                                                                                   United States Court of Appeals
                                                                                            Fifth Circuit
                                                                                          F I L E D
                                                  In the                                    April 16, 2007
                       United States Court of Appeals                                 Charles R. Fulbruge III
                                      for the Fifth Circuit                                   Clerk
                                            _______________

                                              m 06-10871
                                            Summary Calendar
                                            _______________



                      EQUAL EMPLOYMENT OPPORTUNITY COMMISSION,

                                                               Plaintiff-Appellant,

                                                 VERSUS

                                              STOCKS, INC.,
                        DOING BUSINESS AS CAFE ITALIA AND CIA CHOW INC.,

                                                               Defendant-Appellee.

                                     _________________________

                             Appeal from the United States District Court
                                 for the Northern District of Texas
                                         m 3:04-CV-2109
                               ______________________________


Before SMITH, WIENER, and OWEN,                        jury found that Stocks, Inc., doing business as
  Circuit Judges.                                      Café Italia and Cia Chow Inc. (“Café Italia”),
                                                       had unlawfully retaliated against a waitress in
JERRY E. SMITH, Circuit Judge:*                        violation of title VII, and awarded compensa-
                                                       tory damages. The EEOC appealed, claiming
  After the Equal Employment Opportunity               that the district court should have submitted a
Commission (“EEOC”) filed a complaint, a               punitive damages instruction to the jury.1 Be-
                                                       cause the EEOC presented sufficient evidence

   *
    Pursuant to 5TH CIR. R. 47.5, the court has de-
                                                           1
termined that this opinion should not be published          Although Cafe Italia cross-appealed, it with-
and is not precedent except under the limited cir-     drew that cross-appeal; its counsel has withdrawn;
cumstances set forth in 5TH CIR. R. 47.5.4.            and it declined to file an appellee’s brief.
to survive a judgment as a matter of law on the        that week and, you know, hopefully she will
issue of punitive damages, we reverse and              have learned her lesson.”
remand.
                                                          Bridges filed a charge of sex discrimination
                     I.                                and retaliation with the EEOC. Shortly after
   Ashley Bridges was a waitress at Cafe Italia        she left the EEOC office, she received a call
for seven months. After working there a few            from Pucci informing her that she was fired.
weeks, she began receiving inappropriate               She does not claim that Cafe Italia was aware
sexual comments and physical contact from              of her filing before they fired her.
Julio Cabrera, a 25% owner of the restaurant
and a fellow waiter. The inappropriate con-               The EEOC filed a complaint alleging that
duct continued throughout her employment.              Café Italia had subjected Bridges to a sexually
                                                       hostile work environment and had retaliated
   Bridges frequently told Cabrera she did not         against her in violation of title VII. The
appreciate the conduct and requested that he           EEOC sought compensatory and punitive
stop. She complained to the general manager,           damages, but the district court omitted puni-
Dino Pucci, and the assistant manager, Tony            tive damages from the final jury charge. The
Lemus. Despite her complaints, the conduct             jury ruled in favor of Café Italia on the sexual
continued. Café Italia did not have a written          harassment claim but found for the EEOC on
sexual harassment policy.                              the retaliation claim. It awarded compensatory
                                                       damages of $10,000.
   In November, Bridges intervened in an ar-
gument between a server she was dating and                                   II.
Cabrera. According to Bridges, she told Ca-               The EEOC claims it was entitled to have
brera that she could not stand working with            the jury consider an award of punitive dam-
him because of his harassing behavior. Ac-             ages. Generally, we review a jury charge and
cording to Cabrera, Bridges said that if Ca-           special interrogatories for abuse of discretion.
brera did not back off, she would sue the res-         See EEOC v. Manville Sales Corp., 27 F.3d
taurant for sexual harassment. Bridges denied          1089, 1096 (5th Cir. 1994). But, where the
making that threat.                                    decision as to a charge is effectively a judg-
                                                       ment as a matter of law on an issue, we review
   Shortly after this altercation, Bridges’s           de novo. Thompson & Wallace v. Falcon-
shifts were significantly reduced. Pucci and           wood Corp., 100 F.3d 429, 434 (5th Cir.
Lemus told her that her shifts were being cut          1997). By failing to instruct the jury on puni-
because of her threats against the restaurant to       tive damages, the district court ruled by impli-
bring sexual harassment charges. The majority          cation that the EEOC was not legally entitled
owner of the restaurant, Scott Jones, testified        to punitive damages; we review that ruling de
that he had decided to reduce her shifts               novo.
because “it was reported to me that she said if
you fire Alex I will sue you for sexual harass-                              III.
ment. . . . [T]hat’s extortion. . . . She was             In a title VII case, a plaintiff may recover
threatening my livelihood. . . . I said put her        punitive damages by demonstrating that the
on a one week suspension, give her one shift           defendant acted “with malice or with reckless


