October 15, 2008

SCOTUS Rejects FedEx Petition to Review Standard for Awarding Punitive Damages in ADA Cases

Law.com reports that the US Supreme Court has rejected a cert petition by FedEx seeking review of a 4th Circuit decision (Federal Express Corp. v. Equal Employment Opportunity Commission, 513 F.2d 360 (2008)) affirming a jury award of $100,000 in punitive damages. In the suit brought by a deaf package handler pursuant to the Americans with Disabilities Act (ADA), the Baltimore jury found FedEx liable under the "reckless indifference" standard for punitive damages in ADA cases (see Kolstad v. American Dental Association, 527 U.S. 526 (1999)), and the 4th Circuit appellate court rejected FedEx's argument on appeal that its internal compliance and grievance policies established a "good faith" defense to the claim as a matter of law.

The 4th Circuit construed the "reckless indifference" standard as not requiring a subjective "bad motive" on the part of the employer, and further held that "the mere existence of an ADA compliance policy will not alone insulate an employer from punitive damages liability." FedEx challenged that analysis in its petition for certiorari, arguing that the decision "will allow the issue [of punitive damages] to go automatically to the jury in every ADA case involving the interactive process, regardless of the employer's state of mind in attempting to comply with its obligations." The EEOC brief in opposition countered that the "reckless indifference" standard in Kolstad required only "consciousness of consequences or of wrongdoing," and that "an employer can avoid the imposition of punitive damages by demonstrating that it engaged in good-faith efforts to comply with the law." The EEOC's press release announced the denial of FedEx's petition for certiorari last week.

Note that the compensatory award was only $8,000. As described by Sean Andrussier in the North Carolina Appellate Blog, FedEx challenged the $100,000 punitive award (12.5 times the compensatory award) as excessive on appeal. It does not appear, however, that FedEx renewed that argument in its cert petition. The punitive award was well within the applicable $300,000 statutory cap for damages under the ADA. But as the aforementioned blog post explains:

The notion that an award is beyond due process review for excessiveness if it falls within a statutory range is misplaced. See, e.g., Kent v. A.O. White, Jr., Consulting Eng'r, P.C., 559 S.E.2d 731, 736-40 (Ga. Ct. App. 2002) (holding that punitive award that had been reduced by trial court to $250,000 statutory cap remained unconstitutionally excessive and ordering reduction to $85,964).