The U.S. Equal Employment Opportunity Commission
1. SUBJECT: Enforcement Guidance: Compensatory and Punitive Damages Available under § 102 of the Civil Rights Act of 1991. 2. PURPOSE: This enforcement guidance sets forth the Commission's position on the availability of compensatory and punitive damages pursuant to the Civil Rights Act of 1991, § 102, "Damages in Cases of Intentional Discrimination." 3. EFFECTIVE DATE: July 14, 1992. 4. EXPIRATION DATE: As an exception to EEOC Order 205.001, Appendix B, Attachment 4, § a(5), this Notice will remain in effect until rescinded or superseded. 5. ORIGINATOR: Title VII/EPA Division, Office of Legal Counsel. 6. INSTRUCTIONS: File at end of Compliance Manual with other Policy or Enforcement Guidance. 7. SUBJECT MATTER: This enforcement guidance sets forth the Commission's position on how to assess compensatory and punitive damages under § 102 of the Civil Rights Act of 1991, 105 Stat 1071, Pub. L. No. 102-166 (hereinafter referred to as § 1981A).1 I. RIGHT TO RECOVERY Section 1981A(a)(1) provides that a complaining party2 may recover compensatory and punitive damages against a respondent3 who has engaged in unlawful intentional discrimination in violation of Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq., unless that complaining party can recover under 42 U.S.C. § 1981. Only race discrimination claims can be brought under § 1981.4 Damages are available in addition to any relief authorized under § 706(g) of Title VII.5 Therefore, § 1981A does not affect the right to backpay, frontpay, or any type of relief already recoverable under Title VII. Damages are authorized only in cases of intentional discrimination and are therefore not available where the charge alleges that neutral employment practices have an adverse impact. Section 1981A(a)(1). As indicated above, § 1981A(a) provides for damages under Title VII, if the complaining party "cannot recover" under § 1981. For purposes of the Commission's administrative enforcement process, the question arises as to the precise meaning of the "cannot recover" language. The Commission has no jurisdiction over § 1981, nor will the Commission, during the investigation and conciliation process, be able to determine the scope or outcome of a § 1981 action brought by the charging party. Thus, in processing charges, the Commission will seek compensatory and punitive damages, as appropriate, whether or not an individual may have a cause of action under § 1981. This interpretation is supported by the Sponsors' Interpretative Memorandum, 137 Cong. Rec. S15,484 (daily ed. Oct. 30, 1991), which explains that the purpose of the "cannot recover" language was "to assure that a complaining party does not obtain duplicative damage awards against a single respondent under both section 1981 and section 1981A ... [and that] the complaining party need not prove that he or she does not have a cause of action under section 1981 in order to recover damages in the section 1981A action." In addition, the Interpretative Memorandum of Representative Edwards, co-sponsor of HR-1 (House Bill) and Chairman of the Subcommittee on Civil and Constitutional Rights of the House Judiciary Committee which was responsible for HR-1, asserts that "if a party has a potential cause of action under Section , but for whatever reason does not bring it, that party 'cannot recover under section '...," and hence can recover under § 1981A. "No party is under any obligation to proceed under one or the other statute or to waive any cause of action under either statute as a condition of proceeding." 137 Cong. Rec. H9527 (daily ed. Nov. 7, 1991). Therefore, at least, for purposes of charge processing, the Commission will seek damages where otherwise appropriate, even if the complaining party has an ongoing § 1981 court action, as long as the complaining party has not recovered under § 1981. Because the Commission has no enforcement authority under § 1981, its decisions concerning appropriate relief cannot rest on contingencies that may, or may not, occur under § 1981. Any other interpretation would prevent the Commission from being able to settle race discrimination claims, to the equal detriment of complaining parties and respondents. Section 1981A(a)(2) provides the same remedies for intentional violations of the federal employee provisions of the Rehabilitation Act of 1973, 29 U.S.C. § 791, and Title I of the Americans with Disabilities Act of 1990, 42 U.S.C. § 12101 et seq. However, damages are not available in disability discrimination cases which involve reasonable accommodation if the respondent "demonstrates good faith efforts, in consultation with the person with a disability," to provide a reasonable accommodation. Section 1981A(a)(3). For example, assume that a respondent consulted with a sight impaired applicant to determine whether any reasonable accommodations exist to enable the applicant to perform this particular job. The applicant informs the respondent that a scanner would reasonably accommodate him. The scanner is very expensive and the respondent believes that a magnifier, backed up by the office secretary as a part-time reader, would reasonably accommodate the applicant. The applicant subsequently files a charge and the Commission concludes that, under the particular circumstances of that job, the magnifier plus part-time reader was not an effective reasonable accommodation. Thus, the Commission concludes that the respondent failed to provide a reasonable accommodation and is therefore liable for discrimination. While the respondent will be liable for backpay and instatement, as appropriate, the Commission will not seek compensatory or punitive damages in this case because the respondent consulted with the complaining party and had a good faith belief that it had provided a reasonable accommodation. Finally, damages may not be available in certain cases where the employer acted with both legitimate and unlawful motives (mixed motives). Section 107(b) (to be codified at § 706(g)(2)(B) of Title VII). See EEOC Enforcement Guidance No. N915.002, "Recent Developments in Disparate Treatment Theory," July 14, 1992, for a full discussion of this issue. II. TYPES AND EXTENT OF RECOVERY Section 1981A(b) sets limitations on certain damages that complaining parties may recover. First, it specifies that punitive damages are available only if the complaining party demonstrates that the respondent engaged in discrimination "with malice or reckless indifference to the federally protected rights of an aggrieved individual." It also provides that punitive damages are not available against a governmental entity