5th Cir. - Two Punitive Damage Caps, Lower Award Applies

Sometimes the 5th Circuit gets the chance to answer a question of first impression under Texas law, and today that question was how to apply the two punitive damage caps that come into play when there is a discrimination claim under the Texas Commission on Human Rights Act. In Arismendez v. Nightingale Home Health Care, Inc. (5th Cir. 7/23/07) [pdf] the Court held that you look at both damage caps and apply the one that provides the lowest amount of punitive damages.

A federal jury found Arismendez was terminated because of her pregnancy and awarded her approximately $25,000 in back pay, $10,000 in mental anguish and $1,000,000 in punitive damages. It was the question of liability and the amount of the punitive damage award that led to the 5th Circuit.

There were two possible punitive damage caps, the general one passed as part of tort reform found in the Civil Practice and Remedies Code and the one tied to the number of employees in the Labor Code.

The general punitive damage cap, § 41.008 of the Texas Civil Practice and Remedies Code, can only be determined after the jury award. As applied to to Ms. Arismendez it would permit punitive damages in the amount of two times the economic damages awarded ($26,150) plus the amount awarded in compensatory damages ($10,000) up to $750,000. Since that amount ($52,300) is less than the statutory minimum of $200,000, that would be the amount if § 41.008. Since the defendant had more than 500 employees, the exemplary/punitive damage cap under the TCHRA, Texas Labor Code §21.2585, would be $300,000. The 5th Circuit held both apply, and it is the lower which is to be awarded.

That was a come down from the jury award of $1,000,000 in punitive damages. Still it was definitely better than what had happened in the trial court where the judge granted the defendant's motion to set aside the jury verdict as unsupported by the evidence.

The 5th Circuit reversed, reaffirming that it subscribes to the cat's paw theory of discrimination. It held that even if Arismendez' supervisor did not make the termination decision, she had influenced it. The supervisor's comment that she "knew it was illegal to fire [Arismendez] because she was pregnant, [but that she] had a “business to run” and “could not take having a pregnant woman in the office," was enough to taint the decision and support the jury's verdict.

The Court also held that in this case the defendant had not waived the defense of the statutory cap even though it was not pled, since it was raised in the pretrial order. It did not resolve the question of whether it was an affirmative defense, citing two Texas courts of appeal which had gone the other way.

If nothing else, Ms. Asmendariz got to experience the highs and lows of litigation just with respect to the punitive damage award —

• from a jury verdict of $1,000,000 in punitive damages,
• to the trial judge setting that aside so she gets nothing,
• to the appeal where her chances ranged from $1,000,000 [if judge reversed and cap defense waived]; $300,000 [if judge reversed and TCHRA cap applies] or $200,000 [if judge reversed and Civil Practice and Remedies Code cap applies]
• to the ultimate 5th Circuit ruling, $200,000

And of course there's rehearing, en banc and application for cert. that are still possible.

Five Years - And Still Posting

Although I must say at a much slower pace it seems.

On the occasion of Jottings By an Employer's Lawyer's 5th birthday (you can read my first post here), let me once again give my thanks to all who have stopped by and read one or more posts. Too often the blog gets neglected and sometimes it can be a down right pain to think I ought to post something, but I still do enjoy it and find if nothing else, it helps me to continue to stay current and hopefully on top of our ever developing field of law.

Having 5 years worth of public writings available is sometimes humbling, as witnessed by my post immediately below on my initial thoughts on the Supreme Court's decision in Arbaugh, but the good thing about staying around is that I at least get the chance to self-correct.

The Progeny of Arbaugh - Coverage by Estoppel

Maybe it's just the law of unintended consequences, or perhaps more fairly for the Court, the law of unanticipated consequences, but when the Supreme Court held in Arbaugh v. Y & H Corp. that the 15 employee limit was not jurisdictional it barely got more than a ho-hum, at least from me.

Just to prove my point I quote myself from my initial post on Arbaugh:

"In a case that is of more importance to the technicalities of the legal process than to employment law, the Supreme Court yesterday held that the requirement of 15 employees for coverage of Title VII is an element of the plaintiff's case, not a jurisdictional prerequisite."

And I finished off with this —

"All in all a tidy summary of federal courts law and the principle that federal courts are courts of limited jurisdiction --- but not an employment law blockbuster."

— which could prove yet another faulty prediction on my part.

That will certainly be true if a trend that I first noted last month in Danger for the Small Employer: 'Estopping' yourself into coverage where the 6th Circuit held that there were circumstances where an employer with fewer than 20 employees could create coverage by its actions, continues.

