From MSJ Granted to a $5 Million Jury Verdict: Elward v. Sealy, Inc.

Mar 26

Executive Summary

On February 20, 2026, a federal jury in the Western District of Washington awarded $5 million in noneconomic damages to Jamie Elward, a former assembler at Sealy, Inc.’s mattress factory in Lacey, Washington. The jury found in Elward’s favor on both her quid pro quo and hostile work environment claims under Washington’s Law Against Discrimination (WLAD), and rejected Sealy’s Faragher-Ellerth affirmative defense. The verdict came after the Ninth Circuit reversed a full grant of summary judgment to Sealy, finding that disputes of material fact precluded judgment as a matter of law on both claims.

Category	Amount
Noneconomic Damages (Jury)	$5,000,000
Economic Damages	Not Sought
Attorney Fees & Expenses (Pending)	$1.97M–$2.69M
Post-Judgment Interest (Pending)	12% per annum
Total Verdict	$5,000,000*

*Excludes pending attorney fees, expenses, and post-judgment interest

Case Information

Case: Elward v. Sealy, Inc.

Court: United States District Court, Western District of Washington at Tacoma

Case No.: 3:22-cv-05645-BHS

Judge: Hon. Benjamin H. Settle, U.S. District Judge

Appellate Case: Nos. 23-4143, 23-4421 (9th Cir.)

Appellate Panel: Circuit Judges McKeown and Owens; District Judge Kendall (N.D. Ill., sitting by designation)

Verdict Date: February 20, 2026

Matter: Sexual harassment—quid pro quo and hostile work environment—under Washington’s Law Against Discrimination (WLAD), RCW ch. 49.60

Parties

Plaintiff: Jamie Elward, former assembler at Sealy’s Lacey, Washington mattress factory

Defendant: Sealy, Inc. (a subsidiary of Tempur Sealy International, Inc.)

Counsel

Plaintiff’s Counsel:

• Hugh J. McGavick, Law Office of Hugh J. McGavick, PS, Tumwater, WA (WSBA #12047)

• Asa C. Garber, Reason Legal, LLC, Denver, CO (WSBA #43588)

• Richard Wooster (consulting role)

Defendant’s Counsel:

• Ogletree, Deakins, Nash, Smoak & Stewart, PC, Seattle, WA

Key Findings

The jury returned the following findings on the verdict form:

• Quid pro quo WLAD claim: Found for Plaintiff (Yes)

• Hostile work environment WLAD claim: Found for Plaintiff (Yes)

• Tangible employment action: Found for Defendant (No)—the jury found that Sealy did not take a tangible employment action against Elward

• Faragher-Ellerth affirmative defense: Rejected (No)—the jury found Sealy did not prove its affirmative defense to the hostile work environment claim

• Total damages: $5,000,000 (noneconomic damages only—Elward did not seek economic damages)

Factual Background

Jamie Elward began working at Sealy’s mattress factory in Lacey, Washington in August 2020 as a box spring grid assembler in the foundation department. By all accounts she was a good employee. Her original supervisor, Mr. Johnson, viewed her as a valued worker and capable of advancement.

On September 20, 2021, Sealy assigned a new supervisor to Elward’s department: Mr. Perez. What Sealy did not tell Elward—or anyone else in the department—was that Perez had been the subject of sexual harassment complaints at the same facility less than five months earlier. In a March 2021 investigation prompted by a complaint from another female employee, Celerina Zavala, Sealy interviewed 19 witnesses. Zavala reported that Perez had told her that if she wanted to change her shift time, she would need to “spread [her] legs.” Multiple other female employees confirmed that Perez engaged in inappropriate touching, made sexual comments, and made them feel uncomfortable. Several women told investigators they had not previously reported Perez’s conduct because they did not believe Sealy would take it seriously, feared it would be dismissed as a “he-said-she-said” conflict, and worried Perez would be left in charge to retaliate. Sealy closed the investigation by issuing Perez a written warning for calling female employees “babe” and “baby”—an allegation he had admitted to—but dismissed the quid pro quo allegation as lacking “sufficient evidence.”

