An argument for the allowance of punitive damages without compensatory damages under 42 U.S.C. (Sections) 1981a

No harm, no foul?: An argument for the allowance of punitive damages without compensatory damages under 42 U.S.C. (Sections) 1981a

McQuality, Christy Lynn

I. Introduction

The 1991 Civil Rights Act dramatically changed the recovery system for victims of sex discrimination in the workplace.1 Specifically, sec 1981a2 of the amendments granted a statutory right of compensatory and punitive damages to employees who are victims of intentional sex discrimination.3 This right to compensatory and punitive damages represents a significant departure from the remedies previously available under Title VII, which limited recovery to remedies such as back-pay and an injunction for reinstatement.4

However, as a statutory remedy, the damages provision under 1981 a contains certain restrictions that may eliminate the need to apply these common law and due process limitations to punitive damages under sec 1981a.10 Furthermore, the Supreme Court has articulated a standard for awarding punitive damages under sec 1981a that must enter into this mix.11 These facts, along with the high number of employment discrimination cases facing courts today, indicate a likelihood of further division among the circuit courts over whether punitive damages may stand without compensatory damages under sec 1981a.12

rights violations; however, significant differences between sec 1981a and sec 1983 make the analogy inapplicable.15 As such, the argument for punitive damages without compensatory damages under sec 1981a16 stands independent of a 1983 analysis.17 This argument can be made through an examination of common restrictions on punitive damages and their application to sec 1981 a as well as through an analysis of Kolstad v. American Dental Ass’n,18 in which the Supreme Court outlined the standard for awarding punitive damages under sec 1981a.19

eral remedies historically available for employment discrimination.20 An examination of sec 1981a and its legislative history will follow to determine Congressional intent in the enactment of sec 1981a.21 After briefly discussing the court decisions that address this issue, this Note examines the limitations that courts often place on punitive damages and argues that they have no applicability to sec 1981 a claims?22 Finally, this Note analyzes the requirements for punitive liability under 198 la that the Court established in Kolstad23 to shed light on whether the requirements for punitive liability would permit punitive damages absent compensatory damages.24 In conclusion, this Note recommends that punitive damages should be permissible in the absence of compensatory damages under sec 1981a.25

II. Remedies for Employment Discrimination Prior to 1991

the area of civil rights, yet facilitating mediation between employers and employees remained a primary policy objective of Congress.28 This policy objective, along with the goal of making victims of employment discrimination “whole,” fueled the enactment of Title VII.29 Congress, therefore, limited the recourse available to victims to remedies such as back-pay, injunctions, and reinstatement.30 While this remedy scheme helped victims who had suffered discrimination in the form of lost wages or lost career opportunities, many victims of discrimination still had no recourse for the injustices they suffered.31

housing discrimination under 1982 of the 1866 Civil Rights Act.34 Prior to Jones, the Supreme Court consistently interpreted the Reconstruction-era statutes very narrowly.35 The Court maintained that this legislation worked only to prevent actual slavery and did not apply to racial discrimination on the part of private individuals and entities.36 In determining that a private entity could not refuse accessibility to housing on the basis of race, the Jones Court expanded the scope of the Reconstruction-era statutes to prohibit private racebased discrimination.37

victims of sex discrimination could still only recover back-pay or injunctive remedies.42

III. The 1991 Civil Rights Act

compensate victims of sex discrimination in the workplace, it would have to provide an expanded remedial structure to these victims.49

Compensation was not Congress’s only goal in enaci a broader remedial scheme for sex discrimination in the Civil Rights Act of 1991.50 Congress also was concerned that the remedies then available under Title VII ineffectively deterred sex discrimination in the workplace.51 Without an effective deterrent, incidences of sex discrimination fail to abate, and employers would have no incentive to establish preventative programs or remedial outlets for sex discrimination.52

Congress recognized that by expanding damages available to compensate victims, employers would face a bigger potential cost of engaging in or permitting sex discrimination.53 Nonetheless, Congress did not stop by creating a remedial structure consisting of only compensatory damages.54 Congress’s express desire to create greater deterrence from discrimination indicates the importance of the punitive damages provision.55

