
USCA1 Opinion

	




                            UNITED STATES COURT OF APPEALS                                FOR THE FIRST CIRCUIT                                 ____________________          No. 95-1597                        CHARISSA MCKINNON AND BEATRICE POULIN,                               Plaintiffs - Appellees,                                          v.                            KWONG WAH RESTAURANT, ET AL.,                               Defendants - Appellants.                                 ____________________          No. 95-1635                        CHARISSA MCKINNON AND BEATRICE POULIN,                               Plaintiffs - Appellants,                                          v.                            KWONG WAH RESTAURANT, ET AL.,                               Defendants - Appellees.                                 ____________________                    APPEALS FROM THE UNITED STATES DISTRICT COURT                              FOR THE DISTRICT OF MAINE                     [Hon. Morton A. Brody, U.S. District Judge]                                            ___________________                                 ____________________                                        Before                               Torruella, Chief Judge,                                          ___________                      Coffin and Rosenn,* Senior Circuit Judges.                                          _____________________                                _____________________                                        ____________________          *  Of the Third Circuit, sitting by designation.               Daniel L. Lacasse for Kwong Wah Restaurant, et al.               _________________               Catherine R.  Connors, with  whom Fall Ferguson  and Pierce,               _____________________             _____________      _______          Atwood,  Scribner, Allen,  Smith &  Lancaster were  on brief  for          _____________________________________________          Charissa McKinnon and Beatrice Poulin.                                 ____________________                                     May 1, 1996                                 ____________________                                         -2-                    ROSENN, Circuit  Judge.   This appeal  and cross-appeal                    ROSENN, Circuit  Judge.                            ______________          present several  procedural issues as well  as substantive issues          relating  to  damages  arising  out  of  alleged  acts of  sexual          harassment in violation of  Title VII, 42 U.S.C.    2000e et seq.                                                                    __ ____          Charissa McKinnon and Beatrice Poulin brought suit  in the United          States  District Court  for the  District of Maine  against their          former employer, the Kwong  Wah Chinese Restaurant ("Kwong Wah"),          its  owners,  and several  current  and  former  employees.   The          plaintiffs  alleged that  they suffered  sexual harassment  while          working  as waitresses at Kwong  Wah, in violation  of Title VII;          the Maine Human  Rights Act, 5  M.R.S.A.    4572; and state  tort          law.1                    The   court  entered   default  judgment   against  the          defendants,  and  awarded  back  pay,  compensatory  damages  and          attorneys'  fees to  both  plaintiffs.   The  defendants filed  a          Motion to Lift the Default and  File Late Answer, which the court          denied.   McKinnon and Poulin appeal the district court's damages          awards.   Specifically, they assert  that the court  erred in its          failure to  award punitive  damages,  and in  its calculation  of          compensatory damages.   The defendants appeal  the court's denial          of their motion to lift default  and file late answer.   Further,                                        ____________________          1   In  their Complaint,  the plaintiffs  alleged the  following:          Count I--sexual harassment in violation of Title  VII; Count II--          further  violations  of  Title  VII  for  discriminating  against          McKinnon for  her pregnancy; Counts III and IV--violations of the          Maine  Human  Rights  Act;  Count  V--Intentional  Infliction  of          Emotional Distress; Count VI--Negligent Retention or Supervision;          Count  VII--Assault  and  Battery; and  Count  VIII--Invasion  of          Privacy.                                         -3-                                         -3-          they assert that the district court lacked jurisdiction over some          of the  named defendants, because  plaintiffs failed to  name the          individual  defendants before  the  Equal Employment  Opportunity          Commission   ("EEOC").     We  affirm,   except  we   remand  for          clarification  by the  district  court with  respect to  punitive          damages.                                          I.                                          I.                    Both  plaintiffs commenced employment  as waitresses at          the  Kwong  Wah  Restaurant  in   Calais,  Maine  in  July  1991.          Plaintiffs testified  that the owners and employees  at Kwong Wah          subjected them  to  repeated offensive  sexual  harassment,  both          verbal  and physical.   Plaintiff  McKinnon further  alleged that          they subjected  her to additional discrimination  because she was          pregnant  while employed at  Kwong Wah.   McKinnon testified that          one of the restaurant owners tried to force her to sign a release          exempting the Kwong Wah from liability  if she was injured on the          job,  and that  the  Kwong Wah  cut  back  her working  hours  in          retaliation  for her refusal to sign the release.  The plaintiffs          alleged that they were constructively discharged in July 1992.                       Plaintiffs filed timely charges of  discrimination with          the Maine Human Rights Commission ("MHRC") and the  federal Equal          Employment  Opportunity Commission.    The  MHRC determined  that          reasonable    grounds   existed   to    believe   that   unlawful          discrimination  had  occurred.     After  failed  attempts  at  a          conciliation agreement,  the MHRC  authorized suit, and  the EEOC          issued a right to sue letter.                                         -4-                                         -4-                    Plaintiffs filed  a complaint on June 28,  1994, and an          amended  complaint with  minor changes  on July  7, 1994.   Thus,          pursuant to Fed. R.  Civ. P. 12(a)(1)(A), Kwong Wah's  Answer was          due on August 18, 1994.  The defendants, however, did not respond          by  the  due date.    