                              UNPUBLISHED

                 UNITED STATES COURT OF APPEALS
                     FOR THE FOURTH CIRCUIT


                              No. 08-2108


WORLDWIDE NETWORK SERVICES, LLC; WORLDWIDE NETWORK SERVICES,
INTERNATIONAL, FZCO,

               Plaintiffs - Appellees,

          v.

DYNCORP INTERNATIONAL, LLC,

               Defendant – Appellant.

------------------------------------

CHAMBER OF COMMERCE OF THE UNITED STATES OF AMERICA,

               Amicus Supporting Appellant,

LAWYERS’ COMMITTEE FOR CIVIL RIGHTS UNDER LAW; THE NATIONAL
URBAN LEAGUE,

               Amici Supporting Appellees.



                              No. 08-2166


WORLDWIDE NETWORK SERVICES, LLC; WORLDWIDE NETWORK SERVICES,
INTERNATIONAL, FZCO,

               Plaintiffs - Appellants,

          v.

DYNCORP INTERNATIONAL, LLC,

               Defendant – Appellee.
------------------------------------

CHAMBER OF COMMERCE OF THE UNITED STATES OF AMERICA,

                Amicus Supporting Appellee,

LAWYERS’ COMMITTEE FOR CIVIL RIGHTS UNDER LAW; THE NATIONAL
URBAN LEAGUE,

                Amici Supporting Appellants.



Appeals from the United States District Court for the Eastern
District of Virginia, at Alexandria. Gerald Bruce Lee, District
Judge. (1:07-cv-00627-GBL-JFA)


Argued:   September 22, 2009           Decided:   February 12, 2010


Before NIEMEYER and DUNCAN, Circuit Judges, and James P. JONES,
Chief United States District Judge for the Western District of
Virginia, sitting by designation


Affirmed in part and reversed in part by unpublished opinion.
Judge Duncan wrote the majority opinion, in which Judge Niemeyer
concurred as to Part II.D(1)&(2), and in which Judge Jones
concurred as to Parts II.A, II.B, and II.C.       Judge Niemeyer
wrote a separate opinion concurring in part and dissenting in
part.   Judge Jones wrote a separate opinion concurring in part
and dissenting in part.


ARGUED:   Carter  Glasgow  Phillips,   SIDLEY  &   AUSTIN,   LLP,
Washington, D.C., for Dyncorp International, LLC.   Patricia Ann
Millett, AKIN, GUMP, STRAUSS, HAUER & FELD, LLP, Washington,
D.C., for Worldwide Network Services, LLC, and Worldwide Network
Services, International, FZCO.     ON BRIEF: Eric D. McArthur,
SIDLEY & AUSTIN, LLP, Washington, D.C.; George D. Ruttinger,
Keith J. Harrison, Clifton S. Elgarten, CROWELL & MORING, LLP,
Washington, D.C., for Dyncorp International, LLC.      Thomas P.
Goldstein, Anthony T. Pierce, Michele A. Roberts, Merrill C.
Godfrey, Monica P. Sekhon, Won S. Shin, Michael S. Bailey, AKIN,
GUMP, STRAUSS, HAUER & FELD, LLP, Washington, D.C., for
Worldwide Network Services, LLC, and Worldwide Network Services,

                                 2
International, FZCO.   Charles P. Roberts, III, CONSTAGY, BROOKS
& SMITH, LLP, Winston-Salem, North Carolina; Robin S. Conrad,
Shane B. Kawka, NATIONAL CHAMBER LITIGATION CENTER, INC.,
Washington, D.C., for Chamber of Commerce of the United States
of America, Amicus Supporting Dyncorp International, LLC.
Bernard J. DiMuro, Jonathan R. Mook, Michael E. Barnsback,
DIMURO GINSBERG, PC, Alexandria, Virginia; John Brittain, Sarah
Crawford, Tricia Jefferson, LAWYERS’ COMMITTEE FOR CIVIL RIGHTS
UNDER LAW, Washington, D.C., for Lawyers’ Committee for Civil
Rights Under Law, Amicus Supporting Worldwide Network Services,
LLC, and Worldwide Network Services, International, FZCO.   Sean
A. Lev, Priya R. Aiyar, Kfir B. Levy, KELLOGG, HUBER, HANSEN,
TODD, EVANS & FIGEL, PLLC, Washington, D.C., for The National
Urban League, Amicus Supporting Worldwide Network Services, LLC,
and Worldwide Network Services, International, FZCO.


Unpublished opinions are not binding precedent in this circuit.




                                3
DUNCAN, Circuit Judge:

        Worldwide    Network     Services,         Inc.        (“WWNS”)    sued    DynCorp

International,       LLC     (“DynCorp”)          for     discrimination       under      42

U.S.C.    § 1981     and    various     torts      after        DynCorp    terminated      a

subcontract with WWNS related to government work in Iraq and

Afghanistan.        Upon finding DynCorp liable, a jury awarded WWNS

$10 million in punitive damages.                  On appeal, DynCorp challenges

three     evidentiary       rulings,    two        jury     instructions,         and    the

district court’s denial of DynCorp’s motions under Federal Rule

of Civil Procedure 50.          For the reasons stated below, we affirm

in part and reverse in part, vacating the award of punitive

damages.



                                          I.

                                          A.

        DynCorp   contracted     with     the      United       States    Department      of

State    to   provide      services     in       Iraq    and     Afghanistan       for   the

Worldwide     Personal       Protective      Services           program    (“WPPS”)      and

Civilian Police program (“CivPol”).                     WPPS protects United States

personnel and certain foreign officials abroad.                          CivPol provides

law     enforcement,       criminal    justice,          and    other     assistance      to

societies     undergoing       post-conflict            reconstruction.            DynCorp

carried    out    the   services      through       its    International          Technical



                                             4
Services Division (“ITS Division”).                    The CivPol Program Manager

was Richard Cashon.

       In    February     2004    DynCorp    entered         into     subcontracts      with

WWNS       to    provide     communication            and      information-technology

services for WPPS and CivPol (“WPPS Subcontract” and “CivPol

Subcontract”).           DynCorp    then    issued          task     orders    that     would

expire       between     August    and   October           2006. 1      WWNS     had     been

designated a Small Disadvantaged Business by the United States

Small Business Administration under the Small Business Act of

1953 § 8(a), 15 U.S.C. § 637(a), because its owners Walter Gray

and Reginald Bailey are African American.                          WWNS was awarded the

WPPS and CivPol Subcontracts after well-known entrepreneur Ross

Perot introduced Gray and Bailey to Steven Cannon, who was then

President and CEO of DynCorp.



                                            B.

       The quality of WWNS’s work remains unclear.                              In January

2006       the   State   Department      twice        complained       about     WWNS    and

threatened       to    terminate   DynCorp       as    a    result.       One    complaint


       1
       Regarding “task orders,” see 48 C.F.R. § 16.501-1 (“Task
order contract means a contract for services that does not
procure or specify a firm quantity of services (other than a
minimum or maximum quantity) and that provides for the issuance
of orders for the performance of tasks during the period of the
contract.”).


                                            5
stated,     “WWNS’s    technical           performance       has     in     general       been

inadequate      to    the    point        where     it     has     disrupted        critical

communications in the field.”                     J.A. 117.         Also, DynCorp had

previously       complained          to      WWNS        about       radio        failures.

Notwithstanding, Cashon gave WWNS glowing evaluations in January

and March 2006.       His March evaluation deemed WWNS “excellent” or

“good” in every category and stated that DynCorp would hire WWNS

again.

      After    receiving      the    State        Department     complaints,         DynCorp

investigated     WWNS’s      work    and     generated       two    internal        reports.

First, the CivPol Iraq IT Evaluation (“Iraq Report”) completed

by June 19, 2006, evaluated WWNS’s work at the Baghdad Hotel,

the   CivPol    headquarters         for    Iraq.        Second,     the     Middle       East

Information Technology Tiger Team Site Assessment Report (“Tiger

Report”) dated July 22, 2006, evaluated WWNS’s work at locations

in Afghanistan.        The reports’ principal author was Christopher

Kellogg       (“Kellogg”),      but         other        DynCorp      employees           also

contributed.       Each report was highly critical of WWNS.



                                             C.

      DynCorp’s relationship with WWNS began to deteriorate in

December    2005     when    DynCorp       hired     new    executives       in     the    ITS

Division.       Robert      Rosenkranz       became      President,        Richard     Walsh

became     Vice-President       of     Operations,          Walter        Merrick     became

                                             6
Deputy    CivPol     Program    Manager,       and     Leon   DeBeer      became

Information-Technology       Manager.       With   these   arrivals,   DynCorp

began excluding WWNS personnel from planning meetings, ignoring

emails from WWNS managers in Iraq, and failing to provide WWNS

employees with needed access to worksites and equipment.                     In

particular,    DynCorp     failed    to     provide    WWNS   employees    with

security badges needed to move around in Iraq.

     The tension between DynCorp and WWNS reached breaking point

in summer 2006.      On July 17, 2006, Cannon resigned as President

and CEO of DynCorp.        Immediately thereafter, DynCorp decided not

to issue further task orders under the CivPol Subcontract or to

renew the subcontract.         DynCorp alleges that Cashon was solely

responsible for this decision.              Cashon’s testimony and other

evidence,    however,     indicate   that    Cashon,    Rosenkranz,    Merrick,

and Walsh made the decision collectively.

     Prior     to   the    CivPol    Subcontract’s       expiration,    DynCorp

engaged   in   certain     questionable     behavior     toward   WWNS.     For

example, DynCorp had Charles Jones, WWNS’s Iraq Country Manager,

escorted from his workplace at gunpoint.               DynCorp then recruited

WWNS’s non-managerial employees in Iraq and Afghanistan to join

DynCorp or EDO Corporation (“EDO Corp”), the non-minority-owned

company that would eventually replace WWNS.                   Moreover, Walsh

directed DynCorp’s accounting department to stop processing or



                                        7
paying    invoices    from    WWNS    for       work   already     completed. 2      In

stopping payment, DynCorp did not provide WWNS with notice or

the   opportunity     to     cure    alleged      deficiencies       in     the   work.

Because    almost    all     of     WWNS’s      business     came    from     DynCorp,

DynCorp’s actions in ending the CivPol Subcontract, recruiting

WWNS’s employees, and stopping payment on its invoices nearly

destroyed WWNS.



                                           D.

      Beyond the above questionable behavior, the record contains

evidence of DynCorp’s racial animus toward WWNS.                       John Mack, a

consultant    for    DynCorp,       testified     that     Walsh    called    Gray   “a

stupid    black   mother     . . .    .”        J.A.   1723.       Also,    Rosenkranz

terminated DynCorp’s only minority executive Richard Spencer, a

Latino, who testified to “some underlying discriminatory things”

behind his termination.           J.A. 1019.

      DeBeer in particular expressed racial animus, often calling

Gray “nigger” and “kaffir.” 3               J.A. 872.          According to Jones,

DeBeer expressed “[t]wo to three times a week” that “people of

      2
       In February 2008 DynCorp paid WWNS over $3.3 million for
outstanding invoices that dated back two years.   It offered no
explanation for the delay.
      3
       The term “kaffir” is “[u]sed especially in southern Africa
as a disparaging term for a Black person.”      American Heritage
Dictionary of the English Language 952 (4th ed. 2006).


                                           8
Anglo descent . . . had made a grave error” because they “had

taken the black man as a youth and attempted to clothe him and

send him to school” and that “the proper role of the black man

was to go out and kill a lion, proving his manhood, at which

point in time he should be put to work to feed his family . . .

and mated with a woman so that he would have more children, who

could then be put to work feeding their family.”                        J.A. 874.