or political subdivision. Second, § 1981A(b) reiterates that compensatory damages do not include any relief authorized under § 706(g) of Title VII. Third, it provides a limitation on the sum of punitive damages and compensatory damages for "future pecuniary losses, emotional pain, suffering, inconvenience, mental anguish, loss of enjoyment of life, and other nonpecuniary losses." The limitation on the amount of damages (caps) is based on the size (number of employees)6 of the respondent. The limitations are stated as follows: 15 to 100 employees : $50,000 101 to 200 employees : $100,000 201 to 500 employees : $200,000 501 employees or more : $300,000 The limitations do not, on their face, apply to respondents who have fewer than fifteen employees, although labor organizations and employment agencies with fewer than fifteen employees may be subject to Title VII.7 Thus, a literal interpretation of the provision would potentially subject them to unlimited damages. Such an interpretation would be inconsistent with Congress' clear intent to spare small respondents from large damage awards. The provision could also be read to mean that labor organizations and employment agencies with fewer than fifteen employees are not subject to any damages. The Commission rejects both interpretations and concludes that all covered employment agencies and labor organizations with 100 or fewer employees are subject to the $50,000 cap on damages. When the Commission, or an individual, is pursuing a claim on behalf of more than one person, the damage caps are to be applied to each aggrieved individual. For example, where the Commission files suit on behalf of ten complaining parties, against an employer who has 1000 employees, each complaining party may receive (to the extent appropriate) up to $300,000. The respondent's total liability for all ten complaining parties may be up to $3,000,000.8 Because relief recoverable under § 706(g) is not deemed to be compensatory damages, complaining parties may recover full compensation for back pay, interest on backpay, frontpay, or any relief that would have been available under Title VII, § 505 of the Rehabilitation Act, or the ADA, without inclusion in the caps. Although some may contend that frontpay is a "future pecuniary loss" to be included in the caps, the Commission disagrees. Frontpay is a type of "relief authorized under Title VII" and, therefore, is excluded from the definition of compensatory damages and is not included in the caps.9 Past pecuniary losses are also not included in the caps and are fully compensable where actual out-of-pocket losses can be shown. Section 1981A(b)(3) limits only claims that typically do not lend themselves to precise quantification, i.e., punitive damages, future pecuniary losses, and nonpecuniary losses. Example: Complaining Party is subjected to brutal racial harassment and is subsequently demoted. As a result, she suffers from severe depression. She spends $20,000 in psychiatric and medical bills for treatment of the depression. Her psychiatrist also testifies that CP will require approximately two additional years of therapy. CP may receive $20,000 for the medical bills and full backpay and frontpay awards, all of which are fully compensable and not included in the caps. She may also receive damages for the depression (nonpecuniary loss), damages for future psychiatric bills for the next two years (future pecuniary losses), and punitive damages. The respondent has 35 employees. The sum of the damages for the depression, future psychiatric expenses, and punitive damages cannot exceed the statutory cap of $50,000. A. Compensatory Damages Compensatory damages are awarded to compensate a complaining party for losses or suffering inflicted due to the discriminatory act or conduct. See Carey v. Piphus 435 U.S. 247, 254 (1978) (purpose of damages is to "compensate persons for injuries caused by the deprivation of constitutional rights"). Compensatory damages "may be had for any proximate consequences which can be established with requisite certainty." 22 Am Jur 2d Damages § 45 (1965)" Compensatory damages include damages for past pecuniary loss (out-of-pocket loss), future pecuniary loss, and nonpecuniary loss (emotional harm). Compensatory damages are allowed against federal, state, and local governments and private sector employers. The following section sets forth the legal parameters for computing compensatory and punitive damages where appropriate. 1. Pecuniary Losses Pecuniary losses include, for example, moving expenses, job search expenses, medical expenses,10 psychiatric expenses, physical therapy expenses, and other quantifiable out-of-pocket expenses that are incurred as a result of the discriminatory conduct. To recover damages, the complaining party must prove that the employer's discriminatory act or conduct was the cause of his loss. The critical question is whether the complaining party incurred the pecuniary losses as a result of the employer's discriminatory action or conduct. Section 1981A distinguishes past and future pecuniary losses, in that future pecuniary losses are subject to the caps, while past pecuniary losses are not. The Commission concludes that past pecuniary losses are out-of-pocket losses that occurred prior to the date of the resolution of the damage claim, i.e., conciliation, settlement, or the conclusion of litigation. The amount to be awarded for past pecuniary losses can be determined by receipts, records, bills, cancelled checks, confirmation by other individuals, or other proof of actual losses and expenses. Damages for past pecuniary losses will not normally be sought without documentation. Future pecuniary losses are out-of-pocket expenses that are likely to occur after conciliation, settlement, or the conclusion of litigation.11 As noted previously, future pecuniary losses are subject to the caps and do not include frontpay. Future pecuniary losses include the same expenses listed above, if these losses will continue after settlement, conciliation or litigation. The complaining party has a duty to mitigate his/her damages. A complaining party may not recover damages for any harm that (s)he could have avoided or minimized with reasonable effort. See Restatement (Second) of Torts, § 918(1).12 However, the respondent has the burden of showing that the complaining party failed to exercise reasonable diligence to mitigate his/her damages. Cf., e.g., Weaver v. Casa Gallardo, Inc., 922 F.2d 1515, 1527, 55 EPD Par. 40,540 (11th Cir. 1991) (employer has the burden of showing that the plaintiff failed to make reasonable efforts to find work to mitigate his