Hertzberg, Julie K. v. SRAM Corporation

In the
United States Court of Appeals
For the Seventh Circuit

No. 00-1825

JULIE K. HERTZBERG,

Plaintiff-Appellee,

v.

SRAM CORPORATION,

Defendant-Appellant.

Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 96 C 6944--Milton I. Shadur, Judge.

ARGUED FEBRUARY 23, 2001--DECIDED August 2, 2001

Before FLAUM, Chief Judge, and RIPPLE and
WILLIAMS, Circuit Judges.

RIPPLE, Circuit Judge. Julie Hertzberg
brought this action against her former
employer, SRAM Corporation ("SRAM"), for
sexual harassment and retaliatory
discharge. A jury returned a verdict in
favor of Ms. Hertzberg on her sexual
harassment claim and awarded her $20,000
in punitive damages. However, the jury
returned a verdict for SRAM on the
retaliatory discharge claim. The district
court nevertheless granted Ms. Hertzberg
equitable relief in the form of back and
front pay. On appeal, SRAM challenges all
of these awards. For the reasons set
forth in the following opinion, we affirm
in part and reverse in part the judgment
of the district court.

I

BACKGROUND

A. Facts

In November 1994, SRAM, a manufacturer
of bicycle components, hired Ms.
Hertzberg as a shipping coordinator in
its Elk Grove Village, Illinois
warehouse. Almost immediately, Ms.
Hertzberg experienced difficulties with
Manuel Loayza, a co-worker. On numerous
occasions, Loayza told Ms. Hertzberg that
she was not as qualified as he, that
women could not perform shipping
responsibilities as well as men and that
he would take over her job. Ms. Hertzberg
also had disagreements with Loayza about
shipping procedures and about a book that
Loayza had failed to return to Ms.
Hertzberg.

Ms. Hertzberg was upset by Loayza’s
comments and, according to her testimony,
complained to her immediate supervisor,
Brian Lester, on at least three
occasions./1 During one of their
meetings concerning Loayza, Lester told
Ms. Hertzberg that she was "being too
emotional, just like a woman." R.68 at
34. The last time that Ms. Hertzberg
spoke to Lester concerning Loayza’s
remarks, Lester put his hand on Ms.
Hertzberg’s knee and told her he would
take care of it. Ms. Hertzberg perceived
that Lester was unable or unwilling to
curb Loayza’s behavior. Consequently, she
ceased bringing her complaints to Lester.

On the advice of another SRAM employee,
Dee Whatmore, Ms. Hertzberg complained to
plant manager George Margelos concerning
Lester’s and Loayza’s behavior toward
her. Whatmore accompanied Ms. Hertzberg
to Margelos’ office; there, Ms. Hertzberg
reported Lester’s actions, as well as
detailed the problems that she had been
experiencing with Loayza. According to
Ms. Hertzberg, Margelos "seemed to shrug
. . . off" her concerns. R.68 at 54.
Following this meeting, Margelos had at
least one discussion with Lester
concerning the propriety of Lester’s
touching Ms. Hertzberg. Ms. Hertzberg
apparently did not have any further
difficulties with Lester. The record is
inconsistent regarding the actions
Margelos took with respect to Loayza.
Margelos testified to at least one
conversation with Loayza about his
comments that occurred shortly after Ms.
Hertzberg’s complaint; Loayza remembered
this conversation, too, but believed that
it occurred after Ms. Hertzberg’s
departure had become a fait accompli.
Loayza apparently never was warned
formally or disciplined for his comments,
and, despite Ms. Hertzberg’s repeated
complaints to Margelos, the comments
continued unabated until her departure
from SRAM.
 Ms. Hertzberg’s employment with SRAM
ended on February 6, 1995, although how
it ended is not clear. Ms. Hertzberg
testified that she was terminated from
her employment by Lester because she was
being "too disruptive." Id. at 55. Ms.
Hertzberg’s ex-husband and Whatmore both
confirmed that Ms. Hertzberg had told
them that she was fired. Lester and
Margelos, however, denied terminating Ms.
Hertzberg. They testified that Ms.
Hertzberg gave two weeks’ notice. Shortly
thereafter, she informed Lester that she
was reconsidering. Margelos told Lester,
however, that they were going to hold
firm to her resignation./2

After leaving SRAM, Ms. Hertzberg wrote
to SRAM’s president, Stan Day. In the
letter, she related her history of
problems with Loayza, that she had voiced
concerns about "certain procedures Manuel
was using" and that she did not believe
Loayza was a "team play[er]." Def.’s Ex.
1. She also told Day that she had not
intended to resign, but only had wanted
her concerns addressed. She did not
request any action from Day, but provided
her number to him "[i]f [he] would like
to respond." Id. Ms. Hertzberg did not
state that she had been the victim of
sexual harassment, nor did she inform Day
that her discharge was motivated by her
harassment-related complaints.

