Court Opinion

ID: 2967122
Source: CourtListenerOpinion
Date Created: 2015-09-22 01:59:36.888609+00
Date Added: 2024-06-11T11:43:12.274984
License: Public Domain

PUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

ELIZABETH F. SMITH,
Plaintiff-Appellant,

v.                                                                    No. 98-2200

FIRST UNION NATIONAL BANK,
Defendant-Appellee.

Appeal from the United States District Court
for the Western District of North Carolina, at Charlotte.
Robert D. Potter, Senior District Judge.
(CA-97-127-3-P)

Argued: September 22, 1999

Decided: January 19, 2000

Before MURNAGHAN, MICHAEL, and KING, Circuit Judges.

_________________________________________________________________

Affirmed in part, reversed in part, and remanded by published opin-
ion. Judge Murnaghan wrote the opinion, in which Judge Michael and
Judge King joined.

_________________________________________________________________

COUNSEL

ARGUED: Julie Hanna Fosbinder, SHARPE & FOSBINDER, P.A.,
Charlotte, North Carolina, for Appellant. Charles Evans Johnson,
KILPATRICK STOCKTON, L.L.P., Charlotte, North Carolina, for
Appellee. ON BRIEF: Jenny L. Sharpe, SHARPE & FOSBINDER,
P.A., Charlotte, North Carolina; Charles McB. Sasser, COX, GAGE
& SASSER, Charlotte, North Carolina, for Appellant. Cynthia A.
Glasgow, KILPATRICK STOCKTON, L.L.P., Charlotte, North Car-
olina, for Appellee.

_________________________________________________________________

OPINION

MURNAGHAN, Circuit Judge:

Elizabeth Smith appeals from the district court's order granting
summary judgment in favor of First Union National Bank on Smith's
claims for sexual harassment under Title VII, sexual harassment
under N.C. GEN. STAT.§ 143-422.2, retaliation under Title VII, negli-
gent supervision or retention, and a Fair Labor Standards Act (FLSA)
claim based on a failure to pay overtime wages. We affirm in part,
reverse in part, and remand.

I.

Because we are reviewing a grant of summary judgment in favor
of First Union, we state the following facts in the light most favorable
to Smith. See Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 255
(1986). Smith worked for First Union from January 1990 until
November 1995. Smith initially worked as an adjustor, and her duties
consisted of calling and arranging for payment from customers who
had delinquent accounts. As an adjustor, she was paid hourly, and as
a nonexempt employee under the FLSA she received overtime pay.

In January 1993, First Union promoted Smith to the position of
team leader in the Consumer Credit Collections Department. The
position of team leader at First Union was a supervisory position.
Smith assisted her manager, the collection supervisor, in managing
and supervising the work of sixteen adjustors. Smith was responsible
for implementing and communicating collection procedures, inter-
viewing and assisting in the hiring of adjustors, monitoring the perfor-
mance of adjustors on her team, and preparing regular reports
showing the performance of her team.

When Smith became a team leader, she initially reported to collec-
tion supervisor Barbara Judge. In March or April of 1993, however,

                    2
Smith began reporting to collection supervisor Ronald Scoggins.
Scoggins subjected Smith to a barrage of threats and gender-based
insults while she was under his supervision. Scoggins directed some
of his remarks at Smith individually, while other remarks reflected
Scoggins' hostile view of women in general.

Scoggins' remarks began when he informed Smith that he would
have preferred a male in the team leader position because males are
"natural leaders." Scoggins made this comment more than thirty times
in the first few weeks that he supervised Smith. Scoggins also told
Smith that women should not be in management because they are "too
emotional to handle a managerial role." When a female employee was
upset, Scoggins would frequently remark to Smith that the employee
was menstruating or that she needed a "good banging." Scoggins did
not make these types of remarks about male employees.

Scoggins also demeaned the workplace successes of women at
First Union. Scoggins told Smith that "the only way for a woman to
get ahead at First Union was to spread her legs." Scoggins told Smith
that he wished he had been a woman so that he could"whore his way
through life." Scoggins claimed that women should be barefoot and
pregnant, and that they went through life looking for a man to marry.

Scoggins' behavior toward Smith was often threatening. For
instance, Scoggins began standing over Smith's cubicle and barking
orders at her. Scoggins often concluded his orders to Smith with the
remark, "or else you'll see what will happen to you." Scoggins also
threatened Smith when he called her at home at 10:00 p.m., accusing
her of conspiring with his supervisor, George Andrews, to "get him."

In mid-1995, First Union selected Scoggins as a team leader after
an internal administrative reorganization.1 Smith elected not to remain
on Scoggins' team and Scoggins' harassment of Smith consequently
escalated. In October 1995, Scoggins appeared in Smith's cubicle as
_________________________________________________________________
1 First Union consolidated Scoggins' position as collection supervisor
and Smith's position as team leader as of December 1995. Scoggins and
Smith applied for one of the new "team leader" positions. Scoggins was
selected and Smith was not. Smith left First Union before the consolida-
tion took effect.

                    3
she was sitting at her desk. Scoggins grabbed the handles of Smith's
chair and spun her around to face him. Scoggins then looked her over
and stated, in an apparent reference to the O.J. Simpson trial, that he
could "see why a man would slit a woman's throat."

Smith took Scoggins' remark as a serious threat because of the way
that he made the remark and his tone of voice. Smith's fear was also
based on Scoggins' frequent discussions of his alleged military back-
ground, in which he bragged about having to "take people out." Smith
thus believed that Scoggins was capable of acting violently against
her, and, consequently, feared for her safety.

On November 3, 1995, Smith made her first formal complaint
about Scoggins' harassment to First Union's human resources repre-
sentative, Marc Hutto.2 Smith did not complain previously about
Scoggins' behavior for three reasons: first, Scoggins' boss told Smith
that she should never complain to human resources if she "ever
wanted to get anywhere"; second, Scoggins threatened that Smith
would lose her job if she complained about his conduct; and third,
Smith did not understand that Scoggins' behavior constituted sexual
harassment. First Union's policy prohibited only"sexual harassment,
sexual advances, requests for sexual favors, and other verbal or physi-
cal conduct of a sexual nature." Smith understood this to mean that
a sexual advance was needed from the perpetrator for the conduct to
constitute a violation of First Union's policy. Consequently, Smith
did not raise a claim of gender-based harassment before November 3,
1995, because she did not understand that she could do so.

