                    United States Court of Appeals
                          FOR THE EIGHTH CIRCUIT
                                   ___________

                                Nos. 05-3414/3884
                                  ___________

Pamela Allen,                         *
                                      *
           Appellee,                  *
                                      * Appeals from the United States
     v.                               * District Court for the
                                      * Eastern District of Arkansas.
Tobacco Superstore, Inc.; HEK, Inc.,  *
                                      *
           Appellants.                *
                                 ___________

                             Submitted: April 11, 2006
                                Filed: February 2, 2007
                                 ___________

Before RILEY, BEAM, and SMITH, Circuit Judges.
                            ___________

RILEY, Circuit Judge.

       Pamela Allen (Allen), a black African American, brought this action pursuant
to Title VII of the Civil Rights Act of 1964, 42 U.S.C.§ 2000e-2000e-16, and 42
U.S.C. § 1981, alleging Tobacco Superstore, Inc., and HEK, Inc. (collectively, TSI),
failed to promote her based on race and in retaliation for filing a charge of
discrimination with the Equal Employment Opportunity Commission (EEOC). The
district court found in Allen’s favor and awarded Allen back pay, compensatory
damages, punitive damages, attorney fees, and costs. TSI appeals. We affirm in part,
reverse in part, and remand for further proceedings.
I.     BACKGROUND
       TSI operates a chain of eighty-two retail tobacco stores in Arkansas, Tennessee,
Mississippi, and Missouri. In May 2001, TSI opened a new store in Dumas, Arkansas.
On May 19, 2001, TSI area supervisor Jo Bearden (Bearden),1 a Caucasian, hired
Allen as a clerk at the Dumas store, at the pay rate of $5.25 per hour. In June 2001,
Bearden hired Phyllis Lovell (Lovell), a Caucasian, as the Dumas store manager. On
July 23, 2001, Bearden promoted Allen to assistant manager and raised Allen’s pay
to $6.25 per hour.

       On December 24, 2001, TSI’s retail operations manager, Larry Cobb (Cobb),
a Caucasian, returned a telephone call to Lovell at the Dumas store. During the phone
call, Allen entered the store office and overheard Lovell complaining to Cobb about
Allen. Lovell and Allen argued as they took turns talking with Cobb. According to
Cobb, both Lovell and Allen were speaking very loudly and Cobb expressed concern
customers in the store might hear the argument. Cobb received Lovell’s assurance she
and Allen could finish the work day without another argument.

      Cobb was upset by the lack of leadership shown by Lovell and Allen, and
decided to terminate both women. On December 26, pursuant to Cobb’s instruction,
Bearden fired Lovell because of the December 24 incident. However, with Cobb’s
approval, Bearden allowed Allen to transfer to the McGehee, Arkansas, store as a
cashier and to retain her $6.25 rate of pay. Bearden hired Margie Hill (Hill), a
Caucasian, as the Dumas store manager, and on January 15, 2002, hired Tamara L.
White (White), also a Caucasian, to replace Allen as assistant manager. Neither Hill
nor White had previous experience with TSI.




      1
      Bearden supervised ten stores in southeast Arkansas, including stores in Dumas
and McGehee, Arkansas. Bearden was responsible for staffing approximately fifty
employees at the ten stores.
                                         -2-
       On December 27, 2001, McGehee store manager, Becky Smith (Smith), a
Caucasian, confronted cashier, Kelly Morgan (Morgan), a Caucasian. In the presence
of customers, Smith began chastising Morgan about coming into work too early. The
argument continued for about ten minutes. Morgan told Alice Williams (Williams),
an assistant manager at the McGehee store, about the incident and Williams suggested
Morgan speak to Bearden. Williams and Morgan then left the McGehee store and
went to the Dumas store to talk to Bearden. When Bearden called and questioned
Smith about the incident, Smith became belligerent and quit. On January 27, 2002,
Bearden instructed Williams to train Morgan for the McGehee store manager position.

      In March 2002, Allen filed a charge with the EEOC alleging (1) TSI
discriminated against Allen because of her race when TSI hired less-qualified
Caucasian females as manager and assistant manager of the Dumas store in January,
and (2) TSI retaliated against Allen because she complained to Bearden about racial
remarks made by Lovell.

        The EEOC concluded no violation occurred, but issued Allen a right-to-sue
letter on July 31, 2002. Allen filed the instant suit on October 15, 2002, alleging TSI
discriminated against Allen because of her race asserting (1) TSI transferred Allen to
the McGehee store to prevent Allen from becoming the Dumas store manager, (2) TSI
refused to promote Allen to management vacancies at the Dumas store, and (3) Allen
was subjected to a hostile work environment at both the Dumas and McGehee stores.

       After filing suit, Allen continued to work as a cashier at the McGehee store.
Morgan remained store manager until Morgan’s termination on November 22, 2002.
After terminating Morgan, Bearden hired a non-TSI employee, Jeannette Goggans
(Goggans), a Caucasian, as the new McGehee store manager. On January 29, 2003,
Allen amended her complaint, adding the allegation TSI refused to promote Allen to
the McGehee store manager position in November 2002 because of her race and in
retaliation for filing an EEOC charge. Allen further alleged TSI reduced her work

                                         -3-
hours in December 2002 because of her race, and in retaliation for filing the EEOC
charge.

