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TABLE OF CONTENTS

Table of Authorities.......................................................................................... ii

Rule 35(b) Required Statement ........................................................................ 1

Statement of Interest ........................................................................................ 1

Argument.......................................................................................................... 2

Conclusion...................................................................................................... 14

Certificate of Compliance................................................................................ 15

Certificate of Service....................................................................................... 15

TABLE OF AUTHORITIES

CASES

Abner v. Kansas City S. R.R., 513 F.3d 154 (5th Cir. 2008)........ 1, 2, 3, 6, 8, 13

Arizona v. ASARCO, LLC, 733 F.3d 882 (9th Cir. 2013).................................. 2

Bankers Life & Cas. Co. v. Crenshaw, 486 U.S. 71 (1988).............................. 11

BMW of N. Am. v. Gore, 517 U.S. 559 (1996)......................................... passim

Carlson v. Green, 446 U.S. 14 (1980)............................................................. 11

Corti v. Storage Tech. Corp., 304 F.3d 336 (4th Cir. 2002).............................. 9

Cush-Crawford v. Adchem Corp., 271 F.3d 352 (2d Cir. 2001)...... 1, 3, 6, 9, 13

EEOC v. Wal-Mart Stores, Inc., 187 F.3d 1241 (10th Cir. 1991)...................... 8

EEOC v. W & O, Inc., 213 F.3d 600 (11th Cir. 2000)....................................... 9

Exxon Shipping Co. v. Baker, 554 U.S. 471 (2008)............... 3, 4-5, 6, 7, 10, 12

Golson v. Green Tree Fin. Serv. Co., 26 F. App’x 209 (4th Cir. 2002)............. 8

Harris v. Forklift Sys., Inc., 510 U.S. 17 (1993)............................................... 12

Kolstad v. Am. Dental Ass’n, 527 U.S. 526 (1999).......................................... 11

Lust v. Sealy, Inc., 383 F.3d 580 (7th Cir. 2004)..................... 1, 3, 6, 12, 13, 14

Pac. Mut. Ins. Co. v. Haslip, 499 U.S. 1 (1991)................................................ 5

Passantino v. Johnson & Johnson Consumer Prods., 212 F.3d 493 (9th Cir. 2000)

.......................................................................................................................... 9

Provencher v. CVS Pharmacy, 145 F.3d 12 (1st Cir. 1998).............................. 9

Romano v. U-Haul Int’l, 233 F.3d 655 (1st Cir. 2000)............................... 7, 10

State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408 (2003).................... 3

Swinton v. Potomac Corp., 270 F.3d 794 (9th Cir. 2001)............................... 12

Timm v. Progressive Steel Treating, Inc., 137 F.3d 1008 (7th Cir. 1998)....... 8, 9

Tisdale v. Fed. Express Corp., 415 F.3d 516 (6th Cir. 2005)........................ 8, 9

TXO Prod. Corp. v. Alliance Res. Corp., 509 U.S. 443 (1993).......................... 7

STATUTES & RULES

Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq.

42 U.S.C. § 1981a(b)(1) ...................................................................... 5, 6, 7

42 U.S.C. § 1981a(b)(3)......................................................................... 5, 10

Civil Rights Act of 1991, Pub. L. No. 102-166, 105 Stat. 1071..................... 12

Fed. R. App. P. 35............................................................................................ 2

OTHER AUTHORITIES

Joseph A. Seiner, Punitive Damages, Due Process, and Employment Discrimination, 97 Iowa L. Rev. 473 (2012).......................................................................................... 4, 14

U.S. Inflation Calculator, available at www.usinflationcalculator.com

(last visited Jan. 17, 2014) ............................................................................. 13

RULE 35(b) REQUIRED STATEMENT

The panel majority’s ruling presents a question of exceptional importance: Whether a court must conduct a due process analysis and apply the factors articulated in BMW of North America v. Gore, 517 U.S. 559 (1996), to an award of punitive damages that falls within Title VII’s statutory caps. The panel majority’s decision that it had to give the award due process scrutiny, even where the award met the requirements defined by Congress in Title VII, is inconsistent with the following circuit court decisions:

Abner v. Kansas City S. R.R., 513 F.3d 154 (5th Cir. 2008)

Lust v. Sealy, 383 F.3d 580 (7th Cir. 2004)

Cush-Crawford v. Adchem Corp., 271 F.3d 352 (2d Cir. 2001)