In Smith's first compliant to Hutto, she advised Hutto of Scoggins'
threat about slitting a woman's throat, and that this remark and Scog-
gins' other violent conduct made her feel physically threatened. Smith
also advised Hutto about Scoggins' statements concerning women in
management, and his statements that he would not have selected
Smith as a team leader because she was a woman. Smith asked Hutto
to keep her complaint anonymous because she feared retaliation by
_________________________________________________________________
2 Smith complained to First Union management in July 1995 about cer-
tain foreclosure procedures implemented by Scoggins that Smith
believed were improper. However, the July 1995 complaint did not
involve Scoggins' harassment of Smith.

                    4
Scoggins and First Union management. Smith also requested that
First Union remove her from Scoggins' work area immediately.

Over the next few weeks, Smith told Hutto about some of the other
harassing remarks made by Scoggins.3 At Hutto's request, Smith con-
tacted a number of her coworkers and asked that they contact Hutto
about their work experiences with Scoggins. Barbara Judge contacted
Hutto and told him that another employee had left First Union
because of Scoggins' "alleged verbal, sexual harassment," and that
Scoggins had made "comments to [Smith] which [were] derogatory
towards women." Other employees also told Hutto that Scoggins was
threatening and demeaning, and often talked "ugly" to Smith.

Hutto informed Smith on or about November 9, 1995, that he had
interviewed enough people. At that time, Smith told Hutto that she
believed that her complaint would no longer be confidential, and
asked that First Union remove her from Scoggins' floor entirely
because she feared for her personal safety.

First Union's investigation of Smith's complaints focused on
Smith's concerns about Scoggins' management style, and ignored
Smith's allegations of sexual harassment. Neither Hutto nor anyone
else at First Union asked Scoggins whether he made any of the sexu-
ally harassing remarks. In addition, First Union did not follow up on
the allegation that another employee had left First Union due to Scog-
gins' sexual harassment.

First Union never reprimanded Scoggins for his harassment of
Smith nor did First Union even discuss the topic of sexual harassment
with Scoggins. Instead, First Union put Scoggins on probation for
ninety days because of his inappropriate management style; however,
First Union allowed Scoggins to remain in his position in the Con-
sumer Credit Department.

On November 14, 1995, First Union temporarily suspended Smith
and Scoggins with pay. First Union sent both parties to its Employee
_________________________________________________________________
3 Specifically, Smith told Hutto about Scoggins' "wish" that he could
be a woman and "whore his way through life." She also told Hutto about
the "women get ahead at First Union by spreading their legs" remark.

                    5
Assistance Program (EAP). At her first EAP meeting, Smith told
Michael Price, the EAP counselor, about the fear and intimidation she
felt because of Scoggins' conduct toward her. Price advised Smith not
to return to work near Scoggins.

First Union agreed to transfer Smith out of Scoggins' work-team
and into the Val Arthur team. The Arthur team, however, was located
on the same floor as Scoggins' team. The distance between Scoggins'
team and Arthur's team was only 100 feet. The proximity between the
teams and First Union's business practices made it likely that Smith
would run into Scoggins on a daily basis. Price told Hutto that Smith
should not have been placed in an area where she would have daily
contact with Scoggins.

Smith met with Hutto in person for the first time on November 17,
1995. Smith and Hutto discussed the threats and harassing remarks
that Scoggins made to Smith. Although Hutto made several sugges-
tions concerning how Smith might return to work, they did not reach
any decisions except that she would return to work within a week.
Smith contacted Price following the meeting and Price informed her
that First Union was not following his advice that Smith not be
assigned to work in the same area as Scoggins.

After consulting with a therapist, Smith applied for disability bene-
fits. The therapist determined that Smith was suffering from an
adjustment disorder caused, at least in part, by Scoggins' harassing
conduct. The therapist recommended that Smith should not work in
the same environment as Scoggins. When Smith related her thera-
pist's advice to Hutto, he became annoyed and warned Smith that if
she did not submit her disability forms within fifteen days, she would
be subject to termination from First Union. Subsequently, on Decem-
ber 22, 1995, Hutto advised Smith that she could transfer to another
location only if she first returned to her former position, which she
declined to do. On January 26, 1996, First Union finally told Smith
that she could post for positions outside the Consumer Credit Depart-
ment. Smith began searching for positions within First Union's orga-
nization during early February 1996. Smith diligently searched for
jobs that would have allowed her to return to work. She submitted
applications for at least seventy-five positions over a three-month
period.

                    6
Smith did not receive a job offer from First Union. First Union
gave Smith only two interviews out of the seventy-five jobs for which
she submitted applications. Smith claims she was qualified to assume
many of the positions that she applied for within First Union. Smith
admits that most of the jobs she applied for were at grade 32, which
was higher than Smith's grade 30 status. Smith applied for mostly
grade 32 positions because she had been earning incentive pay along
with her grade 30 salary. Smith thus had to work at a grade 32 posi-
tion to maintain her former salary level. Although Smith never
received a new position, she remained on First Union's payroll
receiving disability benefits until First Union permanently removed
her from the payroll in July 1996.

On February 12, 1996, Smith filed a charge of discrimination with
the EEOC. The charge claimed that Scoggins sexually harassed Smith
and that First Union retaliated against her by threatening to terminate
her employment for consulting with counsel. On November 22, 1996,
the EEOC dismissed Smith's charge of discrimination and issued her
a right to sue letter.

On February 20, 1997, Smith filed suit against First Union in
Mecklenburg County, N.C., Superior Court, alleging sexual harass-
ment under Title VII, sexual harassment under N.C. Gen. Stat. § 143-
422.2, retaliation under Title VII, negligent supervision or retention,
intentional and negligent infliction of emotional distress, and a Fair
Labor Standards Act claim based on a failure to pay overtime wages.
First Union removed the action to the Western District of North Caro-
lina on April 22, 1997. First Union then filed a motion for summary
judgment on all counts of Smith's Complaint. The district court
granted First Union's motion on all counts on July 2, 1998. Smith
appeals on all of her claims except her claims for intentional and neg-
ligent infliction of emotional distress.4
_________________________________________________________________

4 Smith did not brief her emotional distress claims and admitted in her
reply brief that she was abandoning them for purposes of the instant
appeal.

