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Can an employer be held liable under Title VII when it fires an employee based on a good faith belief that she falsely accused another employee of sexual harassment — even if that belief may have been based upon a mistake of fact? The Fourth Circuit Court of Appeals recently considered this question in the case of Villa v. CavaMezze Grill, LLC. Based on the facts presented in that case, the court concluded that without evidence of retaliatory motivation, the employer CavaMezze Grill (CMG) did not violate Title VII. This case demonstrates that an employer acting in good faith can reach a conclusion which may be incorrect, but not unlawful. However, the likelihood of success in such cases may depend on the strength of the employer’s investigation of the reported harassment.

Villa was employed as a low level manager for a restaurant owned by CMG, and she reported to the restaurant’s General Manager Marcelo Butron. During her employment, she informed CMG’s Director of Operations Rob Gresham that a former employee (Judy Bonilla) of the restaurant had told Villa that Butron had offered to give the employee a raise in exchange for sex. Villa claimed that there was a witness to this conversation. Villa also informed Gresham that another former employee of the restaurant had quit her job because Butron had made a similar offer to her. Gresham initiated an investigation of these allegations, which included interviews of the two identified victims of the alleged harassment. However, both of those individuals specifically denied that Butron had engaged in the conduct reported by Villa, and Bonilla also denied telling Villa that such harassment had occurred. The individuals also stated that they quit their jobs for reasons that had nothing to do with the alleged harassment. Moreover, the supposed witness identified by Villa denied knowing anything about the alleged harassment. Based upon this investigation, Gresham concluded that Villa had falsified her report, and the company terminated her employment for that reason.

Villa subsequently filed a lawsuit in Federal district court against CMG claiming that her termination constituted retaliation in violation of Title VII. Specifically, she alleged that the internal report she made to Rob Gresham of sexual harassment constituted protected activity under Title VII, and that she was terminated because she made such report – regardless of whether CMG thought that the report was fabricated. In an interesting twist, Bonilla changed her story during her deposition, and testified that she in fact did tell Villa that she had been offered a raise by Butron in exchange for sex. Nevertheless, the district court granted CMG’s motion for summary judgment dismissing the case. Villa then appealed to the Fourth Circuit, which affirmed the lower court’s dismissal.

In reaching its decision, the Fourth Circuit focused on Title VII’s “opposition clause” which prohibits an employer from retaliating against an employee because she opposes in good faith any practice made unlawful by Title VII. Such opposition can include making an internal report to the employer of the unlawful activity in the workplace. However, and according to established case law, false reports to an employer do not constitute a protected opposition activity. Based on the undisputed facts, the Fourth Circuit concluded that CMG did not know when it fired Villa that she had engaged in any protected conduct, because the company honestly believed that she had falsified her report about the alleged harassment. Villa conceded that the sole and true reason for her termination was the company’s belief that she had made the false report. Thus the fact that the company may have been mistaken in that belief (based on evidence that one of the alleged victim’s changed her story about what she told Villa), was of no consequence to the case. Villa ultimately failed to produce any evidence of unlawful retaliatory motivation regarding her termination.

The Fourth Circuit’s decision in Villa is instructive for employers. While false reports to an employer of alleged unlawful conduct in the workplace are not protected under Title VII, employers must exercise extreme caution in terminating any employee based on its belief that the employee made a false report. Whenever an employer receives an internal report of potential unlawful conduct, it has a duty to conduct a prompt, thorough, and objective investigation pursuant to a published and consistently-applied policy against discrimination and harassment. Such investigations normally include interviews of the alleged victims of the conduct, the alleged violator, and any witnesses who might corroborate the allegations. Such investigations often involve difficult assessments of credibility, and conflicting versions of the events are common. As the Villa case demonstrates, an employer’s conclusions drawn from its investigation do not necessarily have to be correct; however, the likelihood of liability is much greater if the employer is unable to demonstrate that its conclusions were based upon a reasonable good faith effort to uncover and eradicate any unlawful practices in the workplace.

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