In the

United States Court of Appeals

For the Seventh Circuit

Nos. 00-1265 & 00-3189

KENNETH COOKE,

Plaintiff-Appellee, Cross-Appellant,

v.

STEFANI MANAGEMENT SERVICES, INC.,

and TUSCANY RESTORANTE, INC.,

Defendants-Appellants, Cross-Appellees.

Appeals from the United States District Court

for the Northern District of Illinois, Eastern Division.

No. 97 C 7604--David H. Coar, Judge.

Argued March 30, 2001--Decided May 14, 2001

 Before FLAUM, Chief Judge, and POSNER and

EVANS, Circuit Judges.

 EVANS, Circuit Judge. In February 1998

Kenneth Cooke was hired as a bartender at

Tuscany Restorante, an upscale restaurant

in Chicago’s Wrigleyville neighborhood.

Tuscany, along with a dozen or so other

restaurants, is owned and operated by

Stefani Management Services, Inc./1 At

the time Cooke was hired, Tuscany was

managed by Fred Lagon. As general

manager, Lagon possessed the power to

hire, fire, and promote Cooke, as well as

schedule his shifts. Cooke claims that

almost immediately after he began working

at Tuscany, Lagon, a homosexual,

subjected him to a litany of sexual

propositions, inappropriate touching, and

nonverbal gestures of a sexual nature.

According to Cooke, this treatment was

unwelcome, offensive, and degrading, and

created an oppressive working

environment. He complained numerous times

to Lagon and to Jennifer Wilson, the

assistant manager of Tuscany, to no

avail. Finally, after Lagon propositioned

him on June 21, 1998, Cooke "basically

got really forceful with [Lagon]," and

told him "no means no . . . and if you

ask me again, there’s going to be some

serious problems." The next day, Lagon

fired Cooke, purportedly for

"inappropriate interactions with

coworkers, superiors, and a neighborhood
restauranteur." Cooke then brought this

single-count, sexual harassment claim

pursuant to Title VII of the Civil Rights

Act of 1964, 42 U.S.C. sec. 2000e et seq.

The case was tried before a jury.

 Stefani’s case contesting liability

consisted mainly of calling a number of

Cooke’s coworkers to testify that they

had never witnessed any harassment. Joy

Soulier, Cooke’s girl friend at the time,

also testified that Cooke shared many

personal matters with her but never

mentioned any inappropriate conduct by

Lagon. In addition, Stefani tried to cast

doubt on Cooke’s assertion that he was

uncomfortable at Tuscany by demonstrating

that he came to the restaurant on his

days off to eat, drink, or socialize with

friends. According to Stefani, this

occurred once or twice per week, but

Cooke maintains he visited Tuscany on his

days off only occasionally, at the

request of Soulier. On at least one

occasion, Cooke went out socially with

Lagon and others. Finally, Stefani

introduced an April 27, 1998, note from

Cooke to Lagon thanking him for a gift of

a bottle of wine, which read: "Fred 

Just a note to say ’thanxs’ [sic] for all

you have done. Here’s looking at many

more fun days to come. Thanks again for

the vino! K."

 Stefani also presented evidence

concerning its sexual harassment policy.

The policy when Cooke began working at

Tuscany prohibited sexual harassment and

directed victims of harassment to report

it to Steven Hartenstein, Stefani’s chief

financial officer. In April 1998 the

policy was changed as part of an overall

revision of the company’s employee

handbook. The new policy required the

victim of sexual harassment to

"immediately contact [his or her] manager

and/ or general manager." Stefani held a

management training seminar on sexual

harassment and its new policy, which

Lagon attended.

 As we see it, this was not a slam dunk

case for either side. Stefani’s case--

aided in no small part by Cooke’s "thank

you for the vino" letter--was strong and

could have been accepted by the jury (and

by us, if Cooke were appealing the

result), but Cooke’s version of the

events was not unbelievable as a matter

of law. And what did the jury do? It
returned a general verdict in favor of

Cooke, giving him fairly meager awards of

$7,500 in back pay and lost benefits and

$10,000 in punitive damages. The jury

rejected Cooke’s request for compensatory

damages for humiliation and past and

present emotional suffering. Finally,

after reviewing Cooke’s attorneys fee

petition and Stefani’s objections, the

district court awarded Cooke attorneys

fees of $49,835.38 and $519.80 in costs.

Stefani appeals the court’s denial of its

motion for judgment as a matter of law on

liability and punitive damages, and Cooke

cross-appeals the court’s attorneys fee

award, which gave him significantly less

than he sought.