IV. The Inapplicability of the sec 1983 Analogy

differences between the statutes indicate that a blanket analogy would be improper.57 Section 1983 creates a constitutional tort. Through sec 1983, Congress defined a legal interest, the deprivation of which creates grounds for a plaintiff to seek damages.59 Moreover, Congress remained silent as to the nature of damages as well as to the amount of damages recoverable.60 These factors illustrate how a sec 1983 claim parallels common law trespass torts,61 which are claims based on direct violations of an individual’s established right or interest, regardless of whether harm actually results.62

finding of liability without a simultaneous finding of compensatory damages.66 Consequently, this nominal damages award will usually justify punitive damages.67

V. Court Decisions Regarding Punitive Damages Under sec 1981a

There is understandable disagreement among courts about whether they can award punitive damages in the absence of compensatory damages in sec 1981a suits Often, courts require a compensatory damages award before a jury may grant punitive damages.76 The circuit courts are split, however, on whether this rule applies to sex discrimination suits under sec 1981a.77

termination.79 After the jury found for the plaintiff, the trial judge allotted all of the punitive damages to the federal claim and all of the compensatory damages to the state claim.80 On appeal, the circuit court vacated the punitive damage award, stating that without a related compensatory award, the punitive damages were untenable.81

court ruled, however, that the availability of remedies under sec 1981a were not subject to Illinois state law restrictions, as sec 1981a is a federal statute.87 Moreover, the court reasoned that the language of the statute did not prevent the jury from award punitive damages without compensatory damages.88

The plaintiff in Timm sued her employer under a hostile-work-vironment theory only under Tide VII.89 The jury found for the plaintiff, but only awarded punitive damages.90 On appeal, the court rejected the First Circuit’s analysis, determining that the jury could have found that the plaintiff had satisfied the criteria for awarding punitive damages without proving a need for compensation.91

The plaintiff in Cush-Crawford sued her employer under a hostile-workenvironment theory.93 The jury returned a verdict for the plaintiff and awarded only punitive damages.94 The trial court, in upholding the award, reasoned that the punitive damage award did not require a comparable cornpensatory damages award. The trial court also distinguished suits under Title VII from common-law tort suits that require a jury to award compensatory damages before a court may sustain a punitive damages award.96

behavior, the Court opened the door to the possibility that an employer’s mental state may warrant a punitive damages award without the employer’s behavior being sufficiently outrageous to cause injury to the plaintiff 101

VI. Limitations on Punitive Damages

and to deter.105 Juries award these damages in addition to any compensatory damages.106 Although punitive danutges serve to important purpose of punfishing socially offensive behavior, courts recognize that punitive damages are subject to abuse.107 Courts therefore have been relucat to uphold punitive damage awards under circumstances in which these informal restrictions are not present.108

A. Actual Damages Requirement

Many courts will not award punitive damages unless the plaintiff proves actual damage.109 This requirement stems from the co-on law principle that a plaintiff cannot recover on a claim unless the plaintiff proved injury to a legally recognized interest.110 If a plaintiff has suffered no deprivation of a a claim.111 The plaintiff would not, therefore, be entitled to recover punitive damages.112

plaintiff.121 Even if a plaintiff could prove that a defendant’s conduct had indirectly invaded a plaintiff’s legal interest, the plaintiff would not have standing to sue under trespass on the case unless the plaintiff also proved damage requiring compensation.122

The development of trespass on the case led to the idea that a plaintiff could not recover punitive damages without compensatory damages.123 Proving injury was a required element of trespass on the case.124 For this reason, if a plaintiff failed to prove a need for compensation, the claim itself would fail.125 The plaintiff would then have no right to recover punitive damages.126

ted punitive damages with only nominal damages, some courts still maintain that a plaintiff cannot recover punitive damages, even an trespass claims, without compensatory damages.130

B. Ratio Between Punitive and Compensatory Damages

subjective feelings about a defendant could influence the amount of the punitive damages 137

Many courts look to the amount of compensatory damages to determine whether the punitive damages are reasonable to prevent imposition of excessive punitive damages.138 If the amount of punitive damages is “grossly excessive” in relation to the damage the defendant actually caused, courts will reduce the punitive damages.139 The reasoning underlying such reductions is that such a large amount of punitive damages exceeds both what is sufficient punishment for the defendant’s actions and what is necessary to deter future action, thereby overstepping the purpose of punitive damages.140

