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. Y oung , ChiefJ ud ge ofthe Un it ed  St at es Dis t ri c tCour tf or the So uthe rnDis t ri c tofI ndi ana , s i t t i ng by des i gna t i on. 

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# U n ited S ta tes Co urt o f Ap p ea ls

F o rth eS e v e n th C ir cu it
N o. 10

- 3247 E QUA L E MPLO YMENT O PP O RTUN ITY C OM MI S S I ON, P la intif f-A pp ellee, v. M ANAGEM ENT H OSPI TALI TYOF R ACI NE, I NC . d /b/a I NTERNATI ONA L H OUSE OF P ANCAK ES, F LI PME AS T ACK, I NC . an d S AL AUDDI N J ANM OHAM MED , D efend a nts-A pp ella nts.

Appeal from the United States District Court fo r the E astern Di stricto f Wisc onsin
. No . 06- cv-0715

—L ynnS. A delm an, Judg e.
A RG UE D A PRI L 5, 2011

—D ECI DE D J AN UA RY 9, 2012

Befo re E A S T E RB R OO K, Chie f Judge, B AUER, Cir cu i tJudg e, a nd Y OUNG, D i s t r i ctJudg e . 2 N o. 10

- 3247 Y OUNG, D i s t r i ctJudg e . The Equa l Em pl o y m en t Oppo r tu
ni ty Com m i ssi on ( “EE OC ”) br ought thi s a cti on on b eh alf oftw o s er ve rs , K at rin a Sh isle r an d M ich elle P ow ell, w ho were em plo yed atan Inter nati onalH ou se of Pa nc ak es fr an ch i se i n Ra cine , W i sc o ns i n ( th e “R ac i ne I H OP”), all egingthatthe ser ver s were sexual l y har ass ed i n vi ol ati on o fTi tl e VI Io fthe Civi l Ri ghts A ct o f19 64, 42 U
. S. C. §§ 2000 e et seq
. A j ury f oun d i n f avo r o fS hi sl era nd Po wel l o n the ho st i l e wor ke nv i r o nm en t cl ai m , and aga i nst the Defendants, M anage m en t Hospit al i ty ofRaci ne, Inc. ( “M H R”) d/b/ a Inter nati onal H ou se of Pa n c ak es , Flip m ea st ac k, In c ., an d S ala u d d in J a n mo h a mme d

. T h e j u r y a wa r d e d c o mp e n s a t o r y d a mag e s t o S hi s l e r a nd P o we l l, a nd a wa r de d p un i ti ve d am ag es to P ow ell. F o l l o wi ngthe j ur y v er di ct, the EEOC fi l ed a do cument e nt i t l e d E EOC ’ s P o s t
- Tr i a l Mo t i o ns tha ta ddr e sse d t wo mo t i o ns : a mo t i o n f o r j ud g men ta g a i ns tDe fe nd

a nt s F l i pm e a s t a c ka nd S a l a ud di n J a nmo ha mm e d a nd a mot i o n f o r a n o r de r o fi nj un c t i v e r e l i e f

. T he De fe nd

ants filed a M oti on f orJ ud gm ent a s a M att ero fLaw orA l ternati vel y fora N ew Tri alo r Rem i tti tur. By Decision an d Ord er d ated A ug us t 31, 2010 , the d istri ct cou rt d en ied th e D efend an ts’ m otions, granted the E E O C ’s mot i o ns , a nd entere d j ud g men ti n f a v o r o fthe EE OC, and an i nj uncti on a gainst F l i pm eas tack, Inc. Thi s a pp eal f ol l owed

. Fo r the r eas ons setf or th be low , we r eve rs e i n part, and affi rm i n part
.N o. 10

- 3247 3

M H R d issolv ed , an d its assets w ere so ld , after the ev en ts 1 gi vi ng r i s e t o thi s c a s e o c c ur r e d. I . B a c kg r o und The re ci tat i on of the re l evant f acts that f ol l ow a re p re sente d i n the l i ght m ostf avo rabl e t o the EEO C, as th eyr el at e to the De fen dan ts ’ Rul e 50 m o ti o n a nd the j u ry ’s v er d ict
. M olnar v. Bo oth , 229 F. 3d 593, 59 7 (7 th Cir
. 20 00) . A l l o therf acts nece ssa ryf orr eso l uti on o f thi s a pp eal, inc lu d i ng the f acts r el evantto the dist ri ct cou rt’s c onc lusion th at Fli p m easta ck w as an “em p loyer” ofS hi sl erand Powel l, wil l be add re sse d i n the Disc ussi on S ec ti o n.

A . Th e D efen d an ts J an m oha m m ed was the pr i nc i palo wnera nd fr an ch i se e o ft wenty - o ne I H OPs, i nc l udi ngthe Ra cine I H OP. H e o perat ed the Raci ne I H OP un der the fra nchis e nam e o fM H R , and w as it s pre si dent and sol e s hare

1 h o l d e r . MHRc o n t r a c t e d wi th F l i p me a s t a c k, a c o m pan y sol el y own ed by J anm oham m ed ’s w ife, V ict or ia J an m o ha m m ed, t o pr o vi de m an ag ementc o ns ul ting se r vi ce s f o r hi s I H OPs
. The se s er vi ce s i nc l ude d a cc o unt i ng an d pa y r o l l, c o r po r at e I H OP f r an ch i se r epo r ti ng an d co m p lian c e, an d h u m an res ou rc es as si st an c e. In add i ti on, Fl i pm eas tack hi re d the dist ri ct m anage rs , w h o, i n turn, hi r ed th e g en er almana g er s o fe ac h r es ta ur an t i n the di st r i ct, a nd o ve r sa w the da y - to
- dayo per at i o ns4 N o. 10

- 3247 oftho se parti cul arr est aurant s. In 200 5, Ste ve S m i th was th e d ist ric t m an a g e r of th e R ac in e IH O P , M ich elle Dahlwas the g en er almana g er, a nd Nadi a DelRi o a nd Rosal i o “J unio r” Gutie rr ez w er e the as si sta nt m anage rs . Th e e mpl o y e e s o fe a c h r e s t a ur a nt, i nc l ud i ngthe g ener al m anage r, as si sta nt m anage rs , and se rv er s, were em plo yee s o fM H R.

B. The Sexual H ar assmen tPol i cy I n 2 00 5, Fl i pm ea st ac kf o r m ul at ed an d upda te d the Sex ua l H arassm en t and Diversity Policy form an agers and em plo yee s o fM H R. Th e pol i cy i nd i cate d that “an y form of un law ful harass m en t of co-w orkers o r me mbe r s o fthe p ub l i c i s ab s o l ut e l y f o rb i dde n, r e g a r dles s of w h et h er it i s v erb al, p h ys ica l, or vis u al h ar as sm en t.” I t a l so sta ted thatem plo yee s “ w i l l r epor t a ny ins ta n ces o fi m pr o perb eh av i o r t o my mana g ero r c o m pa nyr e p r es en tat i ve. ” Victo ri a J anm oham m ed confi rm ed that Gu ti er re z, Del Rio , and Dahl w er e m anage rs o r “co m pany r epres entat i v e s ” w i th i n th e me a n i n go fth e p o l i c y, a n d th a ta c o mp l a i n tt o a n y o n e o fth o s e th r e e wo u l d b e e ffe c t i v e . As th e g en er almana g er, Da hlwas r es po ns ibl e f o r mai ntaini ng a w or kpl ace fre e o fse xual hara ssm en t and f or re port i ng i nstance s o fse xual hara ssm ent t o up per m anage m en t, an d D el R io w as res p o n s i b le for tra in in g a ll new hi re s. Thi s t ra i ni ng consi ste d ofshow i ng al l new hir es a s exual har ass m ent v i deotape, handing them a copy o f the s e xu a l h a r a s s men tp o l i c y, a nd a s k i ngthe m t o r e ad and si gn it . B oth Shi sl erand Powellvi ew ed the vi deo-N o. 10

- 3247 5 tape and si gned Fl i pm eas tack ’ s s exual har ass m ent pol i cy. Shi sl er ’ s a nd Powel l ’ s s i gned copi es ofthe sexualhar ass m en t po li cy, l ike all cop ies si gn ed by I H O P serv ers, w ere l ock ed i n a fi l e cabi net. The co m pla i nt pro cedure w as not avai l abl e in pri nt. I n 2 005, c or po r at e I H OP di r ec te d tha t a cr i si s m an agem en t guid eli ne s p oster be d is p la yed i n ev ery I H OP rest aurant
. The post erpro vi ded a list o f te l ephone num ber s in case o fan e m er gency, s u ch as an ar m ed rob b er y, floo d , ear th q u a k e, or “ ot h er em er ge n c y,” such as a “ disc ri m i nati on cl ai m . ” The pos teri ncl ud ed the t el ephone nu m bero fFl i pm eas tack, the cor pora te num bero fI H OP, and t he ce l l phone num bero f Sm i th. N ei therS hi sl ern or Powel l had any re col l ecti on o fs ee i ngthe po st eri n the Ra cine I H OP.

C . Th e Claim an ts Shi sl er, a tee nager, worke d a t the Raci ne I H OP on tw o differ ent o ccasi ons. Duri ng herfi rs t t er m o fem plo ym en t in Januar y 2 00 4, S hi sl ert es ti fi ed th atthe gen eral m an ager of the Ra cine IH O P, Ch arles H ecke r, w as sexual l y har ass i ng a fem al e s er vernam ed Chri stine. Shi sl erga ve Sm i th a w ri tte n l ett eri nfo rm i ng h i m o f th atf ac t, a nd c o m pl aini ngtha t sh e an d he r b o y fr i en d wer e r e c e i v i n gu n f a i r wo r ka s s i g n me n t s . Ac c o r d i ng to S hi sl er, S m i th ’ s r es po ns e w as “pas si ve ” an d he never“r eal l y s a[ i d] whether ornothe was g oi ng to ta k e ca r e o fi t. ” S hi sl er ne ve r he ar d fr o m S m i thr eg ar di ng thos e i ssues ; however, she tes ti fi ed that H ecke r sta rt ed6 N o. 10

- 3247 to tre at h er d iffer en tly , an d “s ta te d th in gs th at h e o n ly coul d hav e ei ther been tol d, or re ad hi m sel f i n the l etter
. ” Afte r thi ngs wors ened w i th H ecke r, S hi sl er “cal l ed the Corpor ati on” and w as t old she “had to go to [Sm ith] abou t it. ” I n li gh t of H ecke r’s treatm en t of he r, she di d not co m p lain agai n to S m i th. U l ti m ate l y, H ecke r fired Shisler. H erse cond ter m o fem plo ym ent b ega n on M ar ch 3, 20 05. By thi s t i m e, Dahl ser ved as the gene ra l m anage r of th e R ac in e IH O P . G u ti e r r e z, w h o w as ap p ro x im at ely 10 yea rs o l der than Shis l er, was re l ati vel y new to th e p o s i t i o n an d w o r k e d a s th e n i g h tma n a g e r ( 5 : 0 0 p . m. to 3:00 a.m
. ), w hile Shisl er w orked the sec ond shift ( 3: 00 p. m . to 11 : 00 p. m . ) ; c onse quentl y, thei r schedule s ove rl apped

. Shi sl er tes ti fi ed that w henever sh e w or ked w i th Guti erre z, he m ade se xually c harg ed com m ents to he r, i nc l udi ng, “ Iwantt o t ake you in th e ba cka nd fu c k y ou ov er th e p an c ak e b at te r,” “ I b e t y ou ’re kin ky ,” and “yo u li ke i t r ough. ” Guti er re z e ven pro posi ti oned h er for th re e-w ay se x w ith h is (a lleg ed ly) b ise x u al g irlfr i en d. Gut i er r ez star ed athe r b o dy, b r ea st s an d butto cks, l i ke she w as “a pie ce o fm eat, ” r ubbed her sh oul ders and press ed hi s bo dy up agai nst he rs , an d m ad e h er fee l v e ry “u n c om for ta b le.” Sh isle r “t old hi m to ge t the fuck away fro m [ her]

