NEW YORK (AP) -- Mediocre employees deserve the same protection as others from sexual harassment, a federal appeals court said Friday as it reinstated a lawsuit brought by a New Jersey woman against a financial services company.
The 2nd U.S. Circuit Court of Appeals in Manhattan said a jury should hear the claims Renee Mihalik, 42, of Hoboken made in a $5 million lawsuit against Credit Agricole Cheuvreux North America Inc., a brokerage house that performs customized research, sales and other services.
The ruling also supported a New York City Human Rights Law designed to go further to combat some forms of discrimination than state or federal laws.
In the opinion written by Circuit Judge Denny Chin, a three-judge panel of the court concluded there was substantial evidence that Mihalik performed her job poorly at the company's Manhattan offices from July 2007 until she was fired as a vice president in April 2008.
But the ruling said a jury might find that her supervisor, Chief Executive Officer Ian Peacock, discriminated against her and used her shortcomings as an excuse to humiliate and punish her for opposing his behavior.
"If a jury so found, it would be free to infer that Cheuvreux is using Mihalik's poor performance now as a mere cover-up for retaliation," the appeals court said. "Even a poorly performing employee is entitled to an environment free from sexual harassment."
It added: "Mihalik's alleged poor performance would not excuse Peacock's alleged sexual advances and demeaning behavior."
Mihalik claimed in her lawsuit that Peacock ran the financial services firm like a "boys' club," subjecting her to suggestive comments and twice propositioning her for sex in an office where male employees frequently looked at pornography on their computers, regularly talked about visiting strip clubs and rated their female colleagues' appearances.
Her lawsuit said he commented on her appearance often, saying she looked "sexy" and her red shoes meant she was "promiscuous."
When Peacock allegedly propositioned Mihalik twice, asking her to spend the night with him, she rejected the advances, telling him his conduct was offensive and shameful, the court said. She alleged she was fired after she alluded to his sexual propositions when he was critical of her, asking: "What's not working out? Me and you or me at the company?"
The appeals court panel said a lower court judge was wrong to toss out the lawsuit in September 2010 on the grounds that Mihalik had merely presented evidence of "sporadic insensitive comments" rather than a hostile work environment.
The panel also said trial-level judges have continued to erroneously equate federal standards used to decide the merits of discrimination claims with the New York Human Rights Law even after it was strengthened in 2005 so that evidence of "unwanted gender-based conduct" was enough to let a case proceed rather than the "severe and pervasive" standard required by other laws.
Melissa Franzen, the company's chief financial officer, said in an email: "The company is disappointed but respects the court's decision, and we are confident that we will prevail at trial."
Mihalik's lawyer, Brian Heller, said the decision sent a message to lower courts that the New York Human Rights Law provides broader protections than courts have been inclined to recognize. He said the ruling also was important for protecting all workers, regardless of their quality of work.
"A lot of times a company will point to performance like that's the silver bullet," he said. "No one gives up their human rights because they don't perform as well as the company wants. Even if someone is not a good employee, they're still protected against sexual harassment."
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