Sassaman V. Gamache: Possible Impacat On The ERPL Exposure

SASSAMAN V. GAMACHE: POSSIBLE IMPACT ON THE ERPL EXPOSURE

(August 2019)

 

INTRODUCTION

All companies that have employees face a similar exposure because all must hire, train, evaluate, discipline, and, in certain instances, terminate employees. Unfortunately, these routine incidents of interacting with employees create opportunities for lawsuits. Companies purchase Employment-related Practices Liability (ERPL) coverage to protect against such losses.

What is somewhat different about ERPL exposures is that they are not quite the same as most lines of business that involve pure accident. Rather, ERPL incidents involve company processes and/or individual worker actions that are deemed (due to various laws) or are alleged to be improper treatment. Unlike other lines of business, there is often no obvious bodily injury or property damage. The main claim scenarios allege a lack of fairness in the workplace. These claims are referred to as wrongful acts, instead of accidents or occurrences.

The most common wrongful acts are those alleged to be in violation of Federal law. Of particular importance is Title VII of the Civil Rights Act (passed in 1964 and amended several times since then). Title VII makes it illegal for companies to make decisions that unfairly discriminate against employees (and applicants) based on factors such as skin color, nation of origin, gender, race, or religion. This Act, due to the breadth of its intent, generates many ERPL exposures, such as charges of sex discrimination.

The American workplace has long been integrated along gender lines in many, many types of businesses, particularly in those that provide services. Business operations are built upon the supervisor/worker relationship where a supervisor or manager controls the work actions of his or her subordinates. Unfortunately, it is this aspect of control that creates problems. In many ERPL lawsuits, a subordinate charges that a person he or she is reporting to has taken some type of disciplinary action or has abused his or her authority that involves gender-based discrimination.

 

Example: Polly worked for Granite, Inc. for 10 years. She was promoted to supervisor after working there for five years. She married another supervisor and when comparing paychecks, they realized that she had been receiving considerably less than him even though their jobs were identical, seniority was the same and they had similar evaluations. Polly files an EEOC grievance and an ERPL claim. Granite fires her and also fires her husband. They both then file grievances for retaliatory actions and at the same time file an ERPL claim.

 

An ERPL policy often responds to situations involving a given supervisory-level employee’s treatment of a subordinate. It may also involve an allegation of a company’s failure to handle a situation, such as ignoring evidence of a wrongful act and failing to take corrective action. However, actions involving Title VII are becoming increasingly complex. For instance, recent judgments have involved invoking the Act’s protection when the plaintiff is a male, alleging discrimination by a female as well as suits involving plaintiffs and defendants sharing the same gender, but different sexual orientations. Recently, an appellate level judgment occurred which may have a substantial impact on future ERPL exposures. Sassaman v. Gamache, an appellate decision from the Second Circuit of the U.S. Court of Appeals, is significant because it allowed an alleged harasser to sue under Title VII because of the actions and statements of an employer responding to a harassment claim.

 

SASSAMAN V. GAMACHE

This case involves three county election board employees. Sassaman and Brant both reported to Gamache but Sassaman performed duties at a higher job grade level than Brant. Sassaman and Gamache’s work relationship was affected after mistakes made during a vote required an election recall. Gamache was humiliated by the event and blamed Sassaman for those mistakes. Gamache demoted Sassaman and promoted Brant, resulting in the two switching job positions.

Brant and Sassaman were friends who frequently shared lunches and smoke breaks together. Several weeks after the job switch, the two had an argument. Over a phone call Sassaman brought up the possibility that Brant and Gamache were romantically involved and then suggested that the relationship was the real reason for the job switch. Brant denied the charge. During that same conversation, Brant declined two separate requests to meet with Sassaman for drinks and, later, for coffee. However, Brant also discussed some private details about her life after which Sassaman suggested that they should have an intimate encounter which did not occur.

The two agree that the phone call took place, but the facts of the call are in dispute. There is agreement that Sassaman did send Brant a note after their conversation.

The two had a later conversation during which they discussed their friendship with Brant complaining that Sassaman was letting her denial of romantic involvement affect their friendship.

