Can Companies Sue Other Companies for Sexual Harassment?

A New Claim is on the Horizon

Local, state and federal civil rights laws generally prohibit discrimination in employment as well as in public accommodations. The traditional discrimination case is one where an employee sues his or her employer for discrimination in the workplace. However, employers that have multi-state and international operations, must remain vigilant regarding laws that extend to apply outside of the employment context. For example, the New Jersey Law Against Discrimination makes it illegal to "refuse to buy from, sell to, lease from or to, license, contract with, or trade with, provide goods, services or information to, or otherwise do business with any other person" on the basis of gender or other protected categories.

This law came into play in the case of J.T's Tire Service, Inc. & Eileen Totorello v. United Rentals North America & Harold Hinkes, decided by the New Jersey Appellate Division of the Superior Court (the state appellate court). In that case, Eileen Totorello owned a company that sold commercial industrial tires to a branch of United Rentals. Totorello claimed that United Rental's branch manager, Harold Hinkes, pressured her to have a sexual relationship with her. Totorello reported that Hinkes not only made sexual overtones to her, but that he also touched and groped her. One of the sweet-nothings that Hinkes whispered to Totorello was that she "was making a very poor business decision." After she rejected him, Hinkes did more than just pine for Totorello's attention. He caused his United Rentals' branch to stop buying tires from Totorello's company. Ultimately, Totorello's approximate annual revenue from United Rentals, which was close to $350,000, was lost altogether.

Totorello then sued United Rentals for unlawful sex discrimination in violation of the above law. The appellate court acknowledged that the state law had previously been interpreted as allowing independent contractors to bring claims against companies that refused to do business with them due to their age, sex or handicap. Applying this same concept to Totorello's claim, the court found that she was the victim of quid pro quo harassment and that her claim against United Rentals could proceed.

What lessons can you take from this case? One is that there is no doubt that civil rights laws will continue to be interpreted to achieve their broad intent to eliminate discrimination within and outside the workplace. Another important lesson is that your training of employees on equal employment opportunity policy compliance must include education as to the importance of maintaining professionalism off-premises and in connection with all interactions with customers, vendors and business partners. Lastly, if you believe that one of your employees may have acted inappropriately, you must promptly investigate the matter and take prompt remedial action.

If you have questions regarding sexual harassment or other labor and employment issues, please contact Michael Blickman.

This publication is intended for general information purposes only and does not and is not intended to constitute legal advice. The reader must consult with legal counsel to determine how laws or decisions discussed herein apply to the reader's specific circumstances.