Some recent Americans with Disabilities Act employment discrimination cases have resulted in significant jury awards, only to have them drastically reduced by statutory limitations. This has reignited the debate about punitive damages that are designed to punish egregious conduct and deter future violations.
It’s no surprise businesses don’t support punitive and other types of non-economic damages, and lobby for limitations and restrictions to reduce the financial impact. Others feel without the risk of significant economic accountability entities will ignore their responsibilities. In this week’s blawg I’ll review the policies behind punitive and non-economic damages, constitutional requirements, and judicial and legislative limitations. The ADA low damage caps and outright bans leave the disabled without an effective remedy to enforce their rights.
EEOC v. Drivers Management LLC and Werner Enterprises
In 2018 the Equal Employment Opportunity Commission (“EEOC”) sued Drivers Management and Werner Enterprises on behalf of Victor Robinson, a deaf person who Werner refused to hire and failed to provide a reasonable accommodation. EEOC v. Drivers Management, LLC and Werner Enterprises, Inc., Case No. 8:18-cv-00462. In September 2023 a jury awarded $75,000 in compensatory damages and $36 Million in punitive damages. When the judgment was entered in January 2024, Senior Judge John M. Gerrard also found that Werner intentionally discriminated against Robinson in violation of the ADA. However, as required by federal law limiting damages in ADA Title II employment discrimination cases, the judge then reduced the jury’s verdict to $300,000, plus $35,625 back pay.
My colleague Karla Gilbrade, General Counsel of the EEOC, said “As the court noted in its order, federal law caps punitive damages at $300,000 – not even one percent of the jury’s intended award. These caps, which were set by Congress decades ago, take away juries’ power to deter large employers from engaging in intentional discrimination against workers. Juries who have heard the evidence should be able to punish employers who knowingly or recklessly break the nation’s workplace civil rights laws, without constraints from outdated caps on damages.”
A Brief Tutorial on Damages
(a) Different Types of Damages
There are three basic types of damages. Economic damages (sometimes referred to as special compensatory or consequential damages) cover specific monetary losses directly tied to an injury such as medical expenses, lost wages, reduced earning capacity and property damage. Non-economic damages (sometimes referred to as general compensatory damages) are to address non-monetary losses that are not as easily quantifiable such as pain and suffering and emotional distress. Punitive damages are to both deter future illegal acts and punish egregious conduct, and not to compensate an injured party for losses.
(b) Constitutional Support for and Limits on Punitive Damages
In balancing the rights of competing interests, the U. S. Supreme Court has ruled that the Due Process Clauses of the Fifth and Fourteenth Amendments to the U.S. Constitution (a) recognize that states have “broad discretion … with respect to the imposition of … punitive damages,” but also (b) ban punitive damages awards that are grossly excessive or imposed without adequate procedural protections. Cooper Industries, Inc. v. Leatherman Tool Group, Inc., 532 U.S. 424, 432 (2001).
(c) Judicial Review
The Supreme Court has ruled procedural due process requires meaningful constraints on juror discretion, judicial review of punitive damages awards, and fair notice to potential defendants of the categories of conduct subject to punitive damages. Honda Motor v. Oberg, 512 U.S. 415, 420 (1994). In addition, the Court has implied substantive due process prohibits the imposition of excessive or arbitrary punitive damages. The Court has recognized a reasonableness standard, and has applied a multi-factor analysis including: (1) “the degree of reprehensibility of the defendant’s conduct,” (2) the reasonableness of the ratio of the punitive damages award “to the actual harm inflicted on the plaintiff,” and (3) comparability, i.e., “the difference between this remedy and the civil penalties authorized or imposed in comparable cases.” BMW of North America, Inc. v. Gore, 517 U.S. 559, 575 (1996).
Although the Supreme Court has not established any limit on the ratio of punitive damages to compensatory damages, it has indicated few awards exceeding a single digit ratio will pass constitutional muster. State Farm, 538 U.S. at 425. Nevertheless, the Supreme Court has approved ratios as high as 526:1 (TXO Production Corp. v. Alliance Resources Corp., 509 U.S. 443 [1993]), and struck down ratios as low as 5:1 (Honda Motor, 512 U.S. 415 [1994]).
(d) Legislative Approval and Limitations
Legislators can pass statutory approval of punitive damage amounts. In the class action case of Wakefield v ViSalus, Inc., D.C. No. 3:15-cv-01857-SI, the defendant engaged in prohibited robocalls under the Telephone Consumer Protection Act that were subject to minimum statutory damages of $500 per call. Given the number of violations, the total statutory damages were over $925 million. The U. S. Court of Appeals for the 9th Circuit confirmed legislative power to prescribe purely punitive penalties for violations of statutes, but recognized although an individual minimum statutory damage amounts are within legislative powers, there are constitutional limits if the aggregate amount is gravely disproportionate to and unreasonably related to the legal violation committed.
