# FILED
March 2, 1998 Cecil Crowson, Jr. Appellate C ourt Clerk IN THE SUPREME COUR T OF TENNESSEE AT JA CKSON

FOR PUBLICA

TION Filed: March 2, 1998
SANDRA SANDERS, ) ) DYER CHANCERY PLAINTIFF-APPELLEE, ) ) Hon. William H. Inman, v. ) Senior Judge ) Sitting by Desig nation DAVID W. LANIER AND ) STATE OF TENNESSEE, ) ) No. 02S01-9706-CH-00060 DEFENDANTS-APPELLANTS. )

FOR APPELLANT STATE OF : FOR APPELLEE TENNESSEE : Jerrold L. Becker John Knox Walkup Scarlett A. Beaty Attorney General & Repor ter Lockridge, Becker & Valone, P.C.

Knoxville Michael E. Moore Solicitor General Elizabeth Martin Assistant Attorney Gener al



# O P I N I O N

COURT OF APPEALS AFFIRME D AS MODIFIED HOLDER, J.1 Tenn. Code Ann. § 37-1-10 6.
2 The 1972 Pub lic Ac ts 16 76-1 680 , Ch. 8 63 cr eate d a law and e quity c ourt in Dyer C oun ty, Tennessee, and conferredJudge Lanier' s jurisdi ctionalauthorit y over t he juvenil e court of Dy er Cou nty. 2 OPINION
The issue with which we are confronted is whether the State may be liable to a county employee for employ ment discrimination under the Tennessee Human Rights Act ("THRA") when the county employ ee is under the supervis ion of a state judge who commits q uid pro quo sexual har assment against the county employee. The trial court answered the question i n the negative holding that the State was not the plaintiff's employer under the THRA. The Court of Appeals reversed and held that the TH RA imposed liability on the State under an economic realities test. For the reasons set forth in this opinion, we affirm as modified the appellate court's r eversal of the trial cour t's judgment.

FACTS
The plaintiff alleges that she w as employed as a Youth Serv ices Officer with the Dyer County Juvenile Court. Youth Services Officers receive their compens ation fr om the Co unty. 1 The plaintiff, however, maint ains that Chancellor David Lani er possessed the authority to hire, discipline, pr

omote, and terminate her and all other j uvenile court employees . Judge Lanier was a s tate judge and presided over both t he chanc ery and juve nile cour ts in Dyer Co unty. 2
The plaintiff contends that Judge Lanier sexually harassed her. Her allegations include both s exual assault ("grabb ing her breast and buttocks ") and unwelcome sexual advances. She all eges that she rep eatedly rejected Judge Lanier's unwelcome sex ual advances and that Judge Lanier demoted her from her supervisory p

osition in retaliation for rejecting his sex

ual advances. She3 The economic realities test focuses on one's abi lit y to cont rol a pl ainti ff's job performance and em ployme nt oppor tunities. Eyerman v. Mary Kay Cosmetics , 967 F.2d 213, 219 (6th Cir. 1992).
4 The plainti

ff's complai nt also set s forth a cl aim which could be pr operly classifi ed as a supervisor-created hosti le envir onment. Whether the employer i s liabl e for it s supervisor's actions in hosti le work envi ronment claims depends on: "(1) whet her the superv isor's ha rassing actions were foreseeabl e or fell withi n the scope of employment; and (2) even i f they wer

e, whether the emp loyer respo nded a dequa tely and effe ctively to nega te liability." Carr v. U.P.S. , ___ S.W.2d

___ (Te nn. 1 997 ). For the re aso ns s tated in this o pinion , we fin d tha t Jud ge La nier's actio ns fe ll within th e sco pe of e mp loyme nt. W hethe r the Sta te resp onde d ade quate ly to Judg e Lan ier's harassment shall b e decided on remand. 3 further alleges that Judge Lanier denied her an increas e in salary and "unilaterally" altered her job requirements on a weekly basis.
The plaintiff filed suit against th e State of Tennessee ("State") alleg ing violations of the THRA. The defendant filed a motion to dismiss for failur e to state a claim for which r elief can be granted. Tenn. R. C iv. P., Rule 12.02(6). The trial court found that the State w as not the plaintiff's employer for purposes of THRA liability and di smissed the plaintiff's claim for failure to state a cause of action. The appellate court adopted the f ederal courts' economic realities test 3 and the common law test of control and reversed the trial

court.

