Record $186 Million AutoZone Verdict Unlikely To Withstand Judicial Review

On November 17, 2014, a California federal jury awarded $186 million in punitive damages to a San Diego woman who alleged she was fired by AutoZone Stores, Inc. after she complained she was demoted following the birth of her child. The $186 million award is believed to be the largest employment law verdict for an individual in U.S. history. The record award, however, is likely to be reduced on appeal.

Alleged Gender/Pregnancy Discrimination

Plaintiff Rosario Juarez, 43 years-old, began working for a National City AutoZone store in 2000. She started as a Customer Services Representative and was promoted to Parts Sales Manager in 2001. Ms. Juarez alleges she asked to be promoted to Store Manager, but her efforts were frustrated by a “glass ceiling” that prevented women from being promoted within the company. Ms. Juarez was eventually promoted in 2004, but only after allegedly complaining to the human resources department.

According to Ms. Juarez’s Complaint, the AutoZone District Managers were directed to stop promoting women and to get rid of any females already holding managerial positions. Ms. Juarez alleges that when she became pregnant in 2005, her boss repeatedly suggested she step down, suggesting she could not handle the responsibilities of the job while being a mother. The alleged harassment continued once she gave birth to her son, and she was eventually demoted to Parts Sales Manager in 2006. AutoZone asserts Ms. Juarez was demoted for displaying “managerial disloyalty” and poor performance, noting she needed improvement in many areas and was not meeting expectations.

Following her demotion, Ms. Juarez was allegedly asked to work long hours, ordered to “redo work for no reason,” and was humiliated and yelled at in front of co-workers. Her complaints to AutoZone about the situation allegedly fell on deaf ears, and she eventually filed a complaint over the demotion with the California Department of Fair Employment and Housing in 2007.

Ms. Juarez filed suit in 2008, alleging gender/pregnancy discrimination, retaliation, and failure to prevent harassment. The Complaint claims AutoZone has a “glass ceiling” policy that makes it difficult for women to get promoted within the company. According to the Complaint, there are 98 AutoZone stores in the San Diego area, and only 10 of the stores had female managers. Ms. Juarez’s 2010 Amended Complaint states, “AutoZone’s ‘glass ceiling’ for women employees was perpetuated through an opaque promotion process. The opaque promotion procedure was adopted for the purpose of keeping qualified women from being promoted to store manager positions based on discriminatory animus.”

Ms. Juarez was fired one month after she gave her deposition in this case. AutoZone claims Ms. Juarez was terminated after she allowed $400 in cash to go missing from the store register one evening. However, the AutoZone Loss Prevention Officer who handled the investigation into the missing cash testified at trial that she never suspected Ms. Juarez of wrongdoing and that the company was “targeting” Ms. Juarez. Further proof of AutoZone’s discrimination came in the form of trial testimony from a former AutoZone District Manager who testified that he was offered a promotion if he fired all the women in his stores. The former District Manager also testified that an AutoZone Vice President berated him for having too many women in management positions, stating, “What are we running here, a boutique? Get rid of those women.”

Following two weeks of trial testimony, the jury consisting of five men and two women unanimously held auto parts giant liable on all counts, awarding Ms. Juarez over $872,000 in compensatory damages. According to the jury verdict form, the jury found that the alleged discrimination and harassment against Ms. Juarez was “severe and pervasive,” and found that she was discriminated against and later fired because of her pregnancy.

The Punitive Damages Award Will Likely Be Reduced

While plaintiffs often agree to settle for a smaller sum following a favorable jury verdict, such a scenario is unlikely to play out here. AutoZone fully intends to appeal. Following the verdict, a company spokesperson stated, “We believe this verdict could not be based on the evidence or logic, and we plan to proceed with all legal remedies.”

The record punitive damages award is more than 210 times the amount of compensatory damages awarded. Although there is no fixed formula for determining the appropriate amount of punitive damages in any given case, the Supreme Court has held that, “[A]n award of more than four times the amount of compensatory damages might be close to the line of constitutional impropriety… single-digit multiplies are more likely to comport with due process, while still achieving the State’s goals of deterrence and retribution…” (State Farm Mutual Automobile Insurance Co. v. Campbell (2003) 538 U.S. 408, 424-425.) The general rule is that the ratio between punitive and compensatory damages should not exceed 9 to 1. As such, the glaring disparity between the two damages awards in this case is unlikely to withstand review at the appellate level.

When a jury awards exorbitant punitive damages, it sends a message that the defendant company should pay the plaintiff(s) that amount. However, juries of course do not have the final say. The Supreme Court has given appellate courts wide latitude to overrule jury verdicts. Although the verdict in this case is sure to test the boundaries of punitive damages awards in employment discrimination cases, it is likely to be scaled back dramatically on appeal. Stay tuned.

ABOUT THE AUTHOR: Morgan Van Buren is an associate at Tyson & Mendes LLP. He specializes in personal injury and high net worth insurance issues. Contact Morgan at 858.263.4107 or mvanburen@tysonmendes.com.

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