       Allen continued to work at the McGehee store after Goggans became store
manager. On January 2, 2004, when Allen arrived at work, she noticed Goggans
assigned Allen all late shifts for the following week. Allen became upset because she
requested earlier shifts. Allen confronted Goggans and asked whether Goggans had
seen Allen’s note regarding the work schedule. Goggans told Allen she had not. Allen
became agitated and Goggans told Allen if she could not calm down, she should get
her belongings and go home. Allen asked Goggans whether she was being fired, and
Goggans said, “no.” Approximately one hour and twenty minutes later, Allen asked
Goggans whether Goggans meant what she said when she told Allen to leave.
Goggans responded, “yes.” Allen walked out of the store and did not return. Allen
subsequently obtained employment with another company.

         TSI moved for summary judgment on all claims. The district court granted
TSI’s motion as to Allen’s hostile work environment claim, but denied the motion as
to Allen’s race discrimination and retaliation claims. On August 20, 2004, three days
before Allen’s case was set to go to trial, the district court sua sponte set the case for
trial to a jury. Following a seven-day trial, the jury found in favor of Allen on her
failure to promote claims, but found in favor of TSI on Allen’s retaliation and
termination claims. The jury awarded Allen $23,100.00 in compensatory damages
and $100,000.00 in punitive damages.

       On January 6, 2005, the district court vacated the jury verdict, concluding it
erred in sua sponte ordering a jury trial. Nevertheless, the district court reasoned it
had the authority to call an advisory jury pursuant to Federal Rule of Civil Procedure
39, and thus would treat the jury verdict as advisory. Thereafter, on June 16, 2005,
the district court issued an order making its own findings of fact and conclusions of
law. See Allen v. Tobacco Superstore, Inc., 375 F. Supp. 2d 796 (E.D. Ark. 2005).

                                           -4-
The district court determined (1) TSI had not discriminated against Allen by failing
to promote her to a management position in December 2001; (2) TSI discriminated
against Allen by failing to promote her to the Dumas assistant manager position in
January 2002; (3) TSI discriminated and retaliated against Allen by failing to promote
Allen to McGehee store manager in November 2002; and (4) TSI did not terminate
Allen, but rather Allen walked off the job. Id. at 802, 804, 806.

       The district court denied TSI’s motion for a new trial, reasoning TSI was not
prejudiced by having to present its case to a jury rather than to the bench. The district
court also denied TSI’s motion for judgment as a matter of law as a sanction for what
TSI contended was Allen’s repeated perjury. The district court found Allen’s
omissions and alleged perjury were not material and did not rise to the level of an
abuse of the judicial process warranting a dismissal of the lawsuit. Id. at 806.
Accordingly, the district court awarded Allen $16,116.26 in back pay plus
prejudgment interest, $7,500.00 in compensatory damages, and $75,000.00 in punitive
damages. Id. at 808-09. The district court also awarded Allen $74,905.00 in attorney
fees and $4,122.28 in costs. This appeal followed.

II.    DISCUSSION
       TSI argues the district court (1) abused its discretion by not imposing severe
sanctions on Allen for committing perjury; (2) erred in its findings of fact and
conclusions of law by rejecting as pretextual TSI’s stated reasons for not promoting
Allen to a management position; (3) erred in numerous evidentiary rulings and in
relying on theories abandoned by Allen; (4) compounded its initial error of improperly
ordering a jury trial by using the jury’s verdict as advisory and issuing its own
findings of fact and conclusions of law rather than ordering a new bench trial; (5)
erred in awarding excessive compensatory and punitive damages; and (6) erred in
failing to reduce Allen’s attorney fee award based on her limited success.




                                          -5-
       A.    Sanctions
       TSI contends the district court abused its discretion by not striking Allen’s
pleadings, dismissing her claims, or otherwise addressing Allen’s egregious conduct,
which included (1) testifying falsely under oath at her unemployment hearing,
deposition, and trial; (2) making false statements in sworn documents, including her
EEOC charge, responses to discovery requests, and written responses to the
unemployment commission; (3) submitting a fabricated document as an exhibit; and
(4) inducing others to engage in perjury on her behalf. TSI alleges Allen admitted
lying after being confronted at trial with store surveillance videotapes, which
contradicted her pleadings, testimony, and statements.

       We review for an abuse of discretion the district court’s decision regarding the
imposition of sanctions pursuant to its inherent powers or Federal Rule of Civil
Procedure 37. See Martin v. DaimlerChrysler Corp., 251 F.3d 691, 694 (8th Cir.
2001). Our deferential standard of review applies to the district court’s “decision to
impose a sanction, the nature of the sanction imposed, and the factual basis for the
court’s decision.” Chrysler Corp. v. Carey, 186 F.3d 1016, 1019 (8th Cir. 1999)
(citation omitted). The sanction of dismissal of a case is “drastic” and subject to a
more focused review. Id. at 1020. Dismissal should be used only in exceptional cases
because in our justice system, “the opportunity to be heard is a litigant’s most precious
right and should be sparingly denied.” Id. (internal quotation omitted). In addition,
“there is a strong policy in favor of deciding a case on its merits, and against depriving
a party of his day in court.” Id.

       In denying TSI’s motion for judgment as a matter of law as a sanction, the
district court concluded Allen did not present false testimony or withhold evidence
material to the lawsuit, and Allen’s conduct did not rise to the level of an abuse of the
judicial process. We agree.




