Betts v. Costco Wholesale Corp., 07-2103.

• Citation: 558 F.3d 461
• Decision Date: 05 March 2009
• Docket Number: No. 07-2103.,No. 07-2217.,07-2103.,07-2217.
• Parties: Erica BETTS et al., Plaintiffs-Appellees/Cross-Appellants, v. COSTCO WHOLESALE CORPORATION, Defendant-Appellant/Cross-Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (6th Circuit)

558 F.3d 461

Erica BETTS et al., Plaintiffs-Appellees/Cross-Appellants, v. COSTCO WHOLESALE CORPORATION, Defendant-Appellant/Cross-Appellee.

No. 07-2103.

No. 07-2217.

United States Court of Appeals, Sixth Circuit.

Argued: January 15, 2009.

Decided and Filed: March 5, 2009.

ARGUED:

Gerald L. Pauling II, Seyfarth Shaw, Chicago, Illinois, for Appellant. Patricia L. Worrall, The Thurswell Law Firm, Southfield, Michigan, for Appellees.

ON BRIEF:

Gerald L. Pauling II, William F. Dugan, Seyfarth Shaw, Chicago, Illinois, for Appellant. Patricia L. Worrall, Milton H. Greenman, The Thurswell Law Firm, Southfield, Michigan, for Appellees.

Before: KENNEDY, COLE, and GILMAN, Circuit Judges.

GILMAN, J., delivered the opinion of the court, in which KENNEDY, J., joined. COLE, J. (pp. 476-78), delivered a separate opinion concurring in part and dissenting in part.

OPINION

RONALD LEE GILMAN, Circuit Judge.

Six former employees sued Costco Wholesale Corporation, alleging that (1) they were terminated because they are black, and (2) that they were subjected to a racially hostile work environment in violation of Michigan law. (No claim was premised on Title VII of the Civil Rights Act of 1964 or other federal cause of action.) After the district court denied Costco's motion for summary judgment, the case proceeded to trial. A deadlocked jury led to an initial mistrial, but a second jury unanimously found in favor of three of the six employees—Darrell Amour, Stephanie Lewis, and LaVearn Thomas—with respect to their hostile-work-environment claims. None of the six employees, however prevailed on their claims of discriminatory termination. The second jury awarded lost wages to Amour, Lewis, and Thomas. Lewis and Thomas also received damages as compensation for their emotional distress.

Costco subsequently filed motions for judgment as a matter of law and to amend the jury's verdict. The district court denied the motion for judgment as a matter of law, which requested the court to vacate both the jury's finding of liability and the employees' emotional-distress awards. But the court granted Costco's motion to amend the jury's verdict by vacating the awards for lost wages.

Costco appeals the denial of its motion for judgment as a matter of law. Amour, Lewis, and Thomas cross-appeal the order vacating the lost-wages awards. For the reasons set forth below, we REVERSE the award of damages for emotional distress to Lewis and Thomas, AFFIRM the judgment of the district court in all other respects, and REMAND the case with instructions to award nominal damages to Amour, Lewis, and Thomas on their hostile-work-environment claims.

I. BACKGROUND

A. Factual background

Costco sells name-brand merchandise at more than 400 warehouses nationwide, including a warehouse in Livonia, Michigan that is known as "Warehouse 390." Phil Sullivan became the manager of Warehouse 390 in July 2001. He allegedly created a work environment that was racially hostile to the Warehouse's black employees. The six black employees who filed suit are Darrell Amour, Nicola Barnes, Erica Betts, Stephanie Lewis, LaVearn Thomas, and Darrin Whitehead. Neither Barnes, Betts, nor Whitehead prevailed on any of their respective claims and are no longer involved in this case. Amour, Lewis, and Thomas, however, prevailed on their hostile-work-environment claims, alleging that Sullivan repeatedly denigrated and devalued the black employees at Warehouse 390. Their testimony is summarized immediately below.

Amour was hired as a part-time Sales Auditor for Warehouse 390 in April 1998. He subsequently became a full-time employee, initially working as a Back-Up Payroll Administrator, and then as a Payroll Administrator. Sullivan offered Amour a management-level position—as Hard Lines Manager—but Amour declined the offer. During his time as Payroll Administrator, Amour socialized outside of work with Sullivan and developed a personal relationship with him. Amour nevertheless testified during trial that he was repeatedly subjected to racially derogatory remarks and behavior while employed at the Warehouse, including the following:

• Sullivan told Amour that he felt like he was working on a "plantation," which alluded to Costco's numerous black employees.

• Darrin Schaeffer, a white supervisor at the Warehouse, called Amour "Phil's Boy," "Phil's Bitch," and "Phil's Houseboy."

