Supreme Court makes punitive damages for job bias harder to get.

Plaintiffs seeking punitive damages in job bias cases will find courts less open to their pleas following the U.S. Supreme Court's decision in Kolstad v. American Dental Association. (No. 98-208, 1999 WL 407481 (U.S. June 22, 1999).)

At first glance, the decision appears to be a win for plaintiffs, but the High Court struck off on "an adventure" and created a new "good faith" defense for employers accused of discriminating against workers, said Seattle attorney Jeffrey Needle, who chairs ATLA's Employment Rights Section and prepared ATLA's amicus curiae brief in the case.

Plaintiff Carole Kolstad, a high-ranking executive at the American Dental Association (ADA), claimed she was passed over for a promotion because of her sex. A jury awarded her back pay of nearly $53,000, but she was denied punitive damages.

The U.S. Circuit Court of Appeals for the District of Columbia found that, to qualify for a punitive damages award, the employer's discriminatory actions must be egregious. Kolstad argued that [sections] 1981 (a) of the Civil Rights Act of 1991 requires only proof that the employer acted with malice or reckless disregard.

The Supreme Court found by a 7-2 vote that the statute did not make "egregious conduct" a prerequisite to a punitive damages award. Writing for the majority, Justice Sandra Day O'Connor said, "While egregious misconduct is evidence of the requisite mental state, [sections] 1981(a) does not limit plaintiffs to this form of evidence, and the section does not require a showing of egregious or outrageous discrimination independent of the employer's state of mind."

Next, the Court found by a 5-4 vote that when an employer has made "good-faith efforts" to comply with antidiscrimination laws, it cannot be held vicariously liable for punitive damages stemming from its supervisors' discriminatory conduct.

O'Connor wrote, "An employer may not be vicariously liable for the discriminatory employment decisions of managerial agents where these decisions are contrary to the employer's `good-faith efforts to comply with Title VII.'"

Justice John Paul Stevens, dissenting from that part of the opinion, wrote, "I strongly disagree with the Court's decision to volunteer commentary on an issue that the parties have not briefed and that the facts of this case do not present."

Calling the majority's decision "gratuitous" and "ill-advised," Stevens said he would have remanded the case for a trial on punitive damages. Stevens was joined by Justices David Souter, Ruth Bader Ginsburg, and Stephen Breyer.

Needle said, "This part of the opinion really raises more questions than it answers. The Court went off on an adventure of its own and came up with the vicarious liability part. It's shameful in a way, because the Supreme Court was not really properly educated on this issue."

The outcome for Kolstad remains to be seen as her case will go back to the lower court to determine whether she can show that the ADA acted with malice or reckless indifference to her Title VII rights.