                                                   2
indifference to the federally protected rights of          by management-level employees acting within
an aggrieved individual.” 42 U.S.C. § 1981a-               the scope of their employment. The decision
(b)(1). The availability of punitive damages               to limit Bridges’s shifts was made jointly by
“turns on the defendant’s state of mind, not on            the owners of Cafe Italia, and all the decision-
the nature of its egregious conduct.”2                     makers testified that they were aware of her al-
                                                           legations of harassment. There is also no dis-
    In Kolstad, the Court laid out the necessary           pute that Cafe Italia is not entitled to the
evidentiary burden for a title VII plaintiff to            employer’s good faith exception, given that it
recover punitive damages. The defendant em-                had no anti-discrimination policies in place.5
ployer “must at least discriminate in the face of          The only remaining issue is whether the EEOC
a perceived risk that its actions will violate             has demonstrated malice or reckless in-
federal law.” Kolstad, 527 U.S. at 536. Even               difference by showing that Cafe Italia retali-
intentional discrimination may not meet this               ated in the face of a perceived risk that the re-
standard where the employer is “unaware of                 taliation would violate federal law.
the relevant provision” or “discriminates with
the distinct belief that its discrimination is law-           The evidence showed that the decisionmak-
ful.” Id. at 537. The plaintiff must impute                ers at Café Italia had knowledge of federal
liability to the defendant company through                 anti-discrimination laws and were aware of
some theory of vicarious liability, id. at 539,3           their duty not to retaliate against an employee
and must overcome the employer’s good-faith                who brought a sexual harassment complaint.
exception.4                                                The owner, Jones, testified that he did not dis-
                                                           cipline the plaintiff after her initial complaints,
   In this case there is no dispute that the               because she would have gone “to the EEOC.”
EEOC has established vicarious liability by                In several of our sister circuits, evidence that
showing that the retaliatory actions were taken            the employer has knowledge of the anti-dis-
                                                           crimination laws alone is sufficient to
                                                           demonstrate reckless indifference and allow
   2
      EEOC v. E.I. du Pont de Nemours & Co.,               punitive damages to be submitted to the jury.6
2007 WL 610591, at *6 (5th Cir. Mar. 1, 2007)
(citing Kolstad v. Am. Dental Ass’n, 527 U.S. 526,
                                                              5
535 (1999)).                                                    See, e.g., Deffenbaugh-Williams v. Wal-Mart
                                                           Stores, Inc., 188 F.3d 278, 286 (“[Defendant’s]
   3
     See also Rubinstein v. Adm’rs of Tulane               only evidence . . . was that [it] encourages employ-
Educ. Fund, 218 F.3d 392, 405 (5th Cir. 2000)              ees to contact higher management with grievances.
(“The employee must satisfy an additional require-         Plainly, such evidence does not suffice to establish,
ment as set out in this recent articulation of the         as a matter of law, [defendant’s] good faith in re-
necessary showing to obtain punitive damages               quiring its managers to obey Title VII.”).
under Title VII: the requirement of agency.”).
                                                              6
                                                                See Bruso v. United Airlines, Inc., 239 F.3d
   4
     Kolstad, 527 U.S. at 545 (“[A]n employer              848, 858 (7th Cir. 2001) (A plaintiff may satisfy
may not be vicariously liable for the discriminatory       its burden of demonstrating malice or reckless in-
employment decisions of managerial agents where            difference “by demonstrating that the relevant
these decisions are contrary to the employer’s             individuals knew of or were familiar with the anti-
good-faith efforts to comply with Title VII.”) (ci-        discrimination laws and the employer’s policies for
tation omitted).                                                                                  (continued...)

