EEOC's claim of hostile work environment based on harassment by customer to proceed to trial

January 12, 2016

Employment Law Alert

Author(s): Richard H. Tilghman IV, Laura B. Bacon

In Equal Employment Opportunity Commission v. Costco Wholesale Corp., Case No 14 C 6553 (N.D. Ill.), the EEOC has alleged claims against Costco for failing to protect a Costco employee from harassment by a Costco customer. On December 15, 2015, the United States District Court for the Northern District of Illinois issued a decision denying Costco’s motion for summary judgment and allowing the EEOC’s claims to proceed to trial. This decision raises difficult and complex customer relations and employment issues for employers whose employees interact with customers.

The EEOC’s claims were brought on behalf of a part-time Costco employee responsible for assisting Costco customers with purchases and returning merchandise to its location on the store floor. The employee alleged that, over the course of a year, a Costco customer had engaged in a series of harassing conduct toward her, including asking her whether she had a boyfriend, complimenting her looks, inviting her on dates, touching her and trying to hug her. She claimed that she repeatedly complained to her supervisor and others about the conduct. Costco initially interviewed the customer and asked him to avoid contact with the employee.

After approximately one year of periodic harassment from the Costco customer, the employee accused the customer of videotaping her with his cell phone and reported him to Costco and the police. She also obtained an order of protection against the customer. After the cell phone incident, the employee informed Costco that she did not feel safe returning to work. Costco claimed that, as an accommodation, it offered her the chance to work exclusively at the registers, allowing her to avoid contact with the customer. The employee denied that Costco offered this accommodation and, apparently, there was no documentation supporting Costco’s offer.

The general manager thereafter instituted an investigation into the employee’s allegations, banning the customer from the store pending the outcome of the investigation. Later, a chance meeting occurred between the employee and the customer at a different Costco store and an argument ensued, ultimately leading the customer to be banned from all Costco stores.

The EEOC filed claims against Costco for allowing a hostile work environment and constructive discharge. At summary judgment, Judge Ruben Castillo of the Northern District of Illinois held that the hostile work environment claims could proceed to trial based on disputed material facts. In so holding, the court relied on a 2006 decision by the Seventh Circuit Court of Appeals, which noted that even claims of harassment by a customer can give rise to a hostile work environment if the employer fails to take prompt and appropriate corrective action. In denying summary judgment, the court noted that the case presented the proverbial “swearing contest,” with Costco failing to provide conclusive evidence that it took appropriate remedial action.

Still, the decision was not a complete loss for Costco. The court granted Costco’s request to reopen discovery to conduct an independent medical examination of the employee and other discovery into her medical history. The court opined that the employee’s mental health issues could be relevant in determining whether she was, in fact, subjected to a work environment that a reasonable person would find hostile, or whether she misinterpreted innocent conduct because of her “pre-existing issues.”

This finding is significant as courts in the Northern District of Illinois facing similar fact patterns have typically denied such requests, holding that the employee’s medical records are not discoverable unless the employee has claimed more than “garden variety” psychological injuries such as humiliation or embarrassment. Here, the court found that the employee’s claim that she was unable to work for multiple years justified broader access to her mental health records.

Key takeaways for employers

There are several employer lessons from EEOC v. Costco:

  • First, employers with customer-facing businesses must be aware that customer harassment can, in some circumstances, give rise to a claim for hostile work environment;
  • Second, the decision is a reminder of the importance of keeping accurate
    records—had Costco documented the accommodation it allegedly offered to its employee, the employee would have had a harder time claiming material factual disputes that could defeat summary judgment; and
  • Third, the ruling gives employers strong precedent to obtain more mental health information from an employee who claims the inability to work as a result of being subjected to a hostile work environment.

The foregoing has been prepared for the general information of clients and friends of the firm. It is not meant to provide legal advice with respect to any specific matter and should not be acted upon without professional counsel. If you have any questions or require any further information regarding these or other related matters, please contact your regular Nixon Peabody LLP representative. This material may be considered advertising under certain rules of professional conduct.

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