Scope & Limits of Employer Control

BULLOCK, Justice.

K-Mart Corporation appeals from a judgment awarding the appellee, Trotti, $8,000.00 in actual damages and $100,000.00 in exemplary damages for invasion of privacy.

The appellee was an employee in the hosiery department at the appellants’ store number 7441. Her supervisors had never indicated any dissatisfaction with her work nor any suspicion of her honesty.

The appellants provided their employees with lockers for the storage of personal effects during working hours. There was no assignment of any given locker to any individual employee. The employees could, on request, receive locks for the lockers from the appellants, and if the appellants provided the lock to an employee they would keep either a copy of the lock’s combination or a master key for padlocks. Testimony indicated that there was some problem in providing a sufficient number of locks to employees, and, as a result, the store’s administrative personnel permitted employees to purchase and use their own locks on the lockers, but in these instances, the appellants did not require the employee to provide the manager with either a combination or duplicate key. The appellee, with appellants’ knowledge, used one of these lockers and provided her own combination lock.

On October 31, 1981, the appellee placed her purse in her locker when she arrived for work. She testified that she snapped the lock closed and then pulled on it to make sure it was locked. When she returned to her locker during her afternoon break, she discovered the lock hanging open. Searching through her locker, the appellee further discovered her personal items in her purse in considerable disorder. Nothing was missing from either the locker or the purse. The store manager testified that, in the company of three junior administrators at the store, he had that afternoon searched the lockers because of a suspicion raised by the appellants’ security personnel that an unidentified employee, not the appellee, had stolen a watch. The manager and his assistants were also searching for missing price-marking guns. The appellee further testified that, as she left the employee’s locker area after discovering her locker open, she heard the manager suggest to his assistants, “Let’s get busy again.” The manager testified that none of the parties searched through employees’ personal effects.

The appellee approached the manager later that day and asked if he had searched employees’ lockers and/or her purse. The manager initially denied either kind of search and maintained this denial for approximately one month. At that time, the manager then admitted having searched the employees’ lockers and further mentioned that they had, in fact, searched the appellee’s purse, later saying that he meant that they had searched only her locker and not her purse.

The manager testified that during the initial hiring interviews, all prospective employees received verbal notification from personnel supervisors that it was the appellants’ policy to conduct ingress-egress searches of employees and also to conduct unannounced searches of lockers. A personnel supervisor and an assistant manager, however, testified that, although locker searches did regularly occur, the personnel supervisors did not apprise prospective employees of this policy.

The fundamental and basic right to be left alone constitutes the essence of the right to privacy.

The right of privacy has been defined as the right of an individual to be left alone, to live a life of seclusion, to be free from unwarranted publicity.

This right to privacy is so important that the United States Supreme Court has repeatedly deemed it to stem implicitly from the Bill of Rights. Our State courts have long recognized a civil cause of action for the invasion of the right to privacy and have defined such an invasion in many ways: As an intentional intrusion upon the solitude or seclusion of another that is highly offensive to a reasonable person, and as the right to be free from the wrongful intrusion into one’s private activities in such manner as to outrage or cause mental suffering, shame or humiliation to a person of ordinary sensibilities.

The appellants requested the trial court to define an “invasion of privacy” as “the intentional intrusion upon the solitude or seclusion of another that is highly offensive to a reasonable person.” The court refused to include the part of the requested instruction, “that is highly offensive to a reasonable person.” The appellants argue that this refusal constituted an abuse of discretion because the Rules of Civil Procedure require such an instruction. The appellee alleges that the record establishes that the intrusion was highly offensive as a matter of law, and that, therefore, the instruction was unnecessary.

The definition of “invasion of privacy” that the appellant requested is one widely and repeatedly accepted. Although the Texas Supreme Court has not adopted a verbatim rendition of this definition, it is clear that, in Texas, an actionable invasion of privacy by intrusion must consist of an unjustified intrusion of the plaintiff’s solitude or seclusion of such magnitude as to cause an ordinary individual to feel severely offended, humiliated, or outraged.

The appellants correctly point out that no Texas case yet reported has ever declined to include a requirement that the intrusion complained of be highly offensive to a reasonable person, and the appellee agrees with this statement. Nevertheless, the appellee urges that since the facts of this case established the highly objectionable nature of the intrusion as a matter of law, the requested instruction was unnecessary, and thus the trial court properly refused to include it.

We disagree with the appellee’s contention. The record does indicate the appellee’s outrage upon discovering the appellants’ activities but fails to demonstrate that there could be no dispute as to the severity of the offensiveness of the intrusion, thereby making it impossible for us to conclude that the facts established the disputed portion of the instruction as a matter of law.

Moreover, we note that the result of accepting this contention would be to raise the legal theory of invasion of privacy from the realm of intentional torts into the sphere of strict liability. It would make any wrongful intrusion actionable, requiring a plaintiff to establish merely that the intrusion occurred and that the plaintiff did not consent to it. Because of the stern form of liability which already stems from an invasion of privacy, accepting a definition of invasion of privacy which lacked a standard of high offensiveness would result in fundamentally unfair assessments against defendants who offended unreasonably sensitive plaintiffs, but whose transgressions would not realistically fill either an ordinary person or the general society with any sense of outrage. A business executive, for example, could find himself liable for entering an associate’s office without express permission; so could a beautician who opened a co-worker’s drawer in order to find some supplies needed for a customer.

The lockers undisputably were the appellants’ property, and in their unlocked state, a jury could reasonably infer that those lockers were subject to legitimate, reasonable searches by the appellants. This would also be true where the employee used a lock provided by the appellants, because in retaining the lock’s combination or master key, it could be inferred that the appellants manifested an interest both in maintaining control over the locker and in conducting legitimate, reasonable searches. Where, as in the instant case, however, the employee purchases and uses his own lock on the lockers, with the employer’s knowledge, the fact finder is justified in concluding that the employee manifested, and the employer recognized, an expectation that the locker and its contents would be free from intrusion and interference.

In the present case, there is evidence that the appellee locked the locker with her own lock; that when the appellee returned from a break, the lock was lying open; that upon searching her locker, the appellee discovered that someone had rifled her purse; that the appellants’ managerial personnel initially denied making the search but subsequently admitted searching her locker and her purse. We find this is far more evidence than a “mere scintilla,” and we hold that there is some evidence to support the jury’s finding.

As to the “insufficiency” point, after examining the record as a whole, we find it indicates all of the above. The appellee remembers having locked the locker and having seen the lock closed before starting work that day. The record indicates that the searching personnel denied having gone through any employee’s purses, yet nothing in the record directly challenges the appellee’s testimony as to the disruption of her personal effects inside her purse, and, therefore, the jury could make a reasonable inference that the managerial personnel had, in fact, gone through her personal effects. The record also establishes that other employees knew these searches were going on. The store manager testified that all employees received notification of these sporadic searches during their hiring interviews; however, two administrators, including a former personnel supervisor, denied that employees ever received this notification. We hold that the weight of the evidence indicates that the appellants’ employees came upon a locker with a lock provided by an employee, disregarded the appellee’s demonstration of her expectation of privacy, opened and searched the locker, and probably opened and searched her purse as well; and, in so holding, we consider it is immaterial whether the appellee actually securely locked her locker or not. It is sufficient that an employee in this situation, by having placed a lock on the locker at the employee’s own expense and with the appellants’ consent, has demonstrated a legitimate expectation to a right of privacy in both the locker itself and those personal effects within it.

The appellants urged the trial court to adopt concepts of negligence in submitting an intentional tort to the jury and now ask this court to require such concepts in all disputes involving an invasion of privacy. The appellants cite considerable authority applying negligence concepts to cases involving intentional civil assaults and batteries.

These concepts are inapplicable, and the appellants’ authorities are distinguishable on two grounds. First, the circumstances of those assault and battery cases raised questions of causation not usually encountered in intentional torts. Here, however, there is no question that the appellants invaded the appellee’s privacy by opening the locked locker and by opening and investigating her purse. This unwarranted invasion of privacy alone demonstrates that the single act of opening and inspecting the locker, and certainly the purse, was sufficient to justify the jury’s findings. We overrule the appellant’s eighteenth through twenty-first points of error.

The appellants further argue that any physical effects of the intrusion were merely effects stemming from an earlier health problem the appellee had suffered. The record does support these facts, and it would be reasonable to conclude that the unwarranted intrusion of the locker and purse at best exacerbated an earlier physical ailment. This contention, however, is immaterial in this kind of case.

The basis of a cause of action for invasion of privacy is that the defendant has violated the plaintiff’s rights to be left alone. This intrusion itself is actionable, and the plaintiff can receive at least nominal damages for that actionable intrusion without demonstrating physical detriment. The appellants’ improper intrusion of an area where the appellee had manifested an expectation of privacy alone raised her right to recover. We overrule the appellants’ fifteenth point of error.

The jury awarded $8,000.00 as actual damages and $100,000.00 as exemplary damages to the appellee. The appellants contend that this award of exemplary damages was improper because: (1) no evidence, or insufficient evidence, exists of malice.

An award of exemplary damages will be improper where the defendant acted in good faith. A mere wrongful act is insufficient to justify the award of exemplary damages. An award of exemplary damages requires a preliminary finding that the defendant behaved maliciously or with wanton disregard for the plaintiff. Malice is an unlawful act done intentionally and without justification or excuse.

The appellants argue that no malice exists in this case because: (1) the appellants acted correctly and lawfully in opening and searching the lockers; and (2) even if the appellants wrongfully searched the lockers, they did so in a good faith belief that they had the right to do so. Neither of the appellants’ allegations has merit.

First, the record establishes, and we have held herein, that the appellants’ search of the appellee’s locker and purse was wrongful. The mere suspicion either that another employee had stolen watches, or that unidentified employees may have stolen price-marking guns was insufficient to justify the appellants’ search of appellee’s locker and personal possessions without her consent. The record also demonstrates that the appellants lied to appellee and concealed the truth of their wrongful search for approximately one month.

The record indicates, particularly through the appellants’ subsequent denial of their activities, that there was sufficient evidence from which the jury could reasonably conclude that the appellants acted with malicious disregard for both the appellee’s rights of privacy and the rights of privacy of her co-workers. We find that there was sufficient evidence to support the jury’s finding of malice.

Chief Justice RABNER delivered of the opinion of the Court.

In the past twenty years, businesses and private citizens alike have embraced the use of computers, electronic communication devices, the Internet, and e-mail. As those and other forms of technology evolve, the line separating business from personal activities can easily blur.

In the modern workplace, for example, occasional, personal use of the Internet is commonplace. Yet that simple act can raise complex issues about an employer’s monitoring of the workplace and an employee’s reasonable expectation of privacy.

This case presents novel questions about the extent to which an employee can expect privacy and confidentiality in personal e-mails with her attorney, which she accessed on a computer belonging to her employer. Marina Stengart used her company-issued laptop to exchange e-mails with her lawyer through her personal, password-protected, web-based e-mail account. She later filed an employment discrimination lawsuit against her employer, Loving Care Agency, Inc. (Loving Care), and others.

In anticipation of discovery, Loving Care hired a computer forensic expert to recover all files stored on the laptop including the e-mails, which had been automatically saved on the hard drive. Loving Care’s attorneys reviewed the e-mails and used information culled from them in the course of discovery. In response, Stengart’s lawyer demanded that communications between him and Stengart, which he considered privileged, be identified and returned. Opposing counsel disclosed the documents but maintained that the company had the right to review them. Stengart then sought relief in court.

The trial court ruled that, in light of the company’s written policy on electronic communications, Stengart waived the attorney-client privilege by sending e-mails on a company computer. The Appellate Division reversed and found that Loving Care’s counsel had violated RPC 4.4(b) by reading and using the privileged documents.

We hold that, under the circumstances, Stengart could reasonably expect that e-mail communications with her lawyer through her personal account would remain private, and that sending and receiving them via a company laptop did not eliminate the attorney-client privilege that protected them. By reading e-mails that were at least arguably privileged and failing to notify Stengart promptly about them, Loving Care’s counsel breached RPC 4.4(b). We therefore modify and affirm the judgment of the Appellate Division and remand to the trial court to determine what, if any, sanctions should be imposed on counsel for Loving Care.

I.

This appeal arises out of a lawsuit that plaintiff-respondent Marina Stengart filed against her former employer, defendant-appellant Loving Care, its owner, and certain board members and officers of the company. She alleges, among other things, constructive discharge because of a hostile work environment, retaliation, and harassment based on gender, religion, and national origin, in violation of the New Jersey Law Against Discrimination. Loving Care denies the allegations and suggests they are an attempt to escape certain restrictive covenants that are the subject of a separate lawsuit.

Loving Care provides home-care nursing and health services. Stengart began working for Loving Care in 1994 and, over time, was promoted to Executive Director of Nursing. The company provided her with a laptop computer to conduct company business. From that laptop, Stengart could send e-mails using her company e-mail address; she could also access the Internet and visit websites through Loving Care’s server. Unbeknownst to Stengart, certain browser software in place automatically made a copy of each web page she viewed, which was then saved on the computer’s hard drive in a “cache” folder of temporary Internet files. Unless deleted and overwritten with new data, those temporary Internet files remained on the hard drive.

On several days in December 2007, Stengart used her laptop to access a personal, password-protected e-mail account on Yahoo’s website, through which she communicated with her attorney about her situation at work. She never saved her Yahoo ID or password on the company laptop.

Not long after, Stengart left her employment with Loving Care and returned the laptop. On February 7, 2008, she filed the pending complaint.

In an effort to preserve electronic evidence for discovery, in or around April 2008, Loving Care hired experts to create a forensic image of the laptop’s hard drive. Among the items retrieved were temporary Internet files containing the contents of seven or eight e-mails Stengart had exchanged with her lawyer via her Yahoo account. Stengart’s lawyers represented at oral argument that one e-mail was simply a communication he sent to her, to which she did not respond.

A legend appears at the bottom of the e-mails that Stengart’s lawyer sent. It warns readers that

THE INFORMATION CONTAINED IN THIS EMAIL COMMUNICATION IS INTENDED ONLY FOR THE PERSONAL AND CONFIDENTIAL USE OF THE DESIGNATED RECIPIENT NAMED ABOVE. This message may be an Attorney-Client communication, and as such is privileged and confidential. If the reader of this message is not the intended recipient, you are hereby notified that you have received this communication in error, and that your review, dissemination, distribution, or copying of the message is strictly prohibited. If you have received this transmission in error, please destroy this transmission and notify us immediately by telephone and/or reply email.

At least two attorneys from the law firm representing Loving Care, Sills Cummis (the “Firm”), reviewed the e-mail communications between Stengart and her attorney. The Firm did not advise opposing counsel about the e-mails until months later. In its October 21, 2008 reply to Stengart’s first set of interrogatories, the Firm stated that it had obtained certain information from “e-mail correspondence”—between Stengart and her lawyer—from Stengart’s “office computer on December 12, 2007 at 2:25 p.m.” In response, Stengart’s attorney sent a letter demanding that the Firm identify and return all “attorney-client privileged communications” in its possession. The Firm identified and disclosed the e-mails but asserted that Stengart had no reasonable expectation of privacy in files on a company-owned computer in light of the company’s policy on electronic communications.