                                           -6-
       First, the substance of TSI’s claim that Allen gave false testimony is based upon
two events: the Lovell-Allen argument on December 24, 2001, and Allen’s final day
at TSI on January 2, 2004. In pleadings, depositions, and at trial, Allen gave her
account of the events as she recalled them. At trial, TSI presented surveillance
videotapes showing a different version of the events. TSI argues the district court
failed to acknowledge those discrepancies and Allen’s attempt to bolster her case. We
disagree. TSI presented the videotapes to impeach Allen’s testimony as to the events
on December 24, 2001, and January 2, 2004. Apparently, TSI was successful, because
TSI prevailed over Allen’s claims of discriminatory failure to promote in December
2001 and wrongful termination in January 2004. Although impeachment may be clear
and beneficial, the degree of benefit is properly for the trier of fact. Furthermore, like
the district court, we do not find the discrepancies between Allen’s testimony and the
events as depicted on the surveillance videotapes to be so egregious as justify
dismissing Allen’s claims.

      Second, regarding TSI’s allegation Allen falsified applications, TSI essentially
challenges the district court’s credibility findings. We previously have declared
credibility determinations are “within the discretion of the district court and virtually
unassailable on appeal.” United States v. Denton, 434 F.3d 1104, 1114 (8th Cir.
2006) (internal quotation omitted). Furthermore, as the district court noted, the
contested applications were not necessarily material to Allen’s claims because “TSI
did not rely on applications or requests by employees for promotion. Vacancies were
not announced or posted but were filled quite often by word of mouth.” Allen, 375
F. Supp. 2d at 801, 806.

     The district court did not abuse its discretion in denying TSI’s motion for
judgment as a matter of law as a sanction.




                                           -7-
       B.      District Court’s Findings of Fact and Conclusions of Law
       TSI next argues it is entitled to judgment as a matter of law based upon the
district court’s erroneous factual findings and legal conclusions. “We review the
district court’s findings of fact for clear error and its conclusions of law de novo.”
Pachl v. Seagren, 453 F.3d 1064, 1068 (8th Cir. 2006).

              1.     Failure to Promote on January 15, 2002
       TSI alleges the district court’s determination TSI discriminated against Allen
by failing to promote her to assistant manager in January 2002 is inconsistent with the
district court’s determination TSI did not discriminate against Allen on December 27,
2001, by failing to promote her to the McGehee store manager position. TSI
contends, given the serious nature of the Lovell-Allen argument on December 24,
2001, it is unreasonable to believe Allen would have been considered for a promotion
to the assistant manager position at the Dumas store only three weeks later.

       To establish a prima facie case of racial discrimination in a failure-to-promote
claim, a plaintiff must show “(1) she is a member of a protected group; (2) she was
qualified and applied for a promotion to an available position; (3) she was rejected;
and (4) similarly situated employees, not part of the protected group, were promoted
instead.” Shannon v. Ford Motor Co., 72 F.3d 678, 682 (8th Cir. 1996). Failure to
formally apply for a management position does not bar a plaintiff from establishing
a prima facie claim, as long as the plaintiff “made every reasonable attempt to convey
[her] interest in the job to the employer.” Chambers v. Wynne Sch. Dist., 909 F.2d
1214, 1217 (8th Cir. 1990) (quotation omitted). If a prima facie case is established,
“the burden of production shifts to the employer, who must rebut the presumption of
discrimination with evidence ‘that the plaintiff was rejected, or someone else was
preferred, for a legitimate, nondiscriminatory reason.’” Shannon, 72 F.3d at 682
(quoting Texas Dep’t of Cmty. Affairs v. Burdine, 450 U.S. 248, 254 (1981)). A
plaintiff may nonetheless prevail by presenting credible evidence the employer’s
stated reasons are pretextual. Id.

                                         -8-
       Allen met her burden of showing a prima facie case of discrimination. First,
Allen is a member of a protected class. Second, Allen previously held the position of
assistant store manager at the Dumas store. TSI apparently considered Allen qualified
for the assistant manager position since TSI continued to pay Allen at the assistant
manager rate of pay after TSI transferred Allen to the McGehee store as a cashier.
Allen’s lack of an application for promotion does not defeat Allen’s failure to promote
claim, because TSI did not require or even rely on applications. Third, Allen was
passed over for the position. Finally, the position went to Tamara White, a Caucasian
female. The crucial issue, then, is whether the legitimate, non-discriminatory reason
given by TSI for not promoting Allen was pretextual.

       TSI relies on the seriousness of the December 24 Lovell-Allen argument as its
non-discriminatory basis for failing to promote Allen to the Dumas assistant manager
position on January 15, 2002. Allen contends this reason is pretextual since Morgan’s
participation in a similar argument with her store manager did not prevent Morgan
from being promoted to the McGehee store manager position.

       Like the district court, we find no substantial adverse differences between the
Lovell-Allen argument and the Morgan-Smith argument. Allen testified her argument
with Lovell occurred inside the Dumas store office and out of the presence of
customers. The surveillance videotape offered into evidence by TSI was recorded
after the Dumas store closed for the day on December 24, 2001, and therefore could
not corroborate Cobb’s speculation that “[he] knew in [his] mind . . . customers could
hear those people yelling and screaming.” In contrast, it is undisputed the Morgan-
Smith argument occurred in the front of the McGehee store in the presence of
customers. TSI’s assertion Morgan responded more professionally than Allen is
unavailing. First, it was inconsistent for TSI to continue paying Allen at the assistant
manager pay rate of $6.25 per hour after transferring Allen to the McGehee store as
a cashier if TSI deemed Allen’s conduct to be so exceptionally unprofessional.
Second, Lovell’s termination suggests TSI deemed Lovell’s conduct, not Allen’s, to

                                          -9-
be improper.2 Both the Morgan-Smith and the Lovell-Allen arguments resulted in the
store managers, Smith and Lovell, either quitting or being fired. Conversely, in both
cases, the subordinate employees, Morgan and Allen, were not fired. On these facts,
it is a reasonable inference TSI deemed both arguments of similar caliber.

