What was the appropriate response here?1 Well, she could have just laughed it off. She could have elbowed him in the ribs (or other sensitive areas). She could have pulled a practical joke on him the next time he came to meet with her. All are fairly typical bonding ritual responses.
Why'd it go further? Hard to say; going forward on something like this doesn't really help anyone. She comes across looking like she can't work well with others; he comes out looking like a neanderthal who never heard of the initials P followed by C. She gets what sounds very much like a demotion, from the Organized Crime Strike Force to "handles drug cases." He gets fired (although this seems as much because he lied about the incident).
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1 I am, of course, assuming the typical 4 to 6 swipe noogie - not a 10 minute rub 'em bald version.