PREGNANCY DISCRIMINATION

Court burns bakery with punitive damages and attorneys' fees

A sympathetic employee — an impoverished, diabetic, and pregnant mother ― will trump a callous HR manager every time. In a recent case, a jury imposed significant punitive damages and attorneys' fees against a bakery whose explanation for not accommodating (and for ultimately firing) an employee was that it was just a big misunderstanding. As the bakery learned, if your managing agent is a bad apple, the pie is going to get ruined.

Bimbo Bakeries: Beware of the way you treat your bakers

Bimbo Bakeries bakes and sells bakery products. Yaire Lopez began working at Bimbo in March 2001. In 2004, she became a route sales representative, delivering cakes, bagels, muffins, and bread. Baked items were delivered on 15-pound trays stacked on wheeled racks. Since the racks were the same height as the back of the trucks, the drivers didn't need to climb in and out of the trucks to load them with trays.

In November 2004, Lopez, a diabetic single mother of daughters ages four and five, became pregnant. In early 2005, her perinatal nurse practitioner issued a certification to Bimbo stating that her only work restrictions were no lifting over 20 pounds, occasionally lifting 11 to 20 pounds, no climbing, and regular break periods of 15 to 20 minutes every two hours. The form also stated: "If modified work is not available, this patient is then unable to work for this time period."

Lopez's certification made its way to Laura Thompson-McCann, Bimbo's northern California HR manager. Thompson-McCann managed 900 employees and had the authority to hire and fire employees. Less than one hour after Lopez turned in her certification, her supervisor told her that HR had advised that she must go home. Without consulting anyone, Thompson-McCann determined that Lopez was unable to perform her job. She based her conclusion on the job analysis forms for Lopez's position. She determined that no available positions met the employee's restrictions. She didn't document her analysis or engage in any dialogue with Lopez. Conversely, Lopez left two concerned messages that she didn't return.

Lopez applied and was rejected for a position at the Bimbo thrift store. Although she told Thompson-McCann that she wanted to work and feared losing her medical benefits, the HR manager recommended that she take medical leave and disability benefits. After Lopez applied for Medi-Cal benefits, her nurse advised her that she was ineligible because she wasn't disabled. The nurse called Thompson-McCann to confirm that Lopez could perform her job, but she was unmoved. Lopez was forced to file for unemployment. Thompson-McCann wrote a letter to her demanding that she confirm within 48 hours that she had quit. Lopez didn't respond, and the manager terminated her as having resigned.

Despite her religious objections, Lopez arranged to terminate her pregnancy because of her dire financial situation and her need to work to support her other children. When she learned she was carrying twins, she decided not to have the abortion. Her unemployment benefits, cash aid, and food stamps were her sole income. Later, Thompson-McCann again rejected her pleas for work to continue her medical benefits.

After a jury trial on her claims for wrongful termination and gender and pregnancy discrimination, Lopez was awarded compensatory damages of $340,700 and punitive damages of $2 million, and her attorneys were awarded attorneys' fees of over $1 million.

Let them have interim work

An employer is required to transfer a pregnant employee to a modified position if it has a transfer policy for temporarily disabled employees and such a position exists. The employer, however, isn't required to create a position. Bimbo had an interim work program for employees with industrial injuries. The jury's verdict indicates that it determined that the company could have reasonably accommodated Lopez's pregnancy-related conditions.

Be careful who makes and implements policy

The jury awarded Lopez $2 million in punitive damages. A corporate employer may be liable for punitive damages only if an employee acts with oppression, fraud, or malice and is a corporate officer, director, or managing agent. Bimbo unsuccessfully argued that Thompson-McCann wasn't "a managing agent."

Managing agent status is limited to employees who exercise substantial independent authority and judgment over decisions that ultimately determine corporate policy. Liability depends on the extent to which they exercise substantial discretionary authority over decisions that ultimately determine corporate policy.

When an employer has vested the employee with substantial discretionary authority over decisions that ultimately determine corporate policy, its tortious (wrongful) or malicious conduct can result in employer liability for punitive damages. Similarly, when a management employee has the discretion to act beyond the employer's written standards, she can be found to be acting in a managerial capacity. Thus, an employee who manages over 65 employees in eight stores and exercises substantial discretionary authority over vital aspects of the business is a managing agent.

