Amicus Curiae Brief — Kolstad v. American Dental Assn.

No. 98-208

In the

Supreme Court of the United States

October Term, 1998

CAROLE KOLSTAD,

Petitioner,

Vv.

AMERICAN DENTAL ASSOCIATION,

Respondent. _

ON WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

BRIEF OF AMICUS CURIAE

SOCIETY FOR HUMAN RESOURCE MANAGEMENT

IN SUPPORT OF RESPONDENT

D. GREGORY VALENZA

Counsel of Record

ROGER S. KAPLAN

MICHAEL J. LOTITO

NANCY L. O’ NEILL

JACKSON, LEWIS,

SCHNITZLER & KRUPMAN

525 Market St. Ste. 3400

San Francisco, CA 94105

(415) 394-9400

Counsel for Amicus

No. 98-208

Supreme Court of the United States

October Term, 1998

CAROLE KOLSTAD.

Petitioner,

AMERICAN DENTAL ASSOCIATION,

Respondent

ON WRIT OF CERTIORARI

lO THE UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

BRIEF OF AMICUS CURIAE

SOCIETY FOR HUMAN RESOURCE MANAGEMENT

IN SUPPORT OF RESPONDENT

D. GREGORY VALENZA

Counsel of Record

ROGER S. KAPLAN

MICHAEL J. LOTITO

NANCY L. O'NEILL

JACKSON, LEWIS,

SCHNITZLER & KRUPMAN

525 Market St. Ste. 3400

San Francisco, CA 94105

(415) 394-9400

Counsel for Amicus

TABLE OF CONTENTS

pe Gs ys ee ili

INTEREST OF AMICUS CURIAE ..............0..00055 l

SUMEMARY GP ARGUMENT 20... ccc ccc cc cc cecccccces 2

POLL. ch abuebaehedudducvccccccescccaccece 4

A. FOR THE REASONS STATED BY RESPONDENT,

THE COURT OF APPEALS’S STANDARD FOR

IMPOSING PUNITIVE DAMAGES UNDER 42 U.S.C.

§ 1981a IS CONSISTENT WITH THE STATUTORY

LANGUAGE AND CONGRESS’S STATUTORY

SE CUS SO EU USE SK 65d Coda dee siccwccccccecs 4

B. THE LOW THRESHOLD FOR IMPOSITION OF

PUNITIVE DAMAGES ADVOCATED BY

PETITIONER AND HER AMIC/ WILL PROMOTE

THE FILING OF MERITLESS OR AVOIDABLE

EMPLOYMENT DISCRIMINATION LITIGATION IN

Cy oueviobccksscsccvescsedecvctes 5

l. The Number of Employment Discrimination

Claims Filed in Federal Court and Before the

EEOC Has Increased Dramatically Since

Congress Passed 42 U.S.C. § 1981a As Part of the

occ aeecadgncsees 5

2. The Low Standard Courts Apply to Deny

Employers’ Motions for Summary Judgment in

Title VII Cases Provides a Further Basis for

Affirming the Court of Appeals. ............ 7

C. EMPLOYERS ACTING REASONABLY AND IN

GOOD FAITH TO PREVENT AND REMEDY

DISCRIMINATION WITHOUT COURT

INTERVENTION SHOULD BE INSULATED FROM

LIABILITY FOR PUNITi¥:: DAMAGES. ........ 11

l. The “Safe Harbor” Is Consistent with Title VII

am G3 UB. O TRED cc cccccccccsccsices 12

2. A “Safe Harbor” Is Consistent with

Other Laws Imposing Penalties on

Employers and Companies ................ 15

3. Employers May Choose from a Wide Variety of

Resources and Options for Making Reasonable

Efforts to Discharge Their Obligations

Under Title VII to Prevent Employment

NS on hd estes howe 17

ee FC ene ee eee ee 20

BE oo ce cnctnccedeesceduiiadiia shales A

CASES

U.S. Supreme Court

Burlington Indus. v. Ellerth,

___US.__, 118 S. Ct. 2257(1998)........... 15, 16

City of Newport v. Fact Concerts, Inc.,

DS OG bind dcdeccccecccccescctus 4

Faragher v. City of Boca Raton,

moe: ese OB eee passim

Gertz v. Robert Welch, Inc.,

I oe te ee aT 4

Meritor Savings Bank v. Vinson,

See es ena dwcccdovanbecnees ebnbhon 12

Oncale v. Sundowner Offshore Sves., Inc.,

ED ILL NTL OTE 10

St. Mary’s Honor Ctr. v. Hicks,

ES bike en oun dks US bbeecanencet 7

Trans World Airlines, Inc. v. Thurston,

LENS i at ae ne eo 13

United Air Lines v. Evans,

Co ee ee 6

U.S.C ¢ Appeals and District C

Aka v. Washington Hosp. Ctr.,

156 F.3d 1284 (D.C. Cir. 1998) (en banc) ........... x

iv

Barbous v. Merrill,

48 F.3d 1270 (D.C. Cir. 1995)... 2.0... ee eee eee 10

Beaird v. Seagate Technology, Inc.,

145 F.3d 1159 (10th Cir.),

cert.denied, US. ,119S.Ct.617(1998)...... &

Combs v. Plantation Patterns,

106 F.3d 1519 (1 1th Cir. 1997),

cert.denied, US. ,118S. Ct. 685(1998)...... &

Fisher v. Vassar College,

114 F.3d 1332 (2d Cir. 1997) (en banc),

cert.denied, US. _,118S. Ct. 1341 (1998)..... 8

Kolstad v. American Dental Ass'n,

139 F.3d 958 (D.C. Cir. 1998) (en banc),

cert. granted, US. _,119S. Ct. 401 (1998) .... 10

Kolstad v. American Dental Ass’n,

912 F. Supp. 13 (D.D.C. 1996),

aff'd in part and rev'd in part, 108 F.3d 1431 (D.C. Cir.