One  week after  the  answer  was due,  the          defendants moved for  an enlargement  of time to  respond to  the          complaint.  The district court extended the due date to September          28, 1994.   Again, the  defendants did  not file an  answer.   On          September  27,  1994,  the  defendants moved  for  an  additional          extension; the court denied  the motion.  The defendants  took no          action subsequent to the denial.  The  clerk of the court entered          default  against  the  defendants  on  October  11,  1994.    The          defendants again  took  no  action.   On  October 24,  1994,  the          plaintiffs  moved for the  entry of  default judgment;  the court          granted the motion the  next day.  One month  later, November 25,          1994, defendants moved to lift the default judgment.                     In  their motion  to lift  the default,  the defendants          claimed  that  they had  difficulty  in  retaining counsel;  that          counsel did not keep them informed of their obligations to file a          timely  answer;  and  that  their  inability  to  understand  the          complaint  rendered  them  unable  to  respond.    In reply,  the          plaintiffs asserted  that the defendants hired  and fired counsel          as  a  delaying  tactic.   The  plaintiffs  further  alleged that          defendants'  counsel  contacted defendants  by  phone  and letter          alerting them to their obligation  to file a timely answer.   The          court  held a hearing on the issue, and found that the defendants                                         -5-                                         -5-          did not meet their burden of showing good cause to  set aside the          default.   See Fed. R. Civ. P. 55(c) (court may set aside default                     ___          for good cause).                      In  addition,  the  defendants  moved  to  dismiss  the          plaintiffs' Title  VII claims against  the individual  defendants          named in the suit.  The defendants asserted that the court lacked          jurisdiction to hear the matter because  the plaintiffs failed to          include the named defendants  in the charges they had  filed with          the MHRC and  EEOC.  The  court denied the  motion, holding  that          Title VII's charging  requirements were  nonjurisdictional.   The          court found that the  defendants waived their right to  raise the          charging issue by their default.                    The district  court held  a hearing  without a jury  to          determine  damages,  and  awarded  $13,094.84  to  McKinnon,  and          $13,189.45 to Poulin, plus  attorneys' fees.  The award  included          135  weeks of back pay  (adjusted for mitigation)  and $2,500 per          plaintiff in compensatory  damages.  The court declined  to award          front pay, punitive damages, or prejudgment interest.                                           II.                                         II.                    The defendants  claim that the district  court erred in          denying  their motion  to  lift default  judgment  and file  late          answer.   We must review the court's  denial of the motion for an          abuse of discretion.   See The General Contracting &  Trading Co.                                 ___ ______________________________________          v.  Interpole, 899 F.2d 109,  112 (1st Cir. 1990) (motions to set             __________          aside  default judgments are left to "the sound discretion of the          district court").  This court may not reverse unless the district                                         -6-                                         -6-          court's decision is clearly wrong.  Id. at 112.                                              ___                    Fed. R. Civ. P. 55(c) provides:                      (c)  Setting  Aside  Default.   For  good                      (c)  Setting  Aside  Default.                      cause shown  the court  may set aside  an                      entry  of default and,  if a  judgment by                      default  has  been entered,  may likewise                      set  it  aside  in  accordance  with Rule                      60(b).2                    The  parties  in  the  instant   case  offer  differing          accounts  of the events leading up to  the default judgment.  The          plaintiffs  filed their  amended complaint  in July  1994.   They          contend  that the defendants ignored the first due date for their          answer, requested  and were granted  a thirty day  extension, and          then ignored the second due date.  The plaintiffs further contend          that  the  defendants  ignored  the court's  rejection  of  their          request for  a second  extension; ignored the  plaintiffs' motion          for default judgment; ignored the entry of default judgment;  and          waited until  November 25,  1994 to  file a  motion  to lift  the          default judgment.   According  to the plaintiffs,  the defendants          switched  attorneys  on  several  occasions  beginning  with  the          administrative  proceedings  before  the   MHRC.    Finally,  the          plaintiffs contend  that the evidence shows  that defendants were          fully aware of all due dates.  In sum, the  plaintiffs argue that          the  defendants neglected  the suit  with  full awareness  of the          legal consequences.  In contrast,  the defendants claim that they          were  unable to retain suitable  counsel, and that  they were not                                        ____________________          2  Fed. R. Civ. P.  60(b) provides, in relevant part, relief from          judgment  or  order  for  mistake,  inadvertence,  surprise,   or          excusable neglect.                                         -7-                                         -7-          aware  of the due  dates or the  consequences of missing  the due          dates.                      At  an  evidentiary hearing,  the district  court found          that  the  defendants did  not  demonstrate  the necessary  "good          cause" pursuant  to Fed.  R. Civ.  P. 55(c).   In  addressing the          defendants' counsel at the hearing, the court asserted:                      What  the defendants  have done  in their                      actions,  Mr.  Lacasse, speaks  so loudly                      that I have difficulty hearing your voice                      today in this  proceeding.  There  simply                      has  not been  a  showing  of good  cause                      pursuant to Federal Rule 55C to set aside                      the entry of default.   