discrimination policy alone, however, is insufficient to fulfill this requirement. Bruso, 239 F.3d
at 858-59. The employer must also engage in good faith efforts to comply with Title VII after it
becomes aware of any discrimination complaints. See Lamply v. Onyx Acceptance Corp., 340
F.3d 478, 483 (7" Cir. 2003). This requirement exists so that employers do not insulate
themselves from punitive damages by simply implementing anti-discrimination policies without
actually enforcing them. See Bruso, 239 F.3d at 858-59.

ii, ANALYSIS

A. Requisite Mental State

Under the first element of the Kolstad three-part framework, Ciesielski must demonstrate
that Hooters acted with the requisite mental state, that is, with knowledge that its actions may
have violated federal law. See Kolstad, 527 U.S. at 536. Ciesielski can establish this element by
demonstrating that the relevant employees knew or were familiar with anti-discrimination laws
and Hooters’ anti-discrimination policies. See Bruso, 239 F.3d at 858.

At trial, there was testimony that every new Hooters’ employee received an employee
manual containing Hooters’ policy prohibiting sexual harassment in the workplace. (Trial Tr. at
471-72, 612; Def.’s Ex. 27.) Hooters also made its employees aware that they were subject to
disciplinary actions for violations of the non-harassment policy. (Trial Tr. at 868-69.) There was
also undisputed trial testimony that Hooters’ management employees participated in annual
training programs that addressed sexual harassment in the workplace, (/d. at 116, 119.)
Managers Douglas Gleichner, Jimmy Rabbit, Arlen Chung, Lisa Cooper, and Clint Unrue all
testified that they were required to attend annual sexual harassment seminars in which Hooters

trained them about unfair labor practices, including claims of discrimination and harassment.



immediately after she discovered them. (/d. at 1079.) At that time, Ciesielski also complained to
Rabbit about the kitchen staff’s sexual comments and that Rabbitt himself should stop touching
the “Hooters Girls.” (Id. at 1080.) Ciesielski further testified that a few weeks later she attended
a “jump start” meeting with other “Hooters Girls” at which Lisa Cooper, the General Manager,
also attended. (Id. at 1083.) At this meeting, the “Hooters Girls” complained to Cooper about
the holes in the changing room and about the kitchen staff's sexual comments and behavior. (Id.
at 1083-85.) After that, Ciesielski complained to Cooper again explaining that it was
inconvenient to change in the women’s washroom because no one had repaired the holes in the
changing room. (Jd. at 1086-88.) Furthermore, another Hooters employee, Melissa Frankfort,
testified that she notified Assistant Manager Clint Unrue that there was a hole in the changing
room wall in May 2001. (/d. at 948-50.)

Trial evidence reveals that the first hole was sometimes stuffed with apaper towel, toilet
paper, or pantyhose. (/d. at 1440, 1450.) The repairman testified, however, that he did not fix
the hole with drywall until July 21, 2001, which was approximately three months after Ciesielski
and Frankfort, among others, complained of the first hole. (Jd. at 524; Pl.’s Ex. 20.) The
repairman also testified that he usually fixed items on his “to-do list” within a matter of days
after being notified. (Trial Tr. at 1088.)

Ciesielski found a second set of holes in the changing room wall in August or September
2001 and complained to General Manager Cooper at that time. (Id. at 1109-10.) Instead of
handling the complaint herself, Cooper instructed Ciesielski to write a note to the maintenance
repairman. (/d. at 1111.) The repairman fixed the hole four days after Ciesielski asked him to do

so. (Id. at 1112.) Melissa Frankfort corroborated Ciesielski’s testimony concerning the second



to establish a basis for punitive damages. See Dudley v. Wal-Mart Stores, Inc., 166 F.3d 1317,
1323 (11" Cir. 1999). This standard, however, is not the law of this Circuit or supported by the
Supreme Court’s decision in Kolstad. In fact, the Eleventh Circuit decided Dudley a few months
before the Supreme Court’s decision in Kolstad. Accordingly, the Court turns to Kolstad and
Seventh Circuit case law for guidance in determining this requirement.

