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Gyulakian v. Lexus of Watertown, Inc.

Supreme Judicial Court of Massachusetts, Middlesex

August 24, 2016

LEXUS OF WATERTOWN, INC., & another.[1]

          Heard: March 10, 2016.

         Civil action commenced in the Superior Court Department on January 10, 2013. The case was tried before Kimberly S. Budd, J., and postverdict motions for relief were considered by her.

         The Supreme Judicial Court granted an application for direct appellate review.

          Robert S. Mantell (Lori A. Jodoin with him) for the plaintiff.

          Christopher J. Sullivan (Tory A. Weigand with him) for the defendants.

          Rebecca Pontikes, Katherine Skubecz, Michaela C. May, & Chetan Tiwari for Massachusetts Employment Lawyers Association & others.

          Afton M. Templin for Women's Bar Association of Massachusetts.

          Ben Robbins & Martin J. Newhouse for New England Legal Foundation & another.

          Elizabeth S. Dillon for Massachusetts Defense Lawyers Association.

          Present: Gants, C.J., Spina, Cordy, Botsford, Duffly, & Lenk, JJ. [2]

          CORDY, J.

         In December, 2014, a jury rendered a verdict in favor of the plaintiff, Emma Gyulakian, finding that she had been subjected to a sexually hostile or offensive work environment, in violation of G. L. c. 151B (c. 151B), § 4 (§ 4) .[3]The jury, having heard evidence tending to establish that Gyulakian suffered relentless sexual harassment by her direct supervisor, Emmanuel Ferreira, found that the defendants, Lexus of Watertown, Inc., and Post Motors, Inc. (collectively, Lexus), were liable for $40, 000 in compensatory damages for emotional distress, and, concluding that Lexus acted intentionally or with reckless disregard for Gyulakian's rights under the discrimination laws, also awarded Gyulakian $500, 000 in punitive damages.

         Lexus filed a motion for judgment notwithstanding the verdict (judgment n.o.v.), or, in the alternative, for a new trial or a remittitur. A judge of the Superior Court allowed the defendant's motion for judgment n.o.v. in part, denying the motion with respect to the jury's imposition of compensatory damages but allowing it as to the award of punitive damages.

         Gyulakian appealed on the issue of punitive damages, and Lexus cross-appealed the award of compensatory damages. We allowed Gyulakian's application for direct appellate review and affirm the award of compensatory damages. We also reverse the trial judge's ruling as to the punitive damages award, because, based on the evidence at trial, the jury could have found that, independent of the conduct of harassment engaged in by its supervisory employee, Lexus failed to take adequate remedial measures after being put on notice of a sexually hostile or offensive work environment, and that that failure was outrageous or egregious. The jury's award of punitive damages is reinstated, and the matter remanded for consideration of Lexus's motion for remittitur.[4]

         1. Factual and procedural background.

         The jury could have found the following.[5], [6]

         a. Gyulakian's employment.

         Gyulakian was an employee of Lexus from 2003 through January 4, 2012, when her employment was terminated. Between June, 2010, and the end of her employment at Lexus, Gyulakian acted as a finance manager, during which time Ferreira was her direct supervisor. Ferreira, Lexus's finance director, was responsible for assigning hours, vacations, and work flow, and would carry out performance evaluations for all of the finance managers. Ferreira recommended Gyulakian for the finance manager position, and was included in the decision to fire her.

         Despite Gyulakian's success in her role as finance manager, her employment at Lexus was terminated at a meeting on January 4, 2012, because, as Vincent Liuzzi, Lexus's general manager, testified, Gyulakian's relationship with her coworkers had deteriorated. While in that meeting, Gyulakian reported to Liuzzi and Michael O'Connell, Lexus's general sales manager, that, during her tenure in the finance department, Ferreira sexually harassed her and cultivated a sexually hostile or offensive work environment. Gyulakian also reported the same conduct to human resources manager Tammy Grady-Brown later that day. Prior to the day on which her employment was terminated, Gyulakian had not reported the harassment to Liuzzi or Grady-Brown.[7] She had, however, informed Tony Bruno, an assistant general sales manager and Ferreira's supervisor, on multiple occasions about various sexually offensive incidents over the course of the previous eighteen months. After Gyulakian was terminated, Lexus purportedly conducted an investigation, which uncovered no corroboration of her allegations, and Ferreira was not disciplined.

         b. The sexual harassment policy.