There has been no                      reasonable   excuse  presented   for  the                      default.    There  have  been  a  lot  of                      explanations   as   to  the   defendants'                      inability to understand  what's going  on                      and the fact that they haven't had any --                      that they didn't  have any funds  and the                      result  of  all  the  testimony  and  the                      affidavits  and  the presentation  to the                      court  leaves  the court  with  the clear                      understanding that the defendants did not                      act    reasonably   even    under   these                      circumstances.          The defendants  assert  that  the record  does  not  support  the          court's decision: thus, the court abused its discretion.                      Although in  Coon v.  Grenier, 867  F.2d  73 (1st  Cir.                                 ____     _______          1989),  this  court  observed  that  "good cause"  is  a  mutable          standard,  varying from  situation to  situation,  it is  "not so          elastic as  to be devoid of substance."   Id. at 76.   No precise                                                    ___          formula  is suggested, for each case necessarily turns on its own          unique  facts.    Nonetheless,  this  court  found  some  general          guidelines that appear to  have universal application and warrant          consideration  by  a  district  court in  determining  whether  a                                         -8-                                         -8-          default judgment should  be lifted: (1)  whether the default  was          willful;  (2)  whether  setting  it  aside  would  prejudice  the          adversary, (3)  whether a  meritorious defense is  presented; (4)          the nature of  the defendant's explanation  for the default;  (5)          the good faith of the parties;  (6) the amount of money involved;          and (7) the timing  of the motion.  Id.   at 76.  The  court then                                              ___          noted that in  reviewing the district  court's weighing of  these          factors  for  an abuse  of  discretion,  judicial discretion  has          limitations:                      Judicial discretion is necessarily broad-                      -but it  is not  absolute.  Abuse  occurs                      when   a    material   factor   deserving                      significant  weight  is ignored,  when an                      improper factor  is relied upon,  or when                      all  proper and  no improper  factors are                      assessed, but the  court makes a  serious                      mistake in weighing them.           Id.  at 78 (quoting Independent Oil & Chemical Workers v. Proctor          ___                 __________________________________    _______          &           __          Gamble Mfg. Co., 864 F.2d 927, 929 (1st Cir. 1988)).          _______________                    The record shows that  the plaintiffs served each named          defendant with the complaint.   Further, the record reflects that          at  least  some of  the defendants  were  aware of  pending legal          problems  through  their  participation  in   the  administrative          proceedings  before the MHRC.  Additionally,  it appears that the          defendants hired and  fired at least  three attorneys during  the          administrative process.  The defendants' attorney for the instant          appeal at  one time represented  the defendants before  the MHRC.          In the Commission's correspondence with the attorney, it stated:                      Would   you   please  inform   Kwong  Wah                      officials   that   I   will    under   no                                         -9-                                         -9-                      circumstances accept further postponement                      of this  matter?  I do not wish to appear                      harsh towards you.  The history with this                      case, however, has been that each time we                      approach a critical point . . . they hire                      a  new Attorney.   You may or  may not be                      aware that  you  are the  third person  I                      have dealings with to date.          Thus,  it appears  that the  defendants were  aware of  a pending          legal problem, were capable of retaining  legal counsel, but were          uncooperative with their counsel and administrative officials.                    The firm of Eaton, Peabody, Bradford and Veague entered          an  appearance on behalf of  all the defendants,  and applied for          the extensions of  the defendants' filing deadlines.   The record          contains  several   letters  from  Eaton,   Peabody  urging   the          defendants to contact counsel  and notifying them of the  need to          file an answer with the court by the end of the month.3                      Thad  Zmistowski,  an  associate with  Eaton,  Peabody,          testified to his  attempts, on  several occasions,  to reach  the          corporate contact at Kwong Wah by phone.  He finally reached Judy          Canniff, his contact, on  the day before the second  deadline for          filing an answer.  Canniff allegedly informed Zmistowski that the          defendants did not have  the money to retain Eaton,  Peabody, and          would proceed on their own.  Eaton, Peabody filed a second Motion          to Extend the Deadline, and moved the  court to withdraw from its                                        ____________________          3  The letters  evidence the attorneys' frustration in  trying to          pin down  the client.   Apparently, Eaton, Peabody  was concerned          that Kwong Wah's  insurance would not  cover a sexual  harassment          suit.  Thus, the firm requested a $25,000 retainer.  The firm was          trying to get a commitment from the defendants as to whether they          wished to proceed with Eaton, Peabody as counsel.                                         -10-                                         -10-          representation  of   the  defendants.    The   court  denied  the          defendants'  second  request to  extend  the  time of  filing  on          October  5, 1994.  As  previously stated, the  defendants did not          respond  until November 25,  1994, when  they moved  to  lift the          default judgment.                    The  record fully supports the district court's finding          that  the defendants were aware of the pending legal problem, but          hoped that  it "would all go  away."  