In Kolstad, the Supreme Court surmised that a good definition of what constitutes
“managerial capacity” does not exist. Kolstad, 527 U.S. at 543. The Supreme Court explained
that a managerial agent must be “important,” but need not be top management or the company’s
officers or directors. Jd. Although the Seventh Circuit has referred to managerial agents in this
context as “upper management,” the definition of managerial agent under the Kolstad standard
remains imprecise. See Lamply, 340 F.3d at 485. Thus, the Court examines whether there was
sufficient trial evidence for a reasonable jury to conclude that the relevant managers were acting
in a managerial capacity by looking to their discretion and authority and how they carried out
their job responsibilities as Kolstad directs. See Kolstad, 527 U.S. at 543.

At trial, the jury heard evidence about the assistant and general managers’ authority and
discretion at Hooters on Higgins. Not only did the assistant managers run the day-to-day
operations at Hooters on Higgins, there was trial evidence that the assistant managers and
General Manager, Lisa Cooper, could interview and hire personnel. (Trial Tr. at 49, Pl.’s Ex.
55.) The assistant managers would set schedules, solve problems with customer orders, and
resolve staff conflicts. (Trial Tr. at 50.) Further, the assistant managers and General Manager
Cooper could reprimand and discipline employees through “Employee Counseling Reports” and

absentee and discipline reports. (/d. at 58-59, 477; PI.’s Ex. 47.) General Manager Cooper,



(Id. at 116-119, 250-52, 393-95, 472-475, 819-22.)

Based on this trial evidence and viewing the evidence in a light most favorable to
Ciesielski, see Reeves, 530 U.S. at 150-51, the Court concludes that there was sufficient evidence
that would enable a reasonable jury to determine that these managers acted with the requisite
mental state as required under the Kolstad framework. See Bruso, 239 F.3d 859-60. Because
these managers were familiar with Hooters’ non-harassment policy and attended annual sexual
harassment training seminars, a reasonable jury could have concluded that these managers were
familiar with Title VII and must have been aware of the possibility that Ciesielski’s complaints
concerning comments and touching by co-workers and managers, plus the appearance and
recurrence of holes in the changing room wall, would violate Title VII. See id. at 860.

B. Managerial Agents Acting Within Scope of Employment

The next Kolstad element requires plaintiffs to establish a basis for imputing liability to
the their employer. Kolstad, 527 U.S. at 539. To establish this element, plaintiffs are required to
demonstrate that the employees who discriminated against them were managerial agents acting
within the scope of their employment. /d. In making this determination, the fact finder reviews
the employees’ authority and discretion and how the managerial employees carry out their duties.
Id. at 543; Bruso, 239 F.3d at 858. As such, whether an employee is acting in a managerial
capacity is a fact-intensive inquiry. Kolstad, 527 U.S. at 543; Bruso, 239 F.3d at 858.

Defendants argue that because the alleged offenders were assistant managers, except Lisa
Cooper who was the General Manager, there is a serious question whether these individuals are
managerial agents under the Kolstad standard. Indeed, as Hooters points out, the Eleventh

Circuit has concluded that managerial agents must be high up in the corporate hierarchy in order



Hooters’ policies regarding sexual harassment. (Trial Tr. at 1184; Def.’s Ex. 27.) The
“Statement on Harassment” contained in the employee handbook provided details of the types of
conduct that constituted harassment, as well as the complaint procedure. (Trial Tr, at 867-88;
Def.’s Ex. 27.) In addition, Hooters’ managers participated in annual training programs
addressing sexual harassment in the workplace, (Trial Tr. at 116, 119.) Hooters’ President and
CEO, Neil Kiefer, testified that Hooters required all managers, including managers at the Hooters
on Higgins, to attend sexual harassment seminars every year. (id. at 869-70). According to
Kiefer, Hooters had a procedure to address harassment complaints, including an employee’s right
to contact him directly. (/d. at 873.) Based on this undisputed testimony, a reasonable jury
could have found that Hooters had a formal anti-discrimination policy.

