In Harris v. FedEx Corp. Servs., Inc., No. 23-2003, a Fifth Circuit panel vacated a $365 million punitive damages award in race discrimination and retaliation case, finding that the plaintiff Jennifer Harris (“Harris”) failed to show that Fedex Corporate Services, Inc. (“Fedex”) acted with malice or reckless indifference when it terminated her for poor performance.

Background

In March 2019, Harris’ supervisor suggested that Harris, a black woman, step down from her role as a District Sales Manager due to low team sales.  Shortly after, Harris made an internal complaint accusing her supervisor of race discrimination. Fedex launched an internal investigation into Harris’ accusations and concluded that the accusations were unsubstantiated.  During the course of the internal investigation, Harris’ supervisor sent her a letter that notified Harris that she would be required to create a performance improvement plan that highlighted goals and activities to improve her team’s performance.  The letter also advised Harris that additional declining performance from her may result in her termination. Harris then submitted a second internal complaint against her supervisor, alleging that the supervisor’s letter was in retaliation for Harris’ first internal complaint. Fedex launched another internal investigation, and again concluded that Harris’ claims were unsubstantiated.

Harris’ supervisor then sent Harris a second letter, which required Harris to submit another performance improvement plan and informed Harris that her failure to improve her performance may result in her termination. Harris then submitted a third internal complaint against her supervisor, which FedEx investigated and found to be unsubstantiated.  In January 2020, Harris was terminated at her supervisor’s request due to poor performance.

Harris filed suit in the U.S. District Court for the Southern District of Texas in May 2021, alleging race discrimination and retaliation under 42 U.S.C. § 1981 (“Section 1981”). Fedex moved for summary judgment, arguing that Harris’ Section 1981 claims were time-barred due to a provision in her employment contract which required Harris to bring legal action against Fedex within the time prescribed by law or six months from the date of the event that forms the basis of her lawsuit, whichever expires first. The district court denied Fedex’s motion and Harris amended her complaint to include claims for discrimination and retaliation under Title VII.

At trial, the jury found that Fedex had not discriminated against Harris, but that it had retaliated against her. Harris was awarded $1,160,000 in damages for past and future pain and suffering, and an additional $365,000,000 in punitive damages.

Fedex then appealed to the Fifth Circuit on the following issues: (1) whether the limitation provision in Harris’s employment contract barred her Section 1981 claims; (2) whether Harris presented sufficient evidence at trial to support her retaliation claim; (3) whether the Court’s maximum-recovery rule limits Harris’s compensatory damages; (4) whether Harris presented sufficient evidence at trial to warrant punitive damages and whether the punitive damages awarded were unconstitutionally excessive; and (5) whether Fedex is entitled to a new trial based on expert testimony.

Fifth Circuit’s Ruling

First, the panel reversed the district court’s denial of Fedex’s motion for judgment as a matter of law, finding that the limitation provision in Harris’s contract was enforceable because (1) Harris knowingly and voluntarily signed the contract and accepted the provision; (2) the provision was broad enough to encompass retaliation and discrimination claims; and (3) the six-month limitation period was not unreasonable as to Section 1981 claims because such a period is included in various other federal laws and has been found to be reasonable by other courts in the Fifth Circuit. As a result, Harris’s Section 1981 claims were barred and she was only entitled to recover up to $300,000.

Second, the panel found that Harris presented enough evidence at trial to support her retaliation claim, as she offered evidence that she was treated less favorably than similarly situated employees, and evidence of the temporal proximity between her internal complaints and her supervisor’s disciplinary actions.

Third, the panel remitted Harris’s damages to $248,619.57 using the maximum recovery rule, which requires the court to look at its other published decisions involving comparable facts to determine the amount of damages. The panel determined that based on relevant case law, Harris was entitled to a base sum of $100,000, which equaled $248,619.57 when adjusted for inflation.

Fourth, the panel vacated Harris’s $365,000,000 punitive damages award, finding that Harris failed to meet the burden required for punitive damages in Title VII cases.  Specifically, the panel concluded that Harris failed to show that Fedex acted with malice or reckless indifference when it retaliated against her, including because the evidence suggested that Harris’s supervisor disciplined Harris for her performance and insubordination, not in retaliation for her internal complaints. Further, the panel found that Fedex made good-faith efforts to comply with Title VII when it investigated all of Harris’s internal complaints.

Fifth, the panel found that Fedex was not entitled to a new trial based on testimony from an expert who conceded that she did not have any knowledge of Fedex’s policies and procedures, as the expert’s testimony did not affect Fedex’s substantial rights, and Fedex had an opportunity to cross-examine Harris’ expert.

Significance

The jury’s $365 million punitive damages award was one of the largest ever awarded to a single plaintiff in a workplace retaliation case.  The Fifth Circuit’s opinion, however, is a good reminder that the burden for punitive damages in such a case is high and will not be satisfied unless a plaintiff can proffer compelling evidence of an employer’s actual malice or reckless indifference in the alleged adverse employment action. As evident by the Fifth Circuit’s outcome, evidence of an investigation into the claims raised is a best practice to mitigate punitive damages.

Print:
Email this postTweet this postLike this postShare this post on LinkedIn
Photo of Nigel F. Telman Nigel F. Telman

Nigel F. Telman is the Managing Partner of the Firm’s Chicago office, leads the Employment practice in the Chicago office, and is co-head of the Labor Department’s national Employment Litigation & Arbitration Practice Group.

