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In a lengthy employment case, Charles v. Leo the Massachusetts Appeals Court today affirmed an $888,000 compensatory damages award for a public employee who sued her upper-level manager and the city of Boston for racial discrimination and retaliation in violation of G. L. c. 151B.  The Appeals Court also vacated the trial court’s “remittitur” (reduction) of the jury’s $10 million in punitive damages.  The trial court had reduced the jury’s punitive damages award to $2 million, but the Appeals Court has now remanded that for further consideration, which may result in an increase from $2 million back to $10 million, or somewhere in between.  In reaching its decision, the Appeals Court provides new guidance for litigants and trial courts on how punitive damages awards should be handled.

A brief summary of the facts: Plaintiff Charles, a black woman, worked since 1986 as a senior administrative assistant in the trust office of Boston’s treasury department. Leo, a white woman, served as the first assistant collector-treasurer since 1996. Leo supervised Charles’s direct manager.  The evidentiary record indicates that Leo described Charles as “aloof, nondeferential, uppity.” Charles filed a complaint with the Massachusetts Commission Against Discrimination (MCAD). Shortly thereafter, Leo removed Charles as contact person for a project fund with which Charles had been involved.  The record also included evidence that Charles did not apply for a certain promotion because she perceived “a clear message to [her] that [she] need not apply.”

On the issue of the trial court’s reduction of the jury’s $10 million punitive damages award by eighty percent to $2 million, the Appeals Court observed that the “ the jury’s function to make the difficult and uniquely human judgments that defy codification” and that the judge’s role “is not to review the wisdom of the jury’s award of punitive damages . . . but only to determine whether it is excessive.”  The Appeals Court also noted that the anti-discrimination statute “provides no statutory cap on the amount of punitive damages that are allowable for racial discrimination” and that “it is fair to infer that the Legislature intends to punish employers who discriminate, with no restrictions as to the type of discrimination that occurred here.”

In assessing the trial court’s remittitur analysis, the Appeals Court observed that the analysis included the point that “the ratio of the punitive damages award to the compensatory damages award is more than 10 to 1”—a “double digit ratio.”  The Appeals Court concluded that if a judge takes the approach of analyzing ratios, “he or she must do more than compare the dollar amounts awarded as punitive damages in the other cases with the damages awarded in the case before her.”  Instead, “a proper comparison of punitive damages awards in different cases requires an analysis not only of reprehensibility and of the amounts of the awards, but of the relationship of the punitive award in each case to the compensatory award, and of the financial circumstance of the defendants in each case.”  Here, the Appeals Court concluded, “[t]he ratio in this case of approximately 11 to 1 does not exceed a single-digit ratio ‘to a significant degree,’ and out-of-jurisdiction employment cases have upheld against constitutional challenge ratios that far exceed this one.”  The Appeals Court then cited cases approving punitive awards as high as 50 to 1.  “The ratio itself . . . does not necessarily indicate that the award is excessive.” Finally, Appeals Court observed that the trial court had reduced the ratio from 11 to 1 to just over 2 to 1, “without any explanation for her choice of the amount of $2 million.” The trial court was instead required to set forth “a reasoned basis for any remittitur.”  Yet the Appeals Court also stated “[t]o be clear, we are not holding that as a matter of law this award was not excessive, or that an eighty percent reduction in the punitive damages award to $2 million would be an abuse of discretion.”  Thus, the eventual resolution of the punitive damages award in this case is presently unclear.