VII. Punitive Damages Under Gore

Court departed from this rationale and struck down a large punitive damage award.145

The second factor the Court considered was the ratio of the punitive damages to compensatory damages.152 The Court found that the 52 million punitive damage award was “grossly excessive” compared to the 54,000 compensatory award.153 The Court stated that punitive damages should reasonably relate to the actual harm that has occurred, and to the “harm likely to result from the defendant’s conduct.”154 In Gore, the Court noted that not only were, the punitive damages 500 times greater than the compensatory damages, but also no threat of additional damage was ever present under the facts of the case.155

indeed excessive.158 Furthermore, the Court maintained that because the civil penalty was so low in comparison to the punitive damages, the def-dant could not have foreseen this large amount of punitive damages.159 Subjecting the defendant to this punitive damage award would, the Court reasoned, violate the defendant’s substantive due process rights.160 This factor, together with the lack of reprehensible conduct on the part of the defendant and the excessive ratio of the punitive award to the plaintiff s actual damages, contribut;ed to the Court’s determination that the punitive damage award could not stand under the Fourteenth Amendment.161

VIII. Common Law and Due Process Limitations Applied to sec 1981a Claims

Although courts traditionally have attached the aforementioned limitations to punitive damages, they are unnecessary under sec 1981a because of Congress’s implementation of caps to damage awards.162 These caps, which apply to the combined total of punitive and compensatory damages, create their own limitations on the availability of punitive damages under sec 1981a.163 As this Note will demonstrate, the effect of these limitations obviate the need for the restrictions that courts commonly have placed on punitive damages.164

A. Actual Damages and Reasonable Ratio

conceptions that punitive damages should only accompany actual damages and should bear a reasonable relationship to compensatory damages are inapplicable to sex discrimination claims under sec 1981a.166 The damages caps limit the total amount of damages; thus, the compensatory and punitive damages together cannot exceed a certain set amount.167 As such, the higher a plaintiff’s compensatory damages are, the lower her punitive damages must be.168 If a plaintiff were required to prove actual damages to recover punitive damages under sec 1981a, the effect would be that as the plaintiff suffers greater harm, the defendant would face less punishment.169 More plausible is the idea that Congress, with its primary goal of furthering compensation for sex discrimination claims, intended that punitive damages should act as a substitute for compensatory damages in cases in which the defendant had behaved outrageously and caused significant emotional harm to the plaintiff, but which, because of the intangible nature of the harm, the plaintiff may have trouble proving.170

excessive damages.174 In establishing these damage caps, Congress determined what constitutes a reasonable amount of damages that an employer should pay.175 Therefore, Congress has significantly limited a jury’s discretion over the amount of damages a plaintiff may receive.176 These caps eliminate the need for the procedural safeguard of examining the ratio between compensatory and punitive damages to determine the reasonableness of the punitive damages.177

B. Gore Factors

of sec 1981a indicates that Congress considered sex discrimination in the workplace to be reprehensible conduct.179 Congress’s interest in eliminating sex discrimination was a primary reason for enacting sec 1981a.180 By making sex discrimination more cost prohibitive, Congress hoped to eliminate cases of workplace sex discrimination.181 Providing plaintiffs with access to damages ensured that employers would be less likely to engage in discriminatory conduct.182

Congress also intended for the implementation of damages under sec 1981a to provide an incentive for employees to bring suit.183 The remedies available to victims of sex discrimination under Title VII before the 1991 Civil Rights Act were so inadequate that a victim often had little incentive to bring suit.184 By providing damages, Congress hoped that the added incentive to bring suit would encourage plaintiffs to act as “private attorneys general” in punishing and deterring offenders.185 Having plaintiffs act in this capacity, Congress intended that the imposition of damages under sec 1981a would serve the same function as a criminal sanction.186

reprehensible conduct and that permitting recovery of punitive damages, with caps to prevent excessive total damages, will sufficiently punish offenders.'” Furthermore, Congress intended this civil punishment in lieu of criminal sanctions.190 These underlying considerations establish that punitive damages under sec 1981a are reasonable.191 These considerations would be present even in the absence of compensatory damages under sec 1981 a; therefore, a grant of punitive damages without compensatory damages would also be reasonable.192

