California Appeals Court Upholds Award of Punitive Damages in Retaliation Case

​A former store manager for T‑Mobile USA was entitled to $1.5 million in punitive damages in his retaliation lawsuit, a California appeals court ruled. The district manager who fired the store manager was a "managing agent" of T‑Mobile, and his actions were committed with "malice" or "oppression," the court concluded. This meets the requirements for an award of punitive damages under California law. The appeals court, however, reduced the trial court's original award of $4 million in punitive damages to $1.5 million, finding that the initial award was excessive.

T‑Mobile sells wireless telephones and plans to consumers at retail store locations. The employee worked for T‑Mobile from 2007 until 2014 as the manager of a store in Ontario, Calif. He consistently received positive performance reviews. His direct supervisor was a district manager, who oversaw nine stores employing about 100 workers.

The district manager, the plaintiff's supervisor, made final decisions on hiring and firing employees and handled a wide range of operational issues in partnership with personnel from other T‑Mobile departments. The supervisor planned to transfer the employee from the store where he worked to a kiosk located inside a mall. However, the employee had an anxiety disorder that prevented him from performing his job in the crowded mall location.

The employee told his supervisor about the disability and requested an accommodation. He said he was willing to transfer to a different store not located inside a mall. His supervisor was highly skeptical of the employee's condition, allegedly saying, "This is the most ridiculous thing I've ever heard." But he referred the matter to HR, which, after receiving a note from the employee's doctor, told the manager that the employee could not be transferred to the mall location due to his protected medical condition.

Several months later, the employee discovered that retail sales associates were spreading inflammatory rumors and making defamatory statements about him, creating a tense and uncomfortable work environment. The employee reported the issue to his supervisor, who allegedly told him to "quit complaining" and that he had been "nothing but problems." The employee reported the incident and the supervisor's comments to the employer's "integrity line." The next day, the supervisor mailed a termination letter to the employee based on an unfounded rumor that the employee was using the employer's resources for his separate business venture.

The employee subsequently sued T‑Mobile for retaliation in violation of the California Fair Employment and Housing Act. The case was sent to a jury, which returned a unanimous verdict in favor of the employee and awarded him more than $1 million in damages to compensate him for his economic losses and the emotional distress he suffered (called compensatory damages) and an additional $4 million in punitive damages. Such damages are allowed by California law only in certain circumstances. T‑Mobile appealed the award of punitive damages.

Standards for Award of Punitive Damages

A jury may award punitive damages in a retaliation case only when the employer has been guilty of "oppression, fraud or malice," the appeals court first noted. Further, the court said, a corporate employer cannot be found liable for punitive damages based on an employee's acts unless that employee is a "managing agent" of the corporation.

The court found sufficient evidence to support the jury's punitive damages award. First, the court found that there was substantial evidence that the employee's supervisor was a managing agent of T‑Mobile.

Second, the court found that there was substantial evidence that the supervisor acted with malice or oppression. "Malice" is defined under California law as conduct that is intended by the defendant to cause injury to the plaintiff. "Oppression" is "despicable conduct," which is defined as conduct that is "so vile, base, contemptible, miserable, wretched or loathsome that it would be looked down upon and despised by ordinary decent people."

The appellate court, however, reduced the punitive damages award to $1.5 million, finding the $4 million award to be excessive because there was only a "low to moderate degree of reprehensibility" on T‑Mobile's part.

Colucci v. T‑Mobile USA, Calif. Ct. App., No. D075932 (April 29, 2020).

Professional Pointer: Retail district managers who have independent hiring and firing authority and substantial discretionary authority over daily store operations may be considered managing agents for purposes of awarding punitive damages in employment lawsuits.

Joanne Deschenaux, J.D., is a freelance writer in Annapolis, Md.