The 5th U.S. Circuit Court of Appeals threw out on Thursday a jury award of $365,000,000 to a worker who sued FedEx for retaliation, concluding she was not entitled to punitive damages because the company made “good-faith efforts” to comply with Title VII of the Civil Right Act of 1964.
The case, Harris v. FedEx Corporate Services, Inc., involved a Black district sales manager who filed a complaint of race discrimination against her White supervisor after the supervisor suggested she step down due to poor performance, according to court documents.
Shortly after the worker filed the complaint, she received a letter from her supervisor requiring her to create a performance improvement plan, suggesting she would be terminated if she failed to improve. The worker then filed another complaint, alleging the supervisor was retaliating for the first complaint. The supervisor again responded shortly thereafter with another performance warning, after which the worker submitted a third complaint.
Not long after, the supervisor submitted a request for termination to HR, citing poor performance. The request was granted and FedEx fired the worker, who filed suit a little over a year later, alleging race discrimination and retaliation under Title VII.
The case went to trial and the jury found retaliation but not discrimination, awarding the worker $1,160,000 in compensatory damages, plus an additional $365,000,000 in punitive damages.
On appeal, FedEx argued that the punitive damages award was “unconstitutionally excessive,” and the 5th Circuit agreed, noting that a higher evidentiary standard exists for punitive damage awards and that the worker failed to show FedEx intended to violate the law.
After each complaint, HR conducted an in-depth investigation, the court pointed out — the HR advisor “interviewed multiple witnesses, examined relevant evidence, and provided a detailed analysis of [the worker’s] allegations.” In addition, the supervisor was barred from disciplining the worker while the investigations were ongoing, the court noted.
While the 5th Circuit dismissed the jury’s punitive award, it upheld the retaliation claim, although it reduced the compensatory damages award to $248,619.57 in light of Title VII’s cap on damages. Although legally binding, such reductions have been criticized by agencies like the U.S. Equal Employment Opportunity Commission for failing to deter violations.
The appeals court also denied FedEx’s request for a new trial due to alleged flaws in witness testimony, arguing the company could have dealt with these issues in cross-examination and failed to show the testimony substantially influenced the jury.
Correction: A previous version of this story misstated the amount of the jury's punitive award in the headline. The amount is $365,000,000.
