• UPDATED: High Court sides with harassment victim; cuts damages Monday, November 30, 2009

    By Steve Ingram

    The California Supreme Court today made it easier for victims of on-the-job harassment to prove their cases, but restricted the amount of punitive damages the victim in Monday’s case can collect from employers.

    Monday’s case involves Charlene J. Roby, a West Sacramento resident who worked 25 years for drug maker and health care distributor McKesson Corp.

    She was fired in 2000, two years after developing a psychiatric condition diagnosed as panic disorder. She would suffer difficulty breathing, uncontrollable shaking, and profuse sweating, and would scratch her arms until they bled. The prescribed medication caused her to develop an unpleasant body odor.

    According to the high court’s review of the facts, Roby’s boss, Karen Schoener, “made negative comments in front of other workers about Roby’s body odor, although Schoener knew from Roby that medication was causing the odor.”

    “Schoener also called Roby ‘disgusting’ because of the sores on her arms and her excessive sweating. Schoener openly ostracized Roby in the office, refusing to respond to Roby’s greetings and turning away when Roby tried to ask questions, and Schoener made a facial expression of disapproval when Roby took rest breaks because of her panic attacks. … She overlooked Roby when handing out specialty food items, holiday gifts, and travel trinkets, although Schoener regularly gave these small gifts to the other employees on her staff.”

    Roby was financially and emotionally devastated by her termination, and lost her savings and health care insurance. In 2001, the Social Security Administration declared her totally disabled.

    In a trial court before Superior Court Judge Timothy Fall of Yolo County, the jury concluded that Roby was wrongfully discharged, discriminated against, and harassed in violation of California’s Fair Employment and Housing Act.

    The jury also awarded Roby $15 million in punitive damages–although the high court slashed the amount to 1.9 million, the amount of the compensatory damages.

    McKesson appealed, challenging the judgment that McKesson was guilty of workplace harassment, and asked the Court of Appeal to eliminate or at least reduce the punitive damages.

    Writing for the majority, Justice Joyce L. Kennard overturned the Court of Appeal ruling, holding that there was indeed sufficient evidence to support a claim of workplace harassment. The high court said “hostility was pervasive and effectively changed the conditions of Ms. Roby’s employment.”

    “Discrimination is by its nature an abusive action not a non-abusive action. Here the supervisor’s treatment of Ms. Roby involved constant hostility based upon her medical condition and violated California employment law.”

    A majority also reduced the punitive damages, rejecting a view that in this case, the wealth of a defendant should have been heavily weighted when determining the level of damages.

    In the California case, the majority concluded that in this fact-specific case, $1.905 million was the limit that was permitted under the current controlling United States law.

    The majority said:

    “It is certainly relevant for a reviewing court to consider the wealth of a defendant when applying federal constitutional limits to an award of punitive damages, thereby ensuring that the award has the appropriate deterrent effect, but the punitive damages award must not punish the defendant simply for being wealthy.”

    Justice Kathryn Mickle Werdeger, joined by Justice Carlos Moreno, dissented, supporting a higher award of punitive damages of about $3.8 million, and concluding that McKesson itself act reprehensibly toward Roby. The dissenters also concluded that McKesson’s wealth was important:

    “In 2000, the year it fired Roby, McKesson ranked number 38 on Fortune Magazine’s list of the 500 largest American corporations, reportedly having a market value of more than $5 billion, more than $30 billion in revenues, and almost $85 million in profits. … While McKesson’s wealth alone cannot justify a high award, a somewhat larger award may be warranted in order to effectively deter such a large and profitable corporation from repeating its (at the least) conscious disregard of employees’ rights.”

    UPDATE: Consumer attorney Sharon Arkin, who helped brief the case on behalf of Consumer Attorneys of California, said:

    The Supreme Court’s analysis of the harassment issue will make it easier for employees establish that cause of action when they have been abused and mistreated in the workplace.  Unfortunately, in limiting the punitive damages to a one to one ratio, the majority’s opinion ignored the many actions by the employer in not only establishing the policy, but in refusing to stop its abusive use – even to the point that the employer confirmed the wrongful termination after investigation. 

    Perhaps most disturbing is the Supreme Court’s refusal to consider the wealth as a defendant as important a factor in assessing the appropriate amount of punitive damages as the other three State Farm guideposts.  The purpose of punitive damages is to deter wrongful conduct.  A $2 fine for you and me isn’t going to do that.  And a $3 million fine for McKesson won’t either.  As William Blackstone said, “What is ruin to one man’s fortune, may be a matter of indifference to another’s.”  Unless and until the Supreme Court factors in wealth as a meaningful element in the assessment of a punitive damages award, corporate malefactors will not have any incentive to change their ways.

    Roby v. McKesson Corporation, California Supreme Court (S149752) from Court of Appeal 3rd District (C048799)

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    Category: Appellate Reports;