In Haddad v. Wal-Mart Stores, Inc., the Massachusetts Supreme Judicial Court (SJC) reinstated a $1 million punitive damages award and established new standards for awarding punitive damages in discrimination cases brought under Massachusetts General Laws ch. 151B (Chapter 151B), § 4.

Cynthia Haddad, a pharmacist manager at Wal-Mart, complained that her salary was lower than all of the male pharmacist managers and that her employer denied her the additional hourly pay that her male counterparts received. Soon after Haddad lodged internal complaints, district managers questioned Haddad about two fraudulent prescriptions that a pharmacy technician had filled. Haddad denied having any knowledge about the prescriptions, but acknowledged that one of them may have been filled when she left the pharmacy briefly to use the restroom or to purchase a soda. Wal-Mart terminated Haddad’s employment immediately, citing her alleged failure to secure the pharmacy. Haddad brought suit for gender discrimination, and after trial, a jury awarded her compensatory damages, plus $1 million in punitive damages. Wal-Mart filed a post-trial motion to vacate the punitive damages award, which the trial court granted.

On appeal, the SJC concluded that the trial judge erred in vacating the punitive damages award and articulated new requirements for such awards under Chapter 151B, stating: “An award of punitive damages requires a heightened finding beyond mere liability and also beyond a knowing violation of the statute. Punitive damages may be awarded only where the defendant’s conduct is outrageous or egregious.” In determining whether a defendant’s conduct rises to this level, the Court further stated that the fact-finder should consider all of the circumstances surrounding the wrongful conduct, including (1) whether there was a conscious effort to demean; (2) whether the defendant was aware that its conduct would cause harm or recklessly disregarded the likelihood of harm; (3) the actual harm to the plaintiff; (4) the defendant’s actions after learning that the conduct would likely cause harm; (5) the duration of the wrongful conduct; and (6) whether the defendant made any attempt to conceal the conduct.

In this case, the Court found sufficient evidence of misconduct to support an award of punitive damages, particularly because the defendant had paid Haddad less than her male counterparts and had provided shifting explanations regarding the reason for Haddad’s termination. The Court also found it compelling that the employer terminated Haddad for a single infraction, but did not investigate or discipline her male coworkers for similar or more serious infractions.

This ruling provides employers with clearer guidance about the type of conduct that could warrant punitive damages in a discrimination case. It also serves as a sobering reminder to employers that even in single-plaintiff cases, failure to prevent unlawful discrimination may result in substantial punitive damages awards.