Opinion ID: 202751
Heading Depth: 1
Heading Rank: 4

Heading: Title VII—Hostile Work Environment3

Text: 17 Title VII of the Civil Rights Act of 1964 prohibits an employer from discriminating against any individual with respect to [her] compensation, terms, conditions, or privileges of employment, because of such individual's race, color, religion, sex, or national origin. 42 U.S.C. § 2000e-2(a)(1). When the workplace is permeated with discriminatory intimidation, ridicule, and insult that is sufficiently severe or pervasive to alter the conditions of the victim's employment and create an abusive working environment, Title VII is violated. Harris v. Forklift Sys., Inc., 510 U.S. 17, 21, 114 S.Ct. 367, 126 L.Ed.2d 295 (1993) (citations and internal quotation marks omitted). To succeed in a hostile workplace environment claim, Torres must show: (1) that she is a member of a protected class; (2) that she was subjected to unwelcome harassment; (3) that the harassment was based on her membership of the protected class; (4) that the harassment was so severe or pervasive that it altered the conditions of her employment and created an abusive work environment; (5) that the objectionable conduct was objectively and subjectively offensive, such that a reasonable person would find it hostile or abusive and the victim in fact did perceive it to be so; and (6) that some basis for employer liability has been established. O'Rourke v. City of Providence, 235 F.3d 713, 728 (1st Cir. 2001) (citing Faragher v. City of Boca Ratón, 524 U.S. 775, 787-89, 118 S.Ct. 2275, 141 L.Ed.2d 662 (1998)). 18 On summary judgment, Merck-PR claimed that Torres failed to satisfy the sixth element of this test 4 and the district court agreed, dismissing the claim on the ground that employer liability cannot attach for Plaintiff's claim for hostile work environment. 19 An employer's liability for a hostile work environment claim depends on the harasser's employment status relative to the victim's: Merck-PR is vicariously liable if Torres's supervisor at Merck-PR created a hostile work environment, 5 see Faragher, 524 U.S. at 807, 118 S.Ct. 2275; Burlington Indus., Inc. v. Ellerth, 524 U.S. 742, 764-65, 118 S.Ct. 2257, 141 L.Ed.2d 633 (1998), but if a co-worker created the hostile work environment, Merck-PR will be held liable only if it was negligent either in discovering or remedying the harassment, see Crowley v. L.L. Bean, Inc., 303 F.3d 387, 401 (1st Cir. 2002). Other circuits have addressed the question of employer liability in the case of harassment by non-employees, i.e., third parties. Those courts seem to be in general agreement that such cases should be analyzed using the same standard that is applied in the case of co-employee harassment. See, e.g., Lockard v. Pizza Hut, Inc., 162 F.3d 1062, 1074 (10th Cir.1998); Folkerson v. Circus Circus Enters., Inc., 107 F.3d 754, 756 (9th Cir.1997). 20 The district court applied the negligence standard of employer liability because it found that Torres's alleged harassers were neither her supervisors nor her co-workers, but rather third parties for purposes of Title VII liability. The district court noted that Merck-PR and Merck-Mexico were separate and independent legal entities and that neither one controls the day-to-day operations of the other. The district court further found that while Torres was at all times employed by Merck-PR, Spinola was at all times an employee of Merck-Mexico. As such, the district court considered Spinola a non-employee, thus limiting Merck-PR's liability to negligence. 21 Torres's theory of employer liability was that Merck-Mexico and Merck-PR together constituted a single employer, which warrants vicarious liability to Merck-PR. 6 Under the single employer doctrine, two nominally separate companies may be so interrelated that they constitute a single employer subject to liability under Title VII. See NLRB v. Browning-Ferris Indus., Inc., 691 F.2d 1117, 1122 (3d Cir.1982). The single employer (also integrated employer) test may apply in cases where liability is sought to be imposed on the legal employer by arguing that another entity is sufficiently related such that its actions . . . can be attributable to the legal employer. Engelhardt v. S.P. Richards Co., 472 F.3d 1, 4 n. 2 (1st Cir.2006) (applying the single employer test to a claim under the FMLA, but citing to its application in Title VII cases). 22 But the district court rejected that argument, holding that 23 even assuming arguendo that Merck Puerto Rico and Merck Mexico could both be considered Plaintiff's employers for purposes of the Title VII analysis, we have no evidence to sustain a finding that Merck Puerto Rico had any control over the actions of Mr. Spinola, a Merck-Mexico employee. As such, there is no evidence to sustain a finding that at any time Mr. Spinola was acting as an agent of Merck Puerto Rico. 24 The district court did not address whether Merck-PR and Merck-Mexico could, in fact, be considered a single employer. On appeal, Merck-PR avoids this question, arguing that while Spinola was a supervisor, he was a supervisor for Merck-Mexico, not Merck-PR. As such, he could not, and, in fact, did not, bring Merck-PR's official power to bear on Torres. 