Punitive Damages Go To Jury In Pregnancy Discrimination Case
Awareness of Pregnancy Discrimination Law Sets Stage For Punitive Damages
When you litigate a discrimination case, you never know for sure when you’re going to recover punitive damages. For those of us who represent employees, the Eighth Circuit Court of Appeals -- in the case of EEOC v. Siouxland Oral Maxillofacial Surgery Assoc., L.L.P. decided last week -- made that job far easier.
What Happened In The Case
The case involves two women and their experiences at Siouxland, a medical clinic in South Dakota specializing in oral and maxillofacial surgery. 
The First Pregnancy Discrimination Victim
Richelle Dooley, was hired in December of 2001 and started work in January 2002. The day after she began, she filled out health benefit forms.
At that time, she told her supervisor that she was pregnant and that her baby was due in July. "Don't worry," the supervisor said, "we can hire a temp. while you're out."
The supervisor told two of the partners including the managing partner, Dr. Harvey Lee Akerson, about Dooley's pregnancy. Akerson decided that Dooley had to be terminated.
According to Kathy Fjellestad, Siouxland's business manager, this is what he said:
[T]he young lady we just hired is going to have a baby this summer. She isn't going to be available to work. It doesn't make any sense to begin training her.. when she won't be able to work the summer ... [W]e are going to have to let her go.
Fjellestad informed Akerson that Siouxland could not terminate Dooley because of her pregnancy. Akerson decided to fire her anyway.
He told Dooley that "her baby was going to be born during our busy season" and if they had known she was pregnant they would not have hired her.'"
The Second Pregnancy Discrimination Victim
In March of 2002, Angie Gacke interviewed for a position at Siouxland. During the interview she told the interviewers : "I don't know if this is going to be a problem or not, but I'm four months pregnant."
Shererena Kost, supervisor of Siouxlands's surgical staff said:
Yes, it's a problem. Your are just going to end up causing more work for everybody else than you will be helping them.
One of the other interviewers recalled Kost saying:
Because of her pregnancy occurring at the time it was going to be occurring, that it would be best if she just continue her pregnancy, have the baby, have her maternity leave, and then we would talk.
Kost wrote on her resume that she was:
- overqualified for job
- needed insurance
- "4 months pregnant!"
Kost informed Gacke later that day that she did not get the job. As set forth in the opinion:
Kost was aware throughout this process that discriminating on the basis of pregnancy was illegal.
The Trial
The Equal Employment Opportunity Commission filed a lawsuit in 2004 alleging that Siouxland terminated Dooley and refused to hire Gacke because they were pregnant in violation of Title VII of the Civil Rights Act of 1964.
The case was tried to a jury in 2007. Throughout the trial, Siouxland contended that it refused to hire Gacke and fired Dooley because they were not available during their busy season.
The jury found in favor of Gacke and Dooley and awarded backpay. The Court awarded prejudgment interest and attorney fees.
The trial court refused to submit the issue of punitive damages to the jury. The EEOC appealed.
The Eight Circuit Court's Decision
The EEOC appealed the case because it argued that the district court erred when it refused to submit its claim for punitive damages to the jury.
Under Title VII, punitive damages are available if a plaintiff shows that the employer engaged in intentional discrimination "with malice or with reckless indifference to the federally protected rights" of the victim of discrimination. (see Kolstad v. American Dental Assn.)
According to the Supreme Court, malice or reckless indifference pertain to the employer's knowledge that it may be acting in violation of federal law -- not its awareness that it is engaging in discrimination.
So, in order to be liable for punitive damages, "an employer must at least discriminate in the face of a perceived risk that its actions will violate federal law."
In this case, the district court judge refused to submit the issue of punitive damages to the jury because, according to the court -- it "had not been shown that there was a perceived risk that the actions of Siouxland would violate federal law."
Wrong -- according to the Eighth Circuit:
Here, the evidence presented by the EEOC at trial was sufficient for a jury to find that Siouxland acted in the face of a perceived risk that it was violating Dooley's and Gacke's Title VII rights.
With respect to Dooley, the EEOC presented evidence that Akersoon, who ordered Doole's termination, knew that pregnancy discrimination was illegal.
The EEOC also showed that Akerson was warned by Fjellestad that Siouxland could not fire Dooley because she was pregnant, and by Balaban that Siouxland could not or should not terminate Dooely's employment.
This evidence was sufficient for a jury to infer that Akerson acted knowing that his conduct may be violating federal law. ...
[W]ith evidence that Akerman and Kost knew that pregnancy discrimination was illegal, a reasonable jury could also could find that their discrimination was recklessly indifferent to the federally protected rights of Dooley and Gacke.
We therefore conclude that the district court erred in granting Siouxland judgment as a matter of law on Dooley's and Gacke's punitive-damages claims.
We remand for a new trial solely on the issue of punitive damages.
What's Important About The Case
What strikes me as important about the case is that it sets a relatively low threshold of evidence which will allow the issue of punitive damages to go to the jury.
In most cases, there will be evidence that the managers or principals were aware of laws which prohibit discrimination. When employers discriminate in the face of that knowledge, the jury is entitled to determine that the conduct was in reckless indifference to the federally protected rights of the victim according to this case.
The practical effect is that a small award for backpay (like the one in this case) can turn in to a very large award when a jury is permitted to award punitive damages. That's because punitive damages, unlike compensatory damages, are not calculated based on the amount that the plaintiff actually suffered or lost.
Instead, punitive damages are based on evidence of the wealth of the defendant. The amount of the award is supposed to be an amount which is substantial enough to deter similar unlawful conduct in the future.
Consequently, a case with small actual damages can become a very large one in the face of a punitive damage award.
That's exactly what happened to the Siouxland Medical Clinic It's a very bad result for this employer.
It's a very good ruling for victims of discrimination, and for those who work to deter discriminatory conduct in the future.
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