Punitive Damages Overturned

Employer Not Liable For $5 Million Punitive Damages Award

The case of Leggins v. Rite Aid Corp. is an example of how courts can rein in an extravagant jury award. Leggins was a store manager for Rite Aid for 25 years. He suffered serious injuries to his neck and shoulders after being attacked during a robbery. Leggins’ injuries made walking difficult as well as using his left arm and leg. Rite Aid allowed Leggins seven months off work, and granted his request to be transferred to a less busy store. Despite these accommodations, Leggins’ pain did not improve, and he sought back surgery.

Leggins’ new store was inspected three months after he returned to work. His district manager gave him a poor evaluation due to the disrepair of the store and the fact that the stockroom was overrun with merchandise that had not been put onto the sales floor. Leggins explained that he was unable to lift heavy objects because he was still recovering from his surgery, and that he had not had time to catch up with the work that piled up during his leave. He asked the district manager for more employees to help him with these tasks. The manager ignored the request, and assigned Leggins even more physical tasks. Leggins reported this to HR and complained that the district manager had called him a “sissy” and told him that a “big Black guy should be tougher.”

Leggins received a “last and final” warning about his performance, which he did not dispute, after a subsequent investigation found his store in disarray, again. Six months later Rite Aid terminated Leggins for closing his store several hours early on a holiday and failing to resolve the issues that led to his “last and final” warning.

Leggins sued the company, and a jury found that Rite Aid terminated Leggins both because of his disability and for complaining about harassment. In addition to awarding Leggins millions of dollars in compensatory damages, the jury also awarded Leggins $5 million in punitive damages. On appeal, the $5 million award of punitive damages was overturned. Following well-established case law, the court held that California employers are not liable for punitive damages based on the conduct of supervisors and employees who do not have the power to create or influence corporate policy. Thus, Rite Aid could not be liable for punitive damages because there was no evidence that the supervisors involved in disciplining and terminating Leggins had such authority.

What This Means for Employers:

While this case contains good news for employers on the punitive damages front, it is a powerful reminder of the enormous risk involved with disciplining and terminating employees suffering from disabilities. Employers must be careful to establish clear policies for determining which supervisors and employees, if any, are empowered to create corporate policies. Employers should also consider whether those creating corporate policies should also have involvement in enforcing them as this may impact whether the employer is found liable for punitive damages. Contact Barsamian & Moody for assistance in setting up company policies related to discipline and disabilities, and in responding to cases where the employee is seeking punitive damages.

The goal of this article is to provide employers with current labor and employment law information. The contents should neither be interpreted as, nor construed as legal advice or opinion. The reader should consult with Barsamian & Moody at (559) 248-2360 for individual responses to questions or concerns regarding any given situation.