The following month, Kessel stated at a meeting that he was happy that his wife had a c-section, as his wife's genitalia was still in tact. Waechter did not attend the meeting, but several employees reported the incident to her. On other occasions, Kessel mentioned to Waechter the details of his sex life with his wife. In March of 2003, Kessel made comments about Waechter's clothing. Kessel stated that a male patient remarked on her chest and proceeded to ask her to wear clothing that was not so revealing. On another occasion, Kessel showed Waechter photographs of a Carribean vacation. The pictures depicted Kessel, his wife, and other couples scantily clad on the beach. In the Fall of 2004, Kessel received physical therapy at the clinic in close proximity to Waechter's work area. Shirtless, he opened the door to the examination room and beckoned Waechter to come in the room. She refused.

On another occasion in March of 2005, Waechter traveled to Washington, D.C. with her family. Kessel, treating one of Waechter's patients, stated that she was out "screwing around" so that she could have another baby. "You can follow up with Dr. Waechter when she returns from screwing," he stated. Waechter heard about this comment and confronted Kessel, who denied making the statement. During the course of her employment, he continued to make dirty jokes and rude comments. Joseph Sigmon, another doctor at the clinic, testified that Kessel would always tell dirty, sexual jokes to men and women alike. Kessel was not the only one making dirty jokes in the clinic. Even Waechter made an off-color remark about her chest on one occasion.

When Waechter was pregnant with her second child, Kessel's comments became more personal. In October of 2005, Kessel commented on how big Waechter's chest was getting and how fat she was. When Waechter returned from maternity leave, Kessel frequently commented on her breast size and even asked her if he could help pump them while she was nursing. The final straw for Waechter came in February of 2006 when Waechter became involved in a contract dispute with another hospital that loaned her money in 2002 for relocation. Kessel paid her legal fees and agreed to pay any obligation she incurred. "You owe me big for helping you with the Frye thing," he stated. "Are you going to let me help you pump [your breast]?" On February 16, 2006, she tendered her resignation.

Fairbrook had a policy prohibiting sexual harassment while Waechter worked there. The policy instructs employees to report any sexual harassment to their supervisors. If making a report is futile, the employee should make complaints to a human resource representative or a representative of the EEOC. Kessel was Waechter's immediate supervisor and the sole proprietor of Fairbrook. Waechter made several complaints to Kessel and other office managers, but Fairbrook did not investigate her complaints.

On June 17, 2006, Waechter filed a sexual discrimination charge with the EEOC. The EEOC then filed suit on August 23, 2007 in the United States District Court for the District of Western North Carolina, alleging that Fairbrook was a hostile work environment. The district court granted Fairbrook's Motion for Summary Judgment. According to the district court, Kessel's conduct was not severe enough to create a hostile work environment. The district court reasoned that Kessel's comments were not frequent, involved jokes that do not violate Title VII, and did not cause Waechter to miss work or feel stress. The EEOC appealed to the United States Court of Appeals for the Fourth Circuit.

Title VII of the Civil Rights Act of 1964 makes it unlawful for an employer to discriminate against any individual on the basis of sex. 42 U.S.C. §2000e-2(a)(1) (2000). A plaintiff can prove a violation of Title VII by showing that the offending conduct was (1) unwelcome, (2) based on gender, (3) sufficiently severe or pervasive to alter the conditions of employment, and (4) imputable to the employer. Ocheltree v. Scollon Prods., Inc., 335 F.3d 325, 331 (4th Cir. 2003) (en banc). Fairbrook contended that Kessel's comments were not made because of Waechter's sex. The clinic argued that Kessel was a crude person and made crude comments to men and women alike. The Fourth Circuit disagreed and reasoned that a reasonable jury could find that his comments were based on Waechter's sex because his comments were sex specific. For example, the comments regarding the pumping of Waechter's breasts would not have been made to a male.

The Fourth Circuit then analyzed whether Kessel's conduct was sufficiently pervasive to create a hostile work environment. The Court looked to whether a reasonable person in the plaintiff's shoes in light of all the circumstances would consider the environment hostile or abusive. Fairbrook argued that Kessel's conduct was not severe and that it was not unusual for employees to make off-color remarks in the clinic. By illustration, Fairbrook pointed to the instances when Waechter displayed pictures of shirtless men on the wall in her examination room.

The Court found that Kessel targeted Waechter with off-color remarks. In some cases, Kessel embarrassed and ridiculed Waechter in front of her patients. Furthermore, the comments Kessel made during Waechter's pregnancy were highly personal. Fairbrook also contended that Kessel's conduct was not particularly frequent. The Court, however, concluded that a jury could find that the comments were made rather frequently over a three year period. For example, Kessel showed the x-ray image exposing his genitalia 20-30 times. In addition, Kessel repeatedly made comments about Waechter's breasts during her pregnancy.

Fairbrook further contended that Kessel's conduct was not sufficiently sever to cause stress or adversely affect Waechter's job performance. The Court found that the fact that Waechter continued to work is to her credit, not to the credit of the one harassing. Her continued job performance was not dispositive for the Court. Next, Fairbrook contended that there was no evidence of physical threats or sexual advances. However, the Court looked to the instances where Kessel suggested that he and Waechter engage in sexual behavior to conclude that a reasonable jury could find that his conduct negatively altered the work environment. The Fourth Circuit concluded that a reasonable jury could find that Kessel's conduct was severe and pervasive enough to make the work environment intensely uncomfortable.

The Court concluded that the EEOC raised a triable issue of fact and reversed the district court's grant of summary judgment.