                       United States Court of Appeals
                              FOR THE EIGHTH CIRCUIT
                                    ___________

                               Nos. 97-1126 and 97-1220
                                     ___________

Lori A. Todd,                            *
                                         *
      Plaintiff - Appellee,              *
                                         * Appeal from the United States
      v.                                 * District Court for the
                                         * District of Minnesota.
Ortho Biotech, Inc.,                     *
                                         *
      Defendant - Appellant.             *
                                    ___________

                               Submitted: December 16, 1998

                                   Filed: April 30, 1999
                                    ___________

Before RICHARD S. ARNOLD, LOKEN, and HANSEN, Circuit Judges.
                           ___________

LOKEN, Circuit Judge.

       Lori Todd, a former sales representative for Ortho Biotech, Inc. (“Ortho”), was
sexually assaulted by James Moreland, Ortho’s Director of Trade Relations, while
attending Ortho’s 1992 national sales meeting in Boston. Todd sued Ortho, claiming
Moreland’s assault constituted a hostile work environment violation of Title VII of
the Civil Rights Act of 1964, 42 U.S.C. §§ 2000e et seq. (1988), and actionable
sexual harassment under the Minnesota Human Rights Act, MINN. STAT. §§ 363.01
et seq. A jury found Ortho liable under Title VII, and the court imposed additional
damages under the state law claim. Ortho appealed. Based upon the jury’s finding
that Ortho took prompt and effective remedial action after learning of the assault, we
reversed. See Todd v. Ortho Biotech, Inc., 138 F.3d 733 (8th Cir. 1998). Todd
petitioned the Supreme Court for a writ of certiorari, and that Court vacated our
judgment and remanded for further consideration in light of newly decided
Burlington Industries, Inc. v. Ellerth, 118 S. Ct. 2257 (1998), and Faragher v. City of
Boca Raton, 118 S. Ct. 2275 (1998). See Todd v. Ortho Biotech, Inc., 119 S. Ct. 33
(1998) (mem.). At our request, the parties submitted supplemental briefs in which
Ortho argues we should reinstate our prior judgment because the new standard of
Ellerth and Faragher does not apply, and Todd argues the new standard does apply
and requires that we now affirm. For the following reasons, we remand Todd’s Title
VII hostile work environment claim to the district court for further proceedings.

                              I. The Title VII Claim.

      In Ellerth and Faragher, the Supreme Court articulated a new standard for
determining when a supervisor’s sexual harassment subjects the employer to hostile
work environment liability under Title VII:

      An employer is subject to vicarious liability to a victimized employee
      for an actionable hostile environment created by a supervisor with
      immediate (or successively higher) authority over the employee. When
      no tangible employment action is taken, a defending employer may raise
      an affirmative defense to liability or damages, subject to proof by a
      preponderance of the evidence, see Fed. Rule Civ. Proc. 8(c). The
      defense comprises two necessary elements: (a) that the employer
      exercised reasonable care to prevent and correct promptly any sexually
      harassing behavior, and (b) that the plaintiff employee unreasonably
      failed to take advantage of any preventive or corrective opportunities
      provided by the employer or to avoid harm otherwise.

Ellerth, 118 S. Ct. at 2270. This holding overrules the Eighth Circuit standard we
applied in Todd, 138 F.2d at 736, at least in some situations.

                                         -2-
       A. To determine the impact of Ellerth and Faragher on our initial decision, we
must first consider whether the new Ellerth/Faragher standard applies to the facts of
this case. That question is problematic for at least two reasons.

        1. In deciding Todd, 733 F.3d at 736, this court assumed, as did Ortho, that a
single severe act of sexual harassment can, without more, constitute a hostile work
environment that is actionable under Title VII. Neither the Supreme Court nor this
court has squarely addressed this issue, and portions of the opinions in Ellerth and
Faragher cast doubt on its resolution. The Supreme Court’s new affirmative defense
was adopted to avoid “automatic” employer liability and to give credit to employers
who make reasonable efforts to prevent and remedy sexual harassment. See Faragher,
118 S. Ct. at 2291-92. But that defense, adopted in cases that involved ongoing
sexual harassment in a workplace, may not protect an employer from automatic
liability in cases of single, severe, unanticipatable sexual harassment unless, for
example, the harassment does not ripen into an actionable hostile work environment
claim until the employer learns that the harassment has occurred and fails to take
proper remedial action. Cf. Indest v. Freeman Decorating, Inc., 164 F.3d 258, 265
(5th Cir. 1999). Though this is an issue of law, it is the kind of issue that is more
properly addressed by the district court in the first instance.

      2. The new Ellerth/Faragher vicarious liability standard is limited to cases of
harassment by a “supervisor with immediate (or successively higher) authority over
the employee.” The Court did not further explain what it meant by “supervisor.”
Ortho argues that Moreland was not a supervisor under Ellerth and Faragher because
he was not in Todd’s “chain of command” at the time of the assault. Todd responds
that Moreland had retained supervisory authority over Todd and, at any rate, appeared
to Todd to possess such authority. The contours of the term “supervisor” as used in
the new Ellerth/Faragher standard is another question more appropriately addressed
by the district court in the first instance.


                                         -3-
       B. Assuming the new Ellerth/Faragher standard applies to this case, there are
fact questions that we cannot answer on the present record and that prevent us from
deciding, as a matter of law, which side should prevail.

