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Female Pharmacist Wins Appeal Including Punitive Damages and Huge Front Pay Award

It’s one thing to prove discrimination. It’s an altogether different thing to prove damages which occurred as a result of it.

In the recently published gender discrimination case of Haddad v Wal-Mart Stores Inc,*, the  Supreme Court Court ("SJC") of Massachusetts affirmed a jury verdict which included $733,000 for 19 years of front pay (future economic loss) and $1 million dollars in punitive damages – and that’s big news.

What Happened In The Case

Cynthia Haddad worked as a pharmacist at Wal-Mart for ten years (seven of those in the Pittsfield, Massachusetts store) mostly as a staff pharmacist..Throughout her time at Wal-Mart, she received excellent evaluations.  

Towards the end of her employment, Haddad accepted the position of pharmacy manager.

During that time, she received less pay than any male pharmacy manager which she consistently complained about.

On April 14^th, 2004, Haddad was questioned by three Wal-Mart managers about abut two fraudulent prescriptions.

One of the prescriptions was written in 2002 while Haddad was on duty, and another was written in 2004 while a male pharmacist was on duty.

Haddad told the managers that she did not know anything about the fraudulent prescriptions.

She did admit that the 2002 fraudulent prescription could have been written when she briefly left the pharmacy area to buy a soda at a nearby counter, or when she was in the restroom, eating lunch, or talking to customers.

Haddad’s employment was terminated that same day.

She was told that the reason for her termination was based on her statement during the interview that she failed to secure the pharmacy and left Baran (the technician) unattended in the pharmacy area. Baran, who admitted that she falsified the prescription,was also terminated.

The other pharmacist involved -- Richard Blackbird -- was on duty the day the fraudulent 2004 prescription was written. That prescription contained his initials.

In a clear case of unequal treatment, neither Blackbird, nor any other pharmacist was questioned about or disciplined for the 2004 fraudulent prescription.

In stark contract to the treatment Haddad received,  Blackbird was appointed to be pharmacy manager at the time of Haddad's departure.

In addition, Blackbird testified that he commonly left the pharmacy area unsecured to talk to a customer, go the restroom, or get a snack – and that he was unaware of any policy prohibiting this practice.

Haddad filed a lawsuit alleging unequal compensation and termination of employment in violation of Massachusetts laws against discrimination. ( M.G.L. c. 151B, s.4) The complaint also stated a claim for defamation.

The jury found in Haddad’s favor and awarded $922,774 in compensatory damages which included:

• $17,700 in special damages
  

• $125,000 for emotional distress
  

• $95,000 in back pay
  

• $733,000 in front pay

The jury also awarded $1 million dollars in punitive damages.

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Technology Company Hit With Billion Dollar Award

There isn't anything particularly interesting or novel about  Paul Chester's case as far as the law goes. It looks like a straightforward breach of contract case.

What  made me gasp when I read about the case was the size of the award: $4.1 billion !!!!! It's both amazing and unheard of. It's just  SO big.  

The Case

Here's what happened in the case according to the press release from Chester's lawyers.

Paul Thomas Chester was hired by iFreedom Communications, a provider of VoIP and WiFi technology, as its Chief Marketing officer in June of 2004.

The company promised Chester commissions and overrides on gross revenues, as well as the right to receive company stock and other compensation commensurate with Chester's experience in building marketing organizations.

When the time came to pay, iFreedom refused so Chester filed suit. The defendants moved to compel arbitration based on a provision in the employment contract which provided for arbitration in the event of a dispute.

Chester worked for iFreedom until the end of September, 2005 for a total of 15 and a 1/2 months of employment.

The Award

The arbitrator, a retired judge, heard the case and found:

• the defendants obtained Chester's services by means of false pretenses and fraud

• Chester was entitled to unpaid salary, commissions, travel expenses, compensation for unissued company stock and unreturned intellectual property

• the defendants were liable for statutory penalties, interest, attorney's fees, and punitive damages equal to three times the compensatory award

The total was 4.1 billion dollars.

