SEX AND SEVERANCE: DULANEY V. PACKAGING CORP. OF AMERICA

On March 12, 2012, the Fourth Circuit issued its most recent opinion regarding Title VII sexual harassment.  In June 2006, Carla Dulaney began working for PCA as a temporary hourly employee.  In response to Dulaney’s inquiries about being promoted, Bobby Mills, the lead production worker on Dulaney’s shift, extended an offer of permanent employment to Dulaney.

Shortly thereafter, in December 2006, Mills made sexual advances toward Dulaney.  Although Dulaney initially rebuked those advances, after Mills allegedly followed through on threats to make her life “hell[,]” Dulaney submitted to Mills’s demands, engaging in sexual encounters with Mills in the men’s restroom and in an office area to which Mills had access. 

Dulaney eventually complained about Mills to his supervisors, and Mills either resigned or was fired.  Dulaney then continued to work for PCA for a brief period before communicating an interest in finding a new job because of ongoing difficulties with her coworkers. 

Shortly thereafter, on November 5, 2007, Dulaney was presented with a severance agreement.  The accompanying cover letter explained that she had 21 days to sign the agreement; however, Dulaney claims that PCA’s HR representative told her that she would be fired if she did not sign the agreement before she left that day.  Interestingly, the agreement noted that Dulaney’s employment with PCA was terminated three days earlier on November 2.

Dulaney refused to sign the severance agreement and was subsequently escorted out of PCA’s office, told to take her belongings and lock from her locker, and asked when she would be able to return her uniform.  Her key to the facility was also taken.  Although a PCA letter written to Dulaney two days later attempted to explain that she had not been fired and was welcome to return to work, at Dulaney’s unemployment compensation hearing later that month, PCA described Dulaney’s employment status as “terminated.”

In February 2009, Dulaney sued PCA and Mills for gender discrimination and sexual harassment in violation of Title VII.  In granting summary judgment for PCA, the district court relied on the Faragher-Ellerth defense recognized by the Supreme Court – a defense which is an affirmative bar to a sexual harassment claim involving no tangible employment action when the employer has a policy to promptly prevent and correct harassing behavior and the employee unreasonably fails to take advantage of the preventative or corrective opportunities provided by the employer.

Concluding that summary judgment was not appropriate, the Fourth Circuit observed that, before considering the Faragher-Ellerth defense, there must be a determination about whether the defendant-employer took a tangible employment action against the plaintiff.  Despite PCA’s contention that it did not take any such action with regard to Dulaney, the Fourth Circuit determined that it would not be unreasonable to find that the severance agreement and the surrounding circumstances indicate that PCA had terminated Dulaney’s employment.  Finding uncertainty about whether there was a nexus between the harassment and Dulaney’s alleged firing, the court then rejected PCA’s argument that the Faragher-Ellerth defense should still apply since Dulaney’s employment did not end at the hands of her alleged harasser.

There are several lessons for employers from Dulaney.  One of the most important ones is a song we’ve frequently sung on this blog: that is, to take all claims of harassment – including sexual harassment – seriously.  Investigate them as soon as possible and do so thoroughly.  Doing such investigations sufficiently, promptly, and accurately makes it easier to avoid the situation like Dulaney where the employer ends up leaving a factual dispute for a jury to decide – perhaps unfavorably.

Matt Hansberry focuses his practice in the areas of employment litigation and ski-industry defense. Mr. Hansberry has defended companies and management in both federal court and state court cases. He has also defended employers before the West Virginia Human Rights Commission.
 
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