EEOC v. Stocks Inc

United States Court of Appeals
Fifth Circuit
F I L E D
April 16, 2007
Charles R. Fulbruge III
Clerk
In the
United States Court of Appeals
for the Fifth Circuit
_______________
m 06-10871
Summary Calendar
_______________
EQUAL EMPLOYMENT OPPORTUNITY COMMISSION,
Plaintiff-Appellant,
VERSUS
STOCKS, INC.,
DOING BUSINESS AS CAFE ITALIA AND CIA CHOW INC.,
Defendant-Appellee.
_________________________
Appeal from the United States District Court
for the Northern District of Texas
m 3:04-CV-2109
______________________________
Before SMITH, WIENER, and OWEN,
Circuit Judges.
JERRY E. SMITH, Circuit Judge:*
After the Equal Employment Opportunity
Commission (“EEOC”) filed a complaint, a
jury found that Stocks, Inc., doing business as
Café Italia and Cia Chow Inc. (“Café Italia”),
had unlawfully retaliated against a waitress in
violation of title VII, and awarded compensa-
tory damages. The EEOC appealed, claiming
that the district court should have submitted a
punitive damages instruction to the jury.1 Be-
cause the EEOC presented sufficient evidence
* Pursuant to 5TH CIR. R. 47.5, the court has de-
termined that this opinion should not be published
and is not precedent except under the limited cir-
cumstances set forth in 5TH CIR. R. 47.5.4.
1 Although Cafe Italia cross-appealed, it with-
drew that cross-appeal; its counsel has withdrawn;
and it declined to file an appellee’s brief.

-- 1 of 5 --

2
to survive a judgment as a matter of law on the
issue of punitive damages, we reverse and
remand.
I.
Ashley Bridges was a waitress at Cafe Italia
for seven months. After working there a few
weeks, she began receiving inappropriate
sexual comments and physical contact from
Julio Cabrera, a 25% owner of the restaurant
and a fellow waiter. The inappropriate con-
duct continued throughout her employment.
Bridges frequently told Cabrera she did not
appreciate the conduct and requested that he
stop. She complained to the general manager,
Dino Pucci, and the assistant manager, Tony
Lemus. Despite her complaints, the conduct
continued. Café Italia did not have a written
sexual harassment policy.
In November, Bridges intervened in an ar-
gument between a server she was dating and
Cabrera. According to Bridges, she told Ca-
brera that she could not stand working with
him because of his harassing behavior. Ac-
cording to Cabrera, Bridges said that if Ca-
brera did not back off, she would sue the res-
taurant for sexual harassment. Bridges denied
making that threat.
Shortly after this altercation, Bridges’s
shifts were significantly reduced. Pucci and
Lemus told her that her shifts were being cut
because of her threats against the restaurant to
bring sexual harassment charges. The majority
owner of the restaurant, Scott Jones, testified
that he had decided to reduce her shifts
because “it was reported to me that she said if
you fire Alex I will sue you for sexual harass-
ment. . . . [T]hat’s extortion. . . . She was
threatening my livelihood. . . . I said put her
on a one week suspension, give her one shift
that week and, you know, hopefully she will
have learned her lesson.”
Bridges filed a charge of sex discrimination
and retaliation with the EEOC. Shortly after
she left the EEOC office, she received a call
from Pucci informing her that she was fired.
She does not claim that Cafe Italia was aware
of her filing before they fired her.
The EEOC filed a complaint alleging that
Café Italia had subjected Bridges to a sexually
hostile work environment and had retaliated
against her in violation of title VII. The
EEOC sought compensatory and punitive
damages, but the district court omitted puni-
tive damages from the final jury charge. The
jury ruled in favor of Café Italia on the sexual
harassment claim but found for the EEOC on
the retaliation claim. It awarded compensatory
damages of $10,000.
II.
The EEOC claims it was entitled to have
the jury consider an award of punitive dam-
ages. Generally, we review a jury charge and
special interrogatories for abuse of discretion.
See EEOC v. Manville Sales Corp., 27 F.3d
1089, 1096 (5th Cir. 1994). But, where the
decision as to a charge is effectively a judg-
ment as a matter of law on an issue, we review
de novo. Thompson & Wallace v. Falcon-
wood Corp., 100 F.3d 429, 434 (5th Cir.
1997). By failing to instruct the jury on puni-
tive damages, the district court ruled by impli-
cation that the EEOC was not legally entitled
to punitive damages; we review that ruling de
novo.
III.
In a title VII case, a plaintiff may recover
punitive damages by demonstrating that the
defendant acted “with malice or with reckless