As often happens, the situation escalated. Sassaman glimpsed his name in an e-mail that Brant sent to a manager, so he broke into Brant’s e-mail account which revealed that Brant was accusing Sassaman of sexual harassment and stalking.

Sassaman’s break-in was discovered and Brant filed a criminal complaint against Sassaman, causing him to undergo a criminal investigation by the area’s Sheriff’s office (this investigation was dropped as insufficient evidence was found to support formal charges).

Gamache and another manager held a meeting with Sassaman who denied that he violated Brant’s account and also denied that he had made any suggestion to Brant about becoming intimately involved. This was recanted slightly when Sassaman admitted that he had contacted Brant but continued to deny that his contacts were about starting an intimate relationship. Sassaman admitted to lying earlier about having made no contact because the question related to sexually harassing Brant and, in his mind, he hadn’t done so. The managers suspended Sassaman briefly but with pay.

Brant filed a sexual harassment complaint with Gamache against Sassaman. She also threatened a lawsuit.

Gamache called Sassaman in to discuss the complaint and this discussion is at the center of Sassaman’s subsequent lawsuit against Gamache. Sassaman claims Gamache stated the following:

Shortly after this discussion Gamache gave Sassaman the option of resigning or being terminated. Sassaman resigned and then sued Gamache and the election board individually, claiming he was forced out of his job via reverse sex discrimination (in violation of Title VII).

Gamache and the county board filed a request for summary judgment and the lower court granted the motion in favor of the defendants, ruling that Sassaman did not present enough evidence to support the reverse sex discrimination claim. Sassaman appealed.

While the lower court characterized Gamache’s statement as a “mere, stray remark” that was made after the termination decision, the higher court interpreted things differently. In its opinion, the remark appeared to be invidious (unfairly discriminatory or injurious), suggesting that one gender has a propensity for sexually harassing another. The court reviewed the remark in light of the evidence that Gamache and the election board failed to perform a serious investigation of Brant’s claims against Sassaman. While the higher court appreciated the fact that employers are often punished when they fail to act on harassment charges, the court also stated that employers owe their employees the effort of attempting to determine the validity of any complaints. In the higher court’s opinion, Gamache appeared to have relied on an assumption that male employees are likely to have sexually harassed female co-workers and that, in face of a lawsuit, was justified in terminating the employee. The court called the assumption a form of sexual stereotyping, a precise type of behavior that Title VII was created to discourage. The appeals court affirmed the lower court decision regarding Gamache (because individuals are NOT subject to Title VII) but reversed and remanded the decision regarding the election board’s summary judgment request.

 

HOW SASSAMAN V. GAMACHE COULD CHANGE THE ERPL LANDSCAPE

Though there are several avenues that create significant ERPL exposures, claims involving sexual discrimination are the most volatile.

Related Article: EEOC Discrimination Charges and Lawsuits

For years, the greatest danger facing an employer was whether it properly handled harassment claims. More specifically, the problem was often that employers failed in one or more areas:

However, the focus of such situations tended to be on the worker-plaintiff who alleged harassment (see figure one).

Figure One – Pre-Sassaman

 

In traditional instances, the focus is on the employee filing the claim and the legal ramifications created by the decision to investigate as well as the investigation results. The interesting element brought out by the Sassaman v. Gamache case is that the focus may now shift (see figure two).

Figure Two – Post Sassaman

 

In this case, due to the distinct duty owed to the employee against whom a claim is filed, the lack of an investigation and any subsequent disciplinary action could create opposite results in regard to legal or Title VII ramifications.

Of course, the above is a gross simplification of what may occur in any given action involving sexual harassment allegations. However, a case could previously be made for an employer to roll the dice and to forego adequate investigation. Now, with a greater duty owed to BOTH parties to complaint allegations, there may be increased pressure to make a thorough investigation when claims are made. Sexual harassment claims and Title VII ramifications focus on how an employer handles such claims. ERPL insurers, as a method of minimizing loss exposures, may soon see a need to make sure that ERPL applicants and insureds make it a practice to properly investigate such incidents.

Note: For more information, refer to Sassaman, Plaintiff-Appellant, v. Gamache, Dutchess County Board of Elections and Dutchess County, Defendants-Appellees, USCTAPP, 2nd Cir. No. 07-2721. Filed 05/22/09.