Jones    said   DeBeer   predicted       that    DynCorp’s    relationship      with

WWNS    would    end   and     explained       that   “that   ending    was    being

manufactured      by   . . .      factions     within   DynCorp”     that     opposed

Cannon.     J.A. 869.        Jones noted that DeBeer was “consumed by

. . . hatred” for “Cannon and everybody associated with him.”

J.A. 873.

        Finally, DynCorp celebrated WWNS’s demise during a company

dinner in October 2006 hosted by Rosenkranz.                     At the dinner,

Walsh received a T-shirt that read, “WWNS - I took them down,

and all I got was this lousy T-Shirt.”                  J.A. 1139.     After Walsh

put on the T-shirt, DynCorp employee Bill Cavanaugh presented a

letter purportedly from Gray to Walsh and read it aloud in mock

Ebonics.        According    to    a   DynCorp    executive,    Rosenkranz      “was

laughing his ass off.”         J.A. 1029.




                                           9
                                          E.

       In October 2006 WWNS brought this action against DynCorp

and EDO Corp in the District of Columbia.                    The case was later

transferred to the Eastern District of Virginia.                      The complaint

asserted       claims     of    discrimination      under     42   U.S.C.     § 1981

(Count 1);       tortious       interference       with     contract     (Count 3);

tortious       interference       with     prospective      economic      advantage

(Count 4);       civil    conspiracy      (Count   5);    conspiracy     under   the

Virginia Conspiracy Act, Va. Code Ann. § 18.2-499 (Count 6);

breach of the CivPol Subcontract (Count 7); breach of the WPPS

Subcontract (Count 8); and breach of the implied covenant of

good faith and fair dealing (Count 9). 4                  In turn, DynCorp filed

counterclaims of breach of the CivPol Subcontract, breach of the

WPPS       Subcontract,   and    breach    of   warranty.      WWNS    and   DynCorp

proceeded to trial by jury in May 2008.                      WWNS and EDO Corp

settled on the eve of trial.

       Before trial, DynCorp planned to introduce the Iraq and

Tiger Reports into evidence through Kellogg, who would testify

about his observations during DynCorp’s internal investigation.

However, the district court granted WWNS’s motion to exclude the

testimony, saying the reports contained hearsay.                   The court also

found the reports and Kellogg’s proposed testimony inadmissible

       4
           Count 2 was dismissed before trial.


                                          10
under       Federal     Rule       of     Evidence    701,      which    prohibits       lay

witnesses from giving expert testimony.

       During trial, DynCorp objected to Spencer’s testimony about

his termination by Rosenkranz based on Federal Rules of Evidence

401    and    403. 5        The    district   court      overruled      this   objection,

reasoning that Spencer’s testimony was “relevant to the issue of

pretext as it demonstrates DynCorp’s corporate attitude toward

minorities and provides insight into what factors contributed to

DynCorp’s         decision    to    terminate      its    relationship      with      WWNS.”

J.A.       1891.       Later,       DynCorp    tried      to    offer    rehabilitative

testimony from Jasbir Gill, a Sikh employee at DynCorp.                                  The

court held, “Well, I’ll allow Ms. Gill to testify about her

interaction with Mr. DeBeer, and whether or not he used any

racial slurs in her presence,” but “[h]ow she was treated by the

company is irrelevant.”                 J.A. 1568.

       Finally, DynCorp objected to the testimony of John Mack.

When       WWNS    called    him    on    rebuttal,      Mack   testified      that    Walsh

called Gray “a stupid black mother . . . .”                        J.A. 1723.          About

       5
       Rule 401 defines “relevant evidence” to mean “evidence
having any tendency to make the existence of any fact that is of
consequence to the determination of the action more probable or
less probable.”    Fed. R. Evid. 401.    Rule 403 provides that
“evidence   may   be   excluded  if  its   probative  value   is
substantially outweighed by the danger of unfair prejudice,
confusion of the issues, or misleading the jury, or by
considerations of undue delay, waste of time, or needless
presentation of cumulative evidence.” Fed. R. Evid. 403.


                                              11
ten   questions     later,      DynCorp    objected      and       moved   to    strike

because WWNS had failed to notify DynCorp about Mack’s testimony

under   Federal     Rule   of    Civil    Procedure     26(e),       which      requires

parties   to    supplement      discovery       when   new     evidence      surfaces.

During a bench conference, WWNS admitted its failure to notify

DynCorp pursuant to Rule 26(e).                 Nonetheless, the court denied

DynCorp’s motion to strike and instead instructed the jury to

take into consideration WWNS’s failure to notify DynCorp about

Mack’s testimony.

      Following the close of evidence, the district court granted

WWNS’s motion under Federal Rule of Civil Procedure 50(a) for

judgment as a matter of law regarding unpaid invoices totaling

almost $2.8 million.       The court then instructed the jury.

      Regarding     the    § 1981      discrimination         claim,    DynCorp     had

requested      an   instruction     based       on   Hill     v.    Lockheed     Martin

Logistics    Mgmt.,    Inc.,     354     F.3d    277   (4th    Cir.    2004).       The

proposed instruction stated:

      DynCorp asserts that the person who made the decision
      not to renew or extend the WWNS CIVPOL subcontract or
      task   orders   was   not    improperly  motivated   by
      discrimination.   To the extent that WWNS rests its
      discrimination    claim    upon    the   discriminatory
      motivations of a subordinate employee, WWNS must show
      by the greater weight of the evidence that the
      subordinate employee possessed such authority as to be
      viewed as the one principally responsible for the
      decision or the actual decisionmaker for DynCorp.

J.A. 1185.      The district court refused to give this instruction,


                                          12
explaining: “I don’t think I need to.              I think you can prove

that   they    [DynCorp]   were   responsible     or    not,    and    the    jury

doesn’t have to specify which person did what.”                       J.A. 1656.

Instead, the court instructed: “WWNS must prove that DynCorp

intentionally discriminated against WWNS.              That is, the race of

WWNS’s owners must be proven to have been a motivating factor in

DynCorp’s decision not to renew WWNS’s CIVPOL subcontract or

issue further task orders thereunder.”           J.A. 1762.

       Regarding   punitive    damages,    the   district      court   gave   the

following instruction:

       [Y]ou may award punitive damages if WWNS . . . [has]
       shown by clear and convincing evidence that DynCorp
       maliciously,    or    with    reckless    indifference,
       discriminated   against  WWNS,   and/or  that   DynCorp
       tortiously interfered with the contracts between
       [WWNS] and its employees, and/or conspired with EDO to
       interfere with the contracts between [WWNS] and its
       employees, and/or that DynCorp tortiously interfered
       with WWNS’s prospective economic advantage.

J.A. 1771.       By contrast, DynCorp had requested an instruction

that began, “WWNS claims the acts of DynCorp were done with

malice or reckless indifference to WWNS’s federally protected

rights.”      J.A. 1186 (emphasis added).

       After several days of deliberation, the jury returned a

split verdict.       It found in DynCorp’s favor on Counts 4-6 and

one of DynCorp’s counterclaims, awarding DynCorp $178,000 for

breach of the WPPS Subcontract.           The jury found in WWNS’s favor

on all other claims.          It awarded WWNS compensatory damages of

                                     13
$3.42 million for Count 1 (§ 1981 discrimination), $83,000 for

Count 3 (tortious interference with contract), $558,510.42 for

Count 7 (breach of CivPol Subcontract), $42,092.62 for Count 8

(breach of WPPS Subcontract), and $720,000 for Count 9 (breach

of implied covenant of good faith and fair dealing).                  The jury

also awarded WWNS $10 million in punitive damages.

       The district court denied DynCorp’s renewed Federal Rule of

Civil Procedure 50(b) motion for judgment as a matter of law,

Rule 59(a) motion for a new trial, and Rule 59(e) motion to

alter or amend the judgment.             This appeal followed.         We have

jurisdiction under 28 U.S.C. §§ 1331 and 1291. 6



                                       II.

       On     appeal,    DynCorp   asserts     (1) that   the   district    court

should have given DynCorp’s proposed jury instruction regarding

the § 1981 discrimination claim; (2) that DynCorp should have

been awarded judgment as a matter of law on that claim; (3) that

Kellogg’s testimony and the Iraq and Tiger Reports should have

been       admitted;    (4) that   Spencer’s    testimony   should   have   been

excluded; (5) that Mack’s testimony should have been struck;

       6
       WWNS filed a cross-appeal, arguing that Alexis Maniatis’s
proposed   testimony  calculating   WWNS’s   lost  profits   was
erroneously excluded.    Because we do not remand for another
trial to determine compensatory damages, we do not reach WWNS’s
cross-appeal.


                                        14
(6) that the jury instruction on punitive damages for § 1981

discrimination was erroneous; and (7) that the record does not

support punitive damages for § 1981 discrimination. 7                      We consider

each contention below.



                                         A.

      We   first      consider   DynCorp’s          challenge       to   the     district

court’s failure to give its proposed jury instruction regarding

the   § 1981   discrimination         claim.        “A   district        court    commits

reversible     error     in   refusing      to      provide     a    proffered       jury

instruction only when the instruction (1) was correct; (2) was

not substantially covered by the court’s charge to the jury; and

(3)   dealt    with    some   point    in     the    trial    so     important,     that

failure to give the requested instruction seriously impaired the

defendant’s ability to conduct his defense.”                        United States v.

Passaro, 577 F.3d 207, 221 (4th Cir. 2009) (internal quotations

omitted).      “We review the district court’s decision to give or

refuse to give a jury instruction for abuse of discretion.”                           Id.

“Moreover, we do not view a single instruction in isolation;

rather we consider whether taken as a whole and in the context




      7
       DynCorp also asserts that the award of punitive damages
violates the Due Process Clause, but we do not reach this issue
because we vacate that award.


                                         15
of the entire charge, the instructions accurately and fairly

state the controlling law.”             Id. (internal quotations omitted).

     Because DynCorp’s proposed instruction regarding the § 1981

claim   was      based    on   Hill,    in     reviewing        the    district   court’s

failure     to     give    that   instruction            we     must   consider    Hill’s

applicability to this case.              Ethel Hill was a Lockheed mechanic

who repaired aircraft at military bases under contracts between

Lockheed and the United States.                    Her work was overseen by a

“lead person” who reported to her supervisor.                              Lockheed also

assigned a safety inspector to each jobsite who reported to the

lead person but lacked supervisory authority.                              Hill received

three   written      reprimands        based      on   errors      discovered     by   her

jobsite’s        safety    inspector     and       was        terminated    pursuant   to

company policy.           Hill alleged discrimination by that inspector,

who had often called her a “damn woman” and “useless old lady”

who should retire.          Hill, 354 F.3d at 283.

     Hill sued Lockheed under Title VII of the Civil Rights Act,

42 U.S.C. § 2000e (“Title VII”), and the Age Discrimination in

Employment Act, 29 U.S.C. §§ 621-34 (“ADEA”), arguing that but

for the inspector’s discrimination she would have received fewer

reprimands and avoided termination.                    The district court granted

summary judgment to Lockheed on the ground that the inspector’s

bias could not be imputed to Lockheed.                         Hill, 354 F.3d at 283.

In affirming, we announced this rule:

                                             16
      [T]o survive summary judgment, an aggrieved employee
      who rests a discrimination claim under Title VII or
      the ADEA upon the discriminatory motivations of a
      subordinate employee must come forward with sufficient
      evidence that the subordinate employee possessed such
      authority as to be viewed as the one principally
      responsible   for   the    decision  or   the   actual
      decisionmaker for the employer.


