Opinion
Case No. 3:17-CV-1355-NJR
2021-11-02
Michelle J. DARR, Plaintiff, v. PHILLIPS 66 COMPANY, Defendant.
Jill A. Silverstein, Joshua M. Pierson, Ferne P. Wolf, Sowers & Wolf, LLC, St. Louis, MO, Russell C. Riggan, Samuel W. Moore, Riggan Law Firm LLC, Kirkwood, MO, for Plaintiff. Ian P. Cooper, Mollie Gentry Mohan, Jenna M. Lakamp, John M. Reynolds, Tueth, Keeney, St. Louis, MO, for Defendant.
Jill A. Silverstein, Joshua M. Pierson, Ferne P. Wolf, Sowers & Wolf, LLC, St. Louis, MO, Russell C. Riggan, Samuel W. Moore, Riggan Law Firm LLC, Kirkwood, MO, for Plaintiff.
Ian P. Cooper, Mollie Gentry Mohan, Jenna M. Lakamp, John M. Reynolds, Tueth, Keeney, St. Louis, MO, for Defendant.
MEMORANDUM AND ORDER
ROSENSTENGEL, Chief Judge:
This matter is before the Court on a Motion for Leave to File Second Amended Answer to Plaintiff's Complaint (Doc. 80) filed by Defendant Phillips 66 Company ("Phillips 66"). For the following reasons, the motion is granted.
FACTUAL AND PROCEDURAL BACKGROUND
For nearly four years, the parties have been litigating whether Phillips 66 violated the Americans with Disabilities Act, 42 U.S.C. § 12101, et seq., ("ADA"), by terminating Michelle Darr from her employment because of her multiple sclerosis ("MS"). (Doc. 1). On March 1, 2018, Phillips 66 answered the complaint. (Doc. 13). On March 28, 2018, the Court approved and entered the parties’ Proposed Scheduling and Discovery Order. (Doc. 20). In the parties’ Proposed Scheduling and Discovery Order, the parties agreed that motions to amend the pleadings shall be filed by June 25, 2018. (Doc. 20-1).
Phillips 66 now seeks leave to file a Second Amended Answer to include the affirmative defense that Darr is not entitled to punitive damages under Kolstad v. Am. Dental Ass'n , 527 U.S. 526, 119 S.Ct. 2118, 144 L.Ed.2d 494 (1999). Darr timely filed an opposition to the motion for leave. (Doc. 81).
ANALYSIS
I. The Kolstad Defense
Phillips 66 filed this motion for leave because of a recent district court case from Wisconsin, Equal Emp. Opportunity Comm'n v. Wal-Mart Stores, Inc. , 503 F. Supp. 3d 801 (W.D. Wis. 2020). In Wal-Mart Stores , the court held that the defendant employer was required to plead the Kolstad defense as an affirmative defense. Thus, "out of an abundance of caution and in compliance with the district court's admonition in Wal-Mart , [Phillips 66] respectfully seeks leave to add a single affirmative defense asserting that [Darr] is not entitled to punitive damages under Kolstad ." (Doc. 80, p. 2).
The Seventh Circuit has repeatedly reminded courts and counsel that district court opinions have no precedential value. See, e.g., Midlock v. Apple Vacations West, Inc. , 406 F.3d 453, 457–58 (7th Cir. 2005). With that said, Wal-Mart Stores is on appeal, and the Seventh Circuit held oral argument on September 24, 2021. The Court also agrees that "Seventh Circuit has not ruled expressly that the Kolstad good faith defense is an affirmative defense." Wal-Mart Stores, Inc. , 503 F.Supp.3d at 817. Thus, exploring whether the Kolstad defense is an affirmative defense is necessary for the Court's analysis.
A. Affirmative Defense Analysis
In Kolstad , 527 U.S. 526, 119 S.Ct. 2118, 144 L.Ed.2d 494, the Supreme Court "consider[ed] the circumstances under which punitive damages may be awarded in an action under Title VII." Id. at 530, 119 S.Ct. 2118. Much of the Court's analysis centered on whether the plaintiff had to demonstrate that her employer had acted egregiously. Id. at 534, 119 S.Ct. 2118. The Court held that "an employer must at least discriminate in the face of a perceived risk that its actions will violate federal law to be liable in punitive damages." Id. at 536, 119 S.Ct. 2118. The Court continued, "in the punitive damages context, an employer may not be vicariously liable for the discriminatory employment decisions of managerial agents where these decisions are contrary to the employer's ‘good-faith efforts to comply with Title VII.’ " Id. at 545, 119 S.Ct. 2118 (citing Kolstad v. Am. Dental Ass'n , 139 F.3d 958, 974 (D.C. Cir. 1998) (Tatel, J., dissenting)).