Loving Care and its counsel relied on an Administrative and Office Staff Employee Handbook that they maintain contains the company’s Electronic Communication policy (Policy). The record contains various versions of an electronic communications policy, and Stengart contends that none applied to her as a senior company official. Loving Care disagrees. We need not resolve that dispute and assume the Policy applies in addressing the issues on appeal.

The proffered Policy states, in relevant part:

The company reserves and will exercise the right to review, audit, intercept, access, and disclose all matters on the company’s media systems and services at any time, with or without notice.

E-mail and voice mail messages, internet use and communication and computer files are considered part of the company’s business and client records. Such communications are not to be considered private or personal to any individual employee.

The principal purpose of electronic mail (e-mail) is for company business communications. Occasional personal use is permitted; however, the system should not be used to solicit for outside business ventures, charitable organizations, or for any political or religious purpose, unless authorized by the Director of Human Resources.

The Policy also specifically prohibits “certain uses of the e-mail system” including sending inappropriate sexual, discriminatory, or harassing messages, chain letters, “messages in violation of government laws,” or messages relating to job searches, business activities unrelated to Loving Care, or political activities. The Policy concludes with the following warning: “Abuse of the electronic communications system may result in disciplinary action up to and including separation of employment.”

Stengart’s attorney applied for an order to show cause seeking return of the e-mails and other relief. The trial court converted the application to a motion, which it later denied in a written opinion. The trial court concluded that the Firm did not breach the attorney-client privilege because the company’s Policy placed Stengart on sufficient notice that her e-mails would be considered company property. Stengart’s request to disqualify the Firm was therefore denied.

The Appellate Division granted Stengart’s motion for leave to appeal. The panel reversed the trial court order and directed the Firm to turn over all copies of the e-mails and delete any record of them. Assuming that the Policy applied to Stengart, the panel found that “an objective reader could reasonably conclude that not all personal emails are necessarily company property.” In other words, an employee could “retain an expectation of privacy” in personal e-mails sent on a company computer given the language of the Policy.

The panel balanced Loving Care’s right to enforce reasonable rules for the workplace against the public policies underlying the attorney-client privilege. The court rejected the notion that “ownership of the computer is the sole determinative fact” at issue and instead explained that there must be a nexus between company policies and the employer’s legitimate business interests. The panel concluded that society’s important interest in shielding communications with an attorney from disclosure outweighed the company’s interest in upholding the Policy. As a result, the panel found that the e-mails were protected by the attorney-client privilege and should be returned.

The Appellate Division also concluded that the Firm breached its obligations under RPC 4.4(b) by failing to alert Stengart’s attorneys that it possessed the e-mails before reading them. The panel remanded for a hearing to determine whether disqualification of the Firm or some other sanction was appropriate.

We granted Loving Care’s motion for leave to appeal and ordered a stay pending the outcome of this appeal.

II.

Loving Care argues that its employees have no expectation of privacy in their use of company computers based on the company’s Policy. In its briefs before this Court, the company also asserts that by accessing e-mails on a personal account through Loving Care’s computer and server, Stengart either prevented any attorney-client privilege from attaching or waived the privilege by voluntarily subjecting her e-mails to company scrutiny. Finally, Loving Care maintains that its counsel did not violate RPC 4.4(b) because the e-mails were left behind on Stengart’s company computer—not “inadvertently sent,” as per the Rule—and the Firm acted in the good faith belief that any privilege had been waived.

Stengart argues that she intended the e-mails with her lawyer to be confidential and that the Policy, even if it applied to her, failed to provide adequate warning that Loving Care would save on a hard drive, or monitor the contents of, e-mails sent from a personal account. Stengart also maintains that the communications with her lawyer were privileged. When the Firm encountered the arguably protected e-mails, Stengart contends it should have immediately returned them or sought judicial review as to whether the attorney-client privilege applied.

III.

Our analysis draws on two principal areas: the adequacy of the notice provided by the Policy and the important public policy concerns raised by the attorney-client privilege. Both inform the reasonableness of an employee’s expectation of privacy in this matter. We address each area in turn.

IV.

Under the particular circumstances presented, how should a court evaluate whether Stengart had a reasonable expectation of privacy in the e-mails she exchanged with her attorney?

V.

VI.

We next examine whether the Firm’s review and use of the privileged e-mails violated RPC 4.4(b). The Rule provides that “a lawyer who receives a document and has reasonable cause to believe that the document was inadvertently sent shall not read the document or, if he or she has begun to do so, shall stop reading the document, promptly notify the sender, and return the document to the sender.” According to the ABA Model Rules on which RPC 4.4(b) is patterned, the term “‘document’ includes e-mail or other electronic modes of transmission subject to being read or put into readable form.” Model Rules of Prof’l Conduct R. 4.4 cmt. 2 (2004).

Loving Care contends that the Rule does not apply because Stengart left the e-mails behind on her laptop and did not send them inadvertently. In actuality, the Firm retained a computer forensic expert to retrieve e-mails that were automatically saved on the laptop’s hard drive in a “cache” folder of temporary Internet files. Without Stengart’s knowledge, browser software made copies of each webpage she viewed. Under those circumstances, it is difficult to think of the e-mails as items that were simply left behind. We find that the Firm’s review of privileged e-mails between Stengart and her lawyer, and use of the contents of at least one e-mail in responding to interrogatories, fell within the ambit of RPC 4.4(b) and violated that rule.

To be clear, the Firm did not hack into plaintiff’s personal account or maliciously seek out attorney-client documents in a clandestine way. Nor did it rummage through an employee’s personal files out of idle curiosity. Instead, it legitimately attempted to preserve evidence to defend a civil lawsuit. Its error was in not setting aside the arguably privileged messages once it realized they were attorney-client communications, and failing either to notify its adversary or seek court permission before reading further. There is nothing in the record before us to suggest any bad faith on the Firm’s part in reading the Policy as it did. Nonetheless, the Firm should have promptly notified opposing counsel when it discovered the nature of the e-mails.

SCHROEDER, Chief Judge.

We took this sex discrimination case en banc in order to reaffirm our circuit law concerning appearance and grooming standards, and to clarify our evolving law of sex stereotyping claims.

The plaintiff, Darlene Jespersen, was terminated from her position as a bartender at the sports bar in Harrah’s Reno casino not long after Harrah’s began to enforce its comprehensive uniform, appearance and grooming standards for all bartenders. The standards required all bartenders, men and women, to wear the same uniform of black pants and white shirts, a bow tie, and comfortable black shoes. The standards also included grooming requirements that differed to some extent for men and women, requiring women to wear some facial makeup and not permitting men to wear any. Jespersen refused to comply with the makeup requirement and was effectively terminated for that reason.

The district court granted summary judgment to Harrah’s on the ground that the appearance and grooming policies imposed equal burdens on both men and women bartenders because, while women were required to use makeup and men were forbidden to wear makeup, women were allowed to have long hair and men were required to have their hair cut to a length above the collar. The district court also held that the policy could not run afoul of Title VII because it did not discriminate against Jespersen on the basis of the “immutable characteristics” of her sex. The district court further observed that the Supreme Court’s decision in Price Waterhouse v. Hopkins, 490 U.S. 228 (1989), prohibiting discrimination on the basis of sex stereotyping, did not apply to this case because in the district court’s view, the Ninth Circuit had excluded grooming standards from the reach of Price Waterhouse. In reaching that conclusion, the district court relied on Nichols v. Azteca Restaurant Enters., Inc., 256 F.3d 864 (9th Cir.2001) (“We do not imply that all gender-based distinctions are actionable under Title VII. For example, our decision does not imply that there is any violation of Title VII occasioned by reasonable regulations that require male and female employees to conform to different dress and grooming standards.”). The district court granted summary judgment to Harrah’s on all claims.

The three-judge panel affirmed, but on somewhat different grounds. The panel majority held that Jespersen, on this record, failed to show that the appearance policy imposed a greater burden on women than on men. It pointed to the lack of any affidavit in this record to support a claim that the burdens of the policy fell unequally on men and women. Accordingly, the panel did not agree with the district court that grooming policies could never discriminate as a matter of law. The panel also held that Price Waterhouse could apply to grooming or appearance standards only if the policy amounted to sexual harassment, which would require a showing that the employee suffered harassment for failure to conform to commonly-accepted gender stereotypes. The dissent would have denied summary judgment on both theories.

We agree with the district court and the panel majority that on this record, Jespersen has failed to present evidence sufficient to survive summary judgment on her claim that the policy imposes an unequal burden on women. With respect to sex stereotyping, we hold that appearance standards, including makeup requirements, may well be the subject of a Title VII claim for sexual stereotyping, but that on this record Jespersen has failed to create any triable issue of fact that the challenged policy was part of a policy motivated by sex stereotyping. We therefore affirm.

I. BACKGROUND

Plaintiff Darlene Jespersen worked successfully as a bartender at Harrah’s for twenty years and compiled what by all accounts was an exemplary record. During Jespersen’s entire tenure with Harrah’s, the company maintained a policy encouraging female beverage servers to wear makeup. The parties agree, however, that the policy was not enforced until 2000. In February 2000, Harrah’s implemented a “Beverage Department Image Transformation” program at twenty Harrah’s locations, including its casino in Reno. Part of the program consisted of new grooming and appearance standards, called the “Personal Best” program. The program contained certain appearance standards that applied equally to both sexes, including a standard uniform of black pants, white shirt, black vest, and black bow tie. Jespersen has never objected to any of these policies. The program also contained some sex-differentiated appearance requirements as to hair, nails, and makeup.

In April 2000, Harrah’s amended that policy to require that women wear makeup. Jespersen’s only objection here is to the makeup requirement. The amended policy provided in relevant part:

All Beverage Service Personnel, in addition to being friendly, polite, courteous and responsive to our customer’s needs, must possess the ability to physically perform the essential factors of the job as set forth in the standard job descriptions. They must be well groomed, appealing to the eye, be firm and body toned, and be comfortable with maintaining this look while wearing the specified uniform. Additional factors to be considered include, but are not limited to, hair styles, overall body contour, and degree of comfort the employee projects while wearing the uniform.

* * *

Beverage Bartenders and Barbacks will adhere to these additional guidelines:

• Overall Guidelines (applied equally to male/ female):

• Appearance: Must maintain Personal Best image portrayed at time of hire.

• Jewelry, if issued, must be worn. Otherwise, tasteful and simple jewelry is permitted; no large chokers, chains or bracelets.

• No faddish hairstyles or unnatural colors are permitted.

• Males:

• Hair must not extend below top of shirt collar. Ponytails are prohibited.

• Hands and fingernails must be clean and nails neatly trimmed at all times. No colored polish is permitted.

• Eye and facial makeup is not permitted.

• Shoes will be solid black leather or leather type with rubber (non skid) soles.

• Females:

• Hair must be teased, curled, or styled every day you work. Hair must be worn down at all times, no exceptions.

• Stockings are to be of nude or natural color consistent with employee’s skin tone. No runs.

• Nail polish can be clear, white, pink or red color only. No exotic nail art or length.

• Shoes will be solid black leather or leather type with rubber (non skid) soles.

• Make up (face powder, blush and mascara) must be worn and applied neatly in complimentary colors. Lip color must be worn at all times. (emphasis added).

Jespersen did not wear makeup on or off the job, and in her deposition stated that wearing it would conflict with her self-image. It is not disputed that she found the makeup requirement offensive, and felt so uncomfortable wearing makeup that she found it interfered with her ability to perform as a bartender. Unwilling to wear the makeup, and not qualifying for any open positions at the casino with a similar compensation scale, Jespersen left her employment with Harrah’s.

After exhausting her administrative remedies with the Equal Employment Opportunity Commission and obtaining a right to sue notification, Jespersen filed this action in July 2001. In her complaint, Jespersen sought damages as well as declaratory and injunctive relief for discrimination and retaliation for opposition to discrimination, alleging that the “Personal Best” policy discriminated against women by “(1) subjecting them to terms and conditions of employment to which men are not similarly subjected, and (2) requiring that women conform to sex-based stereotypes as a term and condition of employment.”

Harrah’s moved for summary judgment, supporting its motion with documents giving the history and purpose of the appearance and grooming policies. Harrah’s argued that the policy created similar standards for both men and women, and that where the standards differentiated on the basis of sex, as with the face and hair standards, any burdens imposed fell equally on both male and female bartenders.

In her deposition testimony, attached as a response to the motion for summary judgment, Jespersen described the personal indignity she felt as a result of attempting to comply with the makeup policy. Jespersen testified that when she wore the makeup she “felt very degraded and very demeaned.” In addition, Jespersen testified that “it prohibited her from doing her job” because “it affected her self-dignity and took away her credibility as an individual and as a person.” Jespersen made no cross-motion for summary judgment, taking the position that the case should go to the jury. Her response to Harrah’s motion for summary judgment relied solely on her own deposition testimony regarding her subjective reaction to the makeup policy, and on favorable customer feedback and employer evaluation forms regarding her work.

The record therefore does not contain any affidavit or other evidence to establish that complying with the “Personal Best” standards caused burdens to fall unequally on men or women, and there is no evidence to suggest Harrah’s motivation was to stereotype the women bartenders. Jespersen relied solely on evidence that she had been a good bartender, and that she had personal objections to complying with the policy, in order to support her argument that Harrah’s “‘sells’ and exploits its women employees.” Jespersen contended that as a matter of law she had made a prima facie showing of gender discrimination, sufficient to survive summary judgment on both of her claims.

The district court granted Harrah’s motion for summary judgment on all of Jespersen’s claims. In this appeal, Jespersen maintains that the record before the district court was sufficient to create triable issues of material fact as to her unlawful discrimination claims of unequal burdens and sex stereotyping. We deal with each in turn.

II. UNEQUAL BURDENS

In order to assert a valid Title VII claim for sex discrimination, a plaintiff must make out a prima facie case establishing that the challenged employment action was either intentionally discriminatory or that it had a discriminatory effect on the basis of gender. Once a plaintiff establishes such a prima facie case, “the burden then must shift to the employer to articulate some legitimate, nondiscriminatory reason for the employee’s rejection.”

In this case, Jespersen argues that the makeup requirement itself establishes a prima facie case of discriminatory intent and must be justified by Harrah’s as a bona fide occupational qualification. See 42 U.S.C. § 2000e-2(e)(1).(n.1 in opinion) “It shall not be an unlawful employment practice for an employer to hire and employ employees on the basis of his religion, sex, or national origin in those certain instances where religion, sex, or national origin is a bona fide occupational qualification reasonably necessary to the normal operation of that particular business or enterprise.”

