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adopting magistrate judge's award of $15,000 for emotional distress where plaintiff testified that she suffered "continued stress, anger, sadness, and frustration," suffered "an ongoing humiliation," cried most days, was depressed, suffered panic attacks, headaches, nausea, loss of appetite, insomnia and broke out in hives
Summary of this case from White v. N.Y. State Office of Children & Family Servs.Opinion
No. 00 Civ. 4753 (LTS)(KNF).
May 22, 2006
MEMORANDUM ORDER CONCERNING REPORT AND RECOMMENDATION
On June 27, 2000, Stephanie Jowers ("Plaintiff" or "Jowers"), a white female, initiated this action against DME Interactive Holdings, Inc. ("DME") and Darien Dash ("Dash") (collectively, "Defendants"), alleging employment discrimination on the basis of her race in violation of 42 U.S.C. § 1981, as well as of New York state and local civil rights laws. Defendants, appearing by counsel, moved to dismiss the Complaint. The Court denied the motion on February 4, 2003.
By Order dated March 31, 2004, the Court granted defense counsel's motion to withdraw from the representation and directed Defendants to appear by new counsel (or pro se, if the individual Defendant so desired), by May 3, 2004. No appearances were forthcoming. Plaintiff moved for a default judgment on February 14, 2005; the motion was granted on March 16, 2005. Subsequently, the Court referred this matter to United States Magistrate Judge Kevin Nathaniel Fox, pursuant to 28 U.S.C. § 636(b), to conduct an inquest for the determination of damages, if any, to be awarded to the Plaintiff.
On December 15, 2005, Judge Fox issued an Amended Report and Recommendation ("Report") recommending that the Court award Jowers: (1) $3,461.52 for unpaid salary and $358.51 for work-related expenses, plus prejudgment interest at the rate of nine percent per annum; (2) $25,000 for lost wages (back pay), plus prejudgment interest; (3) $15,000 for pain and suffering; (4) $10,000 in punitive damages; and (5) post-judgment interest as calculated by the Clerk of Court from March 16, 2005, at the rate prescribed by 28 U.S.C. § 1961(a). (See Report at 14.)
The original Report and Recommendation, dated December 13, 2005, was amended to reflect a correction to page 9 regarding Jowers' post-termination earnings. The correction appears in boldface print in the Amended Report and Recommendation.
Defendants have filed timely objections to Judge Fox's recommendations as to the amounts of back pay, pain and suffering, and punitive damages awarded. Defendants also request that the case be remanded for discovery proceedings unless the awards are substantially reduced. While Plaintiff submitted a response to Defendants' objections, she did not submit any objections to the Report.
The Court has considered thoroughly the Report and Defendants' objections thereto. For the reasons explained below, the Court adopts Judge Fox's recommendations except to the extent of the awards for back pay and punitive damages. The issue of back pay will be recommitted to Judge Fox for a recommendation as to the amount by which the reduced back pay award should be further reduced to reflect post termination earnings, and the punitive damages award is reduced to $5,000 and is imposed as against Defendant DME only.
BACKGROUND
The procedural history and facts of this case are detailed extensively in the Report, which is appended in its entirety to this Memorandum Order.DISCUSSION
Standard of Review
Pursuant to 28 U.S.C. § 636(b), a district court has the authority to designate a magistrate judge to conduct evidentiary proceedings and submit proposed findings of fact and recommendations on the issue of damages. In assessing a Report and Recommendation, the Court "may accept, reject, or modify, in whole or in part, the findings or recommendations made by the magistrate judge." 28 U.S.C.A. § 636(b)(1)(C) (West 2005); Fed.R.Civ.P. 72(b). Parties may "serve and file written objections to such proposed findings and recommendations" within ten days of service. 28 U.S.C.A. § 636(b)(1)(C) (West 2005). If a party files timely objections, the Court is required to make a de novo determination as to the portions of the Report to which specific objections are made. See id.; Hynes v. Squillace, 143 F.3d 653, 656 (2d Cir. 1998), cert. denied, 525 U.S. 907 (1998). Where a party, however, makes only conclusory or general objections, or simply reiterates the original arguments, the Court will review the Report strictly for clear error. See Orix Fin. Servs., Inc. v. Thunder Ridge Energy, Inc., No. 01 Civ. 4788(RJH)(HBP), 2006 WL 587483, at *1 (S.D.N.Y. Mar. 8, 2006); Camardo v. Gen. Motors Hourly-Rate Employees Pension Plan, 806 F. Supp. 380, 382 (W.D.N.Y. 1992).
