Bouton v. BMW of North America, Inc.

• Decision Date: 03 August 1994
• Docket Number: 93-5316,No. 93-5316,Nos. 93-5296,No. 93-5296,93-5296,s. 93-5296
• Citation: 29 F.3d 103
• Parties: 65 Fair Empl.Prac.Cas. (BNA) 53, 65 Empl. Prac. Dec. P 43,185, 62 USLW 2791 Trude S. BOUTON, Plaintiff, v. BMW OF NORTH AMERICA, INC., Defendant. Trude Bouton, Appellant inBMW of North America, Appellant in
• Court: U.S. Court of Appeals — Third Circuit

Page 103

29 F.3d 103

65 Fair Empl.Prac.Cas. (BNA) 53, 65 Empl.

Prac. Dec. P 43,185,

62 USLW 2791

Trude S. BOUTON, Plaintiff, v. BMW OF NORTH AMERICA, INC., Defendant.

Trude Bouton, Appellant in No. 93-5296.

BMW of North America, Appellant in No. 93-5316.

Nos. 93-5296, 93-5316.

United States Court of Appeals, Third Circuit.

Argued March 8, 1994.

Decided June 10, 1994.

Sur Petition for Rehearing Aug. 3, 1994.

Louis A. Bove (Argued), Swartz, Campbell & Detweiler, Philadelphia, PA, for Trude Bouton.

Marilyn Sneirson (Argued), Lynn B. Su, Thomas W. Dunn, Beattie Padovano, Montvale, NJ, for BMW of North America, Inc.

Before: MANSMANN, LEWIS and SEITZ, Circuit Judges.

OPINION OF THE COURT

SEITZ, Circuit Judge.

Plaintiff, Trude Bouton, filed this action for sexual harassment under state and federal law seeking to hold BMW of North America, Inc. ("BMW") liable as her employer. The district court entered judgment against Bouton on all claims. 1994 WL 447310. As to her Title VII claims, which were tried to the court, ¹ the district court held that there was Bouton appeals the adverse judgments on one Title VII claim and the New Jersey Law Against Discrimination ("NJLAD") claim that was decided as a matter of law. BMW cross-appeals the NJLAD ruling, contending that even if the statute of limitations extended to the date of this action, the district court's judgment should be affirmed on other grounds because the facts do not support employer liability under New Jersey law.

no employer liability. The court also ruled that the statute of limitations had expired on the only New Jersey state law claim on which the jury found in Bouton's favor and so entered judgment for BMW as a matter of law. Finally, the court entered judgment on the jury's verdict in favor of BMW on the remaining claims; no appeal was taken on them.

I. Background

We first address the evidence having in mind that BMW is entitled to the benefit of disputed facts.

Trude Bouton was employed by BMW in July 1984 as a bilingual secretary to Karl Hammermueller, the company's Comptroller, and was promoted with him when he became Treasurer in August 1985. In early fall 1985, Bouton and Hammermueller began a personal relationship.

In April 1986, Bouton became Executive Secretary to the Vice President of Service, Hans Duenzl. Hammermueller's boss suggested the promotion in order to separate her from Hammermueller. In October 1986, Hammermueller moved into Bouton's home, where he lived until they broke up in December 1986.

Thereafter, Bouton took a medical leave. The incident that precipitated her medical leave occurred while she was typing as Duenzl dictated an urgent fax to Germany. It was after 5:00 p.m. on Friday in Germany, and after 12:00 noon in New Jersey. Bouton testified that she requested permission to go to the bathroom and he responded in the crudest terms but without any sexual connotation. Duenzl recalls that she asked to go to lunch and he refused because the recipients were waiting to begin their weekend in Germany. In any event, Bouton ran from the building, bypassed personnel, and went to Hammermueller's office. He summoned Steve Thompson from the Human Resources Department and she made her first contemporaneous complaint of harassment.

BMW investigated the complaint, even involving its President, by having him interview Duenzl. Although BMW could find no harassment, the Human Resources Department decided Bouton should not continue to work for Duenzl. While Bouton was still on the medical leave, BMW informed her that her request to be assigned to Carl Hooser, who had succeeded Duenzl, would be granted. Bouton was never again bothered by Duenzl--indeed, she became comfortable enough to complain to him about Hooser.

Bouton's credibility was seriously challenged both when she complained within BMW and at trial. For example, she testified that while she was cutting bagels for a staff meeting, "Mr. Duenzl approached me from the back, and I could feel he had an erection because he pushed hisself [sic] against my back." However, the female managers who regularly attended those staff meetings testified that bagels were never served--donuts were standard fare. Additionally, there was other conflicting testimony as to Bouton's attendance at company dinners.