                    7
II.

Smith argues that First Union discriminated against her on the basis
of her gender in violation of Title VII. Title VII provides that it shall
be an unlawful employment practice for an employer to fail or refuse
to hire, discharge, or otherwise discriminate against any individual
with respect to compensation, terms, conditions, or privileges of
employment because of such person's gender. See 42 U.S.C. § 2000e-
2(a)(1). An employee's work environment is a term, condition, or
privilege of employment. See Meritor Sav. Bank, FSB v. Vinson, 477
U.S. 57, 73 (1986). A cause of action therefore may exist under Title
VII if sexual harassment creates a hostile work environment or abu-
sive atmosphere. See id.

An employee must prove the following to prevail on a hostile work
environment claim: (1) that she was harassed "because of" her "sex";
(2) that the harassment was unwelcome; (3) that the harassment was
sufficiently severe or pervasive to create an abusive working environ-
ment; and (4) that some basis exists for imputing liability to the
employer. See Hartsell v. Duplex Prods., Inc. , 123 F.3d 766, 772 (4th
Cir. 1997). First Union contends that summary judgment was appro-
priate because Scoggins did not harass Smith "because of" her gender.
An employee is harassed or otherwise discriminated against "because
of" his or her gender if, "but for" the employee's gender, he or she
would not have been the victim of the discrimination. Wrightson v.
Pizza Hut of America, Inc., 99 F.3d 138, 142 (4th Cir. 1996).

First Union attempts to argue that Smith was not harassed "because
of" her gender because both male and female members of Scoggins'
team complained about his management style. One glance at the
harassing remarks made by Scoggins to Smith, however, makes it
clear that Scoggins singled her out for harassment because of her gen-
der. Explicit and derogatory references to women appear in virtually
all of Scoggins' harassing remarks. Smith therefore has sufficiently
alleged that Scoggins harassed her "because of" her gender. See
Steiner v. Showboat Operating Corp., 25 F.3d 1459, 1464 (9th Cir.
1994) ("It is one thing to call a woman `worthless,' and another to call
her a `worthless broad.'").

The second element of a hostile work environment claim is that the
harassment was unwelcome. See Hartsell, 123 F.3d at 772. First

                    8
Union does not claim that Smith welcomed Scoggins' harassment.
Further, Smith repeatedly told Scoggins that his remarks were offen-
sive to her and that the remarks were undermining the morale of the
female employees. Smith therefore has sufficiently alleged that Scog-
gins' harassment was unwelcome.

The third element of a hostile work environment claim is that the
harassment must be sufficiently severe or pervasive so as to create a
hostile work environment. See Hartsell, 123 F.3d at 772. A court
must look at all the circumstances to determine whether a work envi-
ronment is hostile or abusive. These circumstances include: (1) the
frequency of the discriminatory conduct; (2) its severity; (3) whether
it is physically threatening or humiliating, or a mere offensive utter-
ance; and (4) whether it unreasonably interferes with an employee's
work performance. See Harris v. Forklift Sys., Inc., 510 U.S. 17, 23
(1993). The district court found for First Union as a matter of law
because "[p]laintiff has not claimed that Scoggins ever inappropri-
ately touched, propositioned or ogled her, that Scoggins ever invited
her, explicitly or by implication, to have sex with him or to go out on
a date with him."

The district court failed to recognize that a woman's work environ-
ment can be hostile even if she is not subjected to sexual advances or
propositions. See, e.g., Smith v. St. Louis University, 109 F.3d 1261,
1265 (8th Cir. 1997). Instead, an employer violates Title VII "[w]hen
the workplace is permeated with `discriminatory intimidation, ridi-
cule, and insult,' that is `sufficiently severe or pervasive to alter the
conditions of the victim's employment and create an abusive working
environment . . . .'" Harris, 510 U.S. at 21 (quoting Meritor, 477 U.S.
at 65, 67) (citation omitted). A work environment consumed by
remarks that intimidate, ridicule, and maliciously demean the status
of women can create an environment that is as hostile as an environ-
ment that contains unwanted sexual advances.

First Union relies heavily on Hartsell in arguing that Scoggins'
harassment was not severe or pervasive as a matter of law. First
Union's attempt to link Scoggins' harassment of Smith to Hartsell is
not convincing. The factors we must consider under Harris establish
that Scoggins' harassment of Smith was more severe and pervasive
than what the plaintiff experienced in Hartsell . The plaintiff in

                     9
Hartsell was subjected to four isolated, nonthreatening remarks by
coworkers during her tenure at Duplex.5 Conversely, in the present
case, Scoggins, Smith's supervisor, subjected Smith to repeated
remarks that belittled her because she was a woman. 6 Scoggins
directed his insults at Smith on a regular basis; Scoggins made many
of the remarks at least once a month when Smith worked at First
Union.
_________________________________________________________________
5 In Hartsell, the plaintiff's coworkers made the following remarks that
the court found were gender-based: (1) "We've made every female in
this office cry like a baby"; (2) "Why don't we have sales assistants like
that?," upon seeing a buxom woman in a company magazine; (3) a ques-
tion to another sales representative as to whether she would be a "mini
van driving mommy" or "be a salesperson and play with the big boys";
and (4) a statement to plaintiff that she should"go home and fetch [her]
husband's slippers like a good little wife." Hartsell, 123 F.3d at 773. The
court found that these comments were not sufficiently severe or perva-
sive so as to create a jury issue on the plaintiff's hostile work environ-
ment claim.

