Court Allows Same Evidence to Prove both Discrimination and Harassment, but Cuts Back on Punitive Damages

In Roby v. McKesson Corporation, the California Supreme Court wrestled with two key issues in employment litigation: first, whether the same evidence that proves discriminatory conduct can also be used to prove harassment and, second, the proper measure of punitive damages once a plaintiff demonstrates that the employer’s conduct constitutes malicious, oppressive or fraudulent conduct. On the evidentiary issue, the court distinguished between acts that amount to discrimination and those that amount to harassment. Although the terms appear in separate portions of the California Fair Employment and Housing Act (Government Code, sections 12940-12965), the court ruled that there can be some evidentiary overlap. That is, the same evidence that proves discrimination may also be used to support a harassment finding, provided the overall impact of the challenged conduct in fact constitutes discrimination on the one hand, and harassment, on the other. Discrimination findings usually involve situations where the employer, through official company action, has changed the requirements of the job and thereby impacts an employee (or group of employees) on the basis of a prohibited factor, such as gender, race, religion or disability. Harassment, on the other hand, can involve non-official conduct, such the individual sexual misconduct of a fellow employee or supervisor that is not formally adopted by the company as official policy. On the punitive damages question, the court ruled that a one-to-one ration between actual damages and punitive damages was appropriate under the circumstances of this case. The court noted that the supervisor’s conduct appeared to be an isolated instance, although it did amount to oppressive conduct. The court’s opinion appears to make a break from past cases: it cuts back on escalated awards (i.e., where the punitive damages are several times the amount of actual damages). In this regard, the California Supreme Court seems to be moving in line with the United States Supreme Court, which has noted that the due process clause of the Fifth Amendment (applicable to the states by virtue of the Fourteenth Amendment) places limits on the extent to which courts can impose “penalty” damages. As part of the process of assessing punitive damages, the fact finder must weigh the “reprehensibility” of the defendant. To do that, the jury must consider five general factors. They are whether (1) the harm caused to the injured party was physical as opposed to economic; (2) the defendant’s conduct evidences a callous indifference or a reckless disregard of the health and safety of others; (3) the target of the conduct had financial vulnerability; (4) the conduct involved repeated actions as opposed to being an isolated incident; and (5) the harm was the result of intentional malice, trickery or deceit as opposed to being a mere accident. The Roby decision is important for anyone preparing to litigate a harassment case, and anyone considering a request for punitive damages. A full copy of the court’s opinion is attached.

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