California Supreme Court Announces Liability Standard for Sexual Harassment by Professional Service Providers
Employment Law Alert
The California Supreme Court ruled that hostile environment sexual harassment in business relationships outside the workplace must be “pervasive or severe” to be actionable. On July 2, 2009, the Court in Hughes v. Pair held that precisely the same threshold standard for liability under Title VII of the Civil Rights Act of 1964 (Title VII) and California’s Fair Employment and Housing Act (FEHA) also applies to claims brought under California Civil Code section 51.9, which prohibits sexual harassment in “relationships between providers of professional services and their clients,” if those relationships cannot be easily terminated by the plaintiff. Examples of service providers who may come within the statute include physicians, psychiatrists, attorneys, real estate agents, accountants, trustees and teachers.
When Mark Hughes, founder of the nutritional supplement company Herbalife International, died in 2001, he left $350 million in a trust for the benefit of his son, Alex. Beginning in 2001, Alex’s mother, Suzan Hughes (Mark’s ex-wife), filed several lawsuits against the trust and its trustees, including defendant Christopher Pair. In her sexual harassment action against Pair, Hughes alleged that while discussing the possible disbursement of funds from the trust, Pair made several inappropriate comments to her over the telephone and in person on a single day in June 2005. Specifically, Pair purportedly called Hughes “sweetie” and “honey,” and suggested he could persuade the trustees to authorize payment to rent a vacation home, in excess of what the trustees had already approved, if Hughes would be “nice” to him. Hughes further contended that Pair told her to call him when she was “ready to give [him] what [he] want[ed].” She also alleged that he later made a crude comment suggesting that Hughes would face financial consequences if she rejected his advances.
The Court held that Hughes’ allegations did not state a claim for quid pro quo sexual harassment because she could not establish a causal connection between her rejection of Pair’s alleged advances and any tangible, adverse action. Accordingly, the Court’s analysis centered on whether Hughes stated a claim for hostile environment sexual harassment.
Key to the Court’s determination was whether the phrase “pervasive or severe” in section 51.9 has the same meaning as in Title VII and FEHA cases. Hughes argued that “pervasive or severe” has a plain meaning independent of the Title VII and FEHA definition, and that the question of whether Pair’s conduct was pervasive or severe was an issue of fact to be decided by a jury. After reviewing the standard under those statutes and the legislative history of section 51.9, the Court concluded that the California Legislature intended to incorporate the “pervasive or severe” standard used in Title VII and FEHA suits into section 51.9. In sum, under Title VII, FEHA, and section 51.9, hostile environment harassment is actionable only where it is sufficiently severe or pervasive to “alter the conditions” of the parties’ professional relationship and “create an abusive … environment.” In determining whether this standard is met, courts will consider the frequency of the harassing conduct, its severity, and whether it is physically threatening or merely offensive. Isolated inappropriate comments do not meet the statutory standard. It is not sufficient that the behavior be subjectively offensive to the plaintiff; rather, a reasonable person must also perceive the environment as hostile or abusive.
The Court upheld summary judgment (dismissing the claims) in favor of Pair. Although the alleged comments were vulgar and inappropriate, they did not rise to the level of actionable sexual harassment. A few isolated comments made on one day in the course of a professional relationship lasting several years did not alter the conditions of the parties’ relationship and are therefore not “pervasive” under the statue. Likewise, although a single harassing incident can be considered “severe” if it involves physical assault or the threat of such an assault, the Court did not interpret Pair’s alleged statements as threatening such physical conduct. Hughes could not meet the objective standard and her claims failed.