-- 2 of 5 --

3
indifference to the federally protected rights of
an aggrieved individual.” 42 U.S.C. § 1981a-
(b)(1). The availability of punitive damages
“turns on the defendant’s state of mind, not on
the nature of its egregious conduct.”2
In Kolstad, the Court laid out the necessary
evidentiary burden for a title VII plaintiff to
recover punitive damages. The defendant em-
ployer “must at least discriminate in the face of
a perceived risk that its actions will violate
federal law.” Kolstad, 527 U.S. at 536. Even
intentional discrimination may not meet this
standard where the employer is “unaware of
the relevant provision” or “discriminates with
the distinct belief that its discrimination is law-
ful.” Id. at 537. The plaintiff must impute
liability to the defendant company through
some theory of vicarious liability, id. at 539,3
and must overcome the employer’s good-faith
exception.4
In this case there is no dispute that the
EEOC has established vicarious liability by
showing that the retaliatory actions were taken
by management-level employees acting within
the scope of their employment. The decision
to limit Bridges’s shifts was made jointly by
the owners of Cafe Italia, and all the decision-
makers testified that they were aware of her al-
legations of harassment. There is also no dis-
pute that Cafe Italia is not entitled to the
employer’s good faith exception, given that it
had no anti-discrimination policies in place.5
The only remaining issue is whether the EEOC
has demonstrated malice or reckless in-
difference by showing that Cafe Italia retali-
ated in the face of a perceived risk that the re-
taliation would violate federal law.
The evidence showed that the decisionmak-
ers at Café Italia had knowledge of federal
anti-discrimination laws and were aware of
their duty not to retaliate against an employee
who brought a sexual harassment complaint.
The owner, Jones, testified that he did not dis-
cipline the plaintiff after her initial complaints,
because she would have gone “to the EEOC.”
In several of our sister circuits, evidence that
the employer has knowledge of the anti-dis-
crimination laws alone is sufficient to
demonstrate reckless indifference and allow
punitive damages to be submitted to the jury.6
2 EEOC v. E.I. du Pont de Nemours & Co.,
2007 WL 610591, at *6 (5th Cir. Mar. 1, 2007)
(citing Kolstad v. Am. Dental Ass’n, 527 U.S. 526,
535 (1999)).
3 See also Rubinstein v. Adm’rs of Tulane
Educ. Fund, 218 F.3d 392, 405 (5th Cir. 2000)
(“The employee must satisfy an additional require-
ment as set out in this recent articulation of the
necessary showing to obtain punitive damages
under Title VII: the requirement of agency.”).
4 Kolstad, 527 U.S. at 545 (“[A]n employer
may not be vicariously liable for the discriminatory
employment decisions of managerial agents where
these decisions are contrary to the employer’s
good-faith efforts to comply with Title VII.”) (ci-
tation omitted).
5 See, e.g., Deffenbaugh-Williams v. Wal-Mart
Stores, Inc., 188 F.3d 278, 286 (“[Defendant’s]
only evidence . . . was that [it] encourages employ-
ees to contact higher management with grievances.
Plainly, such evidence does not suffice to establish,
as a matter of law, [defendant’s] good faith in re-
quiring its managers to obey Title VII.”).
6 See Bruso v. United Airlines, Inc., 239 F.3d
848, 858 (7th Cir. 2001) (A plaintiff may satisfy
its burden of demonstrating malice or reckless in-
difference “by demonstrating that the relevant
individuals knew of or were familiar with the anti-
discrimination laws and the employer’s policies for
(continued...)