1997), rev'd, 139 F.3d 958 (D.C. Cir. 1998) (en banc),

cert. granted, US. .119S. Ct. 401(1998) .... 10

P. Gioioso & Sons, Inc. v. Secretary of Labor,

OEd Fe a BEE wc rcdenactiesenete ven 17

Rhodes v. Guiberson Tools,

75 F.3d 989 (Sth Cir. 1996) (en banc) .............. s

Sheridan v. E.1. DuPont de Nemour & Co.,

100 F.3d 1061 (3d Cir. 1996) (en banc),

cert.denied, US. ,117S. Ct. 2532 (1997) s

v

Weisbrot v. Medical College of Wisconsin,

i A | ol oe, yey 8

Woods v. Friction Materials, Inc.,

pee Teer rrr Ty rT s

STATUTES, REGULATIONS, AND RULES

Civil Rig! £1964 led

42 U.S.C. § 20006¢ et seq. (1994)... 2.0... cece eee passim

Es ene de dk se ndecidhumaieddial 6

I I cs tenses kknrcdietavecenanes 8

a oo cccemndabdihskekwane tel 6

-ivil Rights Act of 199!

EE oe TE kv ban ns} dice dad cinpeeies passim

Occupational Safety & Health Act

I an donne wes tcapscdssaceses 16

le i te a el a 16

Federal Sentencing Guidelines Manual (1998) ......... 15, 16

Supreme Court Rule 37.3(a) .......... 06. -0eceeeeeeeees I

i i EN IES Ne aE a 2

LEGISLATIVE MATERIALS

137 Cong. Rec. H9536 (daily ed. Nov. 7, 1991) (statement of

Rep. Sensenbrenner)

vi

137 Cong. Rec. $15479 (daily ed. Oct. 20, 1991) (statement of

Sen. Bumpers)

IREATISES, ARTICLES AND OTHER PUBLICATIONS

| R. Ben Hogan, et al., Occupational Safety and Health Act,

ee ee 4 ee SO rey rrr yrs 17

Administrative Office of the Courts, Judicial Business of the

Se OD 0 0 6.0:d be ece odbhbea a celedbehn ad kas 5

Edward S. Rapier, Jr., Corporations: The Federal Sentencing

Guidelines for Organizations: How They Affect A Civil Practice,

GRA Bids A SUED povns bdc0 dks rhe deeecee 16

Stephanie Reynolds, Managing Conflict Through a Team

Intervention and Training Strategy, Employee Relations Today,

WN GE Sedncvecécdds bus essen deed bedesebieedkes 9

U.S. Equal Employment Opportunity Comm'n, Charge Statistics

FY 1991 Through FY 1997 (visited Jan. 10, 1999)

ettp//www 20S. Gowleatal> nn ccc ccc cccccccceceseces 6

U.S. Equal Employment Opportunity Comm'n, Task Force

Report on “Best” Equal Employment Opportunity Policies,

Programs, and Practices in the Private Sector (1998) ....... 18

U.S. Equal Employment Opportunity Comm'n, Enforcement

Guidance: Compensatory and Punitive Damages Available Under

§ 102 of the Civil Rights Act of 1991 (1992) ............. 14

Supreme Court of the United States

October Term, 1998

CAROLE KOLSTAD,

Petitioner,

v.

AMERICAN DENTAL ASSOCIATION,

Respondent.

ON WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

BRIEF OF AMICUS CURIAE

SOCIETY FOR HUMAN RESOURCE MANAGEMENT

IN SUPPORT OF RESPONDENT

INTEREST OF AMICUS CURIAE

The Society for Human Resource Management (“SHRM”)

submits this brief in support of Respondent American Dental

Association.” Beginning 1999 with 113,000 professional members,

L Pursuant to Supreme Court Rule 37.3(a), amicus

files this brief with the consent of the parties. Evidence of consent

is filed concurrently with this brief. Amicus discloses pursuant to

x %

from all 50 states and 80 other countries, SHRM is the leading

voice of the human resource profession. SHRM’s mission is to lead,

represent, guide, and inform human resource practitioners and

others interested in human resource issues regarding matters of

critical and strategic importance to the workplace.

SHRM’s members, on a daily basis, apply the myriad

employment laws governing the workplace. However this Court

ultimately decides the issue presented here, SHRM members,

probably more than any other association of professionals, will be

responsible for assessing its impact and designing and

implementing whatever human resource programs and policies are

appropriate as a result.

SHRM presented testimony before the Senate during the

legislative debates on the Civil Rights Act of 1991. SHRM

regularly provides the Equal Employment Opportunity Commission

with formal comment on regulatory issues as well as informal

advice and assistance when requested.

SHRM welcomes the opportunity to file this brief to assist

the Court’s understanding of the enormous practical effect its

decision will have on the workplace. SHRM hopes this Court will

adopt a rule of law that will encourage employers to initiate and

maintain positive and fair employment practices, furthering the

purposes underlying Title VII of the Civil Rights Act of 1964.

SUMMARY OF ARGUMENT

The decision of the U.S. Court of Appeals for the District of

Columbia Circuit should be affirmed. The imposition of punitive

Supreme Court Rule 37.6 that no counsel for a party authored any

part of this brief, nor did any person or entity other than amicus

curiae, its members, or its counsel make a monetary contribution to

the preparation or submission of this brief.

wTiey eee

-3-

damages should be limited to cases in which the employer must be

punished for egregious conduct. As the court of appeals correctly

recognized, a finding that an employment decision more likely than

not was based on an illegal criterion, without more, is an

insufficient basis for imposing a substantial fine upon an employer.

