(CN) - Two teenage waitresses at a Wisconsin IHOP were sexually harassed by their manager, who said he would like to have sex with one girl "over pancake batter," but may not be able to recover damages from the restaurant's HR firm, the 7th Circuit ruled.
Katrina Shisler and Michelle Powell worked at an International House of Pancakes (IHOP) in Racine, Wisc. in 2005.
On their behalf, the Equal Employment Opportunity Commission sued the restaurant, its HR consulting firm Flipmeastack Inc., and franchise owner Salauddin Janmohammed, alleging that the girls were sexually harassed by their manager, Rosalio Gutierrez.
At a jury trial, Shisler testified that Gutierrez made sexually charged comments to her including, "I want to take you in the back and fuck you over the pancake batter," and "I bet you're kinky."
She said Gutierrez propositioned her "for three-way sex with his (allegedly) bisexual girlfriend," according to the judgment. (Parentheses in ruling.)
When Shisler reported the harassment to the general manager, Michelle Dahl, she said she was told that it was "none of her concern" and "we're done here."
Powell testified that Gutierrez often pulled her ponytail and told her that she "liked it because she would like sex rough." She said he took her into a storage area and pressed himself up against her while telling her that he "would like to do her from behind," according to the 40-page ruling.
Powell complained to Dahl that Gutierrez was "sexually and physically abusing her and other female workers" and "grabbing us and saying dirty things to us," but that Dahl did nothing to address the issue.
The jury found in favor of Shisler and Powell, and granted them a total of $105,000 in compensatory and punitive damages.
U.S. District Judge Lynn Adelman granted the EEOC's post-trial motions, finding that all three defendants were jointly liable for the jury verdict and awarded injunctive relief against Flipmeastack, which was responsible for hiring the restaurant's managers. It denied the defendants' motion for judgment as a matter of law.
In the opinion by U.S. District Judge Richard Young, sitting by designation and writing for a three-judge panel, the 7th Circuit affirmed the denial of the defendants' motion for judgment, but reversed its grant of the EEOC's post-trial motions.
The 7th Circuit found that a rational jury could have found that both girls were subject to severe and pervasive harassment. Gutierrez's comments to Shisler "were highly offensive and easily surpassed what could reasonably be described as vulgar banter, tinged with sexual innuendo."
Additionally, "despite the fact that the defendants had a sexual harassment policy in place, a rational jury could have found that the policy and complaint mechanism were not reasonably effective in practice," Young wrote.
"An employer's complaint mechanism must provide a clear path for reporting harassment, particularly where, as here, a number of the servers were teen-agers. Flipmeastack's sexual harassment policy did not provide a point person to air complaints to. In fact, it provided no names or contact information at all," Young wrote.
Although girls complained to Dahl about being sexually harassed, she failed to act on their complaints, despite knowing "that she had an absolute duty to report allegations to upper management," according to the ruling.
"A rational jury could have concluded that, not only was the policy and the management training ineffective, but the protections offered by them were illusory."
But Young found that the lower court erred in finding Flipmeastack liable for Gutierrez's behavior, and should have left such a determination to a jury.
"Because the district court injected a new theory of the case after the time the defendants could present rebuttal evidence, and because the district court reserved ruling on an issue ultimately found to be a question for the jury, the district court's ruling with respect to the corporate liability of Flipmeastack is reversed and remanded for trial," Young held.
"The district court reframed the issue as 'whether the defendant so far controlled the plaintiff's employment relationship that it is appropriate to regard Flipmeastack as the de facto or indirect employer of the plaintiff."
Until Flipmeastack's liability is determined, the court dissolved the injunction that enjoined the company from "allowing a sexually hostile work environment to exist in any restaurant under its management," and ordered it to create a new sexual harassment training program. It also remitted defendants' motion to reduce Powell's punitive damages award from $100,000 to $50,000, pending resolution of this issue.
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