During the time that Ms. Hertzberg was
employed at SRAM, SRAM had in place a
sexual harassment policy. The policy
required that complaints be made through
the chain of command, all the way to Day.
Ms. Hertzberg had seen the employment
manual containing the sexual harassment
policy on only one occasion; she did not
have a personal copy of the employment
manual and, therefore, was not familiar
with the requirements of the policy.
Margelos testified that he was familiar
with the policy and that the policy
stated that SRAM did not tolerate sexual
harassment. Lester had the same
understanding of the policy. Neither
individual, however, had received
training in harassment issues or how to
conduct a sexual harassment
investigation.

B. District Court Proceedings

After pursuing her claims through
administrative channels, Ms. Hertzberg
filed a two-count complaint in district
court. In her complaint, Ms. Hertzberg
first alleged that she had been sexually
harassed by Loayza and Lester. The second
count of her complaint alleged that SRAM
had fired her in retaliation "for having
opposed and complained about the hostile
and offensive work environment." R.1 at
5. Ms. Hertzberg’s complaint did not
include a claim for discriminatory
discharge, only retaliatory discharge.
Ms. Hertzberg did not allege, either as
part of count one or as a separate count,
that she was constructively discharged--
that her working conditions were so
intolerable that she was forced to
resign.

Ms. Hertzberg’s claims proceeded to
trial. After the close of Ms. Hertzberg’s
case, and again at the end of all of the
evidence, SRAM moved for judgment as a
matter of law on all aspects of Ms.
Hertzberg’s claims, including the
availability of punitive damages. The
district court reserved ruling on the
motion.

The jury then was instructed on Ms.
Hertzberg’s claims of sexual harassment
and retaliatory discharge. These were the
only two bases of recovery submitted to
the jury. The jury returned a verdict for
Ms. Hertzberg on the sexual harassment
claim for which it awarded her $20,000 in
punitive damages./3 The jury, however,
returned a verdict for SRAM on the
retaliatory discharge claim.

Ms. Hertzberg then sought equitable
relief from the district court in the
form of back pay and front pay. She
claimed that she was entitled to
approximately $56,000 in back pay and ten
years’ front pay based on her actuary’s
testimony. Ms. Hertzberg did not file a
supporting memorandum with the district
court detailing why she was entitled to
lost wages in the absence of a jury
finding that she had endured a
discriminatory discharge, actual or
constructive.

In response, SRAM argued that back and
front pay were available to Title VII
plaintiffs only when they had proven
discriminatory discharge. Because Ms.
Hertzberg never had claimed that she was
constructively discharged, and because
the jury rejected her retaliatory
discharge claim, SRAM maintained that
lost pay was not available to Ms.
Hertzberg./4

The district court disagreed. It found
that there was a "but for" relationship
between Ms. Hertzberg’s departure and the
sexual harassment. Tr. of Dec. 16, 1999,
at 9. Therefore, even though Ms.
Hertzberg had not suffered a constructive
discharge, she could still receive
damages for lost pay./5 Ruling on
SRAM’s motion for judgment as a matter of
law, the district court also upheld the
jury’s punitive damages award.
Consequently, it entered a final judgment
of $66,829.18 in Ms. Hertzberg’s favor;
the sum represented $20,000 in punitive
damages awarded by the jury, and
$44,112.18 in back pay and $7,717 in
front pay awarded by the court. SRAM
timely appealed.

II

DISCUSSION

SRAM now seeks review of the district
court’s post-trial rulings. SRAM first
submits that the district court should
not have awarded back pay and front pay
to Ms. Hertzberg. Second, SRAM contends
that the district court erred in its
calculation of the lost pay award.
Finally, SRAM argues that the district
court should not have left the jury’s
punitive damage award undisturbed.

A. Lost Pay

SRAM maintains that the district court
should not have awarded lost pay because
Ms. Hertzberg did not plead or prove a
cause of action that entitled her to back
or front pay. Whether lost pay is
available as a remedy for a statutory
violation is a question of law that we
review de novo. See Selgas v. Am.
Airlines, Inc., 104 F.3d 9, 12 (1st Cir.
1997) ("Our review of the district
court’s decision that both front pay and
reinstatement could be awarded together
as part of the remedies available to a
Title VII plaintiff is de novo, as we
review for legal error."). The district
court’s decision to award lost pay and
the amount of that award, assuming
statutory authorization, is reviewed only
for an abuse of discretion. See Downes v.
Volkswagen of Am., Inc., 41 F.3d 1132,
1141 (7th Cir. 1994) ("The statute also
affords the court discretion to award
front pay according to the circumstances
of each case.").

