Court Opinion

ID: 4517578
Source: CourtListenerOpinion
Date Created: 2020-03-18 20:00:28.019637+00
Date Added: 2024-06-11T11:26:58.443045
License: Public Domain

UNPUBLISHED

                       UNITED STATES COURT OF APPEALS
                           FOR THE FOURTH CIRCUIT

                                      No. 18-2008

STACY SAUNDERS,

                    Plaintiff - Appellant,

             v.

METROPOLITAN PROPERTY MANAGEMENT, INC.,

                    Defendant - Appellee.

Appeal from the United States District Court for the Western District of Virginia, at
Roanoke. Elizabeth Kay Dillon, District Judge. (7:17-cv-00159-EKD-RSB)

Argued: January 28, 2020                                          Decided: March 18, 2020

Before MOTZ, KING, and KEENAN, Circuit Judges.

Affirmed in part, vacated in part, and remanded by unpublished opinion. Judge Keenan
wrote the opinion, in which Judge Motz and Judge King joined.

ARGUED: Terry Neill Grimes, TERRY N. GRIMES, ESQ., PC, Roanoke, Virginia, for
Appellant. Monica Taylor Monday, GENTRY LOCKE, Roanoke, Virginia, for Appellee.
ON BRIEF: Brittany M. Haddox, GRIMES & HADDOX, P.C., Roanoke, Virginia, for
Appellant. Paul Granger Klockenbrink, GENTRY LOCKE, Roanoke, Virginia, for
Appellee.

Unpublished opinions are not binding precedent in this circuit.
BARBARA MILANO KEENAN, Circuit Judge:

       In this employment case, Stacy Saunders appeals from the district court’s award of

summary judgment in favor of her former employer, Metropolitan Property Management,

Inc. (Metro). Her action against Metro alleged a hostile work environment and retaliation

under Title VII of the Civil Rights Act of 1964 (Title VII), 42 U.S.C. §§ 2000e through

2000e-17. After reviewing the record, we affirm the district court’s award of summary

judgment in favor of Metro on the hostile work environment claim. However, we conclude

that there are genuine disputes of material fact with respect to the retaliation claim. We

therefore vacate in part the district court’s award of summary judgment and remand the

retaliation claim for further proceedings.

                                             I.

       We construe the evidence in the light most favorable to Saunders, the party against

whom summary judgment was awarded. Vannoy v. Fed. Reserve Bank of Richmond, 827
F.3d 296, 300 (4th Cir. 2016). Under this construction, we draw all reasonable inferences

in Saunders’ favor. Id.

       Saunders’ former employer, Metro, provides government-subsidized housing for

low-income, elderly individuals throughout the southeastern part of the United States.

Metro employed Saunders as a site manager at one of Metro’s housing sites. As part of

her job, Saunders supervised the work of Clayton Carter, the maintenance technician at

that property.

                                              2
       On November 4, 2015, Saunders informed Joseph Moore, Metro’s Director of

Operations, that Carter had been sexually harassing her. Saunders sent Joseph Moore a

picture of a sexually explicit note Carter had left on her computer keyboard, along with a

letter that she had written describing Carter’s prior pattern of sexual harassment.

       In the letter, Saunders stated that Carter had made “sexual advances” toward her for

about ten months. Saunders said that while Carter initially had focused his sexual

comments on her appearance, his conduct later escalated. According to Saunders, Carter

repeatedly asked her to have sex with him and, on one occasion, showed her a naked

photograph of himself. Saunders alleged that Carter’s conduct had made her feel “very

uncomfortable” and “frightened,” but acknowledged that she had not previously reported

his conduct to Metro.

       In response to Saunders’ allegations, Metro immediately placed both Carter and

Saunders on paid administrative leave and began an investigation. Joseph Moore stated

that Metro placed Saunders on administrative leave “[b]ecause she made a[n] allegation of

sexual harassment against Clayton Carter.”       The same day that Saunders made her

complaint, Joseph Moore directed another employee to advertise Saunders’ and Carter’s

positions on Craigslist, a job-listing website, because of “[t]he allegation of sexual

harassment.”

