Caps in Discrimination Laws Thwart Punitive Damages’ Purpose

Punitive Damages CapsAs a plaintiff’s lawyer, I’m obviously not a huge fan of arbitrary damages caps, most often instituted as part of the “tort reform” movement (and covered extensively in the HBO movie “Hot Coffee”). A recent case of religious discrimination won against AT&T in Missouri may unfortunately demonstrate how arbitrary caps to damage awards rob juries of the only means available to truly punish mega-corporations for willfully violating workplace discrimination laws. In this case, Susann Bashir, a formerly Christian woman who had converted to Islam, won a verdict which included $120,000.00 in back pay and compensatory damages and $6 million dollars in punitive damages due to the hostile work environment she suffered due to her new religious beliefs. That punitive damages award will very likely be reduced to $600,000.00 under a Missouri state law which caps punitive damages at the greater of (1) $500,000.00 or (2) five times the award of compensatory damages. Arbitrary caps on punitive damages, such as the one imposed in Missouri, destroy the entire purpose of punitive damages and allow huge corporations to willfully discriminate with relative impunity.

Ms. Bashir Actually Would Have Received Less Under Federal Religious Discrimination Law

Ms. Bashir brought her workplace discrimination claim against AT&T pursuant to the Missouri Human Rights Act, a state workplace discrimination law which is similar to Title VII. Had Ms. Bashir filed her lawsuit only under federal law, Title VII’s ridiculously low damages cap of $300,000.00 in combined compensatory and punitive damages would have netted her even less than she will ultimately receive should the Missouri punitive damages cap be applied and upheld. So, maybe it will be some small consolation to Ms. Bashir that the travesty of justice she’s about to experience could have been worse.

Why Should She Get $6 million Dollars? She Wasn’t Treated That Badly!

When most lay people hear about this case, even those not automatically predisposed to dislike Ms. Bashir due to her religion, they will probably not be upset that her $6 million in punitives will likely be reduced to 1/10th of what the jury found to be proper. They will rant that she doesn’t deserve $600,000.00, much less $6 million. Of course, the premise to that argument — that punitive damages are about what a plaintiff deserves — demonstrates most lay people’s ignorance as to the primary purpose of punitive damages. In short, punitive damages are not meant to compensate the plaintiff (that’s what compensatory damages are for). They are meant to punish the defendant, and deter future instances of similar conduct for both the defendant and those who may be tempted to act like the defendant in the future.

For punitive damages to serve this purpose, they must take into account not only the egregiousness of the defendant’s conduct, but also the net worth of the defendant. The consideration of net worth works both for and against the defendant — the award must not be so large that it bankrupts the defendant, but it must be large enough to serve the purposes of punishment and deterrence. The jury in Ms. Bashir’s case determined that number to be $6 million, which, given AT&T’s size and wealth (it has a market cap of over $210 Billion and had a gross profit of over $69 Billion over the past 12 months), is not an unreasonable figure.

The effect of damages caps such as those in Title VII and under Missouri state law is to rob juries of their ability to adequately punish willful (and often malicious) acts of workplace discrimination. Arbitrary punitive damages caps remove the teeth from discrimination legislation. They are also entirely unnecessary, as juries’ awards of punitive damages which exceed a reasonable amount can already be (and are) reduced the judge presiding over the case. Arbitrary damages caps are not meant to rein in unreasonable verdicts. They are meant to unfairly reduce reasonable verdicts, which I fear is exactly what will happen in Ms. Bashir’s case.

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