The failure of punitive damages in employment discrimination cases: a call for change.

Author:Seiner, Joseph A.
 
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ABSTRACT

Punitive damages were described by one early court as "an unsightly and an unhealthy excrescense." Although views toward punitive relief have changed over the years, the debate over the availability of exemplary damages in the judicial system has remained controversial. No place is that controversy more aptly demonstrated than in employment discrimination law, where punitive damages first became available in an amendment to Title VII of the Civil Rights Act of 1964 after a bitter congressional debate. Almost a decade ago, in Kolstad v. American Dental Association, the Supreme Court provided guidance on how punitive damages should be applied in discrimination cases brought under Title VII. Kolstad has only generated more confusion concerning the proper standard for exemplary relief, and recent district and appellate court decisions reflect this uncertainty.

Attempting to determine the impact of punitive damages in Title VII cases after Kolstad, I performed an analysis o fall federal district court decisions during the calendar years of 2004 and 2005. The study examined over six hundred district court opinions issued during this timeframe. Of these cases, there were only twenty-four district court decisions either awarding punitive damages under Title VII or upholding a jury's award of punitive relief. An additional study further revealed that slightly less than 18 percent of those Title VII cases that went to a jury resulted in a punitive damage award by the jury, and approximately 29 percent of those juries that found in favor of the plaintiff also awarded punitive damages.

This Article explores the basic foundations of punitive damages in the American judicial system, and examines the goals of providing this form of relief in employment discrimination cases. The Article further examines a study performed on the effectiveness of punitive damages in Title VII cases. After analyzing this data, this Article suggests one alternative way of better achieving the original deterrent purpose behind the addition of punitive damages to Title VII. The Article proposes a three-part framework for analyzing all cases of intentional discrimination and recommends adopting a new scheme for remedial relief under Title VII. The Article then explores the implications of adopting the proposed approach and examines how the proposal fits within the contours of the academic scholarship. The Article concludes by urging that the congressional intent of deterring unlawful discrimination can more properly be achieved through the proposed form of relief.

TABLE OF CONTENTS INTRODUCTION I. THE HISTORY OF PUNITIVE DAMAGES AND THE LAW A. Evolution of Doctrine in American Law B. Purpose of Punitive Damages II. PUNITIVE DAMAGES IN EMPLOYMENT DISCRIMINATION CASES A. Legislative History of the Civil Rights Act of 1991 B. The Revised Statute III. THE SUPREME COURT ADDRESSES PUNITIVE DAMAGES UNDER TITLE VII A. Kolstad v. American Dental Association B. Interpreting Kolstad IV. THE FALSE PROMISE OF PUNITIVE DAMAGES: AN EXAMINATION OF DISTRICT COURT CASES A. Methodology B. Results of Study C. Weaknesses of Analysis D. Analysis Conducted in a Different Database 1. Jury Verdict Research Methodology 2. Results of Jury Verdict Research's Analysis 3. Rationale for Differences in Results E. District Courts Erect Additional Barriers to Punitive Relief 1. District Courts Vacate Awards 2. Courts Refuse To Give Punitive Damage Question to Jury F. Conclusions of Analysis V. A CALL FOR CHANGE A. Liquidated Damages Proposal for Title VII 1. Actual Damages Doubled 2. Abandon the Malice or Reckless Indifference Standard 3. Eliminate the Statutory Cap for Liquidated Damages 4. Good Faith Defense B. Liquidated Damages Proposal Summary VI. IMPLICATIONS OF LIQUIDATED DAMAGES PROPOSAL CONCLUSION "A billion dollars to them is chump change."--Member of jury that awarded $11.8 billion in punitive damages in case brought against Exxon Mobil Corporation. (1)

INTRODUCTION

"[M]onstrous heresy." (2) This is how one early court described the role of punitive damages in civil litigation. (3) Though punitive damages can be seen as "an unsightly and an unhealthy excrescense, deforming the symmetry of the body of the law," (4) there can be little doubt that one of the primary purposes of such relief is to help deter unlawful conduct. (5)