       James Moore, Joseph Moore’s brother and Metro’s financial analyst, conducted the

investigation of Saunders’ complaint. The documents collected during the week-long

investigation included Saunders’ November 4, 2015 letter and statements from Carter, as

                                             3
well as statements from two other employees. 1 James Moore also reviewed multiple tenant

complaints alleging breaches of confidentiality by Saunders and photographs of Saunders’

and Carter’s office spaces.

       In his statements, Carter admitted that he and Saunders had flirted with each other,

but accused Saunders of touching him inappropriately on multiple occasions by “hit[ting]”

or “smack[ing]” him “on the butt.” At first, Carter denied writing the sexually explicit note

to Saunders, but he later confessed that he had written the note and had lied about it because

he was afraid of losing his job.

       Carter also reported that Saunders improperly had disclosed confidential tenant

information. In addition to this reported violation, James Moore discovered during his

investigation that Saunders had committed numerous other workplace infractions.

       After concluding the investigation, James Moore recommended that both Carter and

Saunders be fired. Joseph Moore terminated Saunders’ employment, in part because “[t]he

whole timing aspect did not boast in her favor.” He also prepared a disciplinary action

form based on the results of James Moore’s investigation, which included the following

reasons for Saunders’ termination: (1) failure to return a supervisory coaching form; (2)

disclosure of confidential information to tenants and family members; (3) removal of the

       1
        The other employees, Tammy Reed and Scott Quesenberry, were the site manager
and maintenance technician, respectively, for another Metro property in Virginia. Metro
is a small non-profit corporation, employing about 50 people in total. Metro has about
20 housing sites, and each site is staffed with two employees, a site manager and a
maintenance technician.

                                              4
property waiting list from the office; (4) disorganization; and (5) her interaction with Carter

that had “turned [into] a lustful and flirtatious workplace relationship.”

       With respect to Carter’s employment, the parties dispute whether Metro offered

Carter the option of transferring to another property in lieu of termination. Carter testified

that he was offered a transfer but, when he declined the offer, Metro viewed this action as

Carter’s resignation. Joseph Moore conceded that Carter initially may have been offered

a transfer, but maintained that Carter ultimately was terminated from his employment.

       After Saunders was fired, she filed suit against Metro in the district court, alleging

a hostile work environment and retaliation in violation of Title VII. The day before Metro’s

responsive pleadings were due, Metro’s attorney asked Saunders to agree that Metro be

given additional time to respond because he had miscalculated the filing deadline and was

“in the final stages of joining the Virginia Bar.” Saunders’ counsel did not respond to this

request, and Metro did not ask the district court for an extension of time to file an answer.

       When Metro failed to file its responsive pleadings one month after the deadline,

Saunders moved for entry of default. The district court made a finding of default on the

issue of liability, and scheduled a jury trial on the issue of damages.

       Metro moved to set aside the entry of default under Federal Rules of Civil Procedure

55(c) and 60(b). The court granted Metro’s motion. The court based its decision on a

finding of “excusable neglect” largely due to the actions of Metro’s trial attorney, and

explained that “the interest in reaching the merits controls.” The court awarded Saunders

attorney’s fees and costs incurred “in opposing the motion to set aside the default

judgment.”

                                              5
       Metro filed an answer to Saunders’ complaint and a motion for summary judgment.

The district court granted Metro’s summary judgment motion.                The court held that

Saunders’ hostile work environment claim failed because Metro was not aware of Carter’s

alleged harassment before Saunders’ report on November 4, 2015, and because Metro had

conducted an adequate investigation after receiving that report. The court also held that

Saunders’ retaliation claim failed, because Saunders could not demonstrate that Metro’s

asserted reasons for terminating her employment were pretextual. Saunders now appeals.

                                              II.

       Initially, we find no merit in Saunders’ argument that the district court abused its

discretion in setting aside the entry of default. See Payne ex rel. Estate of Calzada v. Brake,

439 F.3d 198, 204 (4th Cir. 2006) (setting forth the standard of review). A decision to set

aside an entry of default “lies largely within the discretion of the trial judge and [the court’s]

action is not lightly to be disturbed by an appellate court.” Id. (citation omitted). Moreover,

the law disfavors disposition by default and accords preference to resolving a case on its

merits. See Tazco, Inc. v. Dir., Office of Workers Comp. Program, 895 F.2d 949, 950 (4th

Cir. 1990); Augusta Fiberglass Coatings, Inc. v. Fodor Contracting Corp., 843 F.2d 808,

811 (4th Cir. 1988).

