filed: June 16, 1994; As Corrected June 22, 1994.
On Appeal from the United States District Court for the Western District of Pennsylvania. (D.C. Civil No. 92-1403).
Before: Greenberg and Garth, Circuit Judges, and Robreno, District Judge*fn**
GREENBERG, Circuit Judge.
A female employee of the Equal Employment Opportunity Commission brings this appeal from orders of the district court dismissing her action against the EEOC alleging sexual and racial discrimination, sexual harassment and unlawful retaliation, all in violation of Title VII of the Civil Rights Act of 1964. Immediately before the trial, the district court excluded certain evidence from the appellant's sexual discrimination and harassment claims and barred her from proceeding with those claims on the evidence she had intended to offer. Four days later, after an intervening weekend, the appellant elected not to proceed with the balance of her case, as she reasoned that the district court's ruling precluded her from establishing her remaining claims. In accordance with warnings the district court had given the appellant, the court then dismissed her case with prejudice for failure to prosecute, and it assessed her with jury costs.
The appellant appeals from the district court's exclusion of the evidence she intended to offer to prove sexual discrimination and harassment, from the court's judgment against her on those claims on the basis of her proposed evidence, from the court's dismissal of the balance of her case predicated on her decision not to go forward, and from the court's imposition of jury costs against her. We conclude that in the unusual circumstances presented in her allegations, the appellant has alleged a prima facie case of sexual discrimination and harassment and that material issues of fact remain on these claims for consideration by a jury. We also conclude that the court abused its discretion in excluding her evidence. Consequently, we hold that the district court erred in barring her from proceeding with her sexual discrimination and harassment claims.
We also hold that the court did not abuse its discretion in dismissing the balance of her case after she decided not to go forward with her remaining claims, as it warned her that it would dismiss these claims if she did not proceed. However, in light of the significant impact of the court's initial rulings on the appellant's case and the short interval between these rulings and the start of trial on the remaining issues, we hold that the court abused its discretion in assessing the jury costs against her. Thus, we will reverse the order of the district court dismissing the appellant's sexual discrimination and harassment claims and assessing the jury costs against her, but we will affirm the order of the district court dismissing the balance of the case.
The appellant, Ellen V. Spain, is an investigator in the Pittsburgh Area Office of the EEOC.*fn1 Although she was hired in 1974 by that office, the EEOC promoted her to the position of director of the Dayton Area Office in 1979, and she held that position until approximately 1980 or 1981. She then worked briefly for the Department of Housing and Urban Development before returning to the EEOC's Pittsburgh office as an investigator. App. at 75. Spain currently holds a position with a GS 1810-12, Step 10 Grade.*fn2
In addition to suing the EEOC, Spain originally named Eugene Nelson and Johnny Butler as defendants, but they have been dismissed from the action. Nelson and Butler are the director of the EEOC's Pittsburgh Area Office and the director of the EEOC's Philadelphia District Office, respectively. Therefore, Butler is Nelson's superior, and Nelson is Spain's superior. Spain does not challenge the dismissal of the action as to Nelson and Butler.
Spain, a white female, alleges that Nelson and Butler, male African-Americans, have a history of passing over her for promotions to GM-13 and GM-14 level positions in favor of allegedly lesser qualified male African-American applicants. Id. at 2-3. It is undisputed that in 1985, while Spain held a GS-11 position, she unsuccessfully applied for an open GS-12 position, a rejection that led her to file an internal EEOC complaint alleging sexual and racial discrimination. Id. at 75-76. Spain asserts that the events which underlie the present action began shortly after she filed that complaint.
Spain alleges that Nelson, her superior, induced her not to proceed with the EEOC complaint by promising that she would receive the next available promotion, so long as she agreed to lend him money periodically.*fn3 Spain asserts that because Nelson intimidated her she agreed to his requests, and she did obtain the next promotion in early 1986. Id. Spain charges that Nelson began demanding loans at that time and that he repeated these demands every four to eight weeks over the next few years. Id. at 76, 241; appellant's br. at 5. Significantly, EEOC regulations preclude a superior EEOC official from soliciting and accepting loans from a subordinate employee. See 29 C.F.R. § 1600.735-203.
