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7th Circuit upholds $250K jury verdict against Costco for customer’s stalking of worker

By Brandi O. Brown, J.D.

In the EEOC’s suit on behalf of a Costco worker who was stalked by a customer, in which a jury awarded $250,000 in compensatory damages, the Seventh Circuit agreed with the lower court that a reasonable jury could find the conduct severe and pervasive enough to create a hostile work environment. Noting that a state court had found the customer violated the Illinois Stalking No Contact Order Act with his actions, which had caused the employee emotional distress, the appeals court explained that “it would be quite something for us to say that a jury acted unreasonably by reaching the same conclusion.” However, the appeals court remanded on the denial of backpay, instructing the lower court to address whether backpay should have been awarded for the employee’s period of medical leave (EEOC v. Costco Wholesale Corp., September 10, 2018, Barrett, A.).

Customer began stalking her. In the middle of 2010, a Costco employee began encountering a customer who made her uncomfortable. She related the encounters to her manager and told him she was scared. He told her to notify him if she saw the customer again. Shortly thereafter, she saw the same customer wearing “sunglasses and a hat” and watching her from different aisles and from behind clothing. The employee informed her supervisors and they told the customer to “avoid” the employee and not to talk to her. He became angry, stated that it was a “free country” and referred to his “freedom of speech.” However, he agreed to stay away from the employee.

Ignored “stay away” instruction. He did not stay away from her, however. In fact, even though the employee contacted the police to report the stalker (for which she was yelled at by the assistant general manager, who told her to “be friendly” to him), he continued to approach her. Over the next 13 months the employee encountered him many times at the store, on more than one occasion in the view of her supervisor. Costco argued that they could only have encountered each other 20 times, but she claimed it was far more often.

And while Costco argued no reasonable person would have experienced the conduct as severe or pervasive, the EEOC argued otherwise. The customer “constantly” tried to talk to her and give her his phone number. He watched her, asked questions about where she lived, who her boyfriend was, which male employees she spoke with, her age, and her nationality. He told her she was “pretty,” “beautiful,” and “exotic.” He did this in spite of also noting she “look[ed] scared.” He asked her several times if “he freak[ed her] out.” He touched her on multiple occasions and bumped his cart into her. He also paid an uncomfortable amount of attention to the details of her appearance (for example, noting that she had more powder on than earlier in the day). He tried to hug her twice.

No contact orders, medical leave. One day in September 2011 he began videotaping her with his phone, referring to her as “mysterious Dawn” after she told him to leave her alone. A week later she secured a Stalking No Contact Order from a county court, a short-term order forbidding him from approaching her. Three days later she went on medical leave. Over a week later, and well over one year after the stalking began, Costco told the customer not to shop at that location. A few months later, however, the employee encountered him again at a different Costco location where she and her father were doing their own shopping. He began to scream profanities at them. Only then was his membership revoked by Costco. Ultimately, the employee got a plenary No Contact Order against the customer, after an adversarial process. In 2012, her employment was terminated because her unpaid medical leave of absence had extended beyond 12 months.

The EEOC filed suit on her behalf, alleging the employer had discriminated against her because of her sex by creating and allowing a sexually hostile work environment to exist. The hostile work environment claim went to trial and a jury awarded the employee $250,000 in compensatory damages. Costco renewed an earlier motion for judgment as a matter of law, but it was denied. The EEOC’s motion for backpay was also denied and both parties appealed. On appeal Costco focused its attack on the verdict on the argument that the customer’s behavior did not rise to the level of “severe or pervasive.”

Intimidating and frightening behavior. Although the appeals court agreed the conduct did not rise to the level of “vulgarity” called for under Seventh Circuit precedent, it noted that under its precedent, conduct that is not “overtly sexual” can still be actionable. “Actionable discrimination can take other forms,” the court explained, “such as demeaning, ostracizing, or even terrorizing the victim because of her sex.”

In this case a reasonable juror could have found, as it did, that the customer’s conduct was “objectively intimidating or frightening.” In fact, this was the same conclusion reached by the state court, which had concluded that the customer had violated the Illinois Stalking No Contact Order Act. That court concluded that the employee had violated the order by “stalking” the employee, a course of action that the state law defined as “2 or more acts” that included behaviors in which the customer had engaged. The state court concluded that the customer had engaged in a course of conduct that would cause a reasonable person to fear for her safety or suffer emotional distress. Thus, the appeals court explained, “it would be quite something for us to say that a jury acted unreasonably by reaching the same conclusion.”

Open question on backpay. With regard to the trial court’s denial of backpay, it did not err in concluding that backpay was not available for the period after she was fired. It was not a constructive discharge, the court explained, because the employee was fired for failing to comply with the employer’s requirement that she return to work. In other words, she walked off the job. However, contrary to the district court’s conclusion, under Seventh Circuit precedent, backpay was available to remedy wages lost during an unpaid leave, such as the one taken by the employee. The EEOC could recover backpay on her behalf if it were able to show that her work environment was so hostile that she had been forced to take unpaid leave.