Title VII $200,000 Damage Cap to be Applied Per Party, Not Per Claim

In a case of first impression, the Fifth Circuit ruled that the $200,000 damage cap applicable to compensatory and punitive damages in Title VII employment discrimination cases is to be applied per party, rather than per claim: “For the purposes of Title VII’s damage cap, the relevant unit of accounting is the litigant, not the legal theory.” Black v. Pan American Laboratories, L.L.C., No. 09-51092 (5th Cir. July 11, 2011).

Following her termination as a sales representative for a pharmaceutical company, the plaintiff brought suit alleging that her employer (1) discriminated against her on the basis of her sex by assigning her a sales quota, (2) terminated her employment because of her sex, and (3) terminated her because she had made sexual harassment claims. A jury awarded the plaintiff $200,000 in compensatory damages for each of the three claims, $150,000 in back pay for each claim, and an additional $2,400,000 in punitive damages. Finding that the jury’s verdict would amount to a double recovery for the termination and retaliation claim, the District Court reduced the back-pay award to $150,000 and capped compensatory and punitive damages at $200,000 in accordance with the cap provisions of Title VII and the Texas Commission on Human Rights Act.

On appeal, the plaintiff argued that the District Court should have applied the damages cap on a per claim basis because each of her three claims was separate and distinct and could have been brought separately. The Fifth Circuit rejected this contention based on the plain language of the statute.

Noting that a prevailing party can recover only limited compensatory and punitive damages in “an action” brought under Title VII, and noting that an “action” is simply a “lawsuit brought in court,” the Court agreed with several other circuits in holding that “the plain language of § 1981a(b)’s cap applies to each party in an action.”

While the rule seems simple enough (“the cap applies per plaintiff, per suit”), Judge Dennis issued a separate opinion to “clarify” that the damage cap could apply separately to each distinct claim or each related group of claims “in a case in which the plaintiff has raised claims that, under rules of claim preclusion, could have been brought in separate suits.”  Judge Dennis says this clarification will avoid the filing of multiple suits to raise claims that don’t result from the same nucleus of operative facts.

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