Portable Toilets and Managing Agents: Employee Allowed to Pursue Punitive Damages

By Adams, Nye, Becht LLP
on October 18, 2013

IMG_0168.JPGIn the recent case of Davis v. Kiewit Pacific Co., the court reinstated the employee's claim to seek punitive damages at trial before a jury after the employee prevailed at trial on gender discrimination, harassment and retaliation claims. The court reversed summary adjudication of the plaintiff's claim for punitive damages, reasoning that whether either employees, a project manager and EEO officer, were managing agents of the employer was a factual issue for a jury to determine.

Punitive damages are awarded against a defendant in order to discourage bad behavior. They are awarded in addition to compensatory damages, which are designed to make an injured party whole. A plaintiff may recover punitive damages if the defendant is guilty of oppression, fraud, or malice. Corporations can be liable for those punitive damages through the actions (or inactions) of their employees, but only when those employees have sufficient discretion and authority to determine corporate policy as "managing agents" of the employer.

Here, Lisa Davis was among about 100 employees who worked for Kiewit on a canal excavation project and was one of only two women on her shift. She had trouble accessing the portable toilets at her job site--they were far away from her work area and were often unsanitary. She complained up the chain of command, going as far as Kiewit's project manager for the canal and the highest-ranking employee on-site, all to no avail. A short time later, when Ms. Davis went to the portable toilet, she found feces smeared on the seat and a pornographic magazine on the toilet paper dispenser in what she believed was retaliation for her complaints. She immediately informed several supervisors. No one from Kiewit investigated her concerns. A few weeks later, Ms. Davis also complained to Kiewit's equal employment opportunity (EEO) officer. About a week later, Kiewit laid off most of its excavation crew, including Ms. Davis. Kiewit then selectively re-hired the employees a week later but did not re-hire Ms. Davis.

Lisa Davis filed a lawsuit under the Fair Employment and Housing Act ("FEHA"), alleging gender discrimination, harassment, retaliation, and the failure to prevent those actions. She further sought punitive damages alleging that Kiewit's managing agents, specifically the project manager and EEO officer, committed or ratified the oppressive, malicious or fraudulent conduct. The trial court granted summary adjudication on the punitive damages issue, concluding that no managing agent engaged in or ratified oppressive, malicious or fraudulent conduct. The rest of the case except for the issue of punitive damages went to a jury trial and the jury awarded Ms. Davis $270,000 in compensatory damages.

After prevailing on all her claims at trial, Ms. Davis appealed the motion for summary adjudication determination, which prevented her from claiming punitive damages at trial. The Court of Appeal examined Kiewit's argument that there was no question that the project manager and EEO officer were not managing agents, and thus Ms. Davis should not be able to recover punitive damages. The court disagreed, concluding that there was a real question about whether the two men were managing agents of the corporation and reinstated Ms. Davis' claim for punitive damages

In making its determination, the court scrutinized the two declarations the managing agents gave about their job responsibilities and authority. The court found that in both statements, the men were simply "parroting" the legal standard for employees who would not be managing agents. This, the court deemed, was impermissible as the employer could not use conclusory statements about the law as evidence in support of its argument. The court also determined that each declaration failed to contain sufficiently detailed descriptions of the managing agents' job duties and discretion.

Going even further, the court concluded that Ms. Davis had presented enough evidence to show a triable issue on the managing agent issue, even if Kiewit had met its burden. The court considered the facts that the project manager was the top on-site manager and that he had the responsibility to oversee the $170 million project and all employees as support for a reasonable inference that he exercised substantial discretion. Likewise, the court considered the EEO officer's duties to review and enforce policies against discrimination, retaliation, and harassment as support for a reasonable inference that he had substantial authority over corporate policy.

This decision sheds light of the scope of evidence necessary to satisfy the definition of a managing agent and provides support for obtaining the requisite evidence, job descriptions and duties of managing agents. Employers with discriminating or harassing managing agents can't just forestall possible punitive damages by providing a conclusory statement of the law that their managing agents do not exercise any discretionary authority. Instead, as Davis held, they will need to provide a managing agent's full job description and duties in order to determine if he or she has the requisite discretionary authority to allow a claim of punitive damages to proceed.