According to Elward’s trial brief, within days of becoming her supervisor, Perez began what she characterized as a “grooming” campaign. He used his authority to get Elward alone by sending other workers home while keeping her behind. He told her he was excited to “have [her] all to [himself].” He leaned in closely and talked quietly to her in a manner he did not use with male employees. He rubbed her shoulders and back. He told her to stop having lunch with coworkers, stop spending time with them on breaks, and stop socializing with them. He emphasized that everything he discussed with her was private and could not be shared with anyone—not coworkers, not managers, not even her husband. He insisted she be “loyal” only to him, framing secrecy as necessary for his efforts to get her a supervisor promotion.

Critically, Perez also sought to isolate Elward from HR. When she tried to go upstairs—where the Human Resources office was located—Perez would stop her, going himself or sending someone else. This conduct would later become significant in both the Ninth Circuit’s analysis and the jury’s rejection of Sealy’s Faragher-Ellerth defense.

The harassment escalated sharply during the week of November 15, 2021. On Monday, November 15, Perez cornered Elward under the pretense of discussing work, stroked her forearm, and told her he “wanted to make love” to her. He apologized the following day but told Elward on Wednesday, November 17, that what he had said was true. Perez then cornered Elward for approximately 40 minutes—after sending everyone else out of the department—and made graphic sexual statements, including describing specific sex acts he wanted to perform on her. He again raised the prospect of a supervisor work trip, suggesting they would share a hotel room. Sean Coatney, the Operations Manager who had investigated the prior complaints against Perez, walked past twice during this 40-minute exchange and did nothing.

Elward had begun secretly recording her conversations with Perez after the November 15 incident, hoping to avoid a “he-said-she-said” situation with Sealy. On November 18, Perez apologized again but then asked Elward whether she would still go on the supervisor trip. When Elward said she had “standards,” Perez asked whether she would lower them if he got her drunk.

On November 18, Elward broke down crying during a break with coworker Mario Arellano-Zanabria, telling him what Perez had been doing. Arellano-Zanabria agreed to stay with Elward for the rest of the day so Perez could not get her alone again. The next morning, Friday, November 19, Elward went upstairs to report to HR. As she opened the door, she ran into her former supervisor, Greg Johnson. When she told him she “can’t take it anymore,” Johnson immediately responded: “What, Alfredo?” Elward had never spoken to Johnson about Perez before. Johnson later told Elward she was the third or fourth woman at the plant to make sexual harassment complaints against Perez.

Elward reported the harassment to HR representative Shannon Holliday. Elward asked Holliday to listen to the audio recordings she had made of Perez; Holliday refused, citing a policy against workplace recordings. Elward asked Holliday to review security camera footage from the relevant dates; Holliday did not do so. Sealy later allowed the surveillance footage to be auto-deleted, despite Elward having identified it and her counsel having sent a preservation notice. When Elward asked that Perez be fired, Holliday reportedly responded: “We can’t do that because that’s a lawsuit.”

Perez, upon learning that Elward had “gone upstairs,” fled the workplace that same day. He gave his two-week notice over the weekend and asked to use accrued vacation time rather than return. Sealy accepted the resignation. Sealy asserted throughout the litigation that it intended to fire Perez when he returned the following Monday. Sealy’s investigation ultimately concluded that Elward’s sexual harassment allegation was “unable to validate.”

Elward continued to work at Sealy for approximately two more months before voluntarily resigning in February 2022 to accept a higher-paying position at Home Depot. She filed suit in August 2022.

Procedural History

The procedural arc of this case is a striking example of how aggressively a defendant can win at the dispositive motion stage and still face a massive verdict at trial.

Elward initially filed in state court, asserting claims under WLAD. Sealy removed to federal court in September 2022. On cross-motions for summary judgment, Judge Settle granted Sealy’s motion in full in November 2023. The court dismissed the quid pro quo claim with prejudice, finding that even viewed in the light most favorable to Elward, the evidence did not support a finding that Perez sought sexual consideration in exchange for a job benefit. Perez did not have the authority to promote Elward, and she knew that it was up to Perez’s boss, Coatney, whether she could attend the supervisor trip. The court also dismissed the hostile work environment claim, holding that the Faragher-Ellerth defense applied to WLAD claims, that Elward suffered no tangible employment action, that Sealy maintained a reasonable No Harassment Policy, and that Elward’s failure to promptly report was unreasonable as a matter of law.

