Ailish NicPhaidin (60) has sued the State because she was forced to resign some 11 years later.
In an incident shortly after she started work in the embassy in 1976, she alleged a drug was put in her drink in the embassy basement bar and when she woke up, she was in the home of an embassy official where she claims she was raped.
Ms NicPhaidin was giving evidence on the first day of her action against the State as a result of losing her job in the US Embassy.
PR consultant Ms NicPhaidin is originally from Rathmullan, Co Donegal, and now lives in Palm Bay, Florida. She has brought an action against the Minister for Foreign Affairs and the State in relation to her dismissal or forced resignation from the US Embassy, Ballsbridge, Dublin, in 1987.
Ms NicPhaidin has claimed she sought assistance from the Department of Foreign Affairs in the settlement of her employment dispute with the embassy. She has claimed the department breached its duty of care to her and acted negligently in not conveying an offer in 1996 of €200,000 from the embassy.
Ms NicPhaidin also claims she was advised by a department official to initiate legal proceedings in the US, which were later struck out because of lack of jurisdiction.
She alleges that Foreign Affairs failed to fulfil its duties in relation to her dealings with the US Embassy.
The Department of Foreign Affairs says it acted as an intermediary and attempted to bring her situation to the attention of the embassy. It denies the claims and says while there were discussions in 1996 on some kind of an offer, no offer was in fact ever made.
The State claims it had no duty of care to Ms NicPhaidin and says at all times the Department of Foreign Affairs did its best for her.
Ms NicPhaidin told the court she started work in the US Embassy in 1976. In 1986 she got a salary increase and a form of loyalty certificate in recognition of her ten years service at the embassy.
She said that she was having a drink in the basement of the embassy building in Ballsbridge, Dublin in October 1976 when she alleged a man, called Mr Y in court, put a drug in her drink.
She said she woke in his house in South Dublin and was raped. She said she did not go to the gardai as the man had diplomatic status.
In another incident in 1985 she said a man called Mr X pinned her up against a wall and assaulted her and said "I heard all about you".
In February 1987, she said she was called to the security officer and was interrogated over two hours and asked if she was a member of the IRA or a member of the Communist Party or had visited an Eastern Bloc country or whether she knew spies or terrorists.
She said she was brought to Mr X's office and told her security clearance had been withdrawn and she could be fired or resign.
The case before Mr Justice Nicholas Kearns continues.