EEOC v. Wal-Mart Stores, Inc

F I L E D
United States Court of Appeals
Tenth Circuit
UNITED STATES COURT OF APPEALS
NOV 15 1999
FOR THE TENTH CIRCUIT
PATRICK FISHER
Clerk

EQUAL EMPLOYMENT
OPPORTUNITY COMMISSION,

Plaintiff-Appellee,

v. No. 97-2229
(D.C. No. CIV. 96-0086 JP/WWD)
WAL-MART STORES, INC., (D. N.M.)

Defendant-Appellant.

EQUAL EMPLOYMENT
OPPORTUNITY COMMISSION,

Plaintiff-Appellant,

v. No. 97-2252
(D.C. No. CIV. 96-86 JP)
WAL-MART STORES, INC., (D. N.M.)

Defendant-Appellee.

ORDER AND JUDGMENT *

Before LUCERO , McKAY , and PORFILIO , Circuit Judges.

*
This order and judgment is not binding precedent, except under the
doctrines of law of the case, res judicata, and collateral estoppel. The court
generally disfavors the citation of orders and judgments; nevertheless, an order
and judgment may be cited under the terms and conditions of 10th Cir. R. 36.3.
 After examining the briefs and appellate record, this panel has determined

unanimously that oral argument would not materially assist the determination of

these appeals. See Fed. R. App. P. 34(a); 10th Cir. R. 34.1(G). The cases are

therefore ordered submitted without oral argument.

The Equal Employment Opportunity Commission (EEOC) brought this suit

against Wal-Mart Stores, Inc. under § 706(f)(1) and (3) of Title VII of the Civil

Rights Act of 1964, as amended, 42 U.S.C. § 2000e-5(f)(1) and (3), and the Civil

Rights Act of 1991, 42 U.S.C. § 1981a. It sued on behalf of Christa Gurule, a

former Wal-Mart employee, claiming that Wal-Mart subjected Ms. Gurule to a

hostile work environment and constructively discharged her because of her

gender. It also claimed that Wal-Mart acted intentionally and with malice and

reckless indifference. It sought relief in the form of backpay and compensatory

and punitive damages.

The facts were, and are, hotly disputed. The gist of the evidence is this:

Wal-Mart hired Ms. Gurule as a sales associate on August 23, 1993. She quit on

January 28, 1994. During the five months Ms. Gurule worked for Wal-Mart, Ken

Nguyen was a manager-trainee. The EEOC claimed that Mr. Nguyen harassed

Ms. Gurule at work and at home and that Wal-Mart failed to take effective

remedial action to stop him; Wal-Mart said that Mr. Nguyen claimed to have had

a consensual sexual relationship with Ms. Gurule. Ms. Gurule said she quit

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because of Mr. Nguyen’s harassment; Wal-Mart claimed that her personnel file

showed that she was returning to school, and that she manufactured her

harassment claim to hide her affair with Mr. Nguyen from her jealous husband.

Wal-Mart presented evidence that the company had an established policy against

sexual harassment and that every Wal-Mart employee was given the same

computer-based training regarding sexual harassment. There is no evidence in the

excerpts of the transcript that were provided to us that describes the content of

that training or confirms that each of the individuals involved in this case actually

received the training.

The EEOC presented evidence that Ms. Gurule began complaining to

Wal-Mart management about harassment by Mr. Nguyen within a couple of weeks

after beginning work. Store managers were already aware of Mr. Nguyen’s

inappropriate behavior toward female coworkers. One female employee had

already complained to the personnel manager about harassment by Mr. Nguyen.

Three female managers testified that they had been subjected to inappropriate and

offensive comments from him.

Ms. Gurule sought and received a transfer from cosmetics to the cash

registers in the hope that this would prevent Mr. Nguyen from bothering her. It

did not. Her complaint about Mr. Nguyen’s behavior was passed on by her

immediate supervisors, department managers Trudy Lucero and Glenda Derrick,

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to an assistant store manager, Terry Uhl, who admitted he did nothing about it and

ignored inquiries from Ms. Gurule’s father, who also worked at the store.

Another assistant manager, Ed Warriner, was informed about the situation. He

told the store manager, Boyd Dooley, but did nothing more because he believed it

was no longer his problem. Ms. Lucero also spoke with Mr. Dooley, who

informed Ozzie Crawford, Wal-Mart’s District Operations Manager, who

supervised 1800-2000 employees in this and eight other stores. At

Mr. Crawford’s direction, Mr. Dooley talked to Ms. Gurule and her immediate

supervisors, telling them that he would take care of the problem. He and

Mr. Crawford then spoke to Mr. Nguyen. Mr. Crawford considered Mr. Nguyen’s

behavior toward Ms. Gurule to be inappropriate but not harassment. He recalled

that he told Mr. Nguyen not to have any contact with Ms. Gurule unless it related

