Punitive Damages Go To Jury In Pregnancy Discrimination Case

Posted on August 31, 2009 by Ellen Simon

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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Trumped-Up Reasons For Termination Can Prove Retaliatory Discharge

Posted on August 16, 2009 by Ellen Simon

When employees are fired for misconduct, employers often think that they have an airtight defense to any charges of wrongful discharge. But that’s often not so.

The case of Upshaw v. Ford Motor Company, decided last week by the Sixth Circuit Court of Appeals, brought this point home.

What Happened In The Case

Here’s a brief synopsis of what happened in the case.

Carolyn Upshaw worked for Ford Motor Company in Michigan as a production supervisor for several years. In spite of the fact that she received excellent reviews, she was repeatedly denied a promotion.

In 2003, she filed a charge of race and gender discrimination with the Equal Employment Opportunity Commission. Upshaw alleged that Ford had “improperly promoted similarly-situated while male production supervisors to Salary Grade 7 while continually denying her the same promotion.”

She later filed two more EEOC charges alleging various retaliatory acts by Ford. In 2004, she filed a lawsuit. In 2005, Upshaw was fired.

In response, Upshaw filed an additional EEOC charge claiming that she was terminated in retaliation for filing her prior EEOC charges and filing a lawsuit.

Upshaw also amended her complaint to contain a claim for retaliatory discharge. All of her claims were filed pursuant to Title VII of the Civil Rights Act of 1964.

The district court judge threw out Upshaw’s case against Ford. Upshaw appealed, and the Court of Appeals found in her favor on her claim for retaliatory discharge.

Why The Lower Court Was Reversed

Ford claimed that it fired Upshaw for cause. These were the reasons the company gave to support the discharge:

  1. Falsification of company records by under-reporting scrap
  2. Harassment of and retaliation against one the employees she supervised
  3. Violation of company safety policies on multiple occasions by driving an  uninspected personnel scooter and continually failing to wear a required safety vest, and
  4. Insubordination

Upshaw submitted proof that none of these reasons would warrant the termination of a supervisor on its own or together.

Upshaw presented evidence to prove that business reasons for the discharge were not true or not believable (what’s called evidence of "pretext") Therefore, she contended, she should have been allowed to present her case to a jury. The Court agreed.

Evidence of Pretext

The Court had several problems with Ford's justification for Upshaw's termination, not the least of which was that other employees who engaged in the same misconduct were not terminated.  As the Court put it:

As a threshold matter, Upshaw has established that two of Ford’s four proffered reasons for terminating Upshaw – safety violations and her failure to timely resolve union health and safety complaints – do not typically warrant any formal discipline at Ford’s Sharonville plant, let alone termination.

In addition, the charges which were raised because Upshaw allegedly was insubordinate when she failed to timely resolve union safety complaints in a timely fashion were neither valid nor true. 

According to the Court's opinion:

Ford employees testified that no supervisor could be expected to resolve nineteen health and safety complaints by a union representative within a twenty-four hour period, and that they did not know of anybody who has ever been disciplined or fired for failure to complete health and safety forms within 24 hours.

What's more, the supervisor involved with the so-called insubordination testified that “she could never recall asking Upshaw to do something that she did not do.”

Finally, as to  the incorrect scrap reports,  the evidence showed that Ford had never previously treated misreporting scrap as a serious offense that would result in discipline or termination of a supervisor.

In sum, what you have in the case is evidence that employees who engaged in the same conduct as Upshaw were not disciplined or terminated.  The other reasons given by Ford for the discharge were simply not credible or plainly false.

The Court's Conclusions

Viewing the evidence presented by Uphsaw (in a light most favorable to her at the summary judgment stage as the rules require) the Court concluded that her case should not have been thrown out and Upshaw should be entitled to take her retaliation case to a jury.

This is some of what the Court had to say when it reversed the lower court:

Although Ford is entitled to terminate an employee for an actual violation of its internal policies, Upshaw has introduced evidence suggesting that these actual violations were nothing more than trumped -up charges.

The Court also said:

When an employer waits for a legal, legitimate reason to fortuitously materialize and then uses it to cover up his true longstanding motivations for firing the employee, the employer’s actions constitute the very definition of pretext

In addition, the Court also relied on its previous decision in Hamiliton v. General Electric, ((discussed in Employee Rights Post)) -- a case in which the employee filed a charge of discrimination and  was then fired for misconduct :

Plaintiff alleged that after he had filed an age-discrimination claim against GE with the EEOC, his supervisors intensified their scrutiny of his work and harassed him more that they ever had before.

GE terminated plaintiff when he allegedly engaged in “unacceptable conduct;” the parties disputed the details of the incident.

The district court granted summary judgment for GE but we reversed explaining that “a reasonable fact-finder could determine that GE waited for, and ultimately contrived a reason to terminate Hamilton to cloak its true, retaliatory motive for firing him.

Therefore since the jury could find that Ford’s reasons for the discharge were “contrived” following the filing of her EEOC charges and the filing of the lawsuit, Upshaw should  -- according to the Court -- have a right to prove her case to a jury.

Lessons From The Case

This case is a huge help for employees who face charges of misconduct to mask a discriminatory or retaliatory motive for discharge under any civil rights statute.

When employees are not comparably disciplined for the same misconduct, or the reasons given for the discharge just don’t hold up to scrutiny, employers can find themselves in big trouble as far as liability for civil rights violations is concerned.

Employers need to watch out for trumped up charges that don’t hold up to scrutiny.

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