The crux of Spain's sexual discrimination and harassment claims is that over the years rumors developed in the Pittsburgh office that Spain and Nelson were having an affair, because his frequent demands for loans led other employees often to see them together privately in his office, the cafeteria, or leaving the office.*fn4 Spain charges that because it was improper for Nelson to solicit the loans, he needed to meet her privately to ask for loans, to receive the funds, and to pay them back. Id. at 77. Spain claims that she learned of the rumors during casual conversations in the office. She alleges that she complained about the rumors to Nelson approximately four times per year between 1986 and 1988 and once in 1989 and requested him to put them to an end. Id. at 230. However, she alleges that the private meetings and loan requests continued, thereby perpetuating the rumors. According to Spain, the rumors and Nelson's continuation of his conduct in the face of the rumors embarrassed Spain, app. at 231, and caused her co-workers to ostracize her, thereby straining her relationship with them and with her supervisors and making her feel miserable and unable to "deal with the situation." Id. at 77. Spain claims that in late 1989 or early 1990 she told Nelson that she would no longer lend him any money. Id. at 78. Spain alleges that this refusal led Nelson to escalate his harassment, ultimately resulting in her being denied a promotion as a result of the rumors.
In 1990, Spain unsuccessfully sought a promotion to GM-13 Supervisory Investigator. Spain contends that in part Nelson based his decision not to promote her on evaluations by her supervisors in the office. Appellant's br. at 7. As evidence of the impact of the false rumors upon her work environment, Spain points to an affidavit of one of these evaluating supervisors, Bruce Bagin, stating that he graded Spain low on the "integrity" category of the evaluation due to his perception of her conduct with Nelson based on the rumors and his observations. Bagin also stated that Spain had complained to him about the false rumors but that he refused to discuss them because his perception of her conduct seriously had affected his view of her. App. at 80. The EEOC contests Spain's assertion regarding the basis for its decision not to promote her and responds that Nelson considered much evidence assessing her qualifications, including the negative opinion of her supervisor in the Dayton Area Office. Appellee's br. at 4-5.
However, Spain offers as evidence a memorandum from Nelson to his superior, Butler, which discusses the qualifications of the candidate selected for the promotion, as well as the reasons why other candidates were not selected. App. at 374-76. In the memorandum, Nelson states that although Spain had "outstanding skills in administrative matters" and was "proficient in the technical aspects" of the position, she ranked dead last among the candidates due to her consistent "inability to relate effectively with the supervisor, co-workers and others." App. at 376. The memorandum further explains that while all of the candidates had "sufficient technical skills to perform the supervisory job only Ms. Spain is rated so low in interpersonal relations to cause her to be ranked so low." Id. (emphasis added). In contrast to Spain's evidence, the EEOC does not precisely indicate what role the written evaluations of Spain's Pittsburgh supervisors played in Nelson's decision not to promote her.
In June 1990, Spain filed a second complaint with the EEOC, and it is this complaint which directly led to this action and thus to this appeal. Spain asserts that the retaliatory conduct began in earnest after she filed this complaint. App. at 253. Moreover, she alleges that Nelson began coming to her house when she was working at home, and he continued to pressure her to make loans to him and to drop the new complaint. Id. at 274-80. On May 6, 1992, the EEOC issued a proposed Disposition finding that there had not been discrimination against Spain. Id. at 12-14.
On June 8, 1992, Spain filed her complaint in the district court against the EEOC, Nelson, and Butler. Count I of the complaint alleges sexual and racial discrimination, sexual harassment and unlawful retaliation, all in violation of Title VII of the Civil Rights Act of 1964, and Counts II and III allege the state law claim of intentional infliction of emotional distress by Nelson and Butler. Id. at 1-10. In her complaint, Spain claims that she has been subject to retaliation for having filed prior grievances and that Nelson had stopped speaking to her and removed certain supervisory functions from her. Id. at 3. Moreover, Spain charges that she has been subject to sexual discrimination and harassment stemming from "false rumors being circulated that she was involved in an intimate relationship with defendant Nelson." Id. Spain also alleges that even though Nelson knew the rumors were false, he perpetuated them by continuing his improper loan solicitation and by not taking steps to prevent the rumors. Instead, according to Spain, he and Butler, who also knew about the false rumors, used them to deny her advancement. Id. at 3-4.
In essence, Spain's claims of sexual discrimination and harassment are traceable to Nelson's alleged conduct, which both caused and perpetuated the rumors that, in turn, resulted in the treatment she received from both her co-workers and supervisors. Spain also claims that there was retaliation against her for refusing to continue to lend Nelson money, a practice which she asserts had been instituted because of her sex and race. Id. at 4. In addition to alleging that she was bypassed improperly for a promotion, Spain claims that Nelson had begun downgrading her evaluations, and that Butler had rescinded an award due her. Id.
