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New CEO’s remarks about ‘ethnic people,’ hostility toward GC support Title VII claims

By Harold S. Berman J.D.

An African-American general counsel who was fired after complaining about the new CEO’s racist comments and hostile actions survived a motion to dismiss his Title VII discrimination claims, based in part on allegations that the CEO yelled and cursed at him, commented on his color, excluded him from meetings, and made offensive remarks about “ethnic people.” A federal district court in New York denied the defendants’ motion on the Title VII discrimination, hostile work environment, and retaliation claims against the employer—a quasi-government agency—and its board. However, his Section 1981, Section 1983, and state-law claims against these entities and against the individual defendants in their official capacities failed based on sovereign immunity. The Section 1981, Section 1983, and state-law claims survived as to the CEO in her individual capacity (Lewis v. Roosevelt Island Operating Corp., March 28, 2017, Carter, A.).

CEO harasses employee. The employee received consistently positive performance reviews, and a performance-based salary increase two weeks before he was terminated. A white, female CEO was hired in May 2013, who had twice before been sued for discrimination. The employee alleged that she, along with the CFO and HR director, created a hostile work environment against male and black employees. The CEO cursed and yelled at the employee when he asked legitimate questions, and gave him the silent treatment for days. She refused to provide him with needed staffing, excluded him from meetings, and held back important information. She also commented on his color, and spoke offensively about black and “ethnic people” in general, and about other black employees. Following the CEO’s lead, the CFO and HR director made similarly offensive comments.

Termination. The employee alleged that in spring of 2015, he complained to the board about the CEO’s behavior and the hostile and discriminatory environment. He was terminated shortly after. He alleged the CEO emailed him, falsely stating that the board demanded he resign within three hours or face termination. However, contrary to the employer’s by-laws, the board was not involved, but did nothing to change the decision. The employee was replaced by a white woman.

The employee filed suit against the employer, board, CEO, CFO, and HR director, alleging race and gender discrimination, hostile work environment, and retaliation in violation of Title VII, Section 1981, Section1983, the New York State Human Rights Law (NYSHRL), and the New York City Human Rights Law (NYCHRL).

Sovereign immunity. With respect to the claims against the employer and its board of directors, only the employee’s Title VII claims could remain because the employer, the board and the executives in their official capacities were considered an arm of the state protected by sovereign immunity under the Eleventh Amendment. The state legislature considered the employer as “a political subdivision of New York State,” the governor appointed board members, and the employer’s functions traditionally belonged to local government. Additionally, allowing the employer, its executives, and directors to be sued “would expose the state treasury to risk” and “threaten the integrity of the state.”

Race and gender discrimination. The court denied the employer’s motion to dismiss most of the employee’s race and gender discrimination claims. The employee undisputedly belonged to a protected class, was qualified, and his termination was an adverse action. He alleged that the CEO made offensive race-based comments and treated him hostilely, that he was replaced by a white woman, and that his severance terms were less favorable than those of white employees, all of which plausibly inferred that racial or discriminatory intent motivated his termination. His gender-based discrimination allegations were weaker, but still sufficient.

Hostile work environment. The court refused to dismiss the employee’s hostile work environment claims, finding that in addition to racially-charged statements, the employee’s description of the CEO’s facially neutral practices of yelling at him, giving him the silent treatment, excluding him from meetings, and withholding vital information, made his job challenging and undermined his authority.

Retaliation. The retaliation claims also survived. The court rejected the employer’s argument that the employee failed to sufficiently allege the circumstances surrounding his protected conduct and termination, failed to allege the CEO was aware that he complained, and had not established a causal connection between his protected activity and termination. The employee had sufficiently alleged that in spring of 2015 he reported the CEO’s discriminatory conduct to the board and was fired soon after, the CEO was heard complaining about his decision to go to the board, the employer admitted that the employee’s termination was retaliatory, and there was sufficiently close temporal proximity between the employee’s protected activity and his termination to find he alleged that retaliation was a “but for” cause of his termination.

Individual defendants. With respect to the individual defendants, the CEO could be liable in her individual capacity on the employee’s state law, Section 1981, and Section 1983 claims. She was unquestionably personally involved in the alleged discriminatory and retaliatory conduct. The discrimination and retaliation claims against the CFO and HR Director were dismissed, as there was little to suggest they had a role in the termination, but the employee sufficiently alleged that they helped create a hostile work environment.

Negligent hiring, supervision, and training. The court dismissed the employee’s negligent hiring, screening, retention, supervision, and training claims against the employer and the directors. In their official capacities, they were entitled to sovereign immunity. In their individual capacities, the court dismissed the claim without prejudice, as at this stage of the litigation, it appeared that the CEO, CFO and HR Director were acting within the scope of their employment.