6 This issue involves determining whether Scoggins' harassment was
severe or pervasive enough so as to create a hostile work environment.
Although a number of Scoggins' discriminatory remarks are mentioned
in Section I, it is instructive to list them again here. Scoggins' discrimi-
natory remarks to Smith included the following: (1) Scoggins would
have preferred a male in the team leader position because males are "nat-
ural leaders"; (2) Smith would "crack" because women "are not emotion-
ally capable of handling the management role"; (3) Scoggins would
frequently remark to Smith that a woman who was upset "must be men-
struating" or that she needed "a good banging"; (4) women were "out to
get him" and that women generally conspire with each other against men;
(5) Scoggins wished he were a woman so that he could"whore his way
through life"; (6) Smith was lucky to have her job, and she would not get
any further at First Union because she was not attractive; (7) the "only
way for a woman to get ahead at First Union is to spread her legs"; (8)
women had no place in management and did not even belong in college;
(9) women should be "barefoot and pregnant"; (10) women go through
life looking for a man to marry; (11) Barbara Judge, a female supervisor,
was "sleeping her way to the top" and therefore she was a "classic exam-
ple of why women should not be in management"; (12) women's hor-
mones do not allow them to handle work matters in a professional
manner.

                    10
In addition, unlike in Hartsell, Scoggins physically threatened
Smith through his harassment. Scoggins often concluded his orders to
Smith by saying "or else you'll see what will happen to you." Further,
Scoggins made the "slit a woman's throat" remark in the context of
physically threatening gestures. See Baskerville v. Culligan Int'l Co.,
50 F.3d 428, 431 (7th Cir. 1995) (stating that "remarks accompanied
by threatening gestures or contorted facial features, or delivered from
so short a distance from the listener's face as to invade the listener's
private space" are more harassing than words alone). Scoggins made
what a jury could find was a thinly veiled threat to kill Smith because
of her gender in a way that made Smith feel that he was serious about
harming her, especially in light of Scoggins' boasts about "taking
people out" while he was in the military.

Scoggins' threats, his angry late-night phone calls, and his paranoia
about women out to "get him" severely frightened Smith. These acts
and the constant barrage of discriminatory remarks made by Scoggins
unreasonably interfered with Smith's work performance by making
her unable to continue working near Scoggins. Smith's therapist and
Price, First Union's EAP counselor, confirmed Smith's inability to
work in the same area as Scoggins. Therefore, looking at the totality
of the circumstances, the factors in Harris strongly weigh toward a
finding that Scoggins' harassment, if proven at trial, was sufficiently
severe or pervasive so as to create a hostile work environment. The
district court incorrectly resolved this question of fact that a jury
should decide. See Beardsley v. Webb, 30 F.3d 524, 530 (4th Cir.
1994) (whether harassment was sufficiently severe or pervasive is
"quintessentially a question of fact" for the jury).

The last element of a hostile work environment claim is that some
basis exists for imputing liability to First Union. The district court
held, in its alternative holding, that First Union was not vicariously
liable for Scoggins' actions because Smith did not show that First
Union "knew or should have known of the illegal conduct and failed
to take prompt remedial action." The district court applied the correct
test based on controlling Fourth Circuit precedent at the time of its
decision. See Andrade v. Mayfair Management, Inc., 88 F.3d 258, 261
(4th Cir. 1996). In July of 1998, however, the Supreme Court decided
two cases dealing with vicarious liability in sexual harassment suits.

                    11
See Faragher v. City of Boca Raton, 118 S. Ct. 2275 (1998);
Burlington Indus., Inc. v. Ellereth, 118 S. Ct. 2257 (1998).

In Faragher and Ellereth, the Supreme Court adopted the follow-
ing test for vicarious liability in sexual harassment cases:

          An employer is subject to vicarious liability to a victimized
          employee for an actionable hostile environment created by
          a supervisor with immediate (or successively higher) author-
          ity over the employee. When no tangible employment action
          is taken, a defending employer may raise an affirmative
          defense to liability or damages, subject to proof by a pre-
          ponderance of the evidence. The defense comprises two
          necessary elements: (a) that the employer exercised reason-
          able care to prevent and correct promptly any sexually
          harassing behavior, and (b) that the plaintiff employee
          unreasonably failed to take advantage of any preventive or
          corrective opportunities provided by the employer or to
          avoid harm otherwise.

Faragher, 118 S. Ct. at 2292-93 (citation omitted); Ellereth, 118
S. Ct. at 2270 (citation omitted). Smith does not allege that she suf-
fered a tangible employment action due to Scoggins' harassment.
First Union therefore can raise an affirmative defense to liability for
Scoggins' harassment. First Union must prove both elements of the
affirmative defense to avoid vicarious liability. 7

The first element of First Union's affirmative defense is showing
that it exercised reasonable care to prevent and correct promptly any
sexually harassing behavior. Smith argues that First Union failed to
establish the first element of its affirmative defense for two reasons:
(1) First Union failed to exercise reasonable care to prevent Scoggins'
harassment; and (2) First Union failed to exercise reasonable care to
correct promptly Scoggins' harassment. Because First Union cannot
_________________________________________________________________
7 Unlike in Lissau v. Southern Food Serv., Inc., 159 F.3d 177 (4th Cir.
1998), we need not remand this case to the district court to consider the
effect of the Faragher-Ellereth test on vicarious liability because the par-
ties have fully briefed the issue and the record is sufficient to make a rea-
soned determination.

                     12
establish either of the foregoing propositions as a matter of law, the
first element of its affirmative defense, and consequently the defense
as a whole, fails.

An employer's adoption of an effective anti-harassment policy is
an important factor in determining whether it exercised reasonable
care to prevent any sexually harassing behavior. The Supreme Court
noted that "[w]hile proof that an employer had promulgated an anti-
harassment policy with complaint procedure[s] is not necessary in
every instance as a matter of law, the need for a stated policy suitable
to the employment circumstances may appropriately be addressed in
any case when litigating the first element of the defense." Ellereth,
118 S. Ct. at 2270.

The Fourth Circuit interpreted the foregoing Supreme Court deci-
sions in Brown v. Perry, 184 F.3d 388 (4th Cir. 1999). In Brown, this
court held that any anti-harassment policy an employer adopts must
be "both reasonably designed and reasonably effectual." Id. at 396.
The employer prevailed on the first element of its affirmative defense
in Brown because the plaintiff did not provide evidence that the
employer adopted the policy in bad faith or that the policy was "other-
wise defective or dysfunctional."8 Id.