Thus, the  court found that          the  defendants  did not  exhibit  the  good faith  necessary  to          justify the court's lifting  of the default judgment.   Under the          standard set forth  in Coon,  supra, the district  court did  not                                 ____   _____          abuse its discretion in  its denial of the defendants'  motion to          lift default judgment.   After hearing  the testimony, the  court          was not convinced of the  defendants' explanation of the  default          or  of their good faith.  The court's finding that the defendants          defaulted willfully  is well supported.   Further, the defendants          did  not  move  to rectify  the  situation  in  a timely  manner.          Litigants must  act punctually and not  casually or indifferently          if a judicial system is to function effectively.  This court must          uphold  the   district  court's  decision  absent   an  abuse  of          discretion.    We  conclude  that the  district  court  exhibited          patience and concern  for the rights of  the parties and did  not          abuse  its discretion in  denying the defendants'  motion to lift          default judgment.                                          III.                                         III.                    The  defendants next  assert  that the  district  court                                         -11-                                         -11-          lacked  jurisdiction  over  the   Title  VII  claim  against  all          defendants except the Kwong Wah Restaurant because the plaintiffs          failed  to  name the  individual  defendants  in the  proceedings          before  the  EEOC.4    The  district  court's  finding  that  the          charging requirement of Title VII is nonjurisdictional is subject          to plenary  review.  See  In re Extradition  of Howard,  996 F.2d                               ___  ____________________________          1320, 1327 (1st Cir. 1993).                    There are  several requirements  that a  plaintiff must          meet,  pursuant to  Title VII,  prior to  filing suit  in federal          court.   See 42 U.S.C.   2000e-5.   For example, a plaintiff must                   ___          file a timely  EEOC charge against the  discriminatory party, and          receive notice of a right to sue.  Id.   In addition, a plaintiff                                             ___          generally  may not maintain a suit against a defendant in federal          court if  that  defendant was  not  named in  the  administrative          proceedings  and  offered  an  opportunity  for  conciliation  or          voluntary compliance.  42 U.S.C.    2000e-5(f) ("civil action may          be brought against the respondent named in the charge").                      In  the instant  case,  the plaintiffs  named only  the          Kwong Wah Restaurant  in the  complaint before the  MHRC and  the          EEOC.  The  defendants contend  that the court  must dismiss  the          Title  VII charges  against  all individual  defendants (not  the                                           __________          Kwong Wah Restaurant) because the plaintiffs failed to name these          defendants in the administrative complaint.                                          ____________________          4  The plaintiffs filed their Complaint in federal court against:          the  Kwong Wah  Restaurant (a  Maine corporation);  Sarah Elgendi          (co-owner  of Kwong Wah); Danny Chan (co-owner of Kwong Wah); Joe          Lam  (supervisor);  Karen  Landry  (head  waitress);  Karen  Wong          (Manager); Ming Chen (cook); and Shun Cheung (cook).                                         -12-                                         -12-                    In  Curran v.  Portland Super.  Sch. Committee,  435 F.                        ______     _______________________________          Supp.  1063  (D. Maine  1977), the  district  court held  that an          employer may not  be named in a civil suit  unless it was charged          before  the  EEOC.   Id.  at  1073.   The  court  noted that  the                               ___          administrative  charging requirement  ensures that  the defendant          has  notification  of  the  pending  proceedings,  and  that  the          requirement furthers the goal  of voluntary compliance with Title          VII.  Id. at 1074.   The Curran opinion noted, however,  that the                ___                ______          charging requirement is not absolute:                      [S]everal exceptions have been recognized                      as sufficient to confer jurisdiction over                      defendants in a civil action who were not                      named  in  the   EEOC  charges.     These                      exceptions  are:     (1)  if   there  was                      "substantial   identity"    between   the                      respondent  named in the EEOC charges and                      defendants  in the  civil action;  (2) if                      the named respondent acted as the "agent"                      of the defendant sought to be included in                      the  civil  action,  at  least  when  the                      latter  defendant  had   notice  of   and                      participated    in    the    conciliation                      proceedings; and (3)  if the defendant is                      an  "indispensable  party" under  Fed. R.                      Civ. P.  19 in  order to accord  complete                      relief to the parties.            Id. at  1074; see also Glus v. G.C. Murphy Co., 562 F.2d 880, 888          ___           ___ ____ ____    _______________          (3d Cir. 1977) (in determining if a plaintiff may proceed against          parties not named before EEOC, the court should  consider whether          the  plaintiff could ascertain the  role of the  unnamed party at          the time of  the EEOC  filing; whether the  interests of  unnamed          party are similar to  interests of named party; the  prejudice to          the unnamed party; and whether the  unnamed party has represented          to  the plaintiff  that its  relationship  with the  plaintiff is                                         -13-                                         -13-          through the named party.)                    In  determining  whether  the  defendants  waived their          right  to raise  the charging  issue, the  district court  in the          instant  case found that  the requirement  was nonjurisdictional.          See  Fed.  R. Civ.  P. 12(H)(3)  (court  shall dismiss  action if          ___          lacking jurisdiction).  If  the charging requirement is merely  a          conciliation  or compliance  procedure  prior to  filing suit  in          federal  court, it is  subject to waiver,  estoppel and equitable          tolling.  