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By Christine Malafi

Given the recent headlines, all employers should be reminded that they have a legal duty to maintain a workplace that is free from sexual harassment. Sexual harassment suits are prosecuted under the same federal and state laws that are used to sue employers for racial discrimination and harassment, so it is critical that every employer take this form of sexual discrimination seriously. As we have seen, employers have paid a high price for failing to address sexual harassment complaints adequately.

What is sexual harassment?

The New York State Division of Human Rights defines sexual harassment as a “hostile environment” consisting of words, signs, jokes, pranks, intimidation, or physical violence which are of a sexual nature, or which are directed at an individual because of that individual’s sex. This will also consist of any unwanted verbal or physical advances which are offensive or objectionable to the recipient.

Another type of sexual harassment is known as “quid pro quo,” where a person in authority, such as a supervisor, attempts to trade job benefits (i.e. hiring, promotion, or continued employment) for sexual favors.

It takes only a single incident of inappropriate sexual behavior to serve as the basis of a sexual harassment claim.

What Should Employers Do?

Employers can take several steps to reduce the risk of sexual harassment in the workplace, including:

• Sexual Harassment Policy: Have an employee handbook that sets forth a policy defining sexual harassment and the consequences of engaging in such conduct. This policy should also set out a procedure for filing sexual harassment complaints, and state that each complaint will be taken seriously and investigated thoroughly, and also make it clear that retaliation is unlawful. An employer is not allowed to retaliate against an employee who has filed a sexual harassment complaint, whether or not that complaint is ultimately founded.
• Train Employees: Employers should hold training sessions for both managers/supervisors and employees to teach them what sexual harassment is and what conduct is acceptable and not. The training should also review complaint procedures, and remind employees that they are entitled to have a workplace free of sexual harassment. Training is highly recommended because your managers and employees should all be familiar with the law and what to do if such conduct should occur, and if you face a lawsuit, you will be able to show that you took the necessary steps to prevent harassment.
• Monitor Your Workplace: Talk with your employees periodically and ask for their input on any issues that may be occurring inside the workplace. Look around to see if there are any offensive posters or notes that may raise concern. Make your employees aware that the lines of communication are always open.

Sexual harassment has no boundaries, and can occur in any business, and to a male or female. Training and prevention are critical to eliminate these issues to the extent possible. Employers are encouraged to take these necessary steps to eliminate sexual harassment.

Legislative Efforts

In early December, Assemblywoman Sandy Galef (Westchester) introduced a bill that would have the New York State Division of Human Rights develop and implement a uniform sexual harassment policy that would apply to employees of State agencies, offices, departments, and members and employees of the State Assembly and Senate. The policy would create a standard procedure for the handling of sexual harassment complaints and investigation. The future of this bill, and any other new legislation that may come out of this national moment of reckoning regarding sexual harassment, remains to be seen.

For guidance on employee handbooks, policies, and procedures to create a safe workplace, please contact us.

One of the more challenging and ever-evolving issues that we continue to see is determining what is necessary to obtain personal jurisdiction in New York State over an individual or business that resides or does business out of state. If you are dealing with real property in New York, a tort that occurred in New York, or a defendant who resides in or regularly does business in New York, jurisdiction is easily exercised.  The issue arises when the defendant you are seeking to sue in New York has few or no ties to the state.  In such cases, courts go through a very fact-specific analysis to determine whether the defendant has sufficient contacts within New York to avail itself of jurisdiction here.

A recent Suffolk County Commercial Division decision from Justice Emerson in Katherine Sales & Sourcing, Inc. v. Fiorella provides a great snapshot of what courts will consider when determining whether personal jurisdiction exists over an out-of-state defendant.  This derivative action centered on the plaintiff’s claims that defendants engaged in a scheme to defraud a company they jointly owned, Zingarr Sales and Marketing, by submitting fraudulent and inflated bills for services rendered to Zingarr and diverted contracts to a business separately owned by defendants, TGG Direct.