Nigel serves as a high-level strategic advisor to his…

Nigel F. Telman is the Managing Partner of the Firm’s Chicago office, leads the Employment practice in the Chicago office, and is co-head of the Labor Department’s national Employment Litigation & Arbitration Practice Group.

Nigel serves as a high-level strategic advisor to his clients on “bet the company” employment-related claims that often involve significant reputational risk. The nation’s leading organizations turn to Nigel to handle their most sensitive and challenging matters which, due to his involvement, often successfully result in non-public and confidential resolutions. When matters are unable to be settled, Nigel works with clients to strategically design a litigation strategy that advantageously positions them for successful dispositive motions, trial and the possibility of post-trial appeals.

A strategic advisor to boards and C-suite executives on the full spectrum of the employer/employee relationship, Nigel’s nationwide practice is concentrated in litigating single and class action disputes arising out of claims of workplace harassment and employment discrimination, and in handling confidential workplace investigations. In addition, Nigel has significant experience defending and enforcing Restrictive Covenant Agreements, as well as protecting employers’ trade secrets and other confidential information from misappropriation by former employees through the institution of emergency litigation seeking temporary and permanent injunctive relief. Nigel utilizes his experience litigating employment-related disputes to counsel clients on effective ways to avoid litigation. His counseling practice focuses on training and advising clients on ways to improve all aspects of the employment relationship, including techniques on how to make effective hiring decisions; reviewing and revising employment policies, practices and procedures; and advising on employee disciplinary matters, reductions in force and termination decisions.

Providing the highest level of strategic advice and execution across all phases of the employee lifecycle from hire to exit, Nigel represents clients in a range of industries before state and federal courts throughout the country as well as before the U.S. Equal Employment Opportunity Commission, state and local administrative agencies, and the American Arbitration Association.

Nigel is ranked by Chambers USA in Illinois for Labor & Employment and his clients praise him as being “business-savvy and delivering stellar results. He is an extremely effective negotiator and has the highest degree of integrity in all of his dealings.”

Photo of Dakota D. Treece Dakota D. Treece

Dakota is an associate in the Labor and Employment Law Department and a member of the Employment Litigation & Arbitration Group. She regularly defends employers in single-plaintiff actions involving discrimination, harassment and retaliation claims under statutes such as Title VII and the Americans…

Dakota is an associate in the Labor and Employment Law Department and a member of the Employment Litigation & Arbitration Group. She regularly defends employers in single-plaintiff actions involving discrimination, harassment and retaliation claims under statutes such as Title VII and the Americans with Disabilities Act, as well as under various Illinois state laws. She has handled such cases before state and federal courts, the U.S. Equal Employment Opportunity Commission, the Illinois Department of Human Rights, and the Illinois Department of Labor. In addition, Dakota conducts employment-related investigations.

Dakota also provides day-to-day counseling to employers to heighten compliance and minimize the risk of litigation.  Her counseling focuses on issues related to hiring and firing, personnel policies and leave and accommodation requests. She also has experience drafting employee handbooks and company policies. Dakota is a frequent contributor to Proskauer’s Law and the Workplace blog.

While in law school, Dakota served as a law clerk at the International Union, United Automobile, Aerospace, and Agricultural Implement Workers of America (UAW), where she worked on a variety of labor relations issues. She also was a member and published author in the DePaul Law Review.

Photo of Atoyia Harris Atoyia Harris

Atoyia Harris is a special employment law counsel in the Labor and Employment Department and a member of the Employment Litigation & Counseling Group. With bench trial, jury trial, and administrative hearing experience, Atoyia approaches each matter strategically to provide the best result…

Atoyia Harris is a special employment law counsel in the Labor and Employment Department and a member of the Employment Litigation & Counseling Group. With bench trial, jury trial, and administrative hearing experience, Atoyia approaches each matter strategically to provide the best result for her clients. She has successfully defended matters on a wide variety of issues.

Atoyia advises clients and conducts investigations and trainings on issues related to discrimination, harassment, and retaliation. Her practice also includes counseling clients on reductions-in-force, Covid-19 related matters, issues arising out of social movements including Black Lives Matter and #MeToo, and other sensitive employment issues.

Atoyia is co-chair of the Firm’s Black Lawyers Affinity Group, serves as a member of the Firm’s Associate Council, and is on the Proskauer Women’s Alliance Steering Committee.

Active in the New Orleans legal community, Atoyia is a member of the Young Lawyers Board for the Federal Bar Association’s New Orleans Chapter and other organizations. She is also a member of the national Defense Research Institute’s Membership Committee and Diversity and Inclusion Planning Committee.

Atoyia received her J.D. with an International Law Certification from Loyola University New Orleans College of Law. Atoyia served as the Moot Court Selection Chair and staff member of the Loyola Law and Technology Journal. While in law school, Atoyia interned as a law clerk for the Honorable Jay C. Zainey at the United States District Court for the Eastern District of Louisiana and the Honorable Robin Giarrusso at the Orleans Parish Civil District Court. Atoyia was also a member of the award-wining Robert F. Wagner Labor and Employment Moot Court Team.

Prior to law school, Atoyia received her Bachelor of Music in Industry Studies with emphasis in classical piano from Loyola University New Orleans and was member of the Loyola University women’s basketball team.