See Zipes v. Trans World Airlines, Inc., 455  U.S. 385,                    ___ _____    __________________________          392 (1982).                    In Zipes, the Supreme Court held that the timely filing                       _____                                  _____________          of an EEOC charge is not jurisdictional.  Id. at  392.  The Court          _________________                         ___          reasoned  that the  filing requirement  is listed  in  a separate          section of Title VII than the section that grants jurisdiction to          the  district courts.  This  court has not  ruled directly on the          charging requirement.  It has held,  however, that Section 2000e-          5(f)(1) is nonjurisdictional.   See Rice v. New  England College,                                          ___ ____    ____________________          676 F.2d 9, 10  (1st Cir. 1982) (requirement that  plaintiff file          complaint within  90 days of  receipt of  right to sue  letter is          nonjurisdictional).  The charging requirement is found in Section          2000e-5(f)(1).    Although  generally  a plaintiff  must  name  a          defendant  in the proceedings before the EEOC in order to proceed          against  that defendant in  federal court  under Title  VII, this          charging requirement  is subject to exceptions.  We conclude that          the  charging requirement is  nonjurisdictional, thus  subject to          waiver, estoppel and equitable  tolling.  See Zipes, 455  U.S. at                                                    ___ _____                                         -14-                                         -14-          392; see  also Greenwood  v. Ross, 778  F.2d 448,  450 (8th  Cir.               ___  ____ _________     ____          1985)   (Title  VII  conditions   precedent,  including  charging          requirement, are nonjurisdictional);  Liberles v. County of Cook,                                                ________    ______________          709 F.2d 1122, 1125  (7th Cir. 1983) (same); Jackson  v. Seaboard                                                       _______     ________          Coast Line R. Co., 678 F.2d 992, 1010 (11th Cir. 1982) (same).          _________________                    To  avoid   waiver,  a   defendant   must  assert   all          affirmative defenses  in the answer.   See Fed. R.  Civ. P. 8(a);                                                 ___          see also Knapp  Shoes v. Sylvania Shoe Mfg. Corp.,  15 F.3d 1222,          ___ ____ ____________    ________________________          1226 (1st  Cir. 1994) ("Affirmative  defenses not so  pleaded are          waived.").   The  defendants in the  instant case,  through their          default, waived their right to raise the issue that they were not          named in the complaint to the Commission.5  We perceive no  error          in  the  district court's  denial  of the  defendants'  motion to          dismiss on jurisdictional grounds.                                         IV.                                         IV.                    The  plaintiffs appeal  the district  court's grant  of          $2500 in compensatory damages.   In general, this court  will not          override a  damage determination unless the  award is unsupported          by the evidence, grossly excessive, or shocking to the conscious.          See Brown v. Freedman Baking Co., 810 F.2d 6, 11 (1st Cir. 1987);          ___ _____    ___________________          see also Hall v. Ochs, 817 F.2d 920, 927 (1st Cir. 1987).  In the          ___ ____ ____    ____                                        ____________________          5  In addition, the  plaintiffs' Complaint before the  Commission          alleged "At all relevant times, Defendants Kwong Wah, Danny Chan,          Sarah  Elgendi,   Joe  Lam,  Karen  Wah  and  Karen  Landry  were          employers, and  the plaintiffs  employees, covered by  and within          the meaning  of  Title VII.    "When  a court  enters  a  default          judgment against  a defendant,  all allegations in  the complaint          must be  taken as  true."   See  Brockton Savings  Bank v.  Peat,                                      ___  ______________________     _____          Marwick, Mitchell & Co., 771 F.2d 5, 13 (1st Cir. 1985).          _______________________                                         -15-                                         -15-          instant  case, the plaintiffs assert that the court below did not          use the correct  legal standard in its  determination of damages.          Questions of  law  are subject  to  plenary review.   See  In  re                                                                ___  ______          Extradition of Howard, 996 F.2d at 1327.          _____________________                    The  damages provisions of  42 U.S.C.    1981a, part of          the Civil Rights  Act of  1991, provide for  the availability  of          compensatory damages  to victims of intentional discrimination in          violation  of Title VII.   Pursuant to  the statute, compensatory          damages  include   "future  pecuniary  losses,   emotional  pain,          suffering, inconvenience, mental  anguish, loss  of enjoyment  of          life, and other non-pecuniarylosses."  See 42 U.S.C.  1981(b)(3).                                                 ___                    Prior to Congress's enactment of Section 1981a, victims          of intentional  gender  or  religious  discrimination  were  only          entitled  to equitable relief under  Title VII.   Victims of race          discrimination,  however,   are  entitled  to   compensatory  and          punitive damages under 42  U.S.C.   1981.  Section  1981a ensures          that  victims  of intentional  employment  discrimination  on the          basis  of gender or religion are entitled to compensatory, and in          certain  egregious cases,  punitive damages.   See H.R.  Rep. No.                                                         ___          40(I), 102d Cong., 1st  Sess. at 64-65 (1991).   Equitable relief          continues  to be  the sole  remedy available  under Title  VII in          disparate impact cases.                    At the conclusion of the testimony in the instant case,          the court  asserted that it  was "persuaded" that  the plaintiffs          suffered  emotionally as  a  result of  persistent and  extremely          offensive  sexual harassment at Kwong Wah.  Thus, the court found                                         -16-                                         -16-          appropriate an award to the plaintiffs of compensatory damages.                      