Accordingly, the Court will review the portions of the Report to which Defendants have made specific objections de novo and all other portions for clear error. Burden of Proof
At the post-default inquest stage, the plaintiff has the burden of proving damages. The defendant, in turn, has an opportunity to contest the amount. See Greyhound Exhibitgroup, Inc. v. E.L.U.L Realty Corp., 973 F.2d 155, 158 (2d Cir. 1992), cert. denied, 506 U.S. 1080 (1993); Flaks v. Koegel, 504 F.2d 702, 707 (2d Cir. 1974). The plaintiff, however, is entitled to all reasonable inferences from the evidence offered. See Au Bon Pain Corp. v. Artect, Inc., 653 F.3d 61, 65 (2d Cir. 1981) (internal citations omitted).
Defendant's Objections Back Pay
Defendants' first objection is to Judge Fox's award of $25,000 in back pay. Defendants argue that Judge Fox's finding that Plaintiff would have remained employed at DME for an additional eight months, until December 2000, is contrary to the weight of the evidence. Defendants contend that absent any discriminatory conduct, Plaintiff's employment would have been terminated by June 30, 2000, due to massive layoffs effected by DME. (Defs.' Objections to Magistrates Report Recommendation ("Defs.' Obj.") at 18-21.) The Court has reviewed this issue de novo.
Ordinarily, a prevailing plaintiff in a discrimination action is entitled to a back pay award from the date of termination until the date of judgment. Saulpaugh v. Monroe Cmty. Hosp., 4 F.3d 134, 144 (2d Cir. 1993), cert. denied, 510 U.S. 1164 (1994). The purpose of awarding back pay is to make the victim of unlawful discrimination whole, and "not to punish an employer or provide a windfall to the employee." Meling v. St. Francis Coll., 3 F. Supp. 2d 267, 275 (E.D.N.Y. 1998). Accordingly, when fashioning a back pay award for a prevailing employee under federal and New York law, the Court should place a victim of unlawful discrimination in the position he would have been in absent discrimination. See EEOC v. Joint Apprenticeship Comm. of the Joint Indus. Bd. of the Elec. Indus., 186 F.3d 110, 123 (2d Cir. 1999); Shannon v. Fireman's Fund Ins. Co., 136 F. Supp. 2d 225, 230 (S.D.N.Y. 2001) (internal citations omitted).
In the context of a partial staff reduction, the employer has the heavy burden of establishing that a plaintiff would have been discharged as part of such a reduction. See Cosgrove v. Sears, Roebuck, Co., No. 81 Civ. 3482(AGS), 1995 WL 463103, at **7-8 (S.D.N.Y. Aug. 3, 1995), aff'd, 104 F.3d 355 (2d Cir. 1996). Courts, however, have not blindly assumed that a prevailing plaintiff would have been retained. In fact, a plaintiff may not recover damages for any period beyond the elimination of her position for a nondiscriminatory reason, unless the plaintiff can show that she would have been retained in another capacity.Id.; see also Meschino v. Int'l Tel. Tel. Corp., 661 F. Supp. 254, 257-58 (S.D.N.Y. 1987); Bonura v. Chase Manhattan Bank, N.A., 629 F. Supp. 353, 356 (S.D.N.Y. 1986) (citing Gibson v. Mohawk Rubber Co., 695 F.2d 1093, 1097 (8th Cir. 1982)). Accordingly, here the Defendants have the heavy burden of proving that Jowers would have been terminated sooner in connection with their partial staff reduction.
