Two recent Fifth Circuit cases make clear that stray remarks of a supervisor and/or corporate officer can lead to exorbitant jury verdicts in favor of employees alleging discrimination. In Arismendez v. Nightingale Home Healthcare Inc., 493 F.3d 602 (5th Cir. 2007) the Fifth Circuit reversed a district court's judgment notwithstanding the verdict in favor of the employer on appeal. Although the jury had awarded a female plaintiff alleging pregnancy discrimination back pay, compensatory damages and a million dollars in punitive damages, the district court granted the employer's motion for judgment of a matter of law, finding insufficient evidence to sustain the jury verdict. On appeal, the Fifth Circuit reversed by reinstating the jury verdict. The Court also remanded the case to the district court to reduce punitive damages to $200,000 in accordance with the statutory cap under Texas law. In reinstating the jury verdict, the Fifth Circuit gave great weight to the plaintiff's testimony that her female branch manager, in response to her request for maternity leave, stated that plaintiff had to be terminated because there was no way that the manager could have a pregnant woman in the office as there was a "business to run." The employer tried to argue that the supervisor who made the remark had no authority over the Company's decision to terminate plaintiff and therefore, the remarks amounted to stray remarks. The circuit court disagreed, noting that stray remarks may serve as sufficient evidence of discrimination if they are comments of discrimination, approximate in time to the termination, made by an individual with authority over the employment decision at issue and related to the employment decision at issue. The Fifth Circuit stated that in reviewing the evidence, the court looks not just to those who had the official authority to make a decision, but also to those who exerted influence or leverage over the titular decision maker. In this case, the Court concluded that the female supervisor who allegedly made the discriminatory remarks was the plaintiff's direct supervisor, had signed the papers to terminate, and the employer conducted no independent investigation after the female supervisor provided a recommendation on termination. Accordingly, the Court concluded that the discriminatory stray remarks made by the female supervisor contributed significantly to the termination decision officially made by the employer. More importantly, the Fifth Circuit concluded that these discriminatory remarks sufficed as "direct evidence of pregnancy discrimination." Similarly, in the case of Palasota v. Haggar Clothing Co., 499 F.3d 474 (5th Cir. 2007), the Fifth Circuit revisited the second round of appeals in this age discrimination case. The jury had rendered a verdict in favor of the plaintiff against Haggar, awarding $842,000 in back pay and $842,000 in liquidated damages. The district court awarded front pay of $524,000 and interim front pay of $14,000 per month, commencing on the date of judgment until the plaintiff was reinstated. The employer subsequently sought an appeal seeking the overturn of the jury's verdict.
On appeal, the circuit court affirmed the district court's judgment denying the employer's motion for a judgment as a matter of law and remanded only on the issue of the lump sum front pay amount. In the course of its opinion affirming the jury's verdict, the Court noted that the jury relied heavily on the stray remarks and comments made by Haggar Clothing's President. The evidence reflected that the President stated that he wanted "race horses" not "plow horses" and told the plaintiff that he was out of the old school of selling. Moreover, the President announced at a sales meeting that he was concerned about the significant graying of the sales force." Based on such comments, which were bolstered by e-mails among executive management on encouraging more senior employees to retire, the Court concluded that a reasonable juror could have concluded that the plaintiff had been terminated as part of the employer's plan to turn the existing sales force over to younger employees. The Fifth Circuit pointed to an internal company memorandum indicating that in eliminating employees over fifty, the company would have the flexibility to bring on some new players that could achieve growth plans. According to the Court, the memo clearly discussed the broad plan of the company to thin the ranks of older sales associates as part of a transition away from a graying sales force to a younger group of employees. This case underscores that stray comments, whether made orally or in writing, can literally sink a company at trial. Both of these recent decisions with from the Fifth Circuit underscore the need for thorough training at every level of management, beginning primarily with supervisors and continuing up through the corporate ranks. Potentially discriminatory comments and communications should not infect any employer's corporate culture.