STATEMENT OF INTEREST

The Equal Employment Opportunity Commission is the agency charged by Congress with the interpretation, administration, and enforcement of Title VII of the Civil Rights Act of 1964, 42 U.S.C. §§ 2000e et seq. In this case, the jury found ASARCO liable for subjecting Aguilar to a hostile work environment and awarded nominal and punitive damages. The district court reduced the jury’s punitive damages award to the statutory cap of $300,000. A panel of this Court affirmed the availability of punitive damages, but the panel majority reduced the amount to $125,000, the “highest punitive award supportable under due process” which was “in accord with the highest ratio we could locate among discrimination cases.” That figure was taken from the Fifth Circuit’s decision in Abner v. Kansas City Southern Railroad, 513 F.3d 154, 157 (5th Cir. 2008), a race discrimination action brought under Title VII and 42 U.S.C. § 1981, where the plaintiffs were each awarded $1 in nominal damages and $125,000 in punitive damages. As the dissent in this case stated, unless corrected by the full Court, the “ceiling of constitutionally acceptable punitive damages in Title VII cases has somehow forever been fixed by [the Abner] opinion.” Arizona v. ASARCO, 733 F.3d 882, 893 (9th Cir. 2013) (Hurwitz, J., dissenting). The panel majority’s holding conflicts with rulings of other courts of appeals and raises an issue of exceptional importance. We therefore offer our views to the Court.

ARGUMENT

Rule 35 permits en banc rehearing to address decisions raising “question[s] of exceptional importance,” such as those conflicting with decisions in other courts of appeals. Fed. R. App. P. 35. The panel majority decision erroneously applied the BMW v. Gore factors[1] to ASARCO’s due process challenge and selected an arbitrary dollar figure by which to further reduce Aguilar’s already substantially reduced award. This Court should grant rehearing to articulate the correct analysis for punitive damages awards in Title VII cases.

The statutory caps set out in Title VII define the upper limit of a punitive damage award; no additional scrutiny under the due process clause is warranted. “When Congress sets a limit, and a low one, on the total amount of damages that may be awarded, the ratio of punitive to compensatory damages in a particular award ceases to be an issue of constitutional dignity.” Lust v. Sealy, Inc., 383 F.3d 580, 590 (7th Cir. 2004); cf. Exxon Shipping Co. v. Baker, 554 U.S. 471, 502 (2008) (federal law “precedes and should obviate any application of the constitutional standard”). The panel majority’s contrary holding conflicts with decisions of other courts of appeals and so warrants en banc review under Rule 35. Cf. Abner, 513 F.3d at 157; Lust, 383 F.3d at 590; Cush-Crawford v. Adchem Corp., 271 F.3d 352, 359 (2d Cir. 2001).

Nothing in the Supreme Court’s due process jurisprudence requires setting a ratio between punitive and compensatory damages, as the majority did here. In BMW v. Gore, the Supreme Court held that a punitive damages award may violate the due process clause if the award is “grossly excessive.” 517 U.S. at 568; see also State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408, 416-17 (2003). A grossly excessive award is so large and unpredictable that it no longer fairly punishes past conduct or deters future conduct. Gore, 517 U.S. at 568-74. And critically, in the case of a “grossly excessive award,” a defendant lacks sufficient notice that its conduct could result in such a severe penalty. Id. at 574.

The Supreme Court subsequently clarified why, in Gore, it looked to the due process clause as the basis for its excessiveness review of the punitive damage award. In Exxon, the Court explained that its due process cases, including Gore, “all involved awards subject in the first instance to state law.” 554 U.S. at 502. As such, the Supreme Court stated, there was no federal law delineating what punitive damage award might be excessive, and the Court had to resort to due process review. Id. at 501-02. But where federal law sets out what would be an excessive award—in Exxon, it was federal maritime common law authority—then such federal law “precedes and should obviate any application of the constitutional standard.” Id. at 502. “There can be little doubt after Exxon, then, that the courts need not reach the due process issues raised in Gore and State Farm when addressing employment discrimination claims brought under Title VII” because “[j]ust like the [Clean Water Act] and federal maritime law, then, Title VII case law has created a federal scheme that satisfies any constitutional concerns over the excessiveness of punitive awards.” Joseph A. Seiner, Punitive Damages, Due Process, and Employment Discrimination, 97 Iowa L. Rev. 473, 491 (2012).

