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Labor and Employment Alert: The sky may not be the limit for an employee-plaintiff

The sky may not be the limit for an employee-plaintiff

Ohio Court dramatically reduces a punitive damage award by holding that tort reform limits on punitive damages apply in statutory employment cases.
Ohio employers recently enjoyed a welcome victory when an Ohio court held that a statutory limit on punitive damages applies in cases brought under Ohio’s civil rights statute, Revised Code Section 4112. For the specific employer litigating the issue, this resulted in the dramatic reduction of a $43.1 million punitive damages award to $7 million.

The Luri Decision

On May 19, 2011, the Ohio Court of Appeals for the Eighth District (Cuyahoga County) decided Luri v. Republic Services, Inc., Case No. 94908, 2011-Ohio-2389. Luri sued his former employer for retaliation, claiming that his employment was terminated as a result of his refusal to terminate employees because those terminations could be viewed as discriminatory on the bases of disability and/or age. The jury found in Luri’s favor and awarded a $46.6 million verdict, including $43.1 million in punitive damages.

At issue on appeal was whether a punitive damages award in a statutory employment case should have been limited by statutory provisions enacted as part of a comprehensive tort reform bill. This had been a paramount question in the minds of employers and their legal advisors since the tort reform provisions were first enacted in 2005. Finding no applicable exception, the Luri Court held that the punitive damages limitation does apply in employment cases brought pursuant to Ohio’s civil rights statute, R.C. § 4112. 2011-Ohio-2389.

The statutory provision at issue in Luri is found in Ohio Revised Code § 2315.21. With some exceptions, § 2315.21 limits the amounts of punitive damages available to a plaintiff in a tort case. Specifically, punitive damages may not generally exceed two times the amount of the compensatory damages awarded to a plaintiff. R.C. § 2315.21(D)(2)(a). Where the defendant is an individual or a small employer (an employer in the manufacturing sector with fewer than 500 full-time employees or a non-manufacturing employer with less than 100 full-time employees) the limit may be smaller. In those instances, a punitive damage award may not exceed the lesser of two times the compensatory damages award or ten percent of the employer’s or individual’s net worth, up to a maximum of $350,000. R.C § 2315.21(D)(2)(b). Based on these provisions, theLuri Court found the jury’s $43.1 million verdict excessive and ordered it reduced to $7 million, which is two times the amount of the compensatory damages awarded.

Notably, Luri sued three different but related business entities and individually sued his former direct supervisor James Bowen and Bowen’s direct supervisor Ronald Krall. Luri argued that they were all jointly and severally liable for his damages because they comprised a single employer. The Luri Court held that, because Luri had argued that the multiple defendants together comprised a single “employer,” he could only recover a total of $7 million in punitive damages collectively from the defendants. The Court suggested that there may be cases in which each separate defendant could be held liable for the statutory maximum award. In fact, Judge Mary Kilbane dissented from the majority opinion to express her opinion that Luri was entitled to $7 million in punitive damages from each defendant rather than $7 million total in punitive damages. That reasoning would have allowed the jury’s verdict to stand.

What The Luri Decision Means For Employers

Punitive damage awards significantly increase the unpredictability of litigation. Punitive damage awards can, as was the case for Luri, greatly exceed an award of actual damages. Further, there are limitations on the extent to which punitive damages can be insured.

The Ohio Supreme Court has yet to decide the question before the Luri Court: whether punitive damages are limited by R.C. § 2315.21 in statutory employment cases. While courts outside of Cuyahoga County are not obligated to follow its holding, the Luri decision will be persuasive authority to limit such punitive damage awards.

Luri itself leaves unanswered questions, though. For one, the Luri Court did not decide whether the tort reform provisions apply to claims against an employer other than those brought pursuant to R.C. § 4112. Further, the Luri judges were not united in their decision to limit the total punitive damage award for all defendants. A different court could therefore decide that issue differently. Until the Supreme Court decides these issues, some uncertainty remains as to whether and to what extent punitive damages will be available to plaintiff-employees.

A Lesson From Luri

An important point is raised by the underlying case in Luri. Retaliation claims are a serious and often overlooked threat to employers. Luri did not claim that he was discriminated against on the basis of age, disability, or any other class protected by R.C. § 4112. Luri instead claimed that he was retaliated against for having brought concerns about such discrimination to the attention of his supervisor. An employee is often terminated for an independent reason after having complained that he or she was being subjected to discrimination or harassment. It is not uncommon for a jury to find that an employee was notdiscriminated against or harassed but nonetheless find the employer liable for retaliating against the employee for having made a complaint.

Given the potential for liability, it is always prudent to consult with an attorney regarding problematic employment relationships, when a complaint of discrimination or harassment is first made, and before discipline or termination decisions are made.

For more information, please contact:

James J. Boutrous II
248.220.1355
jboutrous@mcdonaldhopkins.com

Heather M. Kern
216.430.2032
hkern@mcdonaldhopkins.com

or any of our labor and employment counseling and litigation attorneys by clicking on the Labor and Employment Practice link below.

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