SHARLENE MURPHY v. BANK ONE, KENTUCKY, N A; JOHN ZEIGER; AND JEFFREY A. LIPPS
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RENDERED: December 10, 1999; 2:00 p.m.
NOT TO BE PUBLISHED
C ommonwealth O f K entucky
C ourt O f A ppeals
NO.
1998-CA-002168-MR
SHARLENE MURPHY
v.
APPELLANT
APPEAL FROM JEFFERSON CIRCUIT COURT
HONORABLE WILLIAM MCANULTY, JUDGE
ACTION NO. 96-CI-04671
BANK ONE, KENTUCKY, N A;
JOHN ZEIGER; AND
JEFFREY A. LIPPS
APPELLEES
OPINION
VACATING AND REMANDING
** ** ** ** **
BEFORE:
COMBS, EMBERTON AND GUIDUGLI, JUDGES.
GUIDUGLI, JUDGE: Sharlene Murphy (Murphy) appeals from an order
of the Jefferson Circuit Court entered August 19, 1998, which
granted summary judgment in favor of Bank One, Kentucky, NA (the
Bank), on her claim of sexual harassment.
Murphy also appeals
from orders of the trial court entered January 2, 1997, and
September 15, 1997, which denied her motions to amend her
complaint to include additional causes of action against both the
Bank and its attorneys, John Zeiger (Zeiger) and Jeffrey Lipps
(Lipps).
We vacate the order of the trial court which granted
summary judgment in favor of the Bank in this case and remand for
further proceedings in accordance with this opinion.
SUMMARY JUDGMENT
Murphy began working in the Facilities Management area
of the Bank in October 1995.
Although she was originally under
the supervision of Vivian Korphage (Korphage), she came under the
supervision of William Gaunt (Gaunt) in early January 1996.
Shortly after she began working under Gaunt’s
supervision, she went into his office to discuss problems she was
having with a co-worker.
According to Murphy, at some point in
time during their conversation he reached out and held her hand.
She did not perceive Gaunt’s conduct to be unreasonable at the
time, and felt that he did it to be supportive of her.
Murphy
also admitted that she voluntarily hugged Gaunt in early January
after he paid her a compliment.
According to Murphy’s deposition testimony, Gaunt’s
conduct slowly changed from grandfatherly in nature to lecherous.
At one point around the end of February 1996, Gaunt allegedly
made comments to her about Korphage’s sex life and told her that
Korphage had slept her way to the top.
Gaunt’s behavior
escalated towards the end of March 1996 when he kissed her on the
lips for the first time.
According to Murphy, by this time Gaunt
had instituted a daily hug routine.
It was during one of these
daily hugs when he kissed her and told her that she was the best
thing that happened to him and that he got the cream of the crop
between her and another female co-worker.
When she expressed
discomfort with this conduct, he said that it was better for them
to be kissing cousins as opposed to enemies.
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Murphy testified
that she did not equate Gaunt’s behavior with sexual harassment
until the first kissing incident at the end of March.
According to Murphy, Gaunt’s behavior remained the same
after the kissing incident.
Besides the daily hug, she described
inappropriate touching by Gaunt during these hugs, related
sexually implicit conversation Gaunt directed at her, and several
other incidents of kissing.
Murphy also described conduct
directed at her by Gaunt during a business trip to Columbus,
Ohio.
Murphy admitted that while she tried to avoid Gaunt in an
effort to avoid the daily hug, she never refused his requests for
hugs.
Murphy freely admitted at her deposition that she was
aware of and had received copies of the Bank’s policy on sexual
harassment and the notice provisions thereunder.
She also
admitted that while she told two of her co-workers (a secretary
and a maintenance man) about Gaunt’s behavior, she did not file a
formal complaint with anyone at the Bank until June 19, 1996.
On
that day, she first went to Korphage and told her about Gaunt’s
behavior.
