                  UNITED STATES COURT OF APPEALS
                       For the Fifth Circuit



                           No. 95-50319


                 DONNA PATTERSON; NICHOLAS BROWN,

                                             Plaintiffs-Appellees,

                                and


                         MICHAEL L. ADAMS,

                                                          Plaintiff,


                              VERSUS


           P.H.P. HEALTHCARE CORPORATION; MARK KENNEDY,

                                             Defendants-Appellants.




           Appeal from the United States District Court
                 For the Western District of Texas
                           July 25, 1996


Before DUHÉ, BARKSDALE, and DeMOSS, Circuit Judges.

DeMOSS, Circuit Judge:

     Nicholas Brown, Michael Adams1 and Donna Patterson brought

suit against PHP Healthcare Corporation and Mark Kennedy in state

court alleging various employment discrimination and retaliation

claims.   PHP Healthcare and Kennedy removed the case to federal


    1
       The district court entered partial summary judgment in this
case and ordered that Michael Adams recover nothing from PHP
Healthcare and Kennedy. Adams filed no appeal.
court pursuant to 28 U.S.C. § 1441(b).        Brown, a black male,

alleged that he was constructively discharged from his position as

a mental health technician and discriminated against because of his

race in violation of 42 U.S.C. § 1981.2    Patterson, the head nurse

at PHP Healthcare’s Fort Hood facility, alleged violations of 42

U.S.C. § 2000e-3 for retaliatory discharge based on her opposition

to Mark Kennedy’s discriminatory hiring practices and Kennedy’s

discrimination against Brown.3    After a bench trial, the district

court entered judgment in favor of Brown and Patterson and awarded

compensatory and punitive damages. For the forthcoming reasons, we

affirm in part and reverse in part.

                                  I.

       On July 1, 1991, PHP Healthcare began providing psychiatric

services under a fixed price contract for the United States Army

personnel at the Darnell Army Community Hospital in Fort Hood,

Texas.     PHP Healthcare, a private corporation employing more than

500 employees, assembled the following people as the “core” staff


   2
        Brown and Adams also alleged that PHP Healthcare and Kennedy
retaliated against them for engaging in protected speech in
violation of 42 U.S.C. § 1983.         Brown, Adams and Patterson
additionally alleged retaliatory discharge based on reports they
made to PHP Healthcare’s headquarters concerning fraudulent billing
practices. The district court entered partial summary judgment in
favor of PHP Healthcare and Kennedy on these claims. No appeal was
taken.
       3
       The district court dismissed Patterson’s state law claims
and her Title VII claims against Kennedy on motion for summary
judgment. See Grant v. Long Star Co., 21 F.3d 649, 651-52 (5th
Cir.), cert. denied, 115 S. Ct. 574 (1994) (holding that private
employees are protected from individual Title VII liability).
Patterson did not raise these issues on appeal, and consequently,
we do not consider the propriety of the district court’s order.

                                   2
for this new project in Fort Hood: the project manager, Mark

Kennedy; the head nurse, Donna Patterson; and the psychologist, Dr.

Michael Adams.      Donna Hood worked as Kennedy’s administrative

assistant.

     In this two day trial, the district court heard testimony from

Kennedy, Patterson, Brown, Dr. Adams and four other witnesses, and

determined the validity and credibility of their statements.           The

district court heard testimony that in late July 1991, less than

one month after the facility opened, Kennedy met individually with

each of his black employees to discuss a complaint that had been

filed with the EEOC.       Patterson testified that Kennedy, who is

Caucasian, warned his black employees that he would not tolerate

any EEOC complaints filed against PHP Healthcare.                After the

meetings, Kennedy told Patterson that “these stupid niggers need to

understand I carry a big stick.”          At trial, Kennedy could not

recall the reason for these meetings and did not refute Patterson’s

testimony.

     Brown and Patterson testified that Kennedy scheduled black

mental health technicians almost exclusively to the less desirable

night shift.    Further, Brown was forced to wait six months before

receiving    his   shift   differential   upon    becoming   a   full-time

employee, while PHP Healthcare promptly resolved a similar problem

with a white employee after one month.           The district court also

heard testimony that a white technician, James Tzcap, received a

promotion to mental health technician supervisor while Brown was

overlooked for the job.


                                    3
     In March 1992, a meeting was held in which black employees

complained about being assigned to the less desirable night shift.

Dr. Adams and Patterson testified that, after this meeting, Kennedy

told Patterson that “not another nigger is to be hired.”          The

district court also heard testimony from Dr. Adams, Patterson and

Janet Berry (a current employee of PHP Healthcare) that Kennedy

regularly referred to black employees as “porch monkeys,” and

“niggers” and considered black employees to be “shiftless” and

“lazy.”   Kennedy did not dispute using the term “porch monkey,”

however, he testified that he was only joking when he used the term

and attributed his use of the term to a joke told by Patterson.    He

also denied ever referring to his employees as “niggers.”

     In August 1992, Patterson hired another black mental health

technician, Eddie Harris.   A few days later, Kennedy left for PHP

headquarters for a meeting.   When he returned on August 17, 1992,

Kennedy fired Patterson.    Appellants PHP Healthcare and Kennedy

contend that Patterson was fired because she took a three hour

lunch while Kennedy was at corporate headquarters. Appellants also

argue that Patterson reported for work late on August 10 and that

she did not show up for work on August 11.   Because of her absence

on August 11, a patient escaped from the hospital.

     After her termination, Patterson filed a claim with the Texas

Employment Commission.   Kennedy submitted a document at the T.E.C.

hearing which listed PHP Healthcare’s reasons for firing Patterson.

Kennedy admittedly created this document and back-dated it for use

at the T.E.C. hearing.   The document included the above details of


                                 4
Patterson’s alleged inappropriate conduct.                PHP Healthcare and

Kennedy contend that the document, in concert with Patterson’s

inability to work constructively with Hood (Kennedy’s assistant),

her regular tardiness in March, April and May 1992, and Patterson’s

insubordinate attempts to assist Brown, were valid reasons to

terminate her employment.

     Patterson never saw this document until the T.E.C. hearings

because Kennedy created it expressly for the hearing. Further, one

month before her termination, Patterson had received favorable

marks   in   all   categories   on    her    employment    evaluation.    PHP

Healthcare’s employment manual also required two verbal warnings

and a written warning prior to termination.          Patterson received no

such reprimands.

     PHP Healthcare and Kennedy attempted to identify problems with

Brown’s performance as well.         Brown received numerous disciplinary

actions, including verbal counseling from Patterson about his

tardiness and his tendency to call in sick before and after

scheduled days off.     Patterson also counseled Brown about agreeing

to work for other technicians and then failing to show up.               Brown

received a written warning about his attendance problems in June

1992 and was placed on probation in July.

     However, Kennedy threatened to impose disciplinary action on

Brown under highly unusual circumstances involving falsified memos

and other documents based on unexcused absences.             Brown testified

that Kennedy twice threatened him with disciplinary actions based

on falsified memos and reports.             Patterson corroborated Brown’s


                                       5
testimony and Kennedy did not refute his use of questionable

documentation of Brown’s conduct.           After Patterson was fired, the

new head nurse, Becky Simpson, told Brown that she had no interest

in hearing from any mental health technician except for the white

technician, James Tzcap.

      Based on this ongoing array of work related problems, Brown

tendered his resignation on September 1, 1992, effective September

4, 1992.   On September 1, Brown received a call from John Bucur, a

PHP   Healthcare    official   from   the    corporate   headquarters,   who

arranged a telephone conference with Brown and Kennedy later that

afternoon.   In this meeting, Brown explained his problems with the

work environment.     Bucur assured Brown that the work environment

would change.      Later that afternoon, Brown asked to withdraw his

resignation.    Kennedy told him that he was no longer needed at PHP

Healthcare and that his position had been filled.           At the time of

trial Kennedy was no longer an employee of PHP Healthcare having

been terminated on April 27, 1994.        Kennedy was terminated from PHP

Healthcare after he gave the primary part of his deposition in this

lawsuit.