 A hostile work environment is created by

conduct which has "the purpose or effect

of unreasonably interfering with an

individual’s work performance or creating

an intimidating, hostile, or offensive

working environment." Meritor Sav. Bank,

FSB v. Vinson, 477 U.S. 57, 65 (1986)

(quoting 29 C.F.R. sec. 1604.11(a)(3)

(1985)). For hostile work environment

sexual harassment to be actionable under

Title VII, the conduct "must be

sufficiently severe or pervasive ’to

alter the conditions of [the victim’s]

employment and create an abusive working

environment.’" Id. at 67 (citation omit

ted). The employee must subjectively

perceive the harassment as sufficiently

severe and pervasive to alter the terms

or conditions of employment, and this

subjective perception must be objectively

reasonable. Harris v. Forklift Sys.,

Inc., 510 U.S. 17, 21-22 (1993). A

plaintiff, however, is not required to

prove that the harassment caused

psychological injury. Id. at 22.

 In order successfully to challenge the

jury’s liability finding, Stefani must

demonstrate that no reasonable jury could

have found for Cooke, even when viewing

the evidence in the light most favorable

to him. See Gile v. United Airlines,

Inc., 213 F.3d 365, 372 (7th Cir. 2000).

To that end, Stefani first argues that no

witnesses corroborated Cooke’s

allegations of sexual harassment, so the

jury was unreasonable to believe his

account of his interactions with Lagon.

We give short shrift to this argument

because it asks us to evaluate the

credibility of the witnesses and assess

the weight of the evidence, two tasks
better left to the jury that heard the

testimony given in court. See Tincher v.

Wal-Mart Stores, Inc., 118 F.3d 1125,

1129 (7th Cir. 1997). Suffice it to say

that the fact that Lagon did not sexually

harass Cooke in the presence of other

Tuscany employees does not negate the

possibility that he did so in their

absence. The jury was entitled to credit

Cooke’s detailed testimony concerning the

numerous incidents of harassment

perpetrated by Lagon.

 Stefani next contends that even if

Cooke’s account of the harassment is

accurate, his actions demonstrate that he

did not subjectively perceive it as

severe or pervasive. In support of this

argument, Stefani points to Cooke’s

allegedly frequent visits to Tuscany on

his days off, his social outing with a

group of people that included Lagon, and

the personal "vino" note. According to

Stefani, if Cooke subjectively perceived

the environment at Tuscany as severely or

pervasively oppressive, he would have

avoided it, and Lagon, at all costs.

Although this argument has some appeal,

we ultimately reject it because the

balance of power between a supervisor and

employee is qualitatively different in a

social setting than it is at work. During

his scheduled shifts, Cooke was not free

to leave Tuscany, or even turn and walk

away from Lagon (an action that could be

considered insubordinate), if he felt

harassed. Not so in a social setting.

Moreover, we will indulge the presumption

that Lagon was more likely to harass

Cooke when he was working alone behind

the bar than when he was accompanied by

friends on a social occasion. Finally,

the jury could have believed that the

fact that Cooke was courteous to Lagon,

his boss, by thanking him for a gift did

not undermine Cooke’s tale of harassment.

In short, none of Cooke’s voluntary

interactions with Lagon satisfy Stefani’s

"herculean burden" of overcoming the

jury’s verdict on liability. See Gile,

213 F.3d at 372./2

 We turn next to the issue of punitive

damages. The standard for awarding

punitive damages in Title VII cases is

set out in the statute, 42 U.S.C. sec.

1981a(b)(1), and the Supreme Court’s

decision in Kolstad v. American Dental

Ass’n, 527 U.S. 526 (1999). Section

1981a(b)(1) states that a party may
recover punitive damages if his employer

engaged in intentional discrimination

"with malice or with reckless

indifference to the federally protected

rights of an aggrieved individual." The

terms "malice" and "reckless

indifference" refer to the employer’s

knowledge that it may be violating

federal law, not its awareness that it is

engaging in discrimination. Kolstad, 527

U.S. 535. Thus, the employer must

perceive some risk that its actions

violate federal law in order to be liable

for punitive damages. Id. at 536.

 In a case involving vicarious liability,

the plaintiff must also establish a basis

for imputing liability to the employer by

showing that the employee who

discriminated against him was a manager,

acting within the scope of his

employment. Bruso v. United Airlines,

Inc., 239 F.3d 848, 858 (7th Cir. 2001).

