Brandi M. Dearth v. Richard L. Collins (11th Cir. 2006)

B efo re BLACK, HULL and FARRIS *, Circuit Judges. P E R CURIAM: A p p e lla n t Brandi M. Dearth ("Dearth") is a former employee of InfoPro G ro u p , Inc. ("InfoPro"). From June 13, 2001 until her termination on November 8, 2 0 0 2 , Dearth was the administrative assistant to Richard L. Collins ("Collins"), In fo P ro 's president, director, and sole shareholder. Dearth filed suit against both In fo P ro and Collins, asserting that Collins repeatedly made sexual suggestions and ad v an ce s toward her and touched her in a sexual manner. Count One of Dearth's co m p lain t asserts a claim of sexual harassment, in violation of Title VII of the C iv il Rights Act of 1964. See 42U.S.C. § 2000e-2 ("Title VII"). After review and o ral argument, we affirm the district court's grant of summary judgment to both d e f e n d a n ts .1 I. C o llin s A s to Collins individually, the district court properly concluded that a Title V I I claim may be brought against only the employer and not against an individual e m p lo y e e.

D e ar th acknowledges that this Court has previously held that "`[t]he relief g r a n te d under Title VII is against the employer, not [against] individual employees w h o se actions would constitute a violation of the Act.'" Hinson v. Clinch County B d . of Educ., 231 F.3d 821, 827 (11th Cir. 2000) (citation omitted); Busby v. City o f Orlando, 931 F.2d 764, 772 (11th Cir. 1991) (also holding that "[i]ndividual c ap a c ity suits under Title VII are . . . inappropriate"). However, Dearth asserts that o u r previous decisions on this point involved only government employers and su p erv iso rs, as opposed to private employers and supervisors (such as InfoPro and C o llin s). As such, Dearth urges us to conclude that, at least "under appropriate circu m stan ces," a harassing supervisor in the private sector, such as Collins, should b e held individually liable for a Title VII violation.

We reject Dearth's argument. As the district court correctly recognized, th e r e is nothing in Title VII, Hinson, Busby, or anywhere else in our precedent that su g g ests that Title VII's limitation of liability to employers is applicable only in situ atio n s where the employer is a public entity. To the extent that we have not so h eld before, we now expressly hold that relief under Title VII is available against o n ly the employer and not against individual employees whose actions would co n stitu te a violation of the Act, regardless of whether the employer is a public c o m p a n y or a private company. See Hinson, 231 F.3d at 827; Busby, 931 F.2d at 772. O u r holding in this regard is in accordance with the majority of our sister circu its that have addressed this question. See, e.g., Wathen v. General Elec. Co., 1 1 5 F.3d 400, 404-05 (6th Cir. 1997) (concluding that an individual employee or su p erv iso r who does not otherwise qualify as an "employer" may not be held p erso n ally liable under Title VII, and collecting cases from the "majority of our sister circuits" that support that holding); see also Grant v. Lone Star Co., 21 F.3d 6 4 9 , 651-53 (5th Cir. 1994) (concluding that the plaintiff had offered "no p ersu asiv e argument why Congress would not have intended to protect private em p lo yees, as well [as public employees], from individual [T]itle VII liability" and h o ld in g that Title VII "does not permit the imposition of liability upon individuals u n le ss they meet [T]itle VII's definition of `employer'").

D earth also argues that even if individual employees generally cannot be h eld liable under Title VII, we should make an exception to this rule in the private secto r based on the "alter ego" doctrine. Dearth concedes that the corporation "I n f o P r o was her `official' employer," but she contends that "InfoPro was C o llin s'[s] alter ego and . . . [as such,] both he and the corporation should be liable to her under Title VII." (emphasis added). Dearth asks us to disregard InfoPro's co rp o rate form and to pierce its corporate veil under Georgia law in order to hold C o llin s individually liable under Title VII. W e reject Dearth's position on two grounds. First, there is nothing in Title V I I that supports Dearth's claim that individual capacity liability can be imposed o n the basis of the alter ego doctrine, and the only circuit that we found to have ad d ressed the issue rejected the argument. See Worth v. Tyer, 276 F.3d 249, 262 (7 th Cir. 2001) (rejecting alter ego theory of individual capacity liability in Title V II lawsuit against the president of a company and citing EEOC v. AIC Security In v estig atio n s, Ltd., 55 F.3d 1276, 1282 n.11 (7th Cir. 1995)).2 In AIC Security I n v e s tig a tio n s , the Seventh Circuit rejected the theory that Vrdolyak, the individual d efen d an t and sole shareholder of AIC Security Investigations, Ltd. ("AIC"), could b e held individually liable under the ADA. The Seventh Circuit found nothing in th e ADA to support individual liability and noted that "[t]he employing entity is s till [potentially] liable." 55 F.3d at 1282. The plaintiffs nevertheless argued, as D earth does here, that "even if individuals cannot be liable under the ADA, V rd o lyak can somehow be liable as AIC's `alter ego.'" Id. at 1282 n.11. The S e v e n th Circuit, however, saw "no good reason why it should make any difference fo r our analysis whether Vrdolyak was AIC's alter ego" and stated that "as to [V rd o lyak 's] individual capacity liability, it does not matter even if she was AIC's alter ego." Id.; see also Worth, 276 F.3d at 262. The Seventh Circuit ack n o w led g ed that if a sole shareholder abused the corporate form and the c o r p o r a te veil were pierced, the sole shareholder might feel the financial "pinch." See AIC Security Investigations, 55 F.3d at 1282 n.11 (noting that Vrdolyak "m ig h t be effectively liable if the corporate veil were pierced, and as sole sh areh o ld er, she will necessarily absorb the pinch from AIC's liability").