damages when seeking backpay); Fleming v. County of Kane, State of Ill., 898 F.2d 553, 560 (7th Cir. 1990) (the burden is on the employer to prove, as an affirmative defense, that the employee failed to mitigate damages when seeking lost wages); Woolridge v. Marlene Industries Corp., 875 F.2d 540, 548, 53 EPD Par. 39,772 (6th Cir. 1989) (defendant has the burden of producing sufficient evidence to establish the amount of interim earnings or lack of diligence in mitigating damages on the part of the plaintiff). Therefore, if the respondent can prove that the complaining party failed to exercise reasonable diligence to mitigate his/her damages and could have avoided or minimized such damages with reasonable effort, the damages may be reduced accordingly. Example: Complaining Party is a nurse in New York City, which has a critical nursing shortage. CP was fired when she rejected the sexual advances of the hospital administrator. CP has been unemployed for over a year. She seeks recovery for past pecuniary losses, which include, among other losses, moving expenses to California and job search expenses in California. CP maintains that it was necessary to move to California to find another nursing position. The respondent proves that CP could have found a comparable nursing position in New York City with reasonable diligence within a matter of weeks and that her New York job search expenses would have been minimal. Therefore, CP's recovery of damages for her moving expenses and job search expenses in California may be limited to the amount of the job search expenses she would have incurred in New York City. Backpay and damages sought for the other pecuniary losses incurred during her year-long unemployment may also be reduced, since the respondent has proved that she could have found another job within a few weeks. 2. Nonpecuniary Losses Damages are available for the intangible injuries of emotional harm such as emotional pain, suffering, inconvenience, mental anguish, and loss of enjoyment of life. Other nonpecuniary losses could include injury to professional standing, injury to character and reputation, injury to credit standing, loss of health, and any other nonpecuniary losses that are incurred as a result of the discriminatory conduct. Nonpecuniary losses for emotional harm are more difficult to prove than pecuniary losses.13 Emotional harm will not be presumed simply because the complaining party is a victim of discrimination.14 The existence, nature, and severity of emotional harm must be proved. Emotional harm may manifest itself, for example, as sleeplessness, anxiety, stress, depression, marital strain, humiliation, emotional distress, loss of self esteem, excessive fatigue, or a nervous breakdown. Physical manifestations of emotional harm may consist of ulcers, gastrointestinal disorders, hair loss, or headaches. An award for emotional harm is warranted only if there is sufficient causal connection between the respondent's illegal actions and the complaining party's injury. See Gore v. Turner, 563 F.2d 159, 164 (5th Cir. 1977). The discriminatory act or conduct must be the cause of the emotional harm. The claim of emotional harm will be seriously undermined if the onset of symptoms of emotional harm preceded the discrimination. However, if a complaining party had preexisting emotional difficulties and his mental health deteriorates as a result of the discriminatory conduct, the additional harm may be attributed to the respondent. The fact that the complaining party may be unusually emotionally sensitive and incur great emotional harm from discriminatory conduct will not absolve the respondent from responsibility for the greater emotional harm. Williamson v. Handy Button Machine Company, 817 F.2d 1290, 1294, 43 EPD Par. 37,178 (7th Cir. 1987) ("perhaps [plaintiff] was unusually sensitive, but a tortfeasor takes its victims as it finds them"). For example, suppose the Commission finds that the respondent is liable for sexual harassment against three female employees, one of whom is an incest victim. The incest victim incurred much greater emotional harm from the sexual harassment than did her two co-workers. The respondent is liable for the greater emotional harm that the incest victim suffered. For charges alleging emotional harm, consider factors that are directly relevant to whether and to what extent the employer caused the employee's emotional harm. For example, in Cowan v. Prudential Insurance Co., 852 F.2d 688, 690-91, 47 EPD Par. 38,167 (2d Cir. 1988), the court found that defendant's failure to promote the plaintiff caused him severe emotional distress, humiliation, loss of self esteem, marital problems, and heavy drinking. However, the court considered several factors to determine whether and to what extent the emotional harm was caused by the defendant or by other factors. The factors considered were that: 1) the plaintiff had not been subjected to overt racism or public humiliation; 2) upper management was not aware that race was a factor in the failure to promote the plaintiff, who had been offered three other less attractive positions; 3) the plaintiff had caused some of the humiliation and difficulties that he had with his co-workers because he told clients that he would be promoted and he criticized his co-workers in a newspaper article; and 4) the plaintiff had not sought counseling. The court found that these factors justified a lower amount than the plaintiff sought. In Vance v. Southern Bell Telephone and Telegraph Company, 863 F.2d 1503, 1516, 48 EPD Par. 38,626 (11th Cir. 1989), the court found that an award of $500,000 in compensatory damages for mental distress, emotional harm, or humiliation resulting from racial discrimination was properly ruled excessive where there were other factors which probably contributed to the plaintiff's mental distress. The plaintiff had marital problems because her husband was named in a paternity suit by another woman, financial problems, problems resulting from an automobile accident, dietary problems, and family illnesses and deaths. Therefore, where a complaining party's emotional harm is due in part to personal difficulties, which were not caused or exacerbated by the discriminatory conduct, the employer is liable only for the harm resulting from the discriminatory conduct. The Commission will typically require medical evidence of emotional harm to seek damages for such harm in conciliation negotiations. However, evidence of emotional harm may be established by testimony. Gunby v. Pennsylvania Electric Company, 840 F.2d 1108, 1121-22, 45 EPD Par. 37,785 (3d Cir. 1988), cert. denied, 492 