by Patrick D. Smith, Attorney with the law firm of Bradshaw, Fowler, Proctor & Fairgrave, P.C.
Last month in Jackson County, Missouri (Kansas City), two different juries issued eye-popping plaintiff verdicts in employment discrimination cases. In one case, a jury awarded Deborah Miller $450,000 in compensatory damages and a whopping $20 million in punitive damages. Miller sued American Family Insurance for age and sex discrimination and retaliation after she lost her management position as part of a corporate restructuring. In the second case, a jury awarded Gary Gentry $120,892 in compensatory damages and $10 million in punitive damages in a retaliation case against the pest control company Orkin.
During the twenty years I have practiced employment law in Iowa, seven figure verdicts have been rare, let alone the eight figures awarded in the Missouri cases. Only once have I seen an eight figure verdict, and that case involved egregious harassment with completely non-responsive management. In the Missouri cases decided last month, on the other hand, a local lawyer observed they were fairly routine discrimination and retaliation cases.
Could something like what happened in these two Kansas City verdicts happen here? The good news for Iowa employers is that punitive damages are not available under the Iowa Civil Rights Act. Some federal employment laws allow punitive damages, most notably Title VII (covering race, sex, religion, and national origin) and the Americans with Disabilities Act (ADA). But, those federal laws cap compensatory and punitive damages based upon the employer’s size. For employers with less than 100 employees, the limit is $50,000. The most that can be recovered is $300,000, for employers with more than 500 employees. Although the damages caps do not apply to awards for back pay, lost wages in the future, or plaintiff’s attorney’s fees, those items are not where juries are giving big awards. So, even in those Iowa cases where a jury awards multiple millions for punitive or non-economic damages, the judge will reduce the verdict to comply with the caps, and the plaintiff will not in the end recover anything close to the amount awarded.
In the end, does it make any difference to Iowa employers that juries in another jurisdiction awarded significant damages in seemingly routine discrimination cases? Or, is this a sign that the employment litigation landscape is becoming (or has already become) more employee friendly? For many years defendants had most of the advantages in employment litigation. It used to be that most of the cases were in federal court and summary judgment was routinely granted for defendants. Even when cases were tried, jurors were often skeptical of discrimination claims and non-economic damage awards were low.
Now, at least in Iowa, most employment cases are filed in state court and it is rare to win on summary judgment. When conducting voir dire of potential jurors, it is obvious citizens are more aware than they used to be of the anti-discrimination laws, and that employees have legal rights. Jurors, almost all of whom are also employees, are more willing to impose consequences on an employer who treats an employee unjustly. Another factor that may play a role in the amount of awards is that Americans are more sensitive to claims of emotional harm than in the past, and more willing to place economic value on mental and emotional distress.
I think these Missouri verdicts are evidence that employment lawsuits are more plaintiff friendly than ever before. It is a trend that is likely to continue, despite the fact that federal enforcement agencies such as EEOC will be less aggressive under a Republican administration. So long as these cases are tried to juries, we can expect more plaintiff verdicts, and probably bigger verdicts.
In light of this trend, it’s more important than ever to try and prevent lawsuits in the first place, and if they occur to be in a defensible position. The most obvious response is to have the right policies and procedures in place, and to make your best efforts to follow them closely. An HR Audit is a good way to see where your company stacks up in this area. Ensuring you have appropriate Employer Practices Liability Insurance (EPLI) is critical, especially if an employment lawsuit would cripple your business. Finally, companies should consider whether arbitration of employment disputes would be more beneficial that litigation. There are restrictions on the ability of employers to impose arbitration on their employees, so legal counsel should be consulted before going down that road.
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