However, as the Seventh Circuit also recognized, that issue is separate and apart fro m the question of whether the alter ego doctrine can provide an independent b asis for individual capacity liability under Title VII in the first place. Id.

Furthermore, in this case, there is no allegation that InfoPro is insolvent or unable to pay any Title VII judgment against it. We thus agree with the Seventh Circuit an d conclude that the alter ego doctrine does not create an exception to the rule ag ain st individual employee liability in Title VII cases.

Second, and in any event, Dearth has failed as a matter of law to establish th a t Collins is InfoPro's alter ego. Under Georgia corporate law,3 individual sh areh o ld ers and officers of a corporation are "shielded by the corporate veil, in the ab sen ce of fraud or abuse of the corporate form." Moore v. Barge, 210 Ga. App.

5 5 2 , 554, 436 S.E.2d 746, 749 (1993). The corporate veil occasionally can be p ie rc ed by operation of the alter ego doctrine, but the alter ego doctrine applies o n ly if three requirements are met. Specifically, "[t]o establish the alter ego doctrine it must be shown [1] that the s to c k h o ld e r s' disregard of the corporate entity made it a mere in stru m en tality for the transaction of their own affairs; [2] that there is su ch unity of interest and ownership that the separate personalities of th e corporation and the owners no longer exist; and [3] to adhere to th e doctrine of corporate entity would promote injustice or protect f r a u d ." M cL ean v. Cont'l Wingate Co., 212 Ga. App. 356, 359, 442 S.E.2d 276, 279 ( 1 9 9 4 ) (quoting Custom Lighting & Decorating, Ltd. v. Hampshire Co., 204 Ga.

A p p . 293, 295-96, 418 S.E.2d 811, 814 (1992)). To justify piercing the corporate v eil, "`the plaintiff must show [that] the owner abused the corporate form by d is re g a rd in g the separateness of legal entities by commingling [funds] on an in terch an g eab le or joint basis or confusing the otherwise separate properties, reco rd s, or control.'" Rasheed v. Klopp Enters., Inc., 276 Ga. App. 91, 95 n.4, 622 S .E .2 d 442, 446 n.4 (2005) (citation omitted).

Dearth points to no evidence that Collins disregarded InfoPro's corporate f o r m ; that Collins used InfoPro to transact his own affairs or commingled In fo P ro 's funds with his own funds; or that Collins is hiding behind InfoPro's co rp o rate form in order to protect his own fraudulent behavior. See McLean, 212 G a . App. at 359, 442 S.E.2d at 279. As noted above, there is also no allegation that it is necessary to disregard the corporate form to satisfy any Title VII judgment that D earth might obtain against InfoPro. Put another way, adherence to the doctrine of c o r p o r a te entity in this case does not promote injustice or protect fraud. See B aillie Lumber Co. v. Thompson, 279 Ga. 288, 289-90, 612 S.E.2d 296, 299 (2 0 0 5 ) (piercing of the corporate veil in Georgia is appropriate in order to "remedy in ju stices," is generally governed by equitable principles, and is appropriate "`only in the absence of adequate remedies at law'") (citation omitted); see also Worth, 2 7 6 F.3d at 262 ("The problem with the `alter ego' theory [of individual liability in T itle VII cases] is that it seeks to impose liability upon shareholders without a s h o w in g of fraud or injustice.").

F o r all of the foregoing reasons, we reject Dearth's argument that she should b e allowed to sue and recover against Collins individually under Title VII.4 I I. InfoP ro T h e district court granted InfoPro's motion for summary judgment on two a lte rn a tiv e grounds. First, the district court concluded that summary judgment was a p p r o p r ia te for InfoPro because Dearth failed to present any evidence that C o llin s's alleged sexual harassment conduct was sufficiently severe or pervasive to c re ate a hostile work environment and to alter the terms and conditions of her em p lo ym en t. See Hulsey v. Pride Rests., LLC, 367 F.3d 1238, 1244-45 & n.3 (1 1 th Cir. 2004); Mendoza v. Borden, Inc., 195 F.3d 1238, 1245 (11th Cir. 1999) ( en banc). Second, the district court concluded that even if Dearth had established a prima facie case of sexual harassment against InfoPro, summary judgment was still appropriate for InfoPro because the so-called Faragher-Ellerth affirmative d efen se barred Dearth's claims. See Faragher v. City of Boca Raton, 524 U.S. 775, 1 1 8 S. Ct. 2275 (1998); Burlington Indus., Inc. v. Ellerth, 524 U.S. 742, 118 S. Ct.

