Punitive damages are generally difficult to obtain. And under Supreme Court precedent, punitive damages greater than ten times an award of compensatory damages is generally considered “grossly excessive,” raises due process issues, and is likely to be struck down or reduced by a court.
That is what makes a new decision from a federal appeals court so significant – in a Title VII case in which plaintiff recovered $1 in “nominal” damages the Court awarded plaintiff the full Title VII cap of $300,000 in punitive damages. Three hundred thousand times the compensatory damages award!
See Arizona v. ASARCO LLC, 2014 BL 346185
After an eight-day trial in a sexual harassment case, the jury awarded plaintiff no compensatory damages, but awarded $1 in nominal damages and $868,750 in punitive damages. The Court applied “the due process analysis in [the US Supreme Court’s] BMW of North America, Inc. v. Gore, 517 U.S. 559 (1996), [and] concluded the punitive damages award was not unconstitutional but, given the $300,000 cap on compensatory and punitive damages found in § 1981a(b)(3)(D)[the Title VII damages statute], reduced the award to $300,000.”
The Court examined the elements set forth in the Gore analysis as to punitive damages: “(1) the degree of reprehensibility of the defendant’s misconduct; (2) the disparity between the actual or potential harm suffered by the plaintiff and the punitive damages award; and (3) the difference between the punitive damages awarded by the jury and the civil penalties authorized or imposed in comparable cases.”
After this analysis, the Court held in the case that:
“there is significant and compelling evidence that management was aware of, and did little to resolve, lewd, inappropriate, and sexually aggressive behavior directed to [plaintiff]; sexually explicit, targeted pictures of [plaintiff] on the walls of the bathroom rented specifically for her use; and overly aggressive management and criticism of [plaintiff] by supervisors. [Plaintiff] complained to management multiple times. The sexually explicit graffiti in the bathroom was not removed while she was working in the filter plant. As the district court correctly noted, to the extent ASARCO did have an antidiscrimination or harassment policy, the existence of such a policy alone is not enough to save it. …
Further, the award is consistent with, and in some cases smaller than, punitive damages awards in other Title VII and 42 U.S.C. § 1981 cases we have considered. … “
“In sum,” the Court stated, “we conclude that punitive damages awards conferred under § 1981a comport with due process. The statute provides specific notice of proscribed conduct. It specifies the maximum amount of damages that can be awarded, and incorporates both specified compensatory and punitive damages within the cap. The $300,000 dollar amount of the cap provides an extremely limited potential for recovery, and has not changed, nor been adjusted for inflation, since its adoption in 1991. There is nothing in our consideration of the Gore factors that would alter that conclusion. The record supports the district court’s conclusion that the punitive award was made in conformance with the statute and was not otherwise in violation of due process.”
Employers must be aware that under the federal anti-discrimination laws, even if a plaintiff is awarded a truly nominal sum after trial, the employer still may be socked with not only substantial punitive damages, but also reasonable attorneys fees. All in all not a happy result.
Better to preemptively train your managers and employees well, have a good, solid (and updated) employment manual, and lead from the top down in terms of respect and zero tolerance in the workplace.