      The district court entered the following findings of fact and

conclusions of law in favor of Brown and Patterson:           The district

court found that Kennedy repeatedly and routinely used racial

slurs, including “porch monkey” and “nigger,” and used these terms

in referring to Brown as well as other black employees.         When black

employees were terminated or left PHP Healthcare, Kennedy routinely

replaced them with white employees.


                                      6
       The district court also found that PHP Healthcare and Kennedy

discriminated against Brown on the basis of his race by limiting

his work schedule, assigning him certain menial duties that were

not performed by white employees, denying him an opportunity for

promotion, falsifying documents in order to take disciplinary

actions against him, and by constructively terminating him.                  With

respect to Brown’s resignation, the district court found that Brown

withdrew his resignation in a timely manner after PHP Healthcare’s

headquarters convinced him that the hostile work environment would

be improved.        Kennedy then refused to allow Brown to withdraw the

resignation         which     constituted    a    constructive      discharge.

Essentially, Brown was retaliated against and terminated for his

complaints of racial problems at the hospital.             He was replaced by

a white employee.           The district court found the reasons given by

PHP Healthcare and Kennedy for Brown’s dismissal to be pretexts for

racial discrimination.

       The district court entered a final judgment in favor of Brown

against      PHP    Healthcare   and   Kennedy   holding   them    jointly   and

severally liable for intentional discrimination in violation of 42

U.S.C. § 1981.        The district court awarded damages of $22,648 in

lost       income   and   benefits,4   $40,000   for   emotional   damage     and

$150,000 in punitive damages to Brown.            The court based its award

       4
       Brown testified that he worked 50 hours per week for PHP
Healthcare. Of those 50 hours, 25 hours were usually from night
and weekend shifts which earned an additional eight percent shift
differential. Therefore, the district court arrived at $22,648 by
calculating (25 hours x $6.19 per hour = $154.75) + (25 hours x
$6.69 per hour = $167.25) = $322 weekly wage and factoring on
various earnings in mitigation.

                                         7
of punitive damages on the willful and malicious discrimination

evidenced in this case.

      As to Patterson, the district court found that she contacted

PHP   Healthcare’s     headquarters       to   call     attention      to   Kennedy’s

discriminatory actions.         In March 1992, after meeting with each

black employee about complaints of race discrimination, Kennedy

told Patterson that “not another nigger is to be hired.”                    In August

1992, Patterson needed another mental health technician and hired

a black employee, Eddie Harris.

      Patterson’s      actions       in       contacting        PHP    Healthcare’s

headquarters    and    in   hiring    another         black   employee      were   the

producing causes of her termination.              Kennedy prepared a document

setting forth his reasons for terminating Patterson; however, the

document was prepared after the termination and back-dated by

Kennedy and Dr. Chaparala, the medical director. Kennedy then lied

about using the document to terminate Patterson when he testified

before the Texas Employment Commission.                Based on these facts, the

district court found that Patterson was terminated because she

hired a black technician in contravention to an illegal directive

given to her by Kennedy.

      The   district    court    awarded       lost    income    and   benefits    of

$40,000,5 $150,000 for emotional damage and pain and suffering, and

$150,000 in punitive damages against PHP Healthcare based on


      5
       Patterson testified without dispute that her actual lost
wages were in excess of $40,000. She explained that she was a
salaried employee of PHP Healthcare and received $36,650 per year
or approximately $17.68 per hour.

                                          8
Patterson’s 42 U.S.C. § 2000e-3 claim.      The district court further

found that both Brown and Patterson were entitled to attorneys’

fees pursuant to 42 U.S.C. § 1988.



                                    II.

     Appellants PHP Healthcare and Kennedy raise a number of

arguments attacking the district court’s legal conclusions based on

improper burden shifting and erroneous legal cause findings under

McDonnell Douglas.6       PHP Healthcare and Kennedy first argue that

the district court erred in finding that Kennedy’s racial slurs

constituted direct evidence of discrimination.        Next, appellants

contend that the district court erred in finding a nexus between

Patterson’s actions opposing Kennedy’s discrimination and hiring

practices and her termination under 42 U.S.C. § 2000e-3.        Third,

appellants maintain that the district court failed to specially

find facts as required by FED. R. CIV. P. 52(a).          Fourth, PHP

Healthcare and Kennedy contend that the district court erred in

finding that appellants’ acts of racial discrimination affected the

terms and conditions of Brown’s employment in violation of 42

U.S.C. § 1981.       Finally, appellants argue that the district court

erred in finding that Brown was constructively discharged.

     We address these arguments together.        After a case has been

fully tried on the merits, the McDonnell Douglas7 burden shifting

     6
             McDonnell Douglas v. Green, 411 U.S. 792 (1973).
         7
         In McDonnell Douglas Corp. v. Green, 411 U.S. 792, 802
(1973), and Texas Dept. of Community Affairs v. Burdine, 450 U.S.
248 (1981), the Supreme Court set out the burden shifting ritual

                                     9
analysis ceases to be of import to an appellate court.                  Haun v.

Ideal Indus., Inc., 81 F.3d 541, 546 (5th Cir. 1996); Molnar v.

Ebasco Constructors, Inc., 986 F.2d 115, 118 (5th Cir. 1993).

Instead, our inquiry becomes whether the record contains sufficient

evidence to support the conclusions reached by the trier of fact.

Haun, 81 F.3d at 546; Molnar, 986 F.2d at 118.

     In    making   this   assessment,       the   district   court’s   factual

findings are examined for clear error pursuant to FED. R. CIV. P.

52(a).    See EEOC v. Clear Lake Dodge, 60 F.3d 1146, 1151 (5th Cir.

1995). Under this standard, we reverse a district court’s judgment

based on erroneous fact findings only when, after weighing the

evidence, we are definitely and firmly convinced that a district

court made a mistake.      Id.   “Where the court’s finding is based on

its decision to credit the testimony of one witness over that of

another,    `that   finding,     if   not    internally   inconsistent,     can

virtually never be clear error.’”             Schlesinger v. Heroz, 2 F.3d

135, 139 (5th Cir. 1993) (quoting Anderson v. Bessemer City, 470

U.S. 564, 575 (1985)).      After a thorough review of the record, we

find ample evidence supporting the district court’s findings as to

liability and, therefore, this case presents no clear error in that

regard.



                                      III.

     PHP Healthcare and Kennedy also contend that the district

court erred in allowing Brown to amend his pretrial order to raise


used in cases brought under Title VII.

                                       10
a hostile work environment claim.            Brown points out that he

received no monetary award for his hostile work environment claim

and, in any event, evidence of PHP Healthcare’s hostile work

environment   would   have     been   admitted   in    support   of   Brown’s

intentional race discrimination claim under § 1981.

     The Federal Rules of Civil Procedure allow a district court to

freely grant leave to amend when justice so requires. FED. R. CIV.

P. 15(a).    We review the district court’s decision to grant or to

deny leave to amend for abuse of discretion.               Engstrom v. First

Nat. Bank of Eagle Lake, 47 F.3d 1459, 1464 (5th Cir.), cert.

denied, 116 S. Ct. 75 (1995).         In this case, permitting Brown’s

amendment did not surprise, prejudice, or delay the appellants’

defense.    Brown’s 42 U.S.C. § 1981 claim should have alerted PHP

Healthcare and Kennedy to the type of evidence that would be

elicited in this case.         Here, Brown’s hostile work environment

claim is not so different from his intentional discrimination claim

so as to surprise PHP Healthcare or Kennedy and prejudice their

defense.    Further, the district court did not award damages based

on the hostile work environment claim.