       Under Federal Rule of Civil Procedure 55(c), a “court may set aside an entry of

default for good cause, and it may set aside a final default judgment under Rule 60(b).”

When ruling on a Rule 55(c) motion, a court considers the following factors: “whether the

moving party has a meritorious defense, whether it acts with reasonable promptness, the

                                                6
personal responsibility of the defaulting party, the prejudice to the [nonmoving] party,

whether there is a history of dilatory action, and the availability of sanctions less drastic.”

Payne, 439 F.3d at 204-05.

       Contrary to the procedure employed by the district court, we do not review the

default motion under Federal Rule of Civil Procedure 60(b), because the district court had

not entered “final default judgment.” Fed. R. Civ. P. 55(c). We recently explained in

Fidrych v. Marriott International, Inc., --- F.3d ---, No. 18-2030, 2020 WL 986674, at *3

(4th Cir. Mar. 2, 2020), that there can be “no final judgment of default” until damages are

awarded. Because Saunders had yet to be awarded damages, there was no “final default

judgment” entered in this case. Fed. R. Civ. P. 55(c). Accordingly, Rule 60(b) did not

apply, and the motion should have been reviewed exclusively under Rule 55(c). Fidrych,

2020 WL 986674, at *3.

       Nevertheless, we have reviewed the record and conclude that the district court did

not abuse its discretion in setting aside the entry of default against Metro. The court

properly considered the factors applicable to a Rule 55(c) motion and correctly identified

Metro’s trial attorney as the party responsible for failing to timely respond to Saunders’

complaint. By granting Metro’s motion to set aside the entry of default and by awarding

Saunders attorney’s fees, the court reached a reasonable resolution of the issue.

Accordingly, we affirm the district court’s decision setting aside the entry of default.

                                              7
                                          III.

       We review the district court’s decision granting summary judgment de novo. Evans

v. Int’l Paper Co., 936 F.3d 183, 191 (4th Cir. 2019). Summary judgment is appropriate

only “if the movant shows that there is no genuine dispute as to any material fact and the

movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a).

                                            A.

        We begin by addressing Saunders’ hostile work environment claim. Under Title

VII, it is “an unlawful employment practice for an employer . . . to discriminate against

any individual with respect to [her] compensation, terms, conditions, or privileges of

employment, because of such individual’s . . . sex.” 42 U.S.C. § 2000e-2(a), (a)(1).

A hostile work environment claim is actionable under Title VII, because “an employee’s

work environment is a term or condition of employment.” Walker v. Mod-U-Kraf Homes,

LLC, 775 F.3d 202, 207 (4th Cir. 2014) (citation omitted).

       To prevail on a hostile work environment claim based on sexual harassment, a

plaintiff must show that the harassment: (1) was unwelcome; (2) was based on her sex; (3)

was “sufficiently severe or pervasive to alter the conditions of employment and create an

abusive atmosphere[;]” and (4) was imputable to her employer. Evans, 936 F.3d at 192.

Because Metro concedes that the record contains disputed evidence regarding the first three

factors, we focus our analysis on the fourth factor, the issue whether Carter’s conduct was

imputable to Metro.

                                             8
         Saunders contends that Metro is liable for Carter’s sexual harassment, because once

Metro indisputably was aware of Saunders’ allegations, Metro failed to conduct a thorough

investigation and instead resolved the dispute by unlawfully terminating her employment.

We disagree with Saunders’ analysis.

         An employer may be held liable for an employee’s conduct “if the employer had

actual or constructive knowledge of the existence of a hostile working environment” and

failed to take “prompt and adequate remedial action.” Amirmokri v. Balt. Gas & Elec. Co.,

60 F.3d 1126, 1130 (4th Cir. 1995). Until an employee has made “a concerted effort to

inform the employer” about harassing conduct unknown to the employer, that “employer

cannot be expected to correct [the] harassment.” Barrett v. Applied Radiant Energy Corp.,

240 F.3d 262, 268 (4th Cir. 2001) (citation omitted). And once informed of the harassment,

if an employer takes        “prompt remedial action reasonably calculated to end the

harassment,” the employer cannot be held liable. Katz v. Dole, 709 F.2d 251, 256 (4th Cir.

