Inadequate Response to Racist Customer Supports Title VII Claim

April 10, 2017

Although an African-American retail sales manager was subjected to a customer’s racist and threatening words and conduct on only two occasions, a federal court found that the incidents were severe enough to support her hostile work environment claims under Title VII. Also, the employer could be found liable for the non-employee’s harassment based on its failure to take prompt remedial action, such as investigating and banning the customer from the store (which was done in the past as to shoplifters, for example).

Irate customer’s racist diatribes. The employee worked for a clothing retailer that had more than 651 stores, some standalone and some located inside larger department stores. In 2013, the employee was promoted and transferred to a Scarsdale, New York, location in a Lord & Taylor store at a shopping center. In December 2013, she encountered an irate customer, whom she described as an Asian woman in her 30s or 40s, and who yelled at the employee and stomped on her foot. The customer made remarks like: “What are you doing? . . . You people, you need to do this . . . Hurry up . . . Your job is to serve me . . . You can’t be manager, your kind . . . You call security. They are not going to do nothing for you people.” The employee called the loss prevention manager, who came and told the customer that she needed to lower her voice or she would be asked to leave. The loss prevention manager took the employee and a sales associate to the stockroom to discuss the events and the employee said the customer had a problem with her because she was a black manager.

The employee also called the acting district manager (DM), though the parties dispute whether she mentioned that the incident was racially charged. The DM told her to send an email, which she did, describing the incident and saying she felt unsafe. The email was forwarded to other managers, but the employee received no response.

Hiding out in the stockroom. On January 5, 2014, the employee saw the same customer and called security. In the meantime, she had to wait on the customer, who again said things like: “Hurry up. This happened last time. See, you people always make it hard for me.” She also called the employee a “c**t” and said, “Oh you’re afraid? You feel scared? You should be. You people make it hard.” A short while later an HR manager approached the customer and told her not to return to the same register or to touch employees. The same HR manager subsequently told the employee that if the customer came back, the employee should go sit in the back.

The employee texted a friend complaining that she was told to sit in the stockroom with another black employee and it was a racial thing. She also emailed management, stating she feared for her safety and was having anxiety. Her email did not mention race, though. Managers discussed the issue but came up with no clear answer on how to respond. Meanwhile, the employee filed a police report and continued to follow up with managers at her employer and at Lord & Taylor, to no effect. She also repeatedly asked for a transfer, but was told there were no open positions.

After the same customer came back to the store and the employee was directed to wait in the stockroom until she left, the employee started looking for another job. She claimed that she experienced physical distress and anxiety every day at work, to the point where she lost weight, cried all the time, and sought help from a counselor. In April 2014, she resigned.

Hostile work environment. Denying the employer’s motion for summary judgment on the employee’s hostile work environment claims under Title VII, Section 1981, and state law, the court rejected the retailer’s argument that the customer’s conduct was not severe and pervasive, was not race-based, and could not be imputed to the employer. The court explained that the phrases “you people” and “your kind” can reasonably be considered to have racial meaning. Also, viewing the circumstances in totality, the two incidents with the customer were severe and included physical threats, which was sufficient to establish a hostile work environment.

As for employer liability, a jury could find the retailer did not take prompt remedial action. While it argued that it had no control over the customer and lacked authority to ban her from the Lord & Taylor store, the Second Circuit has held employers liable for harassment by non-employees. And here, the employer discussed the situation with Lord & Taylor but did not discuss banning the customer from the store even though Lord & Taylor routinely issued “trespass warnings” to ban known shoplifters and other customers.

Constructive discharge. Summary judgment was also denied on the employee’s claim that she was constructively discharged because the work atmosphere became intolerable. Even though the Second Circuit requires a showing of intent on the employer’s part, the facts alleged here were enough to avoid summary judgment because there was a question as to whether the retailer “deliberately failed to take actions calculated to remediate the workplace conditions,” including failing to ban the customer from the store and failing to investigate the incidents. And considering the lack of response when the employee raised her safety concerns up the corporate ladder, a jury could find that she felt compelled to resign.

Punitive damages. The court also refused to dismiss the demand for punitive damages. There was sufficient evidence for a jury to consider whether the company acted in the face of a perceived risk that it was violating federal law. The employer had 651 stores worldwide and had a “comprehensive” anti-harassment policy. Thus, if it failed to properly investigate the employee’s complaints of racial harassment, it was a sophisticated corporation with policies in place such that it understood its actions ran the risk of violating federal law.