The Wal-Mart Effect: Supreme Judicial Court of Massachusetts Reinstates Punitive Damages Award in Gender Discrimination Action Against Wal-Mart

A plaintiff brings an action against her former employer for discrimination. That action seeks punitive as well as compensatory damages. The plaintiff does not have evidence that the employer acted with knowledge that its conduct violated the terms of the specific statute in the employer’s state deeming discrimination unlawful (who could?). The plaintiff does, however, have evidence that the employer acted with knowledge that it was interfering with the plaintiff’s right to be free of unlawful discrimination. Should the plaintiff be able to recover punitive damages? According to the recent opinion of the Supreme Judicial Court of Massachusetts in Haddad v. Wal-Mart Stores, Inc., 2009 WL 3153155 (Mass. 2009), if the plaintiff is claiming gender discrimination, the answer is “yes,” and I agree. But the court also indicated that the answer is “no” if the plaintiff is claiming age discrimination, and I don’t see why that’s the case.

In Haddad, Cynthia Haddad filed a complaint against Wal-Mart, alleging unequal compensation and termination of employment based on gender as well as defamation based upon, inter alia, the following facts:

Cynthia Haddad, worked as a pharmacist at Wal-Mart for ten years….Pursuant to Massachusetts law and regulation, every pharmacy must have a “manager of record.”…In March, 2003, the plaintiff accepted the position of pharmacy manager on a temporary basis.  At that time, and until her termination thirteen months later, the plaintiff was paid at an hourly rate considerably lower than any male pharmacy manager in the Pittsfield region. In addition, although she was told that she would receive the additional hourly pay that Wal-Mart paid all pharmacy managers, she did not receive this differential. After numerous complaints, on April 9, 2004, she finally received a check for the pharmacy manager bonus that others received in February, but she never received the thirteen months’ worth of additional hourly pay.

On April 14, 2004, Wal-Mart district manager David Hogan and two other Wal-Mart managers met with the plaintiff at the Pittsfield store. They questioned her about two prescriptions that had been fraudulently written and filled by pharmacy technician Kristin Baran.  One of the prescriptions had been written in October, 2002, while the plaintiff was on duty, and one was written on March 20, 2004, while a male pharmacist, Richard Blackbird, was on duty. Baran admitted, immediately after the meeting between the Wal-Mart supervisors and the plaintiff, that she falsified the October, 2002, prescription.

The plaintiff denied any knowledge of the fraudulent prescriptions, but told Hogan that the first one could have been written when she briefly left the pharmacy area to purchase a soda at a nearby counter; when she was in the restroom; when she was in the front of the pharmacy talking to customers; or when she was in the back of the pharmacy eating lunch or counting narcotics. The plaintiff’s employment was terminated that same day. She was told that the reason for her termination was based on her statement during the interview that she”fail[ed] to secure the pharmacy”because, in violation of an unspecified Wal-Mart policy, she had briefly left the pharmacy area unsecured, leaving Baran unattended in the pharmacy area. Baran’s employment was also terminated the same day.

The more recent fraudulent prescription contained Blackbird’s initials. Neither Blackbird, who was on duty when the second fraudulent prescription was written, nor any other pharmacist was questioned about or disciplined for it. Indeed, Blackbird was appointed to be pharmacy manager at the time of the plaintiff’s departure. Blackbird testified that he commonly left the pharmacy area unsecured to talk to a customer in the over-the-counter area, to go to the restroom, or to get a snack; he was unaware of any policy prohibiting this practice and was never disciplined for doing so. Other testimony at trial indicated that it was common practice for pharmacists to leave the pharmacy area briefly unsecured  and go to other areas of the store during their shifts. Copies of Wal-Mart‘s written policy regarding lunch breaks, effective in October of 2002, and introduced in evidence, indicated that it was optional whether a pharmacy manager closed and locked the pharmacy during lunch breaks. There was also evidence that this policy later changed several times.

The jury found Wal-Mart liable and awarded Haddad $972,774 in compensatory damages and $1 million in punitive damages. Upon Wal-Mart‘s motion, the trial judge thereafter vacated the award of punitive damages, finding that Haddad “presented no evidence that Wal-Mart knowingly or intentionally violated G.L. c. 151B,” and that there was no evidence that Wal-Mart’s conduct was “otherwise outrageous, evil in motive, or that it could be viewed as exhibiting a reckless indifference for the plaintiff’s rights.”

The Supreme Judicial Court of Massachusetts thereafter granted Haddad’s motion for direct appellate review and reinstated the award of punitive damages, finding that the trial judge’s decision contained

an implication that the judge may well not have intended, i.e., that punitive damages  may be awarded under G.L. c. 151B for gender discrimination only if the plaintiff shows that the defendant acted with knowledge  that its conduct violated the terms of that specific statute.  That is true only for awards of punitive damages  in age discrimination  cases. See G.L. c. 151B, § 9. This may not have been what the judge intended to convey, particularly given that his instructions to the jury on punitive damages  properly included no such requirement. Our cases have held that if a defendant knows that it has acted unlawfully by interfering with the legally protected rights of the plaintiff, such “reckless indifference” to the rights of others constituted conduct warranting “condemnation and deterrence,”…and could be sufficient to support an award of punitive damages.

This seems like the right conclusion with regard to gender discrimination. It appears to me as if the Massachusetts legislature and courts have said that everyone is or should be aware that gender discrimination is unlawful, meaning that an employer doesn’t need to have knowledge that it is violating the specific statute deeming such discrimination unlawful for it to be subject to an award of punitive damages.

But I wonder why Massachusetts treats age discrimination differently. Is the implication that fewer people are aware of or should be aware that age discrimination is unlawful? Or is there some other reason why we should require an age discrimination plaintiff to prove that her employer had knowledge that its conduct violated the specific statute deeming such discrimination unlawful? I couldn’t find anything explaining this portion of  G.L. c. 151B, § 9, and I am at a loss as to why it contains this requirement.

-Colin Miller