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By Patrick Dorrian
Nov. 19 — A former AutoZone store manager in San Diego can keep the record $185 million in punitive damages a jury awarded her for pregnancy-related harassment, discrimination and retaliation, a federal judge ruled Nov. 18, finding that the company's legal department qualifies as an officer, director or managing agent under California law.
Denying AutoZone Stores Inc.'s motion for judgment as a matter of law, the U.S. District Court for the Southern District of California upheld the jury's Nov. 17 verdict during the punitive damages phase of Rosario Juarez's trial under California's Fair Employment and Housing Act. The court rejected the company's contention that the punitive award couldn't stand because Juarez failed to link an AutoZone officer, director or managing agent to the unlawful bias she faced after her district manager learned she was pregnant in November 2005.
According to Juarez, she was harassed, demoted back to parts sales manager over her objections and later terminated because of her sex and pregnancy and in retaliation for complaining about the discrimination. The jury agreed, awarding Juarez $872,720 in compensatory damages Nov. 14, and also finding that the bias was committed with “malice, oppression or fraud,” entitling Juarez to punