California Legal Team

Jerold J. Mackenzie v. Miller Brewing Company, Robert L. Smith and Patricia G.

Best

97-3542





IN THE SUPREME COURT

STATE OF WISCONSIN





No. 97-3542





JEROLD J. MACKENZIE,



Plaintiff-Respondent-Cross-Appellant-Petitioner,



v.



MILLER BREWING COMPANY, ROBERT L. SMITH,



Defendants-Appellants-Cross-Respondents,



and



PATRICIA G. BEST,



Defendant-Cross-Respondent.







On Appeal from the Circuit Court of Milwaukee County

Hon. Louise M. Tesmer





BRIEF OF THE U.S. EQUAL EMPLOYMENT OPPORTUNITY

COMMISSION AS AMICUS CURIAE





C. GREGORY STEWART

General Counsel



PHILIP B. SKLOVER

Associate General Counsel



DENNIS R. McBRIDE               LORRAINE C. DAVIS

Senior Trial Attorney           Assistant General Counsel

(State Bar No. 1000430)

ROBERT J. GREGORY

EQUAL EMPLOYMENT OPPORTUNITY    Senior Attorney

COMMISSION

310 West Wisconsin Avenue       EQUAL EMPLOYMENT OPPORTUNITY

Suite 800                          COMMISSION

Milwaukee, Wisconsin            1801 L Street, N.W.

53203-2292                   Washington, D.C. 20507

(414) 297-4188                  (202) 663-4059



STATEMENT OF INTEREST



The U.S. Equal Employment Opportunity Commission ("Commission" or

"EEOC") is the federal agency entrusted with the enforcement of Title

VII of the Civil Rights Act of 1964, 42 U.S.C. � 2000e et seq. ("Title

VII").  In this case, the plaintiff, Jerold Mackenzie, asserts a claim

of intentional interference with contract against Patricia Best, a

former subordinate employee of Mackenzie's at Miller Brewing Company

("Miller").  The basis of Mackenzie's claim is that Best made false

accusations against Mackenzie in lodging an internal complaint of sexual

harassment with Miller officials.  The jury found in favor of Mackenzie

and awarded $1,500,000 in punitive damages.  The jury, however, did not

make an award of compensatory damages against Best.  The trial court set

aside the punitive award, citing the common law rule in Wisconsin that

punitive damages may be awarded only where the plaintiff has received

an award of compensatory damages for the underlying conduct.

The court of appeals affirmed the trial court's decision to set aside the

award.  See Mackenzie v. Miller Brewing Co., 234 Wis. 2d 1, 608 N.W.2d

331 (Ct. App. 2000).  The court noted that Wisconsin case law recognizes

a conditional privilege for internal complaints of sexual harassment

discrimination.  Under that privilege, the complainant may not be held

liable in an action brought by the alleged harasser absent evidence of

"'ill will or an improper motive towards the plaintiff.'" Id. at 67-68,

608 N.W.2d 331, 358 (quoting Wolf v. F & M Banks, 193 Wis. 2d 439, 462,

534 N.W.2d 877 (Ct. App. 1995)).  The court found that Mackenzie's proof

in this case fell "short of establishing Best's 'ill will or an improper

motive.'" Id. at 68, 608 N.W.2d at 359.  The court also ruled that, even

if Best's conduct justified a finding of liability on Mackenzie's claim,

punitive damages were still not proper under Wisconsin law because the

jury awarded no compensatory damages.  The court concluded that, "in

light of society's interest in encouraging complainants to report sexual

harassment, we do not carve out an exception to the [rule precluding]

punitive damages in the absence of compensatory damages."  Id. at 67,

69-70, 608 N.W.2d at 358-59 (citing the Commission's brief as amicus

curiae).

The Commission agrees with the court of appeals that subjecting sexual

harassment complainants to punitive damages in cases of this nature

could have a chilling effect on the willingness of employees to report

incidents of sexual harassment  in the workplace, thereby undermining the

enforcement of Title VII (and parallel state anti-discrimination laws).

Because of the importance of the issues raised by this appeal to the

effective enforcement of Title VII, the Commission offers its views to

this Court as amicus curiae.



STATEMENT OF THE ISSUE



Whether the court of appeals properly affirmed the decision of the trial

court to set aside the award of punitive damages on Mackenzie's claim

of intentional interference with contract against Best, where the claim

arose from a privileged complaint of sexual harassment discrimination

that did not result in any compensable injury to Mackenzie.



ARGUMENT



THE COURT OF APPEALS PROPERLY AFFIRMED THE TRIAL COURT'S DECISION TO

SET ASIDE THE AWARD OF PUNITIVE DAMAGES AGAINST BEST.



It Is Essential To The Enforcement Of Title VII That     Employees

Are Not Chilled From Exercising Their Protected  Right To Complain Of

Discriminatory Treatment



Title VII is a federal statute that broadly prohibits employment

discrimination.  Relevant to this appeal, Title VII makes it unlawful for

a covered employer to discriminate on the basis of sex.  See 42 U.S.C. �

2000e-2(a)(1).  It has long been recognized that the prohibition in

Title VII extends to sexual harassment that is sufficiently "severe

or pervasive 'to alter the conditions of [the victim's] employment

and create an abusive working environment.'"  Meritor Sav. Bank, FSB

v. Vinson, 477 U.S. 57, 67 (1986).

Title VII is a complaint-driven statute.  The statute depends largely on

the participation of individual employees for its effective enforcement.

See, e.g., EEOC v. Board of Governors, 957 F.2d 424, 431 (7th Cir. 1992).

The Commission's primary role under Title VII is to investigate

and conciliate complaints of discrimination.  The Commission cannot

carry out that role unless employees are willing to report incidents

of alleged discrimination to the Commission (in the form of an EEOC

charge).  See 42 U.S.C. � 2000e-5 (setting forth Title VII's pre-suit

enforcement procedures).  Compliance with Title VII is also achieved when

employees oppose unlawful practices by complaining to their employers.

Even without the intervention of the Commission, an internal complaint

can ferret out incidents of unlawful (or potentially unlawful) conduct,

thereby furthering the enforcement objectives of Title VII.

To ensure that individuals are not deterred from coming forward with

complaints, Title VII defines two forms of protected activity.  First,

Title VII protects individuals who have filed a charge or otherwise

participated in a legal proceeding initiated under Title VII.  See 42

U.S.C. � 2000e-3(a).  Title VII also protects individuals who have

opposed practices made unlawful under Title VII by complaining about

those practices to their employers.  See id.  Title VII forbids an

employer from retaliating against an individual who has engaged in

protected activity.  Title VII makes it unlawful to retaliate even if

the individual engaging in the protected activity makes false statements

that would otherwise support a claim of defamation under state law.

See, e.g., Pettway v. American Cast Iron Pipe Co., 411 F.2d 998, 1003-08

(5th Cir. 1969).  Because Congress "has made it clear that it wishes all

persons with information about [unlawful] practices to be completely free

from coercion against reporting them," Nash v. Florida Indus. Comm'n,

389 U.S. 235, 238 (1967), the law seeks to curb any conduct that has a

"chilling effect on employees' assertion of rights."  Brock v. Casey

Truck Sales, Inc., 839 F.2d 872, 879 (2d Cir. 1988).

B.  Complaints Of Discriminatory Treatment Are Subject

To              Well-Recognized Privileges That Limit The Ability Of

A             Plaintiff To Recover On A State Law Claim Of Tortious

Misconduct



Because the enforcement of Title VII is dependent upon the willing

participation of employees, it is essential that the law ensures,

to the fullest extent possible, that employees are not chilled from

exercising their protected rights under Title VII.  In part, Title

VII itself addresses this point by making it unlawful for an employer

to retaliate against an individual who has engaged in some form of

protected activity.  But the protection against unlawful retaliation

only goes so far.  It prohibits the employer from taking an adverse

employment action against a complaining employee.  It does not, however,

shield the complaining employee from claims of tortious conduct that

may be brought against the employee as a result of the discrimination

complaint.

To buttress the protections of Title VII, a number of States have

adopted privileges that insulate a complaining employee, to one degree

or another, from claims of defamation or intentional interference with

contract asserted against the employee under state law.  First, many

States provide an absolute privilege for statements made as part of a

judicial or administrative proceeding.  See Cruey v. Gannett Co., 64

Cal. App. 4th 356, 368, 76 Cal. Rptr. 2d 670, 677 (Cal. Ct. App. 1998);

Hinds v. Magna Fabrics, Inc., 1997 WL 309378, *5 (S.D.N.Y. June 9, 1997).

Where this privilege applies, an individual may not be sued under

state law for statements made in a Commission charge or in a judicial

proceeding initiated under Title VII.  See Cruey, 64 Cal. App. 4th at

368, 76 Cal. Rptr. 2d at 677; Thomas v. Petrulis, 125 Ill. App. 3d 415,

417-24, 465 N.E.2d 1059, 1061-65 (Ill. App. Ct. 1984).

The absolute privilege applies when an individual files a charge

with the Commission or participates in some legal proceeding

under Title VII.  But the law's protection does not stop at those

types of formal proceedings.  As noted above, Title VII defines

protected activity to include activity taken in opposition to

unlawful discrimination, activity that often takes the form of

an internal complaint.  In the sexual harassment context, such an

internal complaint may be a necessary  prerequisite to maintaining

a claim of discrimination in court.  See Farragher v. City of Boca

Raton, 524 U.S. 775, 807-08 (1998).

In recognition of this principle, a number of courts have extended

a conditional or qualified privilege to complaints of discrimination

even if those complaints do not take the form of a formal charge or

legal suit.  Courts have long held that in an action for defamation

arising out of "an employer-employee relationship," statements made by an

employee can support the plaintiff's claim only if the statements were

made with "actual malice."  E.g., Roy v. Austin Co., 1996 WL 599435,

*9 (N.D. Ill. Oct. 16, 1996) (citing Illinois law).  This principle

clearly applies to an employee's internal complaint of discrimination,

since the "[c]ommunication [is] made by a person with an interest or

duty to make the communication and sent to a person with a corresponding

interest or duty."  Olivieri v. McDonald's Corp., 678 F. Supp. 996,

1001 (E.D.N.Y. 1988); see Stockley v. AT & T Information Sys., Inc.,

687 F. Supp. 764, 769 (E.D.N.Y. 1988) (qualified privilege applied to

communications made during the course of a company's investigation of a

sexual harassment complaint); Lambert v. Morehouse, 68 Wash. App. 500,

506-07, 843 P.2d 1116, 1120 (Wash. Ct. App. 1993) (applying conditional

privilege to employee's internal complaint of sexual harassment).  Courts

have extended the same principle to claims of intentional interference

with contract.  Courts have recognized "a privilege in intentional

interference with contract cases when the defendant acts to protect an

interest 'which the law deems to be of equal or greater value than the

plaintiff's contractual rights.'"  Williams v. Shell Oil Co., 18 F.3d

396, 402 (7th Cir. 1994).  In such a case, the plaintiff can prevail only

by showing that the defendant's conduct was "unjustified or malicious."

Id. at 403; see Cruey, 64 Cal. App. 4th at 369, 76 Cal. Rptr. at 678

(internal complaint of sexual harassment conditionally privileged in

action for tortious interference with contract; otherwise employees

would be chilled from reporting incidents of workplace harassment);

Lawson v. Boeing Co., 58 Wash. App. 261, 266-69, 792 P.2d 545, 549-50

(Wash. Ct. App. 1990) (same).

Wisconsin courts have followed this general approach.  "Wisconsin courts

have long recognized the concept of privilege in the area of tortious

interference with contract."  Liebe v. City Finance Co., 98 Wis. 2d 10,

15, 295 N.W.2d 16, 19 (Ct. App. 1980).  Courts have held that "[n]ot all

intentional interference with contract is actionable," limiting the tort

to cases in which the defendant uses "improper means of inducement,"

e.g., "coercion by physical force, or fraudulent misrepresentation."

Id. at 16, 295 N.W.2d at 19 (citing Pure Milk Prods. Coop. v. National

Farmers Org., 64 Wis. 2d 241, 260, 219 N.W.2d 564, 574 (1974)).

As this Court has explained, "[t]he defense of privilege has developed

under the public policy that certain conduct which would otherwise

be actionable may escape liability because the defendant is acting in

furtherance of some interest of societal importance, which is entitled to

protection even at the expense of uncompensated harm to the plaintiff."

Zinda v. Louisiana Pac. Corp., 149 Wis. 2d 913, 922, 440 N.W.2d 548,

552 (1989).

In Wolf v. F & M Banks, 193 Wis. 2d 439, 534 N.W.2d 877 (Ct. App. 1995),

the Court addressed the precise issue of the applicability of a

conditional privilege in a case in which an employee asserted a claim of

intentional interference with contract against another employee who had

lodged an internal complaint of sexual harassment.  The plaintiff in Wolf

had been fired from his job because of poor performance.  The plaintiff

claimed that he was fired because of a co-employee's complaint of sexual

harassment.  The Court ruled that the harassment complaint could support

a claim of intentional interference only upon proof that the employee

"acted from ill will or an improper motive towards the plaintiff."

Id. at 462, 534 N.W.2d at 885.  The Court reaffirmed the principle

that "[t]ortious employee conduct which is otherwise actionable may be

privileged on public policy grounds if the conduct is in furtherance

of some interest of societal importance."  Id. at 460, 534 N.W.2d at

885; see also Olson v. 3M Co., 188 Wis. 2d 25, 44-47, 523 N.W.2d 578,

585-86 (Ct. App. 1994) (conditional privilege applied with respect to

employer's communications concerning the results of its investigation

of allegations of sexual harassment).

In Wolf, the Court did not reach the issue of whether the conditional

privilege applicable to the complaint of sexual harassment imposed

any limitation on the award of punitive damages.  The Court stressed,

however, the need for ensuring that employees are not chilled from

"freely and openly" discussing matters concerning "employee-related

problems in the workplace."  Wolf, 193 Wis. 2d at 460-61, 534 N.W.2d at

885.  We believe that the logic of Wolf extends to the issue of damages

raised by this appeal.  In complaining about workplace harassment, an

employee is furthering an interest of "societal importance."  Id. at

460, 534 N.W.2d at 885.  At least in cases in which the complaint

does not result in any compensable injury to the alleged harasser,

there is no justification for subjecting the complaining employee

to an award of punitive damages, even assuming that the standard of

"ill will" or "improper motive" can be established.  To the contrary,

there are compelling reasons for insulating the complainant, who has

engaged in a form of protected activity under Title VII, from what may

be a substantial punitive award.

In fact, such a view is consistent with the general approach of Wisconsin

courts to the issue of punitive damages.  Under Wisconsin law, punitive

damages may be awarded, but only in appropriate cases.  As a matter

of law, punitive damages are not appropriate if the tortious act of

the defendant does not give rise to an award of compensatory damages.

The rationale for this rule flows from the tort-law principle that

"if the individual cannot show actual harm, he or she has but a

nominal interest."  Jacque v. Steenberg Homes, Inc., 209 Wis. 2d 605,

615, 563 N.W.2d 154, 158 (1997).  Since "society has little interest

in having the unlawful, but otherwise harmless, conduct deterred,

. . . punitive damages are inappropriate."  Id.  Where the alleged

wrong does not produce an actual harm, as evidenced by an award of

compensatory damages, there is no basis for a punitive award

C.  Punitive Damages Are Improper In This Case



Based upon the above principles, it is clear that the court of appeals

properly affirmed the trial court's decision to set aside the award of

punitive damages in this case.  Mackenzie claims that Best tortiously

interfered with his contractual rights by making false claims of sexual

harassment.  There is "no proof," however, of "'ill will' or 'improper

motive,'" sufficient to overcome the conditional privilege applicable

to Best's internal complaint of sexual harassment discrimination.

Mackenzie, 234 Wis. 2d at 68-69, 608 N.W.2d at 359 (stressing that,

"although Mackenzie disputed certain details of Best's account of [the

alleged harassment], he did not disagree with her essential story").

Even assuming, moreover, that the requisite proof for a finding of

liability is present in this case, the conditional privilege applicable

to internal complaints of sexual harassment discrimination should shield

Best from an award of punitive damages, particularly given the absence

of any award of compensatory damages against Best.

Mackenzie urges that the punitive award against Best can be upheld on

the theory that "punitive damages against one defendant may be supported

by compensatory damages awarded against another defendant."  Br. at 23.

In essence, Mackenzie argues that because the jury awarded compensatory

damages against Miller and its agent, Robert Smith, on Mackenzie's claims

against Miller and Smith for intentional misrepresentation and tortious

interference, the jury's punitive award against Best can be sustained.

Even assuming that the conditional privilege does not otherwise bar

an award of punitive damages, this argument impermissibly conflates

Mackenzie's claims against Miller and Smith, on which compensatory

damages were awarded, with Mackenzie's claim against Best, on which they

were not.  In cases of this nature, the plaintiff's real gripe is not

with the sexual harassment complainant, who simply reports an incident of

sexual harassment (truthfully or otherwise), but with the employer, who

acts on that complaint to affect adversely the plaintiff's employment.

In almost all cases in which an internal complaint of discrimination

leads to some adverse employment action against the alleged harasser,

any harm to the harasser will be the result of an intervening action by

the employer.  In many cases, the employer's action will be justified.

In others, it might be argued that the employer acted precipitously and

improperly in taking the action. In either case, it is that action by

the employer, not the underlying complaint of harassment itself, that

causes the tangible injury (if any) to the alleged harasser.  An award

of compensatory damages for the wrongful conduct of the employer does

not support an award of punitive damages against the sexual harassment

complainant.       CONCLUSION

The Court should affirm the trial court's decision to vacate  the award

of punitive damages against Best.



Respectfully Submitted,



C. GREGORY STEWART,

General Counsel



PHILIP B. SKLOVER

Associate General Counsel



LORRAINE C. DAVIS

Assistant General Counsel





DENNIS R. McBRIDE

ROBERT J. GREGORY



Senior Trial Attorney

Senior Attorney

(State Bar No. 1000430)



EQUAL EMPLOYMENT OPPORTUNITY    EQUAL EMPLOYMENT OPPORTUNITY

COMMISSION                      COMMISSION

310 West Wisconsin Avenue       1801 L Street, N.W.

Suite 800                       Washington, D.C. 20507

Milwaukee, WI 53203-2292        (202) 663-4059

(414) 297-4188

July 28, 2000