After depositions were taken, Spain's complaint against Butler was dismissed on November 10, 1992, with her consent. The United States then filed a Certificate of Substitution of itself for Nelson as a defendant under 28 U.S.C. § 2679, and the district court permitted the substitution on March 3, 1993. Thereafter, on April 6, 1993, Spain filed a motion in limine seeking to exclude evidence that her supervisors in the Dayton office evaluated her negatively and evidence that she had not been forthcoming about her education on her employment application. On April 9, 1993, the EEOC filed a motion in limine pursuant to Fed. R. Evid. 401-03 to prevent Spain and her attorney from referring to or offering as evidence any testimony regarding the alleged loans by Spain to Nelson. On April 12, 1993, Spain agreed to dismiss the United States as a defendant. Thus, as Nelson and Butler were no longer parties, the case went forward solely against the EEOC.
On Thursday, July 15, 1993, the day set for jury selection, the district court ruled sua sponte that it would not permit Spain to proceed with her claims of discrimination based on a sexually hostile working environment. In reaching this Conclusion the court held that Spain could not base her claims on Nelson's failure to stop the false rumors in the workplace that he and Spain were having an affair. The court reached this decision despite Spain's allegations that the rumors caused her to be shunned by her co-workers and to be evaluated poorly for promotion purposes by her supervisors with respect to her integrity and ability to work with others. App. at 29-40. When the court asked Spain's attorney what type of evidence she intended to present to establish the sexual harassment claim, he replied that he would point to "the failure of the superiors to put an end [to] the rumors when they knew about them." Id. at 30. The district court then responded:
I don't think that's recognizable under Title VII. I don't know that an individual who has had no relationship with someone has to embarrass himself by going forward and denying such a relationship just because some other person wants him to do that . . . . And I am not going to let you proceed on that, if that is the basis of that claim.
Id. at 31. Spain's attorney then remarked that "it is clearly the basis of the claim" and that he could not "present the case without the testimony of the rumors." Id.
Spain then attempted to argue orally that the case should be viewed as similar to Jew v. University of Iowa, 749 F. Supp. 946 (S.D. Iowa 1990). App. at 34-39. The court in Jew found that there was a sexually hostile work environment where there were rumors that a female professor and her male superior were having an affair, and other faculty members in the position of evaluating her for promotion purposes spread the rumors and conducted a campaign of open slander and innuendo of a sexual nature against her.
However, the district court, agreeing with the EEOC's attorney, distinguished Jew on several grounds. The court first stated that in Jew, unlike in this case, the supervisor was spreading the rumors.*fn5 The court then asked Spain's attorney how the rumors could have been corrected without Nelson telling people that he was not having an affair with Spain. Id. at 34-35. The attorney responded that Title VII requires a supervisor on notice of sexual harassment to take corrective action promptly and that Nelson or Butler could have told the concerned employees that the rumors were false. Id. In response, the EEOC's attorney argued that the obligation to correct a hostile work environment presupposes that the employer has notice of the environment, and that there was no evidence that Spain complained to Butler about the rumors or evidence that Butler was otherwise on notice of the situation.*fn6
The court then asked Spain what evidence she had that the comments made to her created a hostile environment. Id. at 36. Spain responded that she was treated as an outcast by other employees, and she proffered testimony that a co-worker had warned another employee to stay away from Spain because she was the "boss' lover." Id.; see note 4, supra. The attorney for the EEOC responded that the testimony was that Spain had "got the boss' ear and [would] get you into trouble, which is not the same thing." Id. However, Spain disputed the EEOC's recollection of the co-worker's testimony.
The district court then distinguished Jew on the ground that the rumors in that case were that the professor was having an affair with her supervisor and was using the sexual relationship to gain favor, influence and power with her superior. The court asked Spain whether she had similar evidence. Id. at 36-37. Spain's attorney replied that the EEOC also denied Spain the promotion because she had poor interpersonal relationships with her co-employees. Id. at 37. The EEOC then argued, and the court agreed, that in Jew there was additional evidence of open harassment on the basis of sex in the form of cartoons and in other ways. Spain responded that her supervisors evaluated her negatively with respect to integrity because of the rumors about the affair. Id. at 38.
At first, the district court stated that it would allow evidence supporting these allegations inasmuch as a failure to promote due to the rumors had "a sexual connection." Id. at 39. However, on reconsideration, the court concluded that the poor ratings related to sexual activity and not gender. Consequently, the court ruled that the evidence could not be admitted unless there was evidence that males who did the same thing were treated differently. Id. at 44.
The court thus held that Title VII does not require that a supervisor deny rumors that he is having an affair with a subordinate. Therefore, the district court barred Spain from proceeding on her sexual discrimination and harassment claims based on the evidence she intended to offer. This ruling effectively granted summary judgment to the EEOC on these ...