As Respondent argues, the court of appeals’s view is consistent

with the punitive damages statute, Congress’s intent, and decisions

of other courts.

SHRM urges this Court to fashion a rule regarding punitive

damages consistent with its recent, practical decisions in Title VII

cases. Last Term, this Court recognized that the statutory policy of

Title VII is best served if employers are recognized for their efforts

to discharge their obligations under the statute. In the Faragher v.

City of Boca Raton and Burlington Industries v. Ellerth decisions,

the Court created a “safe harbor” from liability in sexual

harassment claims for employers that act responsibly to fulfill their

obligations under Title VII.

This Court should extend to this case the approach to Title

VII taken in Faragher and Ellerth, by providing employers a safe

harbor from liability for punitive damages. When an employer

demonstrates its reasonable and good faith commitment to

preventing discrimination, and to remedying discrimination should

it occur, the employer should not be held liable for punitive

damages as a matter of law, even if a jury concludes a particular

decision was based on an illegal criterion. Such a rule is consistent

with the letter and spirit of the law, as an employer that takes such

measures cannot be charged with “egregious conduct,” “malice,” or

“reckless indifference” to federally protected rights. This rule also

will encourage employers to prevent employment discrimination

and foster early, informal dispute resolution without the need for

the courts’ involvement.

A. FOR THE REASONS STATED BY RESPONDENT,

THE COURT OF APPEALS’S STANDARD FOR

IMPOSING PUNITIVE DAMAGES UNDER 42 U.S.C.

§ 1981a IS CONSISTENT WITH THE STATUTORY

LANGUAGE AND CONGRESS’S STATUTORY

INTENT

SHRM will not burden this Court with duplicative analysis

already supplied by Respondent and other amici supporting

affirmance. SHRM strongly believes Congress did not intend to

subject employers to liability for punitive damages in every case

where intentional discrimination is established. This result would

obtain if Petitioner’s position were adopted.

This Court’s jurisprudence is clear and consistent: punitive

damages are “private fines levied by civil juries to punish

reprehensible conduct and to deter its future occurrence.” Gertz v.

Robert Welch, Inc., 418 U.S. 323, 350 (1974) (emphasis added);

see also City of Newport v. Fact Concerts, Inc., 453 U.S. 247, 266-

67 (1981) (punitive damages are “intended to punish the tortfeasor

whose wrongful action was intentional or malicious, and to deter

him and others from similar extreme conduct”) (emphasis added).

Respondent’s argument is consistent with this Court’s sound views

regarding the extraordinary remedy of punitive damages. Therefore,

SHRM endorses the arguments advanced by Respondent in favor

of affirming the court of appeals.

ian Lee

a. +

B. THE LOW THRESHOLD FOR IMPOSITION OF

PUNITIVE DAMAGES ADVOCATED_ BY

PETITIONER AND HER AMICI WILL PROMOTE

THE FILING OF MERITLESS OR AVOIDABLE

EMPLOYMENT DISCRIMINATION LITIGATION

IN FEDERAL COURT

1. The Number of Employment Discrimination

Claims Filed in Federal Court and Before the

EEOC Has Increased Dramatically Since

Congress Passed 42 U.S.C. § 1981a As Part of the

Civil Rights Act of 1991

Members of the House and Senators who were critical of the

compensatory and punitive damages provisions in the Civil Rights

Act of 1991 * feared Title VII of the Civil Rights Act of 1964 +

would be turned into a general workplace tort law, resulting in a

“bonanza” for attorneys. See, e.g., 137 Cong. Rec. H9536 (daily ed.

Nov. 7, 1991) (statement of Rep. Sensenbrenner). Their nightmares

unfortunately have come true.

Employment discrimination claims are the most common

type of case filed in federal courts, with the exception of criminal

and prisoner-related cases. See Administrative Office of the Courts,

Judicial Business of the U.S. Courts, tbl. C-2A (1998). The number

of employment discrimination claims filed in federal court has

exploded since the passage of CRA 1991. Thus, for the 12-month

period ending September 30, 1993, there were 12,962 employment

discrimination cases filed. For the same period ending in 1997, the

- Civil Rights Act of 1991, Pub. L. No. 102-1066, 105

Stat. 1072 (codified as amended in scattered sections of 42 U.S.C.)

(hereinafter “CRA 1991").

4 Civil Rights Act of 1964, tit. VII, 78 Stat. 253, as

amended, 42 U.S.C. § 2000e et seq. (1994 & Supp. Il 1996)

(hereinafter “Title VII”).

-6- =

number had soared to 23,796. See id.

There is no sign that the number of employment

discrimination filings will be abated in the foreseeable future. The

Equal Employment Opportunity Commission reports the number of

administrative charges filed under Title VII increased from 49,584

in fiscal year 1991 to 58,615 in fiscal year 1997. In addition,

charges filed under the Americans with Disabilities Act, 42 U.S.C.

