Punitive Damages, Due Process, and Employment Discrimination

• Author: Joseph A. Seiner
• Position: Associate professor at the University of South Carolina School of Law
• Pages: 473-519

473

Punitive Damages, Due Process, and

Employment Discrimination

Joseph A. Seiner

The Supreme Court has failed to provide any substantive guid ance on when

punitive damages are appropriate in employment discrimination cases since

it issued its seminal decision in Kolstad v. American Dental Ass’n over

twelve years ago. The Court has recently expanded its punitive damages

jurisprudence in the high-profile decisions of Philip Morris USA v.

Williams and Exxon Shipping Co. v. Baker. While these cases

dramatically altered the way exemplary relief is analyzed in civil cases, the

extent to which these decisions apply in the workplace context remains

unclear. Surprisingly, there has been almost no academic literature to date

explaining how Philip Morris and Exxon impact punitive damages

claims brought by employment discrimination plaintiffs. This Article seeks to

fill that substantial void in the scholarship, looking specifically at the

potential due process implications.

Navigating the recent Supreme Court cases, this Article proposes a uniform

analytical framework for analyzing punitive damages in cases brought

under Title VII of the Civil Rights Act of 1964. The model proposed in this

Article provides a blueprint for courts and litigants when considering

whether punitive relief is appropriate in an employment discrimination case.

If adopted, the model set forth in this Article would resolve much of the

uncertainty that currently exists in the lower courts over how to apply the

remedial provisions of Title VII—as interpreted through the confusing

Kolstad decision—to employment discrimination claims. This Article

explains how this proposed framework would bring much more efficiency to

the judicial process and help define the future of workplace punitive

damages.

 Associate professor at the University of Sout h Carolina School of Law. The author

would like to thank Charles Sullivan, Michael Zimmer, Sandra Sperino, Benjamin Gutman, and

Megan Seiner for their extremely helpful thoughts and comments on this paper. The author

would also like to thank the participants at the Fifth Annual Colloquium on Current

Scholarship in Labor & Employment Law (held at the Washington University School of Law

and the Saint Louis University School of Law) for their helpful feedback. This Article is

dedicated to Stephen J. Seiner, Alice A. Seiner, John E. Sweeney, Joan D. Sweeney, and

grandparents everywhere for all the love and support that they so selflessly provide. Any errors

in this Article are entirely my own.

474 IOWA LAW REVIEW [Vol. 97:473

I. INTRODUCTION ...................................................................................... 475

II. SUPREME COURT CASE LAW ................................................................... 478

III. KOLSTAD REFINED: THE CURRENT STATE OF THE LAW FOR

WORKPLACE PLAINTIFFS ........................................................................ 484

A. PURPOSE AND ROLE OF WORKPLACE PUNITIVE DAMAGES .................... 484

B. KOLSTAD REVISITED ........................................................................ 488

C. EXXON AND PHILIP MORRIS IN THE WORKPLACE CONTEXT.............. 490

D. CONFUSION IN THE COURTS .............................................................. 496

IV. A NEW MODEL ....................................................................................... 500

A. MANAGEMENT-LEVEL EMPLOYEE ...................................................... 502

B. MANAGER HAD KNOWLEDGE OF TITLE VII ........................................ 505

C. MANAGER ACTING WITHIN SCOPE OF EMPLOYMENT .......................... 508

D. GOOD-FAITH EFFORTS ...................................................................... 509

E. JUDGMENT AS A MATTER OF LAW ...................................................... 512

F. OTHER CONSIDERATIONS .................................................................. 514

G. SUMMARY OF PROPOSED FRAMEWORK ............................................... 515

V. LIMITATIONS OF PROPOSED MODEL ...................................................... 516

VI. IMPLICATIONS OF PROPOSED FRAMEWORK ............................................ 518

VII. CONCLUSION ......................................................................................... 519

2012] EMPLOYMENT DISCRIMINATION 475

Punitive damages are a powerful weapon. Imposed wisely and with

restraint, they have the potential to advance legitimate state interests.

Imposed indiscriminately, however, they have a devastating potential for

harm.

—Former Supreme Court Justice Sandra Day O’Connor1

I. INTRODUCTION

Punitive damages have often captured the attention of the public,

particularly where the awards have provided substantial relief for the victims

involved.2 Title VII of the Civil Rights Act of 1964 (“Title VII”) was amended

in 1991 to include exemplary relief.3 Unfortunately, punitive damages were

added to the statute with no clear guidance on when this form of relief is

appropriate in workplace discrimination cases.4

More than a decade has passed since the Supreme Court provided its

clearest statement of how punitive damages should be analyzed under Title

VII. In Kolstad v. American Dental Ass’n, the Court looked to agency principles

to determine when an employer can be subject to exemplary relief.5 While

Kolstad resolved many questions for this area of the law, it also generated

significant confusion in the lower courts over the proper standard to apply

in workplace cases. Most notably, the decision does little to resolve the

question of what “malice or . . . reckless indifference”6 means under the

statute, and the courts have issued varied and conflicting opinions on this

issue.7

The confusion in this area of the law has become more pronounced

after the Supreme Court’s recent decisions on punitive damages in Exxon

Shipping Co. v. Baker8 and Philip Morris USA v. Williams,9 which both arose

1. Pac. Mut. Life Ins. Co. v. Haslip, 499 U.S. 1, 42 (1991) (O’Connor, J., dissenting). See

generally Developments in the Law: The Paths of Civil Litigation, 113 HARV. L. REV. 1752, 1784–85

(2000) (comparing the criticisms of punitive damages); Richard W. Murphy, Superbifurcation:

Making Room for State Prosecution in the Punitive Damages Process, 76 N.C. L. REV. 463, 467 (1998)

(same).

2. See generally Murphy, supra note 1, at 467 (discussing punitive damages); Developments

in the Law: The Paths of Civil Litigation, supra note 1, at 1783–88 (same).

3. Civil Rights Act of 1991, Pub. L. No. 102-166, § 102, 105 Stat. 1071, 1072–74

(codified at 42 U.S.C. § 1981a (2006)). This Article uses the t erms punitive damages and

exemplary damages interchangeably.

4. See id. See generally Joseph A. Seiner, The Fail ure of Punitive Damages in Employment

Discrimination Cases: A Call for Change, 50 WM. & MARY L. REV. 735 (2008) (discussing punitive

damages in employment discrimination cases).

5. Kolstad v. Am. Dental Ass’n, 527 U.S. 526, 545 (1999).

6. 42 U.S.C. § 1981a(b)(1).

7. See infra Part III (discussing the various approaches of the lower courts when analyzing

punitive damages in the employment discrimination context).

8. Exxon Shipping Co. v. Baker, 554 U.S. 471 (2008).

9. Philip Morris USA v. Williams, 549 U.S. 346 (2007).