     PHP    Healthcare   and    Kennedy    failed     to   present    evidence

demonstrating that the district court’s decision to grant Brown’s

amendment prejudiced their defense of this case.            As such, we find

no abuse of discretion in the district court’s decision to grant

leave to amend.




                                      11
                                        IV.

      PHP Healthcare and Kennedy next challenge the district court’s

award of back pay and reinstatement to Brown based on evidence of

Brown’s failure to disclose his prior criminal conviction.                     The

Supreme   Court    recently       set   out    the     applicable   standard   for

determining whether, and to what extent, after-acquired evidence

affects a damage award under the Age Discrimination in Employment

Act of 1967 (ADEA), 29 U.S.C. § 621 et seq., and Title VII of the

Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq.                 See McKennon

v. Nashville Banner Pub. Co., 115 S. Ct. 879 (1995).                 In McKennon,

the   Court     held    that     evidence     of   employee    wrongdoing    after

termination does not immunize an employer from liability under

Title VII; the wrongdoing, however, may affect the remedy available

to the employee.         Id. at 886-887.           In assessing the effect of

after-acquired evidence, McKennon explains:

              Where an employer seeks to rely upon after-acquired
              evidence of wrongdoing, it must first establish
              that the wrongdoing was of such severity that the
              employee in fact would have been terminated on
              those grounds alone if the employer had known of it
              at the time of the discharge.

Id. at 886-887; and see Shattuck v. Kinetic Concepts, Inc., 49 F.3d

1106, 1108 (5th Cir. 1995) (citing same).

      PHP Healthcare’s employment application asked, “[h]ave you

ever plead guilty to or been convicted of any criminal offense,

excluding minor traffic citations?”                  Brown answered no.        The

application      also    asked     whether     Brown    was   currently     serving

probation or any deferred adjudication for a criminal offense.

Again, Brown answered no. PHP Healthcare’s Vice President of Human

                                         12
Resources, John Bucur, testified that a prior conviction would not

necessarily bar an applicant from working at PHP Healthcare. Bucur

stated, however, that application fraud would result in that

employee’s immediate dismissal.

     Brown admits that he was convicted of burglary in 1982 and

sentenced to ten years probation.             Brown, however, testified that

his probation officer told him that once he completed the probation

and paid restitution, his conviction would be expunged.                   Further,

both Patterson and Brown testified that Kennedy knew of Brown’s

prior conviction when the trio worked together at the Greenleaf

Center.    The district court made fact findings in support of

Brown’s testimony.      The district court believed Brown’s testimony

that his probation officer told him that it was unnecessary to

notify employers of an expunged conviction.                   Consequently, the

district court found that Brown truthfully completed his employment

application.     Based on Patterson’s and Brown’s testimony, the

district court also found that PHP Healthcare and Kennedy knew

about Brown’s prior conviction.          Finally, the district court found

that PHP Healthcare would not have immediately terminated Brown

even if they had not known of the prior conviction.                 As such, the

district court concluded that PHP Healthcare failed to establish

that “the wrongdoing was of such severity that [Brown] in fact

would   have   been    terminated       on    those   grounds     alone   if   [PHP

Healthcare]    had    known   of   it    at    the    time   of   the   discharge.

McKennon, 115 S. Ct. at 886-887.

     In determining whether the district court erred in finding


                                         13
that Brown would not have been terminated based on his submission

of a false employment application, we are again faced with a clear

error review which turns on the district court’s credibility

assessments.    After reviewing the record as a whole, including the

testimony of Patterson, Brown, Kennedy and Bucur, we defer to the

findings of the district court.           Even if PHP Healthcare did not

have imputed knowledge of Brown’s prior conviction, we are not

convinced    that   Brown’s   failure     to   include     his    10   year-old

conviction on his employment application was so severe that PHP

Healthcare would have terminated him based on this after-acquired

knowledge.     The district court’s decision to award back pay and

reinstatement does not leave us with a firm and definite conviction

that a mistake has been made and, as such, we find no clear error.



                                     V.

     Next, PHP Healthcare and Kennedy argue that the district court

committed clear error in finding that Patterson and Brown mitigated

their damages.      Sellers v. Delgado College, 902 F.2d 1189, 1193

(5th Cir.)     (Sellers   III),   cert.    denied,   498   U.S.    987   (1990)

(recognizing that successful Title VII claimants have statutory

duty under 42 U.S.C. § 2000e-5(g) to mitigate damages).                     We

recognize that no such statutory duty exists to mitigate damages

under 42 U.S.C. § 1981.           Nevertheless, we are guided by the

statutory duty to mitigate damages under § 2000e-5(g) based on the

nature of the equitable relief sought by the claimant. See Whiting

v. Jackson State Univ., 616 F.2d 116, 122 n.3 (5th Cir. 1980) (“No


                                     14
chameleon-like change in the nature of the relief is experienced

simply because it is sought under sister provisions in the federal

statutes.”).

      Further, the Supreme Court has recognized that the duty to

mitigate damages, “rooted in an ancient principle of law, requires

the claimant to use reasonable diligence in finding other suitable

employment.”     Ford Motor Co. v. EEOC, 458 U.S. 219, 231 & n.15

(1982) (footnote omitted).             Because an award of back pay is an

equitable remedy designed to make the injured party whole, we are

persuaded that an injured party has a duty under both § 1981 and

Title VII to use reasonable diligence to attain substantially

similar employment and, thereby, mitigate damages. See Johnson v.

Railway Express Agency, Inc., 421 U.S. 411, 459 (1975) (recognizing

that “`the remedies available to the individual under Title VII are

co-extensive     with   the     indiv[i]dual’s    right    to   sue   under       the

provisions of the Civil Rights Act of 1866, 42 U.S.C. § 1981, and

that the two procedures augment each other and are not mutually

exclusive.’”) (quoting H.R. REP. No. 92-238, at 19 (1971)).                        As

such, we adopt the statutory requirement to exercise reasonable

diligence   to    attain      substantially      similar   employment        as     a

prerequisite to obtaining back pay under § 1981.

       In the present case, no party disputes that Brown attained

substantially equivalent employment.           Instead, PHP Healthcare and

Kennedy argue that Brown failed to exercise reasonable diligence to

maintain such comparable employment and should not receive back pay

for   the   period      after    his     involuntary   termination      of        the


                                         15
substantially similar employment.                 We agree.

       The Supreme Court requires successful Title VII claimants to

use “reasonable diligence” to obtain “substantially equivalent”

employment.        Ford Motor Co., 458 U.S. at 232.                The claimant must

exercise reasonable diligence in both seeking and maintaining

substantially equivalent employment in order to effectuate the

reasonable diligence requirement.                  See Brady v. Thurston Motor

Lines, Inc., 753 F.2d 1269, 1277 (4th Cir. 1985) (holding that

forcing      the   Title    VII    defendants       to    pay    for   the   claimant’s

misconduct in her subsequent employment is not properly related to

the    objective     of    the    back    pay    requirements).         Substantially

equivalent      employment        has    been    defined   as    “`employment       which

affords        virtually          identical        promotional         opportunities,

compensation, job responsibilities, working conditions, and status

as    the    position     from    which    the    Title    VII    claimant    has    been

discriminatorily terminated.’”                  Sellers III, 902 F.2d at 1193

(quoting Sellers v. Delgado College, 839 F.2d 1132, 1138 (5th Cir.

1989) (Sellers II)).