-- 3 of 5 --

4
This is unlike the situation in a typical
retaliation case, in that Jones did proffer an ex-
culpatory explanation for the retaliation; he
claims that Bridges threatened to bring a sex-
ual harassment claim in an attempt to extort
better treatment for a fellow employee. Where
an employer “discriminates with the distinct
belief that his discrimination is lawful,” puni-
tive damages are not appropriate. See id. at
537. Jones’s testimony was disputed, how-
ever, and the jury was entitled to disbelieve his
statement that he acted in response to an
extortionate threat.7
Taking the evidence in the light most fa-
vorable to the plaintiff, the jury could have
found that Cafe Italia’s decisionmakers were
aware of their responsibilities under title VII
and acted in the face of a perceived risk that
their actions would violate the statute. There-
fore, a punitive damages instruction should
have been given.
IV.
The EEOC requests a new trial solely on
punitive damages. We have allowed such lim-
ited trials where the issue of punitive damages
is severable from the remainder of the litiga-
tion.8 The EEOC points to employment dis-
crimination caselaw in other circuits in which
courts have remanded for trials solely on puni-
tive damages.9
In the discrimination context, a jury’s ver-
dict on punitive damages is “intertwined with
its view of the facts determining liability and its
award for emotional injury.” Hardin, 227
F.3d at 272. The jury’s decision to award
punitive damages and to set their amount is a
“classic black box decision” that “responds to
the evidence of intentional acts essential here
to the underlying theory of liability.” Id. Be-
cause of “the practical inseparability of the is-
sues of intent, of damages for emotional injury,
and of punitive damages,” we rejected a
plaintiff’s request for a new trial limited to
punitive damages and remanded with instruc-
tion to hold a new trial including a punitive
damages instruction if “requested by the plain-
6(...continued)
implementing those laws.”); Zimmerman v. Assocs.
First Capital Corp., 251 F.3d 376, 385 (2d Cir.
2001) (“[A]cknowledgment of training in ‘equal
opportunity’ permits an inference of the requisite
mental state” for awarding of punitive damages.”);
Ogden v. Wax Works, Inc., 214 F.3d 999, 1010
(8th Cir. 2000) (“A jury could . . . infer [the defen-
dant] had knowledge of Title VII’s proscriptions,
and given this knowledge, reasonably conclude he
acted in the face of a perceived risk that his actions
would violate federal law.”).
7 See, e.g., Hardin v. Caterpillar, 227 F.3d
268, 270-71 (5th Cir. 2000) (reversing district
court’s refusal to issue a punitive damages instruc-
tion, noting that “if the jury credited [the plain-
tiff’s] version of the events over those of [the de-
fendant’s] representatives, a reasonable juror could
conclude that the representatives were either lying
or consciously indifferent to the truth and the le-
gality of their acts”).
8 See Black v. Fid. & Guar. Ins. Underwriters,
Inc., 582 F.2d 984, 991 (5th Cir. 1978) (remand-
ing for new trial on sole issue of punitive damages
in an insurance coverage case where initial dam-
ages were for property damages and loss of in-
come).
9 See EEOC v. Heartway, 466 F.3d 1156, 1171
(10th Cir. 2006). Cf. McDonough v. City of Quin-
cy, 452 F.3d 8, 25 (1st Cir. 2006) (remanding to
district court to make the “judgment call” whether
a new trial solely on the issue of punitive damages
would be fair).

-- 4 of 5 --

5
tiff.” Id. at 272-73.10
The same concerns that led us to reject a
limited trial in Hardin are present here. The
jury’s compensatory award was linked not to
economic lossSSthe court considered any lost
wages or benefits suffered by the plaintiffSS
but rather to emotional pain and suffering, in-
convenience, mental anguish, loss of enjoy-
ment of life, and other non-monetary losses. A
future jury’s decision to award punitive
damages will be tied to the same evidence of
intent as will be the liability decision, and the
factual dispute surrounding the events leading
to Bridges’s suspension will be central to the
decision that Café Italia retaliated in reckless
indifference to her rights.
There is also a significant chance that the
first jury considered the reprehensibility of
Café Italia’s conduct in setting its “black box”
award of compensatory damages, creating a
risk that a second limited trial would lead to a
double recovery.11 By our remand, we leave
to the EEOC the choice of whether it wants a
new trial on all issues, or wishes instead to re-
tain its judgment.
We REVERSE the judgment and RE-
MAND with instruction to grant a new trial
on all issues, including punitive damages, if the
EEOC requests a new trial. If the EEOC
instead elects not to try the case a second time,
the district court will enter judgment awarding
general damages for retaliation in the amount
of $10,000, with interest and other appropriate
adjustments.
10 See also McDonough, 452 F.3d at 24-25
(recognizing the “potential problem in remanding
a case for a trial limited solely to punitive damages
where the first jury awarded emotional distress
damages,” because of the close link between the
jury’s view of “the plaintiff’s level of emotional
trauma” and “the reprehensibility of defendant’s
conduct” and considering the potential risk that
“the plaintiff will recover twice for the reprehensi-
bility of the defendant’s conduct”).
11 See id. at 24.

-- 5 of 5 --