IX. Further Justification: Measuring Punitive Damages Under Kolstad

lem, then, arises when a defendant acts with the requisite malicious motive, yet the conduct does not appear to be sufficiently reprehensible to warrant punitive damages.195

Fortunately, in gauging a defendant’s conduct, courts generally assess the defendant’s mental state.” The Supreme Court solidified this rule with regard to sec 1981 a in Kolstad v. American Dental Ass’n.197 Congress had established the requirement that the employer engage “in a discriminatory practice… with malice or with reckless indifference to the federally protected rights of an aggrieved individual” as the standard for recovering punitive damages.198 This standard brings the factor of a plaintiff’s “federally protected rights” into the mix, along with mental state and conduct, in determining appropriate punitive damage awards.199 Some federal circuit courts had determined that if an employer discriminated against an employee with malicious intent, the employee could recover punitive damages against the employer.200 Other circuit courts maintained that punitive damages were unavailable unless the plaintiff proved that the employer’s conduct was egregious, regardless of the employer’s mental state.201

mental state regarding the defendant’s discriminatory actions.203 Specifically, Congress intended to provide punitive damages in situations in which an employer either acted maliciously or with evil motive, or acted “in the face of a perceived risk that” the employer’s conduct would violate the federally protected rights of the employee.204 The Court noted clearly that the reckless disregard requirement applies to the employer’s perception of the employee’s federally protected rights and not to the employer’s actual conduct.205 Thus, while an employer may harass an employee without any malice or evil intent toward the employee, if the employer nonetheless engages in conduct that he knows or should know would violate the federally protected rights of the employee, the employer can be liable for punitive damages.206

exhibited particularly outrageous conduct The Court recognized that under the common law, punitive damages usually accompany a defendant’s outrageous conduct. The Court maintained, however, that the reason for this tradition lay in the idea that punitive damages really punish the motive or mental state behind the bus behavior.209 While outrageous conduct often accompanies an improper motive, the Court reasoned that to properly punish the evil motive, a court cannot rely simply on whether the defendant’s conduct was egregious.210 Rather, the nature of an employer’s conduct may be a measuring tool to help a jury determine the motive of the defendant.211 The Court emphasized however, that a plaintiff does not need to prove that the employer “engage[d] in conduct with some independent, ‘egregious’ quality before being subject to (punitive damages].”212

in Kolstad, as long as the employer acted without regard to the rights of the employee to be free from such action under federal employment discrimination statutes, the employer would still be liable for punitive damages.215

X. Conclusion

discrimination through sec 1981a’s remedial scheme.217 The legislative history of sec 1981a demonstrates Congress’s intent to provide punitive damages to punish and deter sex discrimination.218 Furthermore, Congress expressed that the availability of fill compensation to victims for both their economic injuries and their intangible emotional harm was a primary goal of the amendmets.219

Section sec 1981a does not mirror 1983 in either its policy or its structure; therefore, the rationale for allowing punitive damages under sec 1983 cannot apply to sec 1981a. Nevertheless, permitting punitive damages without proof of actual damage under sec 1981a is entirely reasonable.220 Congress’s implementation of damages caps create inconsistencies between the limitations that courts usually place on punitive damages and the actual ability to recover punitive damages under sec 1981a.22 Punitive damages also pass the reasonableness tests that the Gore Court established. Congress’s intent to establish punitive damages under sec 1981a demonstrates that a jury’s grant of punitive damages would be reasonable under Gore even without compensatory damages.223

that a plainiff need not demonstrate outrageous conduct apart from the defendant’s mental state to establish liability for punitive damages.226 Under the Kolstad ruling, therefore, an employer may engage in subtle discrimination with disregard to an employee’s rights, yet still be liable for punitive damages.227 If, in such a situation, a plaintiff suffers no injury or is unable to prove injury from the defendant’s conduct, the plaintiff should still be able to recover punitive damages if the employer had the requisite mental state while engaging in discrimination against the employee.228

Christy Lynn McQuality*

Copyright Washington & Lee University, School of Law Spring 2002

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