Jon Allison’s Monday Blog
Last Spring, a jury awarded a former Wal-Mart manager $5.5 million after finding that he had been retaliated against and fired after complaining about discrimination. The case was in the U.S. District Court for the District of Connecticut. It was the first of three cases to go to trial filed by three African-American former managers. The jury found that, after a number of managers complained about race discrimination, Wal-Mart engaged in a phony restructuring and eliminated the positions of the managers who complained. Shortly after the positions were allegedly eliminated, similar positions reappeared. The managers who had complained and been fired were prevented from interviewing for these positions and they were filled by non-African-Americans. The jury determined there had been widespread retaliation and wanted to discourage Wal-Mart from engaging in similar conduct in the future. Of the $5.5 million awarded by the jury, the vast majority ($5 million) was punitive damages. Punitive damages are designed to punish an employer and deter future wrongful conduct. Often the economic losses of a particular plaintiff don’t amount to a lot of money, particularly for a large corporation. A couple of weeks ago, a federal judge reduced the punitive damages award from $5 million to 300,000 citing caps on damages under the statute. These caps ought to be revisited. Most people don’t ever challenge wrongful conduct by an employer. Fewer ever retain an attorney and file suit. Fewer still go through all the steps necessary to get to trial. It can take many years to get there. Once there, if a jury finds wrongful conduct on the part of a large company and wants to send a message to it to stop, it should not be prevented from doing so. If a company is not forced to write a big check in the few instances where wrongful conduct is challenged all the way to a verdict by a jury, there is little incentive for it to change its ways.