United States: Fifth Circuit Caps Title VII Damages "Per Party"

Prior to July 11th, 2011, the US Court of Appeals for the Fifth Circuit had never addressed whether the damages cap under Title VII of the 1964 Civil Rights Act - which prohibits discrimination on the basis of race, color, national origin, religion, or gender - applies to each claim of discrimination brought by a claimant or applies overall to a claimant notwithstanding the number of discrimination claims filed. The Fifth Circuit's decision in Black v. Pan American Laboratories, L.L.C. set out to answer this very question. Much to the approval of employers, the Fifth Circuit held that Title VII's damages cap applies on a "per party," not "per claim," basis.

BACKGROUND

In 1991, Congress enacted a statute (42. U.S.C. §1981a) aimed at overturning certain US Supreme Court rulings it deemed restrictive. Among other things, the new law included the right of a Title VII claimant to recover not only backpay, but also compensatory and punitive damages for things such as mental anguish, pain and suffering and future pecuniary or non-pecuniary losses. Recovery for these types of damages was capped based upon the size of the workforce of the employer being sued: $50,000 for employers with less than 101 employees, $100,000 for employers with less than 201 employees, $200,000 for employers with less than 501 employees and $300,000 for employers with more than 500 employees.

The question of whether the Title VII damages cap applied "per party" or "per claim," however, was left open for interpretation.

THE DECISION & ITS PRACTICAL IMPACT

In Black v. Pan American Laboratories, L.L.C, the plaintiff, Carleen Black, filed three Title VII claims against her employer, alleging two forms of gender discrimination and one form of retaliation. Black prevailed on all three of her statutory claims, and a jury awarded her, in part, $200,000 in damages for each one of her claims ($600,000 total). Before judgment was entered, though, the trial court reduced the amount of Black's damages award from $600,000 to $200,00 using "per party" reasoning to justify its decision.

The Fifth Circuit, in affirming the trial court's decision regarding damages, first turned to the wording of the statute, which states that the amount of compensatory and punitive damages "awarded under this section shall not exceed, for each complaining party," the specified statutory cap. The Court concluded, therefore, that "the plain language of Section 1981a(b)'s cap applies to each party in an action" and noted that its decision was in line with holdings in the Sixth, Seventh and Tenth Circuits and the DC Courts of Appeals. In so holding, the Fifth Circuit, citing longstanding legal principle prohibiting claimants in discrimination cases from "double recovery," rejected Black's contention that because she suffered two kinds of harm (discrimination and retaliation), she was entitled to damages for each one of her claims.

Overall, the Fifth Circuit's holding in Black v. Pan American Laboratories, L.L.C. was a win for employers and provided clarity to a previously unresolved area of the law. Going forward, employers in the Fifth Circuit, and in the other Circuits which have held similarly, will have a better grasp on their total liability under Title VII claims. This, in turn, will help develop litigation strategies and assist in making more informed decisions about settlement.

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