The rundown on the confusing cast of characters in this case: the plaintiff, Katherine Sales and Sourcing, is a New York corporation that owned a 50% interest in one of the nominal defendants, Zingarr, a New Jersey limited liability company that is authorized to do business in New York.  Zingarr is in the business of developing, manufacturing, and selling consumer goods to retail stores, online retailers and wholesalers and has offices in both New Jersey and New York. The other 50% owner of Zingarr is another nominal defendant, Emily Gottschalk, who also owns and manages a third nominal defendant, TGG, a New Jersey limited liability company with offices in New Jersey. Gottschalk and non-party Arthur Danzinger are co-managers of Zingarr.  Danzinger is also the president and a shareholder of Katherine Sales.  Gottschalk’s office is in New Jersey, while Danzinger’s is in New York. Defendant Robert Fiorella is a resident of California, where he maintains an office.  So, in summary, we have a New York plaintiff, nominal defendants in New York and New Jersey, and a defendant who resides in and has an office solely in California.  Fiorella made a motion to dismiss the case against him for lack of personal jurisdiction.

Fiorella was hired by Zingarr at Gottschalk’s request to perform certain consulting services for Zingarr over a period of seven months in 2014.  Fiorella performed all services in California, and never came to New York.

In her decision, Justice Emerson first noted that CPLR 302(a)(1) provides that the court can exercise jurisdiction over a nondomiciliary who transacts any business in New York if the plaintiff’s claims arise from the transaction of such business.  Opticare Acquisition Corp. v. Castillo, 25 A.D.3d 238, 243 (2d Dep’t 2005).  A single act of business in New York has been held to be sufficient under certain circumstances when the business activities in New York were purposeful and there is a substantial relationship between the transaction and the claim asserted.  Id.  While being physically present in New York when a contract is agreed to is generally sufficient to confer jurisdiction, courts will likely not exercise jurisdiction over a non-resident when the contract was negotiated solely by mail, phone, or fax without any New York presence by the out-of-state defendant.  Patel v. Patel, 497 F.Supp. 2d 419, 428 (E.D.N.Y. 2007).  

The court found that although Fiorella had an ongoing relationship with Gottschalk and Zingarr, he never entered New York to negotiate their consulting arrangement, to perform under that consulting arrangement, or for any reason related to his relationship with Gottschalk and Zingarr.  Fiorella’s only actual contacts with New York that directly related to the consulting services were through telephone calls and emails with Danzinger, which the Court found were incidental to the work Fiorella was performing for Gottschalk.  Indeed, Fiorella’s primary business relationship was with Gottschalk, who was located in New Jersey.  The Court also factored in that the calls and emails from Danzinger were initiated by Danzinger and Fiorella was merely responding, thus not actively and purposely availing himself to New York activities.  Fiorella also sent two of the products at issue to Danzinger in New York but, again, these were sent at Danzinger’s request and, as such, the court held that Fiorella was not purposely availing himself to New York.

The court went on to consider the other options to exercise jurisdiction over Fiorella under CPLR 302(a)(2) and (3), but found that the plaintiff could not establish that Fiorella committed a tortious act in New York nor could plaintiff establish that it has sustained any injury other than a financial loss in New York.

Based on this analysis, the court dismissed the Complaint against Fiorella for lack of jurisdiction.  While there is no concrete standard for analyzing the sufficiency of an out-of-state defendant’s contacts with New York, this decision further amplifies the importance of evaluating how you are going to obtain personal jurisdiction over an out-of-state defendant before you commence the lawsuit. If you are the plaintiff, it is critically important to know in advance whether the out-of-state defendant does any business in New York, has an office in New York, negotiated an agreement at issue in New York, held meetings in New York, performed services in New York, regularly communicated with individuals in New York, and so on.  As seen in this case, if you are unable to establish a New York presence for an out-of-state defendant, your case could be over before it begins.