Our settled law in this circuit, however, does not support Jespersen’s position that a sex-based difference in appearance standards alone, without any further showing of disparate effects, creates a prima facie case.

In Gerdom v. Cont’l Airlines, Inc., 692 F.2d 602 (9th Cir.1982), we considered the Continental Airlines policy that imposed strict weight restrictions on female flight attendants, and held it constituted a violation of Title VII. We did so because the airline imposed no weight restriction whatsoever on a class of male employees who performed the same or similar functions as the flight attendants. Indeed, the policy was touted by the airline as intended to “create the public image of an airline which offered passengers service by thin, attractive women, whom executives referred to as Continental’s ‘girls.’” In fact, Continental specifically argued that its policy was justified by its “desire to compete with other airlines by featuring attractive female cabin attendants,” a justification which this court recognized as “discriminatory on its face.” The weight restriction was part of an overall program to create a sexual image for the airline.

In contrast, this case involves an appearance policy that applied to both male and female bartenders, and was aimed at creating a professional and very similar look for all of them. All bartenders wore the same uniform. The policy only differentiated as to grooming standards.

In Frank v. United Airlines, Inc., 216 F.3d 845 (9th Cir.2000), we dealt with a weight policy that applied different standards to men and women in a facially unequal way. The women were forced to meet the requirements of a medium body frame standard while men were required to meet only the more generous requirements of a large body frame standard. In that case, we recognized that “an appearance standard that imposes different but essentially equal burdens on men and women is not disparate treatment.” The United weight policy, however, did not impose equal burdens. On its face, the policy embodied a requirement that categorically “‘applied less favorably to one gender,’” and the burdens imposed upon that gender were obvious from the policy itself.

This case stands in marked contrast, for here we deal with requirements that, on their face, are not more onerous for one gender than the other. Rather, Harrah’s “Personal Best” policy contains sex-differentiated requirements regarding each employee’s hair, hands, and face. While those individual requirements differ according to gender, none on its face places a greater burden on one gender than the other. Grooming standards that appropriately differentiate between the genders are not facially discriminatory.

We have long recognized that companies may differentiate between men and women in appearance and grooming policies, and so have other circuits. The material issue under our settled law is not whether the policies are different, but whether the policy imposed on the plaintiff creates an “unequal burden” for the plaintiff’s gender.

Not every differentiation between the sexes in a grooming and appearance policy creates a “significantly greater burden of compliance.” For example, in Fountain, this court upheld Safeway’s enforcement of its sex-differentiated appearance standard, including its requirement that male employees wear ties, because the company’s actions in enforcing the regulations were not “overly burdensome to its employees.” Similarly, as the Eighth Circuit has recognized, “where, as here, such grooming and appearance policies are reasonable and are imposed in an evenhanded manner on all employees, slight differences in the appearance requirements for males and females have only a negligible effect on employment opportunities.” Under established equal burdens analysis, when an employer’s grooming and appearance policy does not unreasonably burden one gender more than the other, that policy will not violate Title VII.

Jespersen asks us to take judicial notice of the fact that it costs more money and takes more time for a woman to comply with the makeup requirement than it takes for a man to comply with the requirement that he keep his hair short, but these are not matters appropriate for judicial notice. Judicial notice is reserved for matters “generally known within the territorial jurisdiction of the trial court” or “capable of accurate and ready determination by resort to sources whose accuracy cannot reasonably be questioned.” The time and cost of makeup and haircuts is in neither category. The facts that Jespersen would have this court judicially notice are not subject to the requisite “high degree of indisputability” generally required for such judicial notice.

Having failed to create a record establishing that the “Personal Best” policies are more burdensome for women than for men, Jespersen did not present any triable issue of fact. The district court correctly granted summary judgment on the record before it with respect to Jespersen’s claim that the makeup policy created an unequal burden for women.

III. SEX STEREOTYPING

In Price Waterhouse, the Supreme Court considered a mixed-motive discrimination case. There, the plaintiff, Ann Hopkins, was denied partnership in the national accounting firm of Price Waterhouse because some of the partners found her to be too aggressive. While some partners praised Hopkins’s “‘strong character, independence and integrity,’” others commented that she needed to take “‘a course at charm school.’” The Supreme Court determined that once a plaintiff has established that gender played “a motivating part in an employment decision, the defendant may avoid a finding of liability only by proving by a preponderance of the evidence that it would have made the same decision even if it had not taken the plaintiff’s gender into account.”

Consequently, in establishing that “gender played a motivating part in an employment decision,” a plaintiff in a Title VII case may introduce evidence that the employment decision was made in part because of a sex stereotype. According to the Court, this is because “we are beyond the day when an employer could evaluate employees by assuming or insisting that they matched the stereotype associated with their group, for ‘in forbidding employers to discriminate against individuals because of their sex, Congress intended to strike at the entire spectrum of disparate treatment of men and women resulting from sex stereotypes.’” It was therefore impermissible for Hopkins’s employer to place her in an untenable Catch-22: she needed to be aggressive and masculine to excel at her job, but was denied partnership for doing so because of her employer’s gender stereotype. Instead, Hopkins was advised to “‘walk more femininely, talk more femininely, dress more femininely, wear make up, have her hair styled, and wear jewelry.’”

The stereotyping in Price Waterhouse interfered with Hopkins’ ability to perform her work; the advice that she should take “a course at charm school” was intended to discourage her use of the forceful and aggressive techniques that made her successful in the first place. Impermissible sex stereotyping was clear because the very traits that she was asked to hide were the same traits considered praiseworthy in men.

Harrah’s “Personal Best” policy is very different. The policy does not single out Jespersen. It applies to all of the bartenders, male and female. It requires all of the bartenders to wear exactly the same uniforms while interacting with the public in the context of the entertainment industry. It is for the most part unisex, from the black tie to the non-skid shoes. There is no evidence in this record to indicate that the policy was adopted to make women bartenders conform to a commonly-accepted stereotypical image of what women should wear. The record contains nothing to suggest the grooming standards would objectively inhibit a woman’s ability to do the job. The only evidence in the record to support the stereotyping claim is Jespersen’s own subjective reaction to the makeup requirement.

Judge Pregerson’s dissent improperly divides the grooming policy into separate categories of hair, hands, and face, and then focuses exclusively on the makeup requirement to conclude that the policy constitutes sex stereotyping. This parsing, however, conflicts with established grooming standards analysis. The requirements must be viewed in the context of the overall policy. The dissent’s conclusion that the unequal burdens analysis allows impermissible sex stereotyping to persist if imposed equally on both sexes, is wrong because it ignores the protections of Price Waterhouse our decision preserves. If a grooming standard imposed on either sex amounts to impermissible stereotyping, something this record does not establish, a plaintiff of either sex may challenge that requirement under Price Waterhouse.

We respect Jespersen’s resolve to be true to herself and to the image that she wishes to project to the world. We cannot agree, however, that her objection to the makeup requirement, without more, can give rise to a claim of sex stereotyping under Title VII. If we were to do so, we would come perilously close to holding that every grooming, apparel, or appearance requirement that an individual finds personally offensive, or in conflict with his or her own self-image, can create a triable issue of sex discrimination.

This is not a case where the dress or appearance requirement is intended to be sexually provocative, and tending to stereotype women as sex objects. In EEOC v. Sage Realty Corp., 507 F.Supp. 599 (S.D.N.Y.1981), the plaintiff was a lobby attendant in a hotel that employed only female lobby attendants and required a mandatory uniform. The uniform was an octagon designed with an opening for the attendant’s head, to be worn as a poncho, with snaps at the wrists and a tack on each side of the poncho, which was otherwise open. The attendants wore blue dancer pants as part of the uniform but were prohibited from wearing a shirt, blouse, or skirt under the outfit. There, the plaintiff was required to wear a uniform that was “short and revealing on both sides such that her thighs and portions of her buttocks were exposed.” Jespersen, in contrast, was asked only to wear a unisex uniform that covered her entire body and was designed for men and women. The “Personal Best” policy does not, on its face, indicate any discriminatory or sexually stereotypical intent on the part of Harrah’s.

Nor is this a case of sexual harassment. Following Price Waterhouse, our court has held that sexual harassment of an employee because of that employee’s failure to conform to commonly-accepted gender stereotypes is sex discrimination in violation of Title VII. In Nichols, a male waiter was systematically abused for failing to act “as a man should act,” for walking and carrying his tray “like a woman,” and was derided for not having sexual intercourse with a female waitress who was his friend. Applying Price Waterhouse, our court concluded that this harassment was actionable discrimination because of the plaintiff’s sex. In Rene, the homosexual plaintiff stated a Title VII sex stereotyping claim because he endured assaults “of a sexual nature” when Rene’s co-workers forced him to look at homosexual pornography, gave him sexually-oriented “joke” gifts and harassed him for behavior that did not conform to commonly-accepted male stereotypes. Nichols and Rene are not grooming standards cases, but provide the framework for this court’s analysis of when sex stereotyping rises to the level of sex discrimination for Title VII purposes. Unlike the situation in both Rene and Nichols, Harrah’s actions have not condoned or subjected Jespersen to any form of alleged harassment. It is not alleged that the “Personal Best” policy created a hostile work environment.

Nor is there evidence in this record that Harrah’s treated Jespersen any differently than it treated any other bartender, male or female, who did not comply with the written grooming standards applicable to all bartenders. Jespersen’s claim here materially differs from Hopkins’ claim in Price Waterhouse because Harrah’s grooming standards do not require Jespersen to conform to a stereotypical image that would objectively impede her ability to perform her job requirements as a bartender.

We emphasize that we do not preclude, as a matter of law, a claim of sex-stereotyping on the basis of dress or appearance codes. Others may well be filed, and any bases for such claims refined as law in this area evolves. This record, however, is devoid of any basis for permitting this particular claim to go forward, as it is limited to the subjective reaction of a single employee, and there is no evidence of a stereotypical motivation on the part of the employer. This case is essentially a challenge to one small part of what is an overall apparel, appearance, and grooming policy that applies largely the same requirements to both men and women. As we said in Nichols, in commenting on grooming standards, the touch-stone is reasonableness. A makeup requirement must be seen in the context of the overall standards imposed on employees in a given workplace.

PREGERSON, Circuit Judge, with whom Judges KOZINSKI, GRABER, and W. FLETCHER join, dissenting:

I agree with the majority that appearance standards and grooming policies may be subject to Title VII claims. I also agree with the majority that a Title VII plaintiff challenging appearance standards or grooming policies may “make out a prima facie case by establishing that the challenged employment action was either intentionally discriminatory or that it had a discriminatory effect on the basis of gender.” Maj. Op. at 1108 (emphasis added). In other words, I agree with the majority that a Title VII plaintiff may make out a prima facie case by showing that the challenged policy either was motivated in part “because of a sex stereotype,” Maj. Op. at 1111, or “creates an ‘unequal burden’ for the plaintiff’s gender,” Maj. Op. at 1110. Finally, I agree with the majority that Jespersen failed to introduce sufficient evidence to establish that Harrah’s “Personal Best” program created an undue burden on Harrah’s female bartenders. I part ways with the majority, however, inasmuch as I believe that the “Personal Best” program was part of a policy motivated by sex stereotyping and that Jespersen’s termination for failing to comply with the program’s requirements was “because of” her sex. Accordingly, I dissent from Part III of the majority opinion and from the judgment of the court.

The majority contends that it is bound to reject Jespersen’s sex stereotyping claim because she presented too little evidence —only her “own subjective reaction to the makeup requirement.” I disagree. Jespersen’s evidence showed that Harrah’s fired her because she did not comply with a grooming policy that imposed a facial uniform (full makeup) on only female bartenders. Harrah’s stringent “Personal Best” policy required female beverage servers to wear foundation, blush, mascara, and lip color, and to ensure that lip color was on at all times. Jespersen and her female colleagues were required to meet with professional image consultants who in turn created a facial template for each woman. Jespersen was required not simply to wear makeup; in addition, the consultants dictated where and how the makeup had to be applied.

Quite simply, her termination for failing to comply with a grooming policy that imposed a facial uniform on only female bartenders is discrimination “because of” sex. Such discrimination is clearly and unambiguously impermissible under Title VII, which requires that “gender must be irrelevant to employment decisions.”

Notwithstanding Jespersen’s failure to present additional evidence, little is required to make out a sex-stereotyping—as distinct from an undue burden—claim in this situation. In Price Waterhouse, the Supreme Court held that an employer may not condition employment on an employee’s conformance to a sex stereotype associated with their gender. As the majority recognizes, Price Waterhouse allows a Title VII plaintiff to “introduce evidence that the employment decision was made in part because of a sex stereotype.” It is not entirely clear exactly what this evidence must be, but nothing in Price Waterhouse suggests that a certain type or quantity of evidence is required to prove a prima facie case of discrimination.

Moreover, Price Waterhouse recognizes that gender discrimination may manifest itself in stereotypical notions as to how women should dress and present themselves, not only as to how they should behave.

Hopkins, the Price Waterhouse plaintiff, offered individualized evidence, describing events in which she was subjected to discriminatory remarks. However, the Court did not state that such evidence was required. To the contrary, the Court noted that

By focusing on Hopkins’ specific proof we do not suggest a limitation on the possible ways of proving that stereotyping played a motivating role in an employment decision, and we refrain from deciding here which specific facts, ‘standing alone,’ would or would not establish a plaintiff’s case, since such a decision is unnecessary in this case.

The fact that Harrah’s required female bartenders to conform to a sex stereotype by wearing full makeup while working is not in dispute, and the policy is described at length in the majority opinion. This policy did not, as the majority suggests, impose a “grooming, apparel, or appearance requirement that an individual finds personally offensive,” but rather one that treated Jespersen differently from male bartenders “because of” her sex. I believe that the fact that Harrah’s designed and promoted a policy that required women to conform to a sex stereotype by wearing full makeup is sufficient “direct evidence” of discrimination.

The majority contends that Harrah’s “Personal Best” appearance policy is very different from the policy at issue in Price Waterhouse in that it applies to both men and women. I disagree. As the majority concedes, “Harrah’s ‘Personal Best’ policy contains sex-differentiated requirements regarding each employee’s hair, hands, and face.” The fact that a policy contains sex-differentiated requirements that affect people of both genders cannot excuse a particular requirement from scrutiny. By refusing to consider the makeup requirement separately, and instead stressing that the policy contained some gender-neutral requirements, such as color of clothing, as well as a variety of gender-differentiated requirements for “hair, hands, and face,” the majority’s approach would permit otherwise impermissible gender stereotypes to be neutralized by the presence of a stereotype or burden that affects people of the opposite gender, or by some separate non-discriminatory requirement that applies to both men and women. By this logic, it might well have been permissible in Frank v. United Airlines, Inc. to require women, but not men, to meet a medium body frame standard if that requirement were imposed as part of a “physical appearance” policy that also required men, but not women, to achieve a certain degree of upper body muscle definition. But the fact that employees of both genders are subjected to gender-specific requirements does not necessarily mean that particular requirements are not motivated by gender stereotyping.

