demonstrate that he did not subjectively perceive it as severe or pervasive. In support of this argument, Stefani points to Cooke's allegedly frequent visits to Tuscany on his days off, his social outing with a group of people that included Lagon, and the personal "vino" note. According to Stefani, if Cooke subjectively perceived the environment at Tuscany as severely or pervasively oppressive, he would have avoided it, and Lagon, at all costs. Although this argument has some appeal, we ultimately reject it because the balance of power between a supervisor and employee is qualitatively different in a social setting than it is at work. During his scheduled shifts, Cooke was not free to leave Tuscany, or even turn and walk away from Lagon (an action that could be considered insubordinate), if he felt harassed. Not so in a social setting. Moreover, we will indulge the presumption that Lagon was more likely to harass Cooke when he was working alone behind the bar than when he was accompanied by friends on a social occasion. Finally, the jury could have believed that the fact that Cooke was courteous to Lagon, his boss, by thanking him for a gift did not undermine Cooke's tale of harassment. In short, none of Cooke's voluntary interactions with Lagon satisfy Stefani's "herculean burden" of overcoming the jury's verdict on liability. See Gile, 213 F.3d at 372.²

We turn next to the issue of punitive damages. The standard for awarding punitive damages in Title VII cases is set out in the statute, 42 U.S.C. sec. 1981a(b)(1), and the Supreme Court's decision in Kolstad v. American Dental Ass'n, 527 U.S. 526 (1999). Section 1981a(b)(1) states that a party may recover punitive damages if his employer engaged in intentional discrimination "with malice or with reckless indifference to the federally protected rights of an aggrieved individual." The terms "malice" and "reckless indifference" refer to the employer's knowledge that it may be violating federal law, not its awareness that it is engaging in discrimination. Kolstad, 527 U.S. 535. Thus, the employer must perceive some risk that its actions violate federal law in order to be liable for punitive damages. Id. at 536.

In a case involving vicarious liability, the plaintiff must also establish a basis for imputing liability to the employer by showing that the employee who discriminated against him was a manager, acting within the scope of his employment. Bruso v. United Airlines, Inc., 239 F.3d 848, 858 (7th Cir. 2001). An employer may escape punitive damages liability for its manager's acts, however, if it can demonstrate a good faith attempt to establish and enforce an antidiscrimination policy. According to Kolstad, "an employer may not be vicariously liable [for punitive damages] for the discriminatory employment decisions of managerial agents where these decisions are contrary to the employer's 'good faith efforts to comply with Title VII.'" 527 U.S. 545 (citation omitted). Such good faith efforts, if proven, "demonstrate that the employer itself did not act in reckless disregard of federally protected rights, thus making it inappropriate to punish the employer for its [manager's] contravention of its established policies." Bruso, 239 F.3d at 858.³

Stefani--apparently...