The Exxon Court ultimately set out a maritime common law standard for excessiveness, stressing that it was creating “judge-made law” because of “the absence of statute.” Id.[2] Here, of course, Congress already has regulated punitive damage awards by statute. Title VII, as amended by Section 102 of the 1991 Civil Rights Act, allows a jury to award punitive damages “if the complaining party demonstrates that the respondent engaged in a discriminatory practice . . . with malice or with reckless indifference to [her] federally protected rights.” 42 U.S.C. § 1981a(b)(1). If that high threshold is met, the only factor determining the limit on the amount of punitive damages a jury may award is the size of the company found liable for discrimination. See 42 U.S.C. § 1981a(b)(3). For employers like ASARCO, with more than 500 employees, that amount is $300,000. Id. In inserting a damages claim to the 1991 Civil Rights Act, Congress articulated a clear standard for the award of punitive damages and imposed caps on the amount of damages, thereby satisfying the Supreme Court’s requirement that punitive damages be “reasonable in their amount and rational in light of their purpose to punish what has occurred and to deter its repetition.” Pac. Mut. Ins. Co. v. Haslip, 499 U.S. 1, 21 (1991).

The congressional judgment embodied in the statute “obviate[s]” the need to apply the Gore factors anew because the statute effectively addresses those factors:

(1) The degree of reprehensibility is intentional discrimination with malice or reckless indifference to federally protected rights. See 42 U.S.C. § 1981a(b)(1).

(2) Congress set no required ratio of punitive damages to compensatory damages.

(3) The civil penalties that could be imposed are the caps delineated in the statute so there is no need to look to penalties for “comparable misconduct.”

Thus neither Gore concern—large or unpredictable awards—applies to a punitive damages award falling within Title VII’s statutory caps. First, because Title VII’s caps ensure against limitless awards or “runaway juries,” due process concerns about “grossly excessive” awards are not raised for an award within the caps. See Abner, 513 F.3d at 164 (“[T]he combination of the statutory cap and high threshold of culpability for any [punitive damages] award confines the amount of the award to a level tolerated by due process.”); Lust, 383 F.3d at 590 (due process clause challenge is inapplicable in Title VII cases because punitive damages are authorized and limited by 42 U.S.C. § 1981a, which imposes a statutory cap on damages up to $300,000 for employers with more than 500 employees); Cush-Crawford, 271 F.3d at 357-59 (“To the extent that courts worry about unleashing juries to award limitless punitive damages in cases where no harm had occurred, this concern is eliminated by the imposition of statutory caps.”); cf. Exxon, 554 U.S. at 499 (the “real problem” lies with “the stark unpredictability of punitive awards”).

Second, the caps give employers fair notice of the penalty that will be imposed for malice or reckless disregard of an employee’s federally protected rights. Notice to potential law violators is a principal concern of due process because “[e]lementary notions of fairness enshrined in [the Supreme Court’s] constitutional jurisprudence dictate that a person receive fair notice not only of the conduct that will subject him to punishment, but also of the severity of the penalty that a State may impose.” Gore, 517 U.S. at 574; see also Exxon, 554 U.S. at 502 (“a penalty should be reasonably predictable in severity”). Gore’s three factors are designed to tease out whether a defendant received sufficient notice. See 517 U.S. at 574-75 (three “guideposts” were employed to indicate[] that BMW did not receive adequate notice of the magnitude of the sanction that Alabama might impose).

Gore’s notice concerns are satisfied by Title VII’s caps because employers of ASARCO’s size are on notice that engaging in intentional sex discrimination “with malice or with reckless indifference to the federally protected rights of an aggrieved individual,” 42 U.S.C. § 1981a(b)(1), may result in punitive damages up to $300,000. See TXO Prod. Corp. v. Alliance Res. Corp., 509 U.S. 443, 446 (1993) (“[T]he notice component of the Due Process Clause is satisfied if prior law fairly indicated that a punitive damages award might be imposed in response to egregiously tortuous conduct.”). Consequently, the Gore factors need not be addressed a second time in a statutory cap case. See Romano v. U-Haul Int’l, 233 F.3d 655, 673 (1st Cir. 2000) (Gore’s notice concern is addressed in sub-statutory punitive damages cap cases because “[a] congressionally mandated statutory scheme identifying the prohibited conduct as well as the potential range of financial penalties goes far in assuring that a defendant’s due process rights have not been violated.”); Golson v. Green Tree Fin. Serv. Co., 26 F. App’x 209, 216 (4th Cir. 2002) (“In light of the statutory cap on damages, an employer has notice of the range of damages that could be imposed if a trier of fact concludes that the employer violated Title VII and that it did so ‘with malice or with reckless indifference to the federally protected rights’ under 42 U.S.C. §1981a(b)(1).”); EEOC v. Wal-Mart Stores, Inc., 187 F.3d 1241, 1249 (10th Cir. 1991) (reasonableness of the punitive award was “buttressed by the fact that the statute Wal-Mart was found to have violated caps punitive awards for an employer of Wal-Mart’s size at $300,000”).

