How Are Punitive Damages Awarded?

Advice, Is It Worth It?
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What damages can I recover if I file a lawsuit against my employer?Punitive damages punish a party for bad behavior. They are normally reserved for the most blatant cases of wrongdoing and can make a lawsuit far more expensive for an employer.

In a recent California case, the defendant’s behavior was so egregious that the jury wanted the company to pay $22.8 million in punitive damages. The judge reduced that amount to $13 million.

The company changed ownership, and management drove hard to cut costs, including the expense of long-time, older employees. The manager sought to “clean house” by firing or forcing out older employees and replacing them with younger employees earning less. However, the company probably lost any savings when the court smacked it with a $16 million verdict ($13 million punitive damages plus $3 million in compensatory damages) plus the costs of defending the case.

The Case of the $16 Million Bell Pepper

pepper2Bobby Dean Nickel sued Staples for age discrimination. After a jury ruled in his favor, the company appealed and lost.

Nickel had worked for Corporate Express, another office supply business, for seven years when Staples bought the company in 2008. He managed the company’s physical plant in La Mirada. Nickel started working for Lionel Marrero in 2007 and continued to do so after the corporate takeover.

According to the appellate court, Marrero “was on a mission to cut costs” by replacing older, higher-paid employees with part-time and temporary employees. He increased their workload to the breaking point, forcing them into retirement, or found reasons to discipline and fire them.

Until 2009, Nickel generally had positive performance evaluations and had no disciplinary issues. But that year, Marrero had human resources write Nickel up twice. In 2011, at the age of 64, Staples fired Nickel because he ate a bell pepper in the company cafeteria after hours, supposedly without paying for it. Nickel said, and witnesses confirmed, that it was company practice that if an employee took food after hours, he could pay for it the next day.

During the company’s investigation of the incident, Nickel claimed he did not pay for the pepper. (However, later in his deposition and at trial, he testified that he did pay for the $.68 pepper.) After Nickel was fired, he sued Staples for age discrimination, harassment, retaliation, breach of express and implied contracts, and defamation.

According to the court’s decision, the following facts were true:

  • A former manager testified that he had seen Staples’s campaign against older workers firsthand. He heard Marrero speak about the company’s push to eliminate older workers. Marrero instructed managers to find reasons to discipline and fire them.
  • Marrero was quoted as saying, “Take a closer look at the older people. They are starting to drag and are slowing down. If they are not top performers, write them up and get rid of them… We need young energetic people. Walk around the facility with the older workers and if they cannot keep up then get rid of them.”
  • The manager said that Marrero told him to remove older employees so they could hire younger employees, whose pay rates were lower and who would work part-time so Staples would not need to provide benefits.
  • Marrero asked Nickel when he planned to retire and became agitated when Nickel said he had no plans to retire.
  • The decision listed several older employees whose duties became far more difficult, so they left or were fired for little or no reason.

The appellate court found that Staples’s human resources team became Marrero’s “personal tool for disciplining and removing” older employees view publisher site. There was evidence that Marrero and others committed more serious infractions than Nickel yet suffered no consequences.

$13 Million Worth of Punishment

punishUnder California law, punitive damages are proper when a defendant’s conduct rises to extreme indifference to a plaintiff’s rights, which “decent citizens should not have to tolerate.” Clear and convincing evidence of one of three things is required to justify an award of punitive damages:

  1. oppression, which is “despicable conduct that subjects a person to cruel and unjust hardship in conscious disregard of that person’s rights,”
  2. malice, which is “conduct which is intended by the defendant to cause injury to the plaintiff or despicable conduct which is carried on by the defendant with a willful and conscious disregard of the rights or safety of others,” or
  3. fraud.

Here, there was substantial evidence to support the following legal conclusions:

  • Staples purposefully terminated Nickel because of his age, damaged his reputation, and tried to conceal the discrimination.
  • By discharging him because he ate the bell pepper, Staples labeled Nickel a thief, damaging his reputation and future job prospects.
  • Staples engaged in malice motivated by age discrimination when it intentionally hurt Nickel.
  • Staples acted in a “base, contemptible and vile manner” when it tried to cover up the illegal reason for the firing.
  • Staples oppressed Nickel by using the theft claim as a pretext to deny Nickel’s ability to work.

Staples claimed that the punitive damages award was so high that it violated its constitutional right to due process. The appellate court disagreed because of the harm done to Nickel and because of Staples’ egregious acts.

Summing It Up

Punitive damages are not available in all cases. In the right circumstances, they can be a sharp stick that punishes a defendant for abusing its power. Typically, they are awarded when three things are present:

  • clear evidence of wrongdoing sufficient to shock a judge or a jury;
  • someone lied or covered up what happened, along with direct evidence (spoken or written words) of discriminatory intent; and
  • severe harm to the plaintiff occurred in the form of financial loss, psychological harm, physical ailments, and/or a damaged professional reputation.

If there is clear evidence of wrongdoing that may lead to punitive damages, a defendant should be more willing to settle a case and avoid not only the financial penalty but also the bad publicity that can come with a lost lawsuit and evidence of bad behavior.

If you believe you have been discriminated against in violation of federal or state law, contact our office so we can review the facts of your situation, the laws that may apply, and your best options for protecting your legal rights and interests.