The Court finds that Defendants have met their burden. Defendants offered both declaratory and documentary evidence establishing that, absent discrimination, Jowers would have been terminated as part of DME's staff reductions prior to December 2000. The declarations of Dash and of Thomas O'Rourke ("O'Rourke") establish that, as a result of the collapse of technology stocks in the year 2000 and plummeting of DME's stock price, DME undertook extensive layoffs. (See Altman Decl. Ex. N ¶¶ 8-11; Ex. O ¶¶ 2-6; Defs.' Proposed Findings of Fact and Conclusions of Law ("Defs.' FFCL"), 5-6.) Dash and O'Rourke testified that administrative staff, such as Jowers and her supervisors, were the first to be laid off; that DME was operating with a skeleton crew by June 2000; and that Sharon Cox, the employee who allegedly assumed Jowers' duties upon her dismissal, was herself terminated in or about September 2000. (See Defs.' Obj. at 18-21; Altman Decl. Exs. N-O.) DME also produced payroll records showing that DME retained only thirty-one of its eighty-three employees through December 2000. (See Altman Decl. Ex. N ¶ 11 Ex. A thereto.) Jowers' evidence was insufficient to sustain her contention that she would have remained at DME for another year absent discrimination. (See Report at 7.)
Mr. O'Rourke, a shareholder and chief operating officer of Defendant DME, was primarily responsible for laying off DME's employees. (Decl. of Steven Altman ("Altman Decl."), Ex. N ¶¶ 9-10; Ex. O ¶¶ 1, 3-6.)
It is unclear whether Sharon Cox's employment was terminated in August or September of 2000. (See Altman Decl. Ex. N ¶ 13, Ex. O ¶ 7; Defs.' Obj. at 18-21; Defs.' FFCL ¶ 7.) Consequently, the Court accepts September 2000, the time frame more favorable to the Plaintiff, as the date of Cox's termination.
Viewing the evidence in the light most favorable to the Plaintiff, the Court concludes that Jowers would have been discharged as part of DME's staff reduction at the latest in September 2000. Thus, Jowers is entitled to a back pay award through September 2000, in the amount of $31,250, minus any post termination earnings during that period, plus post-judgment interest. This matter will be recommitted to Judge Fox for a determination and Report and Recommendation as to the appropriate amount, if any, of offset for earnings during the period. Pain And Suffering
This determination primarily is based on Defendants' proffered evidence that the employee who allegedly replaced Jowers was also terminated in or about September 2000. (See Altman Decl. Exs. N-O.) The payroll records confirm this, as Ms. Cox's cumulative pay as reflected on December 30, 2000 was the same as it was on September 30, 2000. (Altman Decl. Ex. N Ex. A thereto).
Defendants also object to Judge Fox's recommendation that Plaintiff be awarded $15,000 for emotional distress, arguing that the award is excessive in light of the brief duration of any alleged discrimination, the lack of evidence that she ever sought medical treatment, and the nature of the conditions to which Jowers was subjected. (Defs.' Obj. at 27-28.) Defendants further maintain that Jowers submitted no evidence in support of her emotional distress claim other than her own conclusory testimony. (Defs.' Obj. at 27.) The Court has reviewed de novo the Report as to this issue and adopts Judge Fox's well-reasoned and extensive analysis of Plaintiff's claim, as there was sufficient evidence to support Judge Fox's determination.
When determining damages for mental anguish, a plaintiff's recovery is not preconditioned on whether she underwent treatment, psychiatric or otherwise. See Gleason v. Callanan Indus. Inc., 610 N.Y.S.2d 671, 673 (N.Y.App.Div. 1994). In several cases involving injuries not requiring medical treatment, courts have awarded a broad spectrum of compensatory damages ranging between $5,000 to $75,000, even where no physical manifestations are claimed and plaintiff's testimony is the only evidence of emotional distress. See Kuper v. Empire Blue Cross Blue Shield, No. 99 Civ. 1190, 2003 WL 359462, at **12-13 (S.D.N.Y. Feb. 18, 2003); see also, e.g., Tyler v. Bethlehem Steel Corp., 958 F.2d 1176, 1190 (2d Cir. 1992) (upholding "extremely modest" award of $18,000 for emotional distress where plaintiff testified that he was in a "state of shock"); Tanzini v. Marine Midland Bank, 978 F. Supp. 70, 78-80 (N.D.N.Y. 1997) (remitting emotional distress award from $170,000 to $30,000 where evidence of plaintiff's injuries consisted only of testimony by plaintiff and his wife that plaintiff was "in a state of shock," traumatized, more argumentative, and having trouble sleeping); Trivedi v. Cooper, No. 95 Civ. 2075(DLC), 1996 WL 724743, at *9 (S.D.N.Y. Dec. 17, 1996) (reducing $700,000 mental anguish award to $50,000 where there was "no evidence of psychological counseling, [or] physical manifestations of distress," and the claim consisted solely of "conclusory statements" by the plaintiff that he felt "starved for professional growth," "insulted," "indignant," "unhappy," and "emotionally upset").