Id. at      291    (emphasis      added).           Accordingly,        we    found    summary

judgment appropriate because Hill had not shown evidence that

the    safety        inspector        could          be        considered      the      actual

decisionmaker        or     the     one     principally           responsible         for    the

decision to terminate Hill.               Id. at 297-98.

      DynCorp      argues    that     the      Hill       rule    governs     the     case   now

before us.        After carefully studying Hill, we disagree.                          In that

case, the ultimate question was whether Lockheed intentionally

discriminated        in    deciding       to   terminate         Hill.        This    required

evidence that her “‘protected trait . . . actually motivated the

employer’s decision,’” that is, that the trait “‘actually played

a   role    in    the     employer’s       decisionmaking           process     and     had   a

determinative influence on the outcome.’”                           Id. at 286 (quoting

Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 141

(2000)).      Accordingly, we considered “who is a ‘decisionmaker’

for purposes of discrimination actions brought under Title VII

and   the    ADEA.”         Hill,     354      F.3d       at    286.     We    said     agency

principles        guided   our    decision          because      both    statutes      defined

“employer” to include “any agent” thereof.                         Id. at 287; see also

                                               17
Burlington Indus., Inc. v. Ellerth, 524 U.S. 742, 754-65 (1998).

We then noted Ellerth, where the Supreme Court explained that

“[t]he       supervisor    has    been    empowered      by    the   company      as     a

distinct class of agent to make economic decisions affecting

other employees under his or her control,” and that “tangible

employment actions are the means by which the supervisor brings

the official power of the enterprise to bear on subordinates.”

Id.     at    762.      Therefore,     the     Court    said    that    “a     tangible

employment action taken by the supervisor becomes for Title VII

purposes the act of the employer.”               Id.

        The case most important to our Hill decision was Reeves.

Roger    Reeves      supervised      assembly-line       workers     for      Sanderson

Plumbing Products, Inc., which made toilet seats and covers.

Upon learning that Reeves made various mistakes, Powe Chestnut,

the     director     of    manufacturing        and    the    husband    of     company

president Sandra Sanderson, told Sanderson that Reeves should be

fired.       Sanderson followed his recommendation.               Reeves then sued

under    the    ADEA,     alleging    that     his    termination      resulted    from

discrimination by Chestnut, who had often showed discriminatory

animus toward him.          Reeves, 530 U.S. at 138.             The Supreme Court

found    that    Reeves     had   overcome      judgment       notwithstanding         the

verdict because, although Sanderson “made the formal decision to

discharge”      Reeves,     Chestnut     “was    principally      responsible      for”

and “the actual decisionmaker behind his firing.”                        Id. at 151-

                                          18
52.      Reeves       had     produced      evidence      that        Chestnut       “exercised

‘absolute power’ within the company.”                     Id. at 152.

       Ultimately, Reeves’s rationale dictated the rule that Hill

announced.        See Hill, 354 F.3d at 288-89 (“Reeves informs us

that the person allegedly acting pursuant to a discriminatory

animus     need       not     be     the    ‘formal       decisionmaker’             to    impose

liability upon an employer for an adverse employment action, so

long     as     . . .        the   subordinate        was        the    one     ‘principally

responsible’          for,    or   the     ‘actual       decisionmaker’          behind,        the

action.”       (quoting       Reeves,       530    U.S.     at    151-52)).               For   our

purposes,       Reeves        also     clarifies         the     Hill        rule.          Reeves

distinguishes         between      the     “formal    decisionmaker,”            which      under

Ellerth       would    be    the   person     authorized         to    make     the       relevant

decision, and “subordinate” employees who lack this authority,

such as Chestnut or the safety inspector in Hill.                               Accordingly,

we    believe     the    term      “subordinate       employee”         in    the    Hill       rule

invokes that distinction.                Hill, 354 F.3d at 291.

       Using     this       interpretation,        and    assuming       for     purposes        of

this appeal that Hill applies under § 1981, we conclude that

DynCorp can take no comfort from Hill on the facts before us.

DynCorp relies on Hill to argue that, because it alleges that

Cashon was solely responsible for the decision to terminate the

CivPol Subcontract, the jury should not have been allowed to

consider the racial animus of anyone other than Cashon.                                          We

                                              19
note, however, that Hill does not enable DynCorp to self-select

the decisionmaker whose motives are the purest.                             Furthermore, we

find Hill inapplicable for two separate reasons.

       First, the Hill rule’s initial premise, namely, that the

plaintiff       “rests        a    discrimination            claim     . . .        upon    the

discriminatory motivations of a subordinate employee,” assumes

that a formal decisionmaker can be identified.                          Id. at 291.          In

this    case,     however,         WWNS     and       DynCorp       offered     conflicting

evidence regarding who had authority to terminate the CivPol

Subcontract.       Cashon testified to having this authority but also

admitted that he answered to Rosenkranz regarding his decision.

Moreover,       other     evidence          indicated         that    Cashon,        Merrick,

Rosenkranz,      and    Walsh       were    authorized         to    make    that     decision

collectively.          Significantly, Walsh was the one who directed

DynCorp’s     accounting          department         to    stop    payment    to    WWNS   for

completed work.         By contrast, this problem of identification was

absent from Hill and Reeves, where none debated who had formal

decisionmaking authority.

       Second, even assuming that only Cashon could be considered

the    formal    decisionmaker,            we   are       unwilling    to    conclude      that

Walsh and Rosenkranz, who supervised Cashon, should be treated

like    the     Hill    and       Reeves    subordinate           employees     who    lacked

authority over the formal decisionmaker.                          Because Hill thus does

not apply to this case, we conclude that the district court’s

                                                20
refusal to give DynCorp’s proposed instruction was not an abuse

of discretion. 8



                                          B.

     Next,      we    consider     DynCorp’s    challenge     to    the   district

court’s      denial    of   DynCorp’s     renewed   Rule    50(b)     motion   for

judgment as a matter of law on the § 1981 claim.                    “We review de

novo the grant or denial of a motion for judgment as a matter of

law.”       Robinson v. Equifax Info. Servs, LLC, 560 F.3d 235, 240

(4th Cir. 2009) (internal quotations omitted).                     “Judgment as a

matter of law is proper when, without weighing the credibility

of the evidence, there can be but one reasonable conclusion as

to the proper judgment.”              U.S. ex rel. DRC, Inc. v. Custer

Battles,      LLC,    562   F.3d   295,   305   (4th   Cir.    2009)      (internal

quotations omitted); see also Saunders v. Branch Banking & Trust


        8
       We note as well that DynCorp’s proposed jury instruction
was “substantially covered by the court’s charge to the jury.”
Passaro, 577 F.3d at 221.      As mentioned, the district court
instructed that “the race of WWNS’s owners must be proven to
have been a motivating factor in DynCorp’s decision not to renew
WWNS’s   CIVPOL   subcontract   or  issue   further task  orders
thereunder.”    J.A. 1762.    Following this instruction’s clear
import, the jury could not have considered evidence of racial
bias regarding DynCorp employees that neither made nor had
authority to make that decision.        Thus, DynCorp’s proposed
instruction differed from the actual one only by wrongly
insinuating that just one person could have made or been
responsible   for    the  decision   to   terminate  the  CivPol
Subcontract.


                                          21
Co. of Va., 526 F.3d 142, 147 (4th Cir. 2008) (“A court may

award judgment as a matter of law only if there is no legally

sufficient evidentiary basis for a reasonable jury to find for

the    non-moving    party.”).     On    this    issue,    we    must    view    the

evidence in the light most favorable to the non-moving party,

drawing all reasonable inferences in that party’s favor.                      Dennis

v. Columbia Colleton Med. Ctr., Inc., 290 F.3d 639, 645 (4th

Cir. 2002).

       In this case, § 1981 liability required proof that race

actually motivated DynCorp’s decision to terminate the CivPol

Subcontract, that is, that race “actually played a role in the

. . . decisionmaking process and had a determinative influence

on the outcome.”       Reeves, 530 U.S. at 141.           DynCorp alleges that

only       Cashon   made   the   decision       to   terminate         the    CivPol

Subcontract.        Accordingly,   DynCorp      concludes       that    all    other

DynCorp executives’ alleged racial animus must be ignored under

Hill.       In that light, DynCorp asserts that the verdict cannot

stand.       We disagree with the initial premise that only Cashon

made the decision. 9       The record contains sufficient evidence from

       9
       We do not dispute the characterization in Judge Niemeyer’s
opinion, dissenting in part, that Cashon had authority to
terminate the CivPol Subcontract.    However, that opinion fails
to reckon with Cashon’s own testimony that he made the decision
collectively   with  Merrick,   Rosenkranz,  and   Walsh  —   the
discriminatory animus of at least Rosenkranz and Walsh having
been set out.


                                        22
which a reasonable jury could conclude that Cashon, Rosenkranz,

Merrick, and Walsh made a collective decision to terminate the

CivPol     Subcontract.       The   record    also    contains      evidence    that

Rosenkranz and Walsh harbored racial animus against Gray and

Bailey.      This evidence includes Walsh’s racial slur, Spencer’s

termination by Rosenkranz, Walsh stopping payments to WWNS, and

the      checkered      October     2006      dinner     celebrating         WWNS’s

misfortune. 10       Therefore, sufficient evidence of discrimination

was presented for § 1981 liability.

      Moreover, we note that WWNS presented adequate evidence to

establish § 1981 liability through the burden-shifting analysis

of McDonnell Douglas Corp. v. Green, 411 U.S. 792 (1973), and

its progeny.         See Patterson v. McLean Credit Union, 491 U.S.

164, 186 (1989) (extending McDonnell Douglas to § 1981 cases),

superseded    on     other   grounds   by    statute,   Civil       Rights   Act    of

1991, Pub. L. No. 102-166, 105 Stat. 1071.               Under this analysis,

the plaintiff carries an initial burden to establish a prima

facie case of discrimination.           A company alleging discriminatory

contract     termination     may    carry    this    burden    by    showing    that

(1) the     defendant    terminated    a     contract   with     it,   (2) it      was

      10
        To the extent that Judge Niemeyer’s opinion argues that,
but for evidence about DeBeer, the record contained insufficient
evidence to establish § 1981 discrimination, we note that that
opinion fails to account for Walsh’s otherwise unexplained
decision to stop payments to WWNS.


                                       23
within a protected class, (3) its performance under the contract

met    the      defendant’s          legitimate          expectations,           and     (4)     the

defendant instead contracted with a company not in a protected

class.       See Holland v. Washington Homes, Inc., 487 F.3d 208, 214

(4th     Cir.       2007).          Once        the     prima     facie        case     has     been

established, the burden shifts to the defendant “to articulate a

legitimate,          nondiscriminatory                  reason”         for     the      contract

termination.           Id.    (internal           quotations          omitted).         Once     the

defendant carries this burden of production, the burden shifts

back   to     the    plaintiff           to     prove    that     the    defendant’s          stated

reasons      “were    not     its        true    reasons,       but     were    a     pretext    for

discrimination.”             Id.     (internal quotations omitted).                         At this

point, “the McDonnell Douglas framework — with its presumptions

and burdens — disappear[s] . . . and the sole remaining issue

[i]s    discrimination             vel    non.”          Reeves,      530      U.S.    at     142-43

(internal quotations omitted).

       WWNS established a prima facie case of discrimination by

showing      that     (1)    DynCorp          terminated        the     CivPol      Subcontract,

(2) WWNS had been designated a Small Disadvantaged Business by

the    SBA    because        Gray    and        Bailey    are     African       American,        (3)

Cashon’s glowing evaluations of WWNS in January and March 2006

rated WWNS “excellent” or “good” across the board and stated

that DynCorp would hire WWNS again, and (4) EDO Corp. was not

minority-owned.              In    turn,        DynCorp    articulated          a     legitimate,

                                                  24
nondiscriminatory reason for terminating the CivPol Subcontract.