to his duties as a management trainee. He did not discipline Mr. Nguyen,

however, nor did he explain to Mr. Nguyen what action might be taken against

him. Mr. Nguyen testified that Mr. Dooley merely told him not to date any of the

female employees in retail, and to stay away from the area where Ms. Gurule

worked. Mr. Dooley then left it to Mr. Crawford to follow up on Ms. Gurule’s

complaint, even though he later heard of another incident involving Mr. Nguyen

and Ms. Gurule. Ms. Lucero tried to follow up with Mr. Dooley, but was told that

it was none of her business. Mr. Crawford testified that he was sure that

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Mr. Dooley was asked to stay involved in the problem, but that he never asked

Ms. Gurule whether she was still having problems with Mr. Nguyen, even though

he also heard of the subsequent incident. Ms. Gurule testified that Mr. Nguyen’s

harassment slowed down for awhile, but never stopped.

After a four-day trial, the jury returned a verdict for the EEOC, awarding

damages of $18,000 for sexual harassment and $16,500 for constructive

discharge. The district court did not give a punitive damages instruction, having

decided that the EEOC presented insufficient evidence for the jury to conclude

that Wal-Mart acted with malice or reckless indifference. The court decided that

the EEOC was not entitled to punitive damages under 42 U.S.C. § 1981a(b)(1) as

a matter of law.

Both parties appeal. In No. 97-2229, Wal-Mart appeals from the district

court’s exclusion of evidence under Fed. R. Evid. 412. In No. 97-2252, the

EEOC appeals from the district court’s judgment as a matter of law in favor of

Wal-Mart on the issue of punitive damages. We have jurisdiction under 28

U.S.C. § 1291.

No. 97-2229

Before trial, the EEOC filed a motion in limine, seeking on the basis of

Fed. R. Evid. 402, 403 and 412 to exclude any evidence of Ms. Gurule’s sexual

relationships with anyone other than Mr. Nguyen. The district court allowed

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Wal-Mart to file a motion for the admission of such evidence under

Rule 412(c)(1)(A), and held two hearings on the matter. Two Wal-Mart

employees, Adrian Baca and Mehran Hakhamian, testified that each of them had a

sexual relationship with Ms. Gurule outside of work during the time that she

worked for Wal-Mart. Boyd Dooley, the store manager, testified that he

developed a generalized suspicion that she was engaged in affairs with coworkers

while he was investigating her complaints of harassment, but admitted that he had

no specific knowledge about it. Wal-Mart argued that all of this evidence was

relevant to show: (1) that Ms. Gurule’s claimed emotional distress was caused by

hiding multiple affairs from her husband, not by harassment from Mr. Nguyen; (2)

that Ms. Gurule’s willingness to engage in affairs with coworkers showed that her

affair with Mr. Nguyen was consensual; and (3) that Wal-Mart management’s

suspicions about Ms. Gurule’s affairs explained its resolution of the conflicting

reports it received from her and Mr. Nguyen. Wal-Mart urged that the jury should

have all the evidence in order to decide the truth between Ms. Gurule’s and Mr.

Nguyen’s conflicting stories. The court concluded that the probative value of Mr.

Baca’s and Mr. Hakhamian’s testimony did not substantially outweigh the

possible prejudicial effect to the EEOC, and excluded it under Rule 412(b)(2).

The court also rejected Wal-Mart’s request to examine Mr. Baca and

Mr. Hakhamian regarding their romantic, rather than sexual, relationships with

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Ms. Gurule, on the basis that such testimony would obviously have the same

connotation. The court excluded Mr. Dooley’s testimony as too vague and as

posing too much danger of unfair prejudice.

We review a district court’s exclusion of evidence for abuse of discretion.

Curtis v. Oklahoma City Pub. Sch. Bd. of Educ. , 147 F.3d 1200, 1217 (10th Cir.

1998). We will not disturb the court’s decision unless we have “a definite and

firm conviction that [it] made a clear error of judgment or exceeded the bounds of

permissible choice in the circumstances.” Id. (quotation omitted). Adding to

Wal-Mart’s burden on appeal is the fact that Rule 412 is unlike the other Federal

Rules of Evidence, in that the party seeking the admission of evidence “‘to prove

the sexual behavior or sexual predisposition of any alleged victim’” must show

“that the evidence’s probative value ‘substantially outweigh[s]’ its prejudicial

effect.” Rodriguez-Hernandez v. Miranda-Velez , 132 F.3d 848, 856 (1st Cir.

1998) (quoting Rule 412(b)(2)).

