Why it matters

A California appellate court affirmed a $16 million verdict for age discrimination and wrongful termination brought by a former manager at a Staples facility in La Mirada. Bobby Dean Nickel claimed that he was terminated in 2011 at age 64 by the national chain because of his age, in violation of California's Fair Employment and Housing Act (FEHA). A state court jury sided with Nickel, awarding him $3 million in compensatory damages and an additional $22.8 million in punitives (reduced by the judge to $13 million). Staples appealed, arguing that Nickel failed to establish his termination was due to age discrimination and that the punitive damages award was excessive. In an unpublished opinion, the three-judge panel said the award was "supported by evidence of plaintiff's emotional and mental harm," and that the jury's use of the multiplier of four was not unconstitutionally high based on the facts. Nickel provided more than sufficient evidence that the employer acted with discriminatory intent, the court said, citing testimony from multiple employees that the plaintiff's supervisor fired him to cut costs by replacing him with a younger, cheaper worker as well as referring to Nickel as an "older goat" and "old coot."

Detailed discussion

A state court jury awarded Bobby Dean Nickel more than $25 million in his lawsuit accusing Staples of age discrimination and wrongful termination. At trial, Nickel presented evidence that his supervisor, Lionel Marrero, was on a mission to cut costs at the La Mirada facility by replacing older, higher paid employees with younger, part-time or temporary workers. Nickel told the jury that Marrero would increase the workload for older employees, force them into retirement, or "write them up" for minor errors to create a basis for their termination.

Nickel said Marrero utilized the last method in his case, when he reported Nickel for stealing a bell pepper from the facility's cafeteria afterhours. Nickel claimed there was an accepted practice of taking food from the cafeteria afterhours and paying for it later, which he had done on prior occasions. But Staples terminated him for taking the 68-cent pepper and Nickel filed suit.

The jury awarded Nickel $3 million in compensatory damages and $22.8 million in punitives, reduced by the trial court judge to $13 million.

On appeal, Staples argued that the plaintiff's unethical behavior and violation of the company's anti-theft policy established a legitimate, nondiscriminatory reason for his termination and that Nickel lacked sufficient evidence of discriminatory animus.

But the California appellate panel disagreed. "Marrero's comments about older employees, made in the context of an intention to eliminate them from the workforce, provided substantial evidence of age-based animus," the court said. Other employees testified as to the "concerted attempt" to get rid of older, higher paid workers, along with comments from Marrero that he wanted to "[t]ake a closer look at the older people," and "[w]e need young energetic people."

In addition, Marrero encouraged the hiring of younger workers and frequently queried older workers on their retirement plans. Former employees took the stand to tell jurors about being pushed out of their jobs or being assigned excessive tasks, making it impossible to complete their work in the allotted time.

Causation was also established by Marrero's behavior and comments, the court said, with testimony that he essentially used human resources as his personal tool for disciplining and removing employees, including the plaintiff, for whose termination he had advocated. Nickel also presented evidence that Marrero targeted him by increasing his workload and referring to him as an "older goat" and an "old coot."

"The evidence showed Defendants used a variety of pretexts to push older workers out of the company," the panel wrote.

Considering the punitive damage award, the court found it was supported by "substantial evidence" of malice and oppression. "[T]he jury heard substantial evidence Staples purposefully terminated Plaintiff because of his age, damaged his reputation, and tried to conceal the discrimination," the court said. "By discharging him based on the bell pepper incident, Staples labeled him a thief, effectively damaging Plaintiff's reputation and future job prospects. A jury could reasonably conclude that Staples had engaged in malice—intentionally hurting Plaintiff through this adverse employment action, motivated by discrimination. Substantial evidence also supports a finding that Staples acted in a base, contemptible, and vile manner when it attempted to conceal the illegal reason for the firing. The evidence that Defendants used the theft as a pretext to deny Plaintiff his right to hold employment free from age discrimination was sufficient for the jury's finding of oppression."

As for the amount of damages, the award did not violate due process. The most important guidepost in the analysis: the degree of reprehensibility, the court said. Nickel suffered from physical harm because the termination impacted his emotional and mental health and the panel found he was financially vulnerable when he was terminated, with the family forced to move to Idaho because they could no longer afford to live in California.

"[T]he harm here can reasonably be construed to be the result of intentional malice, as Staples sought to reduce the cost of its operations by systematically removing older, higher-paid employees, specifically Plaintiff in this case, through discriminatory actions," the panel wrote. "A group of managers participated in the final decision to terminate Plaintiff's lengthy and successful employment at the La Mirada facility over a bell pepper, despite the confusion surrounding whether Plaintiff had actually stolen it and whether he had permission to take food and pay for it later. In so doing, Staples rendered Plaintiff jobless and incapable of obtaining new employment due to his now-tarnished professional reputation. In addition, the record indicates that the discriminatory firing was undertaken in order to reduce overhead costs and make Staples more profitable. This motivation likewise increases Staples' reprehensibility."

The multiplier of four—with the $13 million award roughly four times the $3 million compensatory damages—was not presumptively unconstitutional as a single-digit integer, the court said, as well as supported by the evidence, as "reprehensibility was abundant in the case at bar and weighed in favor of greater punitive damages."

To read the opinion in Nickel v. Staples Contract & Commercial, Inc., click here.