Cashon testified that the reason was WWNS’s poor performance.

We believe a reasonable jury could have concluded that DynCorp’s

stated    reason    was     merely    a    pretext       for   discrimination.       For

example,    the     jury    might     have       disbelieved     Cashon’s      testimony

about DynCorp’s stated reason because Cashon himself had given

WWNS glowing evaluations.                 Therefore, we affirm the district

court’s    denial     of    DynCorp’s       Rule    50(b)      motion    regarding   the

§ 1981 claim.



                                             C.

     We    next     consider    three      evidentiary         rulings    that   DynCorp

challenges.        We review each for abuse of discretion.                        United

States v. Basham, 561 F.3d 302, 325 (4th Cir. 2009).



                                             1.

     First,    DynCorp       argues       that    the    district    court     committed

reversible error by excluding Kellogg’s testimony and the Iraq

and Tiger Reports.            This evidence was excluded under Federal

Rule of Evidence 701, which “forbids the admission of expert

testimony dressed in lay witness clothing.”                         United States v.

Perkins, 470 F.3d 150, 156 (4th Cir. 2006).                       Kellogg’s excluded

testimony     and     the    Iraq     and        Tiger    Reports       were   technical

evaluations    of    WWNS’s     performance.             Discussed      topics   include

                                             25
whether        WWNS’s      chosen        method           of        encrypting        wireless

communication provided enough security.                        We believe such matters

are well beyond the scope of permissible lay testimony under

Rule    701.      See     Certain      Underwriters            at    Lloyd’s,       London   v.

Sinkovich, 232 F.3d 200, 203 (4th Cir. 2000) (noting that Rule

701    “generally       does    not    permit      a   lay      witness      to    express   an

opinion    as    to   matters        which    are      beyond       the   realm     of   common

experience and which require the special skill and knowledge of

an expert witness” (internal quotations omitted)).                                 Therefore,

we conclude that the district court’s decision to exclude that

evidence was not an abuse of discretion.



                                              2.

       Second, DynCorp challenges the district court’s failure to

exclude Spencer’s testimony about his termination by Rosenkranz

under Federal Rules of Evidence 401 and 403.                               The court below

reasoned that Spencer’s testimony was “relevant to the issue of

pretext as it demonstrates DynCorp’s corporate attitude toward

minorities and provides insight into what factors contributed to

DynCorp’s       decision       to   terminate       its    relationship           with   WWNS.”

J.A.    1891.      We    believe       that    Spencer’s            testimony      was   indeed

relevant       because     of       Rosenkranz’s        apparent          participation      in

DynCorp’s       decision        to     terminate          the       CivPol        Subcontract.

Moreover, we believe this probative value outweighed any danger

                                              26
of   undue    prejudice.         Thus,    we     affirm      the     district        court’s

decision to allow Spencer’s testimony.



                                          3.

      Finally, DynCorp challenges the district court’s failure to

strike Mack’s testimony that Walsh called Gray “a stupid black

mother . . . .”          J.A. 1723.        Federal Rule of Civil Procedure

26(e)    provides    that    a    party    who       has    made     a    disclosure      or

responded to an interrogatory “must supplement or correct its

disclosure or response . . . in a timely manner if the party

learns that in some material respect the disclosure or response

is   incomplete     or   incorrect.”           Fed.    R.     Civ.       P.   26(e)(1)(A).

Mack’s      allegation    became    known       to    WWNS    several         days    before

trial, but DynCorp was not made aware of it until Mack testified

at trial.      WWNS thus clearly violated Rule 26(e), which it does

not dispute.

      Upon     discovering       that     WWNS       had     not     disclosed        Mack’s

allegation,     DynCorp     objected      and     moved      to    strike      because    of

WWNS’s Rule 26(e) violation.                The district court denied this

motion, stating: “[T]he difficulty that I have is, you’re asking

me to tell the jury to disregard the hot poker that has just

been put in front of their face.                  I don’t think I can undo it

that way.”      J.A. 1730.        Instead, the court instructed the jury

to   take    into   consideration        WWNS’s      failure       to     notify     DynCorp

                                          27
about Mack’s allegation.               DynCorp later moved for a new trial,

arguing that Mack’s testimony should have been struck, but the

court denied this motion.

       Federal Rule of Civil Procedure 37(c)(1) provides: “If a

party    fails    to    provide    information       or   identify      a   witness   as

required by Rule 26(a) or (e), the party is not allowed to use

that information or witness to supply evidence . . . at a trial,

unless the failure was substantially justified or is harmless.”

Fed.    R.    Civ.     P.    37(c)(1).       WWNS   asserts     that    the    Rule   26

violation       was     harmless       but    concedes     that    no       substantial

justification existed.

       We have said that a court determining harmlessness under

Rule 37(c)(1) should consider five factors:

       (1) the surprise to the party against whom the
       evidence would be offered; (2) the ability of that
       party to cure the surprise; (3) the extent to which
       allowing the evidence would disrupt the trial; (4) the
       importance of the evidence; and (5) the nondisclosing
       party’s explanation for its failure to disclose the
       evidence.

S. States Rack & Fixture, Inc. v. Sherwin-Williams Co., 318 F.3d

592, 597 (4th Cir. 2003).                Based on these factors, we believe

WWNS’s Rule 26 violation was indeed harmless.                      Although DynCorp

was     surprised       by     Mack’s     testimony,      the     trial       continued

undisturbed.          Moreover, the record contains abundant evidence of

racial       animus    aside    from     Mack’s     testimony.         This    includes

Spencer’s       termination       by     Rosenkranz,      the     racially      charged

                                             28
October    2006    dinner      celebrating      WWNS’s    misfortune,       and    Walsh

directing DynCorp’s accounting department to stop paying WWNS

for work already completed.               We therefore decline to reverse on

this ground.



                                           D.

      Finally,         we     consider     alleged       errors        regarding     the

$10 million       punitive-damages          award.        DynCorp        argues      that

punitive damages for the § 1981 claim are unsupported by the

record     and    that       the   jury    instruction      on     that    issue      was

erroneous.



                                           1.

      We   begin    by       considering    the   district       court’s    denial     of

DynCorp’s renewed Rule 50(b) motion for judgment as a matter of

law with regard to WWNS’s prayer for punitive damages for the

§ 1981 claim.           We review this decision de novo.                    Lowery v.

Circuit City Stores, Inc., 206 F.3d 431, 442-43 (4th Cir. 2000).

      A plaintiff who prevails under § 1981 “is entitled under

the   common     law    to    punitive     damages   . . .       for    conduct    . . .

exhibiting malice, an evil motive, or recklessness or callous

indifference       to    a    federally    protected      right.”         Id.   at    441

(internal quotations omitted).              The Supreme Court developed this

standard in Smith v. Wade, 461 U.S. 30 (1983), for actions under

                                           29
42 U.S.C. § 1983.          Congress later adopted the standard in the

Civil Rights Act of 1991, which allows punitive damages in Title

VII actions where the employer discriminated “with malice or

with reckless indifference to the federally protected rights of

an      aggrieved      individual.”              42    U.S.C.         § 1981a(b)(1).

Interpreting this statute, the Supreme Court held that “[t]he

terms     ‘malice’    or      ‘reckless    indifference’         pertain     to    the

employer’s    knowledge       that   it   may    be    acting    in    violation   of

federal     law,     not   its    awareness       that      it   is    engaging    in

discrimination.”       Kolstad v. Am. Dental Ass’n, 527 U.S. 526, 535

(1999).     Accordingly, the Court held that “an employer must at

least discriminate in the face of a perceived risk that its

actions    will     violate    federal     law    to   be    liable     in   punitive

damages.”     Id. at 536.        Because § 1981a was intended to mirror

Smith, we have held that “any case law construing the punitive

damages standard set forth in § 1981a, for example Kolstad, is

equally applicable to clarify the common law punitive damages

standard with respect to a § 1981 claim.”                    Lowery, 206 F.3d at

441.    Therefore, upon reviewing § 1981 punitive damages, we have

required evidence that the defendant acted “in the face of a

perceived risk that [its] decision would violate federal law.”

Id. at 443.




                                          30
        Regarding         this    requirement,          Kolstad    noted     hypotheticals

that    are    particularly          relevant      to    the     case    before    us.      The

Supreme Court explained:

        There   will    be  circumstances   where   intentional
        discrimination does not give rise to punitive damages
        liability under this standard. In some instances, the
        employer may simply be unaware of the relevant federal
        prohibition.   There will be cases, moreover, in which
        the employer discriminates with the distinct belief
        that its discrimination is lawful.      The underlying
        theory of discrimination may be novel or otherwise
        poorly recognized.

Kolstad, 527 U.S. at 536-37.                  Accordingly, even a defendant who

discriminates         while       intending     to       cause    injury     might       escape

liability for punitive damages under § 1981 if he thought his

conduct       was    lawful.         This   informs       our     remark    that    punitive

damages are “an extraordinary remedy” and “not every lawsuit

under section 1981 calls for submission of this extraordinary

remedy to a jury.”               Stephens v. S. Atl. Canners, Inc., 848 F.2d

484, 489-90 (4th Cir. 1988).

        Soon after Kolstad, we reviewed a § 1981 punitive-damages

award in Lowery.             Renee Lowery and Lisa Peterson alleged that

Circuit City Stores, Inc. (“Circuit City”) failed to promote

them because of racial animus.                     Circuit City was found liable

under    Title       VII    and    § 1981,      and      the     jury    awarded     punitive

damages of $225,000.              On appeal, Circuit City asserted that the

record    did       not    support    punitive       damages.           Notably,   we     found



                                              31
punitive damages recoverable only under § 1981 and limited our

analysis accordingly.               Lowery, 206 F.3d at 441.

        We explained, “Kolstad teaches that we . . . must first ask

whether the record contains sufficient evidence for a reasonable

juror    to    find    that    in     intentionally           refusing     to    promote   the

plaintiff . . . the decision maker did so in the face of a

perceived risk that her decision would violate federal law.”

Id. at 443.            We continued, “If the answer is no, we should

vacate    the        portion    of     the    judgment         awarding      the    plaintiff

punitive damages and direct entry of judgment as a matter of law

in favor of Circuit City on that issue.”                             Id.    In the end, we

found that the record did contain sufficient evidence because

Circuit       City    had   presented        “evidence        that    it    required    every

person in management to attend a week-long training seminar that

included       education       on    the     federal     anti-discrimination           laws.”

Id. (citing E.E.O.C. v. Wal-Mart Stores, Inc., 187 F.3d 1241,

1246 (10th Cir. 1999) (finding sufficient evidence where the

offending       manager     “testified            that   he    was    familiar      with   the

accommodation          requirements          of    the    ADA    and       its   prohibition

against discrimination and retaliation in the workplace”)).

        We considered the same legal issue in subsequent cases.

Sufficient evidence was found where a supervisor who engaged in

sexual harassment “testified that he had seen an EEOC poster

regarding       sexual      harassment”            at    work     that      read,     “Sexual

                                                  32
harassment     is    unlawful     and    unacceptable           in    the       workplace.”

Anderson v. G.D.C., Inc., 281 F.3d 452, 460 (4th Cir. 2002).