       The district court reasonably rejected as pretextual TSI’s proffered basis for
failing to promote Allen to assistant manager in January 2002, and found TSI
committed racial discrimination.

             2.     Failure to Promote and Retaliation in November 2002
       TSI argues the district court’s finding TSI discriminated and retaliated against
Allen in November 2002 by not promoting Allen to McGehee store manager is
inconsistent with the uncontroverted evidence. According to TSI, after the December
24, 2001 argument, Allen continued to exhibit behavior problems, and TSI argues
those problems, coupled with Allen’s past conduct, constituted legitimate justification
for not promoting Allen to store manager in November 2002.

       Allen easily satisfied the elements of a prime facie case of racial discrimination
for failure to promote in November 2002. The record shows, after Morgan was fired
in November 2002, TSI hired Goggans, a Caucasian female, not previously employed
by TSI, for the McGehee store manager position. Goggans lacked Allen’s experience,
had very few computer skills, and had no recognized supervisory experience. Without
a doubt, TSI knew of Allen’s interest in a management position, because in March
2002 Allen filed a complaint with the EEOC charging TSI with race discrimination
for failing to promote her to assistant manager in January 2002.




      2
     Indeed, TSI later discovered Lovell stole the Dumas store’s bank deposit on
December 24, 2001.

                                          -10-
       The record contains additional evidence of racial discrimination. When Allen
filed her lawsuit, TSI had been in business for approximately ten years and operated
eighty-two retail stores in states with large black populations–Arkansas, Tennessee,
Mississippi, and Missouri–yet none of TSI’s stores had a black store manager. In
2001 and 2002, TSI did not have a procedure for advancement. If an employee
wanted to be considered for a management position, the employee simply asked the
store manager or supervisor. Lovell, Hill, and Goggans were hired after Allen and had
less managerial experience than Allen. Nonetheless, Lovell, Hill, and Goggans were
hired directly into store manager positions. These hiring practices, together with
TSI’s word-of-mouth promotion process, support a finding of discriminatory practice.
See Lyoch v. Anheuser-Busch Co., 139 F.3d 612, 615 (8th Cir. 1998) (concluding the
employee should not bear the same burden of proving a prima facie case of
discrimination when the employer’s promotion criteria are “subjective and the process
‘vague and secretive’” as when the case involves objective criteria which apply to all
applicants).

      Allen also satisfied the elements of a prima facie case of retaliation by engaging
in a statutorily protected activity, suffering an adverse employment action, and
demonstrating a causal connection between the adverse employment action and the
protected activity. See Peterson v. Scott County, 406 F.3d 515, 524 (8th Cir. 2005).
In March 2002, Allen filed an EEOC complaint. Allen suffered an adverse
employment action when TSI denied Allen the McGehee store manager position in
November 2002. Finally, Allen demonstrated a causal connection between the
protected activity and the adverse employment action, because, as the district court
reasoned, the manager vacancy “came on the heels” of Allen’s filing a lawsuit against
TSI, and “[r]ather than consider Allen for the position, Bearden recruited someone
from the outside who was far less qualified for the position than Allen.” Allen, 375
F. Supp. 2d at 806.




                                         -11-
       Having determined Allen made a prima facie showing TSI discriminated and
retaliated against her in November 2002, the question is whether TSI’s legitimate,
non-discriminatory reason for not promoting Allen was pretextual. The district court
found TSI’s justification for not promoting Allen—her altercation with her store
manager on December 24, 2001–could not withstand scrutiny.

      That Allen at one time was involved in a dispute with her manager could
      hardly justify TSI permanently excluding Allen from consideration for
      a manager position, particularly given TSI’s consideration of less
      qualified individuals for the job and the complete absence of written
      criteria for the position. . . .

            Other than vague allegations of complaints about Allen’s
      behavior, there is absolutely no evidence in Allen’s personnel file or
      TSI’s written documents to reveal that Allen’s behavior was so egregious
      or improper. Indeed, TSI’s willingness to continue to pay Allen $6.25
      an hour, more than that paid to other cashiers, is indicative of TSI’s
      opinion that Allen was a valued employee.

Allen, 375 F. Supp. 2d at 803.

       We agree with the district court. TSI cannot persuasively contend the Lovell-
Allen argument which occurred eleven months earlier could provide the sole basis for
not promoting Allen in November 2002. Allen’s length of service with TSI also belies
TSI’s assertion Allen was a problem employee. The record shows Allen worked for
TSI for over two and one-half years, which appears to be a relatively long period of
employment at TSI. Indeed, during the eleven-month period from December 2001 to
November 2002, at least three management employees–Lovell, White, and
Morgan–were fired. A fourth employee, Smith, quit when Bearden confronted Smith
about Smith’s argument with Morgan. It certainly can be inferred from this record
TSI would not hesitate to dismiss an insubordinate employee, yet the record shows no
evidence, other than the December 24 incident, Allen was ever reprimanded or


                                       -12-
otherwise disciplined for insubordination. In fact, at trial Bearden admitted Allen’s
personnel file contained no information about any misconduct, including the
December 24 argument with Lovell, and no negative comments of any other kind.
The lack of any disciplinary record in Allen’s personnel file undermines TSI’s
proffered testimony suggesting Allen could be difficult.

