Answer all questions given in the prompt, and address any other legal issues that arise from the scenario. Write in IRAC format.

James, a male employee at a Pizza Place restaurant operated by New, Inc., in San Antonio, Texas, was subjected to sexual and racial harassment by the general manager, who was female. New, Inc. had a clear, straightforward anti-discrimination policy and complaint procedure. The policy provided that in such a situation, an employee should complain to the harasser's supervisor. James alerted a shift leader and an assistant manager about the harassment, but they were subordinates to the general manager and did not report the harassment to higher-level management. When James finally complained to a manager with authority over the general manager, the employer investigated and fired the general manager within four days. James filed a suit in a federal district court against New, Inc., seeking to impose liability on the employer for the general manager's actions. (See Title VII of the Civil Rights Act)

What is New's best defense? Discuss.