According to Murphy, Korphage told her that she had
formerly been harassed by Gaunt and that in light of what Murphy
was telling her she wished she would have handled the matter
differently.
Korphage urged her to go directly to Human
Resources and report Gaunt’s behavior.
Murphy followed Korphage’s advice and met with Joyce
Tingle (Tingle) in Human Resources the same day.
about Gaunt’s conduct.
Murphy told her
According to Tingle’s deposition
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testimony, the Bank immediately launched an investigation into
Murphy’s allegations.
It was during the course of the Bank’s investigation
that the details concerning Korphage’s earlier problems with
Gaunt came to light.
It appears that in 1995 Korphage went to
Carl Page (Page), who at the time was an executive vice-president
with the Bank who had supervisory responsibility over the Human
Resources department.
Page was also an attorney.
Korphage
testified in her deposition that she began having problems with
Gaunt in 1993, and related problems with Gaunt making
inappropriate comments and gestures, trying to hold her hand,
hovering over her, and staring at her breasts.
Korphage dealt
with the situation by trying to avoid contact with Gaunt.
It
appears that Korphage only reported Gaunt’s activities to Page
due to her concerns over a new supervisory position that was
opening up at the Bank and her desire not to have to supervise
Gaunt or have Gaunt supervise her.
Korphage told Page that she
did not want to file a formal complaint, did not want Gaunt
confronted with her complaint, and did not want her name raised
in any subsequent investigation.
Korphage also told Page that
she would refuse to cooperate with any investigation and that she
did not want any adverse action taken against Gaunt.
Due to Korphage’s complaint to him and her refusal to
file a formal complaint, Page called Michael Luvisi (Luvisi), an
outside attorney who had previously advised the Bank on
employment issues, and asked him what the Bank should do in light
of Korphage’s allegations.
Luvisi advised Page that given the
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nature of Korphage’s allegations and her refusal to cooperate
with the Bank and proceed further against Gaunt, the Bank should
inform Gaunt about the fact that allegations had been made, give
him a copy of the Bank’s sexual harassment policy, and inform him
that the policy would be enforced due to the fact that the
alleged comments were inappropriate.
Luvisi sent a draft
memorandum to Page which detailed Korphage’s complaint and
reluctance to pursue the matter and described the remedial action
to be taken.
Luvisi advised Page that this would be the proper
course of action for the Bank to take.
It appears that the Bank followed Luvisi’s recommended
course of action.
According to an affidavit, Gaunt’s supervisor,
Gilbert Darnell, discussed Korphage’s complaint with Gaunt.
Tingle testified that during the course of the Bank’s
investigation, Gaunt admitted that someone in the Bank had talked
with him about lewd comments he was allegedly making but stated
that he did not know who made the allegations at that time.
At
his deposition, Gaunt denied that Page discussed the matter with
him, but no one ever delved into whether anyone at the Bank ever
talked to him about Korphage’s complaint.
Page copied Luvisi’s
draft memo with Gaunt’s name penciled into the blanks and
forwarded a copy of it to Korphage.
Page never forwarded the
memo to Human Resources, but instead placed it in a file marked
“Confidential” which was not discovered until Murphy filed her
formal complaint.
Tingle testified that following an investigation, the
Bank concluded that Gaunt violated the Bank’s code of ethics,
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particulary finding that he engaged in conduct unbecoming a bank
officer.
According to Tingle the Bank did not make any finding
as to who was the instigator in this case because regardless of
who started the conduct, it was Gaunt’s responsibility as a bank
officer to put an end to it.
Tingle stated that it could not be
proven that Gaunt violated the Bank’s sexual harassment policy.
However, Tingle did agree that Gaunt’s behavior created a hostile
environment.
At the end of the five-day investigation, Gaunt was
informed that his employment was being terminated due to his
failure to comply with the Bank’s code of ethics.
Gaunt was
ultimately permitted to resign in lieu of termination.
At his deposition, Gaunt denied behaving
inappropriately toward Korphage or Murphy.
According to Gaunt,
Murphy initiated the majority of the physical contact between
them, including the hugging and kissing.
Gaunt admitted
initiating hugs on two or three occasions when Murphy performed
her job especially well.
Gaunt agreed with the Bank’s reasoning
that no matter who started the conduct he should have taken steps
to stop it.
However, he further testified that he did not
believe that the Bank felt that he had engaged in sexual
harassment.
Murphy filed a claim against the Bank in August 1998
seeking damages from the Bank for a sexually hostile work
environment in violation of the Kentucky Civil Rights Act,
infliction of extreme emotional distress, and retaliation.
October 24, 1997, the trial court entered an order granting
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On
summary judgment in favor of the Bank on all claims except for
Murphy’s claim of sexual harassment.
In its order, the trial
court found that Murphy had shown that the Bank had reason to
know of Gaunt’s behavior due to Korphage’s earlier complaint and
stated “[t]he question for the jury to decide is whether, in
light of the prior knowledge of Gaunt’s conduct toward a female
employee, Bank One was negligent in allowing the conduct to
continue in that Plaintiff was affected.
See Hirase-Doi v. US
West Communication, 61 F.3d 777, 786 (10th Cir. 1995).”
Subsequent to the trial court’s order of October 1997,
the United States Supreme Court rendered its opinions in
Burlington Industries, Inc. v. Ellerth, 524 U.S. 742, 118 S.Ct.
2257, 141 L.Ed. 2d 633 (1998) and Faragher v. City of Boca Raton,
524 U.S. 775, 118 S.Ct. 2275, 141 L.Ed. 2d 662 (1998).
cases, the Court issued the following holding:
An employer is subject to vicarious liability
to a victimized employee for an actual
hostile environment created by a supervisor
with immediate (or successively higher)
authority over the employee. When no
tangible employment action is taken, a
defending employer may raise an affirmative
defense to liability or damages, subject to
proof by a preponderance of the evidence
[citation omitted]. The defense comprises
two necessary elements: (a) that the employer
exercised reasonable care to prevent and
correct promptly any sexually harassing
behavior, and (b) that the plaintiff employee
unreasonably failed to take advantage of any
preventive or corrective opportunities
provided by the employer or to avoid harm
otherwise. While proof that an employer had
promulgated an antiharassment policy with
complaint procedure is not necessary in every
instance as a matter of law, the need for a
stated policy suitable to the employment
circumstances may appropriately be addressed
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In both
in any case when litigating the first element
of the defense. And while proof that an
employee failed to fulfill the corresponding
obligation of reasonable care to avoid harm
is not limited to showing an unreasonable
failure to use any complaint procedure
provided by the employer, a demonstration of
such failure will normally suffice to satisfy
the employer’s burden under the second
element of the defense. No affirmative
defense is available, however, when the
supervisor’s harassment culminates in a
tangible employment action, such as
discharge, demotion, or undesirable
reassignment.
Ellerth, 524 U.S. at ____, 118 S.Ct. at 2270, 141 L.Ed. 2d at
655; Faragher, 524 U.S. at ____, 118 S.Ct. at 2292-2293, 141
L.Ed. 2d at 689.
Based on the ruling of the Court in Ellerth and
Faragher, the Bank renewed its motion for summary judgment,
arguing that its adoption and enforcement of an anti-sexual
harassment policy and Murphy’s failure to timely report Gaunt’s
conduct satisfied both prongs of the affirmative defense.
On
August 19, 1998, the trial court entered summary judgment in
favor of the Bank.
Murphy contends that the trial court erred in granting
summary judgment in favor of the Bank on her sexual harassment
claims due to the existence of genuine issues of material fact.
At the outset, we note that our “standard of review on appeal of
a summary judgment is whether the trial court correctly found
that there were no genuine issues as to any material fact and
that the moving party was entitled to judgment as a matter of
law.”
Scifres v. Kraft, Ky. App., 916 S.W.2d 779, 781 (1996).
Murphy contends on appeal that while the Bank may prevail at
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trial based on jury instructions drafted to incorporate the
affirmative defense established in Ellerth and Faragher, the
issue of the reasonableness of the Bank’s conduct should be
resolved by a jury.
We agree.
Murphy argues that a genuine issue of material fact
exists as to the reasonableness of the Bank’s conduct, especially
in light of Korphage’s earlier complaint regarding Gaunt’s
behavior.
Murphy contends that because Gaunt’s inappropriate
conduct continued after Korphage’s complaint, a jury question
existed as to whether the Bank exercised reasonable care to
protect against and/or correct sexual harassment.
The Bank
argues that it is entitled to summary judgement under Ellerth and
Faragher because it was able to show that (a) Murphy failed to
timely report Gaunt’s conduct despite the fact that she had
received copies of the Bank’s policies on sexual harassment and
its reporting requirements; and (b) the Bank took prompt action
which resulted in Gaunt’s forced resignation once Murphy brought
Gaunt’s behavior to its attention.
The Bank would further have
us find that the fact that it knew of Korphage’s earlier
complaint should not enter into our decision as to whether
summary judgment was appropriate.
We disagree with the Bank’s argument that Gaunt’s prior
conduct with Korphage has no bearing under the affirmative
defense provided under Ellerth and Faragher.
Under those cases,
the question is whether the Bank exercised reasonable care.
If
the Bank had knowledge of Gaunt’s propensity to subject his coworkers and supervisees to sexual harassment prior to the time
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that Murphy filed a formal complaint, then “there is a genuine
issue of material fact as to whether [the Bank’s] remedial
actions or lack thereof during the period prior to [Murphy’s
complaint] were appropriate or whether [the Bank] was negligent,
either in allowing such conduct to continue or in failing to
learn of such continued behavior in a timely fashion so that it
could respond appropriately.”
Hirase-Doi, 61 F.3d at 786.
If we
accept the Bank’s argument, then an employer who had knowledge
that a supervisor had previously harassed other female employees
who did not file formal complaints would not be liable for
damages if upon the filing of a formal complaint of yet another
female employee the employer finally acts to correct the
situation.
It is for the jury and not the trial court to decide
whether the Bank acted reasonably after Korphage complained.
While we are aware that Murphy may not succeed in her claim
before the jury, summary judgement cannot be used to deprive her
of her day in court simply because the trial court believes she
cannot prevail.
The Bank’s argument that its reliance on Luvisi’s
advice justifies summary judgment in this case is equally
unappealing.
In fact, whether or not the Bank acted reasonably
in following Luvisi’s advice and taking no further action against
Gaunt after Korphage informed Page of his behavior goes to the
disputed issue of material fact which we have already identifiednamely whether the Bank “exercised reasonable care to prevent and
correct promptly any sexually harassing behavior.”
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Ellerth, 524
U.S. at
, 118 S.Ct. at 2270, 141 L. Ed. 2d at 655; Faragher,
524 U.S. at
, 118 S. Ct. at 2292-2293, 141 L. Ed. 2d at 689.
Finally, the Bank’s assertion that Murphy’s failure to
immediately report Gaunt’s conduct automatically satisfied the
second prong of the Ellerth/Faragher defense is incorrect.
While
the holding of those cases indicates that “a demonstration of
such failure will normally suffice to satisfy the employer’s
burden under the second element of the defense,” the standard
once again is whether Murphy “unreasonably failed to take
advantage of any preventive or corrective opportunities provided
by the employer or to avoid harm otherwise.”
added.)
Id. (emphasis
While Murphy freely admits that she waited until June
1996 to report conduct which she believes became offensive in
March 1996, if she is able to submit an explanation for her delay
it is for the jury and not the trial court to decide whether her
conduct in delaying was unreasonable.
AMENDMENT OF COMPLAINT
Shortly after meeting with Tingle, Murphy retained
legal counsel.
On July 15, 1996, counsel for Murphy sent the
Bank a letter demanding payment of $250,000 to settle her claim.
Murphy claims that this letter was sent in response to the Bank’s
request for a demand letter.
Following issuance of the letter,
counsel for Murphy met with Zeiger and Lipps on August 6, 1996,
to discuss settlement of Murphy’s claim.
It appears that during
the course of the meeting counsel for Murphy provided Zeiger and
Lipps with a copy of Murphy’s verified complaint and informed
them that the complaint would be filed if a settlement could not
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be reached. Murphy’s complaint contained no cause of action under
Title VII of the United States Code, and instead only stated a
cause of action for sexual harassment under the Kentucky Civil
Rights Act. It appears that the settlement negotiations were
unsuccessful.
On August 9, 1996, the Bank filed a declaratory
judgement action in the United States District Court for the
Western District of Kentucky (the Federal Court) against Murphy.
In the complaint, The Bank alleged that:
[i]n light of Bank One’s adequate and
effective response once it had notice of
Murphy’s claims, Bank One is entitled to a
declaratory judgment that it complied with
all applicable Federal and Kentucky laws and
has no liability to Murphy . . . for the
unauthorized conduct of its former employee.
The Bank alleged that Gaunt began harassing Murphy in May 1996,
that Murphy reported Gaunt’s conduct on June 19, 1996, and that
the Bank promptly investigated and forced Gaunt’s resignation on
June 28, 1996.
Aside from requesting declaratory judgment, the
Bank expressly disavowed any claim for attorney fees in
conjunction with its claim.
Immediately upon receipt of the
Bank’s complaint, Murphy filed her action with the trial court on
the same day.
On August 28, 1996, the Bank filed a motion with the
trial court seeking a stay of Murphy’s action pending resolution
of its federal action.
In response to the Bank’s motion, the
trial court entered an order giving it an extension of time to
file an answer to Murphy’s complaint pending its order on the
motion to stay.
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On September 27, 1996, the trial court entered an order
granting the stay, apparently on the ground that a stay was
proper because the Bank filed its action first.
However, the
trial court stated that “[c]learly, [the Bank] chose to avail
itself of the federal standard on summary judgment, which
concedely is less demanding than that enunciated in Steelvest,
Inc. v. Scansteel Service Center, Inc., Ky., 807 S.W.2d 476
(1991).
While her state court action was stayed and prior to
the filing of the Bank’s answer, Murphy filed a motion seeking
leave to amend her complaint on November 6, 1996.
Under the
amended complaint Murphy added Zeiger and Lipps as defendants and
alleged under a new Count III that the filing of the federal
declaratory judgment action constituted retaliatory employment
discrimination in violation of KRS 344.280.
On January 2, 1997,
the trial court entered an order denying Murphy’s motion to amend
her complaint to the extent that she sought to add the cause of
action contained in Count III.
Apparently the trial court
construed Count III to be a cause of action against Zeiger and
Lipps only, as it held:
[D]efense counsel . . . are clearly not
Plaintiff’s employers . . . . If Plaintiff
has any viable claim of retaliation regarding
the filing of the Declaratory Judgment
Complaint, it is against [the Bank], not the
attorneys who filed the claim.
On the same day as she filed her motion to amend,
Murphy also moved the trial court for an order lifting the stay
of her complaint on the ground that the federal court had
dismissed the Bank’s declaratory judgment action.
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Attached to
Murphy’s motion was a memorandum opinion and order entered by the
federal court on November 1, 1996, in which the court used its
discretion under 28 U.S.C. Sec. 2201 to dismiss the Bank’s claim.
The federal court found that Murphy’s complaint contained no
federal cause of action and held that the fact that she may
eventually seek relief under Title VII did not entitle the Bank
to rush to the courthouse for the purpose of fixing the trial
forum.
Specifically, the court stated:
It would be unjust for [the Bank] to be
allowed to select the forum for this
lawsuit’s adjudication based on the mere
possibility Murphy might have eventually sued
in federal court. The declaratory judgment
device was never intended to be used in such
a fashion. [Allstate Insurance Company v.]
Mercier [913 F.2d 273 (6th Cir. 1990)]
specifically disapproved of the sort of
procedural fencing and “racing to the
courthouse” we find in this case.
The trial court lifted its stay by order entered November 12,
1996, and the Bank filed its answer on November 17, 1996.
On August 7, 1997, Murphy once again sought leave to
amend her complaint to include, among other things, a claim for
retaliatory employment discrimination in violation of KRS 344.280
regarding the Bank’s filing of the federal declaratory judgment
action.
However, unlike the previous motion to amend, Murphy did
not seek leave to add Zeiger and Lipps as additional defendants.
The trial court once against denied Murphy’s motion, stating:
The Court first addresses Count III. In
part, the opposition is based on the language
in an Order of this Court dated December 31,
1996. Said order concerned another motion to
amend the Complaint in which plaintiff sought
to add an allegation of retaliation against
two attorneys for Bank One. In denying the
motion as to that Count of the Complaint, the
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Court stated that “[i]f the Plaintiff has any
viable claim of retaliation regarding the
filing of the Declaratory Judgement
Complaint, it is against Plaintiff’s
employer, Bank One, not the attorneys who
filed the claim.”
Upon further reflection, the Court is not
certain that this statement is correct. This
conclusion is based on two reasons. First,
the Court is mindful of the fact that the
Plaintiff will not be able to introduce
evidence of the Declaratory Judgment
Complaint without offering the explanation
that it occurred in response to settlement
negotiations. It is fundamental law that a
party may not introduce evidence at trial of
offers to settle or compromise. Whitney v.
Pennick, Ky., 136 S.W.2d 570 (1940); Elam v.
Woolery, Ky., 258 S.W.2d 452 (1953). The
Court cannot allow the charge of retaliation
to circumvent an otherwise established rule
of evidence.
The second reason for the change in the
Court’s opinion is that the Court questions
whether the actions of Defendant Bank One in
exercising its legal right to seek a
declaratory judgment may constitute
“retaliation” under KRS Chapter 344. To so
hold would effectively deny an employer its
rightful access to the courts which is
guaranteed by Section 14 of the Kentucky
Constitution. The Court may deny a motion to
amend a complaint when the proposed amendment
fails to state a claim upon which relief can
be granted. First National Bank of
Cincinnati v. Hartmann, Ky. App., 747 S.W.2d
614, 616 (1988).
Murphy contends that the trial court improperly denied
her motion to amend to include a cause of action under KRS
344.280, which provides in part:
It shall be unlawful practice for a person,
or for two (2) or more persons to conspire:
(1) To retaliate or discriminate in any
manner against a person because he has
opposed a practice declared unlawful by this
chapter, or because he has made a charge,
filed a complaint, testified, assisted, or
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participated in any manner in any
investigation, proceeding, or hearing under
this chapter[.]
For purposes of the Kentucky Civil Rights Act, “person” is
defined as:
one (1) or more individuals, labor
organizations, joint apprenticeship committees, partnerships, asso
corporations, legal representatives, mutual companies, jointstock companies, trusts, unincorporated organizations, trustees
in bankruptcy, fiduciaries, receivers, or other legal or
commercial entity; the state, any of its political or civil
subdivisions or agencies.
On appeal, the standard of review for a trial court’s
denial of a motion to amend is abuse of discretion.
Hamilton v.
Commonwealth Transportation Cabinet, Division of Highways, Ky.,
799 S.W.2d 39, 40 (1990).
We agree with Murphy that the trial
court abused its discretion in not allowing her to amend her
complaint.
Pursuant to CR 15.01, “[a] party may amend his pleading
once as a matter of course at any time before a responsive
pleading is served[.]” It is only when a plaintiff waits until
after the defendant has responded to the original complaint that
CR 15.10 requires the plaintiff to seek leave of the court to
file an amended complaint.
Here, at the time Murphy filed her
initial motion to amend the complaint, the Bank had not yet filed
a responsive pleading.
Therefore, pursuant to CR 15.01, Murphy
should be been permitted to file her first amended complaint as a
matter of right.
In so holding, we realize that the Hartmann case cited
by the trial court recognizes an exception to CR 15.01 when the
amended complaint is merely an exercise in futility which would
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justify denial of the right to amend once as a matter of right
prior to the filing of a responsive pleading.
S.W.2d at 616.
Hartmann, 747
In Hartmann, when the plaintiff’s original
complaint was dismissed due to lack of jurisdiction, he was not
permitted to file an amended complaint as a matter of right
because he was unable to remedy the court’s lack of jurisdiction
under the terms of the amended complaint.
In so ruling, the
court states “[a]lthough amendments should be freely allowed, the
trial court has wide discretion and may consider such factors as
the failure to cure deficiencies by amendment or the futility of
the amendment itself.”
Id.
This is clearly not a case where
there is a fatal deficiency in the original complaint which is
incapable of correction by amendment.
Nor do we believe that the cause of action set forth by
Murphy under Count III of the first amended complaint is merely
an exercise in futility.
First, we have reviewed Count III of
Murphy’s first amended complaint and disagree with the trial
court’s finding that Murphy was attempting to allege a cause of
action for violation of KRS 344.280 against Zeiger and Lipps
alone.
Nowhere in the language of Count III is the cause of
action so limited.
We also disagree with the trial court’s
reasoning in not allowing Murphy’s cause of action to proceed
against Zeiger and Lipps.
As stated earlier, “person” as used in
KRS 344.280(1) is defined to include individuals, and more
specifically, legal representatives.
Even if the trial court
believes that Murphy cannot prevail against Zeiger and Lipps, she
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is still entitled to amend her complaint to present every
potential cause of action.
We also find that the trial court abused its discretion
in regard to Murphy’s second amended complaint against the Bank.
First, we disagree with the trial court’s holding that Murphy
would be unable to produce evidence of the Bank’s federal action
without revealing that it was filed in response to the breakdown
of settlement negotiations.
While the trial court correctly
cites Whitney and Elam for the proposition that evidence of
offers to settle or compromise is inadmissable at trial, this is
clearly not a case which would require admission of such
evidence.
In this case, all the jury would have to be told is
that once the Bank learned that Murphy intended to file suit, it
chose to proceed in federal court.
There is absolutely no need
to introduce any evidence regarding the settlement negotiations.
Secondly, we also disagree with the trial court’s
finding that the Bank’s filing of the federal declaratory
judgment action did not constitute a violation of KRS 344.280.
First, this cause of action was recognized by this Court in
Mountain Clay, Inc. v. Commonwealth, Commission on Human Rights,
Ky. App., 830 S.W.2d 395 (1992).
In that case Elkins, a female
employee, filed a complaint with the Kentucky Commission on Human
Rights [the Commission] alleging that Mountain Clay had engaged
in sexual discrimination.
In response to her complaint, Mountain
Clay filed a circuit court action asking the court to (1) enjoin
the Commission from holding a hearing on the complaint; and (2)
hold Elkins liable for its costs in defending against the action.
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In response to Mountain Clay’s action, Elkins filed a second
complaint with the Commission alleging that Mountain Clay’s
lawsuit was retaliatory in nature and thus violative of KRS
344.280.
In holding that both the Commission and the circuit
court properly ruled in Elkin’s favor on her retaliation
complaint, we held:
The Kentucky Civil Rights Act was enacted “to
safeguard all individuals within the state
from discrimination because of race, color,
religion, national origin, sex, and age” and
to “further the interest, rights and
privileges of individuals within the state.”