      TSI’s hiring and promotion practices coupled with Allen’s work history provide
ample support for the district court rejecting as pretextual TSI’s non-discriminatory
reason for not promoting Allen to the McGehee store manager position in November
2002. See Winbush v. State of Iowa, by Glenwood State Hosp., 66 F.3d 1471, 1479-
80 (8th Cir. 1995) (concluding the employer’s discretionary promotion policies
discouraged promotional opportunities for black employees and “reflected systematic
and purposeful discriminatory treatment” based on race (internal quotation omitted)).

       The district court did not clearly err in determining TSI discriminated and
retaliated against Allen on the basis of race by not promoting her in November 2002.

              3.      Other Claims
       TSI challenges several additional fact findings by the district court arguing they
are either unsupported by the record, contrary to the record, or otherwise improper.
TSI asserts the district court’s findings appear to be outcome determinative rather than
based on the record. TSI asks this court to reject those findings and reverse the
district court. TSI also challenges several of the district court’s evidentiary rulings as
erroneous and prejudicial. Lastly, TSI contends the district court was biased in
Allen’s favor, which unfairly prejudiced TSI and warrants a new trial. We review for
clear error the district court’s factual findings, Bone Shirt v. Hazeltine, 461 F.3d 1011,
1017 (8th Cir. 2006), and for an abuse of discretion the district court’s evidentiary
rulings, Grayson v. Ross, 454 F.3d 802, 812 (8th Cir. 2006).




                                          -13-
       TSI demonstrates, at most, it disagrees with the district court’s factual findings
or characterizations, but falls short of showing those factual findings stem from some
result-oriented bias of the district court. TSI submits no evidence TSI moved to
recuse the judge or questioned the district court’s impartiality during trial. Thus, TSI
waived that argument on appeal. See Fletcher v. Conoco Pipe Line Co., 323 F.3d 661,
664 (8th Cir. 2003) (holding under 28 U.S.C. § 455(a) that a claim for judicial recusal
will not be considered unless timely made).

       Nonetheless, even if the argument has not been waived, TSI fails to rebut the
presumption of impartiality. Pope v. Fed. Express Corp., 974 F.2d 982, 985 (8th Cir.
1992) (“A party introducing a motion to recuse carries a heavy burden of proof; a
judge is presumed to be impartial and the party seeking disqualification bears the
substantial burden of proving otherwise.”). TSI’s evidence consists of vague
allegations the district court assisted Allen’s counsel, interjected itself into the
questioning of witnesses, and allowed Allen to introduce certain evidence, while
prohibiting TSI from doing the same. Taken in context, these allegations are no more
than challenges to the district court’s evidentiary rulings and clearly do not rise to the
level of bias requiring a new trial. See id. (finding two statements made by the
presiding judge as evidence of bias could “at best be characterized as weak and
inconclusive”). Among the trial judge’s duties are not only impartiality, but the
pursuit of a fair trial for all the parties and a search for the truth, which may, within
reason, require some questions directed by the court to the witnesses. Thus, we
conclude the district court did not clearly err in making the challenged factual findings
and did not abuse its discretion in making the challenged evidentiary rulings.

        C.    Advisory Jury
        TSI claims it was “whipsawed” by the district court’s erroneous decision to call
a jury with only three-days’ notice, rather than proceed with a bench trial. TSI asserts
it hurriedly prepared jury instructions, voir dire, new opening and closing statements,
and it had to prepare exhibits for presentation to the jury. TSI submits it would never

                                          -14-
have altered its presentations and arguments had the trial remained a bench trial.
Therefore, TSI maintains it was prejudiced and a new trial is warranted.

       The district court based its decision to call an advisory jury on Fed. R. Civ. P.
39. Rule 39(c) states: “In all actions not triable of right by a jury the court upon
motion or of its own initiative may try any issue with an advisory jury.” In denying
TSI’s motion for a new trial based on the district court’s alleged error in ordering a
jury trial, the district court explained:

             Here, neither party requested a jury trial. Counsel for the parties
      were at least prepared for a trial to the Court when the Court advised
      them that the case would be tried to a jury. The parties have not
      indicated how they were prejudiced by the Court . . . deciding the issues
      or what they would have done differently had the case been a bench trial.
      Indeed, it is likely that counsel would have prepared less for a bench trial
      than for a jury trial.

            A new trial would be a waste of judicial resources. The Court has
      heard the evidence, reviewed the record and has made an independent
      determination of the issues.

Allen, 375 F. Supp. 2d at 806.

       “Rule 39(c) does not expressly require advance notice to the parties of the
court’s intention to treat the jury as advisory,” although such notice is preferable. Ind.
Lumbermens Mut. Ins. Co. v. Timberland Pallet & Lumber Co., 195 F.3d 368, 375
(8th Cir. 1999). Moreover, “failure to give advance notice alone, absent some
demonstrable prejudice to the complaining party, would not be a basis for reversal.”
Id. The district court recognized its error in sua sponte ordering a jury trial, vacated
the jury verdict, and treated the jury as advisory. The district court then made its own
findings of fact and conclusions of law. TSI has not shown more than a mere failure
by the district court to give more advance notice of the advisory jury trial and the


                                          -15-
resulting pressure and inconvenience of hurriedly preparing for a jury trial on three-
days’ notice. TSI fails to show it was prejudiced by the district court’s decision to
proceed with an advisory jury, and therefore is not entitled to a new trial.

