SDNY reduces punitive damages award from $750,000 to $125,000

A Southern District judge has reduced a punitive damages award in a City Human Rights Law case from $750,000 to $125,000. Along the way, the trial court clarifies how to properly charge the jury on punitive damages under the City law.

The case is Duarte v. St. Barnabas Hospital, 2018 WL 4440501, issued by Judge Gardephe on September 17. Lead counsel is Megan Goddard. I assisted with post-trial briefing. Plaintiff is hearing-impaired. She testified that her manager, Quinones, created a hostile environment on the basis of disability in regularly insulting plaintiff over the hearing impairment. I talked about the pain and suffering remittitur at this post. This time, I discuss the punitive damages.

Post-trial, defendant argued that plaintiff was not entitled to punitive damages and, even if she were entitled to them, the award was too high. Judge Gardephe says punitives were warranted, but the award was too high.

Under the New York City Human Rights Law, punitive damages are available if the defendant's actions "amount to willful or wanton negligence, or recklessness, or where there is a conscious disregard of the rights of others or conduct to reckless as to amount to such disregard." That rule is more favorable to plaintiffs than the malice standard under federal law, and it draws from the New York Court of Appeals' ruling in Chauca v. Abraham, 30 N.Y.3d 325 (2017).

While the defendant says its conduct was not reprehensible enough to warrant punitives, the district court  disagrees, reasoning in part as follows:

There is evidence that at staff meetings between 2007 and August 2014 Quinones repeatedly referred to Plaintiff as “deaf,” and that he did so in a manner that was calculated to be demeaning and humiliating to her. Quinones also suggested at staff meetings that Plaintiff was exaggerating her hearing disability, stating repeatedly that Plaintiff could hear when it was convenient for her to hear. There is also evidence that Hospital managers – Quinones and Arce-Tomala – ignored Plaintiff’s repeated complaints about Quinones’s discriminatory misconduct. Finally, there is evidence that the Hospital failed to investigate Plaintiff’s complaints about Quinones’s discriminatory misconduct in November 25, 2013, when the Hospital received Plaintiff’s rebuttal to her written warning.

Based on Plaintiff’s testimony, however, it is clear that the vast majority of staff meetings proceeded without discriminatory ridicule. (Transcript at 791-92 (testifying that Quinones ridiculed Plaintiff’s disability on two or three occasions in 2009 and 2010, and three times in 2011)). Moreover, most of the reprehensibility factors are absent here: there was no evidence of violence or a threat of violence; physical injury; termination of employment that resulted in financial vulnerability; deceit; indifference or reckless disregard for the health or safety of others; or discriminatory misconduct extending to employees other than Duarte.

Having considered “all of the circumstances of the case,” the Court concludes that the Hospital’s conduct “was insufficiently reprehensible to justify a punitive damages award in significant excess of [the] compensatory damages award,” which this Court has remitted to $125,000.

The district court further noted that while plaintiff complained about the harassment, it was not remedied, and there was evidence that management was not properly trained in antidiscrimination procedures. These factors also warrant punitive damages.

Interesting side note to the punitives inquiry. The jury charge said the employer could avoid punitive damages if management put into place policies and practices to educate employees about unlawful discrimination and to properly investigate and resolve discrimination complaints. The employer may also avoid punitives, the district court charged the jury, if it made good faith efforts to implement and enforce these policies and practices. While plaintiff did not object to this charge, she pointed out post-trial that the charge was incorrect, and the district court says in a footnote that this charge "may have been more favorable to the Hospital than was warranted under applicable law." This is because there is no safe harbor from punitive damages when a supervisor or manager commits the discrimination or where management knew about but did not remedy the discrimination. The statute says the safe-harbor against punitive damages only applies when the employer should have known of of a co-worker's discriminatory conduct and failed to exercise reasonable diligence to prevent such discriminatory conduct. When the co-worker harassment/discrimination happens, the existence of the policies and procedures may shield against punitive damages. That shield does not kick in when the manager commits the discrimination or the employer knew about but did not remedy the discrimination. However, the existence of policies and procedures may mitigate the amount of punitive damages.

The trial court says the defective jury charge is harmless error because evidence supports punitive damages even under the defective charge, as a manager committed the harassment and the evidence shows that defendant did not properly prevent or correct the harassment.

This footnote on the scope of the City law's punitive damages provision is worth a read. The Chauca case will result in more juries determining whether to impose punitive damages, as the City law standard is more plaintiff-friendly than federal law. But the statute is worded and structured quite differently than federal law, and even judges may misinterpret its provisions.