§ 12101 ef seg. (1994), the vast majority of which allege disparate

treatment rather than failure to accommodate, increased from

15,274 in fiscal year 1993 to 18,108 in fiscal year 1997. See U.S

Equal Employment Opportunity Comm'n, Charge Statistics FY

1991 Through FY 1997 (visited Jan. 10, 1999)

<http://www.eeoc.gov/stats/>. These filings are a harbinger of a

continued increase in employment discrimination lawsuits. *

If, as urged by Petitioner and her amici, this Court holds

punitive damages may be assessed in a jury's discretion upon any

intentional * violation of Title VII, the number of filings is sure to

continue increasing. The resulting increase in litigation not only

will further burden the federal courts’ dockets, but also the

countless small and medium-sized employers that are subject to

Title VII jurisdiction. *

Put simply, employers of limited resources, facing exposure

1o punitive damages, will pay money out of fear to settle meritless

- The filing of an administrative complaint or

“charge” with the EEOC is a condition precedent to filing a civil

action under Title VII. See 42 U.S.C.§ 2000e-5(f)(1) (1994);

United Air Lines v. Evans, 431 U.S. 553, 555 n.4 (1977).

‘ See infra, n.7.

& Employers of more than fifleen employees are

covered “employers” under Title VII. See 42 U.S.C. § 2000e(b)

(1994).

-7-

cases. As Senator Dale Bumpers, a Democrat who negotiated the

passage of CRA 1991, explained candidly:

I confess that as a country lawyer, | filed lawsuits

that did not have an awful lot of merit but that |

knew had settlement value. Any honest trial lawyer

worth his salt will tell you he has done that. . . . And

I can only tell you that as a small businessman . . . a

lawsuit againsts [sic] me for $50,000 in punitive

damages would have made me go ballistic because

I did not have $50,000 nor any place to lay my

hands on such a sum.

137 Cong. Rec. $15479 (daily ed. Oct. 20, 1991) (statement of Sen.

Bumpers).

Senator Bumpers supported passage of CRA 1991 because

he understood plaintiffs would have to sustain “a heavy burden” to

obtain punitive damages. /d. If Petitioner’s argument carries the

day, this Court will have considerably lightened the plaintiffs’

burden by increasing their leverage.

2. The Low Standard Courts Apply to Deny

Employers’ Motions for Summary Judgment in

Title VII Cases Provides a Further Basis for

Affirming the Court of Appeals

In tandem with the minimal standard several of the circuit

courts apply to motions for summary judgment, the rule advocated

by Petitioner wili result in substantial hardship to employers. As

discussed below, employees easily can evade summary judgment

regarding both liability and punitive damages even in the absence

of proof of unlawful intent to discriminate in violation of Title VII.

The plaintiff in a Title VU lawsuit ultimately must prove

intentional discrimination. See St. Mary's Honor Ctr. v. Hicks, 509

U.S. 502, 507 (1993). ” At present, however, it is possible for an

employee to defeat an employer’s motion for summary judgment

without raising a triable issue of fact regarding intent to unlawfully

discriminate. Rather, to defeat the motion, the plaintiff simply must

establish: (1) he or she was part of a protected class (2) there was

an adverse employment decision (3) he or she was otherwise

qualified (4) the position was filled by a person not in a protected

class (the prima facie case of discrimination), plus (5) the

employer's articulated legitimate reason for making the decision

was unworthy of belief. #

+ It should be noted that establishing “intentional”

discrimination itself does not impose a heavy burden upon

plaintiffs. Employment decisions such as termination of

employment or failure to hire inherently are “intentional.” To prove

intentional discrimination the employee must show a discriminatory

motive merely was a “motivating factor” behind the employment

decision, “even though other factors motivated the decision.” 42

U.S.C. § 2000e-2(m) (1994). Thus, unlawful motivation need not

be the only reason for the decision, nor must the employee prove

the decision would not have occurred “but for” the protected

classification. See id.

& See Aka v. Washington Hosp. Ctr., 156 F.3d 1284,

1289-90 (D.C. Cir. 1998); Beaird v. Seagate Tech., Inc., 145 F.3d

1159 (10th Cir.), cert. denied, U.S.__, 119 S. Ct. 617 (1998).

Combs v. Plantation Patterns, 106 F.3d 1519, 1532 (11th Cir,

1997), cert. denied, _U.S.__, 118 S. Ct. 685 (1998); Sheridan

v. E.l DuPont de Nemour & Co., 100 F.3d 1061, 1067 (3d Cir,

1996) (en banc), cert. denied, U.S. ___, 117 S. Ct. 2532 (1997).

Weisbrot v. Medical College of Wisconsin, 79 F.3d 677, 682 n.5

(7th Cir. 1996). But see Fisher v. Vassar Comege. 114 F.3d 1332

(2d Cir. 1997) (en banc), cert. denied, U.S. - , 1188. Ct. 134]

(1998); Rhodes v. Guiberson Tools, 75 F.3d 989 (5 Cth Cir. 1996) (en

banc), Woods v. Friction Materials, Inc., 30 ¥ 3d 255 (ist Cir.

1994).

-9-

Put another way, if an employer does not provide the full

and complete reason for employment action taken against an

employee or applicant, its motion for summary judgment likely will

be denied. Thus, a plaintiff may defeat a motion for summary

judgment even in the absence of proof that the real reason for the

decision was intentional unlawful discrimination.

In a perfect world, it certainly could be argued that

employers always should provide applicants and employees with

complete reasons for their employment decisions. But an employer

may not have been completely candid with an employee or

applicant for a host of reasons having nothing to do with Title VII,

e.g., to avoid hurting the applicant’s or employee’s feelings or to

avoid an unpleasant conflict.” Yet, under Petitioner’s construction

of 42 U.S.C § 1981a (1994), the employer that tries to avoid, for

example, arguments over the employee's performance not only will

lose a motion for summary judgment on liability for unlawful

discrimination, but also the jury will be permitted to consider

awarding punitive damages.

Seer ene peareae an cemenple ef Ga Cove coemane.

