By Jonathan Stempel 

WASHINGTON, Nov 26 (Reuters) - Fourteen years after deciding that employers can be liable for workplace harassment by supervisors they employ, the U.S. Supreme Court on Monday appeared to struggle with an issue left unanswered: who qualifies as a supervisor.

A decision in the case against Ball State University, brought by a black catering assistant named Maetta Vance, could clarify how readily harassment victims may hold deeper-pocketed employers accountable under federal law.

Several justices questioned where best to draw the line, a task made harder by the agreement of the parties arguing in court that the standard set by the 7th U.S. Circuit Court of Appeals in Chicago in dismissing Vance's case was too strict.

In that June 2011 ruling written by Judge Diane Wood, considered one of its more liberal members, the 7th Circuit said that to be a supervisor, an employee must have the power to hire, fire, demote, promote, transfer or discipline the victim.

Three federal appeals courts have adopted this standard, while three others have said day-to-day oversight is enough to result in liability. A definition proposed by the Equal Employment Opportunity Commission resembles the latter standard.

At Monday's oral argument, Chief Justice John Roberts suggested to Vance's lawyer Daniel Ortiz that the 7th Circuit standard might prove workable.

He posed a scenario in which the most senior of five employees assigned to work in a single room gets to choose the background music, and tells a colleague: "I know you don't like country music; if you don't date me, it's going to be country music all day long.

"I would have thought, under your theory, that means that senior employee is a supervisor," Roberts said. "I would have thought the benefit of the 7th Circuit was that you don't have to go on a case-by-case basis."

Some justices suggested other scenarios, including whether a person becomes a supervisor by having authority to control a thermostat, or decide which employee must work in the only office without air conditioning.

In contrast, Justice Elena Kagan suggested that the 7th Circuit test might be too lenient on employers.

She said, for example, that a university could be freed from liability if a professor subjected a secretary to "living hell, complete hostile work environment on the basis of sex," solely because the secretary could not be fired by the professor, but rather by the head of secretarial services.

SLIDING SCALE

Vance, a black catering assistant at Ball State in Muncie, Indiana, who prepared everything from boxed lunches to formal dinners, had claimed she faced racial epithets and threats of physical harm at work.

Many of her problems stemmed from her dealings with Saundra Davis, a white woman she viewed as a supervisor. She said general manager Bill Kimes, also white, did not protect her and treated other workers better.

Vance said Ball State eventually retaliated against her complaints by making her a "glorified salad girl" who cut vegetables and washed fruit, despite a recent promotion.

Justice Samuel Alito suggested that this might not be enough to subject Ball State to liability.

"What is the most unpleasant thing that Davis could have assigned?" he asked. "Chopping onions all day, every day?"

Ortiz said the standard was not that precise, and that courts would have to use a "sliding scale of negligence" to review harassment claims.

He said a person who oversees a victim's work and can "instill either fear into the victim (or) control the physical location of the victim" would qualify as a supervisor.

INCOMPLETE ANSWER

Gregory Garre, arguing for Ball State, said the 7th Circuit standard was not a "complete answer," and that a harassing employee whose control of a victim's work meaningfully aided the harassment could subject an employer to liability.

But he said that Davis, under any definition, did not qualify as a supervisor, and therefore that Vance must lose.

With the parties in agreement that the 7th Circuit test was too restrictive, some justices suggested possible concern about having taken the case to begin with, given that the Supreme Court does not generally issue "advisory" opinions.

Alito asked "why shouldn't we just remand" to more fully develop the record, while Justice Antonin Scalia said, "There's nobody here defending the 7th Circuit" in the courtroom.

The federal government officially supported neither party, suggesting that the similar standards proposed by the EEOC and the 2nd U.S. Circuit Court of Appeals in New York might be appropriate.

"Control over daily work activities is where we would draw the line," Deputy Solicitor General Sri Srinivasan said.

Several women's and civil rights groups supported Vance's appeal, while the U.S. Chamber of Commerce, the National Retail Federation and various conservative groups supported Ball State.

A decision is expected by the end of June.

The case is Vance v. Ball State University, U.S. Supreme Court. No. 11-556.

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