U.S. 905, 50 EPD Par. 39,201 (1989); Cowan v. Prudential Insurance Co., 852 F.2d at 690-91. The "plaintiff's own testimony may be solely sufficient to establish humiliation or mental distress." Williams v. TransWorld Airlines, Inc., 660 F.2d 1267, 1273, 27 EPD Par. 32,174 (8th Cir. 1981). For example, a plaintiff was awarded $52,644.80 in damages for mental anguish and emotional distress resulting from losing his house and car, marital harmony, and the respect of his children, after he was discriminatorily discharged. Muldrew v. Anheuser-Busch, Inc., 728 F.2d 989, 33 EPD Par. 34,187 (8th Cir. 1984). In Block v. R.H. Macy & Co., Inc., 712 F.2d 1241, 1245, 32 EPD Par. 33,730 (8th Cir. 1983), the plaintiff was awarded $12,402 for "mental anguish, humiliation, embarrassment and stress," $7,598 in backpay, and $60,000 in punitive damages. The evidence presented was that the supervisor openly manifested racial bias against Blacks by making racially offensive references to the plaintiff, another employee, and customers. On one occasion, the supervisor and plaintiff got into a dispute during which the supervisor berated the plaintiff in street language in front of coworkers and customers, although she never addressed White employees in this manner. The supervisor reported the dispute to management and told them that she wanted plaintiff "out of there." Management discharged the plaintiff without asking for her version of the incident, although they were well aware of the supervisor's racial bias. The plaintiff testified that she "cried and felt angry" with her supervisor after her discharge. Plaintiff further testified that she was unemployed for thirteen months and because of her financial dilemma, she suffered sleeplessness, anxiety, embarrassment, and depression. The jury found this evidence sufficient to award damages for mental distress. Similarly, in Stallworth v. Shuler, 777 F.2d 1431, 38 EPD Par. 35,806 (11th Cir. 1985), a case brought under § 1983 and § 1981, the court affirmed an award for $100,000 for humiliation and emotional distress. Over a period of years, the plaintiff was consistently passed over for administrative positions and principalships for racial reasons, while less qualified White persons were promoted. As a result, plaintiff suffered emotional stress, loss of sleep, marital strain, and humiliation. The defendant stated that there was no evidence that plaintiff missed work, received professional help, or slipped in his relationships with students or co-workers. Plaintiff countered that he was careful not to give the respondent a reason not to promote him. The court found that plaintiff's evidence was sufficient to award damages. However, for conciliation or settlement purposes, testimony solely by the complaining party may not be sufficient to establish emotional harm. There should be corroborating testimony by the complaining party's co-workers, supervisors, family, friends, or anyone else with knowledge of the emotional harm. Damage awards for emotional harm vary significantly and there are no definitive rules governing the amounts to be awarded. However, compensatory damage awards must be limited to the sums necessary to compensate the plaintiff for actual harm, even if the harm is intangible. Carter v. Duncan-Huggins, Ltd, 727 F.2d 1225, 33 EPD Par. 34,187 (D.C. Cir. 1984). In Williamson v. Handy Button Machine Company, 817 F.2d at 1293-95, the court upheld a damage award of $10,000 for the psychological disability of a nervous breakdown after the following sequence of events. Plaintiff was discriminated against for over a decade. She was assigned unskilled work, although she was qualified for, and occasionally performed, skilled work. Plaintiff was passed over for numerous promotions, in favor of less qualified White employees with less seniority. Plaintiff was also demoted to a lower status department despite her protests and the seniority rule in the collective bargaining agreement. Finally, on one occasion, the plaintiff used an upstairs bathroom, where she had been assigned a locker by the company, and was loudly berated in scatological terms by a supervisor for using this particular bathroom. The psychiatrist characterized the bathroom incident as the straw that broke the camel's back. The plaintiff was never able to return to work. In addition to the award for emotional harm, plaintiff received $130,000 for backpay and frontpay, $10,000 for medical and psychological expenses, and $100,000 for punitive damages. In comparison, in another case brought under § 1981, the plaintiff received $123,000 for emotional distress. The plaintiff had been under stress continuously for fear of making a mistake on the job, because he was discriminatorily denied proper training which he needed for adequate performance. The plaintiff's White coworkers, both senior and junior to the plaintiff, regularly received formal training. He was denied pay raises equivalent to those of his White co-workers because of his poor evaluations, which stressed the need for training. When the plaintiff finally received training after numerous requests, it was superficial in nature. Plaintiff's stressful situation resulted in high absenteeism and he was placed on probation. He filed a complaint and was subsequently discharged. Plaintiff's psychiatrist testified that the plaintiff was suffering from anxiety, stress, and depression. The court found that this was an adequate basis for the award. Plaintiff also received $176,000 in backpay, and $300,000 in punitive damages. Rowlett v. Anheuser-Busch, 832 F.2d 194, 44 EPD Par. 37,428 (1st Cir. 1987). The method for computing nonpecuniary damages during conciliation or settlement should typically be based on a consideration of the severity of harm and the time that the complaining party has suffered from the emotional harm.15 To determine the severity of the harm consider, for example, whether the harm consisted of occasional sleeplessness, or a nervous breakdown resulting in years of psychotherapy. The length of time that the complaining party has suffered from the emotional harm is also relevant. Of course, a complaining party who has suffered from severe depression for two months will be awarded less money than a complaining party who has suffered from severe depression for a year. However, different methods of computing damage amounts for emotional harm may be appropriate in certain cases. Since medical evidence is important, a medical release should be obtained from the complaining party whenever emotional or physical harm is alleged. B. Punitive Damages Punitive damages are awarded to punish the respondent