      D.      Damages
              1.    Back Pay
       TSI claims the district court erred in calculating Allen’s back wages. TSI
argues Allen’s back wages award should be reduced by $2,950.00, because the district
court had no basis for calculating Allen’s manager pay at $450.00 a week, given the
testimony established most managers made $400.00 per week. TSI also asserts the
district court made mathematical errors in calculating Allen’s lost wages for five
weeks in 2002.

       We review the district court’s award of back pay for clear error. Ledbetter v.
Alltel Corp. Serv., Inc., 437 F.3d 717, 724 (8th Cir. 2006). In awarding Allen back
pay the district court stated:

              Allen is entitled to back pay representing the amount she would
      have earned as assistant manager of the Dumas store less the amount she
      earned and as manager of the McGehee store less the amount she earned
      until she left her employer on January 2, 2004. According to testimony
      at trial, assistant managers earn $6.25 an hour and work 40 hours; store
      managers earned between $400 and $450 per week for 50 hours of work.
      The Court will assume, as Allen was already earning a higher rate of pay
      as a cashier, that she would have received $450.00 per week. Also, TSI
      did not object to Allen’s position that she would have been entitled to
      $450.00 per week as a manager.

Allen, 375 F. Supp. 2d at 808. Both Bearden and Cobb testified managers received
between $400 to $450 per week, and Bearden testified store managers typically
worked fifty hours per week. The district court reasonably concluded Allen already
earned $6.25 per hour as a cashier and probably would have earned the higher amount

                                        -16-
($450 per week) as a manager. Accordingly, the district court did not clearly err in
determining Allen would have made $450 per week as a store manager.

       We do agree with TSI that the district court made mathematical errors in
calculating Allen’s back pay. First, the district court stated Allen would have earned
$11,000.00 as an assistant manager from January 15, 2002, through November 22,
2002. However, using the district court’s stated formula–$6.25 per hour at 40 hours
per week for 45 weeks–we calculate $11,250.00. Second, the district court found
Allen was entitled to an additional $2,700.00, representing the five weeks she should
have been promoted to McGehee store manager in 2002. Again, using the district
court’s stated formula–5 weeks at $450 per week–we calculate $2,250.00. Finally, the
district court made a $0.05 error when adding the 2002 back pay to the 2003 back pay.
The correction of these three mathematical errors reduces Allen’s total back pay award
by $200.05. We, therefore, modify the district court’s award of back pay by reducing
it to $15,916.21, plus prejudgment interest. The back pay award is affirmed in all
other respects.

             2.     Punitive Damages
       TSI also challenges the district court’s award of punitive damages arguing the
evidence does not support an award of punitive damages. Citing BMW of North
America, Inc. v. Gore, 517 U.S. 559, 581 (1996), TSI further contends the district
court’s punitive damages award of $75,000.00 is constitutionally impermissible and
violates due process.

      “On appeal, the district court’s determination of punitive damages is reviewed
under an abuse of discretion standard. However, when passing on a district court’s
determinations concerning the constitutionality of the punitive award, we use a de
novo standard of review.” Conseco Fin. Servicing Corp. v. N. Am. Mortgage Co.,
381 F.3d 811, 823 (8th Cir. 2004) (internal citation omitted).



                                        -17-
        “[P]unitive damages are available in claims under Title VII . . . [where] the
employer has engaged in intentional discrimination and has done so ‘with malice or
with reckless indifference to the federally protected rights of an aggrieved
individual.’” Ogden v. Wax Works, Inc., 214 F.3d 999, 1008 (8th Cir. 2000)
(emphasis added) (quoting Kolstad v. Am. Dental Ass’n, 527 U.S. 526, 529-30
(1999)). “‘The terms “malice” and “reckless” ultimately focus on the actor’s state of
mind,’ and ‘“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.’” Canny v. Dr Pepper/Seven-Up Bottling Group, Inc., 439 F.3d
894, 903 (8th Cir. 2006) (quoting Kolstad, 527 U.S. at 535).

      In awarding punitive damages, the district court found (1) TSI had no
employment policies; (2) TSI did not hire a black manager until after two other black
employees, Dianne Darrough (Darrough) and Theresa Sharkey (Sharkey) filed
discrimination claims; (3) TSI had eighty-two stores in 2003 and no black managers;
(4) TSI did not promote Darrough and Allen; (5) TSI was on notice of claims of
discrimination because three charges of discrimination had been filed; (6) despite the
charges, TSI continued its practice of not posting vacancies; and (7) the EEOC found
TSI discriminated against Sharkey. Allen, 375 F. Supp. 2d at 808-09.

       The district court’s stated reasons support a finding of discrimination, but do
not support an award of punitive damages. While not a sufficient, legitimate non-
discriminatory reason for TSI’s failure to promote Allen in January and November
2002, Allen’s acts of insubordination are enough to disprove Allen’s claim TSI acted
with malice or reckless indifference. The record demonstrates TSI typically
terminated employees for acts of insubordination. Indeed, between December 2001
and November 2002, at the Dumas and McGehee stores alone, TSI terminated three
managers, all of whom were Caucasian, for various acts of insubordination. On the
other hand, despite Allen’s act of arguing with Lovell in an unprofessional manner on



                                         -18-
December 24, 2001, TSI gave some deference to Allen and transferred her, rather than
terminating her as TSI terminated Lovell.