. ” She fel t “ bul l i ed” by hi m and fel t “ dir ty” after he tol d the co oks i n Spani sh that he wanted to have sex with her

. O n M arch 18, 20 05, Shisler, along w ith tw o other serve rs, rep orted Gu tierrez’s be ha vi o r to Del Ri o . S hi sl er to l d Del Ri o tha t s he w ou ld h av e t o b e “ b lin d ” if sh e d id n ot“s ee it go in g on .” Del Rio “bl ew [ them ] o ff,” shoo k herhead, and cal l ed th em “s illy girls .”N o. 10

- 3247 7 A t s om e pointaft erShis l errepor ted G uti er re z’ s be havi or to Del Rio , Gutie rr ez “sl ap gr oped” herbutto cks as she was bendingo verto p ick u p hot s auce fro m the fl oo r. S hi sl er tol d G uti er re z t o “ge t the fuck o ff[ her]

. ” On M ar ch 27, 20 05 , Sh isle r re p or te d G u tie rre z’s be h av ior t o D ah l, w ho s ai d that t hi s was “no ne o f[ her] co ncer n” and then sai d “w e’ re done h er e. ” Afte r her com pla i nts fel l o n deafea rs , S hi sl er“g ave up” and kept working “b ecause [sh e] n ee d ed th e m on ey .” O n A p r i l 3 , 2 00 5, D ah l te rm inated S hi sl erf orvi ol ating the Raci ne I H OP’s c oupon po l i cy, whi ch b ar r ed se r ve r s fr o m po ss es singc o upo ns an d giv in g t h em to cu st om er s. Po we l l, a l s o a t e e na g e r, wo r k e d a tthe R a c i ne I HOP f r om O c to b er or D ec em b er 20 04 u n til Ju n e 2 00 6. P ow ell gener al l y wor k ed th e fi r sts hi ft ( 6: 00 a . m . t o 3 : 00 p.m . ), so she worked w i th Guti er re z when thei r schedule s ove rl apped

—approxi m ate l y o nce a w eek

. Powel l te sti fi ed that i n l ate Februar y 2 005, Gutie rr ez bega n to m ake offen si ve com m ents to Pow el l such a s her“a ss l oo ked good i n them p an ts.” I nitiall y, Pow ell th ou gh t G ut ierrez’s c om m en ts w er e “in ap p ro p ria t e ,” b u t “ l a u g h e d it off, thi n king i t was a j oke [
. ] ” Po w el l ’ s thoughts changed w hen “hi s har ass m en t co nti nued and beca m e m or e s ever e, ” t o the point wh er e “ she t ri ed to avo i d him at al l co sts
. ” G u tie rre z p u lled h er p on yt ail w h en ev er h e co u ld and tol d her that sh e “liked i t be cause [ she] would l i ke [ sex] r ough. ” Guti er re z a l so w hi spere d i n herea r that he would l i ke to “eat[ her] o ut” a nd l eft a vo i cem ai l o n P o we l l ’ s c e l l p h o n e a s k i n gP o we l l “ t o h o o ku p ” w i th h i m.8 N o. 10

- 3247 O n on e o c c as ion w h ile P ow ell a n d G u tie rre z w er e in the k i tchen, Gutie rr ez tol d the co oks i n Spanish “ how bad ly he w an ted to fuc k [Pow ell ] an d [ sh e] w ou ldn ’t l e th i m” a n d th e n t r a n s l a t e d wh a th e s a i d t o he r . He al so tol d h er “he thought [ she] would ge t fre akywith sex. ” On another occa si on, Gutierrez to ok Pow el l i nto the dr y s tor age ar ea and press ed h i m sel fup against her w hi l e t el l i ng herthath e “w ou l d l i ke to do [ her] fro m behi nd

. ” Po w el l al so re cal l ed that w hen Gutie rr ez w al ked past her, he w oul d fre quentl y brush up ag ai nst he r bre ast s an d b ut to ck s. Po wel l r epe at edl y o bj ec te d t o Gut i er r ez ’s behavi or, and ask ed h i m to “knock i t o ff

. ” In re sponse, Gu ti er re z “seem ed to ye l l at[ her] m or e” orga ve her “h ar d er th in gs to d o.” Pow el l te sti fi ed that du ring the fi rs t w eekof A pri l 20 05, sh e c om p lain ed to D ah l th at G u tie rre z w as “s ex u ally and ph ysi cal l y abusi ng [ her] and ot her fem al e work er s” an d “g ra b b in g u s a n d sa yin g d i r t y t h in gs to u s.” A lth ou gh D ah l sa id sh e “ w ou ld ta ke ca re of it,” D ah l d id nothi ng to addres s h er co m pla i nts. Powel l al so tes ti fi ed that Del R io, pro m pted by the co m pla i nts fro m othe r serve rs , aske d Pow el l i fGutie rr ez w as tr eat i ng her i n an i napp ro pri at e way. A l though Po w el l r esponded “ye s, ” DelRi o did not r ep or t these com pla i nts t o up per m anage m ent. W hen Gutie rr ez continued with h is haras si ng b ehavi or, Powel l r epor ted hi s inapp ro pri ate co nd uct to Dahl a gain, but Dahl c ut heroff b y sayi ng tha t “[she ] d idn ’t need to hear it. ” E ven tu all y, li ke Shisler, P ow ell “le ar n ed n otto sa y a n yt h in g.”N o. 10

- 3247 9 D . The I nvest i gat i on Shi sl er ’ s a tto rneyhi re d Lil l y Bro w n, a pri vate i nvest i gato r, t o o bt ai n i nf o r m at i o n abo utS hi sl er ’ s te r m i na ti o n a nd to deter m i ne wh etherse xual hara ssm ent was o ccurr i ng at the r est aurant
. Between M ay 10, 20 05, and M ay 25, 20 05, Br o wn i nt er vi ewe d se r ve r s o f th e Ra cine I H OP, i nc l udi ng Pow el l

. On M ay 21, 20 05, i n th e m idst o fthe i nvest i gation, G ut ierrez qu it his p ositi on as assistan t m an ager. On M ay 23, 20 05, DelRi o i nfo rm ed Sm i th thata pri vate i nv es ti g at o r was a sk i ngabo utGut i er rez’ s ha r as sment o fs e r v e r s . T h i s p r o m pte d S mi th t o c o n d u c th i s o wn in ve st iga tio n . B ec au se G u tie rre z h a d alre ad y q u it hi s posi ti on, S m i th co uld notta ke any c or re cti ve acti on aga i nst hi m . S m i th, however, deter m i ned that Shi sl er an d P ow ell h ad c om p lain ed t o D ah l an d th at D ah l sh ou ld have acte d on t h eir co m pla i nts. S m i th dete rm i ned that Dahl v i ol ate d the s exual h ar ass m ent pol i cy by not invest igating the ir com p lai nt s and term inated her.

E. D ah l’ s Law su it Fol l o wi ngh e r t e r mi na t i o n, Da hlfi l e d a l a ws ui ta g a i ns t M H R al l eging tha t S m i th se xually har ass ed her

. H er case was base d, i n part, o n the al l ega ti on that Sm i th r ubbed hi s finger over the cleavage area of Da hl’s da ug ht er’s picture. Gutie rr ez tes ti fied that he w i tness ed the eve nt, and heard S m i th co m m ent, “i fo nl y s he w as 18. ” Guti er re z tes ti fi ed th at Sm i th’ s co m m ent m ade hi m uncom f or tabl e, bu t he d id n ot re p o r t t his incid en t beca us e he w as fearfu l h e w ou ld los e his j ob

. D ah l co n fro n te d Sm ith ab ou t t h is i n c i d e n t, b u tS mi th t o l d h e r th a ti fs h e r e p o r t e d h i m,10 N o. 10

- 3247 he would “deny e ver ythi ng. ” At any rat e, atthe tr i alo f t h i s m a tt er , Sm ith te st ified th at th e c as e w as u ltim at ely dism i sse d on sum m ar y j ud gm ent in Decem ber20 08.

F. J uryTr i al The j ury tr i alco m m enced on N ovem b er 16, 20 09. T he j ury h eard the ac cou nt s note d above from Sh is ler, Po wel l, S m i th, Da hl, De l Ri o , a nd Gut i er r ez , a m o ng ot h er s. The j ury w as ask ed to deter m i ne wh etherS hi sl er and P owel l ha d b ee n s ubj ec te d t o a ho st i l e wor ke nv i r o nm en t. The De fen dan ts ’ Faragher/ E ll er th af f i rm ati ve defen se was i nc l ude d i n the j ury instr uct i o ns , b utthe verd ict f orm did not inclu d e a sp ecifi c interrogatory w i th r espectto the defe nse. The j ury w as al so ask ed to cons ider w hetherS hi sl erwas ter m i nated i n re tal i ati on f o r c o m pl aini ngo fs ex ua l ha r a s s me n t
. T h e j u ryins truct i o ns and ver dictf or m r efer re d to the thre e Defe nd ants col l ecti vel y, bec ause the di str i ct c ourtr ese rv ed rul i ng o n th e c or p or at e liab ility of Flip m ea st ac k p os t t ria l. On N ove m ber19 , 20 09, the j ury re turned a speci al ver dictf or m i n f avo r ofS hi sl er a n d Powel l o n the sexual hara ssm en t cl ai m s, and i n f avo r ofthe Defe nd ants on S hi sl er ’ s r eta l i ati on cl ai m . The j ury aw ar ded S h i sl er $1 ,00 0 in com pensato rydam age s, and awarded Pow ell $4 ,00 0 in co m p en sa to ry d am ag es an d $1 00 ,00 0 in p u n itiv e d am ag es .N o. 10

- 3247 11 G . Post- Tri al M ot i ons and R uli ngs Fol l owing the j ury ver dict, the Defe nd ants m ove d f orJ ud gm en t as a M att ero fLaw o r f orN ew Tri alunder Rule 5 0(b ) o fthe Feder alRule s o fCi vi l Pro cedure. I n supp or t o fthei r M oti on f orJ ud gm ent a s a M att er of L aw , th e D efe n d an ts arg u ed th at n o ra tio n al jur y c ou ld h av e fo u n d Sh isle r an d P ow ell ex p e r ien c ed a h os tile w or k e nvi ro nm ent, and that, i n an y ev ent, theyhad estab li sh ed th eir Faragher/E ll er th affi rm ati ve defe nse. The Defe nd ants al so ar gued that the j ury’ s a w ar d of $100 , 000 i n pun i ti ve dam age s m ust be st ri cken as aga i nst th e g re at w eig h t o f th e e vid en c e. In s u p p or t o f th eir M oti on f orN ew Tri al, the Defe nd ants ar gued that th e d istri ctc o ur t co m m i tt ed pr ej udi ci ale r r o r b y f ai l i ng to i ncl ud e a speci fi c questi on re gar ding the D efendants’ affi rm ati ve defe nse o n the ver dictform , and byadm i tti ng“ o th era ct s” e vi den ce , o ve r the i r obj ec ti o n. The De fen d an ts als o a rg u ed , in th e a lte rn at ive , th at th e p u n iti ve dam age s a w ar d shoul d be r educed p ursuant to th e s ta tu to ry ca p of $5 0,0 00
. Th e EEO C rai sed two i ssues in i ts Post

