Last month the Seventh Circuit Court of Appeals reinstated a $3.5 million punitive damages award against an employer for failure to “stiffen its efforts” to respond to an employee’s harassment complaints.  See May v. Chrysler Group, LLC, Nos. 11-2012 and 11-3109, U.S. App. LEXIS 17820, at *30 (7th Cir. Aug. 23, 2012).  May, who is Cuban Jewish, worked as a pipefitter at a Chrysler assembly plant and was subjected to racist, xenophobic, homophobic, and anti-Semitic graffiti over the course of a three-year period. The harassment involved over 70 incidents of hateful graffiti, death-threat notes left in May’s toolbox, and threatening phone calls. The harassers vandalized May’s car, struck him in the back with a flying object, punctured his bike and car tires several times, poured sugar in his car tank twice, and left at his work station a dead bird wrapped in toilet paper to look like a Ku Klux Klansman. At Chrysler’s request, May identified 19 employees he had reason to suspect, including two employees who had a history of making racist comments, as well as the husband of the human resources supervisor assigned to May’s case.  Chrysler did not interview any of the suspects. The only issue at trial and on appeal was whether Chrysler was liable for the hostile work environment to which May had been subjected—that is, whether Chrysler failed to respond “promptly and adequately” in a manner likely to end the harassment.

Chrysler’s response to the harassment included a meeting with the head of HR reminding employees at the plant about Chrysler’s harassment policy, implementation of a protocol for handling incidents of harassment against May, an investigation of who was at the plant at the time of the incidents, and retaining a forensic document examiner. The jury found that Chrysler “did not take steps reasonably intended to stop the harassment” and awarded compensatory damages against Chrysler in the amount of $709,000, as well as punitive damages in the amount of $3.5 million. On a post-trial motion for judgment as a matter of law, the District Court agreed that there was sufficient evidentiary basis for the jury to find the employer liable, particularly in light of the “long period of time” during which May endured the harassment, the fact that Chrysler’s response did not adapt or escalate as the harassment continued, Chrysler’s reliance on the same reactionary response despite its obvious ineffectiveness as a deterrent, and Chrysler’s failure to investigate every incident of harassment. May v. Chrysler Group LLC, No. 02 C 50440, 2011 U.S. Dist. LEXIS 73378, at *11-15 (N.D. Ill. July 7, 2011). The district court nonetheless remitted the compensatory damages award from $709,000 to $300,000 on the ground that there was no rational connection between the award and the evidence since the plaintiff had not presented any evidence of actual damages, such as medical bills, and emotional distress alone did not justify such a high award.  Furthermore, the district court vacated the punitive damages award, finding that while Chrysler’s response was potentially “imperfect and somewhat lacking,” it did not reach the level of “callousness and intentional disregard of plaintiff’s right” to support a punitive damages award.

On appeal, the Seventh Circuit disagreed with the lower court’s finding that there was no evidence of recklessness. The court reinstated the punitive damages award, finding that Chrysler was reckless because it “did not increase its (meager) efforts over a long stretch of time in the face of remarkably awful harassment.” The court seemed particularly focused on the duration of the harassment and made clear that when a response proves ineffective over some period of time, the employer must increase its efforts and change its response, otherwise “punitive damages become a possibility.” The court, however, did not provide a precise rule or any guidance on when an employer’s continuous inadequate response becomes reckless. The court rejected Chrysler’s argument that it had made a good-faith effort to comply with the requirements of Title VII, finding declarations about how hard HR employees worked to rectify the situation or how much Chrysler cared about harassment victims were insufficient because its “actions did not add up to a good faith effort to end May’s harassment.” The court focused on evidence presented at trial on what Chrysler did not do, including Chrysler’s failure to interview any of the employees whom May had identified as potential harassers and to install surveillance cameras as both May and the police had suggested. Overall, the court found Chrysler’s response “shockingly thin as measured against the gravity of May’s harassment.” Acknowledging that $3.5 million was a substantial punitive damages award, the court nonetheless found that Chrysler’s long-term recklessness supported it.

In the wake of the Seventh Circuit’s decision in May, it seems that an employer’s response that may initially have been reasonable may become reckless if it proves ineffective and the employer does not adapt and stiffen its efforts.