Although the supervisor denied reading the poster, we found that

“a reasonable jury could nevertheless infer that [his] awareness

of the poster suggested at least a rudimentary knowledge of its

import.”       Id.      Sufficient       evidence       was    also       found    where     a

manager    “was      specifically        aware     of     FedEx’s          internal       ADA

compliance policy, and had received training from FedEx on the

ADA’s compliance requirements.”               E.E.O.C. v. Fed. Express Corp.,

513 F.3d 360, 373 (4th Cir. 2008).

     By contrast, we declined to find sufficient evidence in

Ocheltree v. Scollon Productions, Inc., 335 F.3d 325 (4th Cir.

2003)   (en    banc).     Lisa       Ocheltree    sued        her    employer      Scollon

Productions, Inc., under Title VII because she “was the victim

of severe or pervasive sex-based harassment in her workplace.”

Id. at 327.          We “combed the record,” however, and found “no

evidence      that    would     allow     a     jury     to     find       that     Scollon

Productions     knew,    either      directly     or    by     imputation,         that     it

might have been acting in violation of Ocheltree’s ‘federally

protected rights.’”        Id. at 336.         Thus, we upheld the verdict on

liability but vacated punitive damages.                  Id.

     The      case   before     us     presents    a     scenario          comparable       to

Ocheltree.       WWNS   has     been    unable    to     cite       any    evidence     that

DynCorp    terminated     the    CivPol       Subcontract       “in       the   face   of    a

                                          33
perceived risk that [its] decision would violate federal law.” 11

Lowery, 206 F.3d at 443.    The district court likewise failed to

cite such evidence, and we could find none upon combing the

record. 12   Accordingly, we conclude that the award of punitive

damages should be vacated. 13




     11
         WWNS cites only 41 C.F.R. § 60-1.4, which requires
government contractors to adopt contractual language that
pertains to discrimination against employees or applicants for
employment under Title VII.       However, the language nowhere
mentions    discrimination   against   minority-owned  corporate
subcontractors under § 1981.
     12
        Judge Jones’s opinion, dissenting in part, states that
WWNS’s July 26, 2006, letter to DynCorp indicates that DynCorp
was warned about WWNS’s federal right under § 1981. The letter
itself, however, shows that this warning came after DynCorp had
already terminated the CivPol Subcontract.     The letter demands
that DynCorp “comply with its obligations under the terms of the
February   16,  2004,   Subcontract   and   related  Task  Orders
(collectively ‘the Agreements’),” but makes clear that DynCorp
had already repudiated them.     The letter states that “DynCorp
has taken it upon itself to inform . . . WWNS employees . . .
that the Agreements have been terminated,” and that WWNS
“consider[ed] DynCorp’s conduct to constitute . . . a material
breach of the Agreements.”    J.A. 2692.    Because WWNS sent the
letter   after  DynCorp   had   already   terminated  the  CivPol
Subcontract, the letter tells nothing about whether DynCorp
previously acted “in the face of a perceived risk that [its]
decision would violate federal law.” Lowery, 206 F.3d at 443.
     13
        Added to our rationale, DynCorp argues that the legal
theory WWNS advanced was “novel or otherwise poorly recognized,”
Kolstad, 527 U.S. at 537, because whether a corporation may sue
under § 1981 was never crystal clear. See Domino’s Pizza, Inc.
v. McDonald, 546 U.S. 470, 473 n.1 (2006) (noting that “we have
no occasion to determine whether, as a corporation, it could
have brought suit under § 1981” (emphasis omitted)); Vill. of
Arlington Heights v. Metro. Housing Dev. Corp., 429 U.S. 252,
263 (1977) (holding that “a corporation . . . has no racial
(Continued)
                                34
                                            2.

     Even    aside       from   the    above      error,    the     award       of    punitive

damages     could    not    stand       because      the    district           court’s      jury

instruction         on     punitive        damages          was         also      erroneous.

“Instructions are adequate if construed as a whole, and in light

of the whole record, they adequately inform the jury of the

controlling legal principles without misleading or confusing the

jury to the prejudice of the objecting party.”                                 S. Atl. Ltd.

P’ship of Tenn., L.P. v. Riese, 284 F.3d 518, 530 (4th Cir.

2002) (internal quotations omitted).                    “Even if instructions are

flawed,    there     can   be   no     reversal      unless       the    error       seriously

prejudiced     the       challenging       party’s         case.”          Id.       (internal

quotations     omitted).             Because        DynCorp’s       objection          to     the

district     court’s       instruction         on     punitive       damages         was      not

preserved according to Federal Rule of Civil Procedure 51(d)(1),

reversal would be proper “only when we can conclude that [the]

particular    jury       instruction       must     necessarily          have    caused       the

jury to act in complete ignorance of, or to have misapplied,

fundamentally       controlling        legal      principles        to    the    inevitable

prejudice of an aggrieved party.”                    Spell v. McDaniel, 824 F.2d

1380, 1399 (4th Cir. 1987); see also Fed. R. Civ. P. 51(d)(2).



identity   and    cannot              be   the       direct        target         of        . . .
discrimination”).


                                            35
      In     this     case,       the        district         court        gave     the     following

instruction: “[Y]ou may award punitive damages if WWNS . . .

[has]      shown    by     clear       and        convincing             evidence    that    DynCorp

maliciously,         or     with        reckless             indifference,           discriminated

against WWNS.”             J.A. 1771.              Notably, the court never defined

“malice” or specified to what “reckless indifference” refers.

The word “malice” ordinarily means: “A desire to harm others or

to see others suffer; extreme ill will or spite.”                                           American

Heritage Dictionary of the English Language 1059 (4th ed. 2006).

Unless      properly       instructed,            a    layperson          would     not    know    that

“malice”      also       has      a    technical             legal        meaning     relating       to

awareness     that       one     may    be        breaking         the     law.      Cf.    Perry   v.

McCaughtry,        308     F.3d       682,    694          (7th    Cir.     2002)    (Posner,       J.,

dissenting)         (arguing          that        a        layperson        would     not     without

instruction         know        that    “cause”              had     the     technical        meaning

“substantial factor in”).                     Nor would a layperson assume that

“reckless     indifference”             in    the          instruction       specifically         means

“reckless          indifference              to        federally           protected        rights.”

Accordingly, the jury could not have known that “‘malice’ or

‘reckless indifference’ pertain to [DynCorp’s] knowledge that it

may be acting in violation of federal law,” Kolstad, 527 U.S. at

535, or that punitive damages are improper unless DynCorp acted

“in   the    face    of     a    perceived            risk        that    [its]     decision      would

violate federal law,” Lowery, 206 F.3d at 443.                                       Therefore, we

                                                      36
believe the challenged instruction “caused the jury to act in

complete    ignorance         of    .   .    .    fundamentally            controlling            legal

principles.”       Spell, 824 F.2d at 1399.

      Regarding          whether          DynCorp         was        prejudiced             by      the

instruction,      we     note      again     that       WWNS     has      not    identified         any

evidence    that       DynCorp      suspected           that     terminating           the       CivPol

Subcontract      might       violate      federal         law,      and    we    found       no    such

evidence    in     the    record.            Notwithstanding,              the       jury    awarded

$10 million      of      punitive         damages,        which        the      district          court

concluded    was      “for    DynCorp’s           Section        1981     violation.”              J.A.

1911.      Therefore,         we     believe           serious      prejudice         necessarily

resulted from the challenged instruction.



                                                  3.

      Although     the       punitive-damages             award      based       on    the       § 1981

claim   should     be     vacated,          the    jury’s       verdict         complicates         our

disposition.           The      district          court     instructed           that       punitive

damages may be awarded on Counts 1 and 3-5.                                Among this group,

DynCorp was found liable only on Count 1 (§ 1981 discrimination)

and Count 3 (tortious interference with contract).                                          The jury

awarded $10 million of punitive damages, but the verdict does

not   specify    how      much      was     allocable          to    Count       1    rather       than

Count 3.     For this reason, we cannot vacate the award without

unwittingly vacating any punitive damages allocable to Count 3.

                                                  37
Accordingly, the case must be remanded for retrial on punitive

damages for Count 3. 14



                                       III.

      For    the   reasons    stated     above,    we   affirm   the   district

court’s     refusal   to   give    DynCorp’s      proposed   jury   instruction

pertaining to Hill, the court’s denial of DynCorp’s Rule 50(b)

motion regarding the § 1981 claim, and all evidentiary rulings

challenged by DynCorp.          However, we reverse the court’s denial

of   DynCorp’s     Rule    50(b)   motion     regarding   WWNS’s    prayer   for

punitive damages based on the § 1981 claim, vacate the award of

punitive damages, and remand the case for retrial on punitive

damages for Count 3.         Accordingly, we

                                       AFFIRM IN PART AND REVERSE IN PART.




      14
       Any reconsideration should take into account the standard
for awarding punitive damages under Virginia law.


                                        38
NIEMEYER, Circuit Judge, concurring in part and dissenting in
part:

        After    DynCorp      International,       LLC    refused       to    renew     its

subcontract          with     Worldwide       Network         Services,       LLC        for

information-technology            services,      Worldwide      Services       commenced

this     action,       alleging     that     DynCorp’s        termination          of    the

subcontract was motivated by racial animus and thus constituted

racial discrimination in contracting, in violation of 42 U.S.C.

§   1981.       The    subcontract     had      been     entered     into     to    assist

DynCorp’s performance of its contract with the State Department

to support civilian police programs in Iraq and Afghanistan.

        DynCorp maintained that it terminated its relationship with

Worldwide       Services        because    of      Worldwide         Services’          poor

performance and that the conceded racial animus of a mid-level

manager, who lacked authority to end the relationship, was not

imputable       to    the    corporation   under       Hill     v.   Lockheed       Martin

Logistics Management, Inc., 354 F.3d 277, 291 (4th Cir. 2004)

(en banc) (holding that an employer will not be liable under

Title     VII    of    the     Civil   Rights      Act    of     1964    or    the      Age

Discrimination         in    Employment    Act    of     1967    (“ADEA”)      “for      the

improperly motivated person who merely influences the decision,

but [only] for the person[s] who in reality make[] the decision”

(emphasis added)).           The district court refused DynCorp’s request

to apply Hill to this case and declined to give an instruction


                                           39
to the jury that would have barred imputation of the mid-level

manager’s     racial     animus      to    the    corporation       for    purposes      of

determining liability under § 1981.                       The court stated, “[T]he

jury doesn’t have to specify which person did what.”                              The jury

was thus allowed to consider the racial animus of individuals,

including the mid-level manager, who may have influenced those

who made the decision on behalf of DynCorp, but who were not

themselves decisionmakers, in violation of Hill.

      The majority approves this error by concluding that Hill

does not apply to this case because some of the other DynCorp

employees alleged to have acted with racial animus were high-

level executives who may have had authority to decide not to

renew Worldwide Services’ subcontract, whereas Hill applies when

the   plaintiff’s      claim   “rests        .    .   .   upon    the   discriminatory

motivations of a subordinate employee.”                     Hill, 354 F.3d at 291.

What this reasoning overlooks, I respectfully submit, is the

extent   to   which      Worldwide        Services’       claim   was     based    on   the

conceded racial animus of the mid-level manager, who clearly

lacked   authority       to    end    the        relationship      between        the   two

companies, but who was in a position to influence the decision

to such an extent that the jury may have found that his racial

bias was “a motivating factor in DynCorp’s decision,” which was

all the district court required the jury to find before imposing

liability     on   the     corporation.               Because     Worldwide       Services

                                            40
presented    considerable         evidence         of    this       mid-level    manager’s

racial bias and his role in the deterioration of the companies’

relationship, the jury needed to be told that only the racial

animus of DynCorp’s actual decisionmakers could be considered in

determining whether race motivated the corporation’s decision.

