A former manager of the upscale restaurant at the Hilton Minneapolis who allegedly walked in on upper management having an orgy has filed a lawsuit that probably stretches liability for “undirected” sexual harassment beyond its limits.

Deborah Smith's case may be the first to allege harassment-by-orgy, testing to what extent a plaintiff may be injured by “undirected” sexual conduct and whether a single incident of group sex amounts to “sufficiently severe or pervasive” sexual harassment.

According to the complaint, Smith, who was the night manager at the SkyWater Restaurant and Lounge, opened a door to a banquet room at the Hilton where “she discovered an orgy” with “various Hilton executives inebriated and engaging in sexual acts.”

“In fact, she observed Hilton executives on top of a table engaging in sexual activity,” the suit says.

After Smith “walked away from the orgy,” SkyWater beverage manager James Vennewitz allegedly told her “she would be fired, and he would make sure of it.” She complained about the orgy to human resources but “a campaign of harassment and retaliation ensued,” culminating in her termination on Dec. 19, 2007.

Smith, 43, of Coon Rapids, Minn., is seeking at least $50,000 in damages under the Minnesota Human Rights Act (MHRA), which defines sexual harassment as “unwelcome sexual advances, requests for sexual favors, sexually motivated physical contact or other verbal or physical conduct or communication of a sexual nature.”

“Plaintiff was subjected to unwelcome sexual conduct directed at her on the basis of her sex,” Smith says.

In a related case, another former Hilton employee -- cocktail server April Bezdichek, 25 -- alleges direct harassment. She says Vennewitz told her to come to the banquet room "in which (unknown to her) an orgy was occurring."

"After she came into the room, Defendant Manager Vennewitz pulled her onto his lap and pumped her up and down on his erect penis," the complaint alleges. "He told her how good it felt and tried to physically force her up to a hotel room."

How the orgy was “directed” at Smith is unclear -– there is no allegation in the complaint that she was invited or forced to participate. But the alleged activity was certainly of a “sexual nature” and the MHRA, like Title VII of the federal Civil Rights Act, does not preclude liability for harassment based on “undirected” conduct.

“To determine whether actionable sex discrimination exists in a given case, all the circumstances surrounding the conduct alleged to constitute sexual harassment, such as the nature of the incidents and the context in which they occurred, should be examined,” the Minnesota Supreme Court said in Continental Can Co. v. State of Minnesota, 297 N.W.2d 241 (1980).

In a case quite similar to Smith's, a sheriff's department employee alleged among other things that a supervisor showed off a copy of "Penthouse" magazine and deputies displayed pin-ups of nude women in their lockers. But the Minnesota Court of Appeals ruled in Klink v. Ramsey County, 397 N.W.2d 894 (1986), that the plaintiff did not have an MHRA claim for "inadvertently view[ing] objectionable materials on a sporadic basis."

The co-workers' "carelessness and insensitivity is not tantamount to purposeful sexual harassment," the court said.

At most, the Hilton executives acted carelessly and finding the hotel liable for Smith's inadvertent viewing of their alleged orgy would impose a duty on an employer to “maintain a pristine working environment” -- a duty that the Supreme Court rejected in Continental Can.

The suit also alleges retaliation, which requires Smith to show she had "a reasonable and good faith belief" that she had suffered sexual harassment.

Smith originally filed her case in state court along with Bezdichek and another plaintiff, bartender Harley Gayle, 41. The cases, which have been severed, were removed to federal court last week.