Because I believe that we should be careful not to insulate appearance requirements by viewing them in broad categories, such as “hair, hands, and face,” I would consider the makeup requirement on its own terms. Viewed in isolation—or, at the very least, as part of a narrower category of requirements affecting employees’ faces—the makeup or facial uniform requirement becomes closely analogous to the uniform policy held to constitute impermissible sex stereotyping in Carroll v. Talman Federal Savings & Loan Ass’n of Chicago, 604 F.2d 1028 (7th Cir. 1979). In Carroll, the defendant bank required women to wear employer-issued uniforms, but permitted men to wear business attire of their own choosing. The Seventh Circuit found this rule discriminatory because it suggested to the public that the uniformed women held a “lesser professional status” and that women could not be trusted to choose appropriate business attire.

Just as the bank in Carroll deemed female employees incapable of achieving a professional appearance without assigned uniforms, Harrah’s regarded women as unable to achieve a neat, attractive, and professional appearance without the facial uniform designed by a consultant and required by Harrah’s. The inescapable message is that women’s undoctored faces compare unfavorably to men’s, not because of a physical difference between men’s and women’s faces, but because of a cultural assumption—and gender-based stereotype—that women’s faces are incomplete, unattractive, or unprofessional without full makeup. We need not denounce all makeup as inherently offensive, just as there was no need to denounce all uniforms as inherently offensive in Carroll, to conclude that requiring female bartenders to wear full makeup is an impermissible sex stereotype and is evidence of discrimination because of sex. Therefore, I strongly disagree with the majority’s conclusion that there “is no evidence in this record to indicate that the policy was adopted to make women bartenders conform to a commonly-accepted stereotypical image of what women should wear.” Maj. Op. at 1112.

I believe that Jespersen articulated a classic case of Price Waterhouse discrimination and presented undisputed, material facts sufficient to avoid summary judgment. Accordingly, Jespersen should be allowed to present her case to a jury. Therefore, I respectfully dissent.

KOZINSKI, Circuit Judge, with whom Judges GRABER and W. FLETCHER join, dissenting:

I agree with Judge Pregerson and join his dissent—subject to one caveat: I believe that Jespersen also presented a triable issue of fact on the question of disparate burden.

The majority is right that “the makeup requirements must be viewed in the context of the overall policy.” But I find it perfectly clear that Harrah’s overall grooming policy is substantially more burdensome for women than for men. Every requirement that forces men to spend time or money on their appearance has a corresponding requirement that is as, or more, burdensome for women: short hair v. “teased, curled, or styled” hair; clean trimmed nails v. nail length and color requirements; black leather shoes v. black leather shoes. The requirement that women spend time and money applying full facial makeup has no corresponding requirement for men, making the “overall policy” more burdensome for the former than for the latter. The only question is how much.

It is true that Jespersen failed to present evidence about what it costs to buy makeup and how long it takes to apply it. But is there any doubt that putting on makeup costs money and takes time? Harrah’s policy requires women to apply face powder, blush, mascara and lipstick. You don’t need an expert witness to figure out that such items don’t grow on trees.

Nor is there any rational doubt that application of makeup is an intricate and painstaking process that requires considerable time and care. Even those of us who don’t wear makeup know how long it can take from the hundreds of hours we’ve spent over the years frantically tapping our toes and pointing to our wrists. It’s hard to imagine that a woman could “put on her face,” as they say, in the time it would take a man to shave—certainly not if she were to do the careful and thorough job Harrah’s expects. Makeup, moreover, must be applied and removed every day; the policy burdens men with no such daily ritual. While a man could jog to the casino, slip into his uniform, and get right to work, a woman must travel to work so as to avoid smearing her makeup, or arrive early to put on her makeup there.

It might have been tidier if Jespersen had introduced evidence as to the time and cost associated with complying with the makeup requirement, but I can understand her failure to do so, as these hardly seem like questions reasonably subject to dispute. We could—and should—take judicial notice of these incontrovertible facts.

Alternatively, Jespersen did introduce evidence that she finds it burdensome to wear makeup because doing so is inconsistent with her self-image and interferes with her job performance. My colleagues dismiss this evidence, apparently on the ground that wearing makeup does not, as a matter of law, constitute a substantial burden. This presupposes that Jespersen is unreasonable or idiosyncratic in her discomfort. Why so? Whether to wear cosmetics—literally, the face one presents to the world—is an intensely personal choice. Makeup, moreover, touches delicate parts of the anatomy—the lips, the eyes, the cheeks—and can cause serious discomfort, sometimes even allergic reactions, for someone unaccustomed to wearing it. If you are used to wearing makeup—as most American women are—this may seem like no big deal. But those of us not used to wearing makeup would find a requirement that we do so highly intrusive. Imagine, for example, a rule that all judges wear face powder, blush, mascara and lipstick while on the bench. Like Jespersen, I would find such a regime burdensome and demeaning; it would interfere with my job performance. I suspect many of my colleagues would feel the same way.

Everyone accepts this as a reasonable reaction from a man, but why should it be different for a woman? It is not because of anatomical differences, such as a requirement that women wear bathing suits that cover their breasts. Women’s faces, just like those of men, can be perfectly presentable without makeup; it is a cultural artifact that most women raised in the United States learn to put on—and presumably enjoy wearing—cosmetics. But cultural norms change; not so long ago a man wearing an earring was a gypsy, a pirate or an oddity. Today, a man wearing body piercing jewelry is hardly noticed. So, too, a large (and perhaps growing) number of women choose to present themselves to the world without makeup. I see no justification for forcing them to conform to Harrah’s quaint notion of what a “real woman” looks like.

Nor do I think it appropriate for a court to dismiss a woman’s testimony that she finds wearing makeup degrading and intrusive, as Jespersen clearly does. Not only do we have her sworn statement to that effect, but there can be no doubt about her sincerity or the intensity of her feelings: She quit her job—a job she performed well for two decades—rather than put on the makeup. That is a choice her male colleagues were not forced to make. To me, this states a case of disparate burden, and I would let a jury decide whether an employer can force a woman to make this choice.

Finally, I note with dismay the employer’s decision to let go a valued, experienced employee who had gained accolades from her customers, over what, in the end, is a trivial matter. Quality employees are difficult to find in any industry and I would think an employer would long hesitate before forcing a loyal, long-time employee to quit over an honest and heartfelt difference of opinion about a matter of personal significance to her. Having won the legal battle, I hope that Harrah’s will now do the generous and decent thing by offering Jespersen her job back, and letting her give it her personal best—without the makeup.

LIPEZ, Circuit Judge.

Kimberly Cloutier alleges that her employer, Costco Wholesale Corp. (Costco), failed to offer her a reasonable accommodation after she alerted it to a conflict between the “no facial jewelry” provision of its dress code and her religious practice as a member of the Church of Body Modification. She argues that this failure amounts to religious discrimination in violation of Title VII, 42 U.S.C. § 2000e-2(a), and the corresponding Massachusetts statute. The district court granted summary judgment for Costco, concluding that Costco reasonably accommodated Cloutier by offering to reinstate her if she either covered her facial piercing with a band-aid or replaced it with a clear retainer. We affirm the grant of summary judgment, but on a different basis. We hold that Costco had no duty to accommodate Cloutier because it could not do so without undue hardship.

I.

Kimberly Cloutier began working at Costco’s West Springfield, Massachusetts store in July 1997. Before her first day of work, Cloutier received a copy of the Costco employment agreement, which included the employee dress code. When she was hired, Cloutier had multiple earrings and four tattoos, but no facial piercings.

Cloutier moved from her position as a front-end assistant to the deli department in September 1997. In 1998, Costco revised its dress code to prohibit food handlers, including deli employees, from wearing any jewelry. Cloutier’s supervisor instructed her to remove her earrings pursuant to the revised code, but Cloutier refused. Instead, she requested to transfer to a front-end position where she would be permitted to continue wearing her jewelry. Cloutier did not indicate at the time that her insistence on wearing her earrings was based on a religious or spiritual belief.

Costco approved Cloutier’s transfer back to a front-end position in June 1998, and promoted her to cashier soon thereafter. Over the ensuing two years, she engaged in various forms of body modification including facial piercing and cutting. Although these practices were meaningful to Cloutier, they were not motivated by a religious belief.

In March 2001, Costco further revised its dress code to prohibit all facial jewelry, aside from earrings, and disseminated the modified code to its employees. Cloutier did not challenge the dress code or seek an accommodation, but rather continued uneventfully to wear her eyebrow piercing for several months.

Costco began enforcing its no-facial-jewelry policy in June 2001. On June 25, 2001, front-end supervisors Todd Cunningham and Michele Callaghan informed Cloutier and another employee, Jennifer Theriaque, that they would have to remove their facial piercings. Cloutier and Theriaque did not comply, returning to work the following day still wearing their piercings. When Callaghan reiterated the no-facial-jewelry policy, Cloutier indicated for the first time that she was a member of the Church of Body Modification (CBM), and that her eyebrow piercing was part of her religion.

The CBM was established in 1999 and counts approximately 1000 members who participate in such practices as piercing, tattooing, branding, cutting, and body manipulation. Among the goals espoused in the CBM’s mission statement are for its members to “grow as individuals through body modification and its teachings,” to “promote growth in mind, body and spirit,” and to be “confident role models in learning, teaching, and displaying body modification.” The church’s website, apparently its primary mode for reaching its adherents, did not state that members’ body modifications had to be visible at all times or that temporarily removing body modifications would violate a religious tenet. Still, Cloutier interprets the call to be a confident role model as requiring that her piercings be visible at all times and precluding her from removing or covering her facial jewelry. She does not extend this reasoning to the tattoos on her upper arms, which were covered at work by her shirt.

After reviewing information that Cloutier provided from the CBM website, Callaghan’s supervisor, Andrew Mulik, instructed Cloutier and Theriaque to remove their facial jewelry. They refused. The following day, Cloutier filed a religious discrimination complaint with the Equal Employment Opportunity Commission (EEOC), which is empowered to enforce Title VII.

When Cloutier returned to work for her next shift on June 29, 2001, she was still wearing her facial jewelry. She met with Mark Shevchuk, the store manager, about her membership in the CBM and the EEOC complaint. During the course of the meeting, Cloutier suggested that she be allowed to cover her eyebrow piercing with a flesh-colored band-aid. Shevchuk rejected the suggestion and told Cloutier that she had to remove the piercing or go home. She left.

Theriaque also returned to work wearing her facial jewelry on June 29, 2001 and was reminded of the dress code. She asked whether she could wear clear plastic retainers in place of her jewelry to prevent the piercings from closing. The parties disagree as to whether Costco accepted this arrangement immediately or after several weeks of consideration. For purposes of our summary judgment analysis, we accept Cloutier’s contention that Theriaque wore the retainers to work for several weeks unnoticed before Costco gave her permission to do so.

Although Cloutier learned during the week of July 2, 2001 that Theriaque had returned to work with retainers, she chose to wait for her EEOC complaint to be resolved rather than following suit. During the week of July 7, 2001, Cloutier inquired of her superiors whether she could use vacation time to cover her absences and was told that she had been suspended. The following week, on July 14, Cloutier received notice in the mail that she had been terminated for her unexcused absences resulting from noncompliance with the dress code. She claims that this was her first notice that Costco had decided not to grant her request for an accommodation that would reconcile the dress code with her religious requirement of displaying her facial jewelry at all times.

The parties remained in contact after Cloutier’s termination through the EEOC mediation process. During a meeting on August 10, 2001, Costco offered to let Cloutier return to work wearing either plastic retainers or a band-aid over her jewelry (the same accommodation that Cloutier had suggested prior to her termination). Shevchuk repeated the offer in a letter dated August 29, 2001, asking Cloutier to respond by September 6, 2001.

Although there is some dispute as to whether Cloutier attempted to respond to Costco’s offer before the deadline, she now maintains that neither of the proffered accommodations would be adequate because the CBM’s tenets, as she interprets them, require her to display all of her facial piercings at all times. Replacing her eyebrow piercing with a plastic retainer or covering it with a band-aid would thus contradict her religious convictions. Cloutier asserts that the only reasonable accommodation would be to excuse her from Costco’s dress code, allowing her to wear her facial jewelry to work. Costco responds that this accommodation would interfere with its ability to maintain a professional appearance and would thereby create an undue hardship for its business.

The EEOC determined in May 2002 that Costco’s actions violated Title VII of the Civil Rights Act of 1964. It found that Cloutier’s refusal to remove her facial jewelry was “religiously based as defined by the EEOC,” that Costco did not allow her to wear her facial jewelry at work, and that there was no evidence that allowing her to wear the jewelry would have constituted an undue hardship. Based on this determination, Cloutier filed a suit against Costco in federal district court in August 2002 alleging a Title VII violation. She amended the complaint four months later, adding state law claims for religious discrimination and violation of her civil rights.

The district court granted Costco’s motion to dismiss Cloutier’s state civil rights claim but allowed the federal and state discrimination claims to proceed. Costco then moved for summary judgment on the discrimination claims.

In ruling on that motion, the court applied the two-part framework set forth in EEOC v. Unión Independiente de la Autoridad de Acueductos y Alcantarillados de Puerto Rico, 279 F.3d 49 (1st Cir.2002). First, the court evaluated Cloutier’s prima facie case, which required her to show that (1) a bona fide religious practice conflicted with an employment requirement, (2) she brought the practice to Costco’s attention, and (3) the religious practice was the basis for the termination. The court expressed serious doubts as to whether Cloutier’s claim was based on a “bona fide religious practice” for purposes of the first element, noting that even assuming arguendo that the CBM is a bona fide religion, it “in no way requires a display of facial piercings at all times. The requirement that she display her piercings, open and always, represents the plaintiff’s personal interpretation of the stringency of her beliefs.” The court also questioned the sincerity of Cloutier’s personal interpretation, given that she initially offered to cover her piercing with a band-aid, an alternative that she now claims would violate her religion.

The court ultimately avoided ruling on whether the CBM is a religion or whether Cloutier’s interpretation of the CBM tenets is protected by Title VII. Instead, the court concluded that even if Cloutier had met her prima facie case, Costco should prevail because it fulfilled its obligations under the second part of the Title VII framework. Specifically, the court found that Costco met its burden of showing that it had offered Cloutier a reasonable accommodation of her religious practice:

Costco’s offer of accommodation was manifestly reasonable as a matter of law. The temporary covering of plaintiff’s facial piercings during working hours impinges on plaintiff’s religious scruples no more than the wearing of a blouse, which covers plaintiff’s tattoos. The alternative of a clear plastic retainer does not even require plaintiff to cover her piercings. Neither of these alternative accommodations will compel plaintiff to violate any of the established tenets of the CBM.