The Los Angeles County Superior Court confirmed the award about ten days ago against iFreedom Communications International Holdings Limited, and it's founder, Timothy Ringgenberg and entered judgment against them.

Here's the breakdown from the court if you you want to look at it and copies of the opinions and awards. Thanks to the Dennis Westlind at World of Work for bringing it to us and for answering this question -- how did this guy get all of this money?

The employment agreement guaranteed him a salary of $12,000 a month plus commissions of 5 percent of gross sales; if he was fired without cause, he would continue to receive commissions. iFreedom also was supposed to provide Chester with 1.1 million shares of common stock upon hiring and another 600,000 shares if he met certain sales targets . Apparently, iFreedom did really, really well. Sales, stock and interest added up, and in a big way.

That's how it happened. The company was earning tons of money, much of it due to Chester -- and it refused to pay him what he was clearly entitled to receive. They also lied to him and stole from him.  It's pretty simple stuff  with very large numbers.

(For more about the case, you may  also want took at  Phillip Loree's article. He makes the point that the Arbitration Fairness Act of 2009, if passed, would render pre-dispute agreements which require arbitration of employment disputes --such as Mr. Chester’s dispute with iFreedom -- unenforceable. It's a good point, but  I have no reason to believe that the outcome in this case would have been any different.)

Lessons To Be Learned

So what can we say about this case?  What lessons can we learn? How about this:

• Chester was smart to have a really good employment contract
  

• iFreedom failed to fulfill its promises when it terminated Chester without cause which entitled Chester to the compensation promised in the contract

• iFreedom engaged in "a pattern of  despicable conduct" regarding Chester, including fraud and conversion, according to the arbitrator
  

• Despicable conduct can result in punitive damages -- whether it's awarded by a judge, jury or arbitrator  
  

• Successful companies can do really stupid things

It's not rocket science. It's just the way it is.

Image: http://www.freeclipartnow.com

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In the spirit of National Equal Pay Day on Tuesday, I wanted to share the important gender discrimination case of Donlin v. Phillips Lighting North America Corp. decided by the Third Circuit last week.

Here's what happened in the case.

Colleen Donlin was hired by Phillips as a temporary warehouse employee at its Mountaintop, Pennsylvania distributions center. Her job was to help prepare orders for shipment.

Like other temporary workers, Donlin applied for a permanent position. She was not hired and her eight month temporary assignment ended.

Donlin got two other jobs after she left Philips. At the first job, Donlin earned  $14.70 an hour, but it was a 32-mile commute.

She left that job and found a job closer to home at which she made $13.00 an an hour. Had she been hired by Philips, she would have earned $14.67 an hour as a base salary

Donlin learned that Phillips hired several men for the position she had applied for after it refused to hire her.  She filed a Title VII lawsuit for gender discrimination,  won the trial and was awarded damages.

In discrimination cases, the compensation which can be awarded by a judge or jury  is designed to make victims whole and put them in the position they would have been in had they not been discriminated against.

A winning employee can recover "back pay" and "front pay."

• Back pay represents losses from the the time of the discrimination up to the time of trial. 
  

• Front pay represents the losses that the victim will experience in the future if he or she does not find a comparable position.

Based on the premise that Donlin would have worked for another 25 years, an advisory jury awarded Donlin:

• $63,050 in back pay
  

• 395,795 in front pay
  

• for a total of $458,845

The award was based on the difference in pay and benefits between the $13.00 hour job she was holding at the time of trial and the $14.67 hour job she would have had at Phillips had she not been discriminated against when Phillips refused to hire her.

The judge modified the front-pay award by reducing it to account for 10 years of damages instead of 25, finding that a 25 year period was too speculative -- so the total award was $164,850.

Phillips appealed and the decision came out last week. The issues decided are very important for both victims of discrimination and their lawyers. 

Here are the highlights:

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