State of Arizona v. ASARCO: Court Reduces $300,000 Punitive Damage Award in Title VII Action

In State of Arizona v. ASARCO LLC (9th Cir. 10/24/13), the Ninth Circuit considered whether a $300,000 punitive damage award in a Title VII sexual harassment suit violated constitutional limits where the jury awarded no compensatory damages and only one dollar in nominal damages. 

Angela Aguilar worked for ASARCO at a copper mining and refining facility in Arizona. She alleged that two supervisors harassed her, and management failed to remedy the situation. At trial, the jury awarded her no compensatory damages, one dollar in nominal damages, and $868,750 in punitive damages. The district court reduced the punitive damages to $300,000, the statutory maximum under Title VII for an employer of ASARCO’s size. 42 U.S.C. § 1981a(b)(3)(D). 

The Court of Appeal reversed after examining the "guideposts" for determining excessiveness of a punitive damage award: (1) “the degree of reprehensibility of the defendant’s conduct”; (2) “[the] ratio to the actual harm inflicted on the plaintiff”; and (3) “civil or criminal penalties that could be imposed for comparable misconduct.” BMW of North America, Inc. v. Gore, 517 U.S. 559 (1996). 

First, the Court held that the district court did not err in finding that ASARCO's conduct was reprehensible and would support "a very large punitive award." Slip op. at 9-13. 

Second, the Court considered whether the punitive damage award bore "a reasonable relationship to compensatory damages." Slip op. at 13-16. The Court found that this requirement "suggested" that the damages should be reduced. Slip op. at 16. 

Third, the Court held that Title VII's $300,000 punitive damage cap is a "civil penalty" that gives defendants "fair notice . . . of the severity of the penalty that a State may impose" and supports a $300,000 punitive damage award. Slip op. at 16-17. 

The Court concluded that the Constitution did not bar the imposition of a "substantial punitive award," but that the 300,000 to one ratio was excessive. Slip op. at 18-20. Finding no discrimination case upholding a ratio greater than 125,000 to one, the Court held that $125,000 was the highest award that would maintain a "reasonable relationship" between compensatory and punitive damages.  Slip op. at 20. 

The Court remanded and ordered that the district court could order a new trial unless the plaintiff accepts a remittitur to this level. 

The opinion is available here. 

Davis v. Kiewit Pacific Co.: Court Finds Triable Issue as to Managing Agent Status, Overturns Summary Adjudication of Punitive Damages

In Davis v. Kiewit Pacific Co. (9/18/13, pub. 10/8/13) --- Cal.App.4th ---, the trial court entered a judgment for plaintiff Lisa Davis after a jury found defendant Kiewit Pacific Co. liable for gender discrimination, hostile work environment harassment, retaliation, and failure to prevent harassment, gender discrimination, or retaliation. However, before trial, the trial court granted Kiewit's motion for summary adjudication on Davis's claim for punitive damages, concluding there were no triable issues of material fact whether a managing agent of Kiewit had engaged in or ratified any oppressive, malicious and/or fraudulent conduct against her. The Court of Appeal reversed, finding triable issues of material fact on managing agent status. 

Davis worked for Kiewit on a construction project. She alleged that she complained of harassment to the project manager, Kyle Preedy, and Kiewit's EEO officer, John Lochner. On Kiewit's motion for summary adjudication of punitive damages, she argued that Preedy and Lochner were its managing agents. 

The Court found that Preedy's declaration in support of the motion "simply parroted" the managing agent standard set forth in White v. Ultramar, Inc. (1999) 21 Cal.4th 563, and did not state "sufficient evidence to make a prima facie showing that there was no triable issue regarding whether Preedy was a managing agent of Kiewit." Slip op. at 16. Even if Kiewit had introduced such evidence, Davis met her burden to raise a triable issue of material fact on the issue. Specifically:

Preedy, as the Project's manager, was Kiewit's top on-site manager. He had the responsibility to oversee and manage the $170 million project, including over 100 Kiewit employees working on the site. Preedy's duties included interfacing with stakeholders on the Project, contract administration, operations and personnel oversight, and making sure the Project was completed according to the contract. In performing those duties, a trier of fact could reasonably infer he exercised substantial authority and discretion regarding a broad range of issues involving the Project, including compliance with Kiewit's policies and the hiring, supervision, and laying off of Project employees. Absent evidence showing that management of a $170 million project with supervision of 100 employees is an insignificant part of Kiewit's business, a trier of fact could reasonably infer from the above evidence that Preedy "exercised substantial discretionary authority over significant aspects of [Kiewit's] business" and therefore was a managing agent of Kiewit.

Slip op. at 17-18. 

Lochner's declaration also failed in that it stated conclusions of law, rather than factual evidence. Slip op. at 20. In any event, Davis met her burden of raising a triable issue based on the following facts: 

Lochner, as Kiewit's EEO officer, had the duties and responsibilities to enforce its policies against discrimination, retaliation, and harassment based on gender and other protected classes. A trier of fact could therefore reasonably infer he had the authority and discretion regarding enforcement of those policies because he did not conduct, or direct anyone else to conduct, an investigation regarding the [alleged harassment]. In his declaration, Lochner stated, as Kiewit's district EEO officer, he was responsible for administering Kiewit's policies that prevent discrimination, retaliation, and harassment based on gender and other protected groups for the Northwest District. Lochner stated he "conducted training for staff employees (supervisory personnel); took and responded to employee complaints about EEO and other issues; and conducted or oversaw investigations regarding a variety of employee relations issues including alleged discrimination, retaliation and/or harassment." ... [A] a trier of fact could reasonably infer he had authority and discretion in making, interpreting, and applying Kiewit's EEO policies on a corporation-wide basis and therefore had authority and discretion to make decisions that ultimately determine corporate policy.

Slip op. at 21-22. 

The opinion is available here.