Elward appealed. The case was argued before a Ninth Circuit panel in Seattle on March 25, 2025. On April 24, 2025, the panel issued an unpublished memorandum disposition reversing summary judgment on both claims and remanding for trial. On the quid pro quo claim, the Ninth Circuit found that disputes of material fact remained as to whether Perez conditioned the supervisor trip on Elward’s agreement to have sex with him, and whether he had the authority—actual or apparent—to deliver that benefit. The court observed that despite Coatney’s denial, Perez continued to imply he had leverage to get Elward onto the trip, including suggesting he would pay for her ticket with a company card if she would share a room. On the hostile work environment claim, the panel agreed that Faragher-Ellerth applies to WLAD, affirming the district court on that point of law, but found questions of fact precluded application of the defense. Specifically, Sealy had failed to monitor Perez for sexual harassment after the prior substantiated claims and written warning. And a jury could find Elward’s brief delay in reporting was not unreasonable, given that Perez had actively deterred her from accessing HR.

The panel also denied Elward’s motion to certify the Faragher-Ellerth question to the Washington Supreme Court and affirmed the denial of Sealy’s sanctions motion related to Elward’s spoliation of audio recordings.

The five-day jury trial began on February 17, 2026, before Judge Settle. On February 20, the jury returned its verdict.

Analysis

The reporting delay and the Faragher-Ellerth defense. The central defense issue in this case—at summary judgment, on appeal, and at trial—was whether Sealy could avoid liability through the Faragher-Ellerth affirmative defense. The district court found the defense established as a matter of law, concluding that Elward’s decision to delay reporting while she gathered audio evidence was per se unreasonable. The Ninth Circuit disagreed, holding that a jury could find the delay—a matter of days within the same work week—was reasonable in context, particularly because Perez had actively isolated Elward from HR. At trial, the jury agreed with Elward, rejecting the defense.

This outcome underscores a reality that practitioners on both sides of the aisle know well: the Faragher-Ellerth defense, while powerful at summary judgment, faces a much steeper climb before a jury. When the harasser has actively worked to prevent the victim from reaching HR—by discouraging contact with management, demanding secrecy, and monitoring access to the HR office—the second prong of the defense becomes exceedingly difficult to prove. For plaintiff’s counsel, this case illustrates the value of developing the factual record around the harasser’s isolation tactics. For defense counsel, it demonstrates that a formal anti-harassment policy alone is insufficient when there is evidence that the employer’s own supervisory structure was weaponized to prevent its use.

The prior complaints and Sealy’s response. The first prong of Faragher-Ellerth requires that the employer “exercised reasonable care to prevent and correct” harassment. Sealy’s treatment of the March 2021 Zavala complaint was a significant vulnerability. Sealy investigated thoroughly—interviewing 19 witnesses over several weeks—but its remedial response arguably fell short. Despite multiple women reporting inappropriate conduct, the only documented corrective action was a written warning for calling female employees “babe” and “baby.” The more serious quid pro quo allegation was dismissed as lacking “sufficient evidence,” and Sealy did not investigate the additional misconduct allegations uncovered during its own investigation. Perhaps most damaging, when Zavala herself experienced apparent retaliation from Perez after reporting—he changed her to unfamiliar job duties and responded aggressively when she questioned it—Sealy investigated but took no further action. Perez was then reassigned to supervise Elward’s department without any warning to the women who would now work under him. A jury hearing this sequence could reasonably conclude that Sealy’s response was not calculated to prevent future harassment.

The quid pro quo finding. The jury’s finding on the quid pro quo claim is notable because Judge Settle had concluded at summary judgment that the undisputed facts could not support it. The district court read the evidence as showing that Perez did not have authority to promote Elward, that she knew the trip was Coatney’s decision, and that the exchange did not constitute attempted extortion of sexual favors for a job benefit. The Ninth Circuit disagreed, finding that a jury could view Perez’s repeated implications that he could secure the trip for Elward—including his suggestion that he would use a company card to pay for her ticket—as an implicit conditioning of a job benefit on sex. At trial, the jury saw it that way. Under WLAD, apparent authority to make employment decisions is sufficient. The case provides a useful illustration that quid pro quo findings do not require the harasser to actually possess the authority he claims; it is enough that the employee reasonably believed the harasser could deliver on the promise.

