NY Court of Appeals rejects federal standard for punitive damages under NYC Human Rights Law

The New York Court of Appeals has outlined for the first time the legal standard governing punitive damages under the New York City Human Rights Law. The court rejects the willful/malicious standard that governs Title VII in place of a lesser standard, consistent with the City law's directive that courts liberally interpret this remedial statute beyond the reach of Title VII.

The case is Chauca v. Abraham, decided on November 20. I argued the appeal. The case reached the New York Court of Appeals because the Second Circuit sent it over the New York court for clarification on this issue. As the case originated in the Eastern District of New York, where Chauca won a pregnancy discrimination verdict but was denied the opportunity to seek punitives, Chauca appealed to the Second Circuit, seeking a remand on the punitive damages issue. The Circuit certified this issue to New York's highest court, which now clarifies the punitive damages equation under the City law.

We argued that the punitive damages standard is the same as the liability standard: if you discriminate, you risk punitive damages. That argument is based on statutory construction and the general goals of the City law. The New York Court of Appeals disagreed, ruling that punitives under the City law are governed by the following common law standard:

a plaintiff is entitled to punitive damages where the wrongdoer's actions amount to willful or wanton negligence, or recklessness, or where there is "a conscious disregard of the rights of others or conduct so reckless as to amount to such disregard."

This standard is more pro-plaintiff than Title VII, which provides for punitive damages on the following basis:

The Title VII standard requires "intentional discrimination . . . with malice or with reckless indifference to the . . . protected rights of an aggrieved individual" and the Supreme Court has specified that "the terms `malice' or `reckless indifference' pertain to the employer's knowledge that it may be acting in violation of federal law, not its awareness that it is engaging in discrimination."

In 2001, the Second Circuit held that the Title VII standard governs the City law's punitive damages entitlement. That case is Farias v. Instructional Systems, Inc. (259 F.3d 91 [2d Cir 2001]). In 2005, the NYC Council directed courts to interpret the City law separate and apart from Title VII, admonishing courts that had assumed both statutes carried the same standards. In certifying Chauca to the New York Court of Appeals, the Second Circuit appeared ready to jettison Farias. This ruling from the New York Court appeals rejects Farias, which now is no longer good law.

Judge Wilson dissents from his 6 colleagues on the New York Court of Appeals, agreeing with Chauca that the punitive damages standard under the City law is identical to the liability standard.

The case now returns to the Second Circuit, which will apply the New York Court of Appeals' standard to the facts in Chauca in determining whether Chauca is entitled to a hearing on punitive damages in the Eastern District of New York.