In support of her emotional distress claim, Plaintiff proffered testimony that DME's hostile work environment caused her "continued stress, anger, sadness and frustration" and was an "ongoing public humiliation" for her. (Pl.'s FFCL at 2; Jowers' Decl. ¶¶ 17-18.) Plaintiff testified to crying after leaving work most days. (Pl.'s FFCL at 2; Jowers' Decl. ¶ 18.) Plaintiff further claimed she experienced other mental and physical problems as a result of Defendant's discriminatory conduct, many of which persisted after termination, including struggling with depression, suffering from panic attacks, headaches, nausea, loss of appetite, severe bouts of insomnia and breaking out in hives. (Pl.'s FFCL at 2; Jowers' Decl. ¶ 26.) In addition, Plaintiff maintains that her personal relationships were strained as she had difficulty expressing her feelings with her closest friends of color, because she feared her reverse discrimination would not be easily understood by them. (Jowers' Decl. ¶¶ 24-25.) Finally, Plaintiff contends that she failed to obtain employment after a potential employer learned of her pending lawsuit against DME. (Id. ¶ 27.)
The Court finds the compensation awarded is reasonably related to the effects of the wrongful termination alleged by Jowers and is consistent with damages awarded in comparable cases. Consequently, the Court adopts Judge Fox's recommendation as to the amount of pain and suffering damages.
Punitive Damages
Defendants' next objection is to the $10,000 punitive damages award assessed against DME. Defendants argue that the award is excessive and would not serve any useful purpose due to the short duration of the alleged misconduct, the collapse of DME's business and Defendants' poor financial state. Defendants also assert that the award is unsupported by the record since Jowers' account was often conclusory, incredible and self-contradictory. (Defs.' Obj. at 22-26.) After reviewing de novo this aspect of the Report, the Court declines to accept Judge Fox's recommendation of a $10,000 punitive damages award and finds that an award of $5,000 is adequate to satisfy the purpose of punitive damages in this case.
Under the New York State Human Rights Law, punitive awards are "not allowed." See Thoreson v. Penthouse Int'l, Ltd., 606 N.E.2d 1369, 1371 (N.Y. 1992). Punitive damages are, however, available under 42 U.S.C. § 1981 (see Johnson v. Ry. Express Agency, Inc., 421 U.S. 454, 460 (1975)) and the New York City Human Rights Law (see Weissman v. Dawn Joy Fashions, Inc, 214 F.3d 224, 235 (2d Cir. 2000)). Under federal law, the Supreme Court in Smith v. Wade, determined that the applicable standard for punitive damages is "reckless or callous disregard for the plaintiff's rights, as well as intentional violations of federal law." "[T]he imposition of punitive damages under both federal and local law is governed by the federal standard."Farias v. Instructional Sys., Inc., 259 F.3d 91, 102 (2d Cir. 2001).