and to deter future discriminatory conduct. They are not available against a federal, state, or local government, a government agency, or a political subdivision. Punitive damages are available only where the respondent acted with "malice or with reckless indifference to the federally protected rights of an aggrieved individual." Section 1981A(b)(1). This standard is consistent with § 1981 and therefore should be interpreted consistently.16 The standard for awarding punitive damages under § 1981 is whether the defendant acted with malice, an evil motive, or recklessness or callous indifference to a federally protected right. Stephens v. South Atlantic Canners, Inc., 848 F.2d 484, 489, 46 EPD Par. 38,032 (4th Cir. 1988), cert. denied, 488 U.S. 996 (1988). Additionally, under § 1983, plaintiffs may recover punitive damages when "the defendant's conduct is shown to be motivated by evil motive or intent, or when it involves reckless or callous indifference to the federally protected rights of others." Smith v. Wade, 461 U.S. 30, 56 (1983); Garza v. City of Omaha, 814 F.2d 553, 556, 43 EPD Par. 37,072 (8th Cir. 1987) (punitive damages under § 1983 "may be awarded where the defendant exhibits oppression, malice, gross negligence, willful or wanton misconduct, or reckless disregard for the civil rights of the plaintiff"). 1. Determining Malice or Reckless Disregard A "finding of liability does not of itself entitle a plaintiff to an award of punitive damages." Yarbrough v. Tower Oldsmobile, 789 F.2d 508, 514, 40 EPD Par. 36,216 (7th Cir. 1986). However, conscious, purposeful discrimination may be sufficient to warrant punitive damages.17 As the First Circuit has observed, "can it really be disputed that intentionally discriminating against a [B]lack man on the basis of his skin color is worthy of some outrage?" Rowlett v. Anheuser-Busch, 832 F.2d 194, 206, 44 EPD Par. 37,428 (1st Cir. 1987). In Brown v. Freedman Baking Company, 810 F.2d 6, 42 EPD Par. 36,779 (1st Cir. 1987), punitive damages were warranted for three Black plaintiffs, after two plaintiffs were fired because a manager believed that it "just doesn't look good" for too many Blacks to work in the main store. The third plaintiff complained and was told that when too many Blacks get together "they get arrogant." He was fired when he provided a statement to the EEOC on the other plaintiffs' behalf. The court stated that it "would not be unreasonable for the jury to view such conduct as outrageous and deserving of substantial punitive damages." Id. at 11. A number of factors may be considered to determine whether conduct was committed with malice or reckless indifference to the complaining party's federally protected rights. This evidence is likely to have already been obtained during the liability phase of the investigation. The list is nonexclusive and other relevant factors may also be considered. 1. The degree of egregiousness and nature of the respondent's conduct should be considered. See Restatement (Second) of Torts, § 908(2). In EEOC v. Gaddis, 733 F.2d 1373, 1380, 34 EPD Par. 34,348 (10th Cir. 1984), the court held that allowance of punitive damages "involves an evaluation of the nature of the conduct in question." The respondent had made an employment offer to the plaintiff, an out-of-state resident, based upon a recommendation by another employee. Plaintiff accepted the position and his name was posted on an assignment board as a new employee. The respondent met the plaintiff for the first time when he reported for work. The respondent was visibly upset when he discovered that the plaintiff was Black and stated that a Black person would never be allowed to work in the office. The plaintiff worked for several days and was fired. The respondent stated that no vacancy existed, although it subsequently hired two White males for the position. The court determined that this conduct warranted punitive damages. Conduct which is shocking or offends the conscience is egregious and warrants punitive damages. For example, CP's supervisor often asks CP for dates and sometimes makes sexual remarks to her, although CP has repeatedly asked him to leave her alone. The supervisor finally tells CP, who is the most qualified person for an upcoming promotion, that if she wants the promotion she must have sex with him. The supervisor's conduct may be considered "shocking." 2. The nature, extent, and severity of the harm to the complaining party should be considered. The Restatement (Second) of Torts, § 908(2); Keenan v. City of Philadelphia, 55 FEP Cases 932, 943 (E.D. Pa. 1991). 3. The duration of the discriminatory conduct is relevant. For instance, an extended period of discriminatory conduct "suggests an official policy of discrimination as opposed to the work of a renegade supervisor." Williamson v. Handy Button Machine Company, 817 F.2d at 1296. Evidence that the respondent tolerated or condoned the discriminatory conduct over a period of time could constitute malice and/or reckless indifference. 4. The existence and frequency of similar past discriminatory conduct by the respondent should be considered. For example, if there is a continuing pattern of harassment by the respondent, it may be sufficient to find malice or reckless indifference. 5. Evidence that the respondent planned and/or attempted to conceal or cover-up the discriminatory practices or conduct is relevant. 6. The employer's actions after it was informed of discrimination should be considered. An employer who has notice of discriminatory conduct and fails to take action could incur punitive damages. See Yarbrough v. Tower Oldsmobile, 789 F.2d at 514-15 (punitive damages warranted.under § 1981 where the plaintiff testified that his supervisor reprimanded him in writing, without cause, and transferred him to a less desirable work area after saying "[w]e don't want no Black guy in the front of the shop;" the plaintiff brought his complaints of discrimination to management, who failed to respond and was found to be "indifferent to his federally protected rights"). 7. Proof of threats or deliberate retaliatory action against complaining parties for complaints to management or filing a charge normally will constitute malice. Hunter v. Allis-Chalmers, 797 F.2d 1417, 1425, 41 EPD Par. 36,417 (7th Cir. 1986) (punitive damages warranted where the defendant had deliberately fired a worker for making well-founded complaints with a state FEP agency about persistent acts of racial harassment); Erebia v. Chrysler Plastic Products Corp., 772 F.2d 1250, 1260, 37 EPD Par. 35,317 (6th Cir. 1985) (manager's threat to hurt plaintiff economically for pursuing his complaints of harassment may constitute malice), cert. denied, 475 U.S. 1015 (1986). 