       The Fourth Circuit explained that a Title VII claimant has a

duty    to    exercise     reasonable      diligence       to    maintain    subsequent

employment when that employment is substantially similar to the

claimant’s prior position.                Brady, 753 F.2d at 1277.           This duty

includes an obligation “to make reasonable and good faith efforts

to maintain that job once accepted.”                 Id.    We find this reasoning

persuasive.        By adopting a requirement to use “reasonable and good

faith” effort to maintain employment, reasonable diligence becomes


                                            16
a two part test.         First, the claimant must exercise reasonable

diligence in obtaining substantially similar employment.                     Ford

Motor Co., 458 U.S. at 232; and see Sellers III, 902 F.2d at 1193.

Second, in order to give effect to the statutory requirement to use

reasonable diligence, it necessarily follows that the claimant must

also use reasonable diligence in maintaining that substantially

similar employment.        Brady, 753 F.2d at 1277.

     In   this    case,    the    district    court   found   that   Brown    was

constructively terminated from PHP Healthcare on September 1, 1992.

Brown   began    working    for   Metroplex,     another   mental    Healthcare

provider, on September 8, 1992.              Brown was then terminated from

Metroplex on April 14, 1993.        Kim Henry, the director of nursing at

Metroplex, testified that Brown was fired for excessive absences,

making personal phone calls and for his conflicts with another

staff member.     Brown concedes that he was involuntarily terminated

from his job as a mental health technician for Metroplex.

     We review the district court’s determination of whether a

claimant used reasonable diligence in attaining and maintaining

substantially similar employment as a finding of fact subject to

reversal for     clear     error.     FED. R. CIV. P.      52(a);    Rhodes   v.

Guiberson Oil Tools, 82 F.3d 615, 621 (5th Cir. 1996) (en banc).

As such, if the district court’s findings are plausible in light of

the evidence presented, we may not reverse its decision even if we




                                       17
would have reached a different conclusion.    Anderson v. City of

Bessemer City, 470 U.S. 564, 573-74 (1985).




                               18
     Here, the district court’s damage award included back pay8

from the date Brown was terminated from Metroplex, April 14, 1993,

through December 1993.9          While we recognize the remedial purposes

of this statute generally permit back pay relief in all but

“special circumstances,” this case present such a circumstance.10

Brown was directly responsible for his loss of employment with

Metroplex.        The   record    indicates    that    Brown   was     fired   from

Metroplex    on   April   14,     1993,    because    of   excessive    absences,

excessive use of the company phone for personal phone calls and for

    8
        “Back pay” commonly refers to the wages and other benefits
that an employee would have earned if the unlawful event that
affected the employee’s job related compensation had not occurred.
See Phelps Dodge Corp. v. NLRB, 313 U.S. 177, 197 (1941). On the
other hand, “front pay” is an equitable remedy referring to future
lost earnings. Front pay is usually invoked when reinstatement is
impracticable and is calculated from the date of judgment to age
70, or the normal retirement age, and should reflect earnings in
mitigation of damages. See J. Hardin Marion, Legal and Equitable
Remedies Under the Age Discrimination in Employment Act, 45 MD. L.
REV. 298, 330-334 (1986).
        9
         When calculating back pay damages, 42 U.S.C. § 2000e-
5(g)(1) (1994) provides in pertinent part:

  If the court finds that the respondent has intentionally
  engaged in . . . an unlawful employment practice charged in
  the complaint, the court may . . . order such affirmative
  action as may be appropriate, which may include, but is not
  limited to, reinstatement or hiring of employees, with or
  without back pay . . . or any other equitable relief as the
  court deems appropriate. Back pay liability shall not accrue
  from a date more than two years prior to the filing of a
  charge with the Commission.    Interim earnings or amounts
  earnable with reasonable diligence by the person or persons
  discriminated against shall operate to reduce the back pay
  otherwise allowable.

(Emphasis added).
        10
         Albemarle Paper Co. v. Moody, 422 U.S. 405, 415 (1975)
(recognizing that the statutory requirement to award back pay does
not automatically attach in all circumstances).

                                          19
his conflicts with another staff member.                    Brown presented no

evidence     disputing     the    reasons    given    for     his        termination.

Consequently, we hold that the district court’s back pay assessment

was clearly erroneous.       We hold that a § 1981 claimant who attains

employment substantially equivalent to the employment from which

the   claimant   was     unlawfully    discharged     has     a    duty       “to   make

reasonable    and   good    faith    efforts   to    maintain          that   job   once

accepted.”    Brady, 753 F.2d at 1277.         Brown breached this duty by

acting in such a manner that caused his involuntary termination

from Metroplex.      By failing to make a reasonable and good faith

effort to keep his job at Metroplex, Brown effectively removed

himself from the job market for purposes of receiving back pay.

See id.; Ford Motor Co., 458 U.S. at 231-232.            Therefore, we vacate

the district court’s back pay award to Brown with respect to the

period after his involuntary termination and remand for a new

damage determination in light of our decision.

      PHP Healthcare and Kennedy raise a similar argument contending

that back pay was improperly awarded to Patterson under Title VII.

To meet their burden of showing Patterson failed to mitigate her

damages, PHP Healthcare and Kennedy must show that substantially

equivalent work was available and that Patterson did not exercise

reasonable diligence in attaining that employment.                        See Sellers

III, 902 F.2d at 1193.           After reviewing the record, we hold that

the district     court     committed    no   clear    error       in    finding     that

Patterson made a reasonable effort to mitigate her damages.

      Upon her discharge from PHP Healthcare, Patterson did take a


                                       20
job at Metroplex, but it was only part-time and lasted one month.

Thereafter,   Patterson    testified    that   she   attempted   to   attain

employment but was unsuccessful.         She finally got a job at the

Huntsville prison working with psychiatric prisoners.            Patterson

testified that she worked in Huntsville for three months and then

transferred to the Houston unit.        Patterson worked in Houston for

over one year before quitting and moving back to Gatesville, Texas,

to live with her family.      PHP Healthcare and Kennedy offered no

evidence to show that substantially equivalent work was available

nor did they show that Patterson failed to use reasonable diligence

to attain substantially similar employment.            Further, Patterson

voluntarily resigned from her post-PHP Healthcare jobs.               Unlike

Brown, no evidence exists to show that Patterson breached her duty

to mitigate damages.      Therefore, we hold that the district court

committed no clear error with respect to Patterson’s back pay

award.

                                  VI.

     Next, PHP Healthcare and Kennedy argue that the district court

committed clear error in awarding $40,000 to Brown under 42 U.S.C.

§ 1981 and $150,000 to Patterson under Title VII for emotional

damage and mental pain and suffering.



A. Section 1981 - Emotional Harm.

     We have recognized that emotional harm may be recoverable

under § 1981.   Gore v. Turner, 563 F.2d 159, 164 (5th Cir. 1977);

and see Johnson, 421 U.S. at 460, 95 S. Ct. at 1720.         Our standard


                                   21
of review for awards based on intangible harms such as mental

anguish is deferential to the fact finder because “the harm is

subjective and evaluating it depends considerably on the demeanor

of witnesses.”       1 HENRY H. PERRITT, JR., CIVIL RIGHTS   IN THE   WORKPLACE §

4.6, at 245 (2d ed. 1995); see also Thompson v. San Antonio Retail

Ass’n, 682 F.2d 509, 513 (5th Cir. 1982).

     Although we generally defer to the fact finder in determining

intangible harms, an award is warranted only when a sufficient

causal connection exists between the statutory violation and the

alleged injury.      Gore, 563 F.2d at 164.       The Supreme Court has also

required that compensatory damages such as emotional harm caused by

the deprivation of constitutional rights may be awarded only when

claimants submit proof of actual injury.11             Carey v. Piphus, 435

U.S. 247, 255-56, 98 S. Ct. 1042, 1048 (1978).                    Therefore, a

claimant must present testimony and/or other evidence to show the

nature     and   extent   of   emotional   harm    caused    by   the   alleged

violation.       In Carey, the Court stated:

             We use the term “distress” to include mental
             suffering   or   emotional   anguish.     Although
             essentially subjective, genuine injury in this
             respect may be evidenced by one’s conduct and
             observed by others.     Juries must be guided by
             appropriate instructions, and an award of damages
             must be supported by competent evidence concerning
             the injury.