In its decision to award lost pay, the
district court acknowledged that it was
bound by the jury’s verdict on the
retaliation claim. It also acknowledged
that constructive discharge had not been
submitted to the jury or proven.
Nevertheless, it decided that back pay
and front pay could be awarded because
"but for" SRAM’s harassment Ms. Hertzberg
would not have left her employment. We
believe that the district court’s
approach blurs the distinction between
hostile work environment and constructive
discharge cases, and between monetary
damages and equitable relief.

It is well established that Title VII
encompasses a cause of action for sexual
harassment. We have held that a cause of
action for sexual harassment arises when
the conduct has "the purpose or effect of
unreasonably interfering with an
individual’s work performance or creating
an intimidating, hostile, or offensive
work environment." Wolf v. Northwest Ind.
Symphony Soc’y, 250 F.3d 1136, 1143 (7th
Cir. 2001) (internal quotation marks and
citations omitted). Further, the conduct
at issue must be sufficiently severe or
pervasive that a reasonable person would
find it hostile and that the victim
subjectively sees it as abusive. See
Murray v. Chicago Transit Auth., 252 F.3d
880, 889 (7th Cir. 2001)./6

In addition to defining actionable
sexual harassment, our case law has
distinguished "ordinary" sexual
harassment from "aggravated" sexual
harassment. Rodgers v. Western-Southern
Life Ins. Co., 12 F.3d 668, 677 (7th Cir.
1993). In the "ordinary" case, the
employer engages in or condones hostile
conduct that interferes with the
employee’s ability to perform his or her
job. See Wolf, 250 F.3d at 1143. In such
circumstances the employee "is expected
to remain on the job while seeking
redress" of the harassment. Id. (internal
quotation marks and citations omitted).
In the "aggravated" case, the employer
not only interferes with the employee’s
performance, but "’makes an employee’s
working conditions so intolerable that
the employee is forced into an
involuntary resignation.’" Saxton v. Am.
Tel. & Tel. Co., 10 F.3d 526, 536-37 (7th
Cir. 1993) (quoting Weihaupt v. Am. Med.
Ass’n, 874 F.2d 419, 426 (7th Cir. 1989)
(emphasis in original)). When working
conditions reach these depths, an
employee need not remain on the job, but
may resign and seek his or her remedies
in court. See Chambers v. Am. Trans Air,
Inc., 17 F.3d 998, 1005 (7th Cir. 1994)
("Thus, courts have said that where
conditions are so intolerable that a
reasonable person would feel compelled to
resign, a plaintiff may do that, and then
sue for reinstatement and back pay.").

The distinction between "ordinary" and
"aggravated" harassment is not one merely
of semantics; whether harassment is
ordinary or aggravated affects the
damages available to the plaintiff. A
brief history of damages under Title VII
is helpful in understanding this
distinction. Before Congress enacted the
Civil Rights Act of 1991 ("the 1991
Act"), Title VII allowed for only
equitable remedies, such as
reinstatement, back pay in lieu of
reinstatement and injunctive relief./7
In response to this limitation, courts
developed the constructive discharge
doctrine. See Chambers, 17 F.3d at 1005.
"Thus, courts . . . said that where
conditions are so intolerable that a
reasonable person would feel compelled to
resign, a plaintiff may do that, and then
sue for reinstatement and back pay." Id.
However, the constructive discharge
doctrine did not assist those whose
working conditions were unreasonable, but
not intolerable. Indeed, one
congressional report noted that "[b]ack
pay as the exclusive monetary remedy
under Title VII has not served as an
effective deterrent, and, when back pay
is not available, as in the case where a
discrimination victim remains on-the-job
or leaves the workplace for reasons other
than discrimination, there is simply no
deterrent." H.R. Rep. No. 102-40 (I), at
154 (1991). Consequently, in the 1991
Act, Congress expanded the types of
remedies available to Title VII
plaintiffs to compensate those left
unaided by the original statute. See H.R.
Rep. 102-40 (II), at sec. 8 (1991)
(establishing the need for expanded
remedies in light of the examples of
women who were severely harassed but
received little or no relief).
 The new damage provisions of the 1991
Act are codified at 42 U.S.C. sec. 1981a,
which states:

In an action brought by a complaining
party . . . against a respondent who
engaged in unlawful intentional
discrimination (not an employment
practice that is unlawful because of its
disparate impact) . . . the complaining
party may recover compensatory and
punitive damages as allowed in subsection
(b) of this section, in addition to any
relief authorized by section 706(g) of
the Civil Rights Act of 1964 [42 U.S.C.
sec. 2000e-5(g)], from the respondent.