In the present case, Smith sufficiently alleges that First Union
failed to use reasonable efforts to prevent Scoggins' harassment. First
Union had an anti-harassment policy that Smith was familiar with.
However, unlike in Brown, Smith adequately alleges that the policy
was "otherwise defective or dysfunctional." First Union's policy
stated the following:

          It is First Union's policy to prohibit sexual harassment of
          our employees. Sexual harassment includes any unwelcome
          offensive sexual advances, requests for sexual favors, and
          other verbal or physical conduct of a sexual nature. This
_________________________________________________________________
8 The employer in Brown also prevailed because the plaintiff "unrea-
sonably failed . . . to avoid harm otherwise" under the second element
of the Faragher-Ellereth test. The plaintiff went to her supervisor's
apartment at midnight despite her supervisor's past attempt to coerce
sexual favors. See id. at 397.

                     13
          policy applies to management employees, nonmanagement
          employees, outsiders, and customers.

Smith alleges that First Union's policy "makes it sound as though a
sexual advance is required in order to be sexually harassed at First
Union." Smith therefore did not recognize that Scoggins' harassment,
which was gender-based but not sexually provocative, was a violation
of the policy. Smith's reading of First Union's policy was entirely
reasonable. First Union's policy does not mention discrimination on
the basis of gender. It merely prohibits unwanted sexual advances and
other sexually provocative misconduct. We therefore cannot hold that,
as a matter of law, First Union's policy was a sufficient means of pre-
venting sexual harassment at First Union.

A deficient policy does not necessarily negate an employer's affir-
mative defense in all cases. Smith also alleges, however, that First
Union did not take any steps to prevent sexual harassment other than
its policy. In fact, Smith alleges that First Union discouraged com-
plaining about a supervisor's harassing behavior. When Smith started
at First Union, Scoggins' boss warned Smith that if she "ever wanted
to get anywhere, [I'd] never contradict anyone in an open meeting,
and [I'd] never complain to human resources." Employers cannot sat-
isfy the first element of the Faragher-Ellereth affirmative defense if
its management-level employees are discouraging the use of the com-
plaint process.

First Union also did not exercise reasonable care to correct
promptly Scoggins' harassment. First Union's investigation of
Smith's complaints was inadequate. Hutto had never investigated a
sexual harassment claim when he investigated Smith's complaints.
Hutto's investigation focused on Smith's complaints about Scoggins'
management style, and ignored her allegations of sexual harassment.
Hutto conceded in his deposition that he was alerted to the sexual
content of Scoggins' remarks. Nevertheless, Hutto failed to ask Scog-
gins whether he made any of the sexually harassing remarks to Smith;
in addition, despite Hutto's alleged concern for Smith's safety, he
never asked Scoggins about his "slit a woman's throat" remark, nor
did he reprimand Scoggins for such an ominous threat. If Hutto had
asked Scoggins about Smith's allegations of sexual harassment, he

                    14
would have discovered that Scoggins admits to making some of the
harassing remarks.9

George Andrews, Scoggins' boss, worked with Hutto in investigat-
ing Smith's complaints. Andrews' report notes a number of the sexu-
ally harassing remarks made by Scoggins; it also notes that Barbara
Judge told Andrews that another employee had left First Union "due
to Ron's (Scoggins') alleged verbal, sexual harassment." Andrews
nevertheless failed to characterize Smith's complaints as containing
allegations of sexual harassment. Andrews also admits that he should
have followed up on the allegation that another employee left the
bank because of Scoggins' sexual harassment. However, Andrews
failed to follow-up on the allegation, and admits that "I don't know
why I didn't follow it up. I don't know."

Andrews also failed to investigate whether Scoggins made the "slit
a woman's throat" remark. Andrews testified that Scoggins should
have been terminated if he had made that remark. Andrews, however,
never asked Scoggins whether he made the remark; he also never
asked Hutto if he had concluded whether Scoggins had made the
remark.

Perhaps due to First Union's inadequate investigation of Smith's
complaints, First Union allowed Scoggins to remain in his position as
collection supervisor. First Union never considered transferring Scog-
gins despite Andrews' admission that Scoggins was qualified to per-
form a number of other jobs at First Union. Instead, First Union
placed Scoggins on probation for ninety days and counseled him to
improve his management style and "smile more." First Union's Con-
ference Report, memorializing the reasons for placing Scoggins on
probation, does not mention any of the sexually harassing remarks
made by Scoggins.
_________________________________________________________________
9 In Scoggins' deposition, he admitted telling Smith that women should
not be in management. He also admitted that he told Smith that he
wished he was a woman so that he could be a "lady of the evening" all
his life, and that women generally conspire with each other against men.
Finally, Scoggins admitted that he told Smith, in the context of the O.J.
Simpson trial, that he could understand how a "woman would frustrate
a man and he would want to choke her." Scoggins denies saying anything
about slicing a woman's throat.

                   15
While Scoggins remained in his former position, First Union
insisted on transferring Smith to a position in close proximity to her
harasser. First Union was going to transfer Smith to the Val Arthur
work-team. The Arthur team, however, was located on the same floor
as Scoggins' team; the distance between Scoggins' team and Arthur's
team was only 100 feet. The proximity between the teams and the
general business practices at First Union made it likely that Smith
would have run into Scoggins on a daily basis.

Michael Price, a counselor in First Union's Employee Assistance
Program, testified that he told Hutto that Smith should not have been
placed in an area where she would have had daily contact with Scog-
gins. Smith's therapist also concluded that Smith could not work near
Scoggins because she feared for her life due to Scoggins' implied
threat to "slit a woman's throat." First Union nevertheless told Smith
that she had to return to her position in the Consumer Credit Depart-
ment before she could transfer to a new position. Not until January
26, 1996, almost three months after Smith's complaints, did First
Union allow Smith to post for jobs outside her department. Even then,
First Union gave Smith only two interviews and no jobs out of the
seventy-five positions for which Smith submitted applications.

Given First Union's inadequate investigation, its failure to discuss
or even mention the topic of sexual harassment with Scoggins, and its
insistence on keeping Smith working in close proximity to Scoggins,
a jury could find that First Union did not act with reasonable care to
correct promptly Scoggins' harassing behavior. Because a dispute of
fact exists as to whether First Union exercised reasonable care to pre-
vent and correct promptly Scoggins' harassment of Smith, First Union
cannot rely on an affirmative defense to justify the district court's
grant of summary judgment. Accordingly, we decline to decide
whether First Union proved the second element of the Faragher-
Ellereth test, which is whether Smith unreasonably failed to take
advantage of any preventive or corrective opportunities by First
Union.