2. Calculation of Punitive Damage Amount If malice or reckless disregard of the complaining party's rights is found, respondents may be liable for punitive damages up to the maximum amount allowed.18 Congressional intent was to make respondents "liable for the non-wage economic consequences of [intentional] discrimination up to the full extent of the stated limitations." Sponsors' Interpretative Memorandum, 137 Cong. Rec. S15,484 (daily ed. Oct. 30, 1991). Of course, the punitive damage award should "bear some relation to the 'character of the defendant's act' along with 'the nature and extent of the harm to the plaintiff that the defendant caused."' Rowlett v. Anheuser-Busch, 832 F.2d at 207, quoting, Restatement (Second) of Torts, § 908(2). These factors are discussed above on pages 15 and 16. The financial position of the respondent is also relevant. City of Newport v. Fact Concerts, Inc., 453 U.S. 247, 270 (1981) ("evidence of a tortfeasor's wealth is traditionally admissible as a measure of the amount of punitive damages that should be awarded"); Rowlett v. Anheuser-Busch, 832 F.2d at 207 ("a rich defendant may well be required to pay more than a poor one who committed the same wrong"). The award should be considered in the context of the respondent's monetary resources. The amount of punitive damages should "sting," but not "destroy" the respondent. Keenan v. City of Philadelphia, 55 FEP Cases at 944-45. The following factors are relevant in determining a respondent's financial position. Note, however, that this list is not exclusive and other relevant factors may also be considered. A. The revenues and liabilities of the business. B. The fair market value of the respondent's assets. C. The amount of liquid assets on hand, which includes amounts that they can reasonably borrow. D. The respondent's propensity to generate income in the future -- projected earnings. E. The resale value of the business. This is particularly useful where the business has a unique spot in the market. For instance, large companies may be seeking to buy the business. F. Consider whether the respondent is affiliated with, or a subsidiary of, a larger entity that could provide additional financial resources to the respondent. In Bessier v. Precise Tool & Engineering Co., Inc., 778 F. Supp. 1509, 57 FEP Cases 1249 (W.D. Mo. 1991), the plaintiff was granted discovery of defendant's financial records to prepare a case on the issue of punitive damages. The financial records included: 1) financial statements; 2) income tax returns; 3) documents reflecting the defendant's gross income, net income, and expenditures; 4) bank statements and deposit records; and 5) general ledgers. The defendant was also compelled to answer interrogatories as to its net worth. See also Heller v. Ebb Auto Co., 55 EPD Par. 40,431, 53 FEP Cases 911 (D. Or. 1990) (Plaintiff may be entitled to defendant's profit and loss statements and balance statements after making a prima facie showing of entitlement to punitive damages). III. CHARGE RESOLUTION Damages are often a necessary component of full relief, to the extent that unlawful conduct occurred on or after November 21, 1991. EEOC Policy Guidance No. 915.002, "Application of the Damages Provisions of the Civil Rights Act of 1991 to Pending Charges and Pre-Act Conduct," December 27, 1991. Damages for past pecuniary losses should be routinely sought. Do not assume emotional harm, or automatically seek damages for such harm. Typically, the Commission will require medical evidence of emotional harm to seek damages for such harm in conciliation negotiations. However, in exceptional cases, the complaining party may establish emotional harm without medical documentation, but (s)he should have a reasonable justification for not seeking medical attention for the emotional harm. If malice or reckless disregard of the complaining party's rights is found, the District Director and the Regional Attorney should be consulted, who will, in turn, consult with Headquarters on a case-by-case basis. ______7/14/92____________ _______________-S-_________________ Date Evan J. Kemp, Jr. Chairman 1. Section 102 will be codified at 42 U.S.C. § 1981, rather than as part of Title VII. The text of § 1981 is attached as Appendix A. 2. The term "complaining party" means the Equal Employment Opportunity Commission, the Attorney General, or a person who may bring an action or proceeding under Title VII, the Rehabilitation Act, or the Americans with Disabilities Act. Section 1981A(d)(1). 3. "The term 'respondent' means an employer, employment agency, labor organization, joint labor-management committee controlling apprenticeship or other training or retraining program, including an on-the-job training program, or Federal entity subject to section 717." Section 104(n) (to be codified at § 701(n) of Title VII). 4. 42 U.S.C. § 1981 provides a cause of action for individuals who are discriminated against on the basis of race in the making and enforcing of contracts. The Civil Rights Act of 1991 amends § 1981 to include all forms of racial bias in employment. Section 101(2)(b) of the Act provides that "the term 'make and enforce contracts' includes the making, performance, modification, and termination of contracts, and the enjoyment of all benefits, privileges, terms and conditions of the contractual relationship." Race includes, to some extent, "ethnicity." See St. Francis College v. Al-Khazraji, 481 U.S. 604 (1987) (§ 1981 prohibits racial discrimination as well as discrimination on the basis of "ancestry or ethnic characteristics"). 5. Relief under § 706(g) of Title VII has traditionally been limited to equitable relief. See, e.g., Mitchell v. Seaboard System Railroad, 883 F.2d 451, 452, 51 EPD Par. 39,254 (6th Cir. 1989) (Title VII plaintiffs are entitled to equitable relief, but not to compensatory damages). Equitable relief under § 706(g) usually means backpay, reinstatement, and/or frontpay. Fringe benefits and all forms of compensation are included in backpay. EEOC "Policy Statement on Remedies and Relief for Individual Cases of Unlawful Discrimination," February 5, 1985. Injunctions against future discriminatory conduct by the respondent may also be imposed. 