       In addition, the record depicts TSI as a rapidly growing company with
inadequate, rather than malicious, personnel procedures. Cobb testified when he
started with TSI in 1993, TSI had only one store, and by 2003, TSI had eighty-two
stores. Cobb further testified TSI opened eleven stores during the eight-week period
beginning December 15, 2001, which suggests most of TSI’s growth occurred after
2002. Cobb explained the focus of the business was on profits rather than on the
make-up of store personnel. Cobb also explained in 2001 and 2002, to advance at
TSI, an employee would ask to be considered for a management position. Although
TSI’s rapid growth and promotion practices fail to justify the racial disparity within
TSI’s management personnel, those practices demonstrate justifiable business reasons
or ineptness and not racial malice or reckless indifference directed toward Allen.
Neither Allen nor the record before us demonstrates TSI acted with the requisite state
of mind to support an award of punitive damages.

      The district court erred in granting punitive damages. Because we conclude no
punitive damages award is warranted, we need not address TSI’s due process claim.



       E.    Attorney Fees
       In Allen’s motion for attorney fees and costs, she requested an award of
$107,750.00 in fees for her attorney, Eugene Hunt (Hunt); $9,540.00 in fees for her
attorney, Sandra Harris (Harris); and $4,122.28 in costs. Allen requested hourly rates
of $200.00 for Harris and $250.00 for Hunt. Allen claimed Harris spent 47.7 hours
and Hunt spent 431 hours on her case. The district court found Harris’s hourly rate
was unreasonable, and Hunt’s claimed hours were excessive and lacked the required
specificity. Therefore, the district court reduced Harris’s hourly rate to $175.00 per
hour and disallowed 160 of Hunt’s claimed hours. Once the district court made these

                                        -19-
adjustments, it awarded $67,750.00 in fees for Hunt and $7,155.00 for Harris, for a
total of $74,905.00 in fees and $4,122.28 in costs. The district court declined to make
any further adjustments.

       TSI requests this court vacate the attorney fees award because the district court
erred in finding Allen was a prevailing party. In the alternative, TSI asserts although
the district court’s lodestar determination is lower than the amount requested by Allen,
the award is still significantly higher than what is normally awarded in discrimination
claims. TSI claims the district court’s failure to adjust the award of attorney fees and
failure to consider the Johnson3 factors constitute an abuse of discretion.

       TSI maintains Allen was only successful on three of her eight claims, and, thus,
the lodestar should be reduced based on Allen’s limited success. TSI submits Allen’s
successes are further limited when her damages are compared against the court’s
award. Allen submitted exhibits stating her compensatory damages and back pay
exceeded $233,000.00, and asked the jury to award her $1.5 million in punitive
damages. The district court awarded Allen only $23,616.21 in back pay and
compensatory damages and $75,000.00 in punitive damages—amounts which total
less than one-tenth of the amount she requested. Therefore, TSI argues, given Allen’s
limited success, a substantial reduction in her lodestar amount is appropriate. TSI


      3
        Johnson v. Ga. Highway Express, Inc., 488 F.2d 714, 717-19 (5th Cir. 1974),
abrogated on other grounds by Blanchard v. Bergeron, 489 U.S. 87, 90 (1989)
(establishing twelve factors courts should consider in awarding attorney fees,
including: (1) the time and labor required; (2) the novelty and difficulty of the
questions; (3) the skill requisite to perform the legal service properly; (4) the
attorney’s preclusion of other employment due to acceptance of the case; (5) the
customary fee; (6) whether the fee is fixed or contingent; (7) the time limitations
imposed by the client or the circumstances; (8) the amount involved and the results
obtained; (9) the experience, reputation, and ability of the attorneys; (10) the
“undesirability” of the case; (11) the nature and length of the professional relationship
with the client; and (12) awards in similar cases).

                                          -20-
claims, when all of the Johnson factors are weighed, they also decidedly favor
reducing the lodestar amount. For those reasons, TSI urges $50,000.00 would be an
appropriate amount for Allen’s attorney fee award.

       “We review the district court’s award of attorney’s fees for abuse of discretion.”
Simpson v. Merchs. & Planters Bank, 441 F.3d 572, 581 (8th Cir. 2006). First, we
consider whether Allen was the prevailing party in this litigation. “To be a prevailing
party, [Allen] must ‘succeed on any significant issue in litigation which achieves some
of the benefit [she] sought in bringing suit.’” Forest Park II v. Hadley, 408 F.3d 1052,
1059 (8th Cir. 2005) (quoting Farrar v. Hobby, 506 U.S. 103, 109 (1992)). Allen was
the prevailing party in this case because she obtained judgment in her favor on two of
her claims. Moreover, while not receiving the damages sought, she recovered
substantial damages and received some of the benefit sought in bringing the suit.

       The district court’s lodestar calculations are not challenged by TSI. The district
court considered the twelve factors outlined in Johnson to calculate the final fee award
and did not find any basis for adjusting the lodestar. The district court carefully
scrutinized the affidavits and billing statements provided by Allen’s counsel, and
significantly reduced the requested $117,290.00 in fees to reach a reasonable fee
award of $74,905.00. We find no abuse of discretion in the district court’s decision
and thus affirm the attorney fee award.

III.   CONCLUSION
       We modify the district court’s award of back pay to $15,916.21 with
prejudgment interest and vacate the punitive damages award. We affirm the judgment
of the district court in all other respects.