42 U.S.C. sec. 1981a(a)(1). In adopting
this language, "Congress sought to expand
the available remedies by permitting the
recovery of compensatory and punitive
damages in addition to previously
available remedies, such as front pay."
Pollard v. E.I. du Pont de Nemours & Co.,
121 S. Ct. 1946, 1952 (2001). Thus, the
1991 Civil Rights Act addressed the
disparity in treatment by providing
additional remedies; it left undisturbed
the equitable remedies available under
Title VII. Indeed, Congress explicitly
provided that the new remedy provisions
did not subsume the old Title VII
remedies. See 42 U.S.C. sec. 1981a(b)(2).
Section 1981a (b)(2) states:
"Compensatory damages awarded under this
section shall not include backpay,
interest on backpay, or any other type of
relief authorized under section 706(g) of
the Civil Rights Act of 1964." 42 U.S.C.
sec. 1981a(b)(2).

More important for our purposes, the
1991 Act also left undisturbed the
showing that a plaintiff must make to ob
tain equitable relief: A victim of
discrimination that leaves his or her
employment as a result of the
discrimination must show either an actual
or constructive discharge in order to
receive the equitable remedy of
reinstatement, or back and front pay in
lieu of reinstatement. In the absence of
such a showing, a plaintiff’s exclusive
remedies are those set forth in 42 U.S.C.
sec. 1981a.

We are not alone in reaching this
conclusion. Two circuits that have faced
this issue have held that back pay and
front pay may not be recovered in the
absence of a finding of discriminatory
discharge. See Mallinson-Montague v.
Pocrnick, 224 F.3d 1224 (10th Cir. 2000);
Caviness v. Nucor-Yamato Steel Co., 105
F.3d 1216 (8th Cir. 1997). In Pocrnick, a
district court had rejected the
plaintiffs’ plea for front and back pay
following a jury’s determination that
they had not suffered constructive
discharges. See 224 F.3d at 1226. The
plaintiffs cross-appealed on this basis,
but the Tenth Circuit stated:

Because the remedies available under sec.
1981a do not displace or alter the
remedies available under pre-1991 Title
VII law, but instead merely supplement
those remedies, and because sec.
1981a(b)(2) specifically precludes the
award of back pay as part of the new
compensatory remedies provided therein,
the district court concluded that "there
is nothing in the 1991 Amendments to
suggest that the case law applying those
prior remedies is abrogated. Instead, it
appears that those prior remedies, and
the case law applying those remedies
remain intact." Accordingly, the district
court further concluded that the
Plaintiffs’ entitlement to back pay was
controlled exclusively by sec. 2000e-5(g)
and the case law interpreting it and not
by the separate, supplemental remedies
set out in sec. 1981a.

Id. at 1237 (footnotes omitted). The
appellate court adopted this reasoning
and upheld the judgment.

The Eighth Circuit held similarly in
Caviness. There, the jury had awarded the
plaintiff $51,000 in damages on her
sexual harassment claim. The defendant
argued that the award must be vacated
because the actions occurred pre-1991
and, therefore, only equitable remedies
were available to the plaintiff. The
district court recognized that the plain
tiff was limited to pre-1991 Act
remedies; nevertheless, it upheld the
award and recharacterized it as back pay.
The defendant appealed, and the Eighth
Circuit reversed. In resolving the issue,
the court first noted that "the recovery
of monetary damages by successful
plaintiffs on claims of discrimination
under Title VII before the 1991 Act was
limited to equitable forms of relief,
such as back pay, and the circumstances
under which such monetary equitable
relief was available were likewise
limited." Id. at 1219. Consequently, even

"if unlawful discrimination was proved,
under prior [pre-November 1991] law a
Title VII plaintiff could not recover
monetary relief unless the discrimination
was also found to have some concrete
effect on the plaintiff’s employment
status, such as a denied promotion, a
differential in compensation, or
termination." Sexual harassment occurring
before November 1991 ordinarily does not
have the sort of concrete economic effect
required for the recovery of money
damages under Title VII. The exception
would be sexual harassment that resulted
in constructive discharge . . . . In that
case, back pay (and front pay) would be
potential remedies. But in the absence of
constructive discharge, a plaintiff
subjected to sexual harassment, no matter
how egregious, is not "made whole" by the
equitable remedy of back pay.

