Fifth Circuit Court of Appeals Overturns $366 Million Verdict in FedEx Employee’s Retaliation Lawsuit

HOUSTON, Texas – A recent ruling by the Fifth Circuit Court of Appeals has significant implications for employers regarding race discrimination and retaliation claims. The court overturned a jury verdict that had awarded a Houston-based FedEx employee $366 million in damages.

Jennifer Harris, a district sales manager in Texas, filed a race discrimination complaint against her supervisor within the company. In response, Harris was placed on a performance improvement plan. She was later placed on a second plan and ultimately recommended for termination, leading her to believe her supervisor’s actions were pretextual. Harris presented evidence that white employees in similar situations were not subjected to the same treatment.

The jury sided with Harris, awarding her $1,160,000 in compensatory damages and a staggering $365,000,000 in punitive damages. FedEx appealed the decision.

While the Fifth Circuit agreed with the jury’s finding of retaliation, they sided with FedEx on the issue of punitive damages. The court stated that Harris had not met the burden of proving malice or reckless indifference, which is necessary for an award of punitive damages under Title VII. The court relied on evidence showing that Harris’s supervisor believed her discipline was justified, demonstrating a lack of subjective intent to violate federal law.

Additionally, the court held that even if the supervisor had acted with malice, FedEx would not be liable for punitive damages because the company had made good faith efforts to address Harris’s complaints by investigating and prohibiting disciplinary action while the investigation was ongoing. The court emphasized that FedEx’s actions differed from cases where companies had been held vicariously liable for punitive damages after ignoring the plaintiff’s complaints.

Furthermore, the court significantly reduced the jury’s award of compensatory damages for pain and suffering. They found that Harris’s claim under Section 1981 was time-barred and determined that the maximum amount available under Title VII, $300,000, would be excessive. As a result, the award of compensatory damages was reduced to $248,620.

Harris v. FedEx Corporate Services, Inc. serves as a crucial reminder of the potential legal risks employers face in retaliation cases. It underscores the importance of promptly investigating and addressing discrimination and retaliation complaints in the workplace to ensure the long-term well-being of employees.