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July 26, 1990;

Margaret W. RAUH, Plaintiff,
Marshall B. COYNE, et al., Defendants; Renate BOTTALICO, et al., Plaintiffs, v. Marshall B. COYNE, et al., Defendants

Harold H. Greene, United States District Judge.

The opinion of the court was delivered by: GREENE


 The instant consolidated actions arise out of an alleged sexual assault on a former Madison Hotel employee, plaintiff Renate Bottalico, by defendant Wlodawsky, the hotel's director of operations, and the subsequent discharge of Bottalico's immediate supervisor, plaintiff Renee Immesghen, after she reported the incident to defendant Marshall Coyne, the owner of the Madison Hotel. Plaintiff Ingrid Davis alleges that she too, was sexually harassed by Wlodawsky and discharged after reporting the harassment to her supervisor. Presently before the Court are several motions to dismiss.


 Coyne Defendants' Motion to Dismiss

 Defendants Marshall B. Coyne, Madison Management Corp., and Madison Hotel Inc. ("the Coyne defendants") have filed a motion for partial dismissal or, in the alternative, to strike plaintiff Bottalico's claim for reinstatement, backpay, and compensatory and punitive damages resulting from her termination. The motion raises a number of issues.

 1. Failure to Exhaust Administrative Remedies

 Defendants also assert that plaintiffs failed to obtain a "right to sue" notice from the Equal Employment Opportunity Commission before bringing a civil suit. The EEOC issued the letters on May 22, 1989 after the motion in this Court was filed. Amended Complaint, Attachments B-D. Receipt of right-to-sue letters during the pendency of a Title VII action cures any defects caused by a failure to receive the notice earlier. Williams v. Washington Metropolitan Area Transit Authority, 232 U.S. App. D.C. 251, 721 F.2d 1412, 1418 n. 12 (D.C. Cir. 1983).

 Thus, the claimed failure to exhaust lacks merit on either basis.

 2. Coyne Defendants' Liability for Employee Actions

 Plaintiff Bottalico alleges that Wlodawsky sexually assaulted her on one occasion and made sexually harassing remarks to her on a number of others. Bottalico further asserts that when her supervisor reported the incidents to management, the supervisor was fired. According to the complaint, Wlodawsky created a hostile work environment, and the Coyne defendants, as Wlodawsky's supervisors, are liable for his actions.

 The Coyne defendants argue that they neither knew, nor had reason to know, of Wlodawsky's acts, and that they therefore cannot be held liable for them. That argument, too, is flawed.

 First. The allegations in the complaint, which must be taken as true for purposes of a motion to dismiss, provide ample basis for a finding that the Coyne defendants had reason to know of the harassment and that they were negligent in not discovering and preventing it. See Restatement (Second) of Agency § 219(2)(b), (d) (master liable for torts of servant if master negligent or reckless).

 On January 31, 1988 -- six months before the assault on Bottalico -- Wlodawsky allegedly invited plaintiff Ingrid Davis, a catering secretary at the hotel, to a hotel room to "watch dirty movies and drink schnapps." Davis reported this to her supervisor, Julia Carroll, who, in turn, reported it to the hotel's security director. Wlodawsky also discussed the allegations with defendant Marshall Coyne. On February 11, 1988, Julia Carroll allegedly was fired in retaliation for reporting the incident. The complaint also alleges that Wlodawsky made inappropriate sexual remarks to a number of women hotel employees other than the plaintiffs. *fn1" The number of incidents alleged suggests that an investigation might well have uncovered the problem.

 According to plaintiff, the Coyne defendants made no substantial effort to investigate these allegations. There is no indication that other employees whom Wlodawsky supervised were contacted; no attempt was made to ascertain whether similar incidents had occurred with other women; and the Madison Hotel did not promulgate a written policy on sexual harassment until after the instant lawsuit was filed. See Meritor Savings Bank v. Vinson, 477 U.S. 57, 72, 91 L. Ed. 2d 49, 106 S. Ct. 2399 (1985).

 Second. The "reason to know" test, heavily relied on by the Coyne defendants, is not the exclusive basis upon which an employer may be held derivatively liable. Employers have been held liable on such a basis for hostile work environment harassment where the harassing employee had decision-making authority or authority to alter the plaintiff's employment status. See Huddleston v. Roger Dean Chevrolet, 845 F.2d 900, 904 (11th Cir. 1988); Hunter v. Allis-Chalmers Corp. Engine Div., 797 F.2d 1417, 1423 (7th Cir. 1986) ...

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