Id. (quoting Landgraf v. USI Film Prods.,
511 U.S. 244, 254 (1994)) (alteration in
original). Because, the plaintiff had not
alleged constructive discharge, and
because no other theory of discriminatory
discharge was submitted to the jury, the
Eighth Circuit reversed the back pay
award. See id./8

The requirement that a plaintiff
establish a discriminatory discharge in
order to receive lost pay precludes such
a recovery for Ms. Hertzberg in the
present case. We agree with the district
court that Ms. Hertzberg’s lawyers, "in
the nature of their presentation, may
have shot themselves or their client in
the foot on the retaliation claim by the
instruction that limited adverse
employment action to a termination of
plaintiff’s employment by defendant," Tr.
of Dec. 16, 1999, at 6-7; that is, Ms.
Hertzberg may well have convinced a jury
that she had been constructively
discharged. However, Ms. Hertzberg
presented only two bases of relief to the
jury: sexual harassment and retaliatory
discharge. The jury rejected Ms.
Hertzberg’s retaliatory discharge claim.
Consequently, there was no discriminatory
discharge on which the award of lost pay
could be based, and we must reverse the
lost pay award.
B. Punitive Damages

SRAM also contends that the district
court erred when it failed to grant
SRAM’s motion for judgment as a matter of
law on Ms. Hertzberg’s punitive damage
claim. We review the denial of a motion
for judgment as a matter of law de novo.
See Emmel v. Coca-Cola Bottling Co., 95
F.3d 627, 629 (7th Cir. 1996). In
addressing the issue, we ask "whether the
evidence presented, combined with all
reasonable inferences permissibly drawn
therefrom, is sufficient to support the
verdict when viewed in the light most
favorable to the party against whom the
motion is directed," here, Ms. Hertzberg.
Tapia v. City of Greenwood, 965 F.2d 336,
338 (7th Cir. 1992).

SRAM first argues that Ms. Hertzberg did
not suffer severe sexual harassment. SRAM
also maintains that nothing in the record
suggests that SRAM’s management knew that
its actions with respect to Ms. Hertzberg
might violate federal law. Finally, SRAM
contends that punitive damages should be
foreclosed to Ms. Hertzberg because she
did not utilize her last avenue of
redress under SRAM’s harassment policy--
an appeal to SRAM’s president.
Consequently, SRAM believes, Ms.
Hertzberg cannot establish punitive
damages as a matter of law.

We believe these arguments must be
rejected in the wake of Kolstad v.
American Dental Association, 527 U.S. 526
(1999). In Kolstad, the Supreme Court set
forth the elements that a plaintiff must
establish in order to receive punitive
damages under the 1991 Act. According to
the statute, stated the Court, the
employer must act with malice or reckless
indifference to the plaintiff’s federally
protected rights. "The terms ’malice’ or
’reckless indifference’ pertain to
theemployer’s knowledge that it may be
acting in violation of federal law, not
its awareness that it is engaging in
discrimination." Kolstad, 527 U.S. at
535. Restating the standard in a slightly
different formulation, the Court held:
"[A]n employer must at least discriminate
in the face of a perceived risk that its
actions will violate federal law to be
liable in punitive damages." Id. at 536.
Consequently, although the egregiousness
of the conduct might support an inference
that the employer acted with the
requisite state of mind, a showing of
egregiousness is not an independent
requirement of a punitive damages award.
See id. at 537-38.

This court applied the Kolstad standard
in Bruso v. United Airlines, Inc., 239
F.3d 848 (7th Cir. 2001). In Bruso, we
discussed Kolstad’s "three-part framework
for determining whether an award of
punitive damages is proper under the
statutory standard." 239 F.3d at 857. The
first step requires the plaintiff to
"demonstrate that the employer acted with
the requisite mental state." Id. However,
we continued,

[t]he employer need not be aware that it
is engaging in discrimination. Instead,
it need only act in the face of a
perceived risk that its actions will
violate federal law. A plaintiff may
satisfy this element by demonstrating
that the relevant individuals knew of or
were familiar with the antidiscrimination
laws and the employer’s policies for
implementing those laws.

Id. at 857-58 (internal quotation marks
and citations omitted)./9 Once the
plaintiff has met this burden, the
plaintiff "must demonstrate that the
employees who discriminated against him
are managerial agents acting within the
scope of their employment." Id. However,
even if the plaintiff meets these
burdens, "the employer may avoid
liability for punitive damages if it can
show that it engaged in good faith
efforts to implement an
antidiscrimination policy." Id.