       Because Hill applies to determine when the racial animus of

an employee is imputable to a corporation, it was error for the

district    court    to    have    refused         to   give     an      instruction   under

Hill.     And because, in this case, the mid-level manager with

racial    animus    may,    as    a     factual         matter,       have   substantially

influenced    the     decision          not    to       renew       Worldwide    Services’

subcontract, the error was prejudicial.                         Accordingly, I believe

that a new trial is necessary to permit the jury to resolve who

DynCorp’s decisionmaker or decisionmakers were and whether they

were    actually    motivated      by    racial         animus      in    deciding   not   to

renew Worldwide Services’ subcontract.                          Because I would grant

DynCorp’s request for a new trial, I would not reach the other

issues addressed by the majority, with one exception.                                In view

of the majority’s determination to affirm on liability and to

provide    Judge    Duncan       with    a    majority         on     her    discussion    of

punitive damages, I join her discussion of punitive damages, as

contained in Parts II(D)(1) and (2).




                                              41
                                             I.

       In     February       2004,     the        ITS        (International       Technical

Services)      Division      of   DynCorp     won       a     contract    from    the   State

Department      to    provide     support     for       civilian      police      (“CIVPOL”)

programs in Iraq and Afghanistan.                   Thereafter, DynCorp awarded a

subcontract to Worldwide Services to perform communication and

information-technology services for the CIVPOL program pursuant

to    “task    orders”      issued    by   DynCorp.            The   subcontract’s        term

extended      one    year    (February       2004       to    February    2005)     and   was

renewable      under       four   one-year    options.              DynCorp   renewed      the

subcontract in February 2005 and again in February 2006, but not

thereafter.

       Worldwide Services was headed by Walter Gray and Reginald

Bailey, both African Americans, and the company was certified by

the     Small        Business      Administration              as     a    Section        8(a)

disadvantaged        company.        Before       its       subcontract    with    DynCorp,

Worldwide Services’ annual revenue was about $100,000, which was

produced primarily by providing information-technology services

to local businesses.              During the first year of its subcontract

with    DynCorp,      however,       Worldwide      Services         received      over   $20

million in revenues.

       Richard Cashon, a DynCorp vice president and its program

manager       for    the    CIVPOL    program,          was    charged     with    formally

evaluating          Worldwide        Services’              performance        under       the

                                             42
subcontract, and he gave it positive marks.                                 In January 2006,

Cashon    rated      Worldwide       Services’        performance            as    “exceptional”

and “very good,” noting Worldwide Services’ “technical depth in

terms    of    the   number     of     technically           competent        individuals          on

their    staff”      and    “flexib[ility]           in    terms       of     operating       in    a

dynamic       environment.”          Cashon        wrote     that       he    would        have    no

reservations about using Worldwide Services in the future.                                          A

few months later, Cashon again rated Worldwide Services’ work as

“good” or “excellent” in every category and again stated that

DynCorp “[w]ould . . . hire this contractor again.”

        Despite      Cashon’s        positive        evaluations,             in     early     2006

DynCorp       received       two      letters        from        the     State           Department

criticizing       both     DynCorp     and    Worldwide          Services’          performance.

In the first letter, the Principal Deputy Assistant Secretary

for the State Department’s Bureau of International Narcotics and

Law   Enforcement          Affairs    wrote      a    letter      to     DynCorp’s          CEO    to

complain about a number of defects in DynCorp’s performance,

including its supervision of Worldwide Services.                                         The letter

stated that “[Worldwide Services’] technical performance has in

general    been      inadequate       to   the       point    where      it        has    disrupted

critical communications in the field.”                            The letter also made

clear    that     DynCorp’s        relationship           with    the       State        Department

could be jeopardized if the problems were not resolved.



                                              43
        About three weeks later, a State Department representative

in     Baghdad    sent     a   second        letter       to   DynCorp       that    focused

exclusively on the services provided by Worldwide Services in

Iraq,    and     this    letter      was     even    more      critical      of     Worldwide

Services’ performance.            It concluded that “[a] great deal must

be accomplished to improve many aspects of [Worldwide Services’]

service provision, levels of expertise, project management and

implementation          strategies      to       effect    acceptable        standards    of

IT/communications support.”

        After receiving these letters, DynCorp developed a plan to

manage Worldwide Services more actively.                            Bob Rosenkranz, the

President of DynCorp’s ITS Division, designated Richard Walsh,

the Vice President for Operations, to serve as a “mentor” to

help Worldwide Services improve its performance.                            Walsh began by

having weekly meetings with Worldwide Services’ executives Gray

and    Bailey,     and    in   the     first       meeting     Walsh    emphasized      that

Worldwide Services was “in danger of losing [DynCorp’s] business

altogether” if its performance did not improve.                               In February

2006,     Walsh     traveled      to       Afghanistan         to     observe       Worldwide

Services’        performance      on       the     ground      and,    as    Walsh     later

testified, he found “[t]he situation . . . much worse than I had

thought” and observed that “the basics were not being taken care

of.”     Walsh was particularly concerned that those traveling into

hostile areas were at greater risk because the high-frequency

                                              44
radio network, for which Worldwide Services had responsibility,

was not working properly.

        When        Walsh    shared      his      observations      with    Rosenkranz,

Rosenkranz           expressed     hope     that     DynCorp      could    still     “whip

[Worldwide          Services]     into    shape.”       Rosenkranz       also    described

Worldwide Services as “one of the favored ones,” suggesting that

he     shared        Walsh’s      view    that      Worldwide      Services       received

“protection” from Steve Cannon, DynCorp’s CEO and the DynCorp

executive           most    responsible     for      DynCorp’s     relationship       with

Worldwide Services.

        In    addition       to   Walsh’s      efforts,    DynCorp    also       conducted

internal investigations into Worldwide Services’ performance in

both    Iraq        and    Afghanistan,     and     DynCorp’s     management     received

separate reports from these investigations.                          The report from

Iraq,    completed          by    June   19,    2006,    noted    that     the    “concern

regarding the status of IT and the [Worldwide Services] team

that provides that service to [DynCorp] is well-founded.”                                 But

it also noted that “recent efforts by the [Worldwide Services]

team to improve the situation are typically reaching positive

results” and that “[t]he current situation is a contrast from

what is typically perceived as a rather negative history.”                             The

report       from     Afghanistan,       completed      between    July    22-31,    2006,

found        that    “the    CIVPOL      Afghanistan      program    suffers       from    a



                                               45
serious IT and [c]ommunications problem that is resulting in

reduced program efficiency and effectiveness.”

        DynCorp’s relationship with Worldwide Services suffered an

additional serious blow when DynCorp received a third letter

from    the       State     Department         --    this    time    from   the       contracting

officer          overseeing       the     CIVPOL      contract       --   complaining          about

Worldwide Services’ performance.                           This letter, dated June 23,

2006,       emphasized         the      State        Department’s         “concern[s]          about

pervasive information technology (IT) performance deficiencies

on    all    DynCorp        Task     Orders.”            After     describing     a    number    of

specific issues, the letter concluded by requesting a meeting

“to     discuss         this      broad       spectrum       of    information         technology

deficiencies,”            noting        that        “[t]he    varied      nature       of      these

problems          and     their       pervasiveness           suggests      that       they      are

systemic.”              Shortly      after     DynCorp       received     this     letter,      its

Board       of     Directors         held      a     meeting,       at    which       Cannon     was

questioned          about      the    State        Department’s       complaints.           Cannon

responded          that     “it      might     become        necessary      to    replace       the

subcontractor in question.”                         Four days later, however, Cannon

resigned as President and CEO of DynCorp.

        Cashon, the program manager, then decided not to issue any

additional CIVPOL task orders to Worldwide Services in Iraq.

While       it    was     typical       for    the       program    manager      to    make    such

decisions, in this case there was evidence that Rosenkranz and

                                                    46
Walsh participated in the decision.                       During the last week of

July, Cashon also decided to allow all remaining CIVPOL task

orders directed to Worldwide Services to expire and not to renew

DynCorp’s subcontract with Worldwide Services.

         Worldwide    Services        commenced    this    action      alleging,      among

other things, that DynCorp’s decision not to issue further task

orders and not to renew its CIVPOL subcontract was the product

of intentional racial discrimination, in violation of 42 U.S.C.

§ 1981.       At trial, Worldwide Services presented five items of

direct evidence to demonstrate racial animus.

         First,    Charles     Jones,    Worldwide    Services’         Deputy   Program

Manager in Iraq from March 2006 to August 2006, testified about

racially      offensive       statements    made    by     Leon   DeBeer,     DynCorp’s

Iraq     IT   Manager    and    the     DynCorp    employee       to   whom   Worldwide

Services’         employees    reported     in     Iraq.       Specifically,          Jones

testified that in private conversations, DeBeer, a white South

African, regularly referred to Worldwide Services’ Walter Gray

as   a    “nigger,”     a     “bush    native,”     and    a   “kaffir.”         He    also

testified      that    DeBeer    regularly        complained      that   white     people

“had made a grave error” by “tak[ing] the black man as a youth

and attempt[ing] to clothe him and send him to school” because

“the proper role of the black man was to go out and kill a lion,

proving his manhood, at which point in time he should be put to

work to feed his family” and “be mated with a woman so that he

                                            47
would have more children, who could then be put to work feeding

the family.”

     Second, Jones testified that while he was in Iraq, he heard

Mike Kehoe, DynCorp’s Deputy Program Manager in Iraq for another

State Department contract, describe the acronym for Worldwide

Network Services, “WWNS,” as standing for “where white men never

stay.”

     Third,     John   Mack,   a   part    owner   of   Worldwide   Services,

testified that he once heard Walsh refer to Gray as “a stupid

black mother --.”

     Fourth, Richard Spencer, a former DynCorp executive in the

ITS Division who is Hispanic, testified about the lack of racial

diversity among DynCorp’s ITS executives and about his belief

that his ethnicity played a role in the termination of his own

employment. *




     *
        The    majority   attributes    Spencer’s  termination to
Rosenkranz   and   repeatedly   refers   to   it  as  evidence of
Rosenkranz’s racial animus.      But Spencer testified that while
Rosenkranz signed his termination letter, Spencer had a “fairly
good” relationship with Rosenkranz, who is “not a bad guy.”
Spencer instead suggested that his termination was the decision
of Herb Lanese, DynCorp’s CEO at the time, who did not like
Spencer “for whatever reason.”         Moreover, Spencer did not
attribute any racial motivation to Rosenkranz in signing the
letter.    Considered in its full context, Spencer’s testimony
about his termination should not be used to impute racial animus
to Rosenkranz.


                                      48
        Finally, Spencer also testified about a dinner he attended

in October 2006 for all of Rosenkranz’s direct subordinates and

their    guests   --   approximately             40   persons    --   at    which    Bill

Cavanaugh,    DynCorp’s       Vice       President     for    Business     Development,

presented Walsh with a shirt that said, “WWNS -- I took them

down, and all I got was this lousy T-shirt.”                          Cavanaugh then

proceeded to read a series of fictitious letters, the last of

which     purported    to     be     from    Gray.           According     to   Spencer,

Cavanaugh read the letter, “mak[ing] a bad impression of Walter”

by talking like “the character on Fat Albert” and using “his

interpretation of Ebonics.”                 Spencer testified that everybody

laughed and that specifically Rosenkranz “was laughing his ass

off” and Walsh was “laughing, happy.”