The district court stated:

While the evidence may have been sufficient to

have convinced the jury that Kolstad’s candidacy for

the position [at issue] was treated cavalierly, and

[the male] given a preference from the start, it is

insufficient to prove to the Court’s satisfaction that

her sex or his more likely than not had anything to

do with her rejection.

2 “Managers, like most U.S. workers, are extremely

averse to conflict and will avoid addressing it until it reaches the

point of a crisis.” Stephanie Reynolds, Managing Conflict Through

a Team Intervention and Training Strategy, Employee Rel. Today,

Winter 1998, at 57.

-10-

Kolstad v. American Dental Ass'n, 912 F. Supp. 13, 15 (D.D.C.

1996), aff'd in part and rev'd in part, 108 F.3d 1431 (D.C. Cir.

1997), rev'd, 139 F.3d 958 (D.C. Cir. 1998) (en banc), cert.

granted, US. _, 1198S. Ct. 401 (1998). The district court

would have granted a motion for a directed verdict had it not

considered itself bound by Barbous v. Merrill, 48 F.3d 1270, 1277

(D.C. Cir. 1995) (permitting the jury to infer unlawful

discrimination solely from the rejection of an employer's legitimate

business reason as pretextual).

Thus, Petitioner seeks punitive damages for what the district

court perceived amounted to, at most, arbitrary (but lawful)

conduct, rather than unlawful discrimination. As a practical matter,

the “reckless indifference” standard advocated by Petitioner

imposes on plaintiffs no burden other than proving an employment

decision was based on intentional discrimination.

As the dissent below candidly recognized, Title VII and its

“prohibition against discrimination are well known to employers.”

Kolstad v. American Dental Ass'n, 139 F.3d 958, 973 (D.C. Cir.

1998) (en banc) (Tatel, J., dissenting). The EEOC recognizes, “[i}n

many cases, the evidence that establishes liability will also establish

malice or reckless indifference.” (Brief of Amicus Curiae EEOC at

10 0.5.)

, If punitive damages liability may attach to every decision

that has negative consequences for an employee in a protected class,

sound employer decisionmaking will be significantly inhibited.

Every employee is in a classification protected by Title VII As

stated, every promotion, layoff, and termination decision is an

ie For example, all parties and amici likely would

stipulate every employee is of the male or female sex and, therefore,

is protected under Title VII from discrimination based on sex. See

Oncale v. Sundowner Offshore Sves., Inc.,523 U.S. 75, 118 S. Ct

998, 1002-03 (1998).

intentional decision that can give rise to liability for punitive

damages. “ The mere fact that the offending decision is made by a

person generally aware of laws against discrimination should not be

sufficient to provide plaintiff lawyers with the ultimate litigation

weapon: settlement leverage in the form of this argument: “You

never kmiww what a jury will do with the puniti.e damages claim.”

As stated, a jury most likely will never consider the merits of the

dispute, as employers will be bullied into settlement of all but the

most frivolous claims.

Cc. EMPLOYERS ACTING REASONABLY AND IN

GOOD FAITH TO PREVENT AND REMEDY

DISCRIMINATION WITHOUT COURT

INTERVENTION SHOULD BE INSULATED FROM

LIABILITY FOR PUNITIVE DAMAGES

Last Term, this Court observed in Faragher v. City of Boca

Raton, _U.S. __, 118 S. Ct. 2275 (1998):

It would . . . implement clear statutory policy and

complement the Government’s Title VII

enforcement efforts to recognize the employer's

affirmative obligation to prevent violations [of Title

VII] and give credit here to employers who make

reasonable efforts to discharge their duty.

118 S. Ct. at 2292. See also Burlington Indus. v. Ellerth, __

U.S. , 118 S. Ct. 2257, 2270 (1998).

SHRM urges this Court to hold in the instant case that

employers may avoid liability for punitive damages if they take

reasonable steps to prevent discrimination and provide avenues for

u See supra, 0.7.

-12-

redress of perceived wrongs. “ Such employers plainly do not act

with “malice” or with “reckless indifference” to federally protected

rights, even if a jury concludes that a particular decision was based

on a criterion illegal under Title VII.

A “safe harbor” in which employers may take refuge from

punitive damages liability is consistent with Title VII and 42 U.S.C.

§ 1981a, regardless of whether this Court affirms or reverses the

decision of the court below. Giving employers credit for their good

faith efforts to comply with the law, by reducing the penalties that

may be assessed, also is consistent with other federal laws

punishing employers and corporations.

1. The “Safe Harbor” Is Consistent with Title VII

and 42 U.S.C. § 1981a

Title VII is a “statute meant to influence primary conduct.”

Faragher, __U.S. at___, 118 S. Ct. at 2292. It is intended to

“avoid harm,” and not “to provide redress” to plaintiffs. /d. See also

Ellerth, _U.S. at___, 118 S. Ct. at 2270 (noting Congress's

intention “to promote conciliation rather than litigation in the Title

VII context”). SHRM’s proposal is consistent with Title VII's goal

to avoid harm. The best way to avoid discriminaiion is io prevent

Le While Faragher was a case involving sexual

harassment under Title VII, sexual harassment is “but a form of

employment discrimination.” Ellerth, US.at_— ,118S.Ct at

2275 (Thomas, J., dissenting). See Meritor Savings Bank v. Vinson,

477 U.S. 57, 64-66 (1986). There is no reason to treat harassment

based on sex differently from other forms of prohibited

discrimination in the terms and conditions of employment.

-13-

its occurrence. The safe harbor rewards employers that take

preventive measures. “

The safe harbor proposal also is consistent with 42 U.S.C.