The panel majority reduced Aguilar’s award pursuant to Gore’s second factor. Nothing in the language of the statute expressly or implicitly conditions a recovery of punitive damages on an award of compensatory damages, however. “‘Extra-statutory requirements for recovery should not be invented.’” Abner, 513 F.3d at 160 (quoting Timm v. Progressive Steel Treating, Inc., 137 F.3d 1008, 1010 (7th Cir. 1998)). See also Tisdale v. Fed. Express Corp., 415 F.3d 516, 534 (6th Cir. 2005) (pre-condition of compensatory damages is unwarranted in Title VII cases). Correlating punitive damages to compensatory damages makes little sense given that punitive damages may be available to Title VII claimants even in the absence of any compensatory damages award. See, e.g., Cush-Crawford, 271 F.3d at 359; Timm, 137 F.3d at 1010; Corti v. Storage Tech. Corp., 304 F.3d 336, 341-42 (4th Cir. 2002); Provencher v. CVS Pharmacy, 145 F.3d 5, 12 (1st Cir. 1998); Tisdale, 415 F.3d at 534; EEOC v. W & O, Inc., 213 F.3d 600, 615 (11th Cir. 2000); cf. Passantino v. Johnson & Johnson Consumer Prods., 212 F.3d 493, 514 (9th Cir. 2000) (without ruling on Title VII question, noting that this Circuit has held that punitive damages may be award in § 1983 cases without an award of compensatory or nominal damages if the plaintiff shows that the defendant violated a “federally protected right”).

There is no requirement that punitive damages be proportional to compensatory damages in Title VII cases because “the statutory maxima capping punitive damages awards strongly undermine the concerns that underlie the reluctance to award punitive damages without proof of actual harm.” Cush-Crawford, 271 F.3d at 359. The need to punish and deter intentional discrimination that meets the standard for punitive damages is present regardless of the underlying compensatory or actual damages suffered by the victim of discrimination. See Tisdale, 415 F.3d at 534-35 (concluding that a Title VII punitive damages award does not violate due process even when there are no compensatory damages and noting that the statutory cap “ensures against limitless awards.”).

Title VII caps compensatory and punitive damages together at $300,000 for the largest companies. 42 U.S.C. § 1981a(b)(3). The statute thus incorporates Congress’ judgment that where compensatory awards are higher, a lower punitive damages award is appropriate. But where, as here, a jury has not awarded any significant compensatory damages, the permissible punitive damages award may be proportionately greater. Cf. Exxon, 554 U.S. at 513 (modest economic harm justifies opening the door to higher punitive damages award). Superimposing another ratio limit would upend the careful limitations Congress already set in place.

Applying Gore to a Title VII case creates a particularly strained analysis because, as noted above, Title VII itself sets out civil penalties, obviating the need to look to penalties for “comparable misconduct” (the third Gore factor). See Gore, 517 U.S. at 583. Indeed, Gore itself emphasized that “a reviewing court engaged in determining whether an award of punitive damages is excessive should ‘accord “substantial deference” to legislative judgments concerning appropriate sanctions for the conduct at issue.’” Id. (citation omitted); see also Romano, 233 F.3d at 673 (Where case was brought under Title VII and “the punitive damages award was authorized and limited by 42 U.S.C. § 1981a,” “[a] congressionally-mandated, statutory scheme identifying the prohibited conduct as well as the potential range of financial penalties goes far in assuring that appellants’ due process rights have not been violated.”). Here Congress made a legislative judgment, and the panel majority’s reduction of the amount of punitive damages according to an arbitrary ratio is in tension with that judgment about the appropriate civil penalty.

Compensatory damages and punitive damages serve two independent purposes. Compensatory damages are based on the victim’s injury; punitive damages are based on the company’s state of mind. See Bankers Life & Cas. Co. v. Crenshaw, 486 U.S. 71, 87 (1988) (punitive damages are awarded not to compensate for injury, but to punish and deter reprehensible conduct); see also Kolstad v. Am. Dental Assoc., 527 U.S. 526, 534 (1999) (“Congress plainly sought to impose two standards of liability—one for establishing a right to compensatory damages and another, higher standard that a plaintiff must satisfy to qualify for a punitive award.”).