      11
          We have noted that while Carey refers to damage awards
under 42 U.S.C. § 1983, “it is clear from the opinion as a whole
that the Court’s reasoning was not confined to § 1983.” Johnson v.
IRS, 700 F.2d 971, 977 n.11 (5th Cir. 1983). As a result, we
apply the reasoning of Carey to cases involving federal claims for
emotional harm.

                                      22
Carey, 435 U.S. at 264 n.20, 98 S. Ct. at 1052 n.20 (emphasis

added).     A number of our sister circuits have recognized that a

claimant’s    testimony   alone    may    not   be   sufficient    to    support

anything more than a nominal damage award.                  See Fitzgerald v.

Mountain States Telephone and Telegraph Co., 68 F.3d 1257, 1265

(10th Cir. 1995) (remanding an emotional damage award of $250,000

per plaintiff as clearly excessive when the award was based solely

on the testimony of the plaintiffs; no physicians or psychologists

testified    and   plaintiffs     continued     to   work   in   their    chosen

fields.); Gunby v. Pennsylvania Electric Co., 840 F.2d 1108, 1121

(3d Cir. 1988), cert. denied, 492 U.S. 905 (1989) (reversing a §

1981 emotional distress award for $15,000 based on the lack of

evidence to support such an award); Erebia v. Crysler Plastic Prod.

Corp., 772 F.2d 1250, 1259 (6th Cir. 1985), cert. denied, 475 U.S.

1015 (1986) (reversing a § 1981 emotional damage award of $10,000

and remanding with instructions to award nominal damages because

plaintiff offered only his own testimony); Vance v. Southern Bell

Telephone and Telegraph Co., 863 F.2d 1503, (11th Cir. 1989), cert.

denied, 115 S. Ct. 1110 (1995) (affirming the district court’s

finding that the jury’s award of $500,000 for emotional distress

was grossly excessive when based solely on plaintiff’s testimony

that her hostile work environment caused her mental distress).

     In many instances, corroborating testimony and evidence of

medical or psychological treatment have been relied upon to support

an award of emotional harm or mental anguish.                 See Rowlett v.

Anheuser-Busch, 832 F.2d 194, 204-05 (1st Cir. 1987) (affirming §


                                     23
1981 emotional damage award of $123,000 based on plaintiff’s

testimony and testimony from psychiatrist); Cowan v. Prudential

Ins. Co. of America, 852 F.2d 688, 690-91 (2d Cir. 1988) (affirming

§ 1981 emotional damage award of $15,000 based on testimony of

plaintiff, his wife and co-workers about the stress, humiliation

and emotional distress suffered); Wilmington v. J.I. Case Co., 793

F.2d 909, 922 (8th Cir. 1986) (affirming § 1981 damage award of

based on testimony of plaintiff and other witnesses). For example,

in Rowlett v. Anheuser-Busch, Inc., the First Circuit affirmed an

emotional distress award of $123,000 to a black employee under §

1981 based on plaintiff’s testimony that he was under continuous

stress over a seven year period, he never received the proper

training promised by management, he feared that he would make a

mistake and be discharged because of his lack of training, and,

after his discharge, he was unemployed and suffered emotional

problems.    Rowlett, 832 F.2d at 204-205.         Rowlett also presented

expert testimony of a psychiatrist who explained that he suffered

from symptoms of anxiety, stress, and some depression for which he

was treated with an antidepressant.           Id. at 204.    The court then

held that “Rowlett’s testimony, in combination with that of the

psychiatrist and with the jury’s common sense judgment of the

emotional    complications     that   would    accompany    the   intentional

discrimination Rowlett suffered, provides an adequate basis for the

portion of the compensatory damage award attributable to emotional

distress.”    Id.

     The    EEOC,   as   the   primary     enforcement   mechanism   against


                                      24
discrimination under Title VII, apparently recognized this trend in

case law and interpreted the 1991 Amendments allowing compensatory

damages    under   Title   VII   to   similarly   require   physical

manifestations to recover for emotional harm.     EEOC POLICY GUIDANCE

NO. 915.002 § II(A)(2), at 10 (July 14, 1992).     The Commission’s

position statement noted that “[c]ases awarding compensatory and

punitive damages under other civil rights statutes will be used as

guidance in analyzing the availability of damages under § 1981a.

Section 1981 cases are particularly useful because Congress treated

the § 1981a damage provisions as an amendment to § 1981.”      Id. at

10 n.13.     The Commission then explained its position on the

availability of intangible injury under § 1981a as follows:

               Damages are available for the intangible
          injuries of emotional harm such as emotional pain,
          suffering, inconvenience, mental anguish, and loss
          of enjoyment of life.    Other nonpecuniary losses
          could include injury to professional standing,
          injury to character and reputation, injury to
          credit standing, loss of health, and any other
          nonpecuniary losses that are incurred as a result
          of the discriminatory conduct. Nonpecuniary losses
          for emotional harm are more difficult to prove than
          pecuniary losses.     Emotional harm will not be
          presumed simply because the complaining party is a
          victim of discrimination.[] The existence, nature,
          and severity of emotional harm must be proved.
          Emotional harm may manifest itself, for example, as
          sleeplessness, anxiety, stress, depression, marital
          strain, humiliation, emotional distress, loss of
          self esteem, excessive
fatigue, or a nervous breakdown.       Physical manifestations of
emotional harm may consist of ulcers, gastrointestinal disorders,
hair loss, or headaches. . . . The Commission will typically
require medical evidence of emotional harm to seek damages for such
harm in conciliation negotiations.

Id. at 10-12 (footnotes omitted) (emphasis added).

     In the instant case, the district court awarded $40,000 for


                                 25
emotional distress to Brown based solely on his testimony and the

discriminatory conduct forming the basis of this lawsuit.                      Brown

testified that he felt “frustrated” and “real bad” for being judged

by   the   color   of    his    skin.      Brown    explained     that   the    work

environment was “unbearable” and was “tearing my self-esteem down.”

Brown   also    stated    that    it     “hurt”    and   made   him   “angry”    and

“paranoid” to know that his supervisor referred to Brown as a

“porch monkey” or a “nigger” and generally thought that he was

inferior to white employees.            This testimony is the only evidence

submitted by Brown in support of his emotional distress claim.

       After a complete review of the record, we hold that Brown’s

testimony of mental distress is insufficient to support anything

more than a nominal damage award.               While the district court could

infer that being referred to as a “porch monkey” and a “nigger”

would   cause    one    emotional      distress,    Brown   has   not    presented

evidence with the specificity required by Carey nor has Brown

testified as to any manifestations of harm listed by the EEOC

policy statement.        See    EEOC POLICY GUIDANCE NO. 915.002 § II(A)(2),

at 10-11.      Brown presented no corroborating testimony nor did he

offer expert medical or psychological evidence of damages caused by

his alleged distress.          No evidence suggests that Brown suffered

from    sleeplessness,         anxiety     or     depression.         Furthermore,

immediately after his constructive discharge from PHP Healthcare,

Brown obtained employment at Metroplex for a higher hourly wage

rate than he received at PHP Healthcare.

       In order to establish intangible loss, we recognize that Carey


                                          26
requires a degree of specificity which may include corroborating

testimony or medical or psychological evidence in support of the

damage award.     Carey, 435 U.S. at 264, 98 S. Ct. at 1052.                     Hurt

feelings, anger and frustration are part of life. Unless the cause

of    action   manifests      some   specific   discernable        injury   to   the

claimant’s emotional state, we cannot say that the specificity

requirement of Carey has been satisfied.              We find no support for

the    district   court’s     emotional      damage   award   in    this    record.