1983).

         It is undisputed that Saunders did not report any sexual harassment to Metro until

November 4, 2015, when she submitted the sexually explicit note to Joseph Moore along

with her allegations of prior harassment. Immediately after receiving Saunders’ complaint,

Metro promptly began an investigation and placed both Saunders and Carter on paid

administrative leave. Given that Carter also had accused Saunders of sexual misconduct,

Metro’s decision placing both employees on paid leave was “reasonably calculated to end”

the alleged harassment between the two individuals. Id.

                                              9
       The record reflects that the ensuing investigation was reasonably thorough, with

James Moore reviewing Saunders’ November 4, 2015 letter and collecting statements from

Carter, from other Metro employees, and from various tenants before making his

recommendation. 2 And the investigation was completed in a timely fashion. For these

reasons, we conclude that there are no disputed issues of material fact concerning the

investigation Metro conducted, and that the undisputed facts establish that Metro took

“prompt remedial action reasonably calculated to end the harassment.” Id. Accordingly,

liability for Carter’s conduct cannot be imputed to Metro.

       Our conclusion is not altered by Saunders’ misplaced assertion that Metro’s

response was unlawful because Metro “fir[ed] the victim.” In making this argument,

Saunders improperly confuses her hostile work environment claim with her retaliation

claim. Termination of employment is a “discrete act[,]” which is “different in kind” from

a claim that an employer has maintained or permitted a hostile work environment. Nat’l

R.R. Passenger Corp. v. Morgan, 536 U.S. 101, 114-15 (2002).               A hostile work

environment claim arises from “severe or pervasive” harassment based on the employee’s

sex. Evans, 936 F.3d at 192. The discrete act of job termination does not constitute “severe

or pervasive” harassment and does not negate an otherwise adequate investigation

conducted by an employer. Id.; see Morgan, 536 U.S. at 114-15. We therefore affirm the

       2
        None of the minor complaints Saunders raises regarding the manner in which
James Moore conducted the investigation undermine our conclusion that the investigation
was adequate as a matter of law.

                                            10
district court’s award of summary judgment in Metro’s favor on Saunders’ hostile work

environment claim, and we proceed to address Saunders’ separate claim of retaliation.

                                              B.

       Title VII prohibits retaliation against an employee who has “opposed . . . an

unlawful employment practice,” or “has made a charge” of an unlawful employment

practice. 42 U.S.C. § 2000e-3(a). A prima facie case of retaliation requires proof that:

(1) the plaintiff engaged in protected activity; (2) the plaintiff suffered a “materially

adverse” employment action; and (3) there was a “causal connection between the protected

activity and the adverse action.” Evans, 936 F.3d at 195. If the plaintiff can “establish[] a

prima facie case of retaliation, the burden shifts to the [employer] to articulate a legitimate,

non-retaliatory reason for the adverse employment action.” EEOC v. Navy Fed. Credit

Union, 424 F.3d 397, 407 (4th Cir. 2005). If the employer articulates a non-retaliatory

reason for the employee’s termination, the burden shifts back to the employee to

demonstrate that the reason proffered by the employer was pretextual. Id.

       Saunders does not dispute that Metro accurately identified certain performance-

related issues on her disciplinary action form, namely, that she failed to return a supervisory

coaching form and that she removed the property waiting list from the office. 3 However,

Saunders contends that these alleged work-related reasons for terminating her employment

were pretext for retaliation, because Metro did not view the identified incidents as serious

       3
         Although Saunders partly disputes the allegations that she disclosed confidential
tenant information and that her office was disorganized, we decline to evaluate her job
performance. See DeJarnette v. Corning Inc., 133 F.3d 293, 298-99 (4th Cir. 1998).

                                              11
enough to warrant firing her until she made her complaint of sexual harassment. Saunders

also relies on the many statements made by Joseph Moore suggesting that her protected

activity was the basis for her termination. And finally, Saunders points to Metro’s failure

to offer her a transfer to a different location, an offer that Metro made to Carter, as evidence

that Metro penalized Saunders for filing a complaint.

