Causing waves to travel through the legal community, a California jury has recently ordered a woman’s former employer to pay her $186 million in punitive damages. In the case, the woman claimed that she had been demoted after becoming pregnant and was terminated after she complained about gender and pregnancy discrimination. The jury set punitive damages at more than 200 times the amount of her actual economic losses, found to be $800,000.
There are several remarkable aspects about this verdict. First, it shows that juries are increasingly willing to punish employers whom they believe have mistreated women because of pregnancy and/or childbirth. Second, the jury must have truly intended to punish this employer, because the award was twenty million dollars higher than what even her own attorney asked for. Third, experience tells us it is most unlikely that the former employee will receive anywhere near the punitive damages amount awarded.
In 1978, Congress amended the Civil Rights Act of 1964 by passage of the Pregnancy Discrimination Act. That law clarified that the terms “because of sex” or “on the basis of sex” includes “pregnancy childbirth, or related medical conditions” and that women affected by such conditions must be treated the same as other persons not so affected. Recently, we have seen a sharp increase in the number of such cases and in the number of multi-million dollar jury verdicts in favor of women who have been found to be victims of such discrimination.
However, as eye-catching as such awards are, very high amounts rarely survive appeal or other post-verdict proceedings, especially when the punitive portion is significantly disproportionate to the actual damages.
Punitive damages are intended to punish a defendant for outrageous misconduct and deter similar future misconduct. However, the appellate courts have reined in juries who have, in their view, awarded excessive punitive damages. Although in reviewing the fairness of an award, a number of factors are considered, in general the U.S. Supreme Court has decided that the ratio of punitive to actual damages must be a single digit (i.e. no more than 9). A ratio of 200+ is considerably above that marker and seems vulnerable, to say the least. Thus, though large jury verdicts temporarily grab headlines and cause shock waves among employers, more modest out-of-court settlements are generally the final result.