§ 198la. An employer with a policy against discrimination and

proof that it is enforced is diligently respectful of Title VII, not

“recklessly indifferent,” much less guilty of “malice” or “egregious

conduct.” The dissent below agrees with this point of view:

An employer could thus argue that even though it

had been found liable for the discriminatory acts of

an employee and ordered to pay compensatory

damages to the victim, it should not have to pay

punitive damages, because it had undertaken good

faith efforts to comply with Title Vil—for example,

by hiring staff and managers sensitive to Title VII

responsibilities, by requiring effective EEO training,

or by developing and using objective hiring and

promotion standards—thereby demonstrating that it

never acted in reckless disregard of federally

protected rights.

Kolstad, 139 F.3d at 974 (Tatel, J., dissenting).

Petitioner and some of her amici (including the EEOC)

recognize the employer’s good faith is relevant to the punitive

damages inquiry. Arguing this Court’s decision in Trans World

Airlines, Inc. v. Thurston, 469 U.S. 111, 130 (1985), supplies the

correct analysis of the punitive damages standard, Petitioner states

the employer in Thurston was not guilty of “reckless disregard”

a While, as Petitioner and her amici argue, the

prospect of punitive damages also may provide an incentive for

employers to take the same preventive measures, they also provide

incentive for employees and their attorneys to pursue frivolous

claims.

-|4-

because it “had consulted with counsel about its legal obligations

and, at worst, had simply overlooked the challenged aspect of its

practices.” (Pet. Brief at 19.) The employer's good faith

conduct—obtaining legal advice—insulated it from liability.

Interpreting 42 U.S.C. § 198la, the EEOC stated the

following issues are relevant to whether punitive damages should

be imposed in Title VII cases: whether the conduct suggests an

official policy of discrimination as opposed to the work of a

renegade supervisor, evidence that the employer tolerated or

condoned the discriminatory conduct over time; and the employer's

conduct after it was informed of discrimination. See U.S. Equal

Employment Opportunity Commission, Enforcement Guidance:

Compensatory and Punitive Damages Available Under § 102 of the

Civil Rights Act of 1991 53-54 (1992). The converse also should be

true. If the evidence shows a supervisor's isolated decision rather

than an official policy is responsible for discrimination, or if the

evidence shows the employer does not have a history of tolerating

or condoning discrimination, or if the employer responds promptly

and meaningfully to complaints of raisconduct, the employer should

not be held liable for punitive damages—even if the supervisor's

intentional employment decision ultimately is found to be

discriminatory.

The brief of amici curiae Lawyers’ Committee for Civil

Rights Under Law, et al. is consistent with this approach. It states

“a good faith effort to abide by Title VII does not reflect the

reckless indifference necessary for an award of punitive damages.”

(Brief of Amici Curiae Lawyers’ Committee for Civil Rights Under

Law et al. at 25.)

While SHRM disagrees with the low standard for liability

advocated by Petitioner and her amici, SHRM _ certainly

acknowledges the force of Congress's command: employers who

“persist in intentional discrimination in the face of well-established

federal prohibitions” (Brief of Amicus Curiae EEOC at 31) are

deserving of punishment in the form of punitive damages. SI IRM

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firmly believes, however, that, consistent wi

ver, with this command,

employers that recognize well-established law and make sincere

good faith efforts to avoid intentional discrimination should be

given * credit,” see Faragher, 118 S. Ct. at 2293, for their efforts.

This credit should take the form of insulation from Punitive

despite employers’ reasonable efforts to prevent it. Such a rule will

bine amine

ore arrive on the federal dock

furthering the goals of Title VII. ci yes

In contrast, the rule proposed by Petitioner and her amici i

r amici is

inconsistent with Faragher’s interpretation of the policy underlying

Title VII. For Petitioner would impose punitive damages liability

against the employer based on an individual decisionmaker’s state

of mind alone, without considering the employer's efforts to

— or cure discrimination and whether the plaintiff availed

pete es _— If of the employer’s anti-discrimination policies and

2. A “Safe Harbor” Is Consistent with Other Laws

Companies

Punitive damages are analogous to criminal penalties. A

sate harbor against imposition of punitive damages is consistent

with federal y~- pees law. The Federal Sentencing Guidelines for

—_ izations provides corporations with “credit” for good faith

efforts to comply with our nation’s varied and complex criminal

cor The sentencing rules expressly provide for a substantial

uction in a fine if the organization has an effective “compliance

it

ase. ederal Sentencing Guidelines Manual § 8 ef seg.

-16-

program.” 4 In addition, the Department of Justice will consider

a corporation’s compliance program’s effectiveness as one of the

relevant factors in deciding whether to prosecute a corporation.

An employer’s good faith conduct also is a defense to

financial liability under other employment laws. For example, the

Occupational Safety and Health Act, 29 U.S.C. § 651 ef seg.

(1994), provides for substantial monetary penalties against

employers that fail to adhere to safety standards. See id. § 666. Just

as Title VII requires employers to prevent discrimination, the

OSHA statute

requires that an employer do everything reasonable

in its power to ensure that its personnel do not

violate safety standards. But if an employer lives up

to that billing and an employee nonetheless fails to

use proper equipment or otherwise ignores firmly

established safety measures, it seems unfair to hold

the employer liable. To address this dilemma . . . the

courts have recognized the availability of the

{unpreventable employee misconduct] defense. . . .

({JTo reach safe harbor, an employer must

demonstrate that it (1) established a work rule to

prevent the reckless behavior and/or unsafe

condition from occurring, (2) adequately

communicated the rule to its employees, (3) took

a Id. § 8C2.5(f). An effective compliance program

includes, inter alia, development of compliance standards and

effective communication thereof, reasonable steps to assure

compliance with the standards, and consistent enforcement of the

standards and efforts to prevent future occurrences if violations

occur. See generally Edward S. Rapier, Jr., Corporations: The

Federal Sentencing Guidelines for Organizations: How They Affect

A Civil Practice, 46 La. B.J., Jun. 1998, at 20.

lo See Rapier, supra, at 22.