Although the implementation of a formal anti-discrimination policy is relevant in
evaluating whether Hooters made a good faith effort to comply with Title VII, the Court must
also determine whether there was sufficient evidence for a jury to believe that Hooters did not
engage in a good faith effort to comply with Title VII after it became aware of Ciesielski’s sexual
harassment complaints. See Lamply, 340 F.3d at 483. At trial, the jury heard testimony that
after complaints were made about the recurring holes in the changing room wails, Hooters’
management did not respond in a timely fashion, For instance, Assistant Manager Jimmy
Rabbitt testified that after some “Hooters Girls”! complained to him about the holes in the
dressing room wall, he reported the holes to one of his bosses. (Trial Tr. at 308.) Ciesielski

testified that in May 2001 she reported the holes in the changing room wall to Rabbitt

' Plaintiff and other Hooters’ employees testified that they refer to the women who work
at Hooters as “Hooters Girls.”



Minute Order Form (06/97)

LVR United States District Court, Northern District of Illinois
"Name of Assigned Judge Sitting Judge if Other
. or Magione Judge Amy J. St. Eve thaseassigned Judge
CASE NUMBER 03 C1175 DATE 12/23/2004
CASE Ciesielski vs. Hooters on Higgins
TITLE

of the motion being presented.]

[in the following box (a) indicate the party filing the motion, e.g., plaintiff, defendant, 3rd party plaintiff, and (b) state briefly the nature

MOTION:

DOCKET ENTRY:

qi) a Filed motion of [ use listing in “Motion” box above.]

Q@ a Brief in support of motion due

(3) Oo Answer brief to motion due___. Reply to answer briefdue____.

(4) oO Ruling/Hearingon set for at

(5) Q Status hearing[held/continued to) [set for/re-set for] on setfor_ at

(6) im Pretrial conference[held/continued to] [set for/re-setfor]on___———ssetfor_— at.

Q) Qa Trial[set for/re-set for]on___at

(8) go [Bench/Jury trial] [Hearing] held/continued toa

(9) Oo This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to}
OFRCP4(m) CO Local Rule 41.1 OFRCP41(a\(1) OO FRCP41(a)(2).

(10) +@f [Other docket entry] | Enter Memorandum, Opinion, and Order. The Court denies Defendants’

punitive damages award.

Can ye!

al [For further detail see order attached to the original minute order.]

Motion for Judgment as a Matter of Law under Federal Rule of Civil Procedure 50(b) as to the jury's

No notices required, advised in open court.

No notices required. number of notices

Notices mailed by judge’s staff.

Notified counsel by telephone.

pec 2'f 2004

v | Docketing to mail notices.

| Mail AO 450 form.

Copy to judge/magistrate judge.

a tent} date maited notice
“aU

courtroom Ob
na deputy’s ‘
initials

Date/time received in

central Clerk's Office mmailing deputy initials



cure the problem. As such, viewing the facts and drawing all reasonable inferences in favor of
Ciesielski, see Harvey, 377 F.3d at 707, the jury could have concluded that Hooters failed to
engage in a good faith effort to comply with Title VII after it became aware of Ciesielski’s
complaints of the recurring holes in the changing room walls, and the sexual comments and
touching by other Hooters’ staff. See Lamply, 340 F.3d at 483.

In sum, there was sufficient evidence presented at trial for the jury to conclude that
punitive damages pursuant to the Kolstad standard were appropriate under the circumstances,
Iv. CONCLUSION

For these reasons, the Court denies Defendants’ Motion for Judgment as a Matter of Law
pursuant to Federal Rule of Civil Procedure 50(b),

Dated: December 23, 2004.

ENTERED

(\_ pas. f

AMY J. SKSEVE
United States Bistrict Judge

11


hole in the changing room wall. (/d. at 953-56.) There is trial testimony, however, that a third
set of holes appeared around January 2002, where they remained for approximately two months
after the holes were reported to Assistant Manager Doug Gleichner. (Jd. at 959-61, 1119-20.)

