MSC overturns ‘Champion,’ finds employer not liable for employee quid quo pro sexual harassment

In Hamed v. Wayne County, the Michigan Supreme Court overturned its holding from Champion v. Nation Wide Security that imposed  liability on employers for the quid pro quo sexual harassment by a supervisory employee under the Michigan Civil Rights Act (CRA).

For the 4-3 majority, Justice Mary Beth Kelly wrote that the Champion court ignored traditional common law principles of respondeat superior which were incorporated into the CRA by reference.

First, we note that Champion’s holding was contrary to the plain language of the CRA. As we explained in Chambers, the CRA specifically incorporates common-law agency principles in its definition of “employer.” Michigan’s common-law agency principles, however, do not include the aided-by-agency exception, and the Legislature did not modify the common law by including the aided-by-agency exception in the CRA. The Champion Court failed to recognize this clear intent. Rather, like the dissenting justices here, the ChampionCourt reasoned that the remedial purpose of the civil rights law justified holding the defendant employer vicariously liable for the acts of its employee, based on an apprehension that adherence to traditional agency principles would completely foreclose employer liability for quid pro quo sexual harassment claims.

Aside from failing to give effect to the Legislature’s intent, this reasoning is flawed for two additional reasons. First, it wrongly elevates the CRA’s general remedial purpose above its plain language. Such reasoning is contrary to the cornerstone of statutory interpretation, which is the rule that the plain language used is the best indicator of the Legislature’s intent. Second, the policy concern at the heart of Champion is fundamentally flawed because it was premised on an unfounded fear. Application of
traditional agency principles does not foreclose employers from vicarious liability in the context of quid pro quo sexual harassment claims. An employer may still be liable for and act of quid pro quo sexual harassment that was committed within the scope of employment or for a foreseeable act that was committed outside the scope of employment. Thus, liability may certainly attach if there is sufficient cause to impute the employee’s or agent’s acts to the employer because the employer knew of the employee’s propensity to commit the type of act involved.

Kelly also said the Championcourt relied on federal case law interpreting the federal statute, which is different than the Michigan CRA.

Three justices dissented. Justice Michael Cavanagh wrote that Champion was correctly decided, noting that it was a unanimous decision at the time.

In light of this understanding of the CRA’s purpose and the Legislature’s intent in enacting the CRA, I believe that Champion properly advanced the legislative intent by ensuring that clearly discriminatory conduct is eradicated. The majority’s interpretation, however, bars plaintiff from pursuing a claim in furtherance of this goal and ignores “the legislative intent that employers, not the victims of sexual harassment, bear the costs of remedying and eradicating discrimination.” Champion, 450 Mich at 714. The majority erroneously discards Champion’s interpretation of the legislative intent as based “purely on policy considerations,” ante at 22, and ignores the fact that the policy considerations discussed in Champion were the motivation behind the Legislature’s enactment of the CRA. As a result, “in seeking to shield employers from liability, the majority instead places the burden of preventing an abuse of authority and the corresponding harm on people powerless to prevent it.” Zsigo v Hurley Med Ctr, 475 Mich 215, 236; 716 NW2d 220 (2006) (MARILYN KELLY, J., dissenting).

Cavanagh said the majority is wrong “under any standard” based on the deputy’s previous conduct and violation of jail policies requiring female officers to be present anytime a female inmate is in jail.

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Last call for MSC’s 2010-2011 term

Robert P. Young Jr.

Next Sunday is the official end of the Michigan Supreme Court’s 2010-2011 term. According to the court’s public information office, only eight cases on leave are due by that day. The eight, and what’s at stake [Summaries and briefs from Michigan Supreme Court public information office available at links provided]:

People v. Kowalski: This case deals with several issues related to the state’s evidence against a defendant charged with “accosting, enticing, or soliciting a minor for immoral purposes” and using a computer to commit said acts.”

Krohn v. Auto-Owners Insurance Co.: First-party no-fault auto case involving a plaintiff who sought experimental surgery in Portugal. Defendant said it would pay for physical therapy and testing for the surgery, but not the surgery itself because it was experimental. According to the briefs, the surgery greatly improved the plaintiff’s condition.

Previous MILW coverage:Defining what’s reasonable: Plaintiff argues that Portugal procedure was reasonably necessary; insurer says no,” April 4, 2011

Driver v. Cardiovascular Clinic: This case deals with the applicability of Burton v. Reed City Hospital Corp. in light of Bush v. Shabahang. Burton said that a complaint filed before the 180-day post-Notice-of-Intent period expires is nullified, and doesn’t  toll the limitations period. Bush said courts can allow plaintiffs to amend a defective Notice-of-Intent “in the furtherance of justice.”

Previous MILW coverage:Courts struggle with application of Bush,” March 15, 2010

A matter of timing: MSC considers malpractice case stuck in waiting period limbo,” March 21, 2011

People v. Huston: Sentence scoring issue concerning the vulnerability of the victim and whether it was sufficient to increase the defendant’s sentence.

Ligons v. Crittendon Hospital: Plaintiff’s medical malpractice action was dismissed by Court of Appeals, which ruled that the two affidavits of merit served on defendant lacked a “meaningful statement of causation.” Can plaintiff amend the affidavit of merit under Bush v. Shabahang?

Duffy v. Department of Natural Resources: Plaintiff was injured riding an ATV on Little Manistee Trail, which is on state land. Is the trail a highway under the Governmental Tort Liability Act?

Previous MILW coverage:A road by any other name,” March 14, 2011.

Hamed v. Wayne County: Plaintiff was raped by a Wayne Count Sheriff’s deputy while in Wayne County Jail. Is the jail a “public accommodation” under the Michigan Eliott-Larson Civil Rights Act?

Previous MILW coverage:County liable for deputy’s sexual assault on detainee,” July 20, 2009

People v. Bonilla-Machado: OV 13 sentence scoring is at issue here, along with ineffective assistance of counsel.

We’ll provide in-depth coverage and analysis of these opinions and others throughout August at Michigan Lawyers Weekly.