• Amour heard Sullivan say to white supervisors at the Warehouse that he (Sullivan) "wanted them to hire more white women with big breasts."

• Sullivan would treat white customers better than black ones.

• A white employee, Ann McCormick, had exactly the same number of employment infractions as another black employee who was reprimanded, but nothing was done to McCormick.

• Sullivan moved white employees to Front-End Cashier positions and relegated black employees to less desirable floor positions shortly after making the "plantation" comment.

Lewis also complained that Costco's atmosphere was a hostile one for black employees. She was hired by Costco in October 1999 as a Front-End Assistant. Lewis was promoted to the position of Front-End Cashier the following year, well before Sullivan became the Warehouse's manager. Her trial testimony included the following:

• Lewis overheard Sullivan say that he thought he was working on a plantation.

• Sullivan called Betts a "black-widow spider." Lewis heard the comment and believed that it was racist because there was no reason to call her "black," as opposed to simply calling her a spider.

• Sullivan called Betts "so black and ugly he would never have her work up front." (Lewis equivocated about whether she heard the comment first hand or learned about it from a coworker.)

Costco hired Thomas in March 1998 as a Front-End Assistant at the Warehouse. She was promoted to the position of full-time Front-End Cashier shortly thereafter, again well before Sullivan became the Warehouse's manager. Thomas was transferred to the Optical Department in October 2001, after Sullivan's arrival, where she worked as a full-time Service Assistant. The record does not indicate whether this was a promotion, demotion, or lateral move. Like Amour and Lewis, Thomas testified about Sullivan's demeaning behavior towards Costco's black employees. But despite the allegation of being subjected to a hostile work environment, Thomas said that she "wasn't harassed. Erica Betts was harassed." Thomas further alleged that:

• She witnessed Sullivan berate Betts to the point of tears. After the incident, Sullivan said "that girl just gets under my skin."

• Thomas went to a supervisor, Kenya Banks, to discuss a comment that Sullivan made about "hiring more white people."

• Sullivan's behavior made Thomas want to move from her position in the store.

• The environment was like "walking on egg shells" once Sullivan arrived at the warehouse.

Richard Webb, a Costco Vice President and Sullivan's direct supervisor, testified that he once heard Sullivan make a remark regarding the sale of watermelons at Costco. Although Webb believed that the comment simply expressed Sullivan's desire to stock more "high-end" merchandise at Warehouse 390 (as opposed to watermelons), Webb nonetheless considered the remark to be "racially insensitive" to black people. Even Sullivan conceded that fellow supervisor Narquita Stenhouse and another Costco employee believed that he (Sullivan) was a racist.

Amour and Thomas claim that they were among a number of Costco employees who reported Sullivan's behavior to their supervisors. One of those supervisors, Terry McDaniel, heard from Amour about Sullivan's demeaning remarks. McDaniel distanced herself from the comments, saying that she was "not that way," but did not otherwise opine about how she thought Sullivan treated black employees. The record does not indicate that Amour spoke to anyone with supervisory authority over Sullivan about the incidents.

As already mentioned, Thomas spoke to Banks, another supervisor who was subordinate to Sullivan, regarding Sullivan's desire to hire more white people. But Thomas did not contact Costco's corporate offices about her complaints because she said that other employees had already done so to no avail. Nor did Thomas speak to Vice President Webb, who had supervisory authority over Sullivan, because she believed that he and Sullivan were friends.

Lewis also testified that she did not bother to complain about Sullivan because others had already done so and had failed to spur any corrective action. Betts, however, testified that she complained to several supervisors about Sullivan's behavior, including McDaniel, Stenhouse, and Webb.

B. Procedural background

This lawsuit was originally filed in state court, but was subsequently removed to federal court by Costco on the basis of the parties' diversity of citizenship. The jury trial began in late June 2006. Approximately one month later, the district court declared a mistrial because the jury was deadlocked. A new trial commenced in March 2007, and a unanimous verdict was entered roughly one month later. The second jury rejected all of the plaintiffs' discriminatory-discharge claims and the hostile-work-environment claims of Barnes, Betts, and Whitehead. Amour, Lewis, and Thomas prevailed, however, on their respective hostile-work-environment claims, and the jury awarded them lost wages in the amount of $9,320, $4,640, and $4,507 respectively. Lewis also received $15,000 for the emotional distress that she suffered, and Thomas obtained $10,000 for her emotional distress.

Costco subsequently filed motions under Rules 50(b) and 59(e) of the Federal Rules of Civil Procedure. The Rule 50(b) motion sought a judgment as a matter of law against Amour, Lewis, and Thomas on the grounds that the evidence proffered at trial failed to support either the employees' hostile-work-environment claims or their entitlement to emotional-distress damages. As for the Rule 59(e) motion,...