Smith has established a genuine issue of material fact on her sexual
harassment claim under Title VII. We therefore reverse the district
court's grant of summary judgment in favor of First Union on Smith's
sexual harassment claim under Title VII.

                    16
III.

Smith also alleges a cause of action for sexual harassment under
North Carolina's Equal Employment Practices Act (NCEEPA). The
NCEEPA provides in pertinent part:

          It is the public policy of this State to protect and safeguard
          the right and opportunity of all persons to seek, obtain and
          hold employment without discrimination or abridgement on
          account of race, religion, color, national origin, age, sex or
          handicap by employers which regularly employ 15 or more
          employees.

N.C. GEN. STAT. § 143-422.2. The issue in the present case is whether
Smith can maintain a private cause of action under the NCEEPA.

Neither the North Carolina Supreme Court nor the North Carolina
Court of Appeals has recognized a private cause of action under the
NCEEPA. Instead, most courts have applied the NCEEPA only to
common law wrongful discharge claims or in connection with other
specific statutory remedies. See Hughes v. Bedsole, 48 F.3d 1376,
1383-84 & n.6 (4th Cir. 1995) (analyzing the plaintiff's claim under
the North Carolina common law of wrongful discharge); Iturbe v.
Wandel & Goltermann Techs., 774 F. Supp. 959, 963 (M.D.N.C.
1991); Mayse v. Protective Agency, Inc., 772 F. Supp. 267, 275
(W.D.N.C. 1991); North Carolina Dep't of Correction v. Hodge, 99
N.C. App. 602, 394 S.E.2d 285, 289 (1990) (statutory remedy for
state employees).10

In Mullis v. Mechanics & Farmers Bank, 994 F. Supp. 680
(M.D.N.C. 1997), the court held that "[a]bsent a clear indication from
the courts or the legislature of North Carolina that a private right of
action does exist under the NCEEPA, it would be inappropriate for
a federal court to create a private right of action under the NCEEPA,
_________________________________________________________________
10 Only one case supports Smith's position that she can maintain a pri-
vate cause of action under the NCEEPA. In Bass v. City of Wilson, 835
F. Supp. 255 (E.D.N.C. 1993), the magistrate judge denied the defen-
dant's motion to dismiss on the plaintiff's discrimination claim for fail-
ure to hire asserted under the NCEEPA.

                    17
and this court declines to do so." Id. at 687; see also Ridenhour v.
Concord Screen Printers, Inc., 40 F. Supp.2d 744, 746 (M.D.N.C.
1999). We agree. We therefore affirm the district court's grant of
summary judgment in favor of First Union on Smith's NCEEPA
claim.

IV.

Smith next argues that First Union retaliated against her for com-
plaining about Scoggins in violation of Title VII. Title VII makes it
an "unlawful employment practice for an employer to discriminate
against any of his employees . . . because he has opposed any practice
made an unlawful employment practice by this subchapter." 42
U.S.C. § 2000e-3(a). The district court granted First Union's motion
for summary judgment on Smith's retaliation claim because it held
that Smith did not exhaust her administrative remedies. Alternatively,
the district court held that Smith's retaliation claim failed on the mer-
its.

Before filing suit under Title VII, a plaintiff must exhaust her
administrative remedies by bringing a charge with the EEOC. See
King v. Seaboard Coast Line R.R. Co., 538 F.2d 581, 583 (4th Cir.
1976). A plaintiff's EEOC charge defines the scope of her subsequent
right to institute a civil suit. See Evans v. Technologies Applications
and Serv. Co., 80 F.3d 954, 962-63 (4th Cir. 1996). If a plaintiff's
claims in her judicial complaint are reasonably related to her EEOC
charge and can be expected to follow from a reasonable administra-
tive investigation, the plaintiff may advance such claims in her subse-
quent civil suit. See Chisholm v. United States Postal Serv., 665 F.2d
482, 491 (4th Cir. 1981).

In the present case, Smith's EEOC charge alleged that First Union
retaliated against her by chastising her and threatening to terminate
her employment for consulting with counsel. Smith's Complaint
alleged that First Union retaliated against her by forcing her to work
on Scoggins' floor and by not offering her any other positions at First
Union.

The allegations in Smith's Complaint are reasonably related to her
EEOC charge and would be expected to follow from an administra-

                     18
tive investigation. Both Smith's Complaint and her EEOC charge
allege retaliatory actions by First Union's management because of her
complaints about Scoggins. We therefore can analyze the merits of
Smith's retaliation claim.

The McDonnell Douglas burden-shifting scheme applies in analyz-
ing retaliation claims under Title VII. See McDonnell Douglas Corp.
v. Green, 411 U.S. 792, 802 (1973); Ross v. Communications Satellite
Corp., 759 F.2d 355, 365 (4th Cir. 1985). First, the plaintiff must
establish a prima facie case of retaliation. See Beall v. Abbott Labs.,
130 F.3d 614, 619 (4th Cir. 1997). The burden then shifts to the
employer to produce a legitimate nondiscriminatory reason for the
adverse action. See id. The plaintiff must then demonstrate that the
employer's reason was mere pretext for retaliation by showing "both
that the reason was false and that discrimination was the real reason
for the challenged conduct." Jiminez v. Mary Washington College, 57
F.3d 369, 377-78 (4th Cir. 1995) (quoting St. Mary's Honor Ctr. v.
Hicks, 509 U.S. 502, 515 (1993)).