Accordingly, the Court adopted the following seven criteria to be used when determining whether a particular award is “disproportionately punitive” in nature: the amount of award to each plaintiff, the total award, the nature and persistence of the violations, the extent of the defendant’s culpability, damage awards in similar cases, the substantive or technical nature of the violations, and the circumstances of each case. The case was remanded to the District Court to determine whether the aggregate award this class action case is “so severe and oppressive that it violates due process rights and, if so, by how much the cumulative award should be reduced.”
In summary, the Supreme Court and Courts of Appeal have provided criteria for legislatures and trial courts to balance the competing interests of compensating injured parties and prohibiting excessive or arbitrary damage awards. Legislators can also limit, restrict, and even prohibit compensatory and punitive damage awards. However, many feel that the influence of business lobbying has resulted in low legislative caps and outright bans that don’t encourage businesses to comply with the law. That is the core of the debate about damages limitations and the ADA.
Damage Limitations under the Title I of the ADA
Title I of the ADA applies to discrimination by private employers. There are several types of damages that can be awarded pursuant to Title I that can include back wages, front pay, emotional distress, and consequential damages (such as moving, medical and therapy costs) to attempt to “make the plaintiff whole.” There also is the potential for non-economic and punitive damages.
However, Title I of the ADA incorporates the compensatory and punitive damage caps contained the Title VII of the Civil Rights Act of 1964, 42 USC §§1981a(a)(1). The caps, which have not been adjusted since 1991, vary depending on the size of the employer, and currently range from $50,000 to $300,000. These caps apply to future pecuniary losses, emotional pain, suffering, inconvenience, mental anguish, loss of enjoyment of life, and other nonpecuniary losses. There are no caps on back pack or consequential damages.
Damage Bans under the Title III of the ADA
Title III of the ADA applies to patron discrimination by businesses open to the public. But under Title III plaintiffs can only seek injunctive relief and are not entitled to any monetary damages, unless the Attorney General intervenes and specifically requests damages on their behalf. All the concerns that low compensatory and punitive damage limits encourage business to ignore compliance under Title I are amplified by the ban under Title III. Potential plaintiffs must not only go through the cost, anxiety and stress of a lawsuit to enforce their rights, they know beforehand they will not be compensated for their loss. It is powerful incentive to quietly accept the discrimination, which in turn perpetuates future discrimination.
What about Increasing the Caps?
Representative Suzanne Bonamici and Senator Edward Markey introduced the Equal Remedies Act of 2024, that would eliminate damages caps under the ADA and other civil rights acts. “For too long, employers responsible for discrimination have been able to avoid fully compensating workers they harmed,” said Congresswoman Bonamici. Although the proposed legislation had wide public support, it did not in Congress. In the current political climate change at the federal level seems unlikely, and plaintiffs will be relying on state and local law.
What about State Disability Laws?
Some state and localities allow for compensatory and punitive damages without any statutory caps. However, that also makes for uneven enforcement and protection with respect to multistate businesses. For example, an employee may be protected in their current location, but if relocated may lose their rights.
Commentary
As my readers know, I believe in balancing rights, but we all have different individual views on what is a proper balance. Even if I may disagree with a specific choice, I respect and support a wide range of choices, provided they fall within a circle of reasonableness, logic and constitutional requirements.
Low limits and bans on damages can drastically reduce the deterrent effect on large employers. $300,000 to a company with thousands of employees and billions of dollars in revenue will hardly mean anything. It’s hard not to conclude the low compensatory and punitive damage caps under Title I fall short in both deterring violations and punishing egregious conduct. But at least employees have some economic recourse. The ban on any type of damages under Title III gives large businesses a pass, and condescendingly gives disabled patrons a right without a remedy.
Given the constitutional limits and judicial review of punitive and non-economic damages awards, with multi-faceted procedural and substantive criteria to balance rights, it seems ADA damages caps and bans unfairly tip the scales. Although businesses should have a legal environment where the can anticipate and manage risk, that does not mean they are entitled to eliminate liability in the interest of economic certainty.
Furthermore, the policy is inconsistently applied to different classes of civil rights. For example, there are no legislative limits on compensatory and punitive damages in racial discrimination cases. However, those awards are still subject to review under the Supreme Court’s criteria. In the Driver’s Management case, a court might well find an award of $36 Million is excessive and subject to reduction. But the strict ADA caps and bans prevent any reasoned judicial analysis, and severely impede the fundamental democratic policy of balancing rights. In the interim, businesses can discriminate without accountability.
In conclusion, I agree with EEOC General Counsel Gilbrade that the current ADA limitations give businesses out-of-balance protections that result in both preventable and uncompensated harm to innocent injured parties. It undercuts the policy goals of the ADA. I hope congressional members like Representative Bonamici and Senator Markey will continue to introduce legislation to help rebalance the scales to fairly protect the rights all parties.
Copyright John Drinkwater 2025 All Rights Reserved Turn Up the Quiet TM
Disclaimer: This content is provided for general informational purposes only, and may not reflect the current law in all jurisdictions. No information contained in this post should be construed as legal advice nor is it intended to be a substitute for legal counsel on any subject matter. Readers should consult their own advisor for legal or other advice.