In granting summary judgment on the Title VII claim, the court stressed that “the search for a reasonable accommodation goes both ways. Although the employer is required under Title VII to accommodate an employee’s religious beliefs, the employee has a duty to cooperate with the employer’s good faith efforts to accommodate.” The court also noted that Title VII does not require Costco to grant Cloutier’s preferred accommodation, but merely a reasonable one. While Costco’s suggested accommodation balanced Cloutier’s beliefs with its interest in presenting a professional appearance, Cloutier “offered no accommodation whatsoever.”

Having resolved the federal claim, the court turned to Cloutier’s state law claim under Mass. Gen. Laws ch. 151B § 4(1A), which has been interpreted largely to mirror Title VII. The statute prevents employers from imposing a condition of employment which “would require an employee to violate, or forego the practice of, his creed or religion as required by that creed or religion.” “Creed or religion” is defined as “any sincerely held religious beliefs, without regard to whether such beliefs are approved, espoused, prescribed or required by an established church or other religious institution or organization.” The employee bears the burden of proof in establishing that something is a practice of his creed or religion. Under this examination, “inquiry as to whether an employee’s belief is sincere is constitutionally appropriate.” Where the employee demonstrates that a conflict exists, the burden shifts to the employer, who must prove that it offered the employee a “reasonable accommodation,” defined as one that “shall not cause undue hardship in the conduct of the employer’s business.”

Under the foregoing framework, the district court concluded that summary judgment for Costco was appropriate. Although it noted the possibility that the state statute “casts a broader net than Title VII in covering purely personal beliefs that may be entitled to protection from discrimination,” the court relied on its previous finding that Costco’s offer to let Cloutier return to work wearing a band-aid or plastic retainer was “reasonable as a matter of law.”

Cloutier now appeals, arguing that the court erred in finding no violation of Title VII or state law and that disputed material facts made summary judgment inappropriate.

II.

On appeal, Cloutier vigorously asserts that her insistence on displaying all her facial jewelry at all times is the result of a sincerely held religious belief. Determining whether a belief is religious is “more often than not a difficult and delicate task,” one to which the courts are ill-suited. Fortunately, as the district court noted, there is no need for us to delve into this thorny question in the present case. Even assuming, arguendo, that Cloutier established her prima facie case, the facts here do not support a finding of impermissible religious discrimination.

We find dispositive that the only accommodation Cloutier considers reasonable, a blanket exemption from the no-facial-jewelry policy, would impose an undue hardship on Costco. In such a situation, an employer has no obligation to offer an accommodation before taking an adverse employment action.

MARTIN, Judge.

Plaintiffs assert error with respect to the entry of summary judgment dismissing each of their multiple claims. For the reasons which follow, we conclude that April Cornatzer is entitled to a trial upon two of the three claims which she asserts. However, with respect to her claim for wrongful discharge from employment and to each of the claims of Marlene Hogan and Sonya Mitchell, we affirm the judgment of the trial court.

II

The first issue raised by each of the plaintiffs involves the entry of summary judgment dismissing her claim for intentional infliction of emotional distress. Each plaintiff contends that her forecast of evidence is sufficient to raise genuine issues of material fact with respect to her claim sufficient to survive summary judgment.

The tort of intentional infliction of mental or emotional distress was formally recognized in North Carolina by the decision of our Supreme Court in Stanback v. Stanback, 297 N.C. 181 (1979). The claim exists “when a defendant’s ‘conduct exceeds all bounds usually tolerated by decent society’ and the conduct ‘causes mental distress of a very serious kind.’” The elements of the tort consist of: (1) extreme and outrageous conduct, (2) which is intended to cause and does cause (3) severe emotional distress.

The tort may also exist where defendant’s actions indicate a reckless indifference to the likelihood that they will cause severe emotional distress. Recovery may be had for the emotional distress so caused and for any other bodily harm which proximately results from the distress itself.

III

BY CHAIRMAN MCFERRAN AND MEMBERS KAPLAN, WILCOX, AND PROUTY

Today, after previously issuing a notice and invitation for briefing, we adopt a new legal standard to decide whether an employer’s work rule that does not expressly restrict employees’ protected concerted activity under Section 7 of the National Labor Relations Act (Act) is facially unlawful under Section 8(a)(1) of the Act. Here, an administrative law judge found that the Respondent violated Section 8(a)(1) by maintaining certain rules for its employees that addressed personal conduct, conflicts of interest, and confidentiality of harassment complaints. In making those findings, the judge applied the standard established by a divided Board in Boeing Co., 365 NLRB No. 154 (2017), which sua sponte reversed the standard announced in Lutheran Heritage Village-Livonia, 343 NLRB 646 (2004).

Given the ubiquity of work rules and the importance of ensuring that such rules do not operate to undermine employees’ exercise of their rights under the Act, we sought public input on the standard adopted in Boeing, then purportedly clarified in LA Specialty Produce Co., 368 NLRB No. 93 (2019), and applied in subsequent cases where the Board found that several types of work rules were categorically lawful for employers to maintain, essentially without regard to how the particular rules were drafted.

Accordingly, we invited the parties and interested amici to address the following questions:

1. Should the Board continue to adhere to the standard adopted in Boeing Co. and revised in LA Specialty Produce Co.?

2. In what respects, if any, should the Board modify existing law addressing the maintenance of employer work rules to better ensure that:

   1. the Board interprets work rules in a way that accounts for the economic dependence of employees on their employers and the related potential for a work rule to chill the exercise of Section 7 rights by employees;

   2. the Board properly allocates the burden of proof in cases challenging an employer’s maintenance of a work rule under Section 8(a)(1); and

   3. the Board appropriately balances employees’ rights under Section 7 and employers’ legitimate business interests?

3. Should the Board continue to hold that certain categories of work rules– such as investigative-confidentiality rules, non-disparagement rules, and rules prohibiting outside employment–are always lawful to maintain?

Having carefully considered the briefs of the parties and amici, as well as the Board’s past experiences regarding these issues and the view of our dissenting colleague, we have decided to adopt an approach to assessing facial challenges to employer work rules under Section 8(a)(1) that builds on and revises the Lutheran Heritage standard. As we will explain, the primary problem with the standard from Boeing and LA Specialty Produce is that it permits employers to adopt overbroad work rules that chill employees’ exercise of their rights under Section 7 of the Act, which include the “right to self-organization, to form, join, or assist labor organizations, to bargain collectively . . ., and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection.” 29 U.S.C. § 157. To begin, the current standard fails to account for the economic dependency of employees on their employers. Because employees are typically (and understandably) anxious to avoid discharge or discipline, they are reasonably inclined both to construe an ambiguous work rule to prohibit statutorily protected activities and to avoid the risk of violating the rule by engaging in such activity. In turn, Boeing gives too little weight to the burden a work rule could impose on employees’ Section 7 rights. At the same time, Boeing’s purported balancing test gives too much weight to employer interests. Crucially, Boeing also condones overbroad work rules by not requiring the party drafting the work rules–the employer–to narrowly tailor its rules to only promote its legitimate and substantial business interests while avoiding burdening employee rights.

The standard we adopt today remedies these fundamental defects. We adopt a modified version of the basic framework set forth in Lutheran Heritage, which recognized that overbroad workplace rules and polices may chill employees in the exercise of their Section 7 rights and properly focused the Board’s inquiry on NLRA-protected rights. During the 13 years when the Lutheran Heritage standard was in place, reviewing courts repeatedly and uncontroversially applied and upheld the standard. No court rejected the Lutheran Heritage standard or held that the Board was, in fact, applying some standard other than the one it articulated. However, although Lutheran Heritage implicitly allowed the Board to evaluate employer interests when considering whether a particular rule was unlawfully overbroad, the standard itself did not clearly address how employer interests factored into the Board’s analysis. The modified standard we adopt today makes explicit that an employer can rebut the presumption that a rule is unlawful by proving that it advances legitimate and substantial business interests that cannot be achieved by a more narrowly tailored rule. Because we overrule Boeing, LA Specialty Produce, and the work rules cases relying on them, including those that placed rules into an “always lawful” category based simply on their subject matter, we reject Boeing’s categorical approach, instead returning to a particularized analysis of specific rules, their language, and the employer interests actually invoked to justify them.

As under Lutheran Heritage, our standard requires the General Counsel to prove that a challenged rule has a reasonable tendency to chill employees from exercising their Section 7 rights. We clarify that the Board will interpret the rule from the perspective of an employee who is subject to the rule and economically dependent on the employer, and who also contemplates engaging in protected concerted activity. Consistent with this perspective, the employer’s intent in maintaining a rule is immaterial. Rather, if an employee could reasonably interpret the rule to have a coercive meaning, the General Counsel will carry her burden, even if a contrary, noncoercive interpretation of the rule is also reasonable. If the General Counsel carries her burden, the rule is presumptively unlawful, but the employer may rebut that presumption by proving that the rule advances a legitimate and substantial business interest and that the employer is unable to advance that interest with a more narrowly tailored rule. If the employer proves its defense, then the work rule will be found lawful to maintain.

I.

Applying Section 8(a)(1) of the Act, the Board has long and consistently recognized that an employer’s mere maintenance of a work rule may unlawfully interfere with, restrain, or coerce employees in the exercise of their Section 7 rights. The Supreme Court long ago confirmed the Board’s authority to regulate employer work rules, as part of the flexibility the Board requires “to accomplish the dominant purpose” of the Act: to protect “the right of employees to organize for mutual aid without employer interference.” Because overbroad and ambiguous work rules may have a coercive effect on employees, the Board and courts have long acknowledged that the regulation of work rules “serves an important prophylactic function: it allows the Board to block rules that might chill the exercise of employees’ rights by cowing the employees into inaction, rather than forcing the Board to ‘wait until that chill is manifest,’ and then try to ‘undertake the difficult task of dispelling it.”’

In its decisions carrying out this important function, the Board has grappled with two interrelated issues. The first has been determining the appropriate interpretive principles to apply in evaluating the potentially deleterious impact of a work rule on employees’ exercise of their Section 7 rights. In doing so, the Board regularly has assessed work rules to determine “the reasonably foreseeable effects of the wording of the rule on the conduct of the employees,” observing that “where the language is ambiguous and may be misinterpreted by the employees in such a way as to cause them to refrain from exercising their statutory rights, then the rule is invalid even if interpreted lawfully by the employer in practice.” The second issue for the Board has been determining how to ensure that the rule minimizes any potential impact on employee rights, notwithstanding the legitimate business interests that the employer may be trying to advance by maintaining its rule.

Over the past nearly 25 years, the Board has attempted to articulate and consistently apply a generally applicable test under Section 8(a)(1) for assessing facial challenges to work rules. For almost half that time, the Lutheran Heritage standard provided the interpretive principles relevant to assessing the impact of a given rule on employees’ rights. We detail the Board’s recent history below with an eye toward explaining why a modified version of the Lutheran Heritage standard is the best approach to evaluating facial challenges to work rules in light of the Board’s experience and long-established statutory principles. Our decision today does not disturb the Board’s long-established doctrines covering work rules that address union (or other protected) solicitation, distribution, or insignia. Consistent with the Board’s decisions in both Lutheran Heritage and Boeing, we preserve Board precedent in those areas.

II.

Having considered the valuable perspectives of the parties and amici, as well as the Board’s past experience and the views of our dissenting colleague, we have decided the better approach is a modified version of the framework set forth in Lutheran Heritage for evaluating facial challenges to employer work rules that do not explicitly restrict Section 7 activity by employees and were not promulgated in response to such activity, as clarified herein. As explained, the key issues presented are: (1) defining the interpretive principles to apply to discern when work rules have a reasonable tendency to chill employees’ exercise of their statutory rights and (2) working out the proper adjustment between protecting employee rights and accommodating employers’ legitimate and substantial business interests in maintaining their rules. Although Lafayette Park and Lutheran Heritage established the Board’s proper interpretive focus–the perspective of a reasonable employee subject to the rule–they did not sufficiently (or clearly) articulate how employers’ interests fit into the analysis. While Boeing and LA Specialty Produce, in turn, appropriately recognized that employer interests should factor into the Board’s analysis, they adopted interpretive principles that failed to reflect the true coercive potential of work rules. In addition, those decisions gave too little weight to employees’ Section 7 rights and too much weight to employer interests, in particular by failing to require employers to narrowly tailor their work rules to minimize as much as reasonably possible, if not altogether eliminate, any infringement of employee rights.

The approach we adopt today seeks to preserve the insights of the Board’s prior decisions while addressing their shortcomings. Given the wide range of work rules, the varying language they use, and the many different employment contexts in which they arise, we do not expect our new standard to provide complete certainty and predictability in this area of the law. That abstract goal–as the Board’s experience under Boeing suggests–could be achieved only by arbitrarily expanding the universe of work rules deemed always lawful to maintain, at the obvious expense to employees’ ability to exercise the rights guaranteed to them by the Act.

Our approach is focused on furthering what the Supreme Court many decades ago defined as the “dominant purpose” of the Act: protecting “the right of employees to organize for mutual aid without employer interference.” In the context of this case, achieving the Act’s purpose means ensuring that the Board does not condone employer work rules that chill employees’ exercise of their statutory rights for fear of discipline or discharge if they violate them. The potential for intimidation is great precisely because of what the Supreme Court has described as “the economic dependence of the employees on their employers, and the necessary tendency of the former, because of that relationship, to pick up intended implications of the latter that might be more readily dismissed by a more disinterested ear.” This fact of workplace life should be reflected in the Board’s treatment of work rules under Section 8(a)(1) of the Act, just as the Supreme Court has required with respect to the analysis of employers’ arguably coercive statements to employees.

But “equally undisputed,” as the Supreme Court has also observed, is the “right of employers to maintain discipline in their establishments” and otherwise protect their legitimate and substantial business interests by regulating employees’ workplace conduct. Accordingly, in the work-rules context, as in other situations governed by Section 8(a)(1) of the Act, the Board must fulfill its duty to protect employees’ Section 7 rights while also considering employers’ legitimate and substantial business interests. As we will explain, our new standard gives employers the necessary leeway to maintain rules of their own choosing to advance legitimate and substantial business interests. They simply need to narrowly tailor those rules to significantly minimize, if not altogether eliminate, their coercive potential. If employers do so, their rules will be lawful to maintain.

III.

The Board’s usual practice is to apply new policies and standards retroactively to all pending cases in whatever stage, unless doing so would amount to a manifest injustice. To determine whether retroactive application amounts to a manifest injustice, the Board considers the reliance of the parties on preexisting law, the effect of retroactivity on accomplishment of the purposes of the Act, and any particular injustice arising from retroactive application.