We will assume, arguendo, that Smith has alleged a prima facie
case of retaliation.11 First Union, however, has rebutted Smith's prima
_________________________________________________________________
11 We do so because an element of Smith's prima facie case is that she
suffered an "adverse employment action." McNairn v. Sullivan, 929 F.2d
974, 980 (4th Cir. 1991). Smith claims that she suffered an adverse
employment action when First Union refused to transfer her to a new
position after she complained about Scoggins' harassment. The circuits
are split as to whether an act of retaliation must be an "ultimate employ-
ment decision" to qualify as an adverse employment action. The Fifth
and Eighth Circuits have held that only adverse employment actions that
qualify as ultimate employment decisions are actionable under Title VII.
See Burger v. Central Apartment Management, Inc., 168 F.3d 875, 878-
79 (5th Cir. 1999); Ledergerber v. Stangler, 122 F.3d 1142, 1144 (8th
Cir. 1997). Conversely, the First, Ninth, Tenth, and Eleventh Circuits
have held that adverse actions that do not qualify as ultimate employ-
ment decisions can give rise to liability for retaliation. See Wyatt v. City
of Boston, 35 F.3d 13, 15-16 (1st Cir. 1994); Bouman v. Block, 940 F.2d
1211, 1229 (9th Cir. 1991); Berry v. Stevinson Chevrolet, 74 F.3d 980,
985-86 (10th Cir. 1996); Wideman v. Wal-Mart Stores, Inc., 141 F.3d
1453, 1456 (11th Cir. 1998); see also Passer v. American Chem. Soc'y,
935 F.2d 322, 331 (D.C. Cir. 1991). The Fourth Circuit has not resolved

                    19
facie case by alleging a legitimate nondiscriminatory reason for refus-
ing to transfer Smith. First Union alleges that Smith did not receive
any of the jobs she applied for because she was not qualified for the
positions. First Union points to Smith's admission that most of the
jobs that she applied for were at grade 32, which was a grade higher
than Smith's grade 30 position as a "team leader." First Union also
claims that Smith did not receive a transfer because she was inflexible
about interview times or refused to appear for interviews. First
Union's legitimate, nondiscriminatory reasons for not transferring
Smith force her to come forward with evidence that those reasons
were a mere pretext for discrimination.

Smith argues that First Union's nondiscriminatory reasons were
pretextual because she was qualified to assume a number of positions
for which she did not receive interviews. Smith has listed a number
of jobs that she applied for in which she met the minimum qualifica-
tions for the positions yet did not receive an interview, including a
number of ungraded positions. Smith also alleges that Hutto advised
her to apply for jobs for which she did not meet all of the qualifica-
tions, as First Union could provide Smith with training. Smith's testi-
mony contradicts Hutto's assertion that Smith should have limited her
search to grade 30 positions if she wanted to receive a job. Smith
therefore has produced sufficient evidence to create a dispute of fact
over whether First Union's legitimate nondiscriminatory reasons were
pretextual.

Smith's retaliation claim nevertheless fails as a matter of law
because Smith has not produced sufficient evidence that
_________________________________________________________________

this issue; however, we noted in a case under 42 U.S.C. § 2000e-16(a),
that Title VII "has consistently focused on the question whether there has
been discrimination in what could be characterized as ultimate employ-
ment decisions such as hiring, granting leave, discharging, promoting,
and compensating." Page v. Bolger, 645 F.2d 227, 233 (4th Cir. 1981).

In the present case, neither the district court nor the parties addressed
the circuit split or our decision in Page. Given our finding that First
Union has advanced a legitimate nondiscriminatory alternative for its
actions, we await a more appropriate case to decide whether to apply
Page in the context of a claim under 42 U.S.C.§ 2000e-3(a).

                     20
discrimination was the real reason that First Union failed to transfer
her to a new position. Smith's evidence that First Union's reasons for
transferring her were false is not sufficient to avoid summary judg-
ment on her retaliation claim. The Supreme Court has explained that
"a reason cannot be proved to be `a pretext for discrimination' unless
it is shown both that the reason was false, and that discrimination was
the real reason." St. Mary's, 509 U.S. at 515 (quoting Texas Dep't of
Community Affairs v. Burdine, 450 U.S. 248, 253 (1981)). In applying
St. Mary's, we have held "that to survive a motion for summary judg-
ment under the McDonnell Douglas paradigm the plaintiff must do
more than merely raise a jury question about the veracity of the
employer's proffered justification. The plaintiff must have developed
some evidence on which a juror could reasonably base a finding that
discrimination motivated the challenged employment action."
Vaughan v. The Metrahealth Cos., 145 F.3d 197, 202 (4th Cir. 1998).

Smith has failed to produce sufficient evidence that discrimination
motivated First Union's failure to transfer her to a new position.
Smith's only evidence of retaliatory motive relates to Hutto's conduct
regarding Smith's decision to stay home from work. When Smith told
Hutto that her therapist was keeping her out of work and she was
going to file a claim for disability benefits, Hutto became annoyed;
he warned Smith that she would be subject to termination if she did
not submit her disability forms within fifteen days.

Smith's proffered evidence suggests that Hutto may have harbored
animus against Smith for filing her disability claim. Smith advances
no evidence, however, that Hutto or anyone else at First Union har-
bored animus against her for complaining about Scoggins or for filing
a Complaint with the EEOC. Instead, the evidence suggests that First
Union did not take Smith's allegations seriously, and would have pre-
ferred that Smith work for the Arthur team, in close proximity to
Scoggins. Consequently, First Union was simply indifferent to
Smith's request for a transfer. While First Union's indifference to
Smith's complaints is fatal to First Union's chances of avoiding vicar-
ious liability under Smith's hostile work environment claim, dis-
cussed above, First Union's indifference is insufficient to support an
inference that First Union acted with retaliatory intent. We therefore
affirm the district court's grant of summary judgment in favor of First
Union on Smith's retaliation claim.

                    21
V.

Smith next argues that the district court erred in granting summary
judgment in favor of First Union on Smith's claim for negligent
supervision or retention. In North Carolina, a plaintiff must prove two
elements to hold an employer liable for negligent supervision or
retention: (1) that an incompetent employee committed a tortious act
resulting in injury to the plaintiff; and (2) that prior to the act, the
employer knew or had reason to know of the employee's incompe-
tency. See Hogan v. Forsyth Country Club Co., 79 N.C. App. 483,
340 S.E.2d 116, 124 (1986).

Smith's negligent supervision or retention claim fails because First
Union did not know or have reason to know of Scoggins' harassment
before she complained to Hutto on November 3, 1995. Smith argues
that First Union had reason to know of Scoggins' harassment because
he made many of his derogatory remarks in open team meetings.
Smith does not allege, however, that any of Scoggins' supervisors
were present at these meetings, nor does she allege that they became
aware of Scoggins' harassing remarks prior to November 3, 1995.