With respect to  emotional distress,  a plaintiff  must          demonstrate  that  an  ordinarily  sensitive  person  could  have          suffered the alleged harm.   If the plaintiff meets  this burden,          then  the  defendant  must "take  the  victim  as  he finds  her,          extraordinarily sensitive or  not."  See  Theriault v. Swan,  588                                               ___  _________    ____          A.2d 369 (Me. 1989).  See  also Gammon v. Osteopathic Hospital of                                ___  ____ ______    _______________________          Maine,  Inc.,  534 A.2d  369  (Me. 1989).    The court  may find,          ____________          however, that some of  the plaintiffs' damages stem from  a prior          "injury."  See Lovely v.  Allstate Ins. Co, 658 A.2d 1091  (D. Me                     ___ ______     ________________          1995).6   The burden  is on the  defendant to establish  a causal          relationship between the  prior injury and the damages claimed by          the plaintiffs.  Id. at  1092.  If the court finds  it impossible                           ___          to  apportion the damages, then the defendants are liable for the          entire amount.  Id.                           ___                    The testimony  in the  instant case revealed  that both          plaintiffs  were  suffering  from  emotional  distress caused  by          sources  independent   from  their  employment   at  Kwong   Wah.          Plaintiff McKinnon  separated from  her  boyfriend (now  husband)          during  her employment at the restaurant,  after discovery of her                                        ____________________          6  Lovely addressed a claim for compensatory damages arising from             ______          physical  injuries.  The accident at issue in the case aggravated          a pre-existing injury  to the plaintiff's  elbow.  The  defendant          insurance company  asserted that it should not be responsible for          medical  bills and  loss  of income  resulting  from the  injured          elbow.   The court  found that it  was the  defendant's burden to          establish a  causal relationship  between the earlier  injury and          the damages claimed by the plaintiff.                                                    -17-                                         -17-          unplanned pregnancy.   Plaintiff Poulin testified  to having been          sexually  abused by her stepfather  from when she  was five years          old until she was age seventeen.  She commenced employment at the          Kwong Wah at  the age of  twenty.  In  weighing the evidence  the          court  found it  difficult to  distinguish between  the emotional          suffering caused  by the defendants' behavior,  and the suffering          caused by prior independent sources.  The court reasoned:                      Because the causal connection between the                      harassment   and   Plaintiffs'  emotional                      trauma  is  complicated by  other factors                      similarly  causing  such  suffering,  the                      Court   finds  an   award  of   $2500  in                      compensatory  damages for  each Plaintiff                      appropriate.                    Although the district court encountered some difficulty          in distinguishing  between the  plaintiffs' trauma caused  by the          defendants'  harassment and  that arising  from other  causes, it          nonetheless found  $2500 to be  an appropriate sum  to compensate          each plaintiff.   We conclude  that despite  the difficulty,  the          trial court was able to determine the damages attributable to the          harassment caused by  the defendants.   The trial  court had  the          opportunity to see  and hear  the plaintiffs, and  no doubt  took          into account their  demeanor as  well as other  factors, such  as          their  ages, nature of  employment, and earnings,  in setting the          damages amount.   Apparently, the court  carefully considered the          amounts  it  awarded  and,  without substantial  reasons  to  the          contrary, it  would be particularly inappropriate and injudicious          for  an appellate court to  set aside the  trial court's judgment          under  these circumstances.  See Freedman Baking Co., 810 F.2d at                                       ___ ___________________                                         -18-                                         -18-          11.   We  see no  error in  the district  court's $2500  award of          compensatory damages to each of the plaintiffs.                                          V.                                          V.                    The plaintiffs  also  contend that  the district  court          erred in its failure  to award punitive damages.   The plaintiffs          assert  that the  district court  relied heavily on  an incorrect          legal  standard  in  refusing to  award  punitive  damages.   The          court's legal interpretations are subject to plenary review.  See                                                                        ___          In re Extradition of Howard, 996 F.2d at 1327.          ___________________________                    The plaintiffs rely for their claim to punitive damages          on the amendment  to Section  706(g) of  Title VII,  42 U.S.C.             1981a.   The damage provisions  of this amendment  provide that a          court may award punitive damages to a prevailing party in a Title          VII action if the defendant "engaged in a discriminatory practice          .  . . with malice or with reckless indifference to the federally          protected  rights of an aggrieved  individual."  See  42 U.S.C.                                                             ___          1981a(b)(1).   The amendatory  provision permits courts  to award          damages  in  cases  of  intentional  discrimination resulting  in          actual  injury or loss in  the same circumstances  as such awards          are permitted  under 42  U.S.C.    1981 for  race discrimination.          See H.R. No. 40(1), 102d Cong., 1st Sess. at 74 (1991).          ___                    Although  compensatory damages are available to victims          of intentional  discrimination under Title VII,  a plaintiff must          demonstrate  that the  defendant  acted with  malice or  reckless                                         -19-                                         -19-          indifference  before  he or  she  can  receive punitive  damages.          