Punitive damages argued before U.S. Supreme Court in sex discrimination case.

The U.S. Supreme Court heard arguments on when a successful sex discrimination plaintiff may be awarded punitive damages. (Kolstad v. American Dental Association, No. 98-208 (U.S. argued Mar. 1, 1999).)

The justices' decision, expected by July, could have a broad impact on how corporations deal with job bias litigation, including settlement decisions.

The Court will decide whether the "egregiousness" of intentional discrimination in Title VII cases must be proved before allowing punitive damages.

Eric Schnapper, arguing on behalf of plaintiff Carole Kolstad, a high-ranking executive who claimed she was passed over for a promotion at the American Dental Association (ADA) because of her sex, said plaintiffs should not have to prove their employer's conduct was "egregious" to receive punitive damages. A jury awarded back pay of nearly $53,000 to Kolstad, but she was denied punitive damages.

Schnapper, citing the text of [sections] 1981(a) of the Civil Rights Act of 1991, argued that a plaintiff need only prove the employer acted with malice or reckless indifference. The U.S. Circuit Court of Appeals for the District of Columbia Circuit, in a 6-5 decision, ruled against Kolstad, finding that plaintiffs must clear a higher hurdle. (Kolstad v. American Dental Association, No. 96-7030 (D.C. Cir. May 8, 1998).)

Raymond Fay argued on behalf of the ADA, contending that a two-step process is required for a plaintiff to be eligible for punitive damages: First, the plaintiff must prove the employer intended to discriminate and, second, that the discrimination was "egregious."

Fay argued that a less stringent standard would open the courts to a flood of punitive damages claims in Title VII cases where a successful job bias plaintiff must show only intentional discrimination.

Solicitor General Seth Waxman argued on behalf of the Clinton administration in favor of the less stringent standard for punitive damages.

The Civil Rights Act of 1964 was amended in 1991 to allow juries to decide whether punitive damages are warranted in job bias cases and to set a limit of up to $300,000 on the punitive amount.

Referring to the amendments, Justice Stephen Breyer said, "Why should we fight so hard to resist eligibility for punitives in a statute that has two other checks?"

Schnapper said that "egregious conduct" cannot be interpreted from the statute as it was written. He urged the Court to reject the circuit court's attempt to inject that interpretation into the law.

Justice Antonin Scalia simply asked, "What is the problem with the jury taking into account what is egregious?"

ATLA filed an amicus brief in the case, arguing that the D.C. Circuit's interpretation of the civil rights statute is at odds with the text of the law. The association also argued that Congress made punitives available to plaintiffs to eliminate discrimination in the workplace and that any barrier to obtaining them would undermine Congress's intent.