We believe that the evidence, together
with the reasonable inferences that the
jury was entitled to draw from that
evidence, were sufficient to allow a jury
to resolve these issues in favor of Ms.
Hertzberg. With respect to the first
element, there was evidence that both
Lester and Margelos "knew of . . . the
antidiscrimination laws and the
employer’s policies for implementing
those laws." Id. at 858. Specifically,
Lester testified that SRAM had a sexual
harassment policy and, although he could
not remember the specifics of the policy,
he believed it required an investigation
and an attempt to reach a resolution
between the parties. Furthermore, when
asked about his response to Ms.
Hertzberg’s complaint about Loayza, Mr.
Lester replied: "I spoke with Manuel. I
told him that Julie thought his jokes
were inappropriate and so did I. And that
he should stop doing that immediately. It
was incorrect behavior in the workplace."
R.68 at 119. Consequently, Lester’s
knowledge of the existence of SRAM’s
policy is undisputed. Furthermore, a jury
reasonably could infer from Lester’s
statements to Loayza that Loayza’s
comments were "inappropriate" and
"incorrect" because they were illegal.
See Alexander v. Fulton County, 207 F.3d
1303, 1338 n.28 (11th Cir. 2000) (holding
that sheriff’s testimony that he "would
never assert" that it was "okay to fire
someone because of their race" was
sufficient to establish that he acted
with the requisite mental state); cf.
Ogden v. Wave Works, Inc., 214 F.3d 999,
1010 (8th Cir. 2000) (holding that the
combination of familiarity with company
policy and training in harassment issues
was sufficient evidence from which a jury
could conclude that a managerial employee
acted in the face of a perceived risk
that his actions violated federal law).

The same is true of Margelos. When asked
about SRAM’s policy on sexual harassment,
Margelos responded: "Well, certainly it’s
not tolerated. If we’re made aware of any
issues, we would address them
immediately." R.68 at 248. Furthermore,
when detailing his discussions with
Lester regarding Lester’s touching Ms.
Hertzberg, Margelos stated:

I told Brian [Lester] exactly what Julie
[Hertzberg] and Dee [Whatmore] had told
me. And that Julie felt that it was
inappropriate. I told Brian, you know,
that kind of behavior, regardless of
what, you know, might be just incidental
contact or whatever can be misinterpreted
by other people and it[’]s very
offensive.

R.68 at 256. Margelos, therefore, like
Lester, expressly testified to knowledge
of SRAM’s policy. Furthermore, like
Lester, the jury reasonably could
conclude that Margelos understood that
certain conduct that was "inappropriate"
or "offensive" might be illegal. See
Alexander, 207 F.3d at 1338.
Consequently, we do not believe that we
can reverse the jury’s verdict of
punitive damages with respect to Ms.
Hertzberg’s showing on this first
element.

As stated above, however, our inquiry
does not end here. Ms. Hertzberg also
must show that either Lester or Margelos
was a "managerial agent[ ] . . . acting
within the scope of [his] employment."
Bruso, 239 F.3d at 858. This is
"necessarily a fact-intensive inquiry"
driven by "the kind of authority the
employer has given the employee, the
amount of discretion given to the
employee in executing his job duties, and
the manner in which those duties are
carried out." Id.

Although the evidence in the record
concerning Lester is sparse, it does not
appear from the evidence that Lester’s
responsibilities rendered him a
managerial agent. There is little
evidence in the record concerning
Lester’s day-to-day authority in
overseeing the shipping department.
However, there was testimony from both
Lester and Margelos that Lester had
little discretion in hiring, disciplining
or terminating employees that reported to
him. According to Lester, he had only a
"[s]mall amount" of input in hiring those
who would work under him. R.68 at 116.
Furthermore, Lester had no power to
terminate employees without Margelos’
approval. Because the little evidence
presented suggests that Lester’s
authority and discretion was limited, we
do not believe a jury reasonably could
conclude that Lester was SRAM’s
managerial agent. Cf. Lowery v. Circuit
City Stores, Inc., 206 F.3d 431, 447 (4th
Cir. 2000) (holding that a supervisor was
a managerial agent because she "had the
authority to make personnel decisions . .
. without guidelines or review, and thus
was able to make personnel decisions
without any objective criteria or
accountability"), cert. denied, 121 S.
Ct. 66 (2000); EEOC v. Wal-Mart Stores,
Inc., 187 F.3d 1241, 1247 (10th Cir.
1999) (holding that employees with the
ability to suspend, hire and fire
subordinates occupied management
positions for purposes of imposing
punitive damages).

