Employment-Second Circuit Adopts The Rule That the Faragher/Ellerth Defense is Unavailable When The Supervisor In Question Is The Employer’s Proxy Or Alter Ego

In Townsend v. Benjamin Enterprises, Inc., Nos. 09-0197-cv(L), 09-4509-cv (XAP) (2nd Cir. 2012), the subject of yesterday’s (5/21) blog, the Second Circuit Court of Appeals (the “Court”) faced another issue, namely, whether an employer is liable under Title VII for sexual harassment committed by a senior executive, who is a proxy or alter ego for the employer, despite the possible existence of the Faragher/Ellerth defense. Again, this was an issue of first impression for the Second Circuit. In this case, one of the plaintiffs, Martha Diane Townsend (“Townsend”), was employed by defendant Benjamin Enterprises, Inc. (“BEI”). She alleged that she was sexually harassed by defendant Hugh Benjamin, who was the husband of BEI President Michelle Benjamin, and the sole corporate Vice President of BEI, as well as a shareholder of BEI.

The proxy/alter ego doctrine treats an upper level employee or officer of a company such as Hugh Benjamin, and any action he or she takes, as if he or she is the company, so that the company itself is taking that action and liable for the consequences thereof. The Faragher/Ellerth defense is an affirmative defense to an employer’s vicarious liability for a hostile work environment created by a supervisor of the plaintiff employee. To raise such a defense successfully, the employer must not have taken a tangible employment action against the plaintiff and must demonstrate: (1) that the employer exercised reasonable care to prevent and correct promptly any sexually harassing behavior, and (2) that the plaintiff employee unreasonably failed to take advantage of any preventive or corrective opportunities provided by the employer or to avoid harm otherwise.

The Court noted that the district court had concluded that the doctrine of proxy/alter ego liability applies, notwithstanding the availablity of the Faragher / Ellerth defense. The Court said that every court of appeals to have considered this issue has held that the Faragher/Ellerth affirmative defense is unavailable when the supervisor in question is the employer’s proxy or alter ego. The Court adopted this holding for the Second Circuit. Thus, the Court ruled that the employer-BEI-could be liable for the sexual harrassment committed by Hugh Benjamin, a senior executive, if he is found to be a proxy or alter ego of BEI.