      1. The district court’s vicarious liability instruction did not accurately forecast
the new Ellerth/Faragher standard. The court instructed:

             An employer is liable for the sexual harassment committed by its
      supervisor if the supervisor used his actual or apparent authority to
      further the harassment, or if he was otherwise aided in accomplishing
      the harassment by the existence of his supervisory powers. . . . Apparent
      authority means such authority as an employer knowingly permits a
      manager to assume, or which it holds the manager out as possessing;
      such authority as the manager appears to have by reason of his or her
      actual authority; or such authority as a reasonably prudent person, using
      diligence and discretion, would naturally suppose the manager to
      possess.

In Ellerth and Faragher, the Supreme Court stated that “[a]pparent authority analysis
therefore is inappropriate in this context.” Ellerth, 118 S. Ct. at 2268. Because the
jury may have found Ortho liable for Moreland’s harassment solely by reason of his
apparent authority, we cannot conclude that the jury’s verdict was tantamount to a
finding of liability under Ellerth and Faragher. On the other hand, had the jury been
properly instructed in accordance with the new standard, the evidence appears
sufficient to support a verdict in Todd’s favor. Thus, Ortho is entitled to a new trial,
but not judgment as a matter of law, on this issue.

       2. The district court’s instructions did not ask the jury whether Ortho proved
the Ellerth/Faragher affirmative defense, an essential component of the new standard.
The jury found that Ortho took timely and effective action in response to Moreland’s
assault, the affirmative defense under prior Eighth Circuit law. Because the law has
changed dramatically on this key issue, our review of the present record does not

                                          -4-
reveal whether a reasonable jury could have found for Ortho on the new affirmative
defense. In these circumstances, the appropriate disposition is to remand for a new
trial. See Hill v. International Paper Co., 121 F.3d 168, 177 (5th Cir. 1997).

       This survey of certain issues is intended only to illustrate why Todd’s Title VII
hostile work environment claim must be remanded. Our discussion should not be
read as dictating a particular resolution of these issues, nor does it foreclose the
parties from raising on remand additional issues concerning the proper application of
Ellerth and Faragher to this case.

                             II. The State Law Claim.

      Though Minnesota courts often look to Title VII case law in applying the
Minnesota Human Rights Act, our prior decision granting Ortho judgment as a matter
of law on Todd’s state law claim was based upon a Minnesota statute that defines
sexual harassment as requiring proof that “the employer knows or should know of the
existence of the harassment and fails to take timely and appropriate action.” MINN.
STAT. § 363.01, subd. 41(3). If presented with this case, we conclude the Minnesota
Supreme Court would apply the plain language of that statute, rather than the contrary
standard of Ellerth and Faragher. Therefore, we adhere to our prior decision that
Ortho is entitled to judgment as a matter of law on Todd’s state law claim.

                                  III. Conclusion.

       The judgment of the district court is reversed and the case is remanded to the
district court (a) for further proceedings not inconsistent with this opinion on Lori
Todd’s Title VII claim for hostile work environment sexual harassment, and (b) with
instructions to dismiss Ms. Todd’s sexual harassment claim under the Minnesota
Human Rights Act. The district court’s order awarding attorneys’ fees is vacated.


                                          -5-
RICHARD S. ARNOLD, Circuit Judge, concurring in the judgment.

        I agree that a remand is appropriate in this case, at least to allow the employer
to try to prove the new affirmative defense established by the recent Supreme court
opinions in Ellerth and Faragher. There are a few other aspects of today's opinion,
however, with which I am not in entire agreement, and I desire to add a few words of
explanation.

        First, I have no doubt that a single severe act of sexual harassment can amount
to a hostile work environment actionable under Title VII. I see nothing in Ellerth or
Faragher to negative this proposition. The Court expresses the fear that employer
liability might be automatic if a single severe act is allowed to create liability. This
result, the Court says, would be inconsistent with the Supreme Court's reasons for
creating the new affirmative defense. The affirmative defense set out in the two
recent Supreme Court opinions, however, is not always a complete defense to
liability. It can also be a defense to damages only. See Ellerth, 118 S. Ct. at 2270.
If a supervisor abuses his authority to commit a sufficiently severe act of harassment,
the employer's affirmative defense, if established, should serve to reduce the
damages, but I don't understand why it should always erase the tort completely.

       Second, I cannot agree that apparent-authority analysis would be inappropriate
in the present case. Maybe it's just a question of words, but if the plaintiff reasonably
believed that the supervisor in this case, despite not being any longer in the direct
chain of command, still possessed a substantially equivalent power to affect her
career, that would be enough, in my view, for Mr. Moreland to be treated as a
"supervisor" within the meaning of the new rule. The Court quotes a passage from
Ellerth as holding that "[a]pparent authority analysis . . . is inappropriate in this
context." Id. at 2268. When the entire paragraph in which this sentence appears is
read, however, it seems that the Supreme Court was not laying down a flat rule of
law. A fuller quotation from the Ellerth opinion should make this clear:

                                          -6-
      In the usual case, a supervisor's harassment involves misuse of actual
      power, not the false impression of its existence. Apparent authority
      analysis therefore is inappropriate in this context.

        The present case may be an "unusual" one in the terms of this analytical
approach. Here, Mr. Moreland was not in the direct chain of command, but he was
still a high ranking official in the area of sales, and, as I have said, the plaintiff may
reasonably have believed that he had not lost much of his power, if any. It seems to
me not inappropriate to characterize this approach as involving the concept of
apparent authority. I believe the Court unduly restricts the analysis when it rules
apparent authority out as a matter of law.

      With these observations, I concur in the judgment remanding this case for
further proceedings.

      A true copy.

             Attest:

                 CLERK, U. S. COURT OF APPEALS, EIGHTH CIRCUIT.




                                           -7-