Consequently, based on the above reasoning, we hold that the

district court abused its discretion in awarding emotional distress

damages to Brown on his § 1981 claim.                 We vacate the district

court’s $40,000 emotional distress award as to Brown and remand the

case with instructions for the district court to award nominal

damages.



B. Title VII - Emotional Harm

       For purposes of Title VII, § 102 of the Civil Rights Act of

1991 significantly expanded the available remedies for plaintiffs

subjected to discrimination under Title VII.              42 U.S.C. § 1981a;

and see Landgraf v. USI Film Products, 114 S. Ct. 1483, 1490-1491

(1994). Under this section, “a Title VII plaintiff who wins a back

pay award may also seek compensatory damages for `future pecuniary

losses, emotional pain, suffering, inconvenience, mental anguish,

loss    of   enjoyment   of    life,   and    other   nonpecuniary      losses.’”

Landgraf, 114 S. Ct. at 1491 (quoting 42 U.S.C. § 1981a(b)(3)).                    As

such, both § 1981 and Title VII permit awards for intangible loss


                                        27
such as mental anguish or emotional distress.

       Nothing in the 1991 Amendments to Title VII suggests that we

should analyze claims for emotional distress under Title VII using

different    guidelines        than    those       explained      above    for   §   1981

emotional distress claims.12           Furthermore, Congress treated the §

1981a compensatory and punitive damage provisions as amendments to

§ 1981.     The legislative history of the 1991 Amendments to Title

VII also shows that Congress sought to unify the law for employment

discrimination cases.          H.R. REP. NO. 102-40 (II), 102d Cong., 1st

Sess. at 24 (1991), reprinted in 1991 U.S.C.C.A.N. 694, 717.                           As

such, we     see   no   reason    to    frustrate         Congressional      intent    by

fashioning    different    rules       for     §   1981    and    Title    VII   claims.

Consequently, we read Carey to require a plaintiff to present the

same level of competent evidence under a Title VII emotional

distress claim as is required to sustain a finding for emotional

distress under §§ 1981 and 1983.             Carey, 435 U.S. at 255-56, 98 S.

Ct. at 1048.

       We again review the district court’s emotional damage award

for abuse of discretion.              The district court awarded Patterson

$150,000 for emotional damage, and mental pain and suffering.

Again, no testimony was presented to show any manifestations of

harm listed by the EEOC policy statement.                   Patterson presented no

evidence that she was subjected to sexist or racist comments nor

did   she   testify     that    she    was     subjected         to   a   hostile    work


      12
       We also recognize that nothing in the statute suggests that
the same standards apply.

                                         28
environment.     Instead, Patterson testified that she was terminated

by Kennedy for insubordination for hiring another black employee.

She also explained that Kennedy created and back-dated a document

for   use   at   her   T.E.C.    hearings    in   order       to    challenge   her

application for unemployment.         Patterson also testified that her

retaliatory      firing   emotionally      scarred      her   and    resulted    in

unemployment for almost one year.            Patterson explained that she

worked in a narrow field as a psychiatric nurse and could not

easily attain employment due to the limited number of facilities.



      Apparently, the district court based its emotional harm award

on testimony that Patterson suffered mental anguish during her

unemployment, that she endured a great deal of familial discord

arising from her acceptance of other jobs in Huntsville and Houston

because she was forced to leave her children in the Gatesville

area, and that the firing and subsequent moves to Huntsville and

Houston to obtain work caused mental distress because she was

separated from her children.        Obviously, the retaliatory discharge

caused a substantial disruption in Patterson’s daily routine.

However, this record is void of sufficient competent evidence to

support anything more than nominal damages under Carey. Carey, 435

U.S. at 255-56, 98 S. Ct. at 1048.

      The record contains none of the listed evidentiary factors in

the EEOC policy statement.         See EEOC POLICY GUIDANCE NO. 915.002 at

10-11.      No    corroborating     testimony     was    offered      to   support

Patterson’s testimony.          No evidence suggests that Patterson was


                                      29
humiliated or subjected to any kind of hostile work environment.

Further, no expert medical or psychological evidence exists to

support a claim for emotional harm.                  No proof of actual injury

exists     in   this   case.       Because       Patterson   failed   to    present

sufficient competent testimony and/or other evidence to demonstrate

the nature and extent of emotional harm caused by her unlawful

termination, we hold that the district court abused its discretion

in awarding her $150,000 for emotional distress.                 As we explained

above, Carey teaches us that the an award of damages for “distress”

“must be supported by competent evidence concerning the injury.”

Carey, 435 U.S. at 264 n.20, 98 S. Ct. at 1052 n.20 (emphasis

added).    Patterson’s testimony alone does not meet this threshold.

We therefore vacate the district court’s Title VII emotional

distress award and remand to the district court with instructions

to award nominal damages for Patterson’s emotional distress.



                                          VII.

      Appellants PHP Healthcare and Kennedy also argue that the

district court committed clear error by awarding punitive damages

to Brown under 42 U.S.C. § 1981 and to Patterson under 42 U.S.C. §

1981a.     A party who establishes a cause of action under 42 U.S.C.

§   1981   may    be   entitled     to    punitive     damages   “under     certain

circumstances.”        Johnson v. Railway Express Agency, 421 U.S. 454,

460, 95 S. Ct. 1716, 1720 (1975).               The general rule in this circuit

permits a punitive damage award against a § 1981 defendant when the

defendant       acts   willfully     or    with     gross    disregard     for   the


                                           30
plaintiff’s rights. See Jones v. Western Geophysical Co., 761 F.2d

1158, 1162 (5th Cir. 1985).13          In Jones, we also recognized this

characterization to be one of malice.            Id. (citing Clairborne v.

Illinois Central R.R., 583 F.2d 143, 154 (5th Cir. 1978), cert.

denied, 442 U.S. 934 (1979)).

       Punitive damages were unavailable to Title VII plaintiffs

until the enactment of the 1991 Amendments to the Civil Rights Act

of 1964, 42 U.S.C. § 1981a.                Congress’s primary concern with

enacting punitive damages under § 1981a(b)(1) was to unify the law

under Title VII. H.R. REP. NO. 102-40 (II), 102d Cong., 1st Sess. at

24-29 (1991), reprinted in 1991 U.S.C.C.A.N. 694, 717-723.                    In

furtherance of this unification effort, Congress permitted the

imposition of punitive damages under Title VII in the same general

circumstances as punitive damage awards imposed by courts under §

1981.   Id.; and see H.R. REP. NO. 40(I), 102d Cong., 1st Sess. at 74

(1991), reprinted in 1991 U.S.C.C.A.N. 549, 612.               Section 1981a

provides that, for a district court to award punitive damages under

Title VII, the complaining party must show “that the respondent

engaged in a discriminatory practice or discriminatory practices

with    malice   or    with    reckless    indifference   to   the   federally

protected     rights   of     an   aggrieved   individual.”     42   U.S.C.   §

1981a(b)(1).     “Punitive damages are available under [§ 1981a] to

         13
            The Supreme Court fashioned a similar standard for
assessing punitive damages under § 1983. Smith v. Wade, 461 U.S.
30, 51, 103 S. Ct. 1625, 1637 (1983). In Wade, the Court held that
punitive damages may be assessed under § 1983 when the defendant
commits acts intentionally or with reckless or callous disregard
for the plaintiff’s rights. Wade, 461 U.S. at 51, 103 S. Ct. at
1637.

                                          31
the   same    extent      and   under    the     same       standards   that   they   are

available to plaintiffs under 42 U.S.C. § 1981. No higher standard

may be imposed.”           137 CONG. REC. H9527 (daily ed. Nov. 7, 1991)

(Rep. Edwards’ Interpretive Memorandum).