An employer may escape punitive damages

liability for its manager’s acts,

however, if it can demonstrate a good

faith attempt to establish and enforce an

antidiscrimination policy. According to

Kolstad, "an employer may not be

vicariously liable [for punitive damages]

for the discriminatory employment

decisions of managerial agents where

these decisions are contrary to the

employer’s ’good faith efforts to comply

with Title VII.’" 527 U.S. 545 (citation

omitted). Such good faith efforts, if

proven, "demonstrate that the employer

itself did not act in reckless disregard

of federally protected rights, thus

making it inappropriate to punish the

employer for its [manager’s]

contravention of its established

policies." Bruso, 239 F.3d at 858./3

 Stefani--apparently conceding that Lagon

was its manager, acting within the scope

of his employment--focuses its argument

on Kolstad’s good faith defense, pointing

to its sexual harassment policies, the

management seminar on sexual harassment

attended by Lagon, and an antiharassment

poster mounted at Tuscany. Both the preand post-April 1998 policies make clear

that Stefani prohibits sexual harassment

by its employees, and both polices

provide a mechanism for reporting

violations of this directive. Cooke does

not explain his failure to report Lagon’s

conduct to Mr. Hartenstein as required by

the policy in place prior to April 1998.
And although the post-April 1998 policy

directed employees to report incidents of

sexual harassment to their manager or

general manager, and lacked a bypass

provision to address situations in which

the manager was the harasser, common

sense should have led Cooke to report the

harassment to someone superior to Lagon

in the chain of command. See Parkins v.

Civil Constructors of Ill., Inc., 163

F.3d 1027, 1038 (7th Cir. 1998) ("A

reasonable person, realizing that her

complaints were ineffective, would . . .

seek a remedy elsewhere."). He failed to

do this as well. On this record, there is

simply no evidence that anyone in the

upper management of Stefani had any

inkling that Lagon was engaging in

sexually harassing behavior./4 "[T]he

law against sexual harassment is not

self-enforcing," Perry v. Harris Chernin,

Inc., 126 F.3d 1010, 1014 (7th Cir.

1997), and without knowledge of Lagon’s

conduct, there is nothing Stefani could

have done--beyond the general policies

and training it did provide--to ensure

compliance with Title VII.

 Cooke attempts to work around the fact

that Stefani lacked actual knowledge of

Lagon’s conduct by imputing knowledge to

the company through Lagon. In Deters v.

Equifax Credit Information Services,

Inc., 202 F.3d 1262 (10th Cir. 2000),

after the plaintiff was sexually harassed

by several coworkers, she complained to

the manager designated as the company’s

authority responsible for implementing

its antidiscrimination policy, but he

failed to respond. In the lawsuit that

followed, the company sought refuge under

Kolstad, arguing that it was not

responsible for its designee’s failure

adequately to remedy the harassment. The

court held that Kolstad’s good faith

defense was negated, however, because the

company’s designee was informed of the

harassment and acted with malice or

reckless indifference in addressing the

situation. Id. at 1271. Cooke argues that

he reported Lagon’s harassment to the

individual designated in Stefani’s postApril 1998 sexual harassment policy

(Lagon), so Lagon’s knowledge of the

harassment and his malicious acts should

be imputed to the company.

 Cooke’s reliance on Deters is misplaced

because that case involved a claim of

direct liability, i.e., a claim that the
supervisor failed adequately to remedy

the harassment. See id. at 1270 n.3. In

such a case, the supervisor acts on

behalf of the company in enforcing (or

failing to enforce) its sexual harassment

policy, and it is therefore fair to

attribute his knowledge and acts to the

company. In a vicarious liability case

such as this one, however, the supervisor

directly perpetrated the harassment

through a series of rogue acts motivated

by a desire to amuse himself, not benefit

his employer. If Lagon’s knowledge of the

harassment and malicious intent were

imputed to Stefani, the good faith

defense established by Kolstad could

never be employed in a vicarious

liability case. Because Kolstad itself is

a vicarious liability case, and because

we will not impose punitive damages on an

innocent party, see City of Chicago v.

Matchmaker Real Estate Sales Center,

Inc., 982 F.2d 1086, 1100 & n.14 (7th

Cir. 1992), this is a conclusion we

cannot reach. Cooke points to no evidence

establishing that Stefani had any actual

knowledge of Lagon’s conduct, so nothing

more by way of good faith efforts to

comply with Title VII could be expected.

Accordingly, we must strike the punitive

damages portion of the jury’s award.

 Finally, we turn to Cooke’s cross-appeal

on the issue of attorneys fees. Cooke’s

attorneys requested $115,955.75 in fees

and $1,039.60 in costs, but the district

court, after subtracting $16,285 in

duplicative and excessive requested fees,

awarded only 50 percent of those amounts: 

$49,835.38 in fees and $519.80 in costs.