6. Part-time employees are included in this count. See EEOC Policy Guidance No. N-915-052, "Whether part-time employees are employees within the meaning of § 701(b) of Title VII and § 11(b) of the ADEA," April 20, 1990. Two circuits have concluded that part-time employees are not counted as employees for jurisdictional purposes. See, e.g., EEOC v. Garden and Associates, 956 F.2d 842 (8th Cir. 1992) (ADEA)- Zimmerman v. North American Signal Corp., 794 F.2d 347, 354, 31 EPD Par. 33,486 (7th Cir. 1983) (ADEA). However, the conclusions in these cases were based on the definitional requirement that employers have the requisite number of employees "for each working day in each of twenty or more calendar weeks." Because § 1981A(b)(3) does not contain the "for each working day" requirement for counting employees to determine a respondent's cap, the rationale for a Garden or Zimmerman type of result appears to have been eliminated. 7. See EEOC Compliance Manual, Volume II, § 605, Appendix N. This guidance explains that both labor organizations and employment agencies with fewer than fifteen employees may be covered by Title VII, if they regularly deal with Title VII covered employers. Labor organizations need only operate a hiring hall which procures employees for an employer or have fifteen members to be covered by Title VII. See 42 U.S.C. § 2000e(e). Basing a union's damage caps on its number of employees, rather than on the number of its members, may have been a drafting error. However, since § 1981A(b)(3) specifically refers to the number of "employees," and since that is not inconsistent with the provision's purpose, the Commission interprets the statute to mean that the caps relate to the number of a union's employees, rather than to the number of its members. 8. Section 1981A(b)(3) provides that the amount of damages "shall not exceed [the caps] for each complaining party." Complaining party is defined as "the Equal Employment Opportunity Commission, the Attorney General, or a person who may bring an action under [Title VII, the ADA or the Rehabilitation Act]." Section 1981A(d) (emphasis added), Since each individual who states a claim under one of these statutes is one who may bring an action, each is eligible for damages up to the cap. This is true even when their claims are joined either in Commission or private litigation brought on behalf of several individuals, or in a class action brought by a private party. As a policy matter, any other construction would conflict with Congressional intent to make damages available to fully compensate persons harmed by discrimination and to deter further discrimination. Moreover, a contrary interpretation would be at least unwieldy, if not unworkable. If the Commission cannot seek damages on behalf of each aggrieved person in a single action, it would have to file numerous individual suits or recommend that each individual intervene in Commission actions. 9. The Sponsors' Interpretative Memorandum, 137 Cong. Rec. S15,484 (daily ed. Oct. 30, 1991), states that "damages cannot include backpay, the interest thereon, frontpay, or any other relief authorized under Title VII." (emphasis added). See also Representative Edwards' Interpretative Memorandum, 137 Cong. Rec. H9527 (daily ed. Nov. 7, 1991) (frontpay is relief authorized under Title VII and is excluded from damages). Moreover, courts generally find that frontpay is an available remedy under Title VII. See, e.g., Carter v. Sedgwick County, 929 F.2d 1501, 1505, 56 EPD Par. 40,699 (10th Cir. 1991); Weaver v. Casa Gallardo, Inc., 922 F.2d 1515, 1528, 55 EPD Par. 40,540 (11th Cir. 1991); Edwards v. Occidental Chemical Corp., 892 F.2d 1442, 1449, 52 EPD Par. 39,585 (9th Cir. 1990); Pitre v. Western Electric Co. 843 F.2d 1262, 127879, 46 EPD Par. 37,882 (10th Cir. 1988). But see Fortino v. Quasar Company, 950 F.2d 389, 57 EPD Par. 41,117 (7th Cir. 1991) (ADEA case questioning frontpay awards under Title VII because "Title VII authorizes only equitable relief and frontpay resembles common law damages for breach of employment contract"). 10. Although compensatory damages were not available under Title VII prior to § 1981A, medical expenses have been awarded as part of § 706(g) relief in some circumstances. See, e.g., EEOC v. Service News Co., 898 F.2d 958, 53 EPD Par. 39,736 (4th Cir. 1990) (court awarded unreimbursed medical expenses, which resulted from plaintiff's loss of health insurance after she was discriminatorily discharged); Weiss v. Parker Hannifan Corp., 747 F. Supp. 1118, 1132, 55 EPD Par. 40,531 (D.N.J. 1990) (court awarded unreimbursed medical expenses, resulting from plaintiff's loss of health insurance, as part of backpay). In such cases, medical expenses would be excluded from the caps, either as relief authorized by § 706(g) or as past pecuniary losses. 11. Congressional intent for including future pecuniary losses in the caps appears to have been to limit damages on losses that are typically difficult to quantify. If past out-of-pocket losses can be shown, they can be recovered without regard to the limitations on damages. Up to the time of resolution of the complaint, whether at conciliation, settlement, or the conclusion of litigation, actual out-of-pocket losses can be shown with some certainty. 12. By analogy, § 706(g) of Title VII provides that interim earnings or amounts earnable with reasonable diligence by the charging party shall operate to reduce a backpay amount. 13. Cases awarding compensatory and punitive damages under other civil rights statutes will be used for guidance in analyzing the availability of damages under § 1981A. Section 1981 cases are particularly useful because Congress treated the § 1981A damage provisions as an amendment to § 1981. 14. Complaining parties should be informed that if they claim emotional harm, respondents may be able to obtain records of medical and/or psychiatric treatments for conditions relevant to the complained of symptoms. A respondent may also obtain relevant information concerning the complaining party's private life. 15. During litigation, the amount of damages will be decided by a jury if either party requests a jury. Jury trials will be available if a plaintiff seeks compensatory or punitive damages. Section 1981A(c). 16. "Punitive damages are available under [§ 1981A] to the same extent and under the same standards that they are available to plaintiffs under 42 U.S.C. § 1981. No higher standard may be imposed." Representative Edwards' Interpretative Memorandum, 137 Cong. Rec. H9527 (daily ed. Nov. 7, 1991). 17. Malice is defined as "a condition of mind which prompts a person to do a wrongful act willfully, that is, on purpose, to the injury of another." Black's Law Dictionary 862 (5th ed. 1979). Thus, discriminatory conduct "is maliciously done if prompted or accompanied by ill will ... either toward the injured person individually or toward all persons in one or more groups ... of which the injured person is a member." Soderbeck v. Burnett County, 752 F.2d 285, 289 (7th Cir. 1985), cert. denied, 471 U.S. 1117 (1985). 