Here, retroactive application of the new work-rules standard will not cause manifest injustice. First, LA Specialty Produce’s purported “clarifications” of Boeing’s standard were announced less than 4 years ago, so parties have not had an extended period to rely on Boeing’s purportedly clarified standard. In any event, given the unclear nature of Boeing’s interpretive inquiry and the confusing results of its categorical classification scheme, reliance on Boeing as a practical matter was minimal. Second, as noted above, the standard from Boeing that we overrule was detached from the Act’s goals, which are better promoted by the standard that we adopt today. Retroactive application is thus important to furthering the Act’s purposes. Third, and last, we have identified no particular injustice arising from retroactive application. In particular, to the extent that a rule in a pending case is now found facially unlawful, even if it would have been upheld under Boeing, the remedy will be an order to rescind the rule, leaving the employer free to replace the rule with a more narrowly tailored substitute. For these reasons, we find that retroactive application of the standard we announce today is appropriate.

In this case, the General Counsel alleges that the Respondent unlawfully maintained overbroad work rules governing personal conduct, conflicts of interest, and confidentiality of harassment complaints. Applying Boeing and its progeny, the judge determined that maintenance of those rules was unlawful. Having overruled those decisions, we do not review the judge’s application of them. Instead, to allow the parties an opportunity to present arguments and introduce any relevant evidence under the new standard announced today, we remand this case to the judge for further proceedings consistent with this decision.

Robert A. Ringler, Administrative Law Judge.

This case concerns Starbucks’ response to the Union’s organizing campaigns at five St. Louis cafés.

I.

The following facts are undisputed. At all relevant times, the Company operated a restaurant in New York City, where Tangni Fagoth, Stephanie Garcia, Nadgie Santana, and Juliana Palomino (collectively, “Employees”) were employed as waitresses. In August 2015, the Company hired Theodora Alfredou as the new general manager of the restaurant. The Employees and other servers immediately expressed concerns about Alfredou’s disrespectful and demeaning treatment of employees. The Employees repeatedly lodged complaints about Alfredou’s conduct and unsanitary conditions at the restaurant with Steve Morgan, the Company’s director of operations, as well as the restaurant’s owners. Perceiving no improvement in the conditions, the Employees contacted the New York City Department of Health & Mental Hygiene, which angered management.

On October 29, 2015, bartender/server Annette Polanco sent a group email to the owners, managers, and certain employees announcing her resignation and complaining about Alfredou’s treatment, unsanitary working conditions, and management’s failure to respond to employees’ concerns. The email encouraged the remaining employees to “stand up for their rights.” It also attacked the owners’ business practices, made allegations of tax fraud, accused Alfredou of having improper designs on the porters, and contained obscenities.

The Employees discussed Polanco’s email among themselves and individually used “reply all” to respond. Fagoth replied: “Wow Anette, gracias. Thank you for standing up for us. We will miss you.” Garcia replied: “Just finished reading and I agree. Sad that things have to be this way.”Palomino replied: “I agree . . . 100% as well.” Santana replied: “I’m glad you said what you felt was right. I understand your point of view 100%. Thank you for being a voice for us all.”

Over the course of the next two days, all four of the Employees were fired. The Company issued reprimands memorializing the reasons why the Employees were fired. Alfredou appears to have issued the first set of reprimands, each of which stated that the discharged employee demonstrated “insubordination” when she replied to an email containing “false accusations concerning both management and ownership” and “inappropriate language.” Morgan wrote the second set of reprimands. Each of these reprimands stated:

On 10/29/15 Netty Polanco sent out an e-mail to all of the upper management, ownership, store manager and selected employees of our NYC location. In this e-mail she used foul language, insulted people and wrote about untruths in a very demeaning and negative manner. She undermined the credibility of the management and company in a disparaging way. Employee replied to the e-mail in support of Netty. This is insubordination and will not be tolerated.

Following that statement, each of Morgan’s reprimands contained several sentences detailing the particular employee’s conduct. Morgan’s reprimands for Garcia and Palomino stated that the “outcome” was job abandonment, while his reprimands for Fagoth and Santana stated that they were “terminated for insubordination.”

II.

Following a seven-day trial, the administrative law judge (“ALJ”) determined that the Employees had engaged in protected concerted activity and that their email replies were not so opprobrious as to lose the protection of the NLRA. The ALJ found that the discharges were motivated by the Employees’ supportive replies to Polanco’s email, rejecting the Company’s assertion that the Employees were fired because they afterwards refused to meet with management or abandoned their jobs. The Board adopted the ALJ’s findings and recommended order, as modified by the Board’s identification of an additional violation of Section 8 by the Company that is not at issue here.

III.

“We uphold the NLRB’s findings of fact if supported by substantial evidence and the NLRB’s legal determinations if not arbitrary and capricious.” “Substantial evidence means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.”

IV.

The Company principally argues that the Employees forfeited the protection of the NLRA due to the opprobrious contents of Polanco’s email. The Company contends that Atlantic Steel Co., 245 NLRB 814 (1979), governs our analysis of this issue. The Board has typically applied the Atlantic Steel factors to “direct communications, face-to-face in the workplace, between an employee and a manger or supervisor,” finding Atlantic Steel’s “place of the discussion” factor to be inapplicable to “employees’ off-duty, offsite use of social media. In recent cases involving employee comments made in a nonwork forum, such as on social media, the Board has applied a totality of the circumstances test instead of the Atlantic Steel factors. The Board argues that regardless of which analytical framework applies, the Employees’ conduct was not so opprobrious as to lose the protection of the NLRA.

We agree with the Board. Even under the Atlantic Steel factors, the Employees are entitled to NLRA protection. “To determine whether an employee loses the Act’s protection under Atlantic Steel, the Board balances four factors: (1) the place of the discussion; (2) the subject matter of the discussion; (3) the nature of the employee’s outburst; and (4) whether the outburst was, in any way, provoked by the employer’s unfair labor practices.”

The Company argues that the “place of discussion” factor weighs against protection because in cases involving modern communication technology, the “pertinent question” is “whether or not the comments were made in front of other employees.” Although the Employees’ email replies were made “in front of” other employees, their replies are not comparable to the outburst on the floor of the plant in Atlantic Steel because the e-mail chain was limited to certain individuals and did not unfold in the workplace. To hold that the presence of a limited group of employees on an email chain weighs against a finding of NLRA protection would be antithetical to the nature of concerted action. Thus, to the extent the “place of discussion” factor is applicable, it weighs in favor of NLRA protection.

Second, the Company contends that the “subject matter of discussion” factor weighs against protection because the Employees’ replies were not “immediate outbursts made in the heat of the moment, but rather were sent hours later.” That argument is meritless. The second Atlantic Steel factor does not turn on the timing or emotional tenor of an employee’s outburst. Polanco’s email restated the concerns animating the Employees’ ongoing dialogue with management, including unsanitary conditions and disrespectful treatment by Alfredou, even referencing that dialogue. The subject matter of the email discussion therefore weighs in favor of protection.

Third, the Company argues that the “nature of the employee’s outburst” weighs in its favor because “the language used in Polanco’s email and adopted by Employees went well beyond ‘opprobrious.’” The Company cites no authority to support the proposition that Polanco’s language should be attributed to the Employees. NLRB decisions indicate that it would be inappropriate to do so. The Board appropriately focused on the language of the Employees’ replies, noting that the Employees “did not add to the email with any negative comments of their own,” “did not describe their feelings or animosity toward the manager and owners,” and “never cursed or made any derogatory comments toward the Company in their responses.” The third factor weighs in favor of protection.

Fourth, the Company conclusorily asserts that “there is no evidence to suggest that any unfair labor practice provoked either the email or the Employees’ actions following it.” Petitioner Br. 18. Not so. The Board determined that the emails were provoked, at least in part, by Alfredou’s remark that “if you guys don’t like how things are working here, then you can go look for another job, you can leave,” which remark amounted to an unfair labor practice because it “implicitly threatened discharge” and “clearly had the tendency to restrain and coerce employees in the exercise of their Section 7 rights.” Such a threat constitutes an unfair labor practice when made in response to an employee’s protected grievance.

The Company further argues, as a factual matter, that the Employees were not fired for responding to Polanco’s email, but rather, for “refusing to speak with the owners and walking out” or abandoning their positions, which amounted to “gross insubordination and flat-out refusal to follow their employer’s directions.” The Company asserts, without any citation to the record, that the owners “simply wanted to interview employees,” which “does not mean they were going to terminate them.” We conclude that substantial evidence supports the Board’s finding that the terminations were motivated by, and would not have occurred but for, the employees’ replies to the Polanco email. The record evidence clearly demonstrates that the restaurant’s managers and owners perceived the Employees’ supportive replies as insubordination that could not be tolerated. Notably, all of the written reprimands reflected that motivation for firing the employees. The Company’s bare factual assertions to the contrary fail to refute the Board’s finding of pretext.

Employee Discharges and Other Violations of Section 8(a)(1)

Section 7 of the Act guarantees that “employees shall have the right to self-organization, to form, join, or assist labor organizations and to engage in other concerted activities for the purpose of mutual aid or protection.” Section 8(a)(1) of the Act protects employees’ Section 7 rights by prohibiting an employer from “interfering with, restraining, or coercing employees in the exercise of the rights guaranteed in Section 7.”

An employee’s Section 7 rights must be balanced against an employer’s interest in preventing disparagement of his or her products or services and protecting the reputation of his or her business. Accordingly, an employee’s communications with the public may lose the protection of the Act if they are sufficiently disloyal or defamatory. These communications may be sufficiently disloyal to lose the protection of the Act if they amount to criticisms disconnected from any ongoing labor dispute. See NLRB v. Elec. Workers Local 1229 (Jefferson Standard), 346 U.S. 464 (1953).

An employee’s public statement is defamatory if made maliciously, meaning “with knowledge of its falsity, or with reckless disregard of whether it was true or false.” Linn v. United Plant Guard Workers of America, Local 114, 383 U.S. 53 (1966). “The mere fact that statements are false, misleading or inaccurate is insufficient to demonstrate that they are maliciously untrue. Where an employee relays in good faith what he or she has been told by another employee, reasonably believing the report to be true, the fact that the report may have been inaccurate does not remove the relayed remark from the protection of the Act.”

The Board determined as an initial manner that the only employee conduct at issue was (1) Spinella’s “like” of LaFrance’s initial status update (“Maybe someone should do the owners of Triple Play a favor and buy it from them. They can’t even do the tax paperwork correctly!!! Now I OWE money Wtf!!!!”); and (2) Sanzone’s comment stating “I owe too. Such an asshole.” Regarding this conduct, the Board concluded that, “in the context of the ongoing dialogue among employees about tax withholding,” Spinella and Sanzone had at maximum endorsed LaFrance’s claim that Triple Play had erred in her tax withholding. Special App’x 5. The Board declined to hold either Sanzone or Spinella responsible for any other statement posted in the Facebook discussion on ground that “neither Sanzone nor Spinella would have lost the protection of the Act merely by participating in an otherwise protected discussion in which other persons made unprotected statements.”

The ALJ found and the Board agreed that the Facebook activity in this case was “concerted”, because it involved four current employees and was “part of an ongoing sequence of discussions that began in the workplace about Triple Play’s calculation of employees’ tax withholding.” The Board also adopted the ALJ’s recommendation that the Facebook activity was “protected” because “the discussion concerned workplace complaints about tax liabilities, Triple Play’s tax withholding calculations, and LaFrance’s assertion that she was owed back wages.”

After finding that Sanzone’s and Spinella’s Facebook activity constituted protected concerted activity, the only remaining question before the Board was whether that Facebook activity was so disloyal or defamatory as to lose the protection of the Act. The Board applied Jefferson Standard to conclude that Sanzone’s and Spinella’s Facebook activity was not so disloyal as to lose protection of the Act because “the comments at issue did not even mention Triple Play’s products or services, much less disparage them.” The Board further concluded that Triple Play failed to meet its burden under Linn to establish that the comments at issue were defamatory because “there is no basis for finding that the employees’ claims that their withholding was insufficient to cover their tax liability, or that this shortfall was due to an error on Triple Play’s part, were maliciously untrue.”

Triple Play argues on appeal that because Sanzone’s and Spinella’s Facebook activity contained obscenities that were viewed by customers, the Board should have found that this activity lost the protection of the Act under Starbucks v. NLRB, a case in which a Second Circuit panel remanded a Board Order for reconsideration of the proper standard to apply when analyzing an employee’s utterance of obscenities in the presence of customers. In Triple Play’s view, the panel in Starbucks “strongly suggested” that an employee’s obscenities uttered in the presence of customers “would not be protected in most or all circumstances.”

Triple Play’s reliance on Starbucks is misplaced. The Starbucks panel premised its decision on a finding that the Board had “disregarded the entirely legitimate concern of an employer not to tolerate employee outbursts containing obscenities in the presence of customers.” Here, the Board stated unequivocally that its application of Jefferson Standard and Linn was based on its longstanding recognition “that an employer has a legitimate interest in preventing the disparagement of its products or services and, relatedly, in protecting its reputation from defamation.”

Furthermore, accepting Triple Play’s argument that Starbucks should apply because the Facebook discussion took place “in the presence of customers” could lead to the undesirable result of chilling virtually all employee speech online. Almost all Facebook posts by employees have at least some potential to be viewed by customers. Although customers happened to see the Facebook discussion at issue in this case, the discussion was not directed toward customers and did not reflect the employer’s brand. The Board’s decision that the Facebook activity at issue here did not lose the protection of the Act simply because it contained obscenities viewed by customers accords with the reality of modern-day social media use.

Triple Play further argues that, even if the Board were correct to apply Jefferson Standard and Linn, the Board’s factual conclusions relating to those standards were unsupported because “no evidence in the record establishes that Sanzone’s comment was limited” only to “endorsing LaFrance’s complaint that she owed money on her taxes due to a tax withholding error on Triple Play’s part.” Triple Play would have us find that “the evidence, when taken as a whole, demonstrates that Sanzone clearly endorsed such a comment by LaFrance and that Spinella also endorsed disparaging comments about Triple Play and its owners.” Triple Play also argues that the Board erred in concluding under Linn that Sanzone’s comment was not defamatory because “the evidence unequivocally establishes that Sanzone’s endorsement of LaFrance’s complaint was knowingly false, as Sanzone did not believe that Triple Play had made any errors with respect to her income tax withholdings.”

We agree with counsel for the Board that “Spinella’s and Sanzone’s communications, which were made to seek and provide mutual support looking toward group action, were not made to disparage Triple Play or to undermine its reputation.” The Facebook discussion clearly disclosed the ongoing labor dispute over income tax withholdings, and thus anyone who saw Spinella’s “like” or Sanzone’s statement could evaluate the message critically in light of that dispute.

We also agree with counsel for the Board that Sanzone’s comment was not defamatory under the Linn standard in light of the fact that she had conversations with other employees regarding their tax concerns prior to the Facebook discussion. As the Board observed, “simply because Sanzone knew that Triple Play did not make an error on her (own) tax withholdings does not mean that Sanzone’s endorsement of LaFrance’s complaint about Triple Play making tax withholding errors was deliberately or maliciously false.” Although Sanzone may not have believed that Triple Play erroneously withheld her taxes, that has no bearing on the truth of her statement “I owe too” or her conceivable belief that Triple Play may have erroneously withheld other employees’ taxes. It is certainly plausible that Sanzone truly owed taxes, even if that was not the result of an error on Triple Play’s part—and even if other employees’ claims regarding erroneous tax withholdings later proved inaccurate, such inaccuracies by themselves do not remove the statement from the protection of the Act.

