Tuesday, February 7, 2023

What does an employer have to do to lose $366 million?!

$366 million dollars. That's how much a jury awarded Jennifer Harris, a Black sales manager targeted and then fired by FedEx after she complained to human resources that her boss discriminatorily demoted her. 

That's $1.16 million in compensatory damages and $365 million in punitive damages. 

The trial judge recently rejected FedEx's motion to reduce the punitive verdict as excessive and a violation of its due process rights.

In her lawsuit, Harris pointed to three corporate deficiencies that she claimed supported her entitlement to punitive damages:

  • "FedEx hires HR personnel who are not qualified to follow policies prohibiting discrimination and retaliation."
  • "FedEx fails to adequately train its managers to follow policies prohibiting discrimination and retaliation."
  • "FedEx fails to supervise its managers to ensure they follow policies prohibiting discrimination and retaliation."

Unqualified HR. Poor Training. Inadequate supervision. Three strikes, and FedEx is out $366 million, at least for now.

FedEx has appealed to the conservative 5th Circuit, but regardless of the federal appellate circuit I fully expect that verdict to be reduced to a ratio of 10:1 or less such that it comports with due process. The U.S. Supreme Court is clear that any ratio of punitive to compensatory damages that exceeds that benchmark is likely unconstitutional. A ration of 365:1 is almost certainly unconstitutional, no matter the egregiousness of the misconduct.

While I expect the appellate court to significantly reduce the punitive award, we should strive never to put our organizations into a position to have to make that argument. Hire qualified HR staff. Train your managers on workplace anti-discrimination and anti-retaliation laws. Supervise your managers to make sure they follow your policies. 

Or, to put it in simpler terms, just don't discriminate and don't retaliate.