At.

steps to discover incidents of noncompliance and

(4) effectively enforced the rule whenever

employees transgressed it.

“ Givioso & Sons, Inc. v. Secretary of Labor, 115 F.3d 100 109

2 st Cir. 1997). See generally | R. Ben Hogan, et al., Occupational

Safety and Health Act, § 4.03[6] at 4-73 et seg. (1998).

In sum, a “safe harbor” ti in Ti

cases is completely saiehaannaae mae ee =

imposition of monetary penalties. It ensures a blameless a is

= punished unjustly and promotes salutary conduct designed to

urther the purposes of the legislation at issue. On the other hand

wrongdoers that cannot satisfy the safe harbor requirements :

exposed to such exemplary or other damages as may be 9 ce a

3. Employers May Choose from a Wide Variety of

Resources and Options for Making Reasonable

Efforts to Discharge Their Obligations Under

Title VII to Prevent Employment Discrimination

Faragher provides emplo

yers with some i

—— how to avoid liability for unlawful Scieliaceanaeee,

a L This Court held employers, to avail themselves of the

irmative defense to certain sexual harassment claims, must show:

(a) that the employer exercised reasonable care to

prevent and correct promptly an harassi

behavior, and ti sr wy

(b) that the plaintiff employee unreasonably failed

rs take 5am es any preventive or corrective

unities provided by the empl i

— a y ployer or to avoid

Faragher U.S. at 118S.C

er, ___ U.S. at, . Ct. at 2293. ee

be applied to claims for punitive damages. sae en ey

Employers may obtain from many sources assistance with

their efforts to “exercise reasonable care” in preventing illegal

discrimination. For example, the EEOC recently issued a

comprehensive report on employer “best practices” in an effort to

“achieve equal employment opportunity in the workplace.”

The report 4# is the product of an extensive survey of private

sector employers. The report defined a “best practice” as one that

- complies with the law;

- promotes equal employment opportunity ;

- manifests management commitment and accountability;

- ensures management and employee communication,

- promotes noteworthy results, and

- does not cause or result in unfairness.

See Best Practices at 25.

Applying these parameters, the report provides numerous

examples of “best practices” for a variety of human resource

responsibilities, including recruitment and hiring, promotion and

career advancement, terms and conditions of employment,

termination of employment, alternative dispute resolution, and

management commitment and accountability. See Best Practices

at 6.

It would unduly burden this Court to list or discuss at length

all of the practices compiled by the EEOC. Taking the report as a

Lb Letter from Hon. Reginald Jones, Commissioner,

Equa! Employment Opportunity Commission to Society for Human

Resource Management (Apr. 7, 1997) (on file with SHRM).

ub Equal Employment Opportunity Commission, Tusk

Force Report on “Best” Equal Employment Opportunity Policies,

Programs, and Practices in the Private Sector (1998) (hereinafter

“Best Practices”).

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whole, an employer's commi opport

: tment to equal it

therefore to compliance with Title VII may be aan fe

considering whether the

actions such as: employer has undertaken one or more

p .

a a zero tolerance policy against discrimination

been appropriately communicated to employees;

= Adopted an effective complaint

issues as they arise: resolution system to address

Ss Investigated complai a

and, where samme 0g promply, fairly, and objectively;

~ Corrected mistakes that have occurred.

The above is not meant to be ive li

all employers be required to Setenicene onan op

— discussed. Indeed, employers differ widely in their

capabilities to take every conceivable step imaginable

prevent discrimination from occurring. Rather than the mamta

application of a checklist of factors, the critical issue should be

pana the employer, based on all the facts and circumstances, has

erry commitment to a discrimination-free workplace. Thus

pte iployer conduct demonstrating the employer is undeservi

punitive damages could include any of the following: ah

7 > ge evaluated in part on their human resource

ills, including their

mie ng commitment to equal employment

The employer's history of resolvi

he ver’ ing complaints internal]

within the company and the action taken against those sr

-20-

violate equal employment opportunity standards; and

- Managemen s_ consultation with human resource

professionals or, as in Thurston, employment counsel,

before making the challenged employment decision.

The salutary effect of these efforts is beyond cavil. An

employer taking such comprehensive measures to comply with Title

VII logically could not be called “recklessly indifferent” to Title VII

or malicious, even if the employer “intentionally” made a

challenged employment decision.

Ironically, the employer’s efforts to comply with Title VII

actually could assist a plaintiff seeking punitive damages, if

Petitioner’s argument carries the day. Thus, Petitioner argues,

punitive damages are “authorized where a defendant knew or

should reasonably have realized that its conduct was probably

unlawful.” (Pet. Brief at 14 (footnotes omitted).) (See also Brief of

Amicus Curiae Association of Trial Lawyers of America at 2-3

(stating “punitive damages should be available in cases where the

defendant knew or should have known that its conduct was

unlawful”.) The employer’s dissemination of an equal opportunity

policy and provision of anti-discrimination training surely would

foreclose the employer’s argument that the decisionmaker was

ignorant of the law. In sum, this Court should not countenance

Petitioner’s construction of 42 U.S.C. § 1981a, as it would lead to

this unfair and absurd result.

CONCLUSION

For the foregoing reasons, amicus curiae Society for Human

Resource Management respectfully requests this Court to affirm the

-2]-

ae of the U.S. Court of Appeals for the District of Columbia

it.