The Seventh Circuit characterizes the Supreme Court's punitive damages analysis under 42 U.S.C. § 1981a as a three-part inquiry. See E.E.O.C. v. AutoZone, Inc. , 707 F.3d 824, 835 (7th Cir. 2013). "First, the plaintiff must show that the employer acted with ‘malice’ or ‘reckless indifference’ toward the employee's rights under federal law." Id. (citing Kolstad , 527 U.S. at 533-39, 119 S.Ct. 2118 ). "Second, the plaintiff must establish a basis for imputing liability to the employer based on agency principles." Id. (citing Kolstad, 527 U.S. at 539–44, 119 S.Ct. 2118 ). "Third, when a plaintiff imputes liability to the employer through an agent working in a ‘managerial capacity ... in the scope of employment,’ the employer has the opportunity to avoid liability for punitive damages by showing that it engaged in good-faith efforts to implement an anti-discrimination policy." Id. (citing Kolstad, 527 U.S. at 544–46, 119 S.Ct. 2118 ).
The district court in Wal-Mart Stores , 503 F. Supp. 3d 801, then expanded on the Supreme Court and Seventh Circuit's punitive damages analysis by noting that the "court of appeals has interpreted Kolstad as placing the burden of proof on the defendant to show good faith and not making it an element of a punitive damages claim." Id. at 817 (citing Bruso v. United Airlines, Inc. , 239 F.3d 848, 858-59 (7th Cir. 2001) ). By finding that the third-part of the Kolstad inquiry is defendant's burden, the district court in Wal-Mart Stores found that the Kolstad defense is an affirmative defense. Id. at 817 (acknowledging that the Kolstad defense is an affirmative defense because "an affirmative defense is one on which defendant bears the burden of proof") (citing to Winforge, Inc. v. Coachmen Indus., Inc. , 691 F.3d 856, 872 (7th Cir. 2012) ).
In Winforge , however, the Seventh Circuit noted "a defense is an affirmative defense (a) ‘if the defendant bears the burden of proof’ under state law or (b) ‘if it [does] not controvert the plaintiff's proof. ’ " Id. at 872 (quoting Brunswick Leasing Corp. v. Wisconsin Cent., Ltd. , 136 F.3d 521, 530 (7th Cir. 1998) ) (emphasis added). Applying Winforge , the Seventh Circuit in Reed v. Columbia St. Mary's Hosp. , 915 F.3d 473 (7th Cir. 2019), held that the religious exemption defense under ADA Title III is an affirmative defense "because it assumes the plaintiff can prove everything she must to establish her claim but may still act to defeat her claim." Id. at 477. The Court noted that "[t]he religious exemption defense does not controvert the plaintiff's proof. " Id. at 478. (emphasis added).
The Kolstad defense, however, does not fit within the Seventh Circuit's analysis in Winforge and Reed . Unlike the religious exemption in Reed , where a plaintiff's claim is defeated even if plaintiff can prove everything to establish her claim, the Kolstad defense does not defeat a plaintiff's claim if a plaintiff proves everything to establish punitive damages. See Bruso , 239 F.3d at 860-61 (acknowledging that the "[plaintiff] presented sufficient evidence to allow a reasonable jury to conclude that [defendant] did not engage in a good faith effort to comply with Title VII"). Indeed, the Kolstad defense "is a fact-intensive analysis, and ‘although the implementation of a written or formal antidiscrimination policy is relevant to evaluating an employer's good faith efforts ..., it is not sufficient in and of itself to insulate an employer from a punitive damages award.’ " AutoZone, Inc. , 707 F.3d at 835 (quoting Bruso , 239 F.3d at 858 ).