                                                       3
   This is unlike the situation in a typical                 have been given.
retaliation case, in that Jones did proffer an ex-
culpatory explanation for the retaliation; he                                       IV.
claims that Bridges threatened to bring a sex-                   The EEOC requests a new trial solely on
ual harassment claim in an attempt to extort                 punitive damages. We have allowed such lim-
better treatment for a fellow employee. Where                ited trials where the issue of punitive damages
an employer “discriminates with the distinct                 is severable from the remainder of the litiga-
belief that his discrimination is lawful,” puni-             tion.8 The EEOC points to employment dis-
tive damages are not appropriate. See id. at                 crimination caselaw in other circuits in which
537. Jones’s testimony was disputed, how-                    courts have remanded for trials solely on puni-
ever, and the jury was entitled to disbelieve his            tive damages.9
statement that he acted in response to an
extortionate threat.7                                            In the discrimination context, a jury’s ver-
                                                             dict on punitive damages is “intertwined with
   Taking the evidence in the light most fa-                 its view of the facts determining liability and its
vorable to the plaintiff, the jury could have                award for emotional injury.” Hardin, 227
found that Cafe Italia’s decisionmakers were                 F.3d at 272. The jury’s decision to award
aware of their responsibilities under title VII              punitive damages and to set their amount is a
and acted in the face of a perceived risk that               “classic black box decision” that “responds to
their actions would violate the statute. There-              the evidence of intentional acts essential here
fore, a punitive damages instruction should                  to the underlying theory of liability.” Id. Be-
                                                             cause of “the practical inseparability of the is-
                                                             sues of intent, of damages for emotional injury,
   6                                                         and of punitive damages,” we rejected a
    (...continued)
implementing those laws.”); Zimmerman v. Assocs.             plaintiff’s request for a new trial limited to
First Capital Corp., 251 F.3d 376, 385 (2d Cir.              punitive damages and remanded with instruc-
2001) (“[A]cknowledgment of training in ‘equal               tion to hold a new trial including a punitive
opportunity’ permits an inference of the requisite           damages instruction if “requested by the plain-
mental state” for awarding of punitive damages.”);
Ogden v. Wax Works, Inc., 214 F.3d 999, 1010
(8th Cir. 2000) (“A jury could . . . infer [the defen-
dant] had knowledge of Title VII’s proscriptions,
                                                                8
and given this knowledge, reasonably conclude he                  See Black v. Fid. & Guar. Ins. Underwriters,
acted in the face of a perceived risk that his actions       Inc., 582 F.2d 984, 991 (5th Cir. 1978) (remand-
would violate federal law.”).                                ing for new trial on sole issue of punitive damages
                                                             in an insurance coverage case where initial dam-
   7
      See, e.g., Hardin v. Caterpillar, 227 F.3d             ages were for property damages and loss of in-
268, 270-71 (5th Cir. 2000) (reversing district              come).
court’s refusal to issue a punitive damages instruc-
                                                                9
tion, noting that “if the jury credited [the plain-               See EEOC v. Heartway, 466 F.3d 1156, 1171
tiff’s] version of the events over those of [the de-         (10th Cir. 2006). Cf. McDonough v. City of Quin-
fendant’s] representatives, a reasonable juror could         cy, 452 F.3d 8, 25 (1st Cir. 2006) (remanding to
conclude that the representatives were either lying          district court to make the “judgment call” whether
or consciously indifferent to the truth and the le-          a new trial solely on the issue of punitive damages
gality of their acts”).                                      would be fair).

                                                         4
tiff.” Id. at 272-73.10                                     EEOC requests a new trial. If the EEOC
                                                            instead elects not to try the case a second time,
   The same concerns that led us to reject a                the district court will enter judgment awarding
limited trial in Hardin are present here. The               general damages for retaliation in the amount
jury’s compensatory award was linked not to                 of $10,000, with interest and other appropriate
economic lossSSthe court considered any lost                adjustments.
wages or benefits suffered by the plaintiffSS
but rather to emotional pain and suffering, in-
convenience, mental anguish, loss of enjoy-
ment of life, and other non-monetary losses. A
future jury’s decision to award punitive
damages will be tied to the same evidence of
intent as will be the liability decision, and the
factual dispute surrounding the events leading
to Bridges’s suspension will be central to the
decision that Café Italia retaliated in reckless
indifference to her rights.

    There is also a significant chance that the
first jury considered the reprehensibility of
Café Italia’s conduct in setting its “black box”
award of compensatory damages, creating a
risk that a second limited trial would lead to a
double recovery.11 By our remand, we leave
to the EEOC the choice of whether it wants a
new trial on all issues, or wishes instead to re-
tain its judgment.

   We REVERSE the judgment and RE-
MAND with instruction to grant a new trial
on all issues, including punitive damages, if the

   10
       See also McDonough, 452 F.3d at 24-25
(recognizing the “potential problem in remanding
a case for a trial limited solely to punitive damages
where the first jury awarded emotional distress
damages,” because of the close link between the
jury’s view of “the plaintiff’s level of emotional
trauma” and “the reprehensibility of defendant’s
conduct” and considering the potential risk that
“the plaintiff will recover twice for the reprehensi-
bility of the defendant’s conduct”).
   11
        See id. at 24.

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