4th Circuit CoA Examines Faragher-Ellerth Defense

In Dulaney v. Packaging Corp. of America, Carla Dulaney started working for PCA in 2006 on as assembly line position.  The “lead production worker” was Bobby Mills, who had a number of supervisory powers.  In November 2006, Mills effectively promoted Dulaney from a probationary to permanent position.  The next month, he began repeatedly demanding quid pro quo sexual favors.  At first Dulaney refused, but later did engage in sexual activity with Mills.  Mills would yell at her when she refused him and on occasion would send her home without pay.  When Dulaney reported this to management she was laughed at and told she was replaceable.  Mills continued to face sexual harassment from Mills and rumors were spread by co-workers.  In September 2007, Dulaney and a co-worker complained about Mills’ conduct, which led to his dismissal.  Dulaney’s relationship with her co-workers and supervisor deteriorated after this point.  Finally, she spoke with HR about wanting to find another job and HR gave her a severance agreement three days later.  When Dulaney did not sign the agreement on the spot, she was escorted out of the building and had her keys taken.  After consulting with an attorney, she did not sign the agreement.  Later, she was sent a letter by HR stating she could return to work, but in her unemployment hearing she was still listed as terminated.  Dulaney sued PCA and Mills for gender discrimination and sexual harassment under Title VII and state law.  The district court granted summary judgment for PCA, somewhat confusingly based on the Faragher-Ellerth defense.  The Fourth Circuit unanimously reversed.

The primary issue for the Court was whether the company took a tangible employment action, which would preclude use of the Faragher-Ellerth defense.  The district court reasoned that Dulaney was not fired because she was only given a severance agreement.  However, the agreement could be read to terminate Dulaney, she was escorted off premises when she refused to sign it, and her pay was stopped.  Drawing inferences in her favor, the Court found this constitutes a termination.  The second issue is that there must be “some nexus between the harassment and the tangible employment action for the latter to be actionable.”  Here, the supervisor’s treatment of Dulaney as she sought to report Mills’s sexual harassment and his subsequent involvement in her termination suggested a nexus between Mills’s harassment and her termination.  It was at least enough for a jury to decide the issue.