Sexual Harassment and Negligent Hiring, Can Same Conduct Justify Two Claims, Quirky Question # 152

Quirky Question #152

One of our employees complained of sexual harassment. We investigated, though admittedly not as promptly as we should have. We discovered that the harasser had engaged in some seriously problematic conduct. Our investigation also revealed that the harasser had engaged in similar conduct at a prior employer and previously, at our company, with a different employee who had elected not to report.

The victim of the harassment is now threatening to sue us and demanding settlement compensation. Her lawyer suggests that if we do not settle, he will sue us for multiple claims, including both sexual harassment and negligent hiring. (Apparently, his investigation also revealed the past problems.) Is this legit? Can we be sued for multiple claims based on the same conduct?

Dorsey’s Analysis

As you likely know if your company has had to defend many employment claims, it is a rare plaintiff (and rarer plaintiff’s counsel) who asserts only one claim.  Typically, plaintiff’s attorneys evaluate the nature of the wrongful conduct and consider how many different claims that conduct might support.  In a case of egregious sexual harassment, for example, the same conduct might support a claim for sex discrimination under Title VII, a claim for sex discrimination under a parallel state statute, and common law claims for assault, battery, negligent or intentional infliction of emotional distress, negligent hiring, negligent retention, and negligent supervision.  In addition to these nine causes of action, the presence or absence of certain facts may lead to the pleading of several other claims as well.

“Kitchen-sink” pleading can sometimes be legitimate.  For example, the federal anti-discrimination statutes cap emotional distress damages, whereas many state statutes or common law claims do not.  Similarly, the federal anti-discrimination statutes, and many state statutes as well, limit the recovery of punitive damages, which typically are not constrained under common law theories.  At other times, however, pleading every conceivable claim is simply a waste of both judicial and the parties’ resources, and judges often are justifiably impatient with this approach.

It also is fair to question whether it makes sense to plead multiple claims, rather than focusing strategically on the claims that are most compelling.  Perhaps the most frequently asserted plaintiffs’ explanation for this approach is that it reduces the likelihood that all claims will be dismissed on summary judgment.

The pleading of multiple claims also raises the question implicated by your question – do the statutory claims preempt or supplant the common law claims grounded upon the same facts?  As you may know, the doctrine of preemption is based on the idea that when the legislature passed a statute in a particular area, it intended for the statute to supplant pre-existing common law claims and limit plaintiffs to the new statutory cause of action and the relief provided by the statutory scheme.  At times, Congress and state legislatures are quite explicit regarding the preemptive effect of a specific statute.  For example, states’ workers’ compensation statutes make absolutely clear that the statutes are the exclusive remedy for injuries sustained by employees at work.  At other times, however, Congress or state legislatures do not clearly articulate their intent on this issue, leaving litigants and courts to sort through the language of the statutes and/or the legislative history to discern whether preemption was intended.  In some circumstances, preemption is found; in other instances, the opposite determination is reached.

You inquire about whether the same conduct could justify a statutory claim for sexual harassment and a common law claim for negligent hiring.  Although we have not conducted a 50-state survey on this issue and although it is beyond the scope of this article to do so, our impression is that in most, but not all, jurisdictions, these claims are not mutually exclusive.  But, as we have emphasized in other Blog postings, employment law reflects a combination of federal and state law.  It is critical, therefore, to analyze how this issue is addressed in the jurisdiction where your company is doing business.

For example, the Supreme Court of Texas examined this issue in the case of Waffle House, Inc. v. Williams, No. 07-0205 (June 11, 2010).  The Texas high court explored whether the Texas Commission on Human Rights Act (TCHRA) preempted a common law claim of negligent supervision and retention.  Deciding this issue of first impression, the Texas Supreme Court stated, “Our view is that the TCHRA, the Legislature’s specific and tailored anti-harassment remedy, is preemptive when the complained-of negligence is entwined with the complaint of harassment.”  In reaching this conclusion, the court found that the facts supporting the negligence claim were “inseparable” from those underlying the alleged harassment.  This led the Texas court to assert, “We do not believe the Legislature’s comprehensive remedial scheme allows aggrieved employees to proceed on dual tracks – one statutory and one common-law, with inconsistent procedures, standards, elements, defenses, and remedies.”

Despite this general conclusion, the Texas high court pointed out the limitations of its own holding.  The court emphasized that its ruling did not “foreclose” an assault-based negligence claim arising from independent facts unrelated to sexual harassment.  Similarly, the court noted that its holding does not bar a tort claim against the individual harasser or assailant.  The court also reserved judgment on how the case might have been resolved on the theory that the employer was vicariously liable for the individual’s assault of the plaintiff under common law ratification theory.

