Sizing up punishment for job bias

Carole Kolstad worked for four years in the American Dental Association's office here. When her boss announced his plans to retire, she expressed interest in taking over his job. But the boss had a different idea. He promoted a man with less than two years' experience to the top spot.

Ms. Kolstad sued and a federal jury agreed that the ADA had engaged in gender discrimination. The jury awarded back pay, but the trial judge wasn't convinced of the case's merits. He refused to allow the jury to consider awarding punitive damages.

Today, the US Supreme Court will examine whether the judge was right. The case is expected to set a nationwide standard for when punitive damages are appropriate in federal discrimination cases.

As such, the case could leave a huge imprint on the enforcement of civil rights laws across the country. "It is an issue that confronts judges and juries every day and one that warrants clarification," says Joseph Yablonski, Kolstad's lawyer.

Specifically, the issue the justices must resolve is whether punitive damages should be considered in almost every case in which bias is proved, or whether punitive damages should only apply in the most egregious cases of discrimination.

If a majority of justices agree that punitive damages should apply in most cases, the decision will put employers on heightened notice that they face significant liability should they lose a discrimination case. And it will encourage reluctant employees to file discrimination suits.

If, on the other hand, the court decides that punitive damages should be reserved for only the most outrageous cases, it would reduce the deterrent effect of civil rights laws and discourage some discrimination victims from filing suit against their employers.

Part of the effectiveness of US civil rights laws is that they empower ordinary Americans to defend their rights by filing suit in court. If they win, they are entitled to monetary compensation for any loss suffered.

In addition, under certain circumstances a jury may award punitive damages. Punitive damages are intended to punish wrongdoing and to create a strong incentive for others to comply with antidiscrimination laws.

"Often, compensatory damages are not enough to deter illegal behavior," says Jeffrey Needle, a Seattle lawyer who filed a friend-of-the-court brief in the case on behalf of the Association of Trial Lawyers of America.

"It is the purpose of the statute to eliminate from the workplace conduct motivated by bigotry," he says. "Without the option of punitive damages, fulfilling the purpose of the statute is going to be much, much more difficult."

The issue of punitive damages has long been a hot topic in legal circles. Plaintiffs' lawyers favor easy access to punitive damages because it makes a case potentially much more lucrative for them and their clients.

Corporate defense lawyers and their clients generally oppose the push toward easier punitive-damage awards because they expose employers to greater uncertainty about the extent of their potential liability.

Pro-business groups like the Chamber of Commerce of the United States have long pressed for reforms that would sharply limit the ability of juries to punish offenders.

Part of the concern is the possibility that firms will have to pay large financial awards when and if a jury decides a case more on emotion than adherence to the law.

Kolstad and her supporters argue that Congress addressed this concern in 1991 when it amended the Civil Rights Act by capping the amount of punitive-damage awards at between $50,000 and $300,000, depending on the size of the company.

But others counter that the deck is still stacked against an employer because an employee has nothing to lose by filing a suit and a great deal to gain if the jury awards punitive damages.

By restricting punitive damages to only those cases where an employer acted outrageously, most companies would be protected from excessive punitive-damage awards.

"The conduct has to be quasi-criminal in order for you to award punitive damages, and certainly Congress was aware of that when it passed the amendment to the Civil Rights Act," says Peter Sfikas, general counsel of the ADA in Chicago.