Third Circuit adopts “proxy-liability” exception to Faragher-Ellerth defense.

The plaintiff sued her employer, asserting sexual harassment claims under Title VII of the Civil Rights Act of 1964 and the Pennsylvania Human Relations Act (PHRA). Specifically, the plaintiff alleged that she had experienced ongoing harassment at the hands of her direct supervisor, who also was the company’s director, chief operating officer, and secretary of the board. At trial, the court instructed the jury that should it conclude that the plaintiff had satisfied her burden of proof under Faragher v. City of Boca Raton, 524 U.S. 775 (1998) and Burlington Industries, Inc. v. Ellerth, 524 U.S. 742 (1998), the employer would nevertheless be shielded from liability if the jury also found that: (1) the employer had exercised reasonable care to prevent the harassment and promptly corrected any harassment that did occur; and (2) the plaintiff unreasonably failed to take advantage of any preventative or corrective opportunities provided by the employer. At the conclusion of trial, the jury returned a verdict for the employer, finding that the plaintiff had not proven by a preponderance of the evidence that she had been subjected to sexual harassment. The plaintiff then appealed, arguing that the court erred in declining to instruct the jury that the Faragher-Ellerth defense would be unavailable if it found her alleged harasser to be a “proxy or alter-ego of the employer.” In a case of first impression, the Third Circuit agreed, joining the Second, Fifth, Seventh and Ninth Circuits in adopting the “proxy-liability” exception to the Faragher-Ellerth defense.

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