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Legal Alert: Eighth Circuit Reverses Punitive Damages Award in Sexual Harassment Case

Date   Aug 6, 2007

In a significant decision addressing when punitive damages are appropriate in a Title VII sexual harassment claim, the Eighth Circuit has held that an employer's good faith efforts to comply with Title VII were sufficient to avoid liability for such damages.

 

In a significant decision addressing when punitive damages are appropriate in a Title VII sexual harassment claim, the Eighth Circuit has held that an employer's good faith efforts to comply with Title VII were sufficient to avoid liability for such damages. See Dominic v. DeVilbiss Air Power Co. (July 20, 2007). In this case, in which Ford & Harrison attorneys represented the employer on appeal, the Eighth Circuit reversed the jury's punitive damages award of $250,000 against the employer. The court held that the jury should not have been permitted to consider the issue of punitive damages because of the employer's good faith efforts to comply with Title VII.

Bill Dominic, an accounting department assistant supervisor, claimed his female supervisor, Patricia Fant, made verbal and physical sexual advances toward him and retaliated against him when he reported these advances. Fant denied the allegations. Dominic also complained of accounting irregularities. In response to Dominic’s complaints, the employer conducted four investigations, one led by outside counsel, none of which substantiated his claims.

Because the employer could not verify Dominic's claims, it did not discharge Fant. Additionally, due to company-wide downsizing and the small size of the accounting department, it could not transfer either Fant or Dominic. It took other preventive action, however, including warning Fant against retaliation; requiring all salaried employees to attend an anti-harassment seminar on company premises; and monitoring communications between Dominic and Fant.

Despite the employer's efforts to address his complaints, Dominic resigned and sued the company in federal court, claiming, among other things, sexual harassment and retaliation in violation of Title VII. A jury found in favor of Dominic, awarding him compensatory damages and back pay as well as $250,000 in punitive damages.

The employer appealed only the issue of punitive damages, arguing that the trial court should not have submitted this issue to the jury, especially in light of its good faith efforts to comply with Title VII. The Eighth Circuit agreed, holding that punitive damages are not warranted when, as here, "an employer promptly and conscientiously responds to complaints of harassment or discrimination with good faith efforts."

Under Title VII, punitive damages are appropriate only if the complaining employee can show that the employer acted with "malice or reckless indifference" to the employee’s federally protected rights. Even if the plaintiff can show that some individuals in the company demonstrated the required malice or reckless indifference, punitive damages are not appropriate unless such intent can be imputed to the employer. The Eighth Circuit refused to impute such intent to the employer here, based on its zero-tolerance sexual harassment policy and its prompt and thorough investigation of Dominic’s complaints. The court rejected Dominic’s argument that the company’s response was insufficient because it did not discharge Fant, noting that the employer’s investigation did not uncover any information that corroborated Dominic’s claims or that gave it grounds to discharge Fant.

Employers’ Bottom Line:

This case demonstrates the difficulties involved in dealing with “he said/she said” harassment allegations, where the claims cannot be corroborated. It also illustrates the importance of having an established complaint procedure, taking harassment allegations seriously, conducting thorough investigations, and taking appropriate remedial action that demonstrates the employer’s commitment to its zero-tolerance anti-harassment policy, even if complaints cannot be corroborated.

The Eighth Circuit’s decision in this case is significant because it recognizes that “it would be ‘illogical to ascribe malice or reckless indifference’ to a company which responded appropriately to charges of discrimination.”

If you have any questions regarding this decision or regarding anti-harassment policies and complaint procedures, please contact the Ford & Harrison attorney with whom you usually work or one of the attorneys who represented the employer on the appeal in this case: Arnold Perl,  901-291-1541, Kathryn Pascover, 901-291-1528, or Tom Walsh,  901-291-1552.