$5 million in noneconomic damages—with no lost wages, no medical expert, and no diagnosed injury. Perhaps the most significant aspect of this verdict for practitioners is what it did notinclude. Elward did not seek economic damages of any kind. She was never terminated; she voluntarily resigned approximately two and a half months after reporting to accept a higher-paying position at Home Depot, where Sealy’s own trial brief acknowledged she earns better pay, better benefits, and a more consistent schedule. There was no lost wages claim, no mitigation issue, and no front pay demand. The entire $5 million award is for emotional distress and anguish.

What makes this even more notable is that Elward presented no medical expert testimony. Neither party identified a medical expert to call at trial. Elward invoked RCW 49.60.510, which permits a WLAD plaintiff to seek noneconomic damages without waiving her healthcare privilege, and she did not claim damages based on any “specific diagnosed physical or psychiatric injury.” In other words, this was a garden-variety emotional distress case in the truest sense—the jury heard lay testimony from Elward and other witnesses about the emotional impact of the harassment, and nothing more.

Sealy’s trial brief predicted that any emotional distress award would be “modest,” characterizing Perez’s conduct as occurring on “only three days” of Elward’s 17-month tenure. The jury’s $5 million answer to that framing is a powerful data point for plaintiff’s employment counsel in Washington and the Ninth Circuit. It reflects, in all likelihood, the jury’s rejection of the “three bad days” narrative and its acceptance of Elward’s characterization of a sustained, deliberate campaign of grooming and isolation that fundamentally altered her work experience over nine weeks.

For defense practitioners, the verdict is a cautionary illustration of the risk of taking a garden-variety emotional distress case to trial before a jury when the underlying facts involve a pattern of predatory supervisory conduct, an employer on notice from prior complaints, and a company investigation that concluded it was “unable to validate” harassment that the harasser himself effectively confirmed by fleeing the workplace. Sealy’s trial brief indicated it anticipated moving for a directed verdict at the close of Elward’s case in chief. The $5 million verdict suggests the jury was not receptive to the defense’s framing of the case.

Spoliation issues on both sides. Both sides had spoliation vulnerabilities. Elward deleted or edited portions of the audio recordings she made of Perez, including all but approximately 35 seconds of a 49-minute recorded conversation. Sealy sought sanctions, including dismissal, but both the district court and the Ninth Circuit declined. Meanwhile, Sealy allowed security camera footage—which Elward had specifically asked HR to review and which her counsel had asked Sealy to preserve—to be auto-deleted. Sealy also lost or destroyed HR’s handwritten notes from both the Zavala and Elward investigations. The cross-cutting spoliation issues likely neutralized both sides’ ability to gain much traction on evidence destruction arguments at trial.

Faragher-Ellerth and the WLAD: still an open question. The Ninth Circuit confirmed the district court’s holding that Faragher-Ellerth applies to WLAD claims, following Division III’s decision in Sangster v. Albertson’s, Inc., 99 Wn. App. 156 (2000). The panel denied Elward’s motion to certify the question to the Washington Supreme Court, finding no clear conflict among Washington courts and noting a strong Ninth Circuit presumption against certification sought only after an adverse ruling. However, as the district court itself observed, the Washington Supreme Court has never expressly adopted the defense. For practitioners, the defense remains available in WLAD cases in federal court, but its status in Washington state court remains at least theoretically unsettled.

Pending Fee Petition

Following the verdict, Elward filed a motion for attorney fees and expenses under RCW 49.60.030(2). The fee petition seeks recovery for two attorneys: Hugh J. McGavick (1,247 hours at $910/hour, lodestar of $1,134,770) and Asa C. Garber (924.3 hours at $710/hour, lodestar of $656,253), plus 5 hours for Richard Wooster at $800/hour. Plaintiff requests a multiplier ranging from 1.1x to 1.5x, which would bring the combined fees to between approximately $1.97 million and $2.69 million, plus $20,939.93 in expenses and 12% post-judgment interest on the $5 million judgment from the date of verdict. The fee motion is currently pending and Sealy has opposed it, arguing that plaintiff’s counsel overbilled and proposed exorbitant rates.