First, we affirm the court’s $16,285 offthe-top reduction. The district court’s

memorandum opinion and order sets out its

detailed findings on several instances of

excessive billing by Cooke’s attorneys,

and we find no abuse of discretion in

these findings. Connolly v. National Sch.

Bus Serv., Inc., 177 F.3d 593, 595 (7th

Cir. 1999) (standard of review for

attorneys fee award is abuse of

discretion). Second, we find the district

court’s 50 percent limited-success

reduction entirely justified. Cooke

requested nearly $300,000 from the jury

but, after our decision today, will go

home with $7,500, hardly an overwhelming

success. In addition, contrary to Cooke’s

"information and belief," this was not a

groundbreaking, first-time-ever-in-thisdistrict, same-sex sexual harassment
case, see, e.g., Shermer v. Illinois

Department of Transportation, 171 F.3d

475 (7th Cir. 1999), but rather a run-ofthe-mill employment case in which Cooke

himself was the only substantive witness

for his side of the case. In a simple

case with no broad social impact, Cooke’s

attorneys should be happy to receive fees

of nearly seven times the amount of their

client’s recovery. See Cole v. Wodziak,

169 F.3d 486, 488-89 (7th Cir. 1999)

(expressing view that fee award exceeding

damages is rarely justified).

AFFIRMED in part and REVERSED in part.

FOOTNOTES

/1 Tuscany Restorante, Inc., also appears on our

caption as a defendant because it was so named in

the complaint. It was, however, subsequently

dismissed from the case.

/2 Stefani also suggests, without citing the relevant case law, that it cannot be held vicariously

liable for Lagon’s conduct because Cooke failed

to report the harassment to the company’s CFO as

required by the pre-April 1998 sexual harassment

policy. Two recent Supreme Court cases, Burlington Industries, Inc. v. Ellerth, 524 U.S. 742

(1998), and Faragher v. City of Boca Raton, 524

U.S. 775 (1998), establish an affirmative defense

for employers in hostile environment cases when

one of their supervisors perpetrates the harassment. In such cases, the employer can avoid

liability if it demonstrates (1) that it exercised reasonable care to prevent and promptly

address reports of sexually harassing behavior

and (2) that the employee unreasonably failed to

take advantage of the preventative or corrective

opportunities offered by the employer. Ellerth,

524 U.S. at 765; Faragher, 524 U.S. at 807. But

the Supreme Court was careful to limit this

defense to cases in which no "tangible employment

action" was taken against the employee. Ellerth,

524 U.S. at 765; Faragher, 524 U.S. at 808. In

this case, Lagon’s termination of Cooke was a

"tangible employment action," so the Ellerth/Faragher defense cannot protect Stefani from liability. See Molnar v. Booth, 229 F.3d 593, 601 (7th

Cir. 2000) (tangible employment action taken

against plaintiff bars Ellerth/ Faragher defense). As we discuss infra, however, Stefani’s

sexual harassment policies are relevant to the

issue of punitive damages.

/3 At least one circuit court has held, post-Kolstad, that if the manager in question is sufficiently senior, he may be considered a proxy for

the corporation, and punitive damages may be
imposed without regard to the corporation’s good

faith efforts to comply with Title VII. See

Passantino v. Johnson & Johnson Consumer Prods.,

Inc., 212 F.3d 493, 517 (9th Cir. 2000); see also

Saxton v. American Tel. & Tel. Co., 10 F.3d 526,

536 n.19 (7th Cir. 1993) (pre-Kolstad case applying same rule for liability purposes). Even if

this rule survives Kolstad, however, it would not

apply to this case. Lagon--who was merely the onsite manager of one of Stefani’s numerous restaurants--did not occupy a position in the corporate

hierarchy such that he could be considered a

proxy for Stefani. See Splunge v. Shoney’s, Inc.,

97 F.3d 488, 491-92 & n.2 (11th Cir. 1996)

(refusing to impute state of mind of restaurant

manager perpetrating harassment to corporate

owner of restaurant for punitive damages purposes).

/4 Cooke suggests that Stefani was on notice of

Lagon’s inappropriate conduct because upper

management had reprimanded Lagon on one or more

occasions for being "too friendly" with his

staff. Notwithstanding Cooke’s counsel’s evasive

answers to our questions on this issue, it is

clear that Lagon was reprimanded for fraternizing

with his staff, not harassing them. Knowledge of

fraternization, essentially the opposite of

harassment, could not have placed Stefani on

notice that it had a sexual harassment problem

brewing at Tuscany.