Id.7  The legislative history of the Section notes:          ___                      Plaintiff  must  first prove  intentional                      discrimination,  then  must prove  actual                      injury  or  loss  arising   therefrom  to                      recover  compensatory  damages, and  must                                                      _________                      meet    an     even    higher    standard                      _________________________________________                      (establishing  that  the  employer  acted                      _________________________________________                      with  malice  or   reckless  or   callous                      _________________________________________                      indifference to their rights)  to recover                      _________________________________________                      punitive damages.                      _________________          H.R. Rep. No. 40(I), 102d Cong., 1st Sess. at 72 (1991) (emphasis          added).                    Because  plaintiffs' claims  arise  out  of  a  federal          statute  designed to  protect  federal rights,  federal rules  of          damages  control.   "The  rule  of  damages,  whether drawn  from          federal or state  sources, is  a federal rule  responsive to  the          needs  whenever a federal right is impaired."  Sullivan v. Little                                                         ________    ______          Hunting Park, 396 U.S. 229, 240 (1969).          ____________                    After hearing  the testimony  in the instant  case, the          district court  declined to  award punitive  damages.  The  court          found that  the  plaintiffs had  not  sustained their  burden  of          demonstrating  that  the  defendants  had  acted  maliciously  or          recklessly or callously indifferent to plaintiffs' rights.  In so          finding, the court explained:                                        ____________________          7   The  court's analysis  is the  same for  the state  causes of          action.    In Maine,  punitive damages  are  available in  a tort          action when  the defendant acts with malice.   See F.D.I.C. v. S.                                                         ___ ________    __          Prawer  & Co.,  829 F.  Supp. 439,  453 (D.  Me. 1993);  see also          _____________                                            ________          Tuttle v. Raymond, 494 A.2d 1353, 1361 (Me. 1985).          ______    _______                                         -20-                                         -20-                      There  is  no  question that  Defendants'                      repeated sexual harassment was offensive.                      In fact,  in  many cases,  this  behavior                      might be strong evidence of malice or, at                      least,    reckless     indifference    to                      Plaintiffs'  rights.     In  this   case,                      however,  the  Court  believes that,  the                      behavior of at  least some Defendants was                      influenced  by  language,  cultural,  and                      educational   barriers.       With   this                      consideration  and  all   of  the   other                      evidence  in  mind,  the Court  concludes                      that  Defendants  were  not  acting  with                      either malice or reckless indifference to                      Plaintiffs' rights.  No award of punitive                      damages is therefore appropriate.                    There  was no jury in the instant case, and, of course,          the trial judge  obviously gave no  erroneous instructions.   The          plaintiffs, however, contend that the court nonetheless committed          error as  a matter of  law because it  based its decision  not to          award punitive  damages on an erroneous legal  predicate -- "that          the  ethnic background [of most  of the defendants]  is an excuse          negating  malice or  reckless indifference under  Section 1981a."          Moreover, the  plaintiffs argue  that even  if the judge's  legal          predicate were correct, there is no evidence whatsoever of record          that  the defendants suffered from any ignorance of their duty to          cease  their  offensive  acts   as  a  result  of   their  ethnic          background.   As  to  this  alleged  deficiency  of  record,  the          standard  of  review   is  clearly  erroneous.     See  Reich  v.                                                             ___  _____          Cambridgeport  Air Systems,  Inc., 26 F.3d  1187, 1188  (1st Cir.          _________________________________          1994).                    That the defendants' acts "were patently offensive" and          repeated,  as  the  plaintiffs   argue,  may  provide  cause  for                                         -21-                                         -21-          compensatory damages but do not necessarily mandate a finding  of          punitive  damages.   Unlike  compensatory  damages,  which are  a          matter  of right  to an  injured party  once liability  is found,          punitive  damages are awarded or rejected in a particular case at          the  discretion of the  fact-finder, in  this instance  the trial          judge.  See  Lee v. Southern Home Sites Corp.,  429 F.2d 290, 294                  ___  ___    _________________________          (5th cir. 1970).  There is no vested right to punitive damages on          the part of the plaintiff and  where allowed, they are awarded as          a matter of  public policy  to punish outrageous  conduct by  the          defendant or  to deter  similar conduct  in the  future.   A  key          feature of punitive damages is that "they are never awarded as of          right no matter how egregious the defendant's conduct."  Smith v.                                                                   _____          Wade, 461 U.S. 30, 52 (permitting jury to assess punitive damages          ____          in  action under    1983 when defendant's conduct  is shown to be          motivated  by  evil  intent   or  involves  reckless  or  callous          indifference to the federally protected rights of others).                    Punitive damages  are assessed  as punishment or  as an          example and warning to others.  They are therefore not favored in          the  law  and are  allowed only  with  caution and  within normal          limits.    Lee, 439  F.2d at  294;  Aladdin Manufacturing  Co. v.                     ___                      __________________________          Mantle Lamp Co., 116 F.2d 708, 717 (1st Cir. 1941).          _______________                         The   allowance    of   such   damages                      inherently involves an evaluation  of the                      nature  of the  conduct in  question, the                      wisdom   of   some   form  of   pecuniary                      punishment,  and  the  advisability of  a                      deterrent.  