On appeal, Wal-Mart repeats the arguments it made in the district court. Its

first argument--that evidence of Ms. Gurule’s sexual relationships outside of work

was relevant to disprove her claims that harassment by Mr. Nguyen at work was

the cause of her stress--is unsupported by relevant legal authority in either its

opening brief or its reply brief, and we therefore decline to consider it. See

Phillips v. Calhoun , 956 F.2d 949, 953-54 (10th Cir. 1992).

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 With respect to Wal-Mart’s other arguments, the EEOC correctly points out

that “[t]he gravamen of any sexual harassment claim is that the alleged sexual

advances were ‘unwelcome.’” Meritor Sav. Bank, FSB v. Vinson , 477 U.S. 57,

68 (1986). This court holds that “‘[a] person’s private and consensual sexual

activities do not constitute a waiver of his or her legal protections against

unwelcome and unsolicited sexual harassment’” at work. Winsor v. Hinckley

Dodge, Inc. , 79 F.3d 996, 1001 (10th Cir. 1996) (quoting Katz v. Dole , 709 F.2d

251, 254 n.3 (4th Cir. 1983)); see also Burns v. McGregor Elec. Indus., Inc. , 989

F.2d 959, 963 (8th Cir. 1993) (holding that “[t]he plaintiff’s choice to pose for a

nude magazine outside work hours is not material to the issue of whether plaintiff

found her employer’s work-related conduct offensive.”) For this reason, evidence

of Ms. Gurule’s sexual relationships with coworkers outside work, and evidence

of Wal-Mart management’s generalized suspicions about her relationships outside

work, is not relevant to Ms. Gurule’s claims of harassment at work. Wal-Mart

has failed to demonstrate that the district court abused its discretion by excluding

Wal-Mart’s proffered Rule 412 evidence, and the district court’s decision is

therefore affirmed.

No. 97-2252

In its cross-appeal, the EEOC argues that the district court erred by

deciding as a matter of law that Wal-Mart’s failure to take effective remedial

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action was not with malice or reckless indifference, and that the EEOC therefore

had not carried its burden to create a triable issue as to punitive damages. We

review de novo the district court’s judgment as a matter of law under Fed. R. Civ.

P. 50. See Strickland Tower Maintenance, Inc. v. AT&T Communications, Inc. ,

128 F.3d 1422, 1426 (10th Cir. 1997). Judgment as a matter of law is appropriate

“only if the proof is all one way or so overwhelmingly preponderant in favor of

the movant as to permit no other rational conclusion.” Id. (quotation omitted).

In June of this year, the Supreme Court decided the legal standard for

punitive damages under Title VII. See Kolstad v. American Dental Ass’n ,

119 S. Ct. 2118 (1999). The Court determined that, to demonstrate its entitlement

to punitive damages under 42 U.S.C. § 1981a, a plaintiff must show that: (1) the

employer acted with malice or reckless indifference, a state of mind which can be

shown with evidence that the employer discriminated against the employee with

the knowledge that it might be violating federal law, see Kolstad , 119 S. Ct.

at 2124-25; (2) an employee serving in a managerial capacity committed the

wrong, see id. at 2128; (3) the managerial agent was acting in the scope of

employment, see id. ; and (4) the agent’s action was not contrary to the employer’s

good-faith efforts to comply with Title VII, see id. at 2128-29.

This court recently interpreted Kolstad in EEOC v. Wal-Mart Stores, Inc. ,

Nos. 98-2015, 98-2030, 1999 WL 638210 (10th Cir. Aug. 23, 1999). In that case,

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we decided the record on appeal was sufficient to decide the issues of intent and

agency laid out in Kolstad , even though it had been prepared before the Court

issued its decision. See EEOC v. Wal-Mart , 1999 WL 638210, at *4. Kolstad

and EEOC v. Wal-Mart were decided well after the parties prepared their

materials for this appeal in late 1997 and early 1998. Based upon our review of

the record on appeal, we conclude that it is not sufficient to decide the issues of

intent and agency laid out in Kolstad . First, the district court did not indicate

what standard it was applying to this issue. See Appellee-Cross-Appellant’s

Supp. App., Tab A. Further, the parties provided only ill-marked excerpts of the

trial transcript. Despite a partial evidentiary showing supporting the EEOC’s

claim for punitive damages, there are only bits and pieces of the evidence relevant

to some of the required elements. However, the excerpts provided indicate that

the rest of the evidence the EEOC needs might exist, but the relevant pages were

simply not provided to this court. We therefore remand for the parties to submit

additional briefing to the district court in light of the recently clarified standard

for punitive damages, and for the district court to determine whether the EEOC

carried its burden to create a triable issue as to punitive damages under that

standard. If so, the district court should submit the issue to a jury.

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 The judgment in No. 97-2229 is AFFIRMED. The judgment in

No. 97-2252 is REVERSED, and the case is REMANDED for the specific

purpose of reconsidering the issue of punitive damages.

Entered for the Court

Monroe McKay
Circuit Judge

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