461 U.S. 30, 51 (1983). Although this decision interprets 42 U.S.C. § 1983, courts have generally applied the Smith standard to § 1981 claims as well. See, e.g., Lowery v. Circuit City Stores, Inc., 206 F.3d 431, 441 (4th Cir. 2000). Courts have also held that punitive damages are available under § 1981 to the same extent that they are available to plaintiffs under Title VII. See id. at 441 ("[A]ny case law construing the punitive damages standard set forth in § 1981a . . . is equally applicable to clarify the common law punitive damages standard with respect to a § 1981 claim."); Luciano v. Olsten Corp., 110 F.3d 210, 220 (2d Cir. 1997). Under § 1981a, punitive damages are awarded when an employer has intentionally discriminated "with malice or with reckless indifference to the [plaintiff's] federally protected rights." Kolstad v. Am. Dental Ass'n, 527 U.S. 526, 529-30, 535 (1999).
Upon further review of the record, the Court concludes that it is reasonable to infer from the facts alleged that Defendants intentionally discriminated against Jowers on the basis of race. As explained by Judge Fox, the following allegations support a strong inference of Defendants' malice or reckless indifference: 1) the restructuring of Jowers' position because the office "needed someone black in a leadership role;" 2) Dash's comment that Jowers' termination was not based on DME's economic condition, but was necessitated instead by Jowers not being a "good fit;" and 3) the promotion of a black woman to assume Jowers' duties following her termination. (See Report at 12-13;see also Altman Decl. Ex. A ¶¶ 19-21, 23-24.) Moreover, Jowers asserted that DME's staff "resented and resisted" her supervision and were "openly hostile and antagonistic" because of her race, openly expressing these sentiments at an April 2000 staff meeting. (See Altman Decl. Ex. A ¶¶ 17-18.)
By virtue of Defendants' default, these facts are deemed conceded. See Au Bon Pain Corp. v. Artect, Inc., 653 F.3d 61, 65 (2d Cir. 1981); Flaks v. Koegel, 504 F.2d 702, 707 (2d Cir. 1974). Defendants try to avoid this result by arguing that Jowers' account of abuse was conclusory, often incredible and self-contradictory. (Defs.' Obj. at 24-26.) The Court finds Defendants' arguments unpersuasive. A defendant's attempt to escape the effects of its default should be strictly circumscribed as, it should not be permitted to re-litigate what has already been deemed admitted in law. See Trans World Airlines, Inc. v. Hughes, 308 F. Supp. 679, 683 (S.D.N.Y. 1969),rev'd on other grounds, 312 F. Supp. 478 (S.D.N.Y. 1970). Moreover, "direct evidence is not necessary, and a plaintiff charging discrimination against an employer is usually constrained to rely on the cumulative weight of circumstantial evidence." Luciano v. Olsten Corp., 110 F.3d 210, 215 (2d Cir. 1997) (quoting Rosen v. Thornburgh, 928 F.2d 528, 533 (2d Cir. 1991)).
Having determined that an award of punitive damages is appropriate here, the Court turns to Defendants' arguments that the award is excessive due to the short duration of Defendants' alleged misconduct and Defendants' poor financial condition. In assessing the magnitude of punitive damages, the Second Circuit has considered several factors including: 1) the degree of reprehensibility of defendant's conduct; 2) the ratio of punitive damages to compensatory damages; 3) the remedy and civil penalties imposed in comparable cases; 4) defendant's ability to pay whatever award is assessed; and 5) the amount needed to punish the defendant and deter him and other employers from engaging in similar conduct. See Motorola Credit Corp. v. Uzan, 388 F.3d 39, 63-64 (2d Cir. 2004); Lee v. Edwards, 101 F.3d 805, 809-13 (2d Cir. 1996) (internal citations omitted). Although the short duration of the discriminatory conduct is clearly relevant here, courts have awarded substantial awards for shorter periods of time. See, e.g., Lee, 101 F.3d at 813 (awarding plaintiff $75,000 in punitive damages for two hours of discomfort suffered as a result of police officer's malicious prosecution charge); Walia v. Vivek Purmasir Assocs., Inc., 160 F. Supp. 2d 380, 391-92 (E.D.N.Y. 2000) (upholding $30,000 punitive damages award although sexual harassment experienced was short-lived, only three days).