It did continue on Friday the 13th, when Judge Mark Bennett of the Northern District of Iowa, in a 26 page opinion, based in part on Arbaugh, held it is possible that an employer with fewer than 50 employees within a 75 mile radius, could still find themselves "required" to grant FMLA leave, based on their conduct, even though not technically within the coverage of the statute. Myers v. Tursso Company Inc.

Many large companies have taken the position that they would treat all employees the same under the FMLA, even though some might not technically qualify because of the 50 employees within 75 mile requirement. Their lawyers have often gone along, thinking that in a pinch they could still use the requirement as a defense if an issue arose. That may still be viable in some cases, but the Arbaugh based estoppel decisions make clear it is not always a hands down winner.

Hat tip to the folks at Employment Law 360 for the tip to the Myers decision.

EEOC and the Press Release

For anyone who has ever done battle with the EEOC over the wording of a press release, here's some judicially sanctioned ammunition for the next battle. Although denying Serrano's Restaurant's motion for sanctions against the EEOC, Judge Frederick J. Martone of the District Court of Arizona had this to say:

Our denial of the defendant’s motion is not an expression of our view on the underlying merits or the propriety of the EEOC in using press releases as part of its approach to litigation. Lawyers have a professional obligation to avoid extrajudicial statements that may prejudice a proceeding, see ER 3.6, and an obligation to be truthful in statements to others, see ER 4.1. LRCiv 83.2(d). There is a big difference between promoting the public’s right to know through keeping proceedings public, on the one hand, see Foltz v. State Farm Mut. Auto. Ins. Co., 331 F.3d 1122 (9th Cir. 2003), and affirmatively issuing press releases, on the other. The United States, and its employees, have a special duty not to injure the reputations of its citizens. Nor should it use press releases as a bargaining tool in litigation. [my emphasis]

Hat tip to the Daily Labor Report ($)for picking up this unpublished decision entered on July 5th.

The Sandra Day O'Connor Award: MDV for Title IX Retaliation

Timing is everything and Lindy Vivas, former volleyball coach at Fresno State University and plaintiff in a trial that ended yesterday with a jury verdict in her favor awarding her almost $6 million, is the latest proof. See the article in the Seattle Post, Vivas wins suit against Fresno St.

Vivas' claim was that Fresno State retaliated against her in violation of Title IX, a federal program requiring gender equity in sports programs. When Vivas was fired on December 4, 2004, she might not have known it, but the claim that is making her so happy today was hanging in the balance.

Just four days before Vivas was terminated, the Supreme Court heard oral argument in Jackson v. Birmingham Board of Education. Four months later, the Court in a 5-4 decision written by Justice Sandra Day O'Connor extended an implied cause of action it had earlier found under Title IX to also cover retaliation. You can see my initial post on Jackson here.

Although I have just finished an article explaining my view that while the Roberts Court has been generally good for business, on decisions impacting core human resource issues, the record is not so clear, Jackson was one time where who was holding the fifth vote made a decided difference. After yesterday you might even say a 6 million dollar difference.

While Justice Sandra Day O'Connor was penning the majority decision in Jackson , then Chief Justice Rehnquist and current Justices Scalia and Kennedy were signing onto the vigorous dissent of Justice Clarence Thomas that the majority was "creating remedies out of whole cloth" and "substituting its policy judgments for the bargains struck by Congress as reflected in the statute's text."

If the case had been decided just one year later, which given the course of litigation that winds its way to the Supreme Court is really just a matter of happenstance, I don't think there is any doubt how the new Chief Justice Roberts and Justice O'Connor's replacement, Justice Alito, would have been aligned.

Yesterday's MDV for Vivas may never have to be paid as it must now start its way through post-verdict and the appeal process, but it is unlikely that you will be able to convince anyone involved in this matter that Supreme Court appointments don't matter.

A Freebie from the DOL: The New Minimum Wage Poster

Come July 24th — new minimum wage, new minimum wage poster required.

You can at least print one out (even in color) by going here. FLSA Minimum Wage Poster - Effective July 24, 2007.

Does One Lawsuit Beget Another? Sometimes it 'Smells' Like It

Whether settling one lawsuit will set off a rash of others is one of the imponderables that face employers when trying to decide whether to settle a case for less than it might cost to try, assuming (or perhaps) hoping that it won't result in other suits. This question would seem to be a tailor made dissertation topic for an enterprising want to be PhD in business. but I am not aware of any such research. I do know from my personal experience that it can happen, but it would be nice to see some serious research.

And sometimes cases reported in the press may spawn others as well. For example, this recent headline at the Detroit News website, Worker sues over co-worker's perfume, refers to the earlier well publicized suit, also in Detroit, where a female disk jockey convinced a jury that her perfume allergy was worth $10+ million dollars. See my report on that case here.

A copycat case? I would be shocked if the new plaintiff hadn't at least heard the story.