Deffenbaugh-Williams v. Wal-Mart Stores, Inc.

• Decision Date: 24 September 1998
• Docket Number: No. 97-10685,P,WAL-MART,DEFFENBAUGH-WILLIAM,97-10685
• Citation: 156 F.3d 581
• Parties: 77 Fair Empl.Prac.Cas. (BNA) 1699, 74 Empl. Prac. Dec. P 45,510 Julielaintiff-Appellee/Cross-Appellant, v.STORES, INC., et al., Defendants, Wal-Mart Stores, Inc., Defendant-Appellant/Cross-Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 581

156 F.3d 581

77 Fair Empl.Prac.Cas. (BNA) 1699,

74 Empl. Prac. Dec. P 45,510

Julie DEFFENBAUGH-WILLIAMS, Plaintiff-Appellee/Cross-Appellant, v. WAL-MART STORES, INC., et al., Defendants Wal-Mart Stores, Inc., Defendant-Appellant/Cross-Appellee.

No. 97-10685.

United States Court of Appeals Fifth Circuit.

Sept. 24, 1998.

Mark C. Brodeur, Dallas, TX, for Deffenbaugh-Williams.

Jimmy Preston Wrotenbery, Kevin D. Jewell, Magenheim, Bateman, Robinson, Wrotenbery & Helfand, Houston, TX, for Wal-Mart Stores, Inc.

Appeals from the United States District Court for the Northern District of Texas.

Before JOLLY, SMITH and BARKSDALE, Circuit Judges.

RHESA HAWKINS BARKSDALE, Circuit Judge:

For the numerous issues presented regarding the amended judgment, the principal matter at hand is the imposition of punitive damages against an employer, through vicarious liability, for a racially discriminatory termination, in the light of two very recent Supreme Court decisions regarding employer vicarious liability for sexual harassment. A jury having found Wal-Mart Stores, Inc., liable under Title VII, 42 U.S.C. § 2000e et seq., and 42 U.S.C. § 1981, for such termination of Julie Deffenbaugh-Williams (Deffenbaugh), and having awarded her compensatory and punitive damages, Wal-Mart raises liability and the failure to mitigate the compensatory damages; Deffenbaugh, the district court's setting aside, as a matter of law, the punitive damages. In the alternative, Wal-Mart asserts that the punitive damages are excessive. We AFFIRM as to liability and the amount of compensatory damages; as to the denial of punitive damages, we REVERSE but order a remittitur of $25,000, resulting in those damages being reduced from $100,000 to $75,000, with Deffenbaugh having the option of a new trial on such damages.

I.

Deffenbaugh began working for Wal-Mart in 1979 as the jewelry manager for its store in Bowie, Texas. She voluntarily quit in 1982. In 1989, she began working as a sales associate at the Wal-Mart Hypermart in Arlington, Texas. In 1990, Deffenbaugh was promoted to manager of the jewelry department.

In May 1992, Deffenbaugh, who is white, began dating Truce Williams (Williams), a black sales associate in the Arlington Hypermart men's wear department. They did not reveal the existence of their relationship to their co-workers.

Charlotte England served as Deffenbaugh's direct supervisor until May or June 1993, when Dale Gipson became District Manager of the shoe and jewelry departments of six Wal-Mart stores, including the Arlington Hypermart. As manager of the jewelry department employees at the Hypermart, Gipson had direct supervisory authority over Deffenbaugh. Around this same time, Pat Price became the manager of Deffenbaugh's store; but, he never directly supervised Deffenbaugh.

In May and August 1993, Price saw Deffenbaugh and Williams together at local restaurants; and, on one of these occasions, saw them kiss. In August 1993, shortly after the second occasion on which he saw Deffenbaugh and Williams together in public, Price asked Deffenbaugh to attend a lunch meeting at a local restaurant to discuss store inventory. Deffenbaugh testified that Price, England, and Gipson attended this meeting; and that, in the presence of Price and Gipson, England told Deffenbaugh that she "would never move up with the company being associated with a black man and that Wal-Mart frowned upon fraternization with[in] the company". Deffenbaugh responded that her personal business was not their concern, "because it did not affect [her] job performance". Price and Gipson did not respond to these comments.

In October 1993, Price advised Deffenbaugh about Wal-Mart's nonfraternization policy; and she signed a written acknowledgment of this policy. But, the policy did not prohibit employees from dating if they were not in a direct supervisory relationship.

Prior to December 1993, Deffenbaugh's performance evaluations were favorable and she earned high revenues for the store. Early that December, however, Gipson reprimanded Deffenbaugh for an incident that October, in which she set aside a bottle of perfume to purchase at the end of her shift. Gipson accused her of "shopping on the clock", i.e., shopping for store merchandise during working hours. (In late November, Gipson and Greg Shelton, the Wal-Mart Loss Prevention Manager, had initially accused Deffenbaugh of stealing the perfume.)

