“You might feel better if they gave you some cash…”

Darrell VanDeusen
Darrell VanDeusen

That’s a line from the Eagles’ “Get over it” (track 1 on the 1994 album Hell Freezes Over).

If you watch any TV courtroom drama – you would think that lawyers take a case and wind up having the jury verdict in less than one hour (with time outs for ads).  And justice always prevails.  Of course, reality is far from that imaginary world.  In the real world everyone is entitled to their decade in court.

In the employment discrimination arena few cases ever go to trial.  A quick internet search (the metrics here are sketchy so don’t rely on these numbers, but they’re probably close) suggests that fewer than 6% of employment discrimination claims even go to court, and that far, far fewer ever get to trial.  Even then, plaintiffs win only about one-third of the time.

What do they want to win when they win?  Mostly it’s about monetary damages, of course (because plaintiffs’ lawyers cannot live only on the reinstatement or promotion of a client who was discriminated against). 

Recent commentary on a case from the Fifth Circuit got me thinking about this. In Harris v. FedEx Corp. Servs., __ F. 4th __, 2024 U.S. App. LEXIS 2252 (5th Cir. Feb. 1, 2024), the appellate court reduced a jury award of over $350 million (claimed to be highest jury award ever for a race discrimination claim) to about $250,000.   There was “hair on fire” reporting of “how can this be?”

The answer is that Title VII and other anti-discrimination laws were designed to eradicate discrimination in the workplace, not to be a method for the redistribution of wealth.  So, let’s take a look at this issue.

Jennifer Harris was an account executive at Fed Ex who was fired for alleged poor performance.  She sued under Title VII and under Section 1981(42 U.S.C. § 1981) for race discrimination and retaliation.   A jury found in her favor and awarded her $366,160,000, mostly in punitive damages.  Fed Ex appealed.  The Fifth Circuit panel found some problems with the damages awarded. 

First, Harris had signed an employment agreement that set the limitations period for her Section 1981 claim at six months.  And she didn’t file her complaint within the six month time period. Bear with me here.  Why this is “a thing” gets into some complicated legal history. 

Section 1981 was enacted in 1866 to enforce the 13th Amendment (watch the 2012 movie Lincoln for the short course on that process).  It prohibits race discrimination in the making and enforcement of contracts. But (1) it is not exclusively a workplace anti-discrimination law (it has been applied to employment cases only since 1975); and (2) it has no stated statute of limitations. 

In 1987, the Supreme Court held that federal courts should apply the most appropriate state statute of limitations for Section 1981 claims. Following the passage of the Civil Rights Act of 1991 (which overturned a number of 1989 Supreme Court decisions and added new language to expand the coverage of Section 1981), the issue of an appropriate limitations period was revisited.  In 1990, Congress passed of 28 U. S. C. §1658(a), which created a 4-year default statute of limitations for causes of action “arising under an Act of Congress enacted after [December 1, 1990].”

In Jones v. R. R. Donnelley & Sons Co., 541 U.S. 369 (2004) the Supreme Court held that the four year limitation period applied to Section 1981’s amended language.  It does not apply to claims that could have been raised under Section 1981 before December 1, 1990.   Being fired by an employer (the original meaning of the “making and enforcement of contracts” part) was one of those claims. 

This is most important. Unlike Title VII, which we will turn to next, there is no cap on the potential punitive or compensatory damages available to a prevailing plaintiff under Section 1981.   But a lawsuit still needs to be filed timely.

So, about Title VII.  Prior to the enactment of the 1991 Civil Rights Act, Title VII provided only for “equitable” relief:  backpay, reinstatement, promotion.  The change in 1991 added the availability for “legal relief” things like punitive and compensatory damages.  But Congress included monetary caps based on the size of the employer.   For an employer with 500+ employees (yes, Fed Ex qualifies) the total cap on punitive and compensatory damages is $300,000.

The Fifth Circuit found, based on solid precedent, that Harris’s Section 1981 claim was time barred.  The limitations period in her contract was reasonable and enforceable.  With the Section 1981 claim gone, that cut out all but the capped damages available under Title VII.  The court found sufficient basis for the award of compensatory damages, but not punitive damages because of the “heavy burden” required to prove an employer’s “reckless indifference” to Title VII.  That left Harris with an award of $248,619.57.

The take-away here?  I recognize where you stand depends on where you sit.  Most of the criticism leveled about this decision is from folks who focused on the perception (real or imagined) of large companies taking advantage of helpless employees.  But good lawyers are out there representing employees.  They know the rules that need to be followed.  There likely would have been no problem here were the lawsuit filed timely.  I’ve seen plaintiffs’ lawyers use the dual limitations periods under Section 1981 and Title VII to their advantage.  One may argue that damages caps based on the number of people a company employs is silly, but a one size fits all approach that treats a small business the same as a multinational conglomerate doesn’t work either – unless you want to turn anti-discrimination laws into a method for the redistribution of wealth.   

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