      From our reading of the legislative history to the 1991

Amendments to Title VII, we can conclude that Congress intended

these amendments to unify the law for employment discrimination

cases.      Accordingly, we shall consider the propriety of punitive

damage awards under §§ 1981 and 1981a under the same criteria.

      It is well settled that a private employer may be held liable

for punitive damages in employment discrimination cases under §

1981 based on the acts of supervisory employees.14 Flanagan v. A.E.

Henry Com. Health Serv. Ctr., 876 F.2d 1231, 1235 (5th Cir. 1989).

Title VII, however, only provides for “employer” liability.                           42

U.S.C. § 2000e-2.           Although individuals may not be held liable

under      Title    VII   unless     they   meet        §    2000e(b)    definition   of

“employer,”        an   individual      employee’s          actions   may   subject   the

employer to liability under agency principles.                        See Grant v. Lone

Star Co., 21 F.3d 649, 652 (5th Cir.), cert. denied, 115 S. Ct. 574

(1994) (noting that “the purpose of the `agent’ provision in §

2000e(b) was to incorporate respondeat superior liability into

Title VII.”).           The Supreme Court has also held that employers are

      14
        In Flanagan, we affirmed a district court’s application of
agency principles to extend liability under § 1981 to a private
employer. Id. at 1236. We held that “in cases . . . where a clear
agency relationship exists between the employer and supervisors
with control over the operations of the employer and the employment
status of the plaintiff, liability may be appropriately extended
against the employer.” Id.

                                            32
not strictly liable under Title VII for the discriminatory acts of

their agents.      Meritor Sav. Bank v. Vinson, 477 U.S. 57, 72, 106 S.

Ct. 2399, 2408 (1986).        As such, agency principles apply under

Title VII and should necessarily be extended to the remedies made

available under the 1991 Amendments, 42 U.S.C. § 1981a.

      For punitive damages to be assessed under § 1981 or § 1983,

the defendant must have committed acts with malice or reckless

indifference to the federally protected rights of the plaintiff.

Jones, 761 F.2d at 1162; 42 U.S.C. § 1981a(b)(1).          We review the

propriety of the district court’s punitive damage award for abuse

of discretion.      Id.

      In the case sub judice, the district court found that Brown

and     Patterson    were   subjected     to   willful    and     malicious

discrimination and awarded Brown and Patterson $150,000 each in

punitive damages.      Kennedy was the project manager and supervisor

for PHP Healthcare’s Fort Hood Facility.         The record shows that

Kennedy intentionally discriminated against Brown and Patterson.

The record is replete with Kennedy’s use of racial epithets and

other    actions    demonstrating   his   reprehensible   views    on   race

relations.    Evidence shows that Brown was scheduled to the less

desirable night shifts and assigned menial tasks which white

employees were not required to perform.         The district court also

found that PHP Healthcare and Kennedy discriminated against Brown

on the basis of his race with respect to the assignment of benefits

and disciplinary actions taken by the company.

      The district court further found that Kennedy told Patterson


                                    33
“not another nigger is to be hired.”              A few days after Patterson

hired another black employee, she was terminated.                      The court

further found that Patterson’s attempt to contact PHP Healthcare’s

headquarters in an effort to stop the ongoing discrimination at the

Fort Hood facility was another producing cause of her termination.

After her termination, Kennedy created and back dated a document

for use at Patterson’s T.E.C. hearing detailing alleged misconduct.

This report stated that, while Kennedy was at PHP Healthcare’s

headquarters in Washington, D.C., Patterson took a three hour

lunch, she failed to report to work on another day, and she was

absent from work when a patient escaped.              Kennedy then lied about

using this document to fire Patterson when he testified before the

T.E.C.   Based on the evidence presented, the district court found

that Patterson was, in fact, fired soon after disobeying Kennedy’s

directive    “not   to    hire     any   more   niggers,”    while    Brown    was

constructively discharged after he was assured that the racially

hostile work environment at PHP Healthcare would change.

     The district court found that these facts, taken together,

showed   Kennedy’s    malice       and/or     reckless   indifference    to    the

federally protected rights of Brown and Patterson and awarded

punitive damages.        See 42 U.S.C. § 1981a(b)(1).        Under § 1981, the

district    court   found    Kennedy     and    PHP   Healthcare     jointly   and

severally liable to Brown for $150,000.                  Under Title VII, the

district    court   found    PHP    Healthcare     liable   to   Patterson     for

$150,000 as an “employer” under the terms of the statute.

     Based on the record presented, we cannot say that the district


                                         34
court abused its discretion in assessing punitive damages against

Kennedy.    Kennedy’s actions in falsifying documents to establish a

paper trail      of   misconduct      for   Brown   coupled    with    his    racial

animosity support a determination of malicious or reckless conduct

justifying punitive damages.

     However, the quantum of this award does not comply with the

three factors set out by the Supreme Court to determine the

reasonableness of a punitive damage award.                    See BMW of North

America, Inc. v. Gore, 116 S. Ct. 1589, 1598-99 (1996).                             We

understand that BMW deals with constitutional limits on punitive

damages, but we find it instructive here.              In BMW, the Court held

that the following factors must be considered in determining

whether a punitive damage award was reasonable:               (1) the degree of

reprehensibility of the defendant’s conduct; (2) the disparity

between the harm suffered and the damage award; and (3) the

difference between the damages awarded in this case and comparable

cases.   Id.     An award of $150,000 fails to meet any of these three

factors.

     First,      Brown   was   not    personally     subjected    to       verbal   or

physical abuse and no evidence suggests that Kennedy’s actions

reflected a prevailing attitude of PHP Healthcare to warrant such

a large punitive assessment.            In a close case such as this one,

Kennedy’s      intentional     falsification    of    documents       is    the   only

finding made by the district court which meets the malicious or

reckless indifference requirement for imposing punitive damages.

Next,    the    punitive     damage    assessment     bears      no    “reasonable


                                        35
relationship” to the compensatory damage awards in this case.                 On

remand,    Brown’s   back-pay      and    lost    benefits   award     will   be

substantially     reduced   from    $22,648.        Further,    only    nominal

emotional damage are warranted in this case.           Even if we based the

punitive award on the original back-pay and benefits award of

$22,648 the ratio of punitives to compensatory damages would be

approximately 6.5 to 1.         The Supreme Court has recognized a

punitive damage award of 4 times the amount of compensatory damages

to be “close to the line” in terms of constitutional propriety.

BMW, 106 S. Ct. at 1602 (citing Pacific Mut. Life Ins. Co. v.

Haslip, 499 U.S. 1, 23-24, 111 S. Ct. 1032, 1046 (1991)).              Finally,

the largest punitive damage award under § 1981 in this circuit, of

which we are aware to date, is $50,000.           See Jett v. Dallas Indep.

Sch. Dist., 798 F.2d 748, 762 (5th Cir. 1986), aff’d in part and

remanded in part, 109 S. Ct. 2702 (1989).             For these reasons, we

vacate the punitive damage award in favor of Brown against Kennedy

and remand for reassessment in light of this opinion.

     As to the punitive damage assessments against PHP Healthcare

under § 1981 and Title VII, we again recognize that “the trier of

fact’s    decision    whether      to     award   [punitives]    damages      is

discretionary.”      Sockwell v. Phelps, 20 F.3d 187, 192 (5th Cir.

1994).    However, we find no evidence in         this record to support the

district court’s punitive damage assessment as to PHP Healthcare

under either § 1981 or § 1981a.

     The Supreme Court has held that § 1981 liability reaches only

intentional discrimination, General Bldg. Contractors Ass’n v.