Further, the Kolstad defense controverts plaintiff's proof. "When a plaintiff imputes liability to the employer through an agent working in a ‘managerial capacity ... in the scope of employment,’ the employer has the opportunity to avoid liability for punitive damages by showing that it engaged in good-faith efforts to implement an antidiscrimination policy." AutoZone, Inc. , 707 F.3d at 835. In other words, the employer is controverting the plaintiff's proof of punitive damages by disputing the liability imputed on it through its employees’ actions. As noted in Cooke v. Stefani Mgmt. Servs., Inc. , 250 F.3d 564, (7th Cir. 2001) :
In a case involving vicarious liability, the plaintiff must also establish a basis for imputing liability to the employer by showing that the employee who discriminated against him was a manager, acting within the scope of his employment. Bruso v. United Airlines, Inc. , 239 F.3d 848, 858 (7th Cir. 2001). An employer may escape punitive damages liability for its manager's acts, however, if it can demonstrate a good faith attempt to establish and enforce an antidiscrimination policy.
Id. at 568.
The Court is not persuaded by circuit court cases that conclusively acknowledge the Kolstad defense as an affirmative defense. The First, Second, Fourth, Sixth, and Ninth Circuit cases do not provide reasoning as to why the Kolstad defense is an affirmative defense. Rather, these cases appear to conclusively characterize the Kolstad defense as an affirmative defense. See e.g., Romano v. U-Haul Int'l , 233 F.3d 655, 670 (1st Cir. 2000) (mentioning the phrase "affirmative defense" once when noting that "[a]lthough Kolstad does not state specifically which party must put forth such evidence, the good-faith aspect of Kolstad has subsequently been characterized as an affirmative defense") (emphasis added); Zimmermann v. Assocs. First Cap. Corp. , 251 F.3d 376, 385 (2d Cir. 2001) (mentioning the phrase "affirmative defense" three times without explaining why the Kolstad defense is an affirmative defense); White v. BFI Waste Servs., LLC , 198 F. App'x 283, 287 (4th Cir. 2006) ("[w]hile the ineffectiveness of an antiharassment policy defeats an employer's affirmative defense, as we have already noted, a policy's ineffectiveness alone cannot demonstrate the lack of good faith required for justifying an award of punitive damages"); E.E.O.C. v. New Breed Logistics , 783 F.3d 1057, 1076 (6th Cir. 2015) ; Passantino v. Johnson & Johnson Consumer Prod., Inc. , 212 F.3d 493, 516 (9th Cir. 2000).
In fact, in Deffenbaugh-Williams v. Wal-Mart Stores, Inc. , 188 F.3d 278 (5th Cir. 1999), the Fifth Circuit never mentions the phrase "affirmative defense" or the word "burden," but explains that "[defendant's] antidiscrimination good faith was certainly not so overwhelming that reasonable jurors could not conclude otherwise." Id. at 286. The Third and Tenth Circuits have at least explained that they have not decided whether the Kolstad defense is an affirmative defense. See Medcalf v. Trustees of Univ. of Pennsylvania , 71 F. App'x 924, 933 (3d Cir. 2003) ("the Third Circuit has not addressed the issue of whether the good faith compliance standard set out in Kolstad is an affirmative defense for which the defendant bears the burden of proof, or whether the plaintiff must disprove the defendant's good faith compliance with Title VII by a preponderance of the evidence"); Harsco Corp. v. Renner , 475 F.3d 1179, 1189 (10th Cir. 2007) ("[t]his Court has not yet decided whether this so-called ‘defense’ ‘represents an affirmative defense on which the defendant bears the burden of proof or whether the plaintiff must disprove the defendant's good faith compliance with Title VII’ ").
For these reasons, the Court finds a Kolstad defense is not an affirmative defense.
B. Rule 16 – Phillip 66's Good Cause for its Untimeliness
Even if the Kolstad defense is an affirmative defense, Phillip 66 has shown good cause for its untimeliness. Phillips 66 argues that "Defendants’ Motion for Leave [ ] is governed by Rule 15(a)(2)’s liberal standard and not Rule 16(b)(4)’s good cause standard." (Doc. 83). Phillips 66 relies on the fact that "[t]he initial scheduling order set a deadline in June 2018 to amend without leave of court (Doc 20-1)." (Id. ) (emphasis added). Phillips 66 continues noting "[t]here is, however, no deadline regarding when parties can amend with leave of court." (Id .). Phillips 66 then cites to a district court case for the notion that the Federal Rules of Civil Procedure dictate that Phillip 66's Motion for Leave is governed by Rule 15(a)(2)’s liberal standard. (Id. ). Nearly four years after the opinion in Teton Homes Eur. v. Forks RV , 2010 WL 3980254, at *3 (N.D. Ind. Oct. 8, 2010), was decided, the Seventh Circuit decided Adams v. City of Indianapolis , 742 F.3d 720 (7th Cir. 2014).