KRS 344.020(b). The prohibition against
employer retaliation was enacted to protect
these rights. As one court has said,
“retaliation, whether in the form of a
subsequent discharge or court proceeding,
places an added cost on the exercise of those
rights and as such has a ‘chilling effect.’
Only by enjoining suits filed in retaliation
for the exercise of protected rights can
those rights be ensured.” EEOC v. Levi
Strauss & Co., 515 F.Supp. 640, 642 (N.D.Ill.
1981).
Mountain Clay, 830 S.W.2d at 397 (emphasis added).
Thus, Murphy
has stated a valid cause of action and should be permitted to
proceed.
Finally, we are unpersuaded that the fact that the Bank
expressly disavowed any claim it may have had against Murphy for
attorney fees in conjunction with its federal court action should
make a difference in our decision.
Although the Mountain Clay
decision placed importance on the fact that Mountain Clay sought
attorneys fees from Elkins in finding its actions to be
retaliatory in nature, we do not believe that fact to be the
lynchpin of the decision.
It can hardly be denied that the
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Bank’s institution of the federal declaratory judgment action did
not place “an added cost on the exercise of” Murphy’s rights when
Murphy had to bear the burden of her own additional attorneys’
fees incurred in defending against the Bank’s federal action.
Mountain Clay, 830 S.W.2d at 397.
Having considered the parties’ arguments on appeal, the
trial court’s order of August 19, 1998, granting summary judgment
in favor of the Bank is vacated, and this matter is remanded for
further proceedings.
Secondly, the trial court’s orders of
January 2, 1997, and September 15, 1997, denying Murphy leave to
amend her complaint, are also reversed.
COMBS, JUDGE, CONCURS.
EMBERTON, JUDGE, DISSENTS BY SEPARATE OPINION.
EMBERTON, JUDGE DISSENTING.
I respectfully disagree
with the majority that the reasonableness of the Bank’s conduct
is an issue to be decided by the jury.
The Bank had in place an
anti-sexual harassment policy which was distributed to all
employees and all employees were informed of its contents.
Immediately after becoming aware of the alleged sexual harassment
of Murphy by Gaunt, the Bank investigated the allegations which
resulted in Gaunt’s resignation.
I believe that, as a matter of
law, under Burlington Industries, Inc. v. Ellerth, 524 U.S. 742,
118 S.Ct. 2257, 141 L.Ed.2d 633 (1998), and Faragher v. City of
Boca Raton, 524 U.S. 775, 118 S.Ct. 2275, 141 L.Ed.2d 662 (1998),
the trial court properly entered summary judgment.
My opinion is not altered by the allegations of prior
sexual harassment alleged by Korphage.
-20-
By her own admission, she
refused to pursue the allegations and stated that she would not
participate in an investigation.
Thus, the Bank was unable to
pursue any formal investigatory procedures and took the only
recourse available by handling the matter informally with Gaunt.
I would also affirm the trial court’s denial of
Murphy’s request to amend her complaint to state a cause of
action for retaliatory discharge against the Bank and Zeiger and
Lipps.
I agree with the trial court that the filing of a
declaratory judgment action is not a retaliatory act as
contemplated by Kentucky Revised Statutes (KRS) 344.280.
The
Bank sought nothing from Murphy in its declaratory judgment
action but a determination of liability from the court.
I would affirm the trial court.
ORAL ARGUMENT FOR APPELLANT:
ORAL ARGUMENT FOR APPELLEE:
Thomas E. Clay
Louisville, KY
Jeff Lipps
Louisivlle, KY
BRIEF FOR APPELLANT:
BRIEF FOR APPELLEE:
Thomas E. Clay
Louisville, KY
Dorothy M. Pitt
Louisville, KY
Sean Ragland
Louisville, KY
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