Why it matters: A California jury made national headlines and terrified employers across the country when it awarded $185 million in punitive damages (and less than $1 million in compensatories) to a female employee who alleged gender and pregnancy discrimination against AutoZone. The plaintiff told the jury that she was encouraged to step down from a managerial position when she became pregnant; when she refused to do so and complained about the discrimination she faced, she was first demoted and later terminated. Jurors awarded her a total of $872,719 in compensatory damages and then returned to deliberate on punitives, deciding on $185 million – what is being called the largest verdict ever for an individual in an employment case. In a statement, AutoZone said it intends to appeal the record-setting verdict. The staggering dollar amount of the settlement should reiterate the importance for employers of complying with antidiscrimination laws.

Detailed Discussion

Rosario Juarez began working for a National City, California AutoZone in 2000 as a customer service representative. She was promoted to parts sales manager and then to the position of store manager in October 2001. In November 2005, she informed her district manager that she was pregnant.

According to her federal court complaint and trial testimony, Juarez was encouraged to step down from her managerial position and told that she would not be able to handle the responsibilities of both motherhood and running the store. When she refused to resign and returned to work after her son’s birth in May, she faced continued discrimination.

Juarez was demoted and filed a claim with the state’s Department of Fair Employment and Housing alleging gender and pregnancy discrimination. She was terminated in 2008 after an envelope filled with cash was misplaced and Juarez was blamed for the loss, an event she characterized as retaliation for her complaint with the state agency. She filed suit against AutoZone and the case went to trial in November.

At trial, Juarez told jurors that she repeatedly complained about discrimination at the company and contended the company had a “glass ceiling” limiting women to lower-level positions. She presented evidence that of 98 AutoZone stores in the San Diego area, just 10 had female managers.

In support of her allegations, a former district manager testified that high-level executives at the company held a meeting to celebrate the expiration of a previous settlement that required AutoZone to promote women and track the promotions. He also informed the jury that he was offered a promotion if he fired all the women in his stores and testified that a company vice president criticized him for having too many women in management positions, saying: “What are we running here, a boutique? Get rid of those women.”

AutoZone defended the allegations by claiming Juarez was demoted for poor performance and failure to meet expectations, as well as the disappearing cash. But she presented testimony from the employee that investigated the cash loss admitting that she never believed Juarez took the money and thought the company was targeting Juarez.

After two weeks of trial, the jury awarded Juarez $872,719.52 in total compensatory damages. Three days later, jurors added an additional $185 million – more than 200 times the compensatory amount – in punitive damages.

AutoZone released a statement indicating its intent to appeal the verdict. “We believe this verdict could not be based on the evidence or logic, and we plan to proceed with all legal remedies,” a spokesperson stated.

To read the verdict form for compensatory damages in Juarez v. AutoZone Stores, Inc., click here.

To read the verdict form for punitive damages, click here.