General Manager Cooper testified that there was no investigation into the original hole in
the changing room walls. (/d. at 776.) Cooper testified that instead of interviewing the staff and
others who had access to the building, she thought patching the hole was the most efficient way
to rectify the situation. (/d.) Her further testimony reveals, however, that no investigation took
place after the second or third set of holes appeared. (Jd. at 778.) In fact, she testified that she
did not report the holes in the changing room walls to anyone else in management because she
did not feel like there was anything to report. (/d. at 740.)

There is additional evidence in the trial record that the kitchen staff and assistant
managers made sexual comments and touched other Hooters’ employees. (/d. at 1452.) For
example, “Hooters Girls” complained about the kitchen staffs sexual comments and behavior to
Assistant Manager Unrue in May 2001. (/d. at 733.) Melissa Frankfort testified that Assistant
Manager Jimmy Rabbitt touched other employees, such as tickling them or patting them on the
butt. (/d. at 966.) In fact, after Rabbitt had touched Frankfort on the butt, she asked him to stop
touching her. (/d. at 967.) Frankfort also testified that because it took Hooters months to fix the
holes in the changing room walls, she felt uncomfortable working at Hooters and eventually left
her job there. (id. at 968.)

Based on this evidence in the trial record, the jury could have believed that after
Ciesielski and other “Hooters Girls” complained about the sexual comments, touching, and holes

in the changing room walls, management such as Cooper, Gleichner, Unrue, and Rabbitt did not

10


however, had the final discretion in disciplining an employee. (Trial Tr. at 58.)

In addition, there is trial evidence that Hooters designated Assistant Managers Gleichner,
Unrue, Rabbitt, and Chung to receive and act on sexual harassment complaints. (/d. at 98, 108-
09, 272-73, 392, 475.) The jury also heard evidence that General Manager Cooper, and not the
district manager or area manager, had the final discretion in resolving sexual harassment
complaints. (/d. at 831-32.)

When ruling on a motion for judgment as a matter of law following a jury verdict, it is not
the Court’s role to re-weigh the evidence or make credibility determinations. See Reeves, 530
U.S. at 150. Instead, the Court must determine whether any rational jury could have found for
Ciesielski. See Harvey, 377 F.3d at 707. Reviewing this trial evidence and all reasonable
inferences in a light most favorable to Ciesielski, see Reeves, 530 U.S. at 150-51, the Court
concludes that there was a sufficient evidentiary basis for the jury to conclude that Unrue,
Rabbitt, Chung, Gleichner, and especially Cooper, had the requisite discretion and authority to
make them managerial agents under the Kolstad standard.

Cc Hooters’ Anti-Discrimination Policy

Because a reasonable or rational jury could have found that Ciesielski established the first
two Kolstad factors, the Court turns to whether there was sufficient trial evidence for a
reasonable jury to conclude that Hooters engaged in a good faith effort to implement an anti-
discrimination policy. See Kolstad, 527 U.S. at 544-45. As discussed above, Defendants point
to undisputed testimony that Hooters had a non-harassment policy. Evidence in the record
reveals that at the outset of her employment, Hooters gave Ciesielski a new hire package

containing the Hooters’ non-harassment policy and the new hire manual, both of which set forth


B. Punitive Damages Pursuant to 42 U.S.C. § 1981a

Title VII allows for punitive damages awards when a plaintiff demonstrates that her
employer engaged in discrimination “with malice or with reckless indifference to the federally
protected rights of an aggrieved individual.” 42 U.S.C. § 1981a(b)(1). The Supreme Court has
articulated a three-part framework for determining whether punitive damages are appropriate
under Section 198la. Kolstad v. American Dental Ass'n, 527 U.S. 526, 545, 119 S.Ct. 2118, 144
L.Ed.2d 494 (1999); Bruso v. United Air Lines, Inc., 239 F.3d 848, 857 (7" Cir. 2001). First, a
plaintiff must demonstrate that the defendant acted with knowledge that its actions may have
violated federal law. Kolstad, 527 U.S. at 536; Bruso, 239 F.3d at 857. A plaintiff can establish
this requirement by demonstrating that the relevant employees knew or were familiar with anti-
discrimination laws and the employer’s anti-discrimination policies. Bruso, 239 F.3d at 858.

