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08/04/94 MELODY C. GEISE v. PHOENIX COMPANY CHICAGO

August 4, 1994

MELODY C. GEISE, APPELLEE,
v.
THE PHOENIX COMPANY OF CHICAGO, INC., ET AL. (THE PHOENIX COMPANY OF CHICAGO, INC., APPELLANT).



Harrison

The opinion of the court was delivered by: Harrison

JUSTICE HARRISON delivered the opinion of the court:

Melody Geise brought this common law tort action in the circuit court of Du Page County to recover damages from the Phoenix Company of Chicago, Inc. (Phoenix), and the company's national sales manager, William Walthall. The basis for her claim was that Walthall had harassed her sexually, then caused her to be fired fromher job as a sales representative for Phoenix when she reported his misconduct to the company.

Phoenix did not deny that Walthall was guilty of improper conduct, but claimed that it was not legally responsible for his actions. Although the circuit court agreed and dismissed the counts against Phoenix with prejudice pursuant to section 2-615 of the Code of Civil Procedure (735 ILCS 5/2-615 (West 1992)), the appellate court reversed and remanded for further proceedings (246 Ill. App. 3d 441). We then granted Phoenix leave to appeal (134 Ill. 2d R. 315(a)). For the reasons that follow, we now reverse the judgment of the appellate court, affirm the judgment of the circuit court, and remand for further proceedings.

Because Geise's claims against Phoenix were dismissed on the pleadings, we must accept as true all well-pleaded facts in her complaint and all inferences that can reasonably be drawn from those facts. ( Kolegas v. Heftel Broadcasting Corp. (1992), 154 Ill. 2d 1, 9, 180 Ill. Dec. 307, 607 N.E.2d 201.) According to the complaint, Phoenix hired Geise as an inside sales representative on May 7, 1990. Throughout Geise's employment, Walthall made numerous sexual advances toward her that were unsolicited and without her consent. He tried to kiss and touch her. He dropped things down the front of her blouse. He misled her into believing that certain lunch meetings were business related, when they were actually "orchestrated with the purpose of making sexual advances toward [Geise]."

This was not the first time Walthall had engaged in such activity. Geise alleges that Walthall had a "history and preDisposition of sexual harassment against women employees and co-workers" before assuming his managerial responsibilities at Phoenix. In fact, she asserts, he was dismissed from previous employment for engaging in such conduct. Geise claims that Walthall's history ofsexual misconduct at work would have been discoverable by Phoenix if only the company had made reasonable inquiries before it hired him.

Geise herself made numerous complaints to her supervisors about Walthall's conduct, but the company did nothing. Although it subsequently conducted an investigation based on new allegations by Geise and was able to confirm her charges, it still failed to take any remedial action against Walthall. Instead, on May 1, 1991, Geise was fired as a measure by WILLIAM WALTHALL to retaliate against [Geise] for her failure to submit to his sexual advances and her attempts to inform PHOENIX of his actions." In addition, Geise alleges, Walthall's misconduct caused her to suffer severe emotional distress, manifested by anxiety, weight loss, sleeplessness, and depression.

Geise's complaint, as amended, contained four counts. Counts I and II were directed against Walthall and are not at issue here. This appeal concerns only counts III and IV, which sought to impose liability on Phoenix.

Count III, denominated as a claim for "negligent retention of employee," alleges that Phoenix gave Walthall primary supervisory duties over sales personnel such as Geise and made him responsible for evaluating their professional performance. Count III further alleges that Walthall was "unfit for the position of National Sales Manager, that required him to work with and have authority over women, and that Phoenix knew or should have known that this was so.

According to count III,

"in view of the relationship of authority and control imposed by the managerial position conferred on Defendant Walthall, the Defendant Phoenix owed a duty to its employees to protect them from harm to their persons, property and career advancement."

Geise avers that Phoenix breached this duty when itfailed to take any remedial action after "having factual knowledge and confirmation of Defendant Walthall's sexual harassment toward Plaintiff."

Count IV, designated as "negligent hiring of employee," incorporates all of the preceding allegations of the complaint. In addition, it charges (1) that at the time Phoenix employed Walthall, he had "a history of sexual discrimination and harassment, having been dismissed from previous employment for reasons of sexual discrimination and harassment," (2) that Walthall's improper behavior toward women employees at his previous job could have been discovered by Phoenix through reasonable inquiry, and (3) that Phoenix "owed a duty to [Geise] to investigate and breached its duty of care to its employees by hiring [Walthall] when [it] knew or should have known of his propensity for sexual harassment and discrimination." Count IV further charges that Phoenix was reckless and grossly negligent when it hired Walthall, notwithstanding his prior misconduct, for a position that required him to work with and have authority over women.

Phoenix moved to dismiss counts III and IV pursuant to section 2-615 of the Code of Civil Procedure (735 ILCS 5/2-615 (West 1992)) on the grounds that they failed to state a cause of action. As noted at the outset of this opinion, the circuit court granted Phoenix's motion and dismissed both counts with prejudice. At the same time, it made an express written finding ...


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