Black Employee Fired to Resolve Racial Conflict Can Keep $8.5M Award

A manufacturing company that terminated its only black employee because of racial animosity between him and several white workers is on the hook for a $8.5 million jury award in the employee's race discrimination lawsuit, according to a California appeals court.

The appellate court, however, reduced the original award by about $8 million, finding that although punitive damages were justified by the employer's conduct, the amount of punitive damages the jury awarded was excessive.

The plaintiff worked for a company that manufactured fire hydrants and water valves at a plant in Corona, Calif. He was hired in 2010 and became a production supervisor a few months after his hire. The plaintiff supervised about half of the 18 to 24 employees at the Corona plant, and another supervisor oversaw the other workers. Both supervisors reported to the plant manager, who had worked for the company for more than 30 years, during which time the company had never hired a black supervisor. At the time he worked at the plant, the plaintiff was the only black employee.  

After one of the workers under the plaintiff's supervision was fired for misconduct, several other employees began giving the plaintiff a hard time, believing that he had gotten the worker fired unfairly. Some of the workers he supervised treated him disrespectfully and refused to follow his orders. Several of these workers used the "n-word" and other racially derogatory terms to refer to the plaintiff. One employee testified that she heard other employees use such terms about two dozen times.

Three months after the worker's termination, the plant manager gave the plaintiff a positive performance review and a 3 percent raise. A few months later, though, the plaintiff's relationship with the plant manager began to deteriorate. And when several employees who reported to the plaintiff began going to the other supervisor for direction, the plant manager refused to resolve the situation.

The plaintiff was subsequently fired, allegedly because he could not get along with the plant manager. He sued the company for unlawful discrimination, failure to prevent discrimination and wrongful termination, among other claims. The jury found in his favor and awarded him $373,514 in past and future economic losses and $2.5 million in past and future noneconomic losses. The jury also found the company acted with malice, fraud, or oppression and awarded the plaintiff $13.8 million in punitive damages.

The company appealed.

Plaintiff Was Terminated Because of Race

California's Fair Employment and Housing Act (FEHA) prohibits an employer from taking an employment action against a person "because of" the person's race.

The appellate court found substantial evidence to support the jury's finding that the plaintiff was terminated because he was black.

[SHRM members-only HR Q&A: What is FEHA and what does it cover?]

The court rejected the employer's claim that the plaintiff failed to show that any of his supervisors had racial animus because, although there was evidence of derogatory comments by his co-workers and subordinates, there was no evidence that any of his supervisors had used racial slurs.

The company sought to define "racial animus" too narrowly, the court said. The plaintiff only needed to show that the decision-makers' actions were motivated by race, not that they ever stated anything racially insensitive or disliked the plaintiff because he was black.

It was a reasonable inference from the evidence, the court said, that the company fired the plaintiff because it thought his race, rather than the white employees who used racial slurs, was the problem. The evidence supported the conclusion that the company handled racial conflict at the plant by choosing to terminate the plaintiff's employment rather than trying to create a more inclusive and less hostile work environment, the court said. "That," the court concluded, "was an employment decision based on race."

The appeals court also found that the evidence supported the jury's finding that the company engaged in or ratified conduct that was malicious, oppressive or fraudulent, and so justified the award of punitive damages. However, the court further concluded that the award was excessive and reduced it by about $8 million.

Moland v. McWane Inc., Calif. Ct. App., No. B285628 (March 2, 2020).

Professional Pointer: The bottom line here is that the company chose to address racial conflict in the workplace by firing its only black employee. It is not surprising that the jury found in the plaintiff's favor.

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