7 Torres reiterates her single-employer liability argument, claiming that the district court erred in using a negligence standard applicable to the actions of co-workers and third parties to evaluate Merck-PR's liability for her Merck-Mexico supervisor's discriminatory and harassing conduct. We think there is a triable issue of fact on this question. 25 The flaw in both the district court's and Merck-PR's analyses is that they ignore the fact that if Merck-Mexico and Merck-PR are considered to be one and the same company, the agent (Spinola) of one (Merck-Mexico) automatically becomes the agent of the other (Merck-PR) for purposes of Title VII liability. That is, the question of Spinola's relationship to Merck-PR is answered by the single employer theory. 26 The factors considered in determining whether two or more entities are a single employer under the integrated-enterprise test 8 are: (1) common management; (2) interrelation between operations; (3) centralized control over labor relations; and (4) common ownership. Romano v. U-Haul Int'l, 233 F.3d 655, 662 (1st Cir.2000). All four factors, however, are not necessary for single-employer status. Knowlton v. Teltrust Phones, Inc., 189 F.3d 1177, 1184 (10th Cir.1999); see also Pearson v. Component Tech. Corp., 247 F.3d 471, 486 (3d Cir.2001). Rather, the test should be applied flexibly, placing special emphasis on the control of employment decisions. Romano, 233 F.3d at 666 (We choose to follow the more `flexible' approach . . . which focuses on employment decisions, but only to the extent that the parent exerts `an amount of participation [that] is sufficient and necessary to the total employment process, even absent total control or ultimate authority over hiring decisions.') (quoting Cook v. Arrowsmith Shelburne, Inc., 69 F.3d 1235, 1241 (2d Cir.1995)). 9 27 Applying the four-factor single employer test, we find that there is enough evidence in the record to survive summary judgment. With respect to the interrelation between corporations factor, there is ample evidence of a reciprocal relationship between Merck-PR and Merck-Mexico. First, the record shows that Merck-PR and Merck-Mexico perform substantially the same function. See Engelhardt, 472 F.3d at 6 (finding little, if any, evidence to suggest any interrelation between operations of the two companies, and noting that the nature of the two businesses was distinct — one was in the auto-parts retailing business whereas the subsidiary was in the office-supply wholesaling business). There is also evidence of frequent interchange of employees between Merck-PR and Merck-Mexico, centralized Merck & Co. human resources and personnel policies, as well as a unified system through which all expatriated employees are funneled. See id. (finding no interrelation where the subsidiary was not a division of the parent company whereby upper echelons of control are centralized and efficiencies are realized through consolidation of redundant administrative, human resource, and management functions). 28 With respect to centralized control of labor relations — the primary consideration in evaluating employer status, Romano, 233 F.3d at 666 — there is a significant amount of evidence weighing in favor of a single-employer finding. As mentioned above, Merck & Co. established company-wide human resources and personnel policies applicable to all its subsidiaries. Moreover, the record shows that Merck-PR, Merck-Mexico, and Merck & Co. all had substantial control over Torres's employment. See id. at 7 (finding little evidence of centralized control of labor relations where [t]here is no evidence to suggest that [one of the companies] deferred to [the other] in making hiring, firing, assignment, scheduling, or compensation decisions). Merck-PR paid Torres, provided her benefits and retained the power to terminate her. Meanwhile, Merck-Mexico had virtually exclusive control over her day-to-day employment and had substantial influence over the ultimate decision to terminate her. 29 Torres's termination process itself evinces centralized, top-down control over employment decisions. The purported reason for Torres's termination was the violation of a company-wide professional ethics policy established by Merck & Co., applicable to all its subsidiaries, including Merck-Mexico and Merck-PR. See id. (finding no evidence that [the parent company] required [the subsidiary] to adopt the same policies and programs, and therefore no inference that Defendants centrally determined both companies' employment practices). Moreover, the termination was ultimately approved by human resources personnel for Merck & Co.'s Latin American division, on Merck-PR's recommendation after consulting with Merck-Mexico. 30 Both Merck-PR and Merck-Mexico are subsidiaries of Merck & Co. As such, they share common ownership. However, we presently have no information about the first factor, management of the companies. 31 In sum, we think that the evidentiary record leaves a triable issue of fact as to whether Merck-PR and Merck-Mexico (and Merck & Co.) are one single employer for purposes of Title VII liability for a hostile work environment. Thus, we find that for purposes of summary judgment, Torres has presented sufficient evidence to establish Merck-PR's potential liability for her hostile work environment claim.