On October 5, 2009, the Massachusetts Supreme Judicial Court issued a decision in the case of Haddad v. Wal-Mart Stores, Inc. that provides employers welcome clarification regarding the circumstances permitting awards of punitive damages in employment discrimination actions under state law. Had the Court accepted the plaintiff's position, employers would have been vulnerable to jury awards of punitive damages in virtually every case alleging discrimination. Instead, the SJC held that punitive damages are permissible only when the employer's conduct is especially offensive.
The plaintiff in the case, a discharged Wal-Mart pharmacist, succeeded at trial on her claim of gender discrimination and the jury awarded both compensatory damages and $1 million in punitive damages. The trial judge set aside the punitive damages award, and the parties appealed that and other issues.
While the SJC reinstated the jury's award of punitive damages against Wal-Mart based on the facts in this specific case, the Court soundly rejected the standard for such awards proposed by the plaintiff and several supportive organizations, including a state organization of plaintiffs' employment counsel, which filed a friend-of-the-court brief. The plaintiff and these amici curiae had argued that, barring some ambiguity with respect to legal obligations, punitive damages may be awarded for any unlawful discrimination, an approach that would permit punitive damage awards in virtually every case where liability is found.
The Court rejected the plaintiff's argument as "incorrect," declaring that "[p]unitive damages have been, and remain, permissible only where the defendant's behavior is particularly outrageous or egregious." The Court then set forth a new standard for punitive awards in discrimination actions under state law, to be applied to future claims and all pending claims that have not yet gone to judgment.
The new standard requires "a heightened finding beyond mere liability and also beyond a knowing violation of the statute." Punitive damages may be awarded only where they are "needed to deter [similar] behavior toward the class of which plaintiff is a member, or . . . [where] the defendant's behavior is so egregious that it warrants public condemnation and punishment." Accordingly, it is now clear that a finding of even conscious, intentional discrimination is not enough to support an award of punitive damages. Awards of punitive damages should, therefore, be very much the exception, not the rule, in pending and future discrimination actions under Massachusetts law.
Prince Lobel litigator Jo Ann Shotwell Kaplan authored the brief filed by amicus organizations that opposed the plaintiff's position in Haddad
and urged the Court to adopt this important clarification of the circumstances permitting an award of punitive damages. For further information about the Haddad
decision or Prince Lobel's employment litigation services, please contact Jo Ann Shotwell Kaplan
or 617 456 8097.