An Oregon jury rendered a verdict of nearly $8 million against Nike and in favor of a former employee, Heather Hender, in her gender discrimination lawsuit.

The jury found that Nike discriminated against Hender by paying her less than her male colleagues, an Equal Pay Act violation, and by promoting her more slowly than men because of her gender, a violation of Title VII.

In 2018, four employees sued the company alleging sex discrimination. All four alleged that they were being paid $11,000 less than their male colleagues while performing the same work. The employees also claimed they received fewer promotion opportunities. These differences were allegedly a result of Nike's "job architecture" and "job groupings".

When the employees brought their complaints to Nike's HR department internally, their concerns were allegedly not addressed.

The four employees attempted to obtain class action certification but were unsuccessful. Only Hender's lawsuit remained after the three others settled their claims.

The jury awarded Hender $19,739.52 in damages plus $7.5 million in punitive damages.

Source: https://finance.yahoo.com/small-business/articles/nike-7-5-million-stumble-214711565.html

Commentary

When juries conclude an employer's conduct was deliberate or indifferent, they often "send a message" in response through a punitive damage award.

The U.S. Court of Appeals for the Fifth Circuit recently affirmed a jury's verdict in favor of a parts clerk for SkyWest Airlines, who alleged sex discrimination. The jury had rendered a $2.17 million verdict, which included $2 million in punitive damages. According to the allegations in the lawsuit, the clerk's coworkers requested she perform sexual acts, made jokes about rape, viewed pornography at work, and implied she should make money via prostitution. The clerk reported this to her supervisor, who allegedly appeared "annoyed" by her complaint. No meaningful investigation was allegedly conducted by upper management or HR, causing the full extent of the harassment to be missed and ineffective discipline to be applied. The judgment was reduced based on Title VII's statutory caps. https://www.eeoc.gov/newsroom/jury-awards-217-million-against-skywest-airlines-sex-discrimination; https://www.hcamag.com/us/specialization/employment-law/court-upholds-skywest-harassment-verdict-backs-punitive-damages-against-airline/582054

A Washington jury rendered a $23 million verdict in favor of a Walmart employee, which included $22,500,000 in punitive damages. According to the allegations in the lawsuit, the worker was fired after making several complaints about a coworker's sexual harassment, including complaints via Walmart's ethics hotline. The employee alleged she was told the coworker would be investigated, as would the supervisor who ignored her reports. However, she was fired instead. The jury's verdict was later reduced under Title VII's statutory cap. https://www.hrdive.com/news/walmart-hit-with-23m-jury-verdict-after-retaliation-trial/823309/

Although punitive damage awards appear to be growing in frequency and severity, they may be reduced by statutory caps under federal law and are subject to scrutiny after the U.S. Supreme Court cases, BMW v. Gore and State Farm v. Campbell that limited "grossly excessive" punitive damages.

The U.S. Supreme court held in BMW v. Gore that states may impose large punitive damages in order to further their interest in deterring unlawful conduct. However, the Fourteenth Amendment's due process clause prohibits grossly excessive punishments. Further, in State Farm v. Campbell, the Court held that a punitive damages award of $145 million, alongside a $1 million compensatory damage award, was excessive and in violation of the Fourteenth Amendment. The Court noted that "few awards exceeding a single-digit ratio between punitive and compensatory damages, to a significant degree, will satisfy due process." https://www.oyez.org/cases/1995/94-896; https://www.oyez.org/cases/2002/01-1289

It is important to note that litigating those limitations adds to defense costs, causes delay, and can create uncertainty for organizations.

The final takeaway is to help avoid the risks associated with punitive damage awards, employers should focus on loss prevention. Loss prevention limits the type of wrongdoing that causes punitive damage awards and, if sued, loss prevention helps deter juries from wanting to punish employers.