January 18, 1999 Respectfully submitted,

D. GREGORY VALENZA

Counsel of Record

ROGER S. KAPLAN

MICHAEL J. LotiTo

NANCY L. O'NEILL

JACKSON, LEWIS,

SCHNITZLER & KRUPMAN

525 Market St. Ste. 3400

San Francisco, CA 94105

(415) 394-9400

Counsel for Amicus

SOCIETY FOR HUMAN

RESOURCE MANAGEMENT.

42 U.S.C. § 2000¢(b)

The term "employer" means a person engaged in an industry

affecting commerce who has fifteen or more employees for each

working day in each of twenty or more calendar weeks in the

current or preceding calendar year, and any agent of such a

42 U.S.C, § 2000¢-2(m)

Except as otherwise provided in this subchapter, an

unlawful employment practice is established when the complaining

party demonstrates that race, color, religion, sex, or national origin

was a motivating factor for any employment practice, even though

other factors also motivated the practice.

42 ULS.C. § 2000¢-5/f)

(1) * * * Ifa charge filed with the Commission pursuant to

subsection (b) of this section is dismissed by the Commission, or if

within one hundred and eighty days from the filing of such charge

or the expiration of any period of reference under subsection (c) or

(d) of this section, whichever is later, the Commission has not filed

a civil action under this section or the Attorney General has not

filed a civil action in a case involving a government, governmental

agency, or political subdivision, or the Commission has not entered

into a conciliation agreement to which the person aggrieved is a

party, the Commission, or the Attorney General in a case involving

a government, governmental agency, or political subdivision, shall

so notify the person aggrieved and within ninety days after the

giving of such notice a civil action may be brought against the

respondent named in the charge (A) by the person claiming to be

aggrieved or (B) if such charge was filed by a member of the

Commission, by any person whom the charge alleges was aggrieved

by the alleged unlawful employment practice. . . .

-B-

sated Sesspacinn Commiatatias Ccbdlioes Mesa

§ 8C2.5. CULPABILITY SCORE

(a) Start with 5 points and apply subsections (b) through (g)

below.

(f) Effective Program to Prevent and Detect Violations of

Law

If the offense occurred despite an effective program to

prevent and detect violations of law, subtract 3 points. . . .

. ‘onal Saf | Heald

29 ULS.C. § 666

(a) Willful or repeated violation

loyer who willfully or repeatedly violates the

outa pe 654 of this title, any standard, rule, or order

promulgated pursuant to section 655 of this title, or regulations

prescribed pursuant to this chapter, may be assessed a civil penalty

of not more than $70,000 for each violation, but not less than

$5,000 for each willful violation.

(b) Citation for serious violation

Any employer who has received a citation for a serious

violation of the requirements of section 654 of this title, of any

standard, rule, or order promulgated pursuant to section 655 of this

title, or of any regulations prescribed pursuant to this chapter, shall

be assessed a civil penalty of up to $7,000 for each such violation.

(c) Citation for violation determined not serious

C.

Any employer who has received a citation for a violation of

the requirements of section 654 of this title, of any standard, rule,

or order promulgated pursuant to section 655 of this title, or of

regulations prescribed pursuant to this chapter, and such violation

is specifically determined not to be of a serious nature, may be

assessed a civil penalty of up to $7,000 for each such violation.

(d) Failure to correct violation

Any employer who fails to correct a violation for which a

citation has been issued under section 658(a) of this title within the

period permitted for its correction (which period shall not begin to

run until the date of the final order of the Commission in the case

of any review proceeding under section 659 of this title initiated by

the employer in good faith and not solely for delay or avoidance of

penalties), may be assessed a civil penalty of not more than $7,000

for each day during which such failure or violation continues.

(e) Willful violation causing death to employee

Any employer who willfully violates any standard, rule, or

order promulgated pursuant to section 655 of this title, or of any

regulations prescribed pursuant to this chapter, and that violation

caused death to any employee, shall, upon conviction, be punished

by a fine of not more than $10,000 or by imprisonment for not more

than six months, or by both; except that if the conviction is for a

violation committed after a first conviction of such person,

punishment shall be by a fine of not more than $20,000 or by

imprisonment for not more than one year, or by both.

(f) Giving advance notice of inspection

Any person who gives advance notice of any inspection to

be conducted under this chapter, without authority from the

Secretary or his designees, shall, upon conviction, be punished by

a fine of not more than $1,000 or by imprisonment for not more

than six months, or by both.

-D-

(g) False statements, representations or certification

Whoever knowingly makes any false statement,

representation, or certification in any application, record, report,

vlan, or other document filed or required to be maintained pursuant

_ this chapter shall, upon conviction, be punished by a fine of not

more than $10,000, or by imprisonment for not more than six

months, or by both.

(h) Omitted

(i) Violation of posting requirements

Any employer who violates any of the posting requirements,

as prescribed under the provisions of this chapter, shall be assessed

a civil penalty of up to $7,000 for each violation.

(j) Authority of Commission to assess civil penalties

The Commission shall have authority to assess all civil

penalties provided in this section, giving due consideration to the

appropriateness of the penalty with respect to the size of the

business of the employer being charged, the gravity of the violation,

the good faith of the employer, and the history of previous

violations. mF

(k) Determination of serious violation

For purposes of this section, a serious violation shall be

deemed to exist in a place of employment if there is a substantial

probability that death or serious physical harm could result from a

condition which exists, or from one or more practices, means,

methods, operations, or processes which have been adopted or are

in use, in such place of employment unless the employer did not,

and could not with the exercise of reasonable diligence, know of the

presence of the violation.