Before passage of the Civil Rights Act of 1991 (6) (1991 CRA), punitive damages were not one of the resources plaintiffs had at their disposal to fight employment discrimination. (7) That would change, however, when Congress passed the 1991 CRA with the express purpose of helping to "combat the persistence of employment discrimination." (8) Through the addition of compensatory and punitive damages to Title VII of the Civil Rights Act of 1964, the 1991 CRA was designed "to effectuate a greater level of deterrence." (9) In many respects, Title VII was a "toothless tiger" prior to the 1991 amendments, which gave litigants the ability to obtain significant monetary relief. (10) Rather than simply making the plaintiff whole, the addition of punitive damages to Title VII gave courts and juries a way to punish employers for their illegal conduct. (11) Indeed, Congress hoped that imposing additional damages on those employers that violate Title VII would help to prevent such discriminatory conduct, and the public certainly perceives that punitive damage awards are instrumental in eradicating unlawful employment practices. (12) Even the mention of punitive damages strikes a certain fear in the hearts of executives of large and small corporations alike--though the current statutory caps do provide some level of comfort to employers. (13) Punitive damages are thus widely regarded as one of the single greatest motivators in preventing employers from discriminating against their workers. (14)

Against this backdrop, I embarked on a study of recent employment discrimination cases in which punitive damages had been awarded. My goal was to generate enough data to identify trends in punitive damage awards in cases brought pursuant to Title VII. I was particularly interested in determining whether Kolstad v. American Dental Ass'n, (15) the seminal Supreme Court decision that outlined the standards to be applied to Title VII punitive damages cases, changed in any fundamental fashion the way the lower courts approached their analyses in these cases. I am aware of no substantive empirical studies examining the impact of the Kolstad decision in the context of Title VII punitive damages. (16)

The results of my analysis were surprising. In 2004 and 2005, 36,676 employment law cases were filed in all of the federal district courts in the United States. (17) A search of all published federal district court decisions for the calendar years of 2004 and 2005 that referenced both Title VII and punitive damages resulted in 676 cases. (18) After analyzing each of these cases, I concluded that only twenty-four decisions included cases where a district court either awarded punitive damages under Title VII or upheld a jury's award of punitive relief. (19) This is hardly the kind of raw data that can lead to any reasoned analysis of trends or patterns of remedies in employment discrimination cases.

Moreover, the results of additional research demonstrated some reluctance on the part of juries to award punitive relief. Slightly less than 18 percent of those Title VII cases that went to a jury during 2004 and 2005 resulted in a punitive damage award by the jury, and approximately 29 percent of those juries that found in favor of the plaintiff also awarded punitive damages. (20) There are many reasons why plaintiffs have been unsuccessful in obtaining punitive relief in employment discrimination cases, and these reasons are explored in greater detail in this Article. (21) Regardless of the rationale, however, without more published decisions imposing punitive awards, their deterrent effect will likely begin to wane. It is for this reason that reform in this area of the law is necessary.

Part I of this Article examines the history of punitive damages generally, and their role in the American legal framework and court system. Part II of this Article further examines the passage of the 1991 CRA and explores why Congress and legal theorists believed punitive damages were a critical component missing from Title VII. Part III discusses the Supreme Court's review of Title VII punitive damages in Kolstad v. American Dental Ass'n. Part IV then explores the data uncovered through an examination of all published federal district court decisions during 2004 and 2005, setting forth the methodology of this study. Part V concludes by explaining the necessity for reform in the application of punitive damages to Title VII cases. The Article proposes an alternative approach to the remedial provisions of Title VII which would bring the statute more in line with other areas of employment law. Part VI of the Article then explains how the proposed three-part framework for examining all cases of intentional discrimination fits within the contours of existing academic scholarship.

  1. THE HISTORY OF PUNITIVE DAMAGES AND THE LAW

    1. Evolution of Doctrine in American Law

      Punitive (or "exemplary") damages are not a recent phenomenon, (22) and have been described as an "ancient curiosity." (23) Indeed, these damages date back over four millennia to 2000 B.C. and the Code of Hammurabi, and evolved as part of the common law. (24) Pursuant to the Code, for example, a man who stole an ox, sheep, or pig from a temple or palace would be required to pay damages thirtyfold the worth of the animal. (25)

      The theory of punitive damages persisted through the following centuries. (26) For example, the Magna Carta contains three chapters on the system of amercements, that, in many respects, operated in a similar manner to punitive damages under the current U.S. legal system. (27) The amercement system allowed...

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