- Tri alM oti ons. Fir st, i t c on te n d ed th a t a ll th re e D efe n d an ts w er e join tly an d severally li abl e f o r the am ou nt s set forth in the j ury’s ve rd ict
. Se c on d , i t c on te n d ed th at inju n c tiv e re lief sh ou ld be aw ar ded aga i nst Fl i pm eas tack and that such othe r re l i ef shoul d extend to al l o fthe I H OP rest aurant s i t m anage s. I n i ts Deci si on a nd Order, the dist ri ct c ourtdeni ed the Defendants’ M oti on f orJ ud gm ent a s a M at te r of Law and fo r N ew Tri alo r Rem i tti tur. In additi on, the dis tr i ct co ur t g r an te d the E EOC’ s Po st
- Tr i alM o ti o ns , fi ndi ng12 N o. 10

- 3247 th at Flip m ea st ac k w as an em p loy er of Sh isle r an d P ow ell, and thus, l i abl e fo r the $ 105, 000 j ury ver dictand enj oi ned Flip m ea st ac k fro m , inte r alia , “allo w in g a se x u ally h os tile w or k e nvi ro nm ent t o exi st i n any re sta uran t under i ts m anage m ent. ”

II . A n alysis A . D ef end ants’ M ot i on f or J ud gmen t as a M at t er ofLaw We r e v i e w deno vo the dist ri ct c ou rt ’s deni alo f th e D e fe n d a n t s ’ Mo ti o n f o r J u d g me n ta s a Ma t t e r o fL a w. E ricks on v. Wi s co ns i n Dep’ tof Cor r e ct i ons , 46 9 F
. 3d 600, 601 ( 7th Ci r. 20 06)
. “ ‘ Ou r i nquir y i s l i m i ted to the quest i on whethe r the e vi den ce pre se nt ed, c o m bine d wi tha l l r ea so nab l e i nfer en ce s pe r m i ss ibl y dra wn th er efr o m , i s su ffi ci en t to s u p p o r tth e v e r d i c twh e n v i e we d i n th e l i g ht m ostf avo rabl e t o the part y a gainst whom the m oti on i s di re cted. ’ ” Wal l ac ev. M cGl ot han , 606 F. 3d 41 0, 418 (7t h C i r. 20 10) ( quoti ng Tam m iv. Pors ch eCars N
. Am ., Inc. , 536 F.3d 70 2, 70 7 (7th C ir. 20 08 )). “C re d ibilit y d et er m ina ti o ns , the wei g hi ngo fthe e vi den ce , a nd th e dr awi ng of leg itim at e in fer en c es from th e fa c ts are w ith in the pr ovince o fthe j ury. ” Bogan v
. Ci ty of Ch i cago , 64 4 F.3d 563, 57 2 ( 7th Ci r. 20 11) ( i nter nal quotat i on m ar ks and ci tat i ons om i tte d). W e m ust re ver se onl y i f, “o n th e basis of th e ad m issible eviden ce, no r a tional j ury coul d have found fo r the pr evai l i ng par ty. ” Id

. ( ci ti ng Wa lk er v. B d. o f R egen ts of th e U n i v. o f Wis. Sys. , 41 0 F .3d 38 7, 39 3 (7 th C ir. 20 05 )); s e eal s o Em m e l v. Coca

Cola B o ttling Co. of

Chi cago , 95 F. 3d 627, 630 (7th Cir.N o. 10

- 3247 13 19 96 ) ( “ ‘ [ W ] e ar e par ticul ar l y c ar efuli n e m pl o y m en t disc ri m i nati on case s to avo i d s up pla nti ng our vie w o f the c re dibi l i ty orweight o fthe evi dence f orthato fbo th th e j ury (in i ts verd ict) an d in t h e j ud ge (i n n ot interferin g with that ver dict

. ’ ” ( quoti ng Hyb ert v. Hearst Corp
. , 900 F.2d 10 50 , 105 4 (7 th C ir. 19 90 ))).

1 . S e x u a l Ha r a s s me n tC l a i ms A sexu all y host il e or abus ive w ork en vironm en t is a form ofse x dis cri m i nati on under Ti tl e VI Io fthe Civi l Ri ghts A c t o f 19 64
. M e r i t orSa v. Bank, FS B v. Vi ns on , 47 7 U.S
. 57, 66 ( 19 86 )
. F o r s ex ua l ha r as smentt o b e ac ti o nabl e, a pl aintiffm ust pro ve conduct thati s s o seve re o r perva si ve as “ ‘ to al terthe condi ti ons of [ her] em plo ym ent a nd cr eat e an abusi ve w or ki ng envi ro n m en t. ’ ” Id. a t 67( quo ting Henso n v . D un d ee, 682 F.2d 897, 904 (11th Cir. 1982)). Ind et er m in in g w h et h er th e h ar as sm en t ris es to th is lev el, we c o ns i derthe t o ta l i tyo fthe c i r cumst an ce s, i nc l udi ng the “ ‘ fre quency ofthe disc ri m i natory c onduct; i ts seve ri ty; w h et her i t i s physi cal l y threa teni ng o r hum i l i ating, o r a m er e o ffen siv e u t t e r an c e; an d w h et h er it u n re as on ab ly in te rfe re s w ith an em p loy ee ’s w or k p er for m an c e.’ ” G entry v . Expe r tPackagi ng Co. , 23 8 F
. 3d 842, 85 0 ( 7th Cir
. 20 01) ( quoti ng H a rri s v . Forkli ftSys. , Inc. 51 0 U.S
. 17, 2 3 ( 1 9 9 3 ) )
. In e v a l u a t i n gth e s e v e r i t y o fh a r a s s me n t, we ar e guided by pri orcas e pr ecedent: On one si de l i e s exual as saul ts; o therphysi calco ntact, whethe r a m o r o us o r ho sti l e, f or w hi chthe r e i s no conse nt expre ss ori m pli ed; uni nvi ted se xual sol i ci tati ons; i nti m i dati ng words o r acts ; obscene l anguage o r14 N o. 10

- 3247 ges ture s; por nogr aphic pictures . On the o thersi de l i es the o ccasi onalvul garbante r, tinged w i th se xual in n u en d o, of c oa rs e o r b oo ris h w or ke rs . Baske r vi l l ev. Cul l igan Int ’ l Co. , 50 F. 3d 428, 43 0- 31 ( 7th Cir
. 1995 ) ( i nter nal ci tat i ons om i tte d). W e al so as ses s th e im p act of the h arassm en t on th e plaintiff’s w ork e n v i r o n me n tfr o m b o th a s u bj e c t i v e a n d o bj ec ti v e v i e wp oin t; “ ‘on e t h at a re as on ab l e p er so n w ou ld find h os tile orabusi ve, and one that the victi m i n f act did perc ei ve to be s o. ’ ” G entry, 238 F
. 3d at 850 ( quoti ng Faraghe rv. Ci ty of Boca Rat on , 524 U .S. 77 5, 78 7 (1 99 8)). W e fi nd thata ra ti onalj ury coul d have found that Shisler w as su bj ecte d to harass m en t tha t w as both severe an d p er va siv e. A t t h e t ria l of th is m a tt er , Sh isle r te st ifi ed that Gu ti er re z engag ed i n sexual l y har ass i ng co nd uct dur ing ev ery s hi ft th atGut i er r ez was he r a ss i st an t m an age r. H i s co m m ents to Shi sl erwere hi ghl y o ffensi ve and easi l y s urpasse d w hat c oul d rea sonab l y b e desc ribed as vu lga r b an te r, tin ge d w ith se x u al in n u en d o. H e t old her he wanted to “fuck her, ” pro posi ti oned herf orthr eew ay sex w ith hi s g i rl fri end, to l d her she was “k i nky” and l i ked “r ough” sex, and sta re d at the i nti m ate part s o f her body “ l i ke a pi ece of m eat
. ” Guti er re z e ngage d i n physi calto uching by “sl ap g ro ping” herbutto cks. Shi s l e r t e s t i fi e d tha t s he fe l t “ b ul l i e d” b y hi m a nd that his com m en ts m ad e he r feel “d irty. ” G iven the age d ifferen ce betw een Shisler an d G ut ierrez an d G u t ierrez’s p os itio n of au th or ity ov er h er , a rat ion al jur y c ou ld have concl ud ed that G u ti er re z’ s v erbaland physi cal h ar as sm en t d ire c te d atSh isle r c re at ed an ob j ec tiv ely h os tile an d ab u siv e w or k e n vir on m en t.N o. 10

- 3247 15 The De fen dan ts a tt ac kS hi sler ’ s cr edibi l i tyb y a r g ui ng that on cr oss - exam i nati on, she coul d onl y i denti fy th re e spe c i fi c i ns t a nc e s o fs e xu a l l y h a r a s s i ngc o mm e nt s and conduct by Gu ti er re z o verthe f our- w eekper i od t h at sh e w orked at the R acine I H O P. A s note d , how ever, Shi sl erte sti fi ed to m or e than thr ee speci fi c i nstance s ofco nd uct, and she tes ti fi ed that som e form o fve rba l hara ssm ent o ccurr ed on e ver y s hift th at she work ed w i th Guti er re z. A l though S hi sl erco uld n ot re m em ber th e ex ac t dat es tha t spe ci fi c i ns ta nc es o fs ex ua l ha r as sment occur re d, the j ury w as enti tl ed to bel i eve S hi sl er ’ s v er si on of e ve n ts
. I n any eve n t, to preva i l, S hi sl erneed notsho w that the c onduct com pla i ned ofwas both sev er e andper vasi ve; “e ve n on e a c t o f h ar as sm en t w ill s u ffice if it is e gr eg iou s.” Hoste tl erv. Q uality D ining, Inc. , 218 F
. 3d 798, 80 8 ( 7th Cir . 2 00 0) ( ci tat i ons om i tte d). A j ury coul d i nfe r that the three ins tances thatS hi sl erdi d test i fy t o

—tel l i ng her th at h e t h ou gh t s h e w as “k in ky ” a n d liked it “r ou gh ,” pr o po si ti o ni nghe r f o r s ex o n the pa nc ake ba tt er, a nd “sl ap g ro ping” herbutto cks

—w ere su ffici en tly severe to su p p or t a j u ry ve rd ict
. SeeBa sk erv il le, 50 F. 3d at 431 ( noti ng tha t e ven if a pla i nti ff’ s a l l ega ti ons ofse xual ha r as smenta r e o n th e l i ne b etwee n the mer ely unpl ea sa nt and the s exual l y har ass i ng, “the j ury’ s v er dict, wh ether for or a ga in st th e d efe n d an t, ca n n otbe se t a sid e in th e absen ce of tri al err or”). The Defe nd ants al so sugge st that Shi sl erwas not subj ecti vel y o ffended by Guti er re z’ s c ru de com m ents because herMyS pa c e p a g e c o nt a i ne d a s e xu a l l y g r a ph i c vi deo16 N o. 10