DISCUSSION
The plaintiff alleges that Judge Lanier conditioned her employ ment benefits on sexual favors. The plaintiff further alleges that J udge Lanier possessed supervisory powers over her pos ition and had the actual or appar ent authority to alter the t

erms and conditions of her employ ment.
The plaintiff's claim against Judge Lanier can best be classif ied as quid pro quo harassment. 4 Quid pro quo harassment occ urs when a supervis

or conditions employment benefits on sexual favors. Kelly Carr v. U .P.S. , _ __ S. W. ___ (Tenn. 1997). To prevail u nder a quid pro quo theor y of sexual harassment, a plaintiff must show:4 (1) that the employee w as a member of a protected class; ( 2) that the employee was subjected to unwelcome sexual harassment in the form of sexual advances or requests for sexual fav ors; (3) that the harassment complained of was based on sex; (4) that the employee's submission to th e unwelcome advances w as an express or implied cond ition for receiving job benefits or that the employee's refusal to submit t o the supervisor's demands resulted in a tangible job detriment ; and (5) the existence of respondeat superior liability.
Kauffman v. Allied Signal, Inc. , 970 F.2d 178, 186 (6th Cir. 1992).

In Carr , we held that an employer is strictly liable for a supervisor's quid pro quo harassment under the doc trine of respondeat superior. Carr , ___ S.W.2d at ___. Strict liability is imposed because: (1) a supe rvisor is the alter ego of the employer; and (2) a supervisor has the ac tual or apparent authority to alter an emplo yee's terms or cond itions of emp loyment. "Unde r this alter ego theory of liability, a supervisor's act s within the scope of employ ment are imputed to the employer." Id

.
As to the first four elements, the pl aintiff is a member of a protected class

. She has alleged that she w as subject to unwelcome sex ual advances and that the harassment was based on se x. She has further alleged that she suffered adverse job consequences as a result of her rejecti ng Judge Lanier's sex ual advances.
Our last inquiry is whether Judge Lanier was acting within the scope of his employment. We believe that, when an emplo yer empowers a superv isor with the ability to take actions that affect the employment status of subor dinates, the supervisor's acts t

aken or threats made withi n the actual or apparent scope of authority are imputed to the employer. Ellerth v. Burling ton Industries, Inc ., 102 F.3d 848, 860 (7th Cir. 1996). Accordingly, respondeat superior is applicable under a quid pro quo theor y when: (1) an employ er empowers a supervisor with5 the ability to alter job benefits; (2) the superv isor abuses the empowerment by making a subordinate's job benefits contingent upon receipt of sexual favors; and (3) the subordinate reasonabl y believes that the su pervisor has the actual or apparent authority to alter the subordinate's job benef its.
The State, either directly or indirectly, empow

ered Judge Lanier with the authority to alte r the plaintiff 's job benefit s. The plaintif f alleges that Ju dge Lanier conditioned her job benefit s upon the receipt of sexual fav ors and that she sustained adverse job cons equences as a result of her r ejection of the sexual advances. The p laintiff's co mplaint furt her indicates th at she believed th at Judge Lanier had the actual or apparent authority to hire, di scipline, promote, demote, or terminate her and all other juvenile court employees. The plaintiff 's allegatio ns, if tru e, would su pport a f inding of respond eat supe rior liabi lity.
The THRA prohibits an employer from discriminating against a person or an individual. See Tenn. Code Ann. § 4-21-401(1) (stating "[i]t is a discriminatory practice for an employer to . . . discriminate agai nst an individual with respect to compensation, terms, conditions or privileges of employment." ). "Employer" is defined as including "the state,or any political or civil subdivi sion thereof, . . . or any person acting as an agent of an employer, directly or indirectly." Tenn. Code Ann. § 4-21-102(4). A "person" is defined as including "one (1) or more individuals." By these terms, the definition does not require that the person or individual be an employee of the employer.

The State falls within the THR A's definition of an employer. Judge Lanier allegedly acted, directly or indirectly, as an agent of the State. Judge Lanier's alleged actions agains

t the plaintiff constitute quid pro quo sexual harassment

. In Carr , we held that an employer is strictly li able for its supervisor 's quid pro quo harassment. Carr, ___ S.W.2d at ___. Accordingly, Judge Lanier's actions, if6 proven, may be imp uted to the Sta te because the State empowere d Judge Lanier with the authority he allegedly abused in an attempt to gain sexual favors.
The State's argument that sov ereign immunity insul ates the State from liability for Judge Lanier's alleged discriminatory acts is without merit. The THRA explicitly prov

ides that the State may be li able for employment-related discrimination against

an individual. Tenn. Code A nn. § 4-21-102(4) & 401. The plaintiff's allegations, ther efore, satisfy the legisl ative requirements for i mposition of State liability under the THRA.
The Court of Appeals' revers al of the trial court's decision is affirmed as modified, and the case is remanded to the trial court for proceedi ngs consistent with this opinion. C

osts of this appeal are taxed to the appellant, State of Tennes see, for which execu tion may is sue if ne cessary.

Janice M. Holder, Justice
CONCURRING: Anderson, C.J. Drowota and Reid, J.J. Birch, J., Not Partici pating