         At all relevant times, Lexus had a sexual harassment policy in place, and held trainings for employees and supervisors on that policy.[8] The policy read: "Any employee that feels that (s)he is a victim of sexual harassment should immediately report such actions in accordance with the following procedure. All complaints will be promptly and thoroughly investigated." The reporting guidelines instruct employees to "report the situation to either [Liuzzi] . . . or [Grady-Brown]." The policy allows that "[i]f an employee prefers not to discuss the matter with these individuals, (s)he may go directly to any other member of management." There is no definition in the policy regarding who qualifies as "any other member of management."

         c. The alleged discrimination.

         The jury heard evidence that Ferreira had, since Gyulakian became a finance manager, habitually and graphically sexually harassed her, and that she was working in an otherwise sexually hostile or offensive work environment. By way of example, Ferreira would often comment on Gyulakian's "nipples, " "boobs, " and "ass." Ferreira asked Gyulakian if they would one day sleep together so he could actually see her breasts. At a sexual harassment training, Ferreira commented to Gyulakian about how harassment sounds like "her ass." Gyulakian testified that the sexually charged comments would come on an almost daily basis. The assaults were also physical in nature, as Ferreira once violated Gyulakian's personal "no touching" rule by touching her buttocks, and, on other occasions, Ferreira would attempt to throw coins down Gyulakian's blouse. At one point, Gyulakian witnessed Ferreira, O'Connell, and Bruno looking at naked photographs of Gyulakian's coworker on the coworker's cellular telephone. On another occasion, Robert Silvester, the former Lexus office manager, circulated a memorandum regarding Ferreira's inappropriate behavior after he heard Ferreira discussing anal intercourse in the office.

         d. Procedural background.

         Gyulakian commenced this action against Lexus on January 10, 2013, asserting four claims under G. L. c. 151B, § 4, for harassment based on sex and national origin, on the grounds that she was subjected to a hostile work environment because of her (1) sex and (2) national origin[9]; (3) retaliation and unlawful threats for complaining of that hostile work environment; and (4) termination on an impermissible basis. At the close of Gyulakian's evidence, Lexus unsuccessfully moved for a directed verdict. The motion did not specifically challenge the imposition of punitive damages. Over Lexus's objection, the special verdict slip presented to the jury included a punitive damages question. The jury returned a verdict in favor of Gyulakian on the sexually hostile or offensive work environment claim, awarding Gyulakian $40, 000 in compensatory damages and $500, 000 in punitive damages. The jury returned verdicts in favor of Lexus on the remaining claims.[10]

         Lexus filed a motion for judgment n.o.v. or, in the alternative, for a new trial or a remittitur, requesting, among other things, that the judge set aside or decrease the awards of compensatory and punitive damages. The motion for judgment n.o.v. was allowed as to the award of punitive damages and denied as to the compensatory damages. The judge concluded that an employer "may not be vicariously liable for punitive damages" under G. L. c. 151B based purely on the actions of its supervisory personnel, and that the jury were not provided with sufficient evidence of outrageous or egregious behavior by Lexus.

         Gyulakian appealed from the judge's decision to set aside the award of punitive damages, and Lexus cross-appealed, arguing that the evidence did not support a finding of any liability and its motion for judgment n.o.v. should have been allowed as to the award of compensatory damages.

         2. Discussion.[11]

         a. Lexus's cross appeal.

         Lexus argues that Gyulakian's evidence was insufficient to warrant compensatory damages because it did not show that her work performance suffered as a result of the harassment or that the harassment altered the conditions of her employment. Lexus also argues that the judge erred in failing to include a question on the special verdict form asking whether the plaintiff's suffering was caused by the harassment. We are not persuaded by either contention.

         i. Sufficiency ...

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