We cannot reach the same conclusion with
respect to Margelos. Margelos was plant
manager at the Elk Grove Village facility
and "general manager for [SRAM’s] U.S.
operations." R.68 at 243. He hired the
staff for the Elk Grove Village plant, he
took care of personnel issues and he had
the authority to discipline and terminate
the employment of those who worked for
him, directly or indirectly. We believe
this evidence provides a sufficient basis
from which a jury could conclude that
Margelos was SRAM’s "managerial agent[ ]
acting within the scope of [his]
employment" for purposes of addressing
Ms. Hertzberg’s complaints about Loayza.
Bruso, 239 F.3d at 858.

The issue then becomes whether a
reasonable jury could conclude that SRAM
failed to make "good faith efforts to
implement an antidiscrimination policy."
Id. "[A]lthough the implementation of a
written or formal antidiscrimination
policy is relevant to evaluating an
employer’s good faith efforts at Title
VII compliance, it is not sufficient in
and of itself to insulate an employer
from a punitive damages award." Id. at
858. Taken in the light most favorable to
Ms. Hertzberg, the evidence establishes a
lack of a good faith effort to insulate
Ms. Hertzberg from Loayza’s harassment.
The testimony of Lester and Margelos
established that Ms. Hertzberg complained
about Loayza’s gender-based harassment.
See R.68 at 119 (testimony of Lester that
he "recall[ed] that Julie said that
Manuel was making jokes about women");
id. at 278 (testimony of Margelos charac
terizing Hertzberg’s complaints as
concerning Loayza’s "demeaning and
patronizing" attitude). Furthermore, Ms.
Hertzberg testified that Loayza would
make gender-related comments to her
constantly--"at least over 100
times"during the course of her four-month
employment. Id. at 62. When Ms. Hertzberg
reported these incidents to Lester, she
was told she was being "too emotional."
Id. at 34. When she proceeded through the
chain of command and went to Margelos, he
"seemed to shrug it off," id. at 54;
indeed, both managers were ineffective in
addressing the problem because Loayza’s
badgering did not stop. See Bruso, 239
F.3d at 861 (finding this element of
Kolstad met because Bruso introduced
evidence at trial that suggested that
United’s top management officials
disregarded its zero-tolerance policy by
turning a blind eye to the harassment
that they knew was occurring);
Deffenbaugh-Williams v. Wal-Mart Stores,
Inc., 188 F.3d 278, 286 (5th Cir. 1999)
(considering management’s failure to
respond effectively to complaints as
evidence of lack of good faith)./10
There also was evidence that Margelos
failed to follow SRAM’s procedure for
receiving complaints because he did not
put them in writing. Finally, although
SRAM argues that Ms. Hertzberg did not
make an appeal to the company president
(as allowed by its policy), there is
evidence in the record that SRAM did not
provide its employees ready access to its
sexual harassment policy, nor did a
management employee inform Ms. Hertzberg
of this avenue of redress. Cf. Faragher
v. City of Boca Raton, 524 U.S. 775, 809
(1998) (holding that city could not
establish affirmative defense to sexual
harassment complaint--that it took
reasonable care to prevent and correct
harassing behavior--in light of "complete
failure" to promulgate sexual harassment
policy).

Given the constant nature of the
harassment and SRAM’s lack of managerial
response to the problem, we believe a ju
ry was entitled to conclude that SRAM did
not make good faith efforts to implement
its sexual harassment policy.
Consequently, because a reasonable jury
could have found that Ms. Hertzberg met
her burden with respect to punitive
damages, we shall not disturb its
verdict.

Conclusion

For the foregoing reasons, we reverse
that portion of the district court’s
judgment awarding front and back pay, and
we affirm the judgment with respect to
the award of punitive damages. The
parties shall bear their own costs in
this court.

AFFIRMED IN PART; REVERSED IN PART

FOOTNOTES

/1 Lester, who also was Loayza’s immediate supervi-
sor, testified that he recalled only one com-
plaint from Ms. Hertzberg, that he spoke to
Loayza and that he told Loayza that the comments
were inappropriate.

/2 At some point after Ms. Hertzberg resigned, SRAM
made the decision simply to pay Ms. Hertzberg her
remaining salary without having her finish out
her last two weeks.