Second, the plaintiff must establish a basis for imputing liability to the employer.
Kolstad, 527 US. at 539. A plaintiff establishes this element by demonstrating that the
employees who discriminated against her were managerial agents acting within the scope of their
employment. Jd.; Bruso, 239 F.3d at 858. Whether an employee acts in a managerial capacity is
a fact-intensive inquiry based on the authority the employer gives the employee, the employee’s
discretion, and the manner in which the employee carries out his duties. Kolstad, 527 U.S. at
543. Such an employee must be “important,” but need not be top management or the company’s
officers or directors. Id.

Even if these two requirements are met, an employer may avoid liability for punitive
damages if it can establish that it engaged in a good faith effort to implement an anti-

discrimination policy. See id. at 544-45; Bruso, 239 F.3d at 858. The existence of an anti-


2004, after a seven day jury trial, the jury found in favor of Plaintiff and awarded her $25,000 in
compensatory damages and $250,000 in punitive damages. Defendants then renewed their
motion for judgment as a matter of law pursuant to Rule 50(b). Defendants do not challenge the
amount of the punitive damages that the jury awarded, but argue that punitive damages cannot be
awarded in the first instance, The Court now turns to whether judgment as a matter of law is
appropriate.
Il. LEGAL STANDARDS

A. Federal Rule of Civil Procedure 50(b)

When ruling on a motion for judgment as a matter of law following a jury verdict, the
Court does not re-weigh the evidence presented at trial or make credibility determinations. See
Reeves y. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150, 120 S.Ct. 2097, 147 L.Ed.2d 105
(2000). Instead, considering the totality of the evidence, the Court determines whether the jury
was presented with a “legally sufficient amount of evidence from which it could reasonably
derive its verdict.” Massey v. Blue Cross-Blue Shield of Ilinois, 226 F.3d 922, 924 (7 Cir.
2000). In other words, the Court must determine whether any rational jury could have found for
the Plaintiff. Harvey v. Office of Banks & Real Estate, 377 F.3d 698, 707 (7" Cir, 2004). In
determining a motion under Rule 50(b), the Court views the evidence and all reasonable
inferences in a light most favorable to the party who prevailed under the verdict. Reeves, 530
USS. at 150-51. Courts apply this standard stringently in discrimination cases because witness
credibility is often crucial to the jury’s determination. See Gile v. United Air Lines, 213 F.3d

365, 372 (7" Cir. 2000) (Rule 50(b) movant assumes “herculean burden”).



IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

JOANNA CIESIELSKI,

Plaintiff,
Case No. 03 C 1175
Vv.

HOOTERS MANAGEMENT CORPORATION,
and HOOTERS ON HIGGINS, INC.,

DOCKETED

DEC 27 2004

Defendants.

wee eye ee SS SY

MEMORANDUM OPINION AND ORDER

AMY J. ST. EVE, District Court Judge:

Defendants Hooters Management Corporation and Hooters on Higgins, Inc. (collectively
“Hooters”) move the Court pursuant to Federal Rule of Civil Procedure 50(b) to grant judgment
as a matter of law regarding Plaintiff's punitive damages award. For the following reasons, the
Court denies Defendants’ motion.

1 BACKGROUND

On February 18, 2003, Plaintiff Joanna Ciesielski filed a four-count complaint against
Defendants alleging a hostile work environment claim, failure to supervise, intrusion upon the
seclusion of another, and intentional infliction of emotional distress. The Court granted
Defendants’ Motion for Summary Judgment as to the three state law tort claims, but denied the
motion as to Plaintiff's hostile work environment claim under Title VII. The case then
proceeded to trial on the hostile work environment claim. At the close of Plaintiff's presentation
of evidence, Hooters moved the Court that Plaintiff should be denied punitive damages as matter

of law pursuant to Rule 50(a). The Court took the motion under advisement. On November 23,

We