No Guarantees

Establishing a company-wide anti-harassment policy and responding to employee complaints in accord with that policy does not guarantee that an employer can successfully defend a discrimination lawsuit, according to a ruling by a federal appeals court.

Arnold White and Delbert Gaskins worked for BFI Waste Services as truck drivers based at BFI's facility in Merrifield, Va., for a number of years. In 2002, they filed suit in federal district court against their employer, complaining that BFI's managers discriminated against them by creating a racially hostile work environment during the years they worked at the facility. They charged that managers continually slurred and insulted them by addressing them and other black drivers with demeaning racial epithets.

For the most part, the managers carefully avoided using the slurs openly or over the radio, but verbally accosted the drivers in face-to-face encounters, according to testimony at the trial. At a company picnic, where White and his family exited from an expensive car, a manager called out, “Boy, you make too much money.” Both men testified that they and their families suffered over the years from the harassment.

The evidence at trial showed that BFI's employee handbook directed workers to contact managers in case of such discrimination and also provided a telephone number whereby complaints could be lodged anonymously. The plaintiffs did not use that process, and they never complained about the vast majority of the epithets.

Instead, the plaintiffs complained regularly to a shop steward who collected employee complaints and forwarded them to BFI management. For its part, BFI offered testimony that whenever it received a harassment complaint, it reprimanded the manager involved and had him apologize to the employee.

The jury returned a verdict in favor of the plaintiffs, awarding each of them $600,000 in compensatory damages and $2 million in punitive damages. The district court cut each compensatory award in half, and reduced the punitive awards to $600,000 on the ground that they were excessive. The plaintiffs accepted these adjustments in lieu of a new trial on damages.

On appeal, BFI argued, among other things, that the evidence was insufficient to support the jury's verdict on liability and punitive damages and that the awards were excessive. The U.S. Court of Appeals for the Fourth Circuit ruled that the evidence was insufficient to award punitive damages, but otherwise upheld the verdict.

“While the existence of a policy is necessary to provide … an affirmative defense, … that defense is lost if the policy was ineffective,” said the appeals court. “[T]he shop steward testified, without contradiction, that BFI never addressed the numerous complaints about racial harassment that he presented to management.”

“The jury could have reasonably … determined that BFI's [anti-harassment] policy was ineffective,” the appeals court added.

Noting approvingly that BFI had distributed an anti-harassment policy and conducted training seminars, the appellate panel said: “[A] policy's ineffectiveness alone cannot demonstrate the lack of good faith required for justifying an award of punitive damages.”

[White v. BFI Waste Services, LLC, No. 05-1804, 4th Cir., May 23, 2006.]

The legal editor welcomes comments from readers. Contact Barry Shanoff via e-mail: [email protected].

The columnist is a Rockville, Md., attorney and serves as general counsel of the Solid Waste Association of North America.