/3 Compensatory damages were foreclosed to Ms.
Hertzberg as a result of her discovery responses.
During discovery, SRAM queried Ms. Hertzberg
concerning her damages from the alleged harass-
ment. In response to a discovery request, Ms.
Hertzberg itemized only lost wages as her damag-
es. SRAM also asked Ms. Hertzberg at her deposi-
tion about her damages. Ms. Hertzberg responded
that she only had lost pay damages. These re-
sponses prompted SRAM to file a motion in limine
to preclude Ms. Hertzberg from introducing any
evidence at trial concerning compensatory damages
for emotional distress. Relying on Ms. Hertz-
berg’s discovery responses, the district court
granted SRAM’s motion in limine. Consequently,
the issue of compensatory damages was not submit-
ted to the jury. The fact that Ms. Hertzberg did
not recover compensatory damages does not affect
the jury’s award of punitive damages. See Timm v.
Progressive Steel Treating, Inc., 137 F.3d 1008,
1010 (7th Cir. 1998) (holding that there was "no
legal flaw[ ]" in a jury’s award of punitive
damages in the absence of a compensatory damage
award).

/4 SRAM also took issue with the amount of lost
wages Ms. Hertzberg claimed. According to SRAM,
the testimony of Ms. Hertzberg’s actuary rested
on the faulty assumption that she would have
worked ten hours of overtime per week for ten
years. Furthermore, SRAM objected to any back or
front pay that extended beyond May 1998, the time
when SRAM’s Elk Grove Village facility closed.

/5 Additionally, the district court rejected many of
SRAM’s arguments regarding the speculative nature
of an extended front pay award. The court stated:
"Finally, SRAM’s several objections to the quan-
tification of that lost income recovery do not
rise above the level of captiousness. For one
thing, it was SRAM’s misconduct that created any
difficulty in proving such damages with preci-
sion." R.57 at 5.

/6 "Conduct that is not severe or pervasive enough
to create an objectively hostile or abusive work
environment--an environment that a reasonable
person would find hostile or abusive--is beyond
Title VII’s purview." Harris v. Forklift Sys.,
Inc., 510 U.S. 17, 21 (1993).

/7 See Tobey v. Extel/JWP, Inc., 985 F.2d 330, 332
(7th Cir. 1993) ("Although sexual harassment is
a form of sex discrimination forbidden by Title
VII, damages are not available under that statute
for sexual harassment as such--because Title VII
is not a damages statute.") (citations omitted);
King v. Bd. of Regents of the Univ. of Wis. Sys.,
898 F.2d 533, 537 (7th Cir. 1990) ("Compensatory,
nominal, and punitive damages are not available
under Title VII.").

/8 Some circuits have crafted a narrow exception to
this general rule for failure-to-promote cases.
In a failure to promote case, a plaintiff may
seek back pay for periods beyond the employee’s
voluntary resignation "when the employee was
preparing to enter an entirely different career
with the same employer." Odima v. Westin Tucson
Hotel, 53 F.3d 1484, 1495 (9th Cir. 1995) (inter-
nal quotation marks and citations omitted). In
Odima, the court stated:

An employee who has been discriminatorily denied
an opportunity for a promotion ordinarily may not
collect backpay for periods beyond that employ-
ee’s voluntary resignation unless the employee
demonstrates that she was constructively dis-
charged by the employer. That doctrine does not
apply, however, when the employee was preparing
to enter an entirely different career with the
same employer.

Id. In these cases, "an employer’s discriminatory
denial of the employee’s opportunity to enter an
entirely different career constitutes a refusal
to hire; thus, the limitation on backpay in
promotion cases does not apply." Id.; cf. Wells
v. North Carolina Bd. of Alcohol Control, 714
F.2d 340, 342 (4th Cir. 1983) (holding that back
pay was available to stock clerk who, but for the
company’s discrimination, would have been promot-
ed to a sales clerk position and consequently
would not have suffered a back injury that re-
sulted in his leaving his stock clerk position).
Ms. Hertzberg, however, has made no claim for
failure to promote. Consequently, even if we were
to adopt our colleagues’ reasoning, the exception
is inapplicable to the case now before us.

/9 Another way a plaintiff may meet this burden is
"by showing that the defendant’s employees lied,
either to the plaintiff or to the jury, in order
to cover up their discriminatory actions." Bruso
v. United Airlines, Inc., 239 F.3d 848, 858 (7th
Cir. 2001).

/10 Although Margelos and Lester testified that they
spoke with Loayza, and that Ms. Hertzberg report-
ed no further complaints (indeed, that she had
told them that the situation was improving), the
jury was entitled to credit Ms. Hertzberg’s
version of events. See, e.g., Europlast, Ltd. v.
Oak Switch Sys., Inc., 10 F.3d 1266, 1275 (7th
Cir. 1993) (allowing that a jury may credit the
testimony of one witness over another).