Deffenbaugh was suspended for one day and returned to work only after she had prepared and signed a "plan of action", outlining how she would improve her work performance. The plan included a statement that she would "never shop while on company time". Despite her compliance with these instructions, Deffenbaugh believed the reprimand was pretextual, noting that there was no written policy prohibiting "shopping on the clock".

Deffenbaugh testified that, after this reprimand, she contacted David Norman, the Wal-Mart regional manager, and told him that the Wal-Mart managers were "out to get [her] ... because of [her] dating [Williams]...." Norman replied that it was not a problem if she was dating a black man and assured her that he would "check into it".

On Friday, 14 January 1994, the day after Deffenbaugh married Williams, he told her that he wanted to purchase a VCR from the electronics department. Just before 4:00 p.m., Deffenbaugh, before clocking out, went to the men's wear department to give Williams cash from a paycheck she earlier had cashed for him. Williams asked Deffenbaugh for her Wal-Mart discount card. Deffenbaugh testified that she stopped near the electronics department cashier and handed Williams, not the cashier, the card. Williams used the card to purchase the VCR, while Deffenbaugh went to check on the jewelry department before walking to the front of the store to clock out.

The next morning, Williams' supervisor, Arthur Stanford, telephoned Williams and informed him and Deffenbaugh that "they" were going to "mess with" and "terminate" Deffenbaugh on the following Monday. On Wednesday, 19 January 1994, Gipson told Deffenbaugh that her employment was terminated because she had "shopp[ed] on the clock" again. Deffenbaugh countered that the VCR had been purchased by Williams, not her; and that Gipson could verify this by asking a fellow employee who had seen Williams make the purchase. Instead, Gipson relied on the cashier's handwritten report that Deffenbaugh had been present when Williams made the purchase, and that store records showed that the card was used before Deffenbaugh clocked out.

Deffenbaugh brought this action against Wal-Mart in March 1995, claiming, inter alia, that, in violation of Title VII and § 1981, she, a white female, was discharged because she was dating a black male. Prior to the trial in July 1996, the district court dismissed all claims except that of racial discrimination.

At the close of Deffenbaugh's case, and pursuant to FED.R.CIV.P. 50, Wal-Mart moved for judgment as a matter of law, asserting that Deffenbaugh failed to establish a prima facie case because she is not a member of a protected class; that there was no evidence of discriminatory animus; that Wal-Mart could not be liable for compensatory damages after December 1994, when Deffenbaugh voluntarily terminated her next employment; and that Deffenbaugh was not entitled to punitive damages. The court immediately denied the motion; and Wal-Mart announced that it rested, without presenting any evidence. At the charge conference, Wal-Mart renewed the same motion for judgment; it was, again, denied.

The jury found that race was a motivating factor in Wal-Mart's decision to discharge Deffenbaugh; specifically, that she was discharged because of her association with a black person. It awarded compensatory damages for lost-earnings of $19,000 and punitive damages of $100,000. Judgment was entered to that effect in September 1996.

Prior to entry of judgment, Wal-Mart renewed, and post-entry amended, its motion for judgment as a matter of law and moved for a new trial. A hearing was held in December 1996. As a result, for the punitive damages issue, the district court ordered supplemental briefing on the effect of Patterson v. P.H.P. Healthcare Corp., 90 F.3d 927 (5th Cir.1996), cert. denied, --- U.S. ----, 117 S.Ct. 767, 136 L.Ed.2d 713 (1997). Patterson, which our court decided approximately a week before the verdict for Deffenbaugh, is quite similar to the case at hand, in that it had Title VII and § 1981 claims for racial discrimination in employment, and involved, inter alia, issues concerning employer vicarious liability, mitigation of compensatory damages, and punitive damages, to include whether they were excessive. Unlike the case at hand, Patterson was a bench, not a jury, trial.

In May 1997, pursuant to a comprehensive opinion by the district court, and in the light of Patterson, judgment as a matter of law was granted for Wal-Mart as to punitive damages, the district court holding that Wal-Mart was not vicariously liable for such damages, even though its employee had terminated Deffenbaugh in violation of Title VII and § 1981. Therefore, the district court did not reach whether the punitive damages award was excessive. Otherwise, Wal-Mart's motions were denied. Both parties appeal the amended judgment.

II.

Wal-Mart contends that it was entitled to judgment as a matter of law; alternatively, that the compensatory damages for lost-earnings must be reduced. Deffenbaugh cross-appeals the denial of punitive damages; in the alternative, Wal-Mart maintains such damages are excessive.

A.

Liability is contested in two ways: (1) failure to establish a prima facie case; and (2) insufficient evidence of racial discrimination. Contrary to its claim that it is not vicariously liable for punitive damages, as discussed infra in part II.C.1., Wal-Mart does not make a similar claim concerning liability.

1.

Concerning the prima facie case, Wal-Mart...