Why it matters

New York law permits punitive damages for workers who demonstrate that an employer violated antidiscrimination laws with gross negligence, the state’s highest court has ruled, answering a certified question from the U.S. Court of Appeals for the Second Circuit. Veronika Chauca, a physical therapy aide, alleged that Park Management Systems fired her while she was on maternity leave. A federal court judge denied her request to instruct the jury on punitive damages and Chauca—who was awarded more than $60,000 by jurors—appealed. The Second Circuit accepted the case but punted to the New York Court of Appeals after finding that the New York City Human Rights Law set no standard for awarding punitive damages. Tackling the issue, the court said punitives were available in circumstances of “willful or wanton negligence” or “a conscious disregard of the rights of others,” but refused to permit an award of punitive damages in every employment discrimination case. “Punitive damages represent punishment for wrongful conduct that goes beyond mere negligence and are warranted only where aggravating factors demonstrate an additional level of wrongful conduct,” the court wrote in a 6-to-1 decision.

Detailed discussion

A physical therapy aide, Veronika Chauca sued her former employer for sex and pregnancy discrimination under Title VII, the Family and Medical Leave Act, the New York State Human Rights Law and the New York City Human Rights Law (NYCHRL).

At trial, her attorney requested a jury instruction on punitive damages under the NYCHRL. The district court judge applied the standard for punitive damages found in Title VII—whether the plaintiff submitted evidence that her employer had intentionally discriminated against her with malice or reckless indifference to her protected rights. Finding no evidence in support of this standard, the court denied the instruction.

The jury awarded Chauca in excess of $60,000, but she appealed, arguing that the court erred by importing the Title VII standard for punitive damages. Considering the issue, the U.S. Court of Appeals for the Second Circuit found itself stumped as the NYCHRL “provides no specific guidance” on an applicable standard for punitive damages. The federal appellate panel certified the question to the New York Court of Appeals for an answer.

Pursuant to the NYCHRL, employers are prohibited from “refus[ing] to hire” or “discharg[ing] from employment” an individual because of his or her gender. Although the statute explicitly provides for punitive damages, “there is no provision in the NYCHRL setting a standard for imposing them,” New York’s highest court explained.

Chauca took the position that all plaintiffs should be entitled to a punitive damages charge upon any showing of liability, as the legislature has encouraged a liberal construction of the statute. On the other end of the spectrum, the defendants urged the court to stick with the application of the Title VII standard.

Instead, the court split the difference, ruling that punitive damages are not automatically available with a showing of liability but that plaintiffs do not need to meet the heightened standard set by Title VII.

“Punitive damages differ conceptually from compensatory damages and are intended to address ‘gross misbehavior’ or conduct that ‘willfully and wantonly causes hurt to another,’” the court wrote. “Punitive damages represent punishment for wrongful conduct that goes beyond mere negligence and are warranted only where aggravating factors demonstrate an additional level of wrongful conduct.”

The Title VII standard was repudiated by the City Council in 2005 when it passed the Restoration Act, amending the city’s Administrative Code “to ensure that ‘[t]he provisions of [the NYCHRL] shall be construed liberally … regardless of whether federal or New York State civil and human rights law … have been so construed,’” the court said.

At the time, lawmakers expressed concern that the NYCHRL was being interpreted too strictly, so the Restoration Act made clear that similarly worded state or federal statutes may be used as interpretive aids only to the extent that the counterpart provisions are viewed “as a floor below which the City’s Human Rights Law cannot fall, rather than a ceiling above which the local law cannot rise,” the court added.

“As a result, this Court has acknowledged that all provisions of the NYCHRL must be construed ‘broadly in favor of discrimination plaintiffs, to the extent that such construction is reasonably possible,’” the court said.

With this in mind, the court turned to the standard it articulated in Home Insurance Co. v. American Home Products Corp., which entitles a plaintiff “to punitive damages where the wrongdoer’s actions amount to willful or wanton negligence, or recklessness, or where there is ‘a conscious disregard of the rights of others or conduct so reckless as to amount to such disregard.’”

This standard represents “the lowest threshold, and the least stringent form, for the state of mind required to impose punitive damages,” the court wrote. “By implementing a lower degree of culpability and eschewing the knowledge requirement, applying this standard adheres to the City Council’s liberal construction mandate while remaining consistent with the language of the statute.”

It is also “properly reflective of the serious and destructive nature of the underlying discriminatory conduct and the goal of deterring ‘future reprehensible conduct,’” the court added, encouraging “nondiscriminatory behavior and the development and application of appropriate employment criteria. In sum, this approach is the most liberal construction of the statute that is ‘reasonably possible’ and furthers the purpose of the NYCHRL.”

One member of the state’s highest court dissented, siding with the plaintiff to argue that a punitive damages charge should be given whenever liability is proven, unless the employer has adopted and fully implemented the antidiscrimination programs, policies and procedures promulgated by the city’s Commission on Human Rights.

To read the opinion in Chauca v. Abraham, click here.