California Appeals Court Overturns Jury Award of $285,000 for Failure to Prevent Sexual Harassment and Discrimination

On March Sixth, the California Court of Appeals released its decision in Dickson v. Burke Williams, Inc., overturning a jury award of $285,000 against a company for failing to prevent sexual harassment and discrimination.

The employee was a massage therapist who sued her employer for alleged sex discrimination and sexual harassment perpetrated by two customers, and for failing to prevent the discrimination and harassment from occurring. These claims were brought under the California Fair Employment and Housing Act (FEHA). Under California Government Code section 12940, FEHA not only prohibits employers from discriminating against employees on the basis of sex or engaging in sexual harassment; it also makes employers liable if they “fail to take all reasonable steps necessary to prevent discrimination or harassment from occurring.”

The wrinkle in this case is that the jury did not find the employer liable for discrimination or harassment, but only for failing to prevent discrimination and harassment. There was no harassment because the conduct was not “severe and pervasive,” and there was no discrimination because no adverse employment action was taken against the worker. Nevertheless, the jury awarded the worker $35,000 in compensatory damages and $250,000 in punitive damages.

Before the case was sent to the jury, the employer asked the judge to instruct the jury to skip the “failure to prevent” question unless they first found the employer liable for discrimination or harassment. The judge ignored this request and instructed the jury on both types of claims, with the anomalous result that the jury found the employer liable for  failure to prevent something which never happened.

The employer asked the judge to set aside the jury verdict, but that request was denied, and this appeal followed. The question for the court on appeal was whether an employer could be liable for failure to prevent discrimination or harassment where no discrimination or harassment actually occurred.

Employer Wins on Appeal

The appeals court sided with the employer and agreed that the employer is not liable for failure to prevent sexual harassment, unless there is some actionable underlying sexual harassment. The appellate court agreed that the jury should not be instructed to consider a “failure to prevent” claim unless it finds that the underlying claim is proved.

Did the court get it right?

The employee’s argument was that the employer could be held liable for failing to prevent harassing conduct which was “actual harassment,” even if the conduct did not rise to the level of an actionable claim (a claim you could sue on). The court disagreed and felt that to go that far would allow a worker to hold an employer liable for any conduct the employee perceived as harassment, even though it would be lawful conduct under the law. This holding fails to consider that clearly the jury thought improper, harassing conduct occurred that the employer failed to take reasonable steps to prevent, enough so that the jury imposed a penalty on the employer of a quarter of a million dollars in punitive damages. Perhaps letting the jury decide these questions would be more in keeping with the legislature’s intent to protect workers from discrimination and harassment in the workplace that could reasonably be prevented.