        Recognizing    that        the    evidence      most     strongly       described

racial animus of DeBeer, DynCorp requested a jury instruction

from the district court, based on Hill, limiting those employees

whose racial animus would be imputable to the corporation.                           Its

requested instruction provided in part:

        To the extent that [Worldwide Services] rests its
        discrimination     claim   upon    the    discriminatory
        motivations of a subordinate employee, [Worldwide
        Services] must show by the greater weight of the
        evidence that the subordinate employee possessed such
        authority to be viewed as the one principally
        responsible    for    the  decision    or   the   actual
        decisionmaker for DynCorp.




                                            49
       The     district       court      refused         to    give      the      instruction,

justifying its refusal by making a distinction between this case

and Hill.       The court noted that the Hill opinion was limited to

employer liability under Title VII and the ADEA, whereas this

case    involves      liability         under       §    1981.        The       court     stated,

“Plaintiffs      pursuing        claims    under         Title     VII     or    the    ADEA    are

subject to stricter scrutiny than those pursuing claims under

Section      1981   because       Title    VII      and       ADEA    actions       must   first

proceed through the EEOC process.”                         The court noted that our

decision in Hill has “never been extended beyond claims brought

under Title VII and the ADEA,” and it “decline[d] to be the

first court to expressly do so.”                        The court concluded that “the

Hill   standard       is   not    a     correct         statement     of    law     for    claims

brought under 42 U.S.C. § 1981.”

       Rather than limit DynCorp’s discrimination liability under

§ 1981    to    the    standard         stated      in     Hill,     the        district    court

instructed      the    jury      that    the     “race        of   [Worldwide          Services’]

owners . . . must have been a factor that actually led to the

decision . . . not to renew or extend [Worldwide Services’]

CIVPOL subcontract or task orders.”                      (Emphasis added).

       The   jury     found    that      DynCorp’s         decision        not    to    renew   or

extend Worldwide Services’ CIVPOL subcontract or task orders was

based in part on racial animus imputed to the corporation, and

it returned a verdict in favor of Worldwide Services on its

                                               50
§ 1981 claim, awarding it $3.42 million in compensatory damages

and $10 million in punitive damages.                          From the judgment entered

on the jury’s verdict, DynCorp filed this appeal.



                                             II.

     DynCorp’s         decision       not    to         renew       its   subcontract        with

Worldwide        Services       was     a        corporate            decision,       and     the

corporation’s management testified that the corporate decision

was made by executives whose motive for ending the relationship

with Worldwide Services was only business oriented -- based on

Worldwide        Services’        poor            performance,             as       graphically

demonstrated by the three letters of complaint from the State

Department -- and not for any reason of race.

     Worldwide         Services       alleges          that     race      was   a   motivating

factor,    and    the    vast    bulk       of    its        direct    evidence       of   racial

animus bore on DeBeer, the IT Manager in Iraq.

     As     a    middle       manager,       DeBeer’s           views      about      Worldwide

Services’ performance were influential in that Cashon listened

to executives both below and above him.                          But DeBeer was not the

decisionmaker or even one of several possible decisionmakers.

Everyone    at    DynCorp       testified             that    the     person    who    had    the

authority to make the decision not to renew Worldwide Services’

subcontract was Cashon, the manager for the CIVPOL program, who

concededly       did    not   have     any       racial        animus      toward     Worldwide

                                                 51
Services.        Indeed, he was a strong supporter of the firm until

evidence started coming in about its deficiencies.                           There was

also testimony that two other DynCorp executives, Rosenkranz and

Walsh,    participated      in    the    decision.       While      there      was    some

evidence of racial animus imputable to them, it was much weaker

and more isolated than that imputed to DeBeer.                          Specifically,

testimony showed that Rosenkranz and Walsh laughed at racial

jokes directed at Worldwide Services told at a dinner and that

Walsh once make a racial slur about Worldwide Services’ Walter

Gray.

     In short, without the racial animus of DeBeer, no one can

predict    how     the   jury    might    have    ruled.         The    record        amply

supports     DynCorp’s      suggestion      that,       absent      DeBeer’s      racial

animus, the evidence may have been too weak as a matter of law

to support a § 1981 claim and that therefore DeBeer’s racial

animus     was    critical.        Because       the    district       court     allowed

DeBeer’s racial animus to be considered by the jury in deciding

whether DynCorp’s decision was racially motivated, it is a real

possibility that it allowed the jury to find § 1981 liability

erroneously.        This    is   because    DeBeer,      as   the      subordinate      of

Cashon, had influence on Cashon’s decision on behalf of DynCorp.

Without     testimony      of    DeBeer’s      racial    animus,       the     jury    was

essentially left with direct evidence that Rosenkranz and Walsh



                                          52
laughed at racial jokes about Worldwide Services and Walsh once

spoke a racial slur about Gray.

      Thus, it was likely critical to the jury’s verdict whether

DeBeer’s     racial     animus    could        be    imputed    to        DynCorp      as   a

motivating     factor     in     its     not      renewing     Worldwide         Services’

subcontract.      Had    the     district         court    applied    Hill,      the    jury

would have been told that DynCorp was not “liable . . . for the

improperly motivated person [DeBeer] who merely influences the

decision.”     Hill, 354 F.3d at 291.               We explained in Hill that an

employee, such as DeBeer, does not become a decisionmaker whose

discriminatory    motivations          may     be    attributed      to    the     employer

“simply because he had a substantial influence on the ultimate

decision or because he has played a role, even a significant

one, in the adverse employment decision.”                    Id. (emphasis added).

If Hill had been applied, the jury would have been told that

Worldwide    Services     had    to    prove        that   DeBeer     “possessed        such

authority as to be viewed as the one principally responsible for

the   decision   or     the     actual    decisionmaker         for       the    employer”

before it could consider the impact of DeBeer’s racial animus.

Id. (emphasis added).            Based on the testimony in this record

that Cashon made the decision with Rosenkranz and Walsh and that

DeBeer did not have the authority of one principally responsible

for   the    decision    but     could       only     be    tagged    as     one    having



                                             53
influence    on    it,       DeBeer’s       racial    animus   would       not   have   been

imputable to DynCorp.

     In     limiting           a      corporation’s       liability          for      racial

discrimination          in    Hill     to    the     conduct   of     persons      actually

responsible       for        the    corporation’s        action,      we     carried     out

Congress’ intent to hold a corporation responsible for racial

discrimination           only       when      its      executives       and        employees

responsible       for    the       corporation’s      decision      acted     with    racial

animus,     not    when       any     corporate       employee      manifested        racial

animus.

     The district court, however, rejected the application of

Hill to § 1981 and instead instructed the jury that the race of

Worldwide     Services’            owners    “must     have    been    a     factor     that

actually     led        to      the     decision”        to    terminate         DynCorp’s

relationship with Worldwide Services.                    As a result, the jury was

permitted to consider the racial animus of any employee whose

influence “actually led to the decision.”                           The district court

thus extended corporate liability for § 1981 to the actions of

any person who influenced the decision, regardless of whether

that person was a decisionmaker.                      If Hill was applicable, the

district court’s instruction was legally erroneous.

     Not    only    was       the     district      court’s    instruction         erroneous

under Hill, if Hill was applicable, the error was material to

the outcome in this case.                    Without consideration of DeBeer’s

                                              54
racial    animus,     the   evidence     to    support   a     verdict    was    thin,

perhaps     even    fatally    thin,     and    the     district       court     surely

recognized this.         It devoted substantial discussion to why it

decided not to give the Hill instruction, concluding that Hill

was “not a correct statement” of § 1981 law and that corporate

agency    for     discrimination     under      Title    VII     was    “subject       to

stricter scrutiny” than corporate agency under § 1981.                         Indeed,

the court acknowledged the importance of Hill when it stated

that it “adopted whole cloth DynCorp’s proffered Section 1981

jury     instructions,      excluding    only     the    language       specifically

addressing Hill’s holding.”          (Emphasis added).

       The dispositive question on appeal, therefore, reduces to

whether    Hill     accurately     describes     when    the    racial    animus       of

corporate employees may be imputed to a corporation for purposes

of the corporation’s liability for racial discrimination under

§ 1981.      I     submit   that   how   racial       animus    is     imputed    to    a

corporation for corporate liability is the same issue, whether

discrimination is alleged to be in violation of Title VII or of

§ 1981, as we have so recognized.                Indeed, the majority, too,

assumes that Hill applies to § 1981 claims.                    This assumption is,

I believe, correct and determinative of this appeal.




                                         55
                                       III.

       In Hill, a former Lockheed mechanic, whose employment was

terminated on the basis of three written reprimands, brought an

action against her corporate employer under Title VII and the

ADEA, alleging that her team’s safety inspector’s discriminatory

animus    led   him   “to     report    admittedly        valid     infractions,”

resulting in her second and third reprimands.                Hill, 354 F.3d at

283.     Hill’s claim therefore rested on her argument that the

safety    inspector’s       alleged    discriminatory      animus     should   be

imputed to the corporation.            Hill did not dispute that she had

violated corporate rules and standards, and she did not assert

that her direct supervisors, who issued the reprimands, or her

two program managers, who terminated her employment, acted with

discriminatory animus.          The district court granted Lockheed’s

motion for summary judgment, and we affirmed.                We held that Hill

could not base a claim on the safety inspector’s animus because

he was not one of the corporation’s decisionmakers with respect

to the decision to issue reprimands to Hill or to terminate her

employment.

       In reaching this result, we held that “an employer will be

liable   not    for   the    improperly       motivated    person    who   merely

influences the decision [to take an adverse employment action],

but for the person who in reality makes the decision.”                      Hill,

354 F.3d at 291 (emphasis added).              To be sure, we did not limit

                                        56
corporate liability under Title VII and the ADEA to the actions

of only “formal decisionmakers for the employer,” because doing

so might allow employers “to insulate themselves from liability

simply by hiding behind the blind approvals, albeit non-biased,

of formal decisionmakers.”          Id. at 290 (emphasis added).              But we

also rejected the notion that the discriminatory motivations of

an employee may be attributed to the employer “simply because he

had a substantial influence on the ultimate decision or because

he has played a role, even a significant one, in the adverse

employment decision.”           Id. at 291.       Thus, we concluded that in

determining a corporation’s liability under Title VII or the

ADEA, the focus must be on the motivations of those agents of

the   corporation      who      actually       made   the     adverse     employment

decision on behalf of the corporation:

      In sum, to survive summary judgment, an aggrieved
      employee who rests a discrimination claim under Title
      VII or the ADEA upon the discriminatory motivations of
      a   subordinate  employee   must  come   forward  with
      sufficient evidence that the subordinate employee
      possessed such authority as to be viewed as the one
      principally responsible for the decision or the actual
      decisionmaker for the employer.

Id.

      Even   though    Hill     defined    corporate        liability     under   only

Title VII and the ADEA, the agency issue resolved in Hill exists

under any discrimination statute creating corporate liability.

See   Burlington      Indus.,    Inc.     v.    Ellerth,     524   U.S.    742,    754


                                          57
(1998).       More to the point, in § 1981 claims, courts must answer

the    same     “general       question      [of]      the    proper         extent     of    a[]

[corporate] employer’s responsibility for the offensive acts of

its employees.”             Dennis v. County of Fairfax, 55 F.3d 151, 155

(4th Cir. 1995).             And Congress, in drafting § 1981, need not

have   provided        an    explicit       direction        to    be    clear       that    this

question “implicates principles of agency law.”                                  Id. at 155.