       In response, Metro contends that Saunders’ employment was terminated for

legitimate performance-related reasons discovered during the investigation. Moreover,

according to Metro, regardless whether Carter was offered a transfer at the outset of the

investigation, Carter’s employment also ultimately was terminated. We disagree with

Metro’s position.

       An employee who asserts a right protected under Title VII is “shielded from

retaliation on account of [that] assertion” but is not “insulated from the consequences of

. . . poor performance.” Ziskie v. Mineta, 547 F.3d 220, 229 (4th Cir. 2008). This Court

may intervene in an employer’s decision to fire an employee only if the reason for that

decision was the employee’s protected activity. See Foster v. Univ. of Md.-E. Shore, 787
F.3d 243, 252 (4th Cir. 2015); see also DeJarnette v. Corning Inc., 133 F.3d 293, 298-99

(4th Cir. 1998). We will “not sit as a kind of super-personnel department weighing the

prudence of employment decisions.” DeJarnette, 133 F.3d at 299 (citation omitted). Our

duty instead is to determine “whether the reason for which the [employer] discharged the

plaintiff was discriminatory.” Id. (citation omitted). Accordingly, an employee must

“show that retaliation was the real reason” she was fired, and that she “would not have been

terminated but for her employer’s retaliatory animus.” Foster, 787 F.3d at 252 (citations

                                              12
and internal quotation marks omitted). Evidence that an employer gave a similarly situated

employee more favorable treatment can be “especially relevant” evidence of pretext. Laing

v. Fed. Express Corp., 703 F.3d 713, 719 (4th Cir. 2013) (citation omitted).

       We recognize that before Saunders was fired, she had received both positive and

negative performance reviews.      However, we decline to evaluate the merits of her

performance as an employee. See DeJarnette, 133 F.3d at 298-99. We conclude only that

disputed issues of material fact remain with respect to the issue whether she would have

been fired but for her complaint of sexual harassment. See Foster, 787 F.3d at 252.

       There is compelling evidence to support Saunders’ argument that the real reason she

was fired was because she engaged in the protected activity of filing a complaint of sexual

harassment. Most significantly, Joseph Moore admitted that he had directed an employee

to advertise Saunders’ position the same day that she made her sexual harassment

complaint, because she had made that complaint. Joseph Moore also testified that he had

made the decision to terminate Saunders’ employment based in part on “the timing of the

allegation.” Further, when Joseph Moore was asked about his negative performance

assessment of Saunders, his response suggested that he thought Saunders was lying about

having been sexually harassed. Thus, each time that Joseph Moore was asked why he

terminated Saunders’ employment, his rationale included her complaint of sexual

harassment. These numerous admissions by Joseph Moore suggest that this may be “the

rare case in which an employer admits not just to possessing an impermissible motive, but

also to acting upon it.” Id. at 249 n.6. Additionally, when coupled with this explicit

                                            13
testimony of Joseph Moore, the evidence that Carter was treated more favorably than

Saunders further supports her claim of retaliation.

       These facts, taken together, undermine Metro’s stated reasons for terminating

Saunders’ employment, creating a disputed issue of fact regarding whether Metro’s alleged

basis for firing Saunders was pretextual. We therefore hold that a jury reasonably could

determine that Metro failed to articulate a legitimate, non-retaliatory basis for firing

Saunders, and that her protected activity was the “real reason” Metro fired her. Id. at 252.

Accordingly, we vacate the district court’s award of summary judgment to Metro on the

retaliation claim. 4

                                          IV.

       In conclusion, we affirm the district court’s decision setting aside the entry of

default, as well as the court’s award of summary judgment to Metro on the hostile work

environment claim. We vacate the court’s award of summary judgment on the retaliation

claim, and we remand that claim to the district court for further proceedings.

                                                                    AFFIRMED IN PART,
                                                                     VACATED IN PART,
                                                                      AND REMANDED

       4
         The district court assumed without deciding that Saunders could establish a prima
facie case of retaliation. We decline to address this issue in the first instance and remand
for further proceedings.

                                            14