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Fourth Circuit Says Managers' Indifferent Response to Harassment Complaint Does Not Subject Employer to Punitive Damages

    Client Alerts
  • May 18, 2020

Title VII of the Civil Rights Act of 1964 allows awards of both compensatory and punitive damages capped at a total amount depending on the size of the employer. In a new decision from the Fourth Circuit Court of Appeals (which includes North Carolina, South Carolina, and Virginia), an award of punitive damages against an employer was overturned based on lack of personal involvement or malice by managers who failed to appropriately respond to the plaintiff’s complaints.

In Ward v. AutoZoners, LLC, the male plaintiff complained to multiple managers about sexual harassment by a female co-worker. He alleged that the managers either did nothing in response to his complaints or told him to handle the problem himself. Following trial, the jury awarded the plaintiff compensatory and punitive damages, as well as damages under state law for intentional infliction of emotional distress. On appeal, the employer sought to overturn both the punitive damages and the emotional distress awards.

The Fourth Circuit vacated the jury’s award of punitive damages against the employer. It noted that under Title VII, in order to hold an employer liable for punitive damages for a co-worker harassment claim, the plaintiff must demonstrate either (1) that the managers participated in the harassing conduct, or (2) that they acted with malice or reckless indifference in responding to the harassment. In this case, the court found that the managers failed to adequately respond to the plaintiff’s complaints, but they did not act with the subjective degree of knowledge of the situation to constitute reckless indifference. As such, the employer cannot be held vicariously liable for punitive damages.

The Fourth Circuit affirmed the emotional distress verdict, finding that this judgment and the compensatory damages award under Title VII do not constitute a prohibited double recovery.