- 3247

o fy o ungmal es masturba tingi n the pr es en ce o fy o ung f e m a l es , an d co n ta in s t h e c om m en t, “fu n n y a s h ell.” The j ury w as entitl ed to di sr ega rd thi s v i deo as ev i dence that Shi sl er did not f i nd Gu ti er re z’ s com m ents t o b e o ffe ns i v e . As the di s t r i ct c o ur to b s e r v e d, “shar i ng j oke s with fri en ds i n an o nl i ne co m m unity i s v ast l y di ffer ent th an bei ng pro posi ti oned f orse x by a supervi soratwork. ” F u r th e r, th e r e i s s u ffi c i e n te v i d e n c e i n t he r e c o r d s h o wing tha t Shisler w as su bj ectively offen d ed by G ut ierrez’s c om m en ts and conduct beca use s he rep ea te d ly i n f o r me d G u t i e r r e z th a th i s c o n d u c t wa s u n we l c o me an d co m p lain ed to IH O P m an ag er s D el R io an d D ah l. A cc o r di ng l y, the r e i s su ffi ci en t ev i den ce i n the r ecord fro m wh i ch a ra ti onalj ury coul d find thatS h isle r w as the v i cti m o fse xual hara ssm ent w h ile an em plo yee at th e R ac in e IH O P , in vio lat ion of T itle V II. W e a lso fin d a ra tio n al jur y c ou ld h av e fo u n d th at P ow ell was s ubj ec te d t o a s ex ua l l y ho st i l e wor ke nv i r o nm ent. Powe ll test i fi ed that Gu ti er re z m ade i napp ro pri ate c om m en ts to h er like “ yo u r as s loo ks goo d in th em p an ts ,” p u lled h er p on yt ail a n d to ld h e r sh e “ w ou ld like it ro ugh” and “w oul d getfr eaky with sex. ” He proposi ti oned her f oro ra l se x, to l d h er h e w oul d l i ke to “do herfro m be hi nd” a s he pr es se d hi s pel vi s i nt o he r b o dy, t o l d the coo ks he wanted to “fuck” he r, and l eft a vo i cem ai l m essag e o n herphone as ki n g herto “ho ok up ” with hi m . Gut i er r ez t o uch ed he r b r ea st s an d b ut to ck s wheneve r he co uld bybr ushi ng up against he r as he walk ed pa s th e r . P o we l l t e s t i fi e d G ut i e r r e z ’ s c o mm e nt s ma deN o. 10

- 3247 17 her feel“di rty, ” a nd thatshe fel t worr i ed if sh e had to w or k o n th e sam e s hi ft a s Guti er re z. Powel l al so tes ti fi ed th at w he n sh e o b j ecte d to Gu tierrez’s treatm en t of he r, he ga ve her harderwork ass i gnm ents or“ ye ll ed at her m or e,” “[s ]o s h e le ar n ed j u st n o t t o sa y a n yt h in g.” Li k e S hi sl er, Po wel l was a te en ag er at th e tim e. The age di spari ty between Powel l and Guti er re z, coupl ed w i th Gu ti er re z’s p osi ti on o fautho ri ty ove r her, co uld have l ed a r at i o na l j ur y t o c o nc l ude tha t Guti er r ez ’ s ve rba l a nd physi calhar ass m ent d irecte d at Po w el l cr eat ed an o bj ecti vel y ho sti l e a nd abusi ve w or k e nvi ro nm ent, and that P ow ell re as on ab ly p er c eiv ed it as su c h

.
2. The Faragh er

/Ell er th A f f i r m at i ve D ef ense A n em p loy er c an b e he ld vic ar iou sly liab le for a su p er visor ’ s s exual har ass m ent o fa su bor dinat e. Genera l l y, ane m pl o y ermay av o i d l i ab i l i tyi fi t ca n pr o ve th e tw o el em ents ofthe Fa rag her/ E ll er th affi rm ati ve de fense: “( a) tha t th e empl o y ere xe r ci se d r ea so nabl e ca r e to pr ev en t an d c o r r ec t pr o m ptly a ny se xua l l y har as singb eh av i o r, a nd ( b) thatthe pla i nti ffem plo yee unrea sonab l y f ai l ed to ta ke ad va n ta ge o f a n y p re ve n tiv e o r c or re c tiv e o p p or tu n ities p rovide d by th e em p loyer or to avoid ha r m ot h e rw i se. ” B url ington In d us. , Inc. v. Eller th , 52 4 U.S
. 74 2, 76 5 (1 99 8); Fa rag her, 524 U .S. at 8 07
.

a. Defe nd ants’ Pre vent at i ve M easur es The Defe nd ants c onte nd thattheyto ok sexualhar ass m ent s er i ousl y, and i nsti tu ted an e ffecti ve sexualhar ass -18 N o. 10

- 3247

m ent pol i cy to preve nt and pro m ptl y c or re ct a ny i nstance s ofse xual hara ssm ent o ccurr ing in the w or kpl ace. Vict or i a J anm oham m ed tes ti fi ed that the pol i cy w as a
“ z e r o t o l e r a nc e ” p o l i c y, me a ning“ we do n o tt ol er ate an y sex ua l ha rassm en t, an y d isc rim ination. W e d on’t e v e n t o l e r a t e som e b o dy n o ti nv e s t i g a t i ng . ” T o thi s e nd , the Defendants r equi re d al l o ftheir n ew em plo yee s, i nc l udi ngS hi sl era nd Po wel l, t o wat cha video e duca ting them o n sexu al h ar ass m ent in the w or kpl ace, and to r ea d a nd s i g n the i r sexua l ha r as smentpo l i cy . The S ex ua l Ha r a s s me n ta n d D i v e r s i t y P o l i c y th a tS h i s l e r a nd Pow el l si gned st ate d the f ol l owing: Ihave watched the S exual H ar ass m ent a nd Div er si ty vi deos. I am fully a w ar e o fo ur co m panie s [ si c] pol i ci es re gar ding both

—z e r o t o l e r a n c e f o r a n y ty p e o fu n l a wfu l d isc rim in at ion an d /or h ar as sm en t. O u r c om p an y is c om m itt ed to p r o v i d in g a w or k e n vir on m en t t h at is fre e o funl aw ful behavi ori n any f or m . Iwil l l ead by exam ple

. * * * A ny f or m o funl aw ful hara ssm ent o fco-w orker s o r memb e r s o fthe pu b l i c i s ab s o l ut e l y f o rb i dde n, r e g a r dl ess o f w hetheri t i s v erbal, physi cal, o r vi sualhar ass m en t. Y ou m us t be sen s it ive to the feeling s of oth ers and m ust no t a ct in a way that m i ght b e co n sid er ed offensi ve to som eone els e. Iwil l r epor t a ny i nstance s o f i m properbehav i orto m y m anage r orco m pany r epresenta ti ve . The c o m pan y wi l l t ak e i m m edi at e an d appropri ate st eps to i nvest i gat e a ll r epor ts of im p rop er beh avior.N o. 10

- 3247 19 I also u n d er st an d th e s ev er ity of kn ow in gly m ak in g fa l se accusat i ons ofdi scr i m i nati on o r hara ssm en t. Sex ua l H arassm e n t and /or Discrim ination are a s er i ous c harg e a nd sho uld be ta ken s er i ousl y. I n add iti on, the Defe nd ants al so note the prese nce o f the Cri si s M anage m ent Gui del i nes Po ste r i n the em plo yee b re ak roo m th at d isp lay ed , in p ar t, Sm ith ’s c ell phone num ber

. Lastl y, Defendants p oint out that as soo n as Del Rio i nfo rm ed Sm i th thata pri vate i nvest i gat or w as ask i ng questi ons about sexual hara ssm en t at the Racine I H OP, he i m m edi ate l y conducted an i nvest i gati on, to ok w i tness st ate m ents, d ete rm i ned that the pol i cy ha d b ee n v i o l at ed, a nd t o o kc o r rective ac ti o n b y fi r i ng Dahl forherf ai l ure to i nvest i gat e the se rv er s’ al l ega ti ons. W e fi nd thata ra ti onalj ury c oul d have co ncl ud ed th at the Defe nd ants exer ci sed r eas onabl e ca re byi nsti tuti nga s ex ua l h a r a s smentpo l i cywi tha r ea so nabl e co m pl aint m echani sm , and by engagi ng i n prom pt and cor re cti ve acti on byi nves ti gat i ng S hi sl er ’ s a nd Powel l ’ s co m pla i nts ofhar ass m ent a nd te rm i nati ng D ahl

. Li ke the di str i ct co ur t, ho wev er, we fi nd that the e vi den ce was s uffi ci en t f ora j ury to fi nd o ther w ise. A l though the pre sence of a s ex u al h ar as sm en t p olic y is e n c ou ra ge d by T it l e V II, “t h e m er e c re at i o n o fa se x u al h ar as sm en t p olic y w ill not sh ield a com pany fro m i ts re sponsibi l i ty to ac tiv ely p re ve n t s ex u al h ar as sm en t in th e w or kp lac e.” G entry, 2 38 F
. 3d at8 47
. The po l i cy m us t pr o vi de “a mean i ngful pro cess wh er eby an em plo yee can express hi s o r he r c o nc erns r eg ar di nga n i nd ivi dualwi th i n a wor k i ng e nv i r o nme nt
. ” Id

. Ca se law also requ ires that th e po li cy’s20 N o. 10

- 3247

co m pl aintmech an i sm be r ea so nabl e, “ an d w ha t i s r ea so nabl e depends o n the e mpl o y ment ci rcum sta nces, and ther ef or e, am ong othe r thi ngs, o n the capabi l i ti es ofthe c las s o fem plo yee s in questi on. ” E E OCv . V&J F o ods, Inc. , 5 0 7F
. 3 d 5 7 5 , 5 7 8 ( 7 th Ci r . 2 0 0 7 ) ( i nt er nal quo ta ti o n mar k s an d c i ta ti o ns o m i tt ed )
. M o r eo ve r, the p oli cy m us t not only be r eason ably effective on p a p e r, b u t a lso rea so n ab ly eff ec tiv e in p r a c t i c e. C la rk v . U nited P arce l Se rv. , Inc. , 400 F.3d 34 1, 35 0 (6 th C ir. 20 05 ). Despit e the f act that the Defendants had a sexualhar ass m en t po l i cyi n pl ac e, a ra ti o na l j ur y c o ul d ha ve f o und th atthe po l i cya nd co m pl aintm ec ha ni sm wer e no t r ea so nably effective in p ractice. A t trial, the j ury h eard evi dence i nd i cating tha t a l l m anage ri alem p l oye es at the R a c i ne I HOP f a i l e d t o c a r r y o utthe i r du t i e s u nd er th e p olic y. See Lo ughm an v. M alnati O rg. , Inc. , 39 5 F
. 3d 40 4, 40 7 ( 7th Ci r . 20 05 ) ( fi ndi ng th at “the co ns i st en t str eam o fhar ass m ent a t the r est aurantsu ggests that M alna ti ’ s po l i cywas a ctua l l y no t ve r y e ffec ti ve a t al l ”)
. F o r e x a mpl e , G u t i e r r e z v i o l a t e d th e p o l i c y b y e n g a g i ng i n sexualhar ass m ent. The o theras si sta nt m anage r of the Racine I H OP, Del Rio , and the generalm anage r of th e Ra cine IH O P, Da hl , both f ail ed to report G ut ierrez’s hara ssm ent a fterS hi sl er a n d Powel l co m pla i ned to them

. M or eov er, the j ury hear d evi dence that S m i th f ai l ed to i nv es ti g at e Shi sl er ’ s pr i o r c o m pl ainto fha r as sment ofano therfem al e s er verbythe f or m er g en er alm anage r ofthe Raci ne I H OP, H ecke r. T he j ury al so hear d evi dence th at Sm ith en ga ge d in in a p p ro p ria te co n d u c t t h at co u ld b e d es cribed und erthe pol i cy as sexualhar ass m ent,N o. 10

