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$13.4M verdict in sexual harassment case conformed, remitted, so employee awarded $800K

By Kathleen Kapusta, J.D.

Granting an employee’s motion to conform the $13.4M jury verdict on her Title VII and NYSHRL sexual harassment claims, and in order to provide her with the opportunity for the most complete recovery, a federal court in New York allocated $1 of the $1.7M compensatory damages to the Title VII claim, allocated the remaining $1,699,999 to the NYSHRL claim, and allocated the entire $11.7M punitive damages award to Title VII. The court then reduced the punitive damages award to $299,999 in light of Title VII’s statutory cap. Granting the employer’s motion to remit the compensatory damages, the court reduced the award to $500,000 under the NYSHRL and $1 under Title VII. Finally, the court denied the employer’s motion to vacate or remit the punitive damages award and provided the employee with 30 days to accept the $800,000 award or proceed to a new trial on damages (Mayo-Coleman v. American Sugar Holdings, Inc., June 5, 2018, Crotty, P.).

Conform or remit? After a four-day trial, the jury returned a verdict in favor of the employee on her claim that due to her supervisor’s sexual harassment, her employer had subjected her to a hostile work environment in violation of Title VII and the NYSHRL. The standard of proof for both statutes was the same, and the jury was not asked to distinguish between the two laws when awarding $1.7M in compensatory damages and $11.7M in punitive damages. Because the NYSHRL does not provide for punitive damages but has no cap on compensatory damages, and Title VII caps the sum of compensatory and punitive damages at $300,000, the employee moved to conform the verdict by allocating $1,699,999 of her compensatory damages award to the NYSHRL claim and the remaining $1 to the Title VII claim, allowing her to recover $299,999 in punitive damages under Title VII for a total of $1,999,999.

Arguing that the employee was entitled to no more than $30,000 in compensatory damages and no punitive damages, the employer moved for either a new trial on damages or a remittitur of the compensatory damages and vacatur or remittitur of the punitive damages.

Allocation. A plaintiff that recovers a single award under parallel statutes may “be paid under the theory of liability that provides the most complete recovery,” the court began, noting that courts regularly allocate all or nearly all of the compensatory damages to the state-law claims and the punitive damages to the Title VII claims to maximize a plaintiff’s recovery by removing the compensatory damages from Title VII’s statutory cap, and here the employee requested such an allocation.

Compensatory damages. The employer, however, argued that the jury’s $1.7M compensatory damages award for emotional distress was excessive and should be remitted to $30,000 or less. Because it had allocated all but $1 to the NYSHRL claim, the court evaluated the award under New York law, which states that an award is excessive if it deviates materially from what would be reasonable compensation. Acceptable damages for emotional distress in NYSHRL adverse employment action cases lacking extraordinary circumstances range from around $30,000 to $125,000. Higher damages are generally permitted when the case involves medical treatment and physical manifestation of symptoms such as nightmares, sleeplessness, and weight loss.

Extraordinary circumstances. In this case, the employee, a 59-year old woman, testified that as a result of her supervisor’s sexual harassment, she experienced severe emotional distress, stopped eating, lost weight, and became depressed, which impacted her relationship with her boyfriend and caused them to break up. She also saw a psychiatrist, began taking psychotropic medication, and was ultimately diagnosed with major depressive disorder. Thus, the court found this case contained circumstances that would be considered “extraordinary” under New York law.

Increased susceptibility. And although the employer cited cases with similarly egregious facts in which New York courts remitted awards to $50,000 or less, the court here noted that those courts did not consider the plaintiffs’ emotional distress to be especially severe. Here, the employee testified that she had been raped at the age of 14 and her supervisor’s behavior made her feel “violated all over again.” Explaining that the “defendant takes the plaintiff as he finds her,” the court found that the employee’s increased susceptibility to emotional distress from sexual harassment could be considered when calculating compensatory damages.

Remitted. Rejecting the employee’s argument it should either allow the jury’s verdict of $1.7M to stand, or at most, remit it to $1.5M, the court pointed out that many of the cases she cited were not sexual harassment cases and involved more harm than just emotional distress alone. Moreover, unlike other sexual harassment cases with extraordinary circumstances and large jury verdicts, the employee never stopped working in the same job. Considering all these factors, the court found an award of $500,000 under the NYSHRL was the greatest amount that could be awarded without being excessive.

Punitive damages. As to the punitive damages award, the court found sufficient evidence to support the jury’s finding that the employer acted with malice and reckless indifference in failing to address the supervisor’s conduct. Specifically, there was evidence from which a jury was entitled to infer that the employer recklessly caused the employee to believe her pleas for help would be ignored and she would first have to raise any complaints about sexual harassment with her supervisor. There was also evidence that HR’s investigation into her sexual harassment claim was a sham and thus a reasonable jury could conclude the employer acted with reckless and callous indifference to the employee’s federally protected rights.

Nor did the punitive damages award of $299,999 violate due process. The evidence supported a finding of particularly reprehensible misconduct, there was little disparity between the award of $299,999 in punitive damages and the award of $500,001 in compensatory damages, and the punitive damages award was reasonable in comparison to damages awards in other cases. Accordingly, the court denied the employer’s motion to either vacate or remit the punitive damages award.