Compliance December 2, 2009

CA High Court Upholds Wrongful Firing Penalty Reduction

December 2, 2009 (PLANSPONSOR.com) - The California Supreme Court has slashed a jury's punitive damages award from $15 million to $1.9 million in a case against an employer for harassment and wrongful termination.

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The state high court cited a U.S. Supreme Court ruling in limiting punitive damages to a one-to-one ratio with compensatory damages because of McKesson Corp.’s “low degree of reprehensibility” and the “substantial compensatory damages verdict, which included a substantial award of noneconomic damages,” according to Business Insurance. However, the court reversed an appeals court decision that there was insufficient evidence for a harassment verdict against McKesson.

It remanded the case to reinstate a single $500,000 harassment award against the employer and supervisor, reinstate the jury’s $3,000 punitive damages award against the supervisor, and modify punitive damages award against McKesson to $1.91 million, Business Insurance said.

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According to the news report, Charlene J. Roby was a customer services worker who received favorable performance reviews during 25 years with the pharmaceutical distributor, but in 1997, she began suffering panic attacks that made her miss work. Medication caused her to develop body odor, while the attacks caused a nervous disorder that led to open sores.

A supervisor called Roby “disgusting” and openly ostracized her, according to the ruling. McKesson terminated Roby in 2001, citing her absences.

She then sued McKesson and her supervisor for failure to accommodate her medical condition, harassment, and wrongful termination, among other things.

A jury found she was wrongfully discharged based on her medical condition and disability, and that she had been illegally harassed and discriminated against. The jury awarded $3.5 million in compensatory damages and $15 million in punitive damages against McKesson. In addition, the jury awarded $500,000 in compensatory damages and $3,000 in punitive damages against a supervisor responsible for the harassment.

A California appeals court found there was insufficient evidence for a harassment verdict against McKesson, reducing punitive damages to $2 million and compensatory damages to $1.41 million.

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