Again, the Seventh Circuit repeatedly reminds courts and counsel that district court opinions have no precedential value. See, e.g., Midlock , 406 F.3d at 457–58.
Significantly, in Adams , the Seventh Circuit noted the following:
[W]hen a motion for leave to amend is filed after the deadline for amending the
pleadings has elapsed, the generous standard in Rule 15(a)(2) for allowing amendments "is in some tension with" Rule 16(b)(4), which governs scheduling orders and requires a showing of good cause to justify modifying time limits. See Alioto v. Town of Lisbon , 651 F.3d 715, 719 (7th Cir. 2011). In this situation, the district court is "entitled to apply the heightened good-cause standard of Rule 16(b)(4) before considering whether the requirements of Rule 15(a)(2) were satisfied." Id. ; Cir. see also FED.R.CIV.P. 6(b)(1)(B) (requiring a showing of "good cause" and "excusable neglect" to extend a deadline after it expires).
Id. at 733–34.
"To amend a pleading after the expiration of the trial court's [s]cheduling [o]rder deadline to amend pleadings, the moving party must show ‘good cause.’ " CMFG Life Ins. Co. v. RBS Sec., Inc. , 799 F.3d 729, 749 (7th Cir. 2015) (quoting Trustmark Ins. Co. v. Gen. & Cologne Life Re of Am. , 424 F.3d 542, 553 (7th Cir. 2005) ). When determining whether good cause is shown, "the primary consideration ... is the diligence of the party seeking amendment." Alioto v. Town of Lisbon , 651 F.3d 715, 720 (7th Cir. 2011).
Darr argues that "[Phillips 66] does not explain why, despite its diligence, it failed to meet the Court's deadline for amending pleadings." (Doc. 81). Darr misses the point. Not only has the Seventh Circuit yet to weigh on whether the Kolstad defense is an affirmative defense, but also district courts within the circuit have been unclear until Wal-Mart Stores , 503 F.Supp.3d 801. See e.g., Bell v. Ardagh Grp. S.A. , 2019 WL 4918691, at *3 (S.D. Ind. Sept. 4, 2019) ("[w]hile some Circuit Courts have established this rule as an affirmative defense, the Seventh Circuit has yet to weigh in on the issue"); Clark v. Metro Health Found., Inc. , 90 F. Supp. 2d 976, 985 (N.D. Ind. 2000) (noting that "[i]f this case were being tried today, the defendants likely would raise the affirmative defense articulated in Kolstad [,]" but acknowledging that the defense was not raised in the pretrial order or in the instructions conference and "the affirmative defense announced in Kolstad is not so great a break with prior law as to allow the issue to be raised for the first time on a post-trial motion").
Darr also argues that "[Phillips 66's] vague allusion to evolving law does not explain why it could not meet the deadline." (Doc. 81). But a simple search on Westlaw using the terms " Kolstad " and "affirmative defense" reveals merely thirteen cases from the Seventh Circuit and district courts within. In eight of the thirteen cases, employers brought a Kolstad defense as an affirmative defense. See Renalds v. S.R.G. Rest. Grp. , 119 F. Supp. 2d 800, 806 (N.D. Ill. 2000) ; Cracco v. Vitran Express, Inc. , 2007 WL 9815680, at *2 (N.D. Ill. June 29, 2007) ; Alford v. Aaron Rents, Inc. , 2010 WL 2765260, at *25 (S.D. Ill. May 17, 2010) ; Palomares v. Second Fed. Sav. & Loan Ass'n of Chicago , 2011 WL 2111978, at *4 (N.D. Ill. May 25, 2011) ; Equal Emp. Opportunity Comm'n v. Amsted Rail Co. , 2015 WL 4473967, at *2 (S.D. Ill. July 21, 2015) ; Badshah v. Am. Airlines, Inc. , 2017 WL 2021089, at *2 (N.D. Ill. May 12, 2017) ; Behn v. Kiewit Infrastructure Co. , 2018 WL 5776293, at *4 (N.D. Ill. Nov. 2, 2018) ; Bell , 2019 WL 4918691. These eight cases are not only nonbinding, but also the most recent case, Bell , was unclear whether the Kolstad defense is an affirmative defense. Thus, Phillips 66 failed to meet the deadline because it found out about the possibility of Kolstad being an affirmative defense after the decision in Wal-Mart Stores , 503 F.Supp.3d 801 was appealed. The Court finds Phillips 66 was diligent as it filed its motion within weeks after the Seventh Circuit held oral argument on September 24, 2021.