- 3247 21 by ru bbin g his fing er over the cleav age are a of a p icture o f Da h l ’ s t e e n a g e d a u g h t e r a n d s t a t i n g, “ i f o n l y s he w as 18. ” Guti er re z t est i fi ed that he witnes sed thi s inci dent, b u t d id n otrep or t it . A rat ion a l j u ry , fac ed w ith th is evid en ce, could hav e f ou nd that non e of th e m an agers of t h e R ac in e IH O P to ok ac tio n u n d er th e p olic y t h at co u ld be t er m ed “co rr ecti ve” or“e ffecti ve. ” See C la rk, 40 0 F. 3d at 35 0 ( “T he e ffec ti ve ne ss o fa n e mpl o y er ’ s se xua l ha r as sment p oli cy d ep en d s up on th e effective n e ss of those w ho are d esigna ted to i m p lem en t it. ”). Se cond, al though m anage m ent was r equ i re d to tak e s exual har ass m ent t ra i ni ng, the evidence at tr i al su gg es te d th at th e t ra in in g w as ina d eq u at e. D el R io te st i fi ed th ats he di d not recei ve s ex ua l ha r as smentt r aini ng wh en she bec am e a n assista nt m anage r, ev en tho ugh she, as the ass istant m anage r, was re sponsibl e for th e ori en tation and training of ne w em p loyees. M oreover, ev entho ug h the po l i cys ta te d tha t “a ny f o r m o funl awful h ar as sm en t o f co -w or ke rs or m em b er s o f th e p u b lic i s abs olute l y f o rbi dden, ” DelRi o “ bl ew o ff ” S hi sl er ’ s an d Pow el l ’ s co m pla i nts. Del Rio knew that she had an abso l ute du ty to re portse xu a l ha r a s s men t a l l e g a t i ons to up p er m an agem en t, yet sh e d id n ot r e p o r t Pow ell ’s com pla i nts b ecause , i n h er opini on, Powel l di d not s eem to be “ afra i d” ofGutie rr ez. S i m i l ar l y, Dahl knew that she had a n absol ute duty to re portsuch a l l ega ti ons to uppe r mana g ement
. Ye t, i n the f ac e o fPo wel l ’ s al l eg at i o ns th at G ut ierrez w as “sex ua ll y and ph ysicall y a bu sing [her] an d o t he r fem ale servers,” she fai led to rep ort Pow ell ’s com pla i nts. On these f acts , a ra ti onal j u ry co uld have concl ud ed that, not onl y w as the pol i cy and th e m anage -22 N o. 10

- 3247

m ent t ra i ni ng i neffecti ve, bu t the pro tect i ons offer ed b y t h em w er e illu so ry . G entry, 2 3 8 F
. 3 d a t8 4 7

- 5 0 ( up ho l di ng j ury’ s dete rm in at ion that e m plo yerf ai l ed to ta ke preve ntati ve orcorr ecti ve acti on reg ar ding sexualhar ass m ent where evi dence reveal ed defi ci enci es i n hara ssm en t p olic y a n d a failu re to res p on d to co m p lain ts ). T h ird , “[ o] ur ca ses r eco gni ze prom pt i nvest i gat i on o f th e all eged m iscond uc t as a ha ll m ark of reason abl e c orre cti ve acti on. ” C er ros v . S te el Tech., Inc. , 39 8 F
. 3d 944, 95 4 (7th C ir. 2005) (ci tations om itted ). H ere, a ration a l j ury coul d have co ncl ud ed that Sm i th’ s invest i gat i on o f Gu ti er re z’ s s exua l harass m ent was not“pro m pt. ” S hi sl er co m pl aine d t o mana g emento fGutierr ez ’ s ha r as sment tw i ce in M ar ch 200 5, and Powellco m pla i ned to m anage m ent three ti m es i n A pri l 20 05. S m i th di d not co m m ence hi s invest i gat i on unti l M ay 23, 2005
. This i s not the type o f r esp onse “ ‘ r ea so nabl y l i k ely t o pr ev en t th e ha r as sment fro m r ecurr i ng. ’ ” Id

. ( quoti ng Wi l l i am s v. Was t eMgm t
. of Il l. , 361 F.3d 10 21 , 102 9 (7 th C ir. 20 04 )). In ad d itio n, a ra ti onal j ury coul d have be l i eve d that a n i nvest i gat i on ensued onl y b ecause S hisl er ’ s pri vate i nvest i gat orst ar ted m ak i ngi nqui r i es o fo th erfemal e se r vers a t th e Ra cine IH O P
. F ur th er, a r at i o na l j ury c o ul d ha ve c o nc l ude d tha t th e po li cy was no t r ea so nabl y e ffec ti ve o n pa per . As the dist ri ct c ourto bser ved, an e m plo yer ’ s co m pla i nt m echani sm m ust pro vi de a c l ear p ath fo r re port i ng har ass m ent, p articu larl y w he re, as her e, a nu m ber of the servers w er e t ee n ag er s. Se eV&JFo ods , 5 07F
. 3d at5 78 ( no ting that because i t was parto fV& J’s busi ness pla n toN o. 10

- 3247 23

em p loy te en ag er s, “t h e c o m p an y w as ob liga te d to su it i ts pr o ce dur es t o the unde r st an di ngo fthe a ve r ag e tee nag er ”). Flip m ea st ac k’s se x u al h ar as sm en t p olic y d id not provi de a point per son to air c om pla i nts t o. In f act, it p r o vi ded no na m es o r c o nt ac t i nf o r m at i o n a t al l

. To the e xtent the Cri si s M an agem ent Gui del i nes Po ste r w as m eant to supp lem en t the se xual hara ssm ent pol i cy i n thi s r ega rd, a ra ti onalj ury cou ld h av e co ncl ud ed that i t d id n ot fulfi l l thi s r ol e. Fi rs t, nei therS hi sl ernor P ow ell c ou ld rec all w h et h er th e p os te r w as ac tu ally d i s p l a y e d i n th e em p l o y e e b r e a kr o o m d u r i n gth e t i me th atthe y wer e ha r as sed. S ec o nd, the po st erc o ntains i nstr ucti ons on how to deal with naturaldi sasters, fire s, an d oth er ev en ts su c h as food -b or n e illn es s. It al so conta i ns the phone num b er s o fl oca l autho ri ti es, an d Fl ipm easta ck’s corp orate nu m bers, inc lud ing Sm ith’s ce l l phon e number

. The wor d “ di sc r i m i na ti o n” i s co nta i ne d on th e po st erunde r the he ading“ o th ere m er g en ci es” ; however, t h e p os te r d oe s n ot in for m an empl o y ee whi chc o m pan y numbe r t o c al l in t he e ve nthe orshe bel i eve s that the sexual harass m ent pol i cy has been vi ol ate d. I n additi on, the poste r did not descr ibe e mp l o y e e s ’ r i g h t s u n d e r T i t l e V I Io r p r o v i d e p h o n e n u mber s forthe EE OC o r a l oc al ci vi l r i ghts offi ce, and thus, did notpro vi de a m ean s f orthe em plo yee to m ake an exte rnalco m plai nt o fdi scr i m i nati on. These f acts, a n d th e i n fe r e n c e s r e a s o n ab l y d r a wnfr o m th e m, c o u l d h a v e l e d a r a t i o n a l j u r y t o c o n c l u d e th a tt h e c o mpla i nt m echani sm pro vi ded byFl i pm eas tack ’ s sexual hara ssm ent pol i cy did notpro vi de a cl earpath f orr epor ti ng har ass m en t. Fo r al l o fthes e r eas ons, we fi nd tha tthe j ur y ’ s de t e r m i na t i o n tha tthe De fe nd

-24 N o. 10

- 3247

an ts di d no t di sc ha r g e th ei r duty t o effec ti ve l y pr ev en t an d c o r r e c tp r o mpt l y s e xu a l h a r a s s men ti n the wo r k pl ace, w as not unreas onabl e.
b. Sh i sl er ’ s and Pow el l ’ s Pr eve ntat i ve orCorr ect i ve A ct i on W e no w tur n to the seco nd el em ent o fthe Faragher/E ll er th affi rm ati ve defe nse

—i.e., w h et h er Sh isle r an d P ow ell unreas onabl y f ai l ed to tak e advantage ofp re venta ti ve o r c o r r ec ti ve m ea su r es . The De fen dan ts ’ pr i m ary a r g um en t o n a p p ea l is th at n eit h er Sh isle r n or P ow ell eve r com pla i ned to Sm i th, and th er e i s “ no doubt” that ha d the y do ne s o , “ [ S mi th] woul d ha v e t a k e n pr o mpt acti on t o cor re ct s exual har ass m ent. ” The Defendan ts’ ar g um en t i g no r es the t er m s o fthe s ex ua l ha r assm en t pol i cy i tse l f, wh i ch pro vi ded thatan e m plo yee was to “ r epo r t any i ns ta nc es o fi m pr o perb eh av i o r t o [ th e empl o y ee ’ s] mana g ero r c o m pany r epr es en ta ti ve . ” As the c re at or of th e po licy , V ict or ia Jan m oh am m ed affirm ed th is f ac t at tria l

. S hi sl era nd Po wel l ut i l i ze d the c o m pl aint m ech an ism by fi rst asking Gu tierrez, an assistan t m an ager, to sto p hi s haras si ng behavi or . W hen G uti er re z refused to sto p hi s hara ssm ent, both Shi sl er and Po w el l r epor ted Guti er r ez ’ s ha r as smentt o De l Ri o a nd Da hl

—each o fwh om w er e m an ag e r s o r c om p an y re p re se n ta tiv es w ith in th e m ea n in g of t h e p olic y. Dur i ngthe month tha t S hi sl erwor k ed a t the Ra cine I H OP (M ar ch 200 5) , she fi rs t r epor ted Guti er re z’ s har ass men t t o De l Ri o o n M a r c h 1 8 , 2 0 0 5
. Af t e r De l Ri o f ai l ed to t ak e ac ti on, S hi sl err epo r te d the ha r as smentt o Da hlN o. 10

- 3247 25 on M ar ch 27, 20 05. On cro ss- exam i nati on, Shis l erte sti fi ed that, after she l ast com pla i ned to Dahl, and Dah l “b l ew he r off, ” she c o u ld h ave com p laine d to Sm ith; how ever, Sm i th di d no t wo r k tha t da y, a nd wo ul d no t b e at t h e re st au ra n t “ u n til th e v er y n ex t Su n d ay , po ss ibly .” Sh isle r w as te rm in at ed on A p ril 3, 20 05 . G ive n th is e vidence, a ra ti onalj ury coul d have b elie ved thatS hi sl er d id n ot act u nrea son ably by fai lin g to report G ut ierrez’s co nduc t di r ec tly t o S m i th

. I n additi on, a ra tio nal j ury coul d have be l i eve d that Shisler did not feel com fortable reporting G ut ierrez’s hara ssm ent to Sm i th. Shi sl er tes ti fi ed that Sm i th fail ed to re spond to her pri orco m p lain t ofhar ass m ent b y H ecke r toward anothe r ser ver i n 2004
. Shi sl er al so tes ti fi ed tha t a ft e r s he c o mpl a i ne d t o S mi th, He c k e r b ega n to tr eather m or e har shl y. In l i ght o fthi s pri orexper i ence, a r ati onalj ury coul d have co ncl ud ed that her deci si on n otto co n ta c t Sm ith in 2 00 5 w as th er efo re j u st ified

. Pow el l fi rs t co m p l ai ned to Dahl o fGutie rr ez’ s har ass m en t dur i ng th e fi r st wee k o f Apri l 20 05. Dahl r es po nde d tha t sh e “wo ul d t ak e ca r e o fi t. ” The f o l l o wi ng wee k, De l Ri o as k ed Po wel l i fGuti er r ez had b ee n t r ea ting her i napp ro pri ate l y, and Pow el l responded i n the affi rm at i v e . S t i l l, n o a c t i o n wa s t a k e n . P o we l l l a s ta i r e d a c o mpl aintt o Da hldur i ngthe l as t wee k of A p ri l, b utDa hl tol d her that she “ didn’tneed t o heari t. ” W hi l e i t i s t rue, as th e d ist r i c t c ou rtob se rv ed , th at P ow ell m ight ha ve c o m pl aine d t o S m i tha fter itb ec ame e vi den t t h a tn e i th e r D a h l n o r D e l R i o h a d c o r r e c t e d th e p r o b l e m, o nl y abo utthr ee t o f ou r w eeks e l aps ed be twe enthe26 N o. 10

- 3247 ti m e that Po w el l l astcom pla i ned to Dahl and the date that Gu ti er re z r esi gned. A r ati onalj ury coul d have co nclu d ed that Pow el l di d not ac t unre aso nabl y in f ai l i ng to co ntact Sm ith d u rin g t h is t im e p er iod

. See H a rdy v. U niv. of Ill
. atChi cago , 3 28 F
. 3d 36 1, 3 65

- 66 ( 7th Ci r . 2 00 3) ( st at i ng that i t i s forthe j ury to deter m i ne w h et h er em plo yee un reason ably fai led to ava ilherself ofher em p lo y e r ’s com pla i nt pro cedures, and em plo yee ’ s del ay ofsi x w eek s to re portsuperv i sor ’ s m i sco nd uct aft er tr yi ng to deal w i th super vi sordi re ctl y w as not unreaso nabl e as a m att er of l aw ). For a ll o f th ese reason s, w e find that the j ury’s de t e r mi na t i o n tha tS hi s l e r a nd P o we l l tookp r o mpt an d a ppr o pr i at e ac ti o n unde r th e po l i cy was no t unr ea so nab le.