Therefore, "the infliction of                      such  damages, and the amount thereof are                      of necessity within the discretion of the                      trier of the fact."                                          -22-                                         -22-          Lee, 439 F.2d at 294 (citations omitted).          ___                    In Rowlett  v. Anheuser-Busch, Inc., 832  F.2d 194 (1st                       _______     ____________________          Cir.  1987), this court dealt at  length with the appropriateness          of a  jury award of  punitive damages.   Writing for this  court,          Judge Torruella held that even in a jurisdiction which authorizes          punitive  damages  in   cases  requiring  proof   of  intentional          wrongdoing,  this  does  not   mean  that  punitive  damages  are          appropriate in every such case.   Rather, "in each case the trier          of  the fact  has the  discretion to  determine whether  punitive          damages  are  necessary,  to   punish  [the  defendant]  for  his          outrageous conduct and deter him and others like him from similar          conduct  in the future."   Id. at  205 (citations omitted).   The                                     ___          court  therefore reduced the punitive  damages award in a Section          1983 case by 90 percent.  Id. at 207.                                    ___                    In Hern ndez-Tirado  v. Artau,  874 F.2d 866  (1st Cir.                       ________________     _____          1989), this court vacated entirely the  district court's award of          punitive damages in  a Section  1983 case.   The court  carefully          analyzed  the Supreme Court's decision in Smith v. Wade, 461 U.S.                                                    _____    ____          30, where the  Court made clear that a jury  "may" award punitive          damages  in  Section  1983  cases  when  a  defendant  has  shown          "reckless  or  callous  indifference to  the  federally protected          rights of others," as  well as when his conduct is  "motivated by          evil motive or intent."  This court observed, however, that in so          holding,  the Supreme Court did not say that the fact-finder must          award punitive damages  in every  single Section  1983 case  that          does involve an intentional  tort.  The court concluded  that the          ____                                         -23-                                         -23-          defendants'  intentional misconduct  did  not rise  to the  level          calling  for  punishment  and  deterrence  over  and  above  that          provided by  the compensatory award.   It  therefore vacated  the          award of punitive damages observing that "neither the common law,          nor the Supreme Court in Smith,  allows a jury to assess punitive                                   _____          damages in  every single instance  where it finds  an intentional          tort; rather,  they require  conduct that is  'outrageous' either          because of a person's  'evil motive' or because of  his 'reckless          indifference' to  the rights  of others."   Hern ndez-Tirado, 874                                                      ________________          F.2d at 869.                    In sum,  the law  does not  require the  fact-finder to          award punitive  damages in every  case under  Section 1981a  that          involves an intentional tort.   The plaintiff must show  that the          defendant  acted  with malice  or  reckless  indifference to  the          plaintiff's rights.   We believe, however, that heavy reliance on          cultural and educational factors  is inappropriate in the instant          case.  Ignorance of the  law or of local custom is  not a defense          under  Section 1981a  to  the alleged  offensive  conduct of  the          defendants.                        A  defendant's cultural background is not irrelevant in          evaluating the  appropriateness of punitive damages.   In certain          circumstances,  a  defendant's  background will  likely  have  an          impact  on his consciousness of wrongdoing.  In the instant case,          however, the  district court's  only explicit reason  for denying          punitive  damages  was  the  cultural,  ethnic,  and  educational          background of  the defendants,  and this is  not the  dispositive                                         -24-                                         -24-          factor.  The court did not point to any evidence in the record to          support its assumption  that the defendants were  not acting with          reckless indifference to the plaintiffs' rights.  In  the context          of this case and on this record, primary reliance on cultural and          educational  background  is  tenuous  and   appears  unsupported.          Although the court also  considered "all the other evidence,"  it          is  not clear  from the  record what  "other evidence"  the court          considered.                      Accordingly, we  will remand to the  district court for          further  clarification  and  explanation  as   to  what  evidence          supported its decision to deny the plaintiffs punitive damages.                                         VI.                                         VI.                    In sum,  we conclude  that the district  court properly          denied the  defendants'  motion to  lift  default and  file  late          answer.  Through their default, the defendants waived their right          to  challenge the plaintiffs' Title  VII claim on  the basis that          the plaintiffs  failed to  name the individual  defendants before          the EEOC  or the  MHRC.   Thus, the order  of the  district court          denying the defendants' motions is affirmed.                    We also conclude that the  district court did not abuse          its  discretion in arriving at a  $2500 compensatory damage award          for each plaintiff and  this judgment is affirmed.  On  the issue          of punitive damages, the matter is remanded to the district court          for clarification and explanation, within thirty days, as to what          evidence  the  court  relied  upon  in  declining  to  award  the          plaintiffs punitive damages.  This court will retain jurisdiction                                         -25-                                         -25-          of the case pending the district court's clarification.                                         -26-                                         -26-