                                          -21-
SMITH, Circuit Judge, concurring in part and dissenting in part.

       Though I agree with much of the majority's analysis, I cannot concur with its
holding that the district court abused its discretion in awarding punitive damages to
Allen.

       We review a district court's determination of punitive damages for an abuse of
discretion, Conseco Fin. Servicing Co. v. N. Am. Mortgage Co., 381 F.3d 811, 823
(8th Cir. 2004), meaning that we will not reverse the district court unless its decision
is "grossly unsound, unreasonable, or illegal." Black’s Law Dictionary 10 (7th ed.
1999).

       After thoroughly reviewing the record, I cannot conclude that the district court's
award of punitive damages was "grossly unsound, unreasonable, or illegal." First, TSI
makes virtually no argument as to why the district court abused its discretion in
awarding punitive damages. It devotes only one paragraph in its 65-page brief to the
issue. Furthermore, within this one paragraph, TSI fails to cite a single authority for
the proposition that Allen's misconduct "demonstrates she should not be awarded any
compensatory or punitive damages." The only cases relied on by TSI relate to the
constitutionality of the punitive damages award, not to its availability.

       Second, our case law supports affirmance of the punitive damages award.
"Punitive damages may be recovered for employment discrimination if the employer
engages in intentional discrimination with malice or with reckless indifference to the
individual's protected rights." Ross v. Kan. City Power & Light Co., 293 F.3d 1041,
1048 (8th Cir. 2002) (citing Kolstad v. Am. Dental Ass'n, 527 U.S. 526, 529–30
(1999)) (emphasis added). "The terms 'malice' and 'reckless' ultimately focus on the
actor's state of mind, and '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." Canny v. Dr. Pepper/Seven-Up Bottling Group, Inc.,

                                          -22-
439 F.3d 894, 903 (8th Cir. 2006) (internal quotations and citation omitted). The
plaintiff is not required "to establish egregious misconduct on the part of an employer
in order to have punitive damages submitted to the jury." Ross, 293 F.3d at 1048.
When an employer "deliberately turn[s] a deaf ear to discriminatory conduct," punitive
damages may be warranted. Walsh v. Nat'l Computer Sys., Inc., 332 F.3d 1150, 1161
(8th Cir. 2003).

       For example, we have previously held that a district court properly submitted
punitive damages to the jury "because it found that the evidence showed that [the
employer] occasionally took 'special efforts' on behalf of white applicants, including
making further inquiry when their applications did not initially meet minimum
qualifications." Ross, 293 F.3d at 1048. Additionally, the plaintiff presented evidence
that the employer "may have passed over qualified internal black candidates in favor
of new college graduates who were white." Id.

        Just as the plaintiff in Ross presented evidence that the employer was passing
over internal black candidates in favor of whites, so too did Allen present evidence
that, after terminating Morgan, Bearden hired Goggans, a white female, and non-TSI
employee, as the new store manager, passing over Allen for the position. In addition,
Allen presented evidence that while she was demoted and transferred for arguing with
Lovell, TSI took no action against Morgan—a white employee who engaged in similar
conduct—and, in fact, promoted Morgan after the incident with Smith.4 Finally, the
record demonstrates that TSI was on notice that it may be acting in violation of federal
law based on several EEOC charges filed against it. Specifically, the district court
found that:




      4
       Smith quit before any action could be taken.

                                         -23-
      Allen had filed an EEOC charge in March, 2002, Theresa Sharkey5 had
      filed a charge in March, 2002, and Diane Darrough6 had filed a charge
      in August, 2002. Thus, as of November 2002, when the manager position
      came open, TSI was on notice that Allen wanted a managerial position
      and that TSI did not have any black managers. Allen had even filed a
      race discrimination action. TSI still did not post the job vacancy; still had
      not written employment policies or job standards. It went outside the
      company to recruit someone who had not had any experience with the
      company, while it had well qualified black employees with managerial
      experience.

Allen v. Tobacco Superstore, Inc., 375 F. Supp. 2d 796, 809 (E.D. Ark. 2005).
Additionally, the EEOC found evidence that TSI "consistently discriminated against




      5
       Theresa Sharkey was hired as a cashier at the TSI in Blytheville, Arkansas, in
January 2001. She had over six years' experience as a manager of a grocery store.
Assistant managers and managers were hired during the ten months that Sharkey
worked at TSI who had far less experience than she.
      6
       Darrough had extensive management experience. She was hired as an assistant
manager at the Star City, Arkansas, TSI store in February 2002. The Star City store
manager, who was white, was fired for stealing a store deposit in July 2002. Darrough
was acting manager for about a month; however, rather than promote Darrough,
Bearden and Cobb brought in the manager of the Monticello, Arkansas, store, Myrtis
Thompson, who is white, to manage both the Star City and Monticello stores.
Bearden's reason for not promoting Darrough was that she did not feel Darrough had
enough training. However, by the time that the manager position became permanent,
Darrough had been with TSI for several months and had more direct experience than
other managers who were hired from without. Furthermore, an additional assistant
manager, who is white, was hired at the Star City store to help Thompson. Thompson
was the only manager who had to manage two stores, and Star City was the only store
with two assistant managers. Darrough was ultimately promoted to manager of the
Star City store, however, it was only after she filed a lawsuit alleging discrimination.

                                          -24-
Blacks as a class by denying them promotions to assistant manager and manager
positions." Id.

     For the foregoing reasons, I respectfully dissent.
                     ______________________________




                                    -25-