2 2 5 7 (1998).

We first conclude that Collins's alleged conduct was sufficiently severe and p e r v a siv e to establish a prima facie case of hostile work environment sexual h arassm en t. However, we agree with the district court's conclusion that the F arag h er-E llerth defense bars Dearth's claims against InfoPro. Under the facts of th is case, the district court correctly concluded that (1) InfoPro exercised r ea so n a b le care to prevent and promptly correct any sexually harassing behavior, b y virtue of its sexual harassment policy in its employee handbooks; and (2) D earth unreasonably failed to take advantage of any preventative or corrective o p p o r tu n itie s provided by InfoPro, or to otherwise avoid harm, by failing to notify an yo n e at InfoPro of Collins's alleged harassment.5 Faragher, 524 U.S. at 807, 118 S . Ct. at 2292-93; Ellerth, 524 U.S. at 765, 118 S. Ct. at 2270. Indeed, Dearth did n o t make any claims of sexual harassment until she was advised of her termination.

Once InfoPro was informed of the alleged sexual harassment, an investigation was im m ed iately conducted by InfoPro's legal counsel. Dearth's arguments that the F arag h er-E llerth defense does not apply here lack merit.6 I II . S u m m ary F o r all of the above reasons, we affirm the district court's grant of summary ju d g m en t to Collins and InfoPro.

A F F IR M E D .

* Honorable Jerome Farris, United States Circuit Judge for the Ninth Circuit, sitting by designation.

1 Dearth's complaint also contains Counts Two through Seven and includes a Title VII retaliation claim as well as state law claims of assault and battery, negligent supervision, and intentional infliction of emotional distress. However, Dearth does not appeal the district court's grant of summary judgment to the defendants on her retaliation claim or the district court's dismissal without prejudice of her state law claims. As such, we do not discuss those claims.

2 In EEOC v. AIC Security Investigations, Ltd., the Seventh Circuit concluded that the plaintiffs had waived the alter ego argument, but subsequently discussed, in dicta, the merits of whether the alter ego doctrine could be used to impose individual liability under the Americans with Disabilities Act ("ADA"). Title VII, the ADA, and the Age Discrimination in Employment Act all have similar definitions of "employer" and "[c]ourts routinely apply arguments regarding individual liability to all three statutes interchangeably." AIC Security Investigations, 55 F.3d at 1279-80. We do the same here by relying on AIC Security Investigations as persuasive authority.

3 The parties agree that Georgia law governs the elements of the alter ego doctrine. Thus, we do not decide whether Georgia or federal law would govern the applicability of the doctrine in Title VII cases or the elements of the doctrine.

4 We similarly find no merit in Dearth's argument that the district court abused its discretion in striking five paragraphs of her thirty-six paragraph affidavit in response to defendants' motions for summary judgment.

5 InfoPro's employee handbook provides that "[a]n employee who believes that he or she has been subject to harassment or hostile conduct and an employee who witnesses harassment should immediately notify their supervisor or the Human Resources Department." 6 Although Dearth focuses on her hostile work environment sexual harassment claim, Dearth also asserts that she was terminated because she refused Collins's sexual advances. To the extent that Dearth asserts a separate wrongful termination claim, that claim is not subject to the Faragher-Ellerth defense. See Hulsey, 367 F.3d at 1245-46 (explaining that while the Faragher-Ellerth defense is available to bar hostile work environment sexual harassment claims, the defense cannot be used to bar claims of "tangible employment action" sexual harassment, where an employee's refusal to acquiesce to a supervisor's sexual advances results in a specific hiring, firing, reassignment, significant change in benefits, or denial of promotion). However, Dearth's wrongful termination fails because InfoPro presented unrebutted evidence that other InfoPro employees complained repeatedly about Dearth's rude behavior and attitude and that Collins had originally intended to terminate Dearth in February 2002 (until Dearth convinced Collins otherwise). In November 2002, the employee complaints about Dearth increased, including complaints from Teresa Rhodes and Rhonda Martin in emails to Collins. Additionally, the receptionist reportedly quit because she could no longer work with Dearth. InfoPro established that Dearth was terminated for her job performance, and the evidence did not establish any causal link between her termination and the alleged sexual harassment. See Frederick v. Sprint/United Mgmt. Co., 246 F.3d 1305, 1312 (11th Cir. 2001) (recognizing that there must be a causal link between the sexual harassment and the tangible adverse employment action allegedly suffered by the employee). Thus, Dearth's claims are more appropriately considered as hostile work environment sexual harassment claims, and we are able to dispose of those claims via the Faragher-Ellerth doctrine.

Brandi M. Dearth v. Richard L. Collins (11th Cir. 2006)

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