After Bouton returned from medical leave, she began complaining about Hooser, her first American boss. She thought he was too informal--"too Californian," not a strong "German manager." Hooser restricted her overtime and criticized her secretarial skills and attitude. He insisted that they communicate in writing, which he explained was because her English was so poor that he needed a method of decreasing miscommunications. Bouton's self-typed autobiography illustrated her inferior secretarial skills. Additionally, both her written work and spoken transcripts portray sub-par proficiency with the English language.

A member of the personnel department surmised that these problems had not been so glaring to her previous bilingual bosses who valued her German skills and who may not have recognized the errors in English. Duenzl explained that he eventually learned With this background, we proceed to consider whether the District Court correctly absolved BMW of liability.

her phrasing was poor and asked American managers to edit his correspondence. Thus, the jury could readily attribute Hooser's actions to the personality conflict and to Bouton's inadequacies as a secretary without reflecting any sexual motivation. Indeed, the record in this case fairly supports the conclusion that Hooser was very tolerant of Bouton when she tried to persuade the President of BMW to fire him. The jury evaluated its interpretation of this evidence by rejecting all of Bouton's complaints against Hooser.

II. Title VII Employer Liability

Bouton argues that the district court's ruling against her Title VII claim is impermissibly inconsistent with the jury verdict favoring her NJLAD claim. BMW responds that the judge correctly applied collateral estoppel to facts found by the jury, but decided against her because she did not prove employer liability under Title VII.

Under both Title VII and NJLAD, a hostile environment claim requires proof of pervasive or severe intentional discrimination that affected the plaintiff and would also affect a reasonable person. See Meritor Sav. Bank, FSB v. Vinson, 477 U.S. 57, 67, 106 S.Ct. 2399, 2405-06, 91 L.Ed.2d 49 (1986); Andrews v. City of Philadelphia, 895 F.2d 1469, 1482 (3d Cir.1990); ² Lehmann v. Toys 'R' Us, Inc., 132 N.J. 587, 626 A.2d 445, 453 (1993). However, Bouton sought to have BMW held liable rather than the harasser. Thus, she also had to show that employer liability was appropriate. At the time of the Bouton v. BMW trial, the New Jersey Supreme Court had not yet decided the principle governing employer liability under NJLAD. Because the district court predicted that New Jersey would adopt strict liability, it did not instruct the jury on employer liability. When the district court reached the Title VII decision, it applied the jury's findings to the first four elements, but then concluded that employer liability was not appropriate because "as soon as [BMW] knew of the conduct, it took prompt and adequate remedial measures." Op. at 18.

The United States Supreme Court has instructed courts to use agency principles when deciding employer liability for sexually hostile work environments. Meritor Sav. Bank, FSB v. Vinson, 477 U.S. 57, 72, 106 S.Ct. 2399, 2408, 91 L.Ed.2d 49 (1986). Meritor rejects the possibility that employers are strictly liable for hostile environments and also repudiates the notion that a grievance procedure will automatically protect the employer. Id. at 72-73. The challenge before this court is to determine what middle ground remains in agency law.

The Restatement (Second) of Agency Sec. 219 provides three potential bases for holding employers liable for sexual harassment perpetrated by their employees. Section 219(1) holds employers responsible for torts committed by their employees within the scope of their employment. Two of the four reasons listed in Sec. 219(2) for imposing liability when an employee acts outside the scope of employment could also apply. Under Sec. 219(2)(b), masters are liable for their own negligence or recklessness; in a harassment case, this is typically negligent failure to discipline or fire, or failure to take remedial action upon notice of harassment. Finally, under Sec. 219(2)(d), if the servant relied upon apparent authority or was aided by the agency relationship, the master is required to answer.

Under Sec. 219(1), Bouton asserts that BMW is liable because Duenzl was acting within the scope of his employment. Scope-of-employment liability is often invoked in quid pro quo cases because the supervisor has used his authority over the employee's job to extort sexual favors. Without the agency relationship Courts of appeals that have spoken readily accept the negligence concept of Sec. 219(2)(b) if the harassment is reported to the employer. Failure to investigate and remediate will result in employer liability. See, e.g., EEOC v. Hacienda Hotel, 881 F.2d 1504 (9th Cir.1989); Lipsett v. University of Puerto Rico, 864 F.2d 881, 903 (1st Cir.1988). Conversely, under negligence principles, prompt and effective action by the employer will relieve it of liability. In Andrews, this court joined other circuits in interpreting these principles to impose liability when the employer knew or should have known of harassment and failed to take prompt remedial action. Andrews v. City of Philadelphia, 895 F.2d at 1486.

quid pro quo harassment would be impossible, so the employer is responsible. See, e.g., Karibian v. Columbia Univ., 14 F.3d 773, 777-78 (2d Cir.1994), petition for cert. filed, 62 U.S.L.W. 3724 (U.S. Apr. 22, 1994) (No. 93-1674). However, in a hostile environment case, the harasser is not explicitly...