3. Pun i t i ve D am age s Puniti ve dam age s a re ava i l abl e under Tit l e VI Iwh en a pl ai nti ffdem onst ra tes th at the defe nd ant e ngage d i n i ntenti onaldi scr i m i nati on “ w i th m al i ce orwith r eckl ess i nd i fferen c e to the federa l l y pr ote cted r i ghts ofan a ggr iev ed i nd i vi du al

. ” 4 2 U.S
. C. § 1 981a ( b) ( 1)
. W hether an award ofpuniti ve dam age s i s pro per i s s ubj ect to a t h re e-p ar t in q u iry
. Kol s t adv . Ame r i c an De n t al As s ’n , 527 U
. S. 526 (1999). T he first tw o elem en ts requ ire the pl ai nti ffto sho w that : ( 1) the em p loyeract ed w i th the r equi si te m entalst ate

—i. e., that i t acted “in the face of a perce i ved r i sk th at i ts acti ons w i l l vi ol ate the federa l law ”; an d (2) th e e m p loy er ’s m an ag e r ial a ge n t re c kle ss ly disr ega rded the plainti ff’ s federa l l y pr ote cted r i ghts w h ile ac tin g w ith in th e sc op e of em p loy m en t. Id

. at 535

- 36,N o. 10

- 3247 27 543. Thi rd, an e m plo yerm ay avo i d vi car i ous l i abi l i ty f or a m an ag er i al empl o y ee ’ s di sc r i m i na to r y co nduc t ifthe em plo yercan sh ow that i t e ngage d i n go od f ai th eff or ts to im p lem en t a n an ti-d isc rim in at ion p olic y. Id

. a t 54 5. The Defen dan ts c ha ll en g e o nl y the thi r d e l ement, c l ai m i ng th at th is cas e pr es en ts a “te x tb oo k ex am p le of re sp on sib le em plo ye rs i m ple m enti ng and f ol l owing cl earand effecti ve sexualhar ass m ent pol i ci es. ” W hi l e the De fe nd a nt s ’ s e xu a l h a r a s s men tp o l i cy i s r el evantto ev al uati ng wh etheran e m plo yerenga ged ingoo d fait h eff o r t s t o c om p ly w ith T itle V II, “itis not suffi ci ent in and ofi tse l fto insul ate an em plo yerfro m a p un iti v e da m ages aw ard

. Ot he rw ise, em p loyers w ou ld h av e a n inc en t i v e t o ad op t fo rm al p olic ies in or der t o esca pe l i abi l i ty f orpuniti ve dam ages, but the y w ou ld h av e n o in c en tiv e t o e n for c e t h os e p olic ies .” B ru so v . U nite d Airli nes, Inc. , 2 39 F
. 3d 84 8, 8 58

- 59 ( 7th Ci r. 20 01 ) (foot n ot e c olle c tin g c as es an d cit at ion om itt ed ). A ra tionalj ur y c o ul d ha ve c o nc l ude d tha t th e Defen dants’ pol i cy w as not suffi ci en t to i nsul ate i t fro m a p u ni ti ve dam age s a w ar d, because i t was i neffecti ve i n advanci ng the ed ucati on and p ro tect i on ofthe em plo yee s’ rig h ts u n d er T it l e V II . A rat ion al jur y c ou ld have concl ud ed that cer tain pol i cy l anguage

—i
. e. , no ting the “ seve ri ty ofkno w i ngl y m aking a f alse a c c usati on o f disc r i mi na t i o n o rh a r ass m ent”

—w as i nser ted to di sco urag e c om p lain ts of s ex u al h ar as sm en t. Ind ee d , Vic to ria J anm oham m ed tes ti fi ed that the l anguage was i nser ted afterherhusband w as s u ed f orse xual hara ssm ent b y a s er verato ne o fhi s I H OP rest aurant s. A l though28 N o. 10

- 3247 she deni ed that the l anguage was inser ted int o th e s exual ha rassm en t po li cy in reaction to the law su it, the j ury w as enti tl ed to di sbel i eve her

. In ad d i ti on, S m i th te sti fi ed th at, onc e th e se r ve r s vi ewe d the s ex ua l ha r as sment vi deo and si gned the s ex ual har ass m ent a nd di ver si ty p olic y, th e p olic y w as loc ke d ina file c ab in et, no t a c c es sib le to the ser ver s without m anage ri alapprov al

. I fthe m anage ri al approval had t o com e fro m a m anage r w ho happened to b e th e al l eg ed ha r as se r, thi s c ou ld pr es en t a si g ni fi ca nt h u rd le for relie f. See V&JFo ods , 50 7 F
. 3d at 579 ( “A pol i cy aga i nst haras sm ent that incl ud es no a ssur ance th a ta h a r a s s i n gs u pe r v i s o r c a n b e b y p a s s e d i n th e c o mp lai nt proc ess is un reason able as a m atter of l aw . ”). M or eo ve r, th e c om p lain t m ec h an ism w as m en tio n ed in th e v i d e o , b u t wa s n o t a v a i l ab l e i n wr i t t e n f o r m. To t he extent the c ri si s m anage m ent poste r w as m eant to add re ss thi s i ssue by provi ding the nam e a nd cell p h one num ber ofS m i th, the poste r w as i nsuffi ci ent t o fi l l the ga p i n inf o r m at i o n f o r the re as o ns pre vi o us l y st at ed r eg ar di ng th e D efe n d an ts ’ affirm at ive d efe n se . F ur th er, a rat ional j ury c o ul d ha ve c o nc l ude d tha t th e Defe nd ants did n ot enga ge i n go od f ai th eff or ts to educate th ei r mana g er i als ta ffabo uts ex ua l ha r as smenti n the w or kpl ace. Del Ri o tes ti fi ed th at , al though s he r ecei ved traini ngo n s ex ua l ha r as smentwhens he was a s er ve r, she di d not r ec eive addit i onaltr ai ni ng aftershe w as p ro m ot ed to as sis ta n t m an ag er . A s D el R io w a s in charg e of tr ai ni ng al l new em plo yee s on the D efendants’ sexual h ar assm ent pol i cy, herl ack oftr ai ni ng i s t ro ubl esom e. M or eov er, DelRi o re cei ved num er ous com pla i nts o f G u tie rre z’s se x u al h ar a s s m e n t fro m Sh isle r an d P ow ellN o. 10

- 3247 29

Bec a us e MH R i s a di s s ol ve d c or po r a t i on, the di s t r i c tc ourt 2 he l d thatJ anm oha m m ed h ad t o pe rs ona l l y s at i s fy a ny j udgm en t ag ain st M H R to the exten t of th e d istribu tion s he rec eiv ed as a re s ul tofthe di s s ol ut i on ofM H R. The di s t ri c tc our tf ound thathe rec ei ved $15, 000 from t h e sa le ofM H R ’ s ass ets ; thus , he was l i abl e f or tha tam ountofthe judgm en tagai ns tM H R. Tha ti s s ue is not th e sub ject of this ap p eal. (am on g ot h er s), b u t fa iled to rep or t t h eir c om p lain ts , in p ar t, bec ause she di d not thi nk Powel l was ser i ous. Guti er r ez a nd Da hlre ce i ve d tr aini ngon se xua l ha r as sment as m an ageri alst aff; however, nei therco m pli ed w i th the pol i cy by re port i ng the har ass m ent t o up per m an agem ent. Gu ti er re z engag ed i n sexual hara ssm ent, and fa i l ed to re portS m i th wh en he m ade i napp ropri ate co m m ents w hi l e a dm i ring a picture of Dahl’ s daughter

. Dahl re cei ved co m pl aint s reg ar di ngGut i er r ez ’ s se xua l ha r as sment ofse rv er s o n num er ous o ccasi ons, but, l i ke Del Rio , f ai l ed to r epor t those cl ai m s to Sm i th or to up per m anage men ta tF l i pme a s t a c k

. T hu s , a s the di s t r i c tc o ur tf o un d, a r ati onalj ury coul d have co ncl ud ed that the Defendants’ con si st en t f ai l ur e to c o m pl y wi ththe s ex ua l ha r as sment p olic y e vin c ed a lac k of u n d er st an d in g of w h at co n st ituted se xual hara ssm en t under Fl i pm eas tack ’ s pol i cy an d w ha t the ir resp ons ibi lit ies w ere as m an agerial staff und erthe pol i cy. A ccor dingl y, we fi nd that t h er e was a r ea so nabl e ba si s i n the r ecord to pe r m i t a j ur y t o fi nd that the Defendants di d not e ngage in goo d f ai th effor ts to com p ly w ith Title VII

. Th e jury’s p un iti ve d am ages aw ard st ands aga i nst M H R and J anm oham m ed; however, f or 2 th e r ea so ns adv an ce d i n S ec ti o n I I
. C. o f th i s o pinion, the30 N o. 10

- 3247 pu n itiv e d am ag es aw ar d ag ain st Fl i pm eas tacki s r em anded to the di str i ct c ourt
. W e no w turn t o the di st r i ctc o ur t’ s r ul i ngde ny i ngthe D efe n d an ts ’ m ot ion for n ew tria l.

B. D ef end ants’ M ot i on f orN ew Tr i al P ursuant t o F ED . R. C IV . P. 59( a) D efe n d a n t s c h alle n ge th e d ist ric t c ou rt ’s d en ial of t h eir m o ti o n f o r ne w tr i alo n t wo g r o unds. Fir st, the y c o nt en d th a tth e d i s t r i c tc o u r tab u s e d i t s d i s c r e t i o n b y f a i l i ng to i nc l ude the Faragher/E ll er th affi rm ati ve defe nse o n th e spe ci alv er di ctf o r m . S ec o nd, the y c o nt en d tha t th e di st r i ctc o ur t admi tt ed “other ac ts ” ev i den ce tha t pr ej udice d t h e j ury aga i nst them

. W e r evi ew a dist ri ct cour t’ s r ulings o n a m oti on f ornew t ria l fo r an abuse o fd isc re tio n . A ldri dge v. Fore stRiver, Inc. , 6 3 5 F
. 3 d 8 70, 87 7 (7 th C ir. 20 11 ).