An employer can't insulate itself from liability by giving an employee a nonmanagerial title while allowing him to make crucial policy decisions. Nor is a corporation shielded from liability when policies are issued by high-level management but are discretionarily conferred by lower-level employees in a discriminatory or otherwise culpable fashion. What matters is what the company does ― including through the discretionary acts of its employees ― not just what it says in a stated or written policy.

Be careful how you cook

Bimbo argued it "was all just a big misunderstanding." The jury found that Thompson-McCann and the bakery were guilty of fraud, oppression, or malice because she intentionally discriminated against Lopez by firing her because of her pregnancy. The bakery then attempted to hide the illegal motives with the false explanation that the termination was the result of Lopez's resignation following her failure to respond to Thompson-McCann's 48-hour letter.

Punitive damages are available not only for egregious conduct but also when an employer acts with the knowledge or reckless indifference that it may be violating the law. Punitive damages were supported in this case because:

• Lopez was sent home from work the very day she submitted her work restrictions;
• she wasn't given a modified assignment;
• Bimbo refused to reconsider employing her after her nurse advised that her restrictions didn't prevent her from doing her job; and
• she was a pregnant, diabetic single mother who desperately needed the income and medical benefits.

Bimbo asserted that the $2 million award was unconstitutionally excessive. The reprehensibility of the conduct is the most important indicator of the reasonableness of a punitive damage award. In analyzing the degree of reprehensibility, the court considered whether:

1. the harm was economic or physical;
2. the conduct demonstrated disregard for the health or safety of others;
3. Lopez was financially vulnerable;
4. the conduct was repetitive or an isolated incident; and
5. the harm was the result of accident or intentional malice, trickery, or deceit.

For punitive damages to be effective, the employer must feel economic pain. Ten times the actual damages isn't an excessive punitive damage award. While the employer's financial condition is a legitimate factor in determining the appropriate amount of punitive damages, in this case, since Bimbo's net assets were $826 million, the $2 million awarded was consistent with the state's interest in punishing reprehensible conduct and deterring its repetition.

And the icing on the cake are those attorneys' fees

By statute, the trial court may award attorneys' fees and costs to the prevailing individual. California's Fair Employment and Housing Act safeguards Californians' right to be employed without discrimination on account of race, religion, color, national origin, ancestry, physical or medical disability, medical condition, marital status, sex, age, or sexual orientation. That right is based on the idea that job discrimination foments domestic strife and unrest, deprives the state of the fullest utilization of its capacities for development and advancement, and substantially and adversely affects the interest of employees, employers, and the public in general.

And the cherry on top is that those fees can be multiplied

A lawyer who provides "contingency" legal services with the risk of not being paid must recover an amount that reflects both of those functions. Otherwise, competent counsel will be reluctant to accept contingent fee cases, and large or politically powerful defendants wouldn't be held to answer for constitutional deprivations, resulting in harm to the public. The purpose of a fee award is not to punish the employer but to ensure that the employee won't have to bear the expense of litigation. These fees can be enhanced based on the difficulty of the questions and the skill in which they were presented. The court upheld the award of fees 1.5 times the amount of fees actually incurred by Lopez's attorneys. Lopez v. Bimbo Bakeries (California Court of Appeal, First Appellate District, 4/23/09, unpublished).

Bottom line

Although the law may not favor punitive damages, they will be awarded in appropriate cases. If an employee is given sufficient authority that extends to deciding issues of corporate policy, then a managing agent relationship has been created. That person can bind the company for punitive damages purposes if she acts with the sufficient level of culpable conduct. In this case, the jury found that Thompson-McCann was a managing agent and had no trouble determining that her conduct was sufficiently reprehensible to award punitive damages.

Of course, from the employee's perspective, it helps to have an employee direct from central casting. Given the apparent atmospherics of the case, it's surprising that it went to trial. The message for employers is to be careful about who is minding the store. Otherwise, be prepared to shell out dough for actual damages, punitive damages, and attorneys' fees.