                                         36
Pennsylvania, 458 U.S. 375, 389-91, 102 S. Ct. 3141, 3149-50

(1982).   The Court has also held that employers are not strictly

liable for the acts of their employee.   Vinson, 477 U.S. at 72, 106

S. Ct. at 2408.     Agency principles apply to § 1981 (and to Title

VII) to hold an employer liable “for those intentional wrongs of

his employees that are committed in furtherance of the employment;

the tortfeasing employee must think (however misguidedly) that he

is doing the employer’s business in committing the wrong.” General

Bldg. Contractors, 458 U.S. at 392, 102 S. Ct. at 3150-51.       We

agree that Kennedy’s actions may be attributed to PHP Healthcare

for purposes of compensatory damages, given his supervisory role as

project manager.

     However, the imposition of punitive damages under § 1981 and

Title VII requires that the discrimination be malicious or done

with reckless indifference.    Jones, 761 F.2d at 1162; and see 42

U.S.C § 1981a.     All of the discriminatory acts in this case were

solely acts of Kennedy.   Kennedy was not a corporate officer of PHP

Healthcare but was the “project manager” of the Fort Hood office.

PHP Healthcare provided a handbook which expressly established a

policy of non-discrimination and explained how employees could

complain about discriminatory practices to the company.    Further,

the vice president of human resources, John Bucur, testified that

memos were distributed throughout the Fort Hood facility which also

set out the procedures for making complaints to headquarters.    No

evidence suggests that Brown or Patterson followed these procedures

in an attempt to notify PHP Healthcare’s corporate office that


                                 37
Kennedy was discriminating against black employees.              The record is

completely void of evidence showing that PHP Healthcare took part

in   any    discriminatory      conduct   much   less   any    “malicious”   or

“reckless” conduct.        The existence of the employment handbook

setting forth a policy of non-discrimination is at least prima

facie evidence of awareness on the part of PHP Healthcare of the

federally protected rights of Brown and Patterson; and there is

nothing in this record which purports to show that PHP Healthcare

took    any   action    which    was   inconsistent     with    that   policy.

Similarly, there is nothing in the record which would show that PHP

Healthcare had         knowledge of Kennedy’s malicious or reckless

conduct, or authorized, ratified, or approved Kennedy’s actions.

See Fitzgerald, 68 F.3d at 1263 (refusing to impose punitive

damages under § 1981 where employer took no part in the intentional

discrimination).       Although Kennedy was the project manager of PHP

Healthcare’s Fort Hood facility, his actions alone, without some

evidence showing that PHP Healthcare knew or should have known of

Kennedy’s malicious or reckless conduct, are insufficient to cause

punitive liability to directly attach to PHP Healthcare.15

       For these reasons, we hold that the district court abused its


       15
        We have affirmed a district court’s refusal to impose
punitive damages based on evidence that a defendant had taken steps
to eliminate racial discrimination and the ambiguous nature of the
evidence at the district court level. Jones v. Western Geophysical
Co., 761 F.2d at 1162. When prompt remedial measures were taken by
the employer, the evidence “did not compel the conclusion the
[defendant] had behaved maliciously.” Id. at 1162. Similarly, the
evidence in this case does not compel the conclusion that PHP
Healthcare behaved in a manner which warranted the imposition of
punitive damages.

                                       38
discretion in awarding punitive damages against PHP Healthcare in

this case.        Therefore, we vacate the district court’s punitive

damage award in favor of Brown and remand for reassessment against

Kennedy under § 1981 in his individual capacity.                          We reverse

Patterson’s punitive damage award under Title VII because no

individual liability attaches under this statute.                    See Grant, 21

F.3d at 651.



                                        VIII.

      PHP Healthcare and Kennedy further contend that the district

court erred computing attorneys’ fees in this case. When Brown and

Patterson originally filed this suit on May 28, 1993, they were

represented by the law firm of Salter and Thetford.                       Salter and

Thetford withdrew as counsel on July 25, 1994.                    Brown retained

David J. Guillory, David Weiser and Bill Bingham while Patterson

hired W.V. Dunnam, Jr., as counsel.                    Brown then amended his

complaint    to    add   violations     of    42   U.S.C.   §§   1981     and   1983.

Patterson    also    filed   an   amended       complaint   adding      intentional

infliction of emotional distress.             All claims except for Brown’s §

1981 claim and Patterson’s Title VII claim were dismissed at the

summary judgment stage.

      PHP Healthcare and Kennedy contend that the district court

erred in awarding $22,500 in attorney’s fees to Brown and Patterson

for   the   time    spent    by   the   law     firm   of   Salter    &    Thetford.

Appellants also maintain that the $45,000 in attorney’s fees

awarded to Brown should have been reduced by the amount of hours


                                         39
spent on claims unrelated to the successful claims.            We review a

district court’s award of attorney’s fees for abuse of discretion.

Cooper v. Pentecost, 77 F.3d 829, 831 (5th Cir. 1996).

     Congress enacted the Civil Rights Attorney’s Fees Awards Act

of 1976, 42 U.S.C. § 1988. Section 1988 authorizes district courts

to award reasonable attorney’s fees to prevailing parties in civil

rights cases.      See Hensley v. Eckerhart, 461 U.S. 424, 429 (1983).

In Hensley, the Supreme Court offered guidance for determining a

proper award of attorney’s fees in cases in which the plaintiffs

brought a number of causes of action but prevailed on only a few

or, in this case, one:

             Many civil rights cases will present only a single
             claim. In other cases the plaintiff’s claims for
             relief will involve a common core of facts or will
             be based on legal theories. Much of counsel’s time
             will be devoted generally to the litigation as a
             whole, making it difficult to divide the hours
             expended on a claim-by-claim basis.

Id. at 435.

     Here, the district court properly followed the teachings of

Hensley and reduced the attorney’s fees award claimed by Guillory,

Weiser and Bingham and further adjusted Salter and Thetford’s

stated    hours.     The   district   court   also   applied   the   Johnson

factors.16     See Cooper, 77 F.3d at 831 (recognizing that the

district court must examine the factors set out in Johnson).            Per

Johnson, the district court examined the novelty and difficulty of

the case, the requisite skill required to perform legal services,


     16
        Johnson v. Georgia Hwy Express, 488 F.2d 714, 717-719 (5th
Cir. 1974).

                                      40
the   preclusion    of    other    employment,    customary   fees,   amounts

involved and results obtained; the desirability of the case, the

nature and length of the professional relationship awards in

similar cases, and the time and labor required.            Johnson, 488 F.2d

at 717-719.

      Based on the district court’s Johnson factor analysis and the

findings presented, we find no abuse of discretion with respect to

the district court’s attorneys’ fee award of $68,898.84 to Brown

and $36,000 to Patterson.

                                      IX.

      In summary, we affirm the district court’s judgment against

PHP Healthcare for back pay on Patterson’s claim of retaliatory

discharge under 42 U.S.C. § 2000e-3.          We also affirm the district

court’s judgment of liability against PHP Healthcare and Kennedy

for back pay on Brown’s claim of race discrimination under 42

U.S.C. § 1981.        However, because of his failure to exercise

reasonable diligence to maintain substantially similar employment

and mitigate his damages, we vacate the district court’s back pay

award as to Brown and remand that award to the district court for

redetermination.         The district court is instructed to reduce

Brown’s back pay award by excluding all back pay from the date of

his involuntary termination from Metroplex forward.

      We vacate the awards of emotional damages as to both Brown and

Patterson   and    remand   such    awards   to   the   district   court   with

instructions to assess nominal damages for such claims.               We also

vacate the district court’s award of punitive damage as to Brown


                                       41
and remand that award to the district court to reassess the award

consistent with the instructions herein and to assess such award

against Kennedy in his individual capacity.   As to Patterson, we

reverse the punitive damage award in its entirety and render

judgment that no punitive damages are recoverable by Patterson

against PHP Healthcare in this case.    We affirm the awards of

attorneys’ fees in this case.




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