A former dealership finance manager who was fired after complaining about repeated sexual harassment by the store’s finance director is entitled to both punitive and compensatory damages, the highest court in Massachusetts has ruled.
The decision upheld a $40,000 jury verdict for compensatory damages and ordered a lower court judge to review whether the size of the $500,000 punitive damages award against Lexus of Watertown Inc. should be reduced.
The ruling by the Supreme Judicial Court of Massachusetts is a victory for Emma Gyulakian, whom the dealership hired in 2003 and terminated in 2012. During that time, she was under the direct supervision of then-finance director Emmanuel Ferreira.
According to trial testimony, Ferreira “sexually harassed her and cultivated a sexually hostile or offensive work environment,” even after Gyulakian complained to an assistant general sales manager who supervised Ferreira.
She testified that Ferreira often commented on her body, touched her buttocks and tried to throw coins down her blouse, and that “sexually charged comments would come on almost a daily basis,” the court said. It also cited evidence that he and other male employees looked at nude cellphone photos of a female co-worker and that the store’s office manager at that time had circulated a memo about improper behavior after hearing Ferreira discuss sexual intercourse in the office.
In an opinion written by Justice Robert Cordy, the Supreme Judicial Court said the store conducted only a perfunctory internal investigation and did not discipline Ferreira.
However, he is no longer employed there, according to a phone call to the store.
The jury found Lexus of Watertown liable for maintaining a sexually hostile or offensive work environment, but the trial judge tossed out the punitive damages part of the verdict.
In upholding compensatory damages and reinstating the right to punitive damages, the high court said there was enough evidence for the jury to conclude that the dealership knew about Ferreira’s misbehavior and took no effective steps to stop it.
For example, the court cited testimony “that members of senior management” were aware of the situation and that the dealership “did not adhere to its own sexual harassment policy and failed to take any action to remedy the discrimination.”
In addition, the high court said, the jury could conclude that the store’s internal investigation, which didn’t even interview any finance department employees except Ferreira, was “wholly insufficient.”
There was proof that the dealership “acted intentionally or with reckless disregard for Gyulakian’s rights under the discrimination laws and that its actions were outrageous or egregious,” the court said.
A lower court judge will now review the argument by Lexus of Watertown that the $500,000 punitive damages award was excessive and will determine the amount of attorney fees the store must pay Gyulakian, said her lawyer, Robert Mantell of Boston.
The lesson, he said, is that “auto dealerships, like any Massachusetts company, should respond promptly, effectively and without bias when they have reason to believe that there have been inappropriate sexual comments or conduct in the workplace.”
The dealership’s lawyer, Christopher Sullivan of Woburn, Mass, said the decision means plaintiffs can’t collect any punitive damages solely based on sexual harassment by a dealership manager or supervisor.
Rather, they must prove that “ownership and/or upper level management was aware of or acted with reckless disregard for the rights of the employee. In other words, management must be complicit in the harassment or turn a blind eye to it to be liable for punitive damages,” he said.
However, Sullivan called the $500,000 punitive damage award “grossly disproportionate” and “excessive based on the prejudices in society against auto dealerships.”