Next, the Court addresses Defendants' argument that an award of punitive damages would be pointless due to Defendants' poor financial state and the collapse of DME. (Defs.' Obj. at 24.) Punitive damages "must be reasonable in their amount and rational in light of their purpose to punish what has occurred and to deter its repetition." Vasbinder v. Scott, 976 F.2d 118, 121 (2d Cir. 1992) (internal citation omitted). Moreover, a punitive damages award should not be "so high as to result in financial ruin to the defendant." Smith v. Lightning Bolt Prods., Inc., 861 F.2d 363, 373 (2d Cir. 1988). In considering an offending party's financial condition, it is well settled that "it is the defendant's burden to show that his financial circumstances warrant a limitation of the award." Mathie v. Fries, 121 F.3d 808, 816 (2d Cir. 1997) (internal citation omitted); see also Lee, 101 F.3d at 813 (recognizing that the purpose of punitive damages is deterrence and "that deterrence is directly related to what people can afford to pay"); Zarcone v. Perry, 572 F.2d 52, 56 (2d Cir. 1978). Defendant DME has proffered sufficient evidence to show that its assets are so substantially diminished as to warrant a reduction of the punitive award. Defendants offered testimony that DME is no longer in operation and provided a financial statement demonstrating DME's negative net worth and substantial debt. (See Altman Decl. Ex. N ¶¶ 14, 16 Ex. C thereto; Ex. O ¶ 8.) In light of this evidence and on consideration of the totality of the record, the Court finds that an award of $5,000 is sufficient to satisfy the purpose of punitive damages.
For the foregoing reasons, the Court declines to adopt Judge Fox's recommendation as to the amount of punitive damages and reduces the amount to $5,000. In light of Judge Fox's recommended determination, which Jowers does not contest and the undersigned adopts, that the record is insufficient to support a finding of Defendant Dash's personal liability under federal law, the punitive damages award is made only as against Defendant DME.
Mitigation of Damages
Defendants further argue that they are entitled to discovery on several damages issues, and that this case should be remanded for discovery proceedings unless the awards are significantly reduced. Defendants claim they requested discovery on several occasions and were effectively denied the opportunity by Judge Fox. (Defs.'s Obj. at 3, 21-22.)
According to Fed.R.Civ.P. 72(a), a district court may set aside a magistrate judge's decision on a non-dispositive matter only if that decision is "clearly erroneous or contrary to law." The denial of discovery is a non-dispositive matter. Although Defendants are entitled to discovery on the issue of damages, Defendants waived that right in this case. In Judge Fox's Order dated April 5, 2005, he provided Defendants with ample opportunity to request an evidentiary hearing for the purpose of either cross-examining the Plaintiff or calling their own witnesses. Furthermore, the Order explicitly provided that, "[i]f no request for a hearing is made by any party within 45 days of service of plaintiff's inquest submissions, then I shall make my decision solely on the [basis] of the memoranda and affidavits without oral argument." (Altman Decl. Ex. J ¶¶ 3, 5.) Defendants chose not to request a hearing. Accordingly, in reviewing Defendants' objection under the clearly erroneous standard, the Court finds that Judge Fox did not err in rejecting Defendants' requests for discovery.
Unpaid Wages, Work-related Expenses and Prejudgment Interest
Defendants did not object to the portions of the Report relating to Plaintiff's entitlement to $3,461.52 for unpaid wages and $358.51 for employment-related expenses. Consequently, the Court has reviewed the Report for clear error and concludes that Judge Fox's determinations are supported by the record and the law in all respects. Thus, the Court adopts Judge Fox's recommendations as to the amounts of unpaid wages and work-related expenses.
CONCLUSION
The Court having considered thoroughly Judge Fox's carefully drafted and well-reasoned Report and the parties' submissions, and having reviewed the portions of the Report objected to de novo, hereby adopts the findings and recommendations in the Report in its entirety, except as to the amount of back pay and the amount of and liability for punitive damages. As to back pay, the Court finds that plaintiff is entitled to five months back pay, in the gross amount of $31,250, less any post termination earnings, and plus prejudgment interest. This matter is hereby recommitted to Judge Fox for investigation and a recommendation as to the amount, if any, by which the reduced back pay award should be further reduced to reflect post termination earnings during the relevant period. With respect to punitive damages, Plaintiff is awarded $5,000, against Defendant DME only.