In addition to finding that the discharges of Sanzone and Spinella violated the Act, the Board adopted the ALJ’s conclusions that Triple Play violated the Act by (1) threatening employees with discharge for their Facebook activity; (2) interrogating employees about their Facebook activity; and (3) informing employees that they were being discharged for their Facebook activity. Because Sanzone’s and Spinella’s Facebook activity did not lose the protection of the Act, Triple Play’s challenge to the other violations of Section 8(a)(1) must necessarily fail.

WILLIAM J. MARTINI, District Judge.

Plaintiff Deborah Ehling brings this action against Monmouth-Ocean Hospital Service Corp. (“MONOC”), Vincent Robbins, and Stacy Quagliana (collectively “Defendants”), alleging violations of the Electronic Communications Privacy Act, the Family Medical Leave Act, and various state laws. This matter comes before the Court on Defendants’ motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief may be granted. For the reasons set forth below, Defendants’ Rule 12(b)(6) motion is GRANTED in part, and DENIED in part.

I. Background

Plaintiff Deborah Ehling is a registered nurse and paramedic. Defendant Monmouth-Ocean Hospital Service Corporation (“MONOC”) is a non-profit hospital service corporation dedicated to providing emergency medical services to the citizens of the State of New Jersey. Defendant Vincent Robbins is the President and CEO of MONOC. Defendant Stacy Quagliana is the Executive Director of Administration at MONOC.

Plaintiff was hired by MONOC in 2004 as a registered nurse and paramedic. In July of 2008, Plaintiff took over as the Acting President of the local union for Professional Emergency Medical Services Association — New Jersey (the “Union”). As President, Plaintiff was “very proactive in attempting to protect the rights and safety of her union members” and filed numerous complaints and charges against MONOC to that end. Plaintiff alleges that, as soon as she became President of the Union, Defendants began engaging in a pattern of retaliatory conduct against her, eventually culminating in her termination in July 2011. Although the Amended Complaint contains allegations regarding a wide range of conduct, the Court will discuss only those allegations that are relevant to the motion to dismiss.

During the 2008-2009 timeframe, Plaintiff maintained an account on Facebook, a social networking website. According to Plaintiff, if someone was not invited to be her Facebook “friend,” he or she could not access and view postings on Plaintiff’s Facebook “wall.” Many of Plaintiff’s coworkers were invited to be Plaintiff’s Facebook friends. Plaintiff did not invite any members of MONOC management as friends.

Plaintiff alleges that MONOC “subsequently gained access to Ms. Ehling’s Facebook account by having a supervisor(s) summon a MONOC employee, who was also one of Ms. Ehling’s Facebook friends, into an office” and “coercing, strong-arming, and/or threatening the employee into accessing his Facebook account on the work computer in the supervisor’s presence.” Plaintiff claims that the supervisor viewed and copied Plaintiff’s Facebook postings. One such posting was a comment that Plaintiff made regarding a shooting that took place at the Holocaust Museum in Washington, DC, stating:

An 88 yr old sociopath white supremacist opened fire in the Wash D.C. Holocaust Museum this morning and killed an innocent guard (leaving children). Other guards opened fire. The 88 yr old was shot. He survived. I blame the DC paramedics. I want to say 2 things to the DC medics. 1. WHAT WERE YOU THINKING? and 2. This was your opportunity to really make a difference! WTF!!!! And to the other guards …. go to target practice.

On June 17, 2009, MONOC sent letters regarding Plaintiff’s Facebook posting to the New Jersey Board of Nursing and the New Jersey Department of Health, Office of Emergency Medical Services. The letters state that MONOC was concerned that Plaintiff’s Facebook posting showed a disregard for patient safety. Plaintiff alleges that these letters were sent in a “malicious” attempt to attack Plaintiff, damage her reputation and employment opportunities, and potentially risk losing her nursing license and paramedic certification status.

III. Discussion

Defendants move to dismiss two of the nine counts in the Amended Complaint: (1) Count II, alleging a violation of the New Jersey Wiretapping and Electronic Surveillance Control Act; and (2) Count IV, alleging common law invasion of privacy. Each issue will be addressed in turn.

Chin, Circuit Judge:

In this case, plaintiff-appellant William Gunnar Truitt, an employee of defendant-appellee Salisbury Bank and Trust Company (the “Bank”), announced his candidacy for a New York State Assembly seat. The Bank thereafter advised Truitt that he had to choose between running for office and continuing his employment with the Bank. Truitt decided not to discontinue his campaign, and his employment with the Bank ended.

Truitt brought this action below, contending that the Bank violated New York Labor Law § 201-d by requiring him to cease protected political activity as a condition of retaining his employment at the Bank. The statute makes it unlawful for an employer to discharge or discriminate against an employee for engaging in, inter alia, specified political activities outside of working hours. N.Y. Lab. Law § 201d(2)(a). Protected activities expressly include “running for public office.” The district court granted summary judgment in favor of the Bank, concluding, as a matter of law, that because Truitt voluntarily resigned from his position and was not constructively discharged, his suit could not succeed. The court thereafter denied Truitt’s motion for reconsideration, and this appeal followed.

For the reasons discussed below, we vacate the judgment and remand.

Background

Discussion

SAM BASS, Justice.

Farouk Al Attar and Rima Al Attar are husband and wife, and partners in a general partnership, known as Apollo Paint & Body. Brunner states that Farouk’s actions are the basis of this suit, and that Rima and Apollo are vicariously liable. Brunner alleged that Farouk terminated her, because he feared that she would catch and spread the Acquired Immune Deficiency Syndrome (AIDS) to employees. Appellees urged that Brunner was terminated because of her refusal to work during the hours required, her request to be terminated, and her failure, inability and/or refusal to perform the work expected of her.

Brunner stated that she had neither contracted AIDS, nor been infected with the human immunodeficiency virus which causes AIDS.

Appellees moved for summary judgment, alleging that Brunner did not state a cause of action, and could not amend her pleadings to state a cause of action.

Brunner testified by deposition that she was terminated from Apollo Paint & Body because she was a volunteer with the AIDS Foundation. Brunner had told Farouk that she would be volunteering in her free time on Saturdays and Sundays, and in the evenings. Brunner promised that her volunteer work would not interfere with her position at Apollo, and stated that there was no danger to the employees at Apollo Paint & Body, because Brunner could not catch AIDS from the patients’ touching, sneezing, or breathing on her. She further stated that the only way to catch AIDS is through sexual contact or blood transfusions. Brunner told Farouk that his customers did not have to know about her volunteer work. Farouk responded by saying that he could not allow Brunner to perform volunteer work at the AIDS Foundation and work at Apollo. Farouk told Brunner that he did not want to place himself, his family, and the office workers in jeopardy. Farouk urged Brunner to resign, and she refused.

Rima told another supervisor not to let Farouk fire Brunner. In a later discussion, Farouk asked Brunner to reconsider, but she would not. Farouk then said that he would have to fire Brunner.

Brunner asserts that this Court should not permit her to be terminated for performing volunteer work for the AIDS Foundation because her termination violates the public policy exception to the employment-at-will doctrine.

Brunner does not allege that her employment was governed by a contract, or that it was for a definite term. The general rule is that employment for an indefinite term may be terminated at will and without cause. In Sabine Pilot, the Texas Supreme Court recognized a very narrow exception to the judicially-created employment-at-will doctrine. “That narrow exception covers only the discharge of an employee for the sole reason that the employee refused to perform an illegal act.” The supreme court stated that where an employee sought to invoke the public policy exception, “it is the plaintiff’s burden to prove by a preponderance of the evidence that his discharge was for no reason other than his refusal to perform an illegal act.”In McClendon v. Ingersoll-Rand Co., the Texas supreme court announced another judicially-created exception to the employment-at-will doctrine, which permits recovery of lost future wages, mental anguish, and punitive damages, where the “plaintiff proves that the principal reason for his termination was the employer’s desire to avoid contributing to or paying benefits under the employee’s pension fund.”

Brunner alleges that she was fired because she refused to quit her volunteer work with the AIDS Foundation; however, she has not alleged that she was terminated for refusing to perform an illegal act, or because her employer wished to avoid paying benefits under her pension fund. Brunner has failed to allege sufficient facts to place her within these two exceptions to the employment-at-will doctrine. See Jennings v. Minco Technology Labs, Inc., 765 S.W.2d 497 (Tex. App. 1989) (court refused to create an exception to the doctrine on the grounds of public policy, to enable an employee to obtain declaratory and injunctive relief, restraining employer from administering random urinalysis drug tests on employees); Berry v. Doctor’s Health Facilities, 715 S.W.2d 60 (Tex. App. 1986) (court declined to create an exception to the employment-at-will doctrine on the grounds of public policy, to encompass a cause of action asserting wrongful termination, because the employee “knew too much” about alleged improprieties within the hospital administration); Winters v. Houston Chronicle Publishing Company, 781 S.W.2d 408 (Tex. App. 1989) (court declined to extend Sabine Pilot exception to employment-at-will doctrine, where private employee alleged he was discharged for reporting to management that his upper level managers and supervisors were engaged in circulation fraud, inventory theft, and a “kickback” scheme). This Court cannot create another exception for performing volunteer work at the Houston AIDS Foundation. If such an exception is to be created, that is a matter within the province of the Texas Supreme Court.

RUSHING, J.

International Business Machines (IBM) appeals from the judgment entered against it after a jury awarded $100,000 compensatory and $200,000 punitive damages to respondent (Virginia Rulon-Miller) on claims of wrongful discharge and intentional infliction of emotional distress. Rulon-Miller was a low-level marketing manager at IBM in its office products division in San Francisco. Her termination as a marketing manager at IBM came about as a result of an accusation made by her immediate supervisor, defendant Callahan, of a romantic relationship with the manager of a rival office products firm, QYX.

Factual Background

IBM is an international manufacturer of computers, office equipment and telecommunications systems. As well, it offers broad general services in the data processing field. It is reputed to be the single most successful high technology firm in the world. It is also a major force in the low technology field of typewriters and office equipment.

IBM is an employer traditionally thought to provide great security to its employees as well as an environment of openness and dignity. The company is organized into divisions, and each division is, to an extent, independent of others. The company prides itself on providing career opportunities to its employees, and respondent represents a good example of this. She started in 1967 as a receptionist in the Philadelphia Data Center. She was told that “career opportunities are available to employees as long as they are performing satisfactorily and are willing to accept new challenges.” While she worked at the data center in Philadelphia, she attended night school and earned a baccalaureate degree. She was promoted to equipment scheduler and not long after received her first merit award. The company moved her to Atlanta, Georgia where she spent 15 months as a data processor. She was transferred to the office products division and was assigned the position of “marketing support representative” in San Francisco where she trained users (i.e., customers) of newly purchased IBM equipment. Respondent was promoted to “product planner” in 1973 where her duties included overseeing the performance of new office products in the marketplace. As a product planner, she moved to Austin, Texas and later to Lexington, Kentucky. Thereafter, at the urging of her managers that she go into sales in the office products division, she enrolled at the IBM sales school in Dallas. After graduation, she was assigned to San Francisco.

Her territory was the financial district. She was given a performance plan by her management which set forth the company’s expectations of her. She was from time to time thereafter graded against that plan on a scale of one through five with a grade of one being the highest. After her first year on the job, she was given a rating of one and was felt by her manager to be a person who rated at the top of IBM’s scale.

A little over a year after she began in San Francisco, IBM reorganized its office products division into two separate functions, one called office systems and another called office products. Respondent was assigned to office systems; again she was given ratings of one and while there received a series of congratulatory letters from her superiors and was promoted to marketing representative. She was one of the most successful sales persons in the office and received a number of prizes and awards for her sales efforts. IBM’s system of rewarding salespersons has a formalistic aspect about it that allows for subtle distinctions to be made while putting great emphasis on performance; respondent exercised that reward system to its fullest. She was a very successful seller of typewriters and other office equipment.

She was then put into a program called “Accelerated Career Development Program” which was a way of rewarding certain persons who were seen by their superiors as having management potential. IBM’s prediction of her future came true and in 1978 she was named a marketing manager in the office products branch.

IBM knew about respondent’s relationship with Matt Blum well before her appointment as a manager. Respondent met Blum in 1976 when he was an account manager for IBM. That they were dating was widely known within the organization. In 1977 Blum left IBM to join QYX, an IBM competitor, and was transferred to Philadelphia. When Blum returned to San Francisco in the summer of 1978, IBM personnel were aware that he and respondent began dating again. This seemed to present no problems to respondent’s superiors, as Callahan confirmed when she was promoted to manager. Respondent testified: “Somewhat in passing, Phil said: I heard the other day you were dating Matt Blum, and I said: Oh. And he said, I don’t have any problem with that. You’re my number one pick. I just want to assure you that you are my selection.” The relationship with Blum was also known to Regional Manager Gary Nelson who agreed with Callahan. Neither Callahan nor Nelson raised any issue of conflict of interest because of the Blum relationship.

Respondent flourished in her management position, and the company, apparently grateful for her efforts, gave her a $4,000 merit raise in 1979 and told her that she was doing a good job. A week later, her manager, Phillip Callahan, left a message that he wanted to see her.

When she walked into Callahan’s office he confronted her with the question of whether she was dating Matt Blum. She wondered at the relevance of the inquiry and he said the dating constituted a “conflict of interest,” and told her to stop dating Blum or lose her job and said she had a “couple of days to a week” to think about it.

The next day Callahan called her in again, told her “he had made up her mind for her,” and when she protested, dismissed her. IBM and Callahan claim that he merely “transferred” respondent to another division.

Discussion

Respondent’s claims of wrongful discharge and intentional infliction of emotional distress were both submitted to the jury. Appellant argues that the jury should not have been permitted to consider the issue of wrongful discharge because as a matter of law the offer of reassignment cannot be considered a wrongful discharge. In developing this argument, IBM attempts to change the nature of this case from one of wrongful termination into a debate about constructive discharge through an alleged administrative reassignment.

The initial discussion between Callahan and respondent of her relationship with Blum is important. When Callahan questioned her relationship with Blum, respondent invoked her right to privacy in her personal life relying on existing IBM policies. A threshold inquiry is thus presented whether respondent could reasonably rely on those policies for job protection. Any conflicting action by the company would be wrongful in that it would constitute a violation of her contract rights.