If punitive damages are reduced based on an underlying award of compensatory damages, plaintiffs in some cases will have no remedy because “punitive damages may be the only significant remedy available . . . where . . . rights are maliciously violated but the victim cannot prove compensable injury.” Carlson v. Green, 446 U.S. 14, 22 n. 9 (1980) (allowing punitive damages award in § 1983 action). For example, where an employer refuses to hire women but each denied applicant found other jobs paying more and suffered no emotional or physical damages, none of the women could recover compensatory damages. Or, most apropos to this case, an employer may allow severe harassment but the victim may suffer no compensable injury, even where the employer has acted maliciously or recklessly. See Harris v. Forklift Sys., Inc., 510 U.S. 17, 21, 22 (1993) (holding that Title VII’s prohibition against discrimination “‘is not limited to ‘economic’ or ‘tangible’ discrimination,” and that the district court therefore erred in requiring conduct that “‘seriously affect[ed] plaintiff's psychological well being’ or led her to ‘suffe[r] injury’”); Swinton v. Potomac Corp., 270 F.3d 794, 818 (9th Cir. 2001) (in racial harassment case brought under § 1981, court struggling with ratio inquiry noted that “the personal distress and indignity visited upon [the plaintiff] are difficult to calculate”); cf. Exxon, 554 U.S. at 513 (door to higher punitive damages award opened in cases of modest economic harm). Especially in a harassment case, reducing the award based on a ratio frustrates the deterrence objectives of punitive damages. See Civil Rights Act of 1991 § 2(1), Pub. L. No. 102-166, 105 Stat. 1071 (Congressional finding that “additional remedies under Federal law are needed to deter unlawful harassment and intentional discrimination in the workplace”).

The Seventh Circuit expounded upon the illogic of imposing a ratio in cases without measurable compensatory damages, especially the single digit ratio ASARCO urges: “Suppose [the plaintiff] had been emotionally sturdier and incurred only $10 in emotional injury from the delay in her promotion . . . .Would [the defendant] argue that in that case the maximum award of punitive damages would be $100? So meager an award would accomplish none of the purposes . . . for which punitive damages are validly awarded.” Lust, 383 F.3d at 591. That reasoning applies in this case. As one court of appeals observed, “there is some unseemliness for a defendant who engages in malicious or reckless violations of legal duty to escape either the punitive or deterrent goal of punitive damages merely because either good fortune or a plaintiff’s unusual strength or resilience protected the plaintiff from suffering harm.” Cush-Crawford, 271 F.3d at 359. See also Abner, 513 F.3d 154 (“Injury that results from discrimination under Title VII is often difficult to quantify in physical terms; preventing juries from awarding punitive damages when an employer engaged in reprehensible discrimination without inflicting easily quantifiable physical and monetary harm would quell the deterrence that Congress intended in the most egregious discrimination cases under Title VII.”).

Finally, Congress’ decision to cap damages awards at a relatively low amount undercuts any argument that there needs to be an additional “grossly excessive” scrutiny under Gore. See, e.g., Lust, 383 F.3d at 591 (“[C]apping the ratio of compensatory and punitive damages makes sense only when the compensatory damages are large, which the statutory cap on total damages in employment discrimination cases precludes.”). The maximum $300,000 allowed for the largest companies has not been adjusted since the 1991 Act, and accounting for inflation, is equivalent to just $175,312.89 in 1991 dollars. See U.S. Inflation Calculator, available at www.usinflationcalculator.com (last visited Jan. 17, 2014). One commentator has observed that “given the upper limits of the potential punitive awards—which have remained static since the amendments went into effect—there is no need for employers to be concerned with the multimillion-dollar verdicts that have arisen in other contexts . . . .” Seiner, supra, at 493; see also Lust, 383 F.3d at 590-91 (“The purpose of placing a constitutional ceiling on punitive damages is to protect defendants against outlandish awards. . . . That purpose falls out of the picture when the legislature has placed a tight cap on total, including punitive, damages. . . .”).

CONCLUSION

We urge this Court to rehear the case en banc.

Respectfully submitted,

P. DAVID LOPEZ

General Counsel

LORRAINE C. DAVIS

Acting Associate General Counsel

JENNIFER S. GOLDSTEIN

Acting Assistant General Counsel

/s/ Julie L. Gantz

______________________________________

JULIE L. GANTZ

Attorney

EQUAL EMPLOYMENT OPPORTUNITY COMMISSION

January 21, 2014

[1] The factors articulated for determining when a punitive damages award is so excessive such that it violates constitutional notions of fairness are: (1) degree of reprehensibility for the defendant’s conduct, (2) ratio of punitive damages to the compensatory award or actual harm inflicted, and (3) civil or criminal penalties that could be imposed for comparable misconduct. BMW of N. Am. v. Gore, 517 U.S. 559, 575-83 (1996).

[2] The Exxon Court considered the particular factors of the case before it, where the conduct was neither intentional nor malicious, and where there was not the modest economic harm or odds of detection that have justified “open[ing] the door to higher awards.” Id. at 513. The Court accordingly limited punitive damages to $507.5 million, an amount equal to the compensatory damages award. Id. at 514.