1. S p ec ial V erd ic t F orm W hetherto “s ubm i t s peci ali nter ro gat or i es ( ei thero n al l i ssues o r on a subset ofi ssues l i ke dam age s) i s co m m i tted to the sound disc re tio n ofthe dist ri ct c ourt
. ” Cru z v. To w n o

f C icero , 2 75 F
. 3d 57 9, 5 91 (7th Ci r . 2 00 1) ( ci ting Bula rz v. Pr ude nt i al Ins . Co. , 93 F.3d 37 2, 377 (7th Cir. 1996)). The ver dictfo rm as ked the j ury to deci de w hether th e D efenda nt s wer e l i ab l e f o r s ex ua l ha r as sment, b ut f ai l ed to i nc l ude a n a ddi ti o na l i nt er r o g at o r y a sk i ng w hether th e D efe n d an ts w er e e n tit led to th eirN o. 10

- 3247 31 Faragher/E ll er th affi rm ativ e defense. The Defendants ass er t that the di str i ct c ourt ’ s f ai l ure to i nclu de on the s peci alverd ict f or m any i nter ro gat or i es re l ate d to th ei r a ffi r m at i ve de fen se i m per m i ss ibl y t o o kthe i ss ue awayfr o m the j ur y, an d co ns ti tu te s anabus e o fdi sc r et i o n. See U n ited S ta tes Fire Ins. C o . v. P ressed Steel Ta nkC o ., Inc ., 85 2 F .2d 31 3, 3 1 8 ( 7 t h C ir. 19 88 ) (h old in g t h at R u le 49( a) o fthe Feder alRule s o fCi vi l Pro cedure re quir es a di str i c t c ourtto subm i t a l l m ate ri ali ssues r ai sed by th e plead ings an d the evid en ce in a sp ecial verdict form ). The ver dictf or m i n thi s ca se w as enti tl ed “Sp ec ial Verdi ct F or m . ” Yet, as the dist ri ct c ourtdescr ibed i t, the v er dictf or m w as a gener alve rdi ct for m as i t per tained to th e Defen dan ts ’ l i ab i l i tyf o r s ex ua l ha r as sment, a nd a s p e c i a l v e r d i c tf o r m a s i tp e r t a i n e d t o d a ma g e s . We ar e no t a w ar e o fany rul e that pr ecl ud es t h is ty pe ofhybri d ver dictf or m ; Rule 4 9 d oe s not. Our ca se l aw r equi r es o nl y tha t th e ve r di ct form notb e co nfus i ng o r m isle ad in g t o th e jur y. Happ e l v . Wal mar tS t ore s , Inc. , 602 F. 3d 820, 82 7 ( 7th Ci r. 20 10)
. In eva l uati ng wh ether a ve rdi ct for m i s c onfusi ng o r m i sl eadi ng, we consi der the v er dictf or m i n l i ght o fthe i nstru c tio n s gi ven t o det er m i ne “ whethe r [ th e j ur y ] ha d [ an ] unde r st an di ng of t h e is su es an d its d u ty t o d et er m in e t h os e is su es .” Id

. ( intern al quo tation m arks an d citation om itted ). T he De fend an ts d o not ch all en g e t h e district cou rt’s i ns truct i o ns t o the j ur y, i nc l udi ngthe i ns tructi ons o n the el ement s o fa c l ai m f o r s ex ua l ha r as smenta nd the De fen d an ts’ Faragher/E ll er th a ffi r m at i ve d e fe n s e . T h e in s t ru c t i o ns i nf o r m ed th e j ur y tha t i n e va l uating w he th erthe De fen -32 N o. 10

- 3247 dants were l i abl e forGutie rr ez’ s s exual har ass m ent o f Shi sl erand/o r Pow el l, theywere to consi der whe th er the Defendant s had prove n thei r affi rm ati ve defe nse b y a pr epo nde r an ce o fthe e vi den ce. W e fi nd tha t th e ve r di ctf o r m , r ea d i n l i g hto fthe j ur y i ns truc tions, i nf or m ed the j ury that i n fi nd i ng the Defendants’ l i abl e, they w er e i m pli ci tly rej ecting the i r affi rm ati ve defe nse. There

f or e, the dist ri ct c ourt ’ s d ec isi on notto i ncl ud e a questi on a dd re ssing the Defendants’ a ffi rm ati ve defe nse o n the l i abi l i ty port i on o fthe ver dictf orm w as n ot an ab u se of d isc re tio n .
2. “ O t her A ct s” Ev i den ce W e r e v i e w c l a i ms o fi mpr o pe r l y a dmi t t e d e v i de nce for an a b u se of d isc re tio n . Far f aras v. Ci t ize ns Bank a nd Trust of Chi cago , 4 33 F
. 3d 55 8, 5 64 ( 7th Ci r . 2 00 6)
. W he re th e a lleg ed err or of ad m iss ion oc c u rre d d u rin g t ria l, “w e wil l gr ant a new tr i al onl y i f the er ro r had a subst anti al i nfl ue nc e o ve r the j ur y, a nd the r es ul t r ea ch ed was i nc o nsi ste nt with substa nti alj usti ce. ” Id

. ( i nter nal q u otati on m arks an d citations om itted ). “E vide nt iary e r r ors satisfy thi s s tandard o nl y when a si gni fi c an t chance exi sts that they affecte d the o utcom e o f the tr i al

. ” O ld Republi c Ins . Co. v. Em pl oye rs Re i ns uranc eCorp. , 14 4 F
. 3d 1077, 1082 ( 7th Cir. 1998) (ci tations om itted ). The Defen d an ts ob j ec t t o t w o p iec es of ev id en c e a d m itted at tr i al : ( 1) S hi sl er’ s t est i m ony that H ecke r, the gener al m anger ofthe Raci ne I H OP p ri orto Dahl, se xually har as se d a no th erfemal e se r ve r na m ed C hri st i ne , a nd (2) D ah l’ s testim ony that Sm ith se x u a ll y hara ssed her.N o. 10

- 3247 33 Defen dan ts c o nt en d thi s e vide nc e was “ i r r el ev an t an d high l y i nfl amm at o r y ” an d i t “wr o ng l y pr ej udi ce d the j ury aga i nst defendants. ” Evidence i s re l evant i f i t has “any tendency t o m ake th e ex i st en ce o fa ny f ac t th ati s o fc o ns equenc e to the d et er m in at ion of th e a c tio n m or e p ro b ab le or les s p ro b ab le than i t would be w i thout the e vi dence. ” F ED . R. E V ID . 40 1. Rel evante vid ence m ay be e xcl ud ed, however, “i fi ts pr o ba ti ve v al ue i s su bs ta nt i al l y o ut wei g he d b y the danger ofunfa i r prej ud i ce . . . . ” F ED . R. E V ID . 403
. Shi sl erte sti fi ed that Sm i th’ s r esponse to herr epor t o f H ecker’s har ass m ent was “pass i ve. ” S he al so tes ti fi ed that, fol l owing her re portto Sm i th, H ecke r bega n to as si gn he r the wo r s tr e s t a ur a nts e c t i o ns . Whe n s he c o nt a c ted c or p or at e IH O P , sh e w as info rm ed sh e h ad to co m p lain to S m i th

. Given he r r ec en t ex per i en ce wi thS m i th, Shi sl erdeci de d not t o pursue the m att er . Contr ar y t o Defen dan ts ’ a ss er ti o n, S hi sl er ’ s te st i m o ny r eg ar di ng H eck e r ’ s h a r a s s men twa s r e l e v a ntt o the De fe nd a nt s’ Faraghe r/ Ell e r t h affi rm ati ve de fense because , as the district court reason ed , i t sug geste d that Fl ipm easta ck’s se x u al h ar as sm en t p olic y w as n otrea so n ab ly eff ec tiv e. Dahl t estifi ed that she was se xually har ass ed by Sm i th. The d istri ct c ourtf ound that herte sti m ony w as a lso r elevan t to the D efend an ts’ Faraghe r/ Ell e r t h a ffi rm ative de fense. Th e D efend an ts con ten d th a t they w ere pr ej ud i c e d b y the a dmi s s i o n o fDa hl ’ s t e s t i mon y, because herl aw sui t against M H R, al l eging tha t S m i th sex ua ll y hara ssed her, w as d ism issed by the district cou rt on sum m ar y j ud gm ent el eve n m onths bef or e the tr i al of th is m at te r c om m en c ed

.34 N o. 10

- 3247 The s ubj ec t o fDa hl ’ s l aws ui t w as addr es se d dur i ng Sm i th’ s t est i m ony. H e t est i fi ed that Dahl’ s l aw su it w as “dis m i sse d” becau se “ ther e was no m er i t t o i t. ” Thus, an y pr ej udi ce c au se d b y the a dm i ss i o n o fDa hl ’ s te st i m o ny was c ur ed byS m i th ’s te st i m o ny . Acco r di ng l y, we fi nd the a dm i ssi on o f S hi sl er ’ s a nd Dahl’ s t est i m ony w as not anabus e o fdi sc r et i o n.
C. E E OC’ s Po s t - Tri a l Mot i o ns The EE OC ’ s Po st- Tri alM oti ons i ncl ud e a m oti on t o fi nd the De fe nd a nt s j o i nt l ya nd s e v e r a l l y l i ab l e , a nd a mo t i o n f o r i nj u n c t i v e r e l i e fa g a i n s tF l i p me a s t a c k

. We f i r s t a d d r e s s th e di st r i ct c o ur t’ s o r der ho l di ng Fl i pm eas tackl i abl e forthe sexualhar ass m ent o f the c l ai m ants. W e r evi ew the dis tr i ct c ourt ’ s co ncl usi on o fl a w de n ovo . M e t avan t eCorp. v. Em igrantSa v. Bank, 619 F.3d 748, 758-59 (7th Cir. 2010).

1. Corp orate Liability Pr i or to tri a l, the EE OC fi l e d a mo t i o n i n l i mi ne r e g a r di ng co rpor ate l i abi l i ty. The m oti on a ske d the d i str i ct cour t t o ru le, a s a m att ero fl aw , thatFl i pm eas tack, as an aff iliat e c or p or at ion of M H R, sh ou ld be h eld liab le for G uti er re z’ s har ass m ent o fS hi sl erand Powellunder t wo o f th e th r e e th e o r i e s a d v a nc ed i n P a pa v. Ka ty In du s., Inc. , 16 6 F
. 3d 937, 94 0- 41 ( 7th Ci r. 19 99 ) ( hol ding that a n a ffi l i a t e ’ s cor po r a t e e xi s t e nc e ma y b e di s r e g a r de d, an d th e a ffilia te h eld to be an em p loy er u n d er T itle V II, i n “ th r ee s i tu at i o ns ”; the t r adi ti o na l co ndi ti o ns a r e pr es en tN o. 10

- 3247 35 to p ier c e t h e c or p or at e v eil, th e a ffiliat e s p lits its elf i nt o t i ny c o r po r at i o ns f o r th e ex pr es s pur po se o fa vo i di ng liab ility u n d er T i tle V II, an d th e p ar en t c or p or at ion d irected the d iscrim inatory act of w hich the p lai nt iff i s com pla i ni ng)
. The EE OC ar gued und er the “fi rs t s itu ation” of Papa t h at M H R ’s c or p or at e liab ility sh ou ld be pi er ce d a nd tha t F l i pm ea st ac ks houl d b e he l d the re alem plo yer of Gu ti er re z a t the Raci ne I H OP. I t a l so argu ed un d er the “thi r d si tu at i o n” of Papa th atF l i pm ea st ac ks ho uld be he l d l i ab l e f o r di r ec ting th e d isc rim in at or y ac t, b ec au se it “w as th e e n tit y re sp on sibl e forthe i na dequ ate H R pol i ci es and practi ces that allo w ed th e h ar as sm en t t o oc c u r an d co n tin u e . . . . ” A fter the m otion w as fully briefe d , the district cou rt he l d a p r e - t r i a l c o nfe r e nc e , the mi nu t e s o fwh i c h s t ate , “Court to re sol ve m oti ons i n l i m i ne o n 3 c or pora te l aw i ssues aftertr i al, i f necess ar y. EE OC m ay fi l e obj ecti on to thi s pro cedure. ” F ol l owing or alargum ent, we re quested a tr an scr i pt ofthe pre- tr i alco nfe re nce fro m the dist ri ct cour t. A l though there was no t ra nscri pt, t h e d i str i ct c ou rtex p lain ed , in a w r i tt en m em or an d u m , th at it chose to r ule o n the i ssue ofFl i pm easta c k’ s co rpor ate l i ab i l i tyb ec au se i t be l i ev ed th atif “th e f ac ts r el at i ng to cor pora te str ucture and the r el ati on sh ip between th e t h re e d efe n d an ts h ad be en ad d re ss ed d u rin g t r i a l, th e t ria l w ou l d h av e b ee n m u c h lon ge r an d m or e c om p lic a t e d tha n i twa s . ” Ne i the r the D ef e nd a nt s n o rthe EE OC obj ecte d to thi s pro cedure. I n i ts po st
- tr i alm oti o n, the EEOC s ubmi tt ed th e i ss ue of Fl ipm easta ck’s corp ora t e li abili ty to the district cou rt on th e s am e g ro u n d s a ss er te d in it s m ot i o n in lim in e. In36 N o. 10