Smith also argues that First Union had reason to know of Scoggins'
harassment because a previous female employee had complained
about Scoggins addressing her as "honey" or"sweetheart." However,
Scoggins' supervisor counseled Scoggins to stop using these demean-
ing titles and he complied. First Union did not become aware of any
other allegations concerning Scoggins until November 3, 1995. First
Union therefore had no reason to believe that Scoggins had a propen-
sity for engaging in sexually harassing behavior.

Smith fails to create a genuine dispute of material fact as to
whether First Union knew or had reason to know of Scoggins' harass-
ment before November 3, 1995. The district court properly granted
summary judgment to First Union on Smith's negligent supervision
or retention claim.12
_________________________________________________________________
12 Because Smith has failed to sufficiently allege the constructive notice
element of her negligent supervision or retention claim, we decline to
decide whether a Title VII violation can be the underlying tort for a neg-
ligent supervision or retention claim under North Carolina law. See
Hartsell, 123 F.3d at 774.

                    22
VI.

Finally, Smith alleges a cause of action for overtime pay based on
the provisions of the FLSA. The district court granted First Union's
motion for summary judgment on Smith's claim for overtime pay
because she was an exempt executive employee under the FLSA.

Smith began her career at First Union as an adjustor, which was a
nonexempt position subject to the FLSA. In January of 1993, First
Union promoted Smith to the position of team leader. The team leader
position was a salaried position that involved working up to sixty
hours a week.

Section (7)(a)(1) of the FLSA requires that employers pay their
employees time and a half for work over forty hours a week. See 29
U.S.C. § 207(a)(1). The FLSA, however, provides an exemption from
the overtime requirement for persons "employed in a bona fide execu-
tive, administrative, or professional capacity." Id. § 213(a)(1).

Because Smith earned more than $250.00 a week at First Union,
the Department of Labor's "short test" applies in determining whether
she is exempt under the FLSA. See 29 C.F.R.§ 541.119(a) (1998). An
employee will be exempt under the executive exemption's short test
if: (1) the employee's primary duty consists of the management of the
enterprise or of a customarily recognized department or subdivision
thereof; and (2) includes the customary and regular direction of the
work of two or more other employees therein. See id.; West v. Anne
Arundel County, 137 F.3d 752, 763 (4th Cir. 1998).

The first element of the short test is whether Smith's primary duty
as a team leader consisted of managing the adjustors. An employee's
primary duty is normally one that comprises more than 50% of the
employee's time. See 29 C.F.R. § 541.103; Clark v. J.M. Benson Co.,
789 F.2d 282, 286 (4th Cir. 1986). "Time alone, however, is not the
sole test, and in situations where the employee does not spend over
50 percent of his time in managerial duties, he might nevertheless
have management as his primary duty if the other pertinent factors
support such a conclusion." 29 C.F.R. § 541.103.

                    23
Smith claims that she spent between 80 and 90% of her time doing
the work of an adjustor, a position that did not include management
responsibility.13 Smith argues that her assessment of the time she
spent in management is sufficient to create a dispute of fact about her
status as exempt under the FLSA. See Clark, 789 F.2d at 286 n.2
(deviating from the 50% "rule of thumb" requires consideration of the
factual circumstances for which a jury is more appropriate).

Smith's work as an adjustor, however, was with accounts that were
delinquent or within "problem areas." Scoggins assigned Smith to
areas that had unusually high delinquencies so Smith could get the
area "under control." Further, Smith would handle accounts when an
adjustor could not solve the customer's problems. Smith also would
assist individual adjustors when improving the collection percentages
of that area was necessary.

The Regulations expressly recognize that employees who are
responsible for the more difficult and complex tasks in a department
will have management as their primary duty. See 29 C.F.R. § 541.103
("In the data processing field an employee who directs the day-to-day
activities of a single group of programmers and who performs the
more complex or responsible jobs in programming will be considered
to have management as his primary duty."). Smith's work as an adjus-
tor therefore was in a managerial capacity.

Smith also testified that she had greater responsibility than other
team members, including her duty to review the work of the adjustors
before she gave their files to Scoggins. Smith's affidavit included a
job description for the collection team leader position which she
claimed was "for essentially the job [she] was doing." The job
description lists the following duties:

          Ensure collection practices and procedures are established
          and adhered to so that risks are minimized. Maintain quality
          control checks to ensure corporate and regulatory compli-
          ance. Ensure Fuheb's delinquency ration goals are consis-
          tently met. Review problem assets accounts to identify and
_________________________________________________________________
13 Smith equates her position to that of a "working foreman." See 29
C.F.R. § 541.115.

                    24
          minimize potential loss. Establish productivity and quality
          goals with team and management. Encourage individual
          achievement and provide ongoing feedback, and implement
          plans to improve employee satisfaction.

These tasks are clearly managerial.

The second element of the executive exemption's short test is
whether Smith's primary duty included the customary and regular
direction of the work of two or more employees. Smith attempts to
create a dispute of fact about her supervisory status by arguing that
Scoggins closely monitored her actions. Scoggins controlled the
scheduling and the work assignments of all the employees under
Smith's supervision. Smith therefore argues that she did not "super-
vise" any employees within the meaning of the Regulations.

Smith admitted in her deposition that she supervised the sixteen
adjustors on her team; she participated in interviewing new adjustors
and trained new personnel on policies, procedures, and collection
techniques. Smith's resume also shows that she supervised two or
more employees. Smith's resume listed many supervisory duties,
including managing the adjustors, monitoring and reviewing team
performance, directing work flow, training adjustors, and counseling
adjustors on problem accounts. First Union therefore has established
the second element of the executive exemption's"short test."

First Union has established that Smith met both elements of the
executive exemption under the FLSA. We therefore affirm the district
court's grant of summary judgment in favor of First Union on Smith's
claim for overtime pay under the FLSA.

VII.

For the foregoing reasons, we reverse and remand the judgment of
the district court as to Smith's sexual harassment claim under Title
VII. As to Smith's remaining claims, we affirm the judgment of the
district court.

AFFIRMED IN PART, REVERSED IN PART,
AND REMANDED

                    25