Indeed,    we    have       previously      recognized        that       the    same    general

agency    principles         apply    in    interpreting           §    1981    as    apply    in

interpreting Title VII.               See Spriggs v. Diamond Auto Glass, 242

F.3d 179, 184, 186–90 (4th Cir. 2001) (noting that under both §

1981   and     Title    VII     there      must   be    “some          basis    for    imposing

liability       on   [the      corporate       defendant]”             and     analyzing      the

employer’s      liability       for    a    racially     hostile         work     environment

without       distinguishing          between     the        two       statutes       (internal

quotation marks and citation omitted)); Lowery v. Circuit City

Stores, Inc., 206 F.3d 431, 441 (4th Cir. 2000) (using the Title

VII standard for imputing liability to a corporate employer for

conduct alleged to justify punitive damages under § 1981).

       Moreover, it would be analytically discordant not to apply

Title VII agency principles to § 1981 agency questions.                                        An

employee      alleging        that    his    corporate        employer          intentionally

discriminated against him on the basis of race, in violation of

both Title VII and § 1981, would oddly be able to demonstrate

                                             58
his employer’s liability under § 1981 for the discriminatory

motivations of an employee who substantially influenced, but did

not   make,    the    decision          to   take    an   adverse    employment         action

against him, but he would not be able to do so under Title VII.

Similarly,      an    employee         alleging      intentional     discrimination        on

the   basis      of    sex        or    religion        premised    on     a     subordinate

employee’s influential animus would have no recourse, while her

coworker’s analogous § 1981 claim would succeed.                           While we must

recognize that Title VII and § 1981 provide “separate, distinct,

and independent” causes of action, Johnson v. Railway Express

Agency,    Inc.,      421     U.S.       454,     461     (1975),    the       standard   for

imputing racial animus to a corporation in making out each claim

must, out of logical and practical necessity, be the same.

      Worldwide Services argues bluntly that Hill should not be

expanded       because       it        was   erroneously        decided,        relying     on

decisions      in    other    circuits        that      have   criticized       Hill.      See

Poland    v.    Chertoff,         494    F.3d    1174,     1182-83    (9th       Cir.   2007)

(finding Hill’s rule too narrow and holding instead that “even

if the biased subordinate was not the principal decisionmaker,

the biased subordinate’s [improper] motive will be imputed to

the employer if the subordinate influenced, affected, or was

involved in the adverse employment decision”); EEOC v. BCI Coca-

Cola Bottling Co. of L.A., 450 F.3d 476, 487 (10th Cir. 2006)

(critiquing Hill’s “peculiar focus on who is a decisionmaker for

                                                59
purposes of discrimination actions” on the ground that, under

agency law principles, an employer’s agents “include[] not only

‘decisionmakers’ but other agents whose actions, aided by the

agency   relation,      cause   injury”         (internal     quotation      marks   and

citation omitted)); Lust v. Sealy, Inc., 383 F.3d 580, 584 (7th

Cir. 2004) (criticizing Hill as “inconsistent with the normal

analysis of causal issues in tort litigation”); cf. Ricci v.

DeStefano, 129 S. Ct. 2658, 2689 (2009) (Alito, J., concurring)

(noting circuit split and describing Hill as adopting “[t]he

least employee-friendly standard” by “ask[ing] only whether ‘the

actual decisionmaker’ acted with discriminatory intent”).                            But,

it   would   be   inappropriate      for    us     to    limit   Hill    arbitrarily,

which is precisely what we would have to do in order to conclude

that the agency principles announced in Hill do not apply to

§ 1981   actions.        Worldwide    Services’          argument    that    Hill    was

wrongly decided can only be directed to this court sitting en

banc.

      In sum, the issue of when to impute the racial animus of an

employee     to   a   corporation    for    liability        under   Title     VII   and

§ 1981 must be and, indeed, is the same.                     See Spriggs, 242 F.3d

at   184,    186-90;     Lowery,     206    F.3d        at   441.       It   was     thus

prejudicial error for the district court to have concluded that

the standard was different and to have refused to instruct the

jury on the Hill standard for determining whether the racial

                                           60
animus of DeBeer was imputable to DynCorp in connection with

DynCorp’s decision not to renew the subcontract with Worldwide

Services.      Because a new trial on Worldwide Services’ § 1981

claim    is   thus   required,   I   would   vacate    the   judgment   on   the

§ 1981    claim,     including   the   award   of     punitive   damages,    and

remand for a new trial, requiring the district court to instruct

the jury on Hill.




                                       61
JONES, Chief District Judge, concurring in part and dissenting
in part:

       I join with Judge Duncan in affirming the district court’s

refusal to instruct the jury based on Hill v. Lockheed Martin

Logistics Mgmt., Inc., 354 F.3d 277 (4th Cir. 2004), its denial

of a Rule 50(b) motion on the plaintiff’s § 1981 claim, and its

evidentiary rulings.            However, I would also affirm the district

court’s refusal to set aside the jury’s punitive damage award. 1

       The majority finds that there was insufficient evidence to

support an award of punitive damages as to the § 1981 claim.                       To

the    contrary,      I   believe     that     there   was    ample    evidence   that

DynCorp       International,           LLC        (“DynCorp”)     terminated       the

subcontract      it   entered        into    with   Worldwide   Network     Services,

Inc.       (“WWNS”)       to   provide       communication       and    information-

technology      services       for    the    U.S.   State    Department’s    Civilian

Police programs in Iraq and Afghanistan (“CivPol Subcontract”)


       1
       The result of the majority holding in this appeal is to
remand the case for a new trial solely on to the issue of
punitive damages as to Count 3, tortious interference with
contract. Punitive damages on that count will be capped by state
law at $350,000. Va. Code Ann. § 8.01-38.1 (2007). Under Judge
Niemeyer’s view of the case, the case would be remanded for a
new trial as to both liability and damages on the § 1981 claim.
Because there is no statutory cap on § 1981 punitives, this
result would preserve the possibility of a larger punitive
damage award –- perhaps as much as $10 million, as awarded by
this jury.    If WWNS had its option, it might prefer Judge
Niemeyer’s result, but of course we do not decide legal issues
on the basis of the parties’ preferences.


                                             62
in the face of knowledge that “it may be acting in violation of

federal law.”         Kolstad v. Am. Dental Ass’n, 527 U.S. 526, 535

(1999).

       Indeed, DynCorp was warned by WWNS that ending the CivPol

Subcontract might violate WWNS’s federally protected rights.                                On

July 26, 2006, WWNS sent DynCorp’s in-house counsel a letter,

via     e-mail       and     overnight            mail,       demanding        that    DynCorp

immediately        “comply        with      its    obligations         under    the”    CivPol

Subcontract and informing DynCorp that WWNS had “evidence that

DynCorp’s actions have been racially-motivated in violation of

federal anti-discrimination laws.”                        (J.A. 2692.)          The evidence

also       shows   that     the       executives        who     made    the     decision    to

terminate the CivPol Subcontract were aware of the contents of

this letter.          On July 26, 2006, WWNS Chairman and CEO, Walter

Gray, wrote two of DynCorp’s decisionmakers, Richard Cashon and

Robert Rosenkranz -- as well as Herb Lanese, the CEO of DynCorp

--    to    confirm       that    DynCorp’s        in-house      counsel       received    the

letter “regarding [DynCorp’s] wrongful and improper conduct in

terminating        [WWNS’s]        services       under    the     CivPol      subcontract.”

(J.A.       2694.)         Richard          Walsh,      Division       Vice-President        of

Operations for DynCorp, later e-mailed an internal PowerPoint

presentation         to    other       DynCorp         executives      including        Cashon,

outlining the eventual termination of the CivPol Subcontract.

One    of    the   slides        of   the    presentation        stated     that      “[r]ecent

                                                  63
correspondence indicate[s] that WWNS is planning legal action

against [DynCorp] based on racial discrimination.”                       (J.A. 2788.)

       Comparing this case to Anderson v. G.D.C., Inc., 281 F.3d

452    (4th   Cir.       2002),   it    is   clear   a     jury      could     reasonably

conclude from the July 26 letter that DynCorp’s decisionmakers

discriminated against WWNS “in the face of a perceived risk that

its actions will violate federal law.”                         Kolstad, 527 U.S. at

536.    In Anderson, one of the defendant’s employees was found to

have sexually harassed the plaintiff in violation of Title VII,

a federal law prohibiting discrimination on the basis of sex.

281    F.3d   at    458-59.       The    only     evidence       presented      that   the

employee knew of the Title VII prohibition was that he looked

at, but did not read, a poster entitled “Sexual Harassment,”

advising employees of proper workplace conduct.                              Id. at 460.

Nevertheless,           this   court    found      that        the   employee’s        mere

“awareness”        of    the   poster   “suggested        at    least    a    rudimentary

knowledge of its import” sufficient to pass the Kolstad test.

Id.

       Here, the DynCorp decisionmakers were directly warned, and

even anticipating, that they would have to confront litigation

for    racial      discrimination       if    they   continued          to    pursue   the

termination of the CivPol Subcontract.                   Their level of awareness

of WWNS’s federally protected rights was therefore well beyond



                                             64
that of the employee in Anderson who at most saw the title of a

poster on a wall.

     DynCorp argues that, even if the July 26 letter did put the

decisionmakers on notice, it came too late to avoid violating

§ 1981, but I find little merit to this argument.                                 The letter

was sent well before WWNS had ceased operations under the CivPol

Subcontract in either Iraq or Afghanistan.                          Not only were the

task orders under the CivPol Subcontract still in effect, but

DynCorp had not yet notified WWNS of its intention to let any of

the task orders expire.

     The    task       order      in   Iraq     was   not    scheduled       to   end     until

August 11, 2006.             Although DynCorp formally informed WWNS in a

letter dated July 28, 2006, that DynCorp intended to let the

personnel     portion        of    this       task    order      expire,     DynCorp      also

extended    its     purchase       of    services      from      WWNS   in   Iraq    another

thirty days.

     Moreover,         the     four     task    orders      in   Afghanistan       continued

until August 31, September 8, September 30, and October 9, 2006,

months after WWNS’s warning.                    According to the CivPol Program

Manager Richard Cashon, “The task orders in Afghanistan had a

little bit more time on them . . . .                               It could have been

conceivable       to    continue         with     WWNS      in   Afghanistan,        if    the

situation dictated it, even though we were transitioning out of

Iraq.”      (J.A.      1678.)          According      to    DynCorp’s      own    PowerPoint

                                                65
presentation, the “[f]inal transition” from WWNS was not set to

occur until October 9, 2006.                (J.A. 2791.)      Thus, even if, by

July 26, 2006, DynCorp’s decisionmakers were already scheming to

terminate the CivPol Subcontract, they still had plenty of time

to reverse their decision in order to avoid violating § 1981.

      Accordingly, I find that there was sufficient evidence that

DynCorp      was   aware   that       its    actions      might   violate   WWNS’s

federally protected rights, 2 and I would not vacate the punitive

damage award on this ground.

      In addition, because DynCorp did not properly object to the

district court’s punitive damage instruction to the jury, and

because the instruction given did not prejudice DynCorp, I would

not vacate the award on that ground.

      Finally, the amount of the punitive damage award does not

violate due process, as argued by DynCorp, and is not assailable

for   that    reason.      See    State      Farm   Mut.    Auto.    Ins.   Co.    v.

Campbell, 538 U.S. 408, 425 (2003) (holding that a single digit

ratio,    especially    four     to   one    or   less,    between   punitive     and

compensatory damages is “likely to comport with due process”).




      2
       It is true, as Judge Duncan points out, that in affirming
the punitive damage award, the district court did not cite any
evidence that DynCorp had knowledge that it might violate
§ 1981.   However, DynCorp never claimed below that it lacked
knowledge of WWNS’s federally protected rights.


                                            66
     For   these   reasons,   while   I   otherwise   agree   with   Judge

Duncan, I respectfully dissent from setting aside the jury’s

punitive damage award.




                                  67