18. The sum of punitive damages, future pecuniary losses, and nonpecuniary losses may not exceed the damage caps set forth in § 1981A(b)(3). Therefore, punitive damage awards under § 1981A typically will not be "grossly excessive" or "shocking." See Rowlett v. Anheuser-Busch, 832 F.2d 194, 206, 44 EPD Par. 37,428 (1st Cir. 1987) (punitive damage award of $3 million ruled grossly excessive and reduced to $300,000); Vance v. Southern Bell Telephone and Telegraph Company, 863 F.2d 1503, 1516, 48 EPD Par. 38,626 (11th Cir. 1989) (punitive damage award of $2.5 million is "high and rather shocking"). APPENDIX A SEC. 102. DAMAGES IN CASES OF INTENTIONAL DISCRIMINATION The Revised Statutes are amended by inserting after section 1977 (42 U.S.C. 1981) the following new section: "SEC. 1977A. DAMAGES IN CASES OF INTENTIONAL DISCRIMINATION IN EMPLOYMENT. "(a) RIGHT OF RECOVERY.- "(1) CIVIL RIGHTS.- In an action brought by a complaining party under section 706 or 717 of the Civil Rights Act of 1964 (42 U.S.C 2000e-5) against a respondent who engaged in unlawful intentional discrimination (not an employment practice that is unlawful because of its disparate impact) prohibited under section 703, 704, or 717 of the Act (42 U.S.C. 2000e-2 or 2000e-3), and provided that the complaining party cannot recover under section 1977 of the Revised Statutes (42 U.S.C. 1981), the complaining party may recover compensatory and punitive damages as allowed in subsection (b), in addition to any relief authorized by section 706(g) of the Civil Rights Act of 1964, from the respondent. "(2) DISABILITY.- In an action brought by a complaining party under the powers, remedies, and procedures set forth in section 706 or 717 of the Civil Rights Act of 1964 (as provided in section 107(a)), and section 505(a)(1) of the Rehabilitation Act of 1973 (29 U.S.C. 794a(a)(1)), respectively) against a respondent who engaged in unlawful intentional discrimination (not an employment practice that is unlawful because of its disparate impact) under section 501 of the Rehabilitation Act of 1973 (29 U.S.C. 791) and the regulations implementing section 501, or who violated the requirements of section 501 of the Act or the regulations implementing section 501 concerning the provision of a reasonable accommodation, or section 102 of the Americans with Disabilities Act of 1990 (42 U.S.C. 12112), or committed a violation of section 102(b)(5) of the Act, against an individual, the complaining party may recover compensatory and punitive damages as allowed in subsection (b), in addition to any relief authorized by section 706(g) of the Civil Rights Act of 1964, from the respondent. "(3) REASONABLE ACCOMMODATION AND GOOD FAITH EFFORT.- In cases where a discriminatory practice involves the provision of a reasonable accommodation pursuant to section 102(b)(5) of the Americans with Disabilities Act of 1990 or regulations implementing section 501 of the Rehabilitation Act of 1973, damages may not be awarded under this section where the covered entity demonstrates good faith efforts, in consultation with the person with the disability who has informed the covered entity that accommodation is needed, to identify and make a reasonable accommodation that would provide such individual with an equally effective opportunity and would not cause an undue hardship on the operation of the business. "(b) COMPENSATORY AND PUNITIVE DAMAGES.- "(1) DETERMINATION OF PUNITIVE DAMAGES.- A complaining party may recover punitive damages under this section against a respondent (other than a government, government agency or political subdivision) if the complaining party demonstrates that the respondent engaged in a discriminatory practice or discriminatory practices with malice or with reckless indifference to the federally protected rights of an aggrieved individual. "(2) EXCLUSIONS FROM COMPENSATORY DAMAGES.- Compensatory damages awarded under this section shall not include backpay, interest on backpay, or any other type of relief authorized under section 706(g) of the Civil Rights Act of 1964. "(3) LIMITATIONS.- The sum of the amount of compensatory damages awarded under this section for future pecuniary losses, emotional pain, suffering, inconvenience, mental anguish, loss of enjoyment of life, and other nonpecuniary losses, and the amount of punitive damages awarded under this section, shall not exceed, for each complaining party- "(A) in the case of a respondent who has more than 14 and fewer than 101 employees in each of 20 or more calendar weeks in the current or preceding calendar year, $50,000; "(B) in the case of a respondent who has more than 100 and fewer than 201 employees in each of 20 or more calendar weeks in the current or preceding calendar year, $100,000; and "(C) in the case of a respondent who has more than 200 and fewer than 501 employees in each of 20 or more calendar weeks in the current or preceding calendar year, $200,000; and "(D) in the case of a respondent who has more than 500 employees in each of 20 or more calendar weeks in the current or preceding calendar year, $300,000. "(4) CONSTRUCTION.- Nothing in this section shall be construed to limit the scope of, or the relief available under, section 1977 of the Revised Statutes (42 U.S.C. 1981). "(c) JURY TRIAL.- If a complaining party seeks compensatory or punitive damages under this section- "(1) any party may demand a trial by jury; and "(2) the court shall not inform the jury of the limitations described in subsection (b)(3). "(d) DEFINITIONS.- As used in this section: "(1) COMPLAINING PARTY.-The term 'complaining party' means- "(A) in the case of a person seeking to bring an action under subsection (a)(1), the Equal Employment Opportunity Commission, the Attorney General, or a person who may bring an action or proceeding under title VII of the Civil Rights Act of 1964 (42 U.S.C. 2000e et seq.); or "(B) in the case of a person seeking to bring an action under subsection (a)(2), the Equal Employment Opportunity Commission, the Attorney General, a person who may bring an action or proceeding under section 505(a)(1) of the Rehabilitation Act of 1973 (29 U.S.C. 794a(a)(1)), or a person who may bring an action or proceeding under title I of the Americans with Disabilities Act of 1990 (42 U.S.C. 12101 et seq.). "(2) DISCRIMINATORY PRACTICE.-The term 'discriminatory practice' means the discrimination described in paragraph (1), or the discrimination or the violation described in paragraph (2), of subsection (a)."
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