It is unclear whether the Seventh Circuit will address whether the Kolstad defense is an affirmative defense on appeal. Rather, Wal-Mart's statement of issues on appeal includes:
- Whether the district court abused its discretion when it declined to bifurcate the liability and damages phases of the trial, causing inflammatory, emotional damages testimony to infect the jury's consideration of liability.
Oral argument also did not cover whether the Kolstad defense is an affirmative defense.
C. Rule 15 – Prejudice to Darr
" Federal Rules of Civil Procedure 8(c), 12, and 15 prescribe the processes for raising affirmative defenses and considering untimely affirmative defenses." Burton v. Ghosh , 961 F.3d 960, 964–65 (7th Cir. 2020). Federal Rule of Civil Procedure 8(c) provides a non-exhaustive list of affirmative defenses and defendants must "affirmatively state" all affirmative defenses in a responsive pleading. The Seventh Circuit acknowledges that "a defense not listed in Rule 8(c) is an affirmative defense that must be pleaded if the defendant bears the burden of proof on the issue under state law or if the defense does not controvert the plaintiff's proof. " Reed , 915 F.3d at 478 (emphasis added).
When an affirmative defense is not raised in accordance with Rule 8(c) "[it] is waived when it has been knowingly and intelligently relinquished and forfeited when the defendant has failed to preserve the defense by pleading it." Burton , 961 F.3d at 965 (citing Reed , 915 F.3d at 478 ). "A district court may, however, exercise its discretion to allow a late affirmative defense if the plaintiff does not suffer prejudice from the delay." Id. (citing Global Technology & Trading, Inc. v. Tech Mahindra Ltd. , 789 F.3d 730, 732 (7th Cir. 2015) ; Garofalo v. Village of Hazel Crest , 754 F.3d 428, 436 (7th Cir. 2014) ; FED. R. CIV. P. 15(a)(2) ).
Darr does not suffer prejudice from Phillips 66's delay. Darr asserts that "had [Phillips 66] timely pleaded the affirmative defense, plaintiff would have had the chance to conduct discovery on defendant's alleged ‘good faith.’ " (Doc. 81). Darr continues noting that discovery closed nearly three years ago, on December 7, 2018. Phillips 66 responds arguing that "[Darr] cannot on the one hand chide Defendant for not seeing a 2020 Wisconsin district court decision until recently while on the other hand ignoring the fact that the 7th Circuit's pattern instructions have included the ‘good faith efforts’ language for years." (Doc. 83).
Unlike the Seventh Circuit's silence on whether the Kolstad defense is an affirmative defense, the Seventh Circuit has laid out the framework to determine whether punitive damages are proper under 42 U.S.C. § 1981a. The Seventh Circuit is clear the third part of the framework includes "[the] [employer's] opportunity to avoid liability for punitive damages by showing that it engaged in good-faith efforts to implement an antidiscrimination policy." AutoZone, Inc. , 707 F.3d at 835. Plaintiffs, like Darr, have notice of the framework and an employer's opportunity. Accordingly, the Court finds that Darr was not prejudiced, and Phillips 66 may raise the Kolstad defense.
CONCLUSION
For these reasons, the Motion for Leave to File Second Amended Answer to Plaintiff's Complaint (Doc. 80) filed by Defendant Phillips 66 Company ("Phillips 66") is GRANTED .
The Court will set this matter by separate notice for a hearing to discuss whether Darr needs to conduct expedited discovery on the issue of Phillip 66's non-discrimination policies. Counsel shall be prepared to discuss what additional discovery is needed (i.e. parties to depose) and a deadline for any expedited discovery.