The facts leading to the Waffle House decision were relatively straightforward.  Williams worked as a waitress at Waffle House for approximately 9 months.  Beginning in her first week of employment and continuing throughout the rest of the time she worked for Waffle House, she was subjected to a variety of offensive behaviors by one of the restaurant’s cooks.  The conduct included unwanted physical contact, crude remarks and gestures, and other offensive behaviors.  Williams reported the conduct on multiple occasions but Waffle House failed to respond appropriately and the harassment continued.  Williams ultimately resigned her employment, claiming that she was constructively discharged.  She sued under both TCHRA’s prohibition of sexual harassment and the common law claim of negligent retention and supervision.  The jury found for Williams on both claims, awarding her $400,000 in past compensatory damages, $25,000 in future compensatory damages, and $3.46 Million in punitive damages.  Williams opted for the higher damages awarded pursuant to the common law claims, rather than the statutory claims.  The trial court capped the punitive damages at $425,000 pursuant to Texas law mandating equivalency of compensatory and exemplary damages.  The intermediate appellate court affirmed the trial court’s ruling and the case went up to the Texas Supreme Court.

As noted above, the Texas Supreme Court held that Williams’ exclusive remedy against Waffle House was her statutory harassment claim, even though the legislative creation of a statutory remedy is “not presumed to displace common-law remedies,” and the “abrogation of common-law claims is disfavored.” However, the court stressed that the enactment of a statutory cause of action may abrogate a common-law claim if there is a “clear repugnance’ between the two causes of action. As framed by the court, “Today’s question is whether employer liability for unwanted sexual touching by a coworker (simple assault under Texas law given its ‘offensive or provocative nature) is limited to a tailored TCHRA scheme that specifically covers employer liability for sexual harassment.  We think the answer should be yes.”

The Texas court observed that allowing Williams to recover on her tort claim would “collide with the elaborately crafted statutory scheme,” a scheme that “incorporates a legislative attempt to balance various interests and concerns of employees and employers.” In support of this conclusion, the court pointed to five substantive distinctions between the statutory structure and the common law cause of action: a) administrative review; b) statute of limitations; c) substantive elements of the claims; d) affirmative defenses; and e) remedies.  With respect to each of these areas, the court identified significant differences between the statute and the common law.  For example, with respect to “administrative review,” the court noted that the statute required exhaustion of administrative remedies and encouraged alternative dispute resolution, features absent in the common law claim.  Similarly, the statute of limitations of the two legal theories was different.  With respect to the elements of the claim, the Texas court found significant differences, essentially concluding that it would be easier to make out a claim under the common law theory.  Likewise, with regard to the affirmative defenses and remedies, the court found important distinctions between the parallel schemes.

The Waffle House decision is not above criticism.  First and foremost, the court largely disregarded the fact that Texas legislature, when creating what the court characterized as an “elaborately crafted statutory scheme,” did not simply state that the statute was the exclusive remedy for any claims relating to sexual harassment.  Often times, this type of omission is fatal to a preemption argument.  Second, the court’s deference to the supposed thoughtfulness of the legislative process – often a reflection of horse-trading and compromise – is itself suspect.  Third, the court’s ruling fails to consider circumstances where the facts supporting a common law claim would not support a statutory claim.  Are plaintiffs in those situations precluded from litigating based on the pre-existing common law claim simply because the conduct complained of falls with the statutory scope?  Fourth, arguably the torts of negligent hiring, retention and supervision are designed to address different workplace problems than prohibitions against sexual harassment and impose different types of obligations upon employers (e.g., due diligence with respect to reviewing the employee’s prior employment history).  Fifth, the Waffle House decision may simply lead plaintiffs’ counsel to plead their clients’ cases differently, pursuing the ideas set forth in the decision about the limitations of the court’s ruling.

Regardless of whether you consider the decision brilliant or flawed, however, it does illustrate one more arrow in the defense quiver.  When confronted with claims that arguably overlap, defendants should consider carefully whether they can assert a preemption argument as to some of the common law claims.  (As noted in the Waffle House decision, the Texas Supreme Court recently has decided a couple of other cases in which it found that other causes of action – certain types of whistle blowing claims and the tort of intentional infliction of emotional distress – also were preempted by the TCHRA.)  The applicability of the preemption defense will turn largely on the specific language of the state statute that defendant contends has preemptive effect.

As for your specific situation, we hope the analysis above highlights the issues you should consider.  Without knowing the state in which your situation has arisen, it’s difficult to know whether there is a likelihood of your successful pursuit of a preemption argument.  A careful examination of the specific language of your state’s anti-discrimination statute, as well your state courts’ decisions on preemption should provide you insight into whether you likely will succeed with this defense.  Finally, note that even if your employee is entitled to pursue both of the overlapping statutory and common law claims, your employee will not be able to recover twice for the same wrongful conduct.

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