(1) Under the common law rule codified in Labor Code section 2922, an employment contract of indefinite duration is, in general, terminable at “the will” of either party. This common law rule has been considerably altered by the recognition of the Supreme Court of California that implicit in any such relationship or contract is an underlying principle that requires the parties to deal openly and fairly with one another. This general requirement of fairness has been identified as the covenant of good faith and fair dealing. The covenant of good faith and fair dealing embraces a number of rights, obligations, and considerations implicit in contractual relations and certain other relationships. At least two of those considerations are relevant herein. The duty of fair dealing by an employer is, simply stated, a requirement that like cases be treated alike. Implied in this, of course, is that the company, if it has rules and regulations, apply those rules and regulations to its employees as well as affording its employees their protection.

As can be seen from an analysis of other cases, this is not in any substantial way a variation from general contract law in California, for if an employee has the right in an employment contract (as distinct from an implied covenant), the courts have routinely given her the benefit of that contract. Thus, the fair dealing portion of the covenant of good faith and fair dealing is at least the right of an employee to the benefit of rules and regulations adopted for his or her protection.

(2a) In this case, there is a close question of whether those rules or regulations permit IBM to inquire into the purely personal life of the employee. If so, an attendant question is whether such a policy was applied consistently, particularly as between men and women. The distinction is important because the right of privacy, a constitutional right in California, could be implicated by the IBM inquiry. Much of the testimony below concerned what those policies were. The evidence was conflicting on the meaning of certain IBM policies. We observe ambiguity in the application but not in the intent. The “Watson Memo” (so called because it was signed by a former chairman of IBM) provided as follows:

TO ALL IBM MANAGERS:

The line that separates an individual’s on-the-job business life from his other life as a private citizen is at times well-defined and at other times indistinct. But the line does exist, and you and I, as managers in IBM, must be able to recognize that line.

I have seen instances where managers took disciplinary measures against employees for actions or conduct that are not rightfully the company’s concern. These managers usually justified their decisions by citing their personal code of ethics and morals or by quoting some fragment of company policy that seemed to support their position. Both arguments proved unjust on close examination. What we need, in every case, is balanced judgment which weighs the needs of the business and the rights of the individual.

Our primary objective as IBM managers is to further the business of this company by leading our people properly and measuring quantity and quality of work and effectiveness on the job against clearly set standards of responsibility and compensation. This is performance — and performance is, in the final analysis, the one thing that the company can insist on from everyone.

We have concern with an employee’s off-the-job behavior only when it reduces his ability to perform regular job assignments, interferes with the job performance of other employees, or if his outside behavior affects the reputation of the company in a major way. When on-the-job performance is acceptable, I can think of few situations in which outside activities could result in disciplinary action or dismissal.

When such situations do come to your attention, you should seek the advice and counsel of the next appropriate level of management and the personnel department in determining what action — if any — is called for. Action should be taken only when a legitimate interest of the company is injured or jeopardized. Furthermore the damage must be clear beyond reasonable doubt and not based on hasty decisions about what one person might think is good for the company.

IBM’s first basic belief is respect for the individual, and the essence of this belief is a strict regard for his right to personal privacy. This idea should never be compromised easily or quickly.

/s/ Tom Watson, Jr.

It is clear that this company policy insures to the employee both the right of privacy and the right to hold a job even though “off-the-job behavior” might not be approved of by the employee’s manager.

IBM had adopted policies governing employee conduct. Some of those policies were collected in a document known as the “Performance and Recognition” (PAR) Manual. IBM relies on the following portion of the PAR Manual:

“A conflict of interest can arise when an employee is involved in activity for personal gain, which for any reason is in conflict with IBM’s business interests. Generally speaking, ‘moonlighting’ is defined as working at some activity for personal gain outside of your IBM job. If you do perform outside work, you have a special responsibility to avoid any conflict with IBM’s business interests.

Obviously, you cannot solicit or perform in competition with IBM product or service offerings. Outside work cannot be performed on IBM time, including ‘personal’ time off. You cannot use IBM equipment, materials, resources, or ‘inside’ information for outside work. Nor should you solicit business or clients or perform outside work on IBM premises.

Employees must be free of any significant investment or association of their own or of their immediate family’s sic, in competitors or suppliers, which might interfere or be thought to interfere with the independent exercise of their judgment in the best interests of IBM.

This policy of IBM is entitled “Gifts” and appears to be directed at “moonlighting” and soliciting outside business or clients on IBM premises. It prohibits “significant investment” in competitors or suppliers of IBM. It also prohibits “association” with such persons “which might interfere or be thought to interfere with the independent exercise of their judgment in the best interests of IBM.”

Callahan based his action against respondent on a “conflict of interest.” But the record shows that IBM did not interpret this policy to prohibit a romantic relationship. Callahan admitted that there was no company rule or policy requiring an employee to terminate friendships with fellow employees who leave and join competitors. Gary Nelson, Callahan’s superior, also confirmed that IBM had no policy against employees socializing with competitors.

This issue was hotly contested with respondent claiming that the “conflict of interest” claim was a pretext for her unjust termination. Whether it was presented a fact question for the jury.

Do the policies reflected in this record give IBM a right to terminate an employee for a conflict of interest? The answer must be yes, but whether respondent’s conduct constituted such was for the jury. We observe that while respondent was successful, her primary job did not give her access to sensitive information which could have been useful to competitors. She was, after all, a seller of typewriters and office equipment. Respondent’s brief makes much of the concession by IBM that there was no evidence whatever that respondent had given any information or help to IBM’s competitor QYX. It really is no concession at all; she did not have the information or help to give. Even so, the question is one of substantial evidence. The evidence is abundant that there was no conflict of interest by respondent.

It does seem clear that an overall policy established by IBM chairman Watson was one of no company interest in the outside activities of an employee so long as the activities did not interfere with the work of the employee. Moreover, in the last analysis, it may be simply a question for the jury to decide whether, in the application of these policies, the right was conferred on IBM to inquire into the personal or romantic relationships its managers had with others. This is an important question because IBM, in attempting to reargue the facts to us, casts this argument in other terms, namely: that it had a right to inquire even if there was no evidence that such a relationship interfered with the discharge of the employee’s duties because it had the effect of diminishing the morale of the employees answering to the manager. This is the “Caesar’s wife” argument; it is merely a recast of the principal argument and asks the same question in different terms. The same answer holds in both cases: there being no evidence to support the more direct argument, there is no evidence to support the indirect argument.

Moreover, the record shows that the evidence of rumor was not a basis for any decline in the morale of the employees reporting to respondent. Employees Mary Hrize and Wayne Fyvie, who reported to respondent’s manager that she was seen at a tea dance at the Hyatt Regency with Matt Blum and also that she was not living at her residence in Marin, did not believe that those rumors in any way impaired her abilities as a manager. In the initial confrontation between respondent and her superior the assertion of the right to be free of inquiries concerning her personal life was based on substantive direct contract rights she had flowing to her from IBM policies. Further, there is no doubt that the jury could have so found and on this record we must assume that they did so find.

MERCURE, J.

In February 1993, defendant discharged two of its employees for violating its “fraternization” policy, which is codified in defendant’s 1989 Associates Handbook and prohibits a “dating relationship” between a married employee and another employee, other than his or her own spouse. In this action, plaintiff seeks reinstatement of the two employees with back pay upon the ground that their discharge violated Labor Law § 201-d(2)(c), which forbids employer discrimination against employees because of their participation in “legal recreational activities” pursued outside of work hours. Defendant moved to dismiss the complaint. The trial court denied the motion with regard to the first cause of action, concluding that “dating” while one is married “may well be ‘recreational activities’ within the meaning of Labor Law § 201-d(2)(c)”, but granted the motion with regard to the second cause of action, predicated upon Executive Law § 63(12), which prohibits repeated or persistent illegality in the transaction of business. The parties cross-appeal.

We are not at all persuaded by the effort to force “a dating relationship” within the definition of “recreational activities” and accordingly reverse so much of its order as denied the motion to dismiss the first cause of action. Labor Law § 201-d(1)(b) defines “recreational activities” as meaning: “any lawful, leisure-time activity, for which the employee receives no compensation and which is generally engaged in for recreational purposes, including but not limited to sports, games, hobbies, exercise, reading and the viewing of television, movies and similar material”. In our view, there is no justification for proceeding beyond the fundamental rule of construction that “where words of a statute are free from ambiguity and express plainly, clearly and distinctly the legislative intent, resort may not be had to other means of interpretation”. To us, “dating” is entirely distinct from and, in fact, bears little resemblance to “recreational activity”. Whether characterized as a relationship or an activity, an indispensable element of “dating”, in fact its raison d’être, is romance, either pursued or realized. For that reason, although a dating couple may go bowling and under the circumstances call that activity a “date”, when two individuals lacking amorous interest in one another go bowling or engage in any other kind of “legal recreational activity”, they are not “dating”.

Moreover, even if Labor Law § 201-d(1)(b) was found to contain some ambiguity, application of the rules of statutory construction does not support Supreme Court’s interpretation. We agree with defendant that, to the extent relevant, the voluminous legislative history to the enactment, including memoranda issued in connection with the veto of two earlier more expansive bills, evinces an obvious intent to limit the statutory protection to certain clearly defined categories of leisure-time activities. Further, in view of the specific inclusion of “sports, games, hobbies, exercise, reading and the viewing of television, movies and similar material” within the statutory definition of “recreational activities”, application of the doctrine of noscitur a sociis compels the conclusion that personal relationships fall outside the scope of legislative intent.

Nor is there any realistic danger that this construction will permit employers to infringe upon the right of employees to engage in protected off-hours pursuits by wrongly characterizing dispassionate recreational activity as dating. To the contrary, recognition of the distinction between “dating” and “recreational activity” imposes upon the employer the enhanced burden of establishing not only joint activity of a recreational nature, but the employees’ mutual romantic interest as well. Similarly, this construction in no way diminishes the statutory protection afforded social relationships between unmarried employees or married employees having no romantic interest or involvement with one another.

YESAWICH JR., J. (dissenting).

I respectfully dissent, for I find defendant’s central thesis, apparently accepted by the majority, that the employment policy at issue only prohibits romantic entanglements and not other types of social interaction, to be wholly without merit. While the majority encumbers the word “dating” with an “amorous interest” component, there is nothing in defendant’s fraternization policy, its application — defendant does not allege that its two former employees manifested an intimate or amatory attitude toward each other — or even in defendant’s own definition of a “date”, “a social engagement between persons of opposite sex” (Webster’s Ninth New Collegiate Dictionary 325 1988), that leads to such a conclusion.

More importantly, I do not agree that “dating”, whether or not it involves romantic attachment, falls outside the general definition of “recreational activities” found in Labor Law § 201-d(1)(b). The statute, by its terms, appears to encompass social activities, whether or not they have a romantic element, for it includes any lawful activity pursued for recreational purposes and undertaken during leisure time. Though no explicit definition of “recreational purposes” is contained in the statute, “recreation” is, in the words of one dictionary, “a means of refreshment or diversion” (Webster’s Ninth New Collegiate Dictionary 985 1985); social interaction surely qualifies as a “diversion”.

Moreover, while the majority assures that the construction it adopts “in no way diminishes the statutory protection afforded social relationships between unmarried employees”, I am less sanguine, because the majority’s holding implies that the statute affords no protection to any social relationship that might contain a romantic aspect, regardless of the marital status of the participants, or the impact that the relationship has on their capacity to perform their jobs.

In my view, given the fact that the Legislature’s primary intent in enacting Labor Law § 201-d was to curtail employers’ ability to discriminate on the basis of activities that are pursued outside of work hours, and that have no bearing on one’s ability to perform one’s job, and concomitantly to guarantee employees a certain degree of freedom to conduct their lives as they please during nonworking hours, the narrow interpretation adopted by the majority is indefensible. Rather, the statute, and the term “recreational activities” in particular, should be construed as broadly as the definitional language allows, to effect its remedial purpose.

And while it is true that, as a general rule of statutory construction, the breadth of an inclusory phrase is to be considered limited by the specific examples accompanying it, this principle must yield where necessary to carry out the underlying purpose of the enactment. Additionally, it is only applicable when the examples fall into a single, well-defined class, and are not themselves general in nature. Here, the list, which includes vast categories such as “hobbies” and “sports”, as well as very different types of activities (e.g., exercise, reading), appears to have been compiled with an eye toward extending the reach of the statute. This, coupled with the explicit directive that the definition is not to be limited to the examples given, provides further indication that the term “recreational activities” should be construed expansively. Accordingly, I would affirm the denial of defendant’s motion to dismiss the first cause of action.

David S. Cayer, United States Magistrate Judge

I. Factual and Procedural Background

Taking the facts of the Second Amended Complaint as true, Plaintiff is a fifty-four year old woman who worked for Defendants in their motor vehicle auction business for over fourteen years. She was terminated in February 2019. At the time of her termination, Plaintiff was a Total Resource Auction supervisor and managed seven employees. She was a loyal, reliable and respected employee.

During the last several years before her termination, Plaintiff developed chronic pain and related anxiety. A year before her termination, she was diagnosed with fibromyalgia and referred to a rheumatologist who put her on prescription medication. Those medications and their side effects are detailed in the Second Amended Complaint. Plaintiff was open with her supervisors about her health problems, including her medications and their side effects.

With her rheumatologist’s knowledge and agreement, Plaintiff began using CBD oil as an alternative therapy. The oil provided Plaintiff with significant pain relief, reduced her anxiety and improved her sleep without the side effects of her prescription medications. Plaintiff bought a stronger version of the same brand CBD oil, made under the same state and federal standard of 0.3% THC or less. She would take seven or eight drops at home in the morning and enjoy significant pain relief for twenty-four hours. Plaintiff was able to wean off her prescription medications completely by early February 2019.

On February 13, 2019, Plaintiff was injured at work when a windstorm blew an open truck door against her hand. She thought her thumb was broken. Plaintiff reported the injury and went to a local medical facility for treatment. Pursuant to Defendants’ drug policy related to workplace injuries, Plaintiff was required to submit to a drug screen. Plaintiff does not use illegal drugs and had tested negative throughout her employment. She was shocked to learn that she tested positive for THC at the level of 20 ng/dl and faced possible termination. The threshold level for a positive THC test under Federal Department of Transportation regulations is 50 ng/dl. Plaintiff learned that some users of CBD oil test positive for low levels of THC.

Her direct supervisor as well as the Assistant General Manager and Human Resources representative wanted Plaintiff to remain employed and urged the corporate office not to terminate her. Plaintiff provided her managers with information about the CBD oil as well as her doctor’s agreement that she take it to treat her fibromyalgia. Plaintiff also offered to discontinue the CBD oil and resume her prescription medication. Defendants’ corporate officials rejected that proposal and insisted she be terminated. Plaintiff’s appeal to the corporate office for reinstatement was denied.

On May 22, 2019, Plaintiff filed a wrongful discharge claim in Iredell County Superior Court alleging that she was terminated for using CBD oil outside of work, in violation of the public policy set forth in N.C.Gen. Stat. §95-28.2.

Defendants removed the case to this Court on July 1, 2019 and moved to dismiss Plaintiff’s Complaint.

III. Discussion