- 3247 the di str i ct c ourt ’ s Decision and Order, i t found that th e co nt r o l the o r y a dva nc ed i n E E O Cv. Ill inois , 69 F. 3d 167, 16 9 ( 7th Ci r. 19 95) a p p lied, and that Papa “was note nt i r ely o n po i nt
. ” M o r eo ve r, the di st r i ctc o urt r ej e c t e d the g r o un ds u po n whi c h the EE OC b a s e d i ts cl ai m o fF l i pm ea st ac k ’ s co r po r at e l iabil i ty
. I t f o und th at“ F l i pm ea st ac ki s a di st i nc t l eg al en tity, ” an d that “Fl i pm eas tackdi d not di re ct Guti er re z’ s be havi or . ” W e agree w ith th e D e fe n d an ts th at th e con trol th eory of l iabil ity w as inj ecte d i nt o the c a s e too l ate. In su p p ort ofo urr ul i ng, we fi nd B urd ett v. M iller, 95 7 F
. 2d 1375 ( 7th Ci r. 1 992 ) di r ec tly o n po i nt
. In M iller, we ove rturned a RI CO co nv ict ion based o n an e nter pri se theo ryr ai sed n otby th e p ar tie s, b u t b y t h e d ist ric t c ou rtw h en it enter ed i ts fi nd i ngs o ff act and concl usi ons ofl aw po stt r i al

. The c o m p la i nta l l eg ed th atM i l l era nd h is a c c ou n tin g firm w er e a n en te rp ris e t h a te n ga ge d in a patt er n ofr acke tee ring ac ti vi ty consi sting o f m i sl e a di ngst a t e men t s a nd o mi s s i o ns tha tv i o l a t e d fe der al s ec u rit ies law s. Id

. at13 79. The p l ainti ffm ai ntai ned h er en te rp ris e t h eo ry th ro u gh ou t t h e t ria l. Id . at 1380. I n the d ist r i ctc o ur t’ s fi ndi ng s o ff ac t an d c o nc l us i o ns ofl aw , i t found the acc ounti ng fi rm had not been i nvol ved i n the al l ege d i l l egal act i vi ty, so ther e was no en te r pr i se c o ns i st i ngo fM i l l era nd hi s ac co unt i ng firm

. Id

. at13 79. Instea d, the di str i ct c ourtf ou n d M i l l er a nd thr e e o fh i s a s s o c i a t e s i n the fr a ud co ns t i t ut e d a R I C O ente rp rise, ev e n t hou gh, du ring the trial, there was “ no ment i o n o fan e nt er pr i se c o ns i st i ngo fthe f o ur conspi rator s them sel ves. ” Id

. at13 80. W e co ncl ud ed th ata l th o ug h the r e was e xt en si ve e vi d en ce c o nc erni ngN o. 10

- 3247 37 M i l l er ’ s co nnecti on with hi s three as soc i ate s, the pa rt i es di d no t c o ns e nt, wi thin the mea ning o f Ru l e 1 5 ( b) o f th e Fed eral Ru les ofC ivi l Proc ed ure , to define th e ent erpri se as consi sting o fM i l l erand h is three as soc i ate s d u rin g t h e t ria l. Id

. I nd e e d, we no t e d tha t “ M i l l e r had no warni ng tha t e vi dence m ani fest l y a dm i ssibl e be cause re l evantto the consp i ra cy charg e would al so be use d to e st ab l i shthe e xi st en ce ofan e nt er pr i se t o whi chno o ne i n the c o ur s e o fthi s l i t i g a t i o n ha d a l l ud e d. ” Id

. Ac c o r di ngl y, w e hel d that the dist ri ct courtcom m i tte d prej ud i ci al er ro r by changi ng the theo ryo fthe case a fterthe cl ose of the ev i dence, bec ause i t r an co unter to the s pir i t o f the a dvers ar y s yst em and depri ved the defe nd ant o f th e o p p or tu n ity to reb u t t h e n ew en te rp ris e t h eo ry . Id

. I n the EE OC ’ s pre - tr i ala n d p ost
- tr i alm oti ons, i t r el i ed s o l e l y o n th e “ fi r s t ” a n d “ th i r d s i t u a t i o n ” r a i s e d i n Papa
. A fterco m ple ti on o fpost
- tr i albr i efi ng, the dist ri ct c ou rt, sua s ponte, i nj ecte d a n enti re l y new theo ryo fl i abi l i ty b as ed u p on a c a s e n ev er cit ed by eith er p ar ty , E E OC v. Illin o is, s up ra . The di st r i ct co ur t r efr amed the i ss ue as “w he th er the d efend an t so far con troll ed the p lai nt iff’ s em plo ym ent r el ati onshi p that i t [ i s] appropr i ate to re gar d [F l i pm eas tack ] as the de f acto o r i nd i re ct em plo yero fthe pla i nti ff

. ” In so r u ling, the dist ri ct co ur t depr i ve d the De fen dan ts o fpr es en tingc o ntr ar y e vi den ce . Thi s er r o r i s no t ha r m l es s. I t i s ev i den t fro m the dist ri ct c ourt ’ s pos t- tr i alD ecis i on a nd Order that had it d eci ded Fl i pm eas tack ’ s co rpor ate l i abi l i ty st ric tly from t h e p ar tie s’ w rit te n su b m iss ion s, it w ou ld ha ve fou n d F lipm easta ck n ot li able for Shisler’s an d P ow ell’s se x u al h ar as sm en t.38 N o. 10

- 3247 There i s o ne o theri ssue to ad d re ss . A t o ra l ar gum ent, w e r ai sed c oncerns r ega rdi ng the di str i ct c ourt ’ s deci si on to re m ove the corp or ate l i abi l i ty i ssue fro m the province ofthe j ury. The EEO C subm i ts that the Defe nd ants w ai ved th eir right to a j ury b y fai ling to obj ect. Th e record refl ects thatthe Defe nd ants did notr ai se an o bj ecti on t o the di str i ct c ourt ’ s deci si on t o rul e o n the cor pora te l i abi l i ty i ssue bef or e t ri alf ortwo r eas ons. Fi rs t, the Defe nd ants unde r st o o d t ha t the EEOC was s ee k i ngt o pi er ce the cor pora te exi ste nc e o fM H R and find thatFl i pm eas tack w as an em plo ye r ofGutie rr ez. S eco nd , the Defe nd ants di d no t b e l i eve that Papa a ppl i ed to the f ac ts o fthe c as e. A c c or d in gly , w e fin d th a t t h e D efe n d an ts d id not w ai ve thei r ri ght t o a j ury w ith r espectto the contr ol th eo ry of liab ility

. Bec au se the di st r i ctc o ur t i nj ec te d a n ew the o r y o fthe case afterthe ti m e the Defendants co uld pre sent rebuttal ev i den ce , a nd b ec au se the di st r i ctc o ur t r es er ve d r ul i ng o n a n i ss ue u lti m atel y f o und t o b e a que st i o n f o r the j ur y, the di st r i ctc o ur t’ s r ul i ngw ith respe ctt o the cor pora te l i abi l i ty of Fl i pm eas tacki s r eve rs ed and re

m an d ed for t ria l.

2. I njuncti on A gai nst Fli pm east ack T he De fend an ts also obj ect to the district cou rt’s order enj oi ni ng F l i pm eas tackfro m “a l l owing a s exu ally ho st i l e work envi r o nm en t to e xi sti n a ny r es ta ur an t und eri ts m anage m ent, ” a nd o rdering F l i pm eas tack to cr ea te a n ew se x u a l h ar as sm en t t ra in in g p ro gr am , a new wri tte n anti

- hara ssm ent a nd anti

- discrim i nati onN o. 10

- 3247 39 po l i cy, an d to po st a N o ti ce i n i ts r es ta urant s i nf o r m i ng em plo yees ofthe cour t’ s Orderf ora peri od off our yea rs . Because we r eve rs e the di str i ct c ourt’s fi nd i ng o fl i abi l i ty w i th r espectto Fl i pm eas tack, w e nee d not a dd re ss the Defendants’ speci fi c o bj ecti ons. The i nj uncti on a gainst Flip m ea st ac k m u st be d iss olv ed

.
D. Mo t i o n f o rRe mi t t i t ur Las tly, we addr es s th e di st r i ctc o ur t’ s d en ia l o fDe fen d an ts’ m otion to rem it Pow ell ’s pu nitive d a m a ges aw ard fr o m $ 1 0 0 , 0 0 0 t o $ 5 0 , 0 0 0 p ur s ua ntto 1 8 U. S
. C. § 1 981(b) ( 3) ( A )
. In denyi ng the m ot ion, the di str i ct cour t found that Po w el l was an em plo yee o fFl i pm eas tack, and because Fl i pme ast ack m anage d at l eas t 2 01 em plo yee s, Pow ell ’s com p en satory an d pu nit iv e d am ages aw ard w as w ith inth e s ta tu to ry ca p . See 1 8 U. S
. C. § 1 9 8 1 a ( b ) ( 3 ) ( C) ( pr o vi di ngtha t th e st atut o r y c ap f o r c o m pen satory an d puni ti ve da m ag es “ i n the c as e o f a r es po nde ntwho has m or e than 20 0 an d few erthan 501 em plo yee s in each o f2 0 o rmo r e c a l e nd a r we e k s i n the currento r p r e c e di ng ca l endar y ear[ i s ] $2 00, 000” )
. Because thi s a pp eall eave s th e liab ility of Flip m ea st ac k u n r e so lve d , w e a re u n ab le to add re ss the pr opri etyo fthe dist ri ct c ourt ’ s r uling. W e the refore r em an d this i ssu e for th e d istri ct cou rt to ad d re ss if, an d w h en , Flip m ea st ac k i s f o u n d liab le for th e jud gm en t.

I I I . Concl usio n W e a ffi rm the dist ri ct c ourt ’s deni alo fthe Defe nd ants’ M oti on f orJudgm ent a s a M att ero fLaw and M oti on40 N o. 10

- 3247 f o r New Tr i alwi thr es pec t to De fend an ts, M H R a nd Salaud d in Janm oha m m ed

. W e reverse the d istri ct c o u rt’s g r an t o fthe EEOC’ s Pos t- Tr i alM o ti o ns ; the j udg m en t ag ains t F l i pm ea st ac ki s r ev er se d and rem an ded, a nd the i nj uncti on di sso l ved. Because Fl i pm eas tack ’ s l i abi l i ty f or Pow el l ’ s punit i ve dam age s aw ar d hi nges on the d egr ee of co nt r o l F l i pm ea st ac kha d o ve r the em pl o y ee s o fM H R, th e puni ti ve da m ag es a war d a g ains t F l i pm eas ta ck, a nd th e n e e d , i f a n y, t o r e mi t th a t a wa r d p u r s u a n t to t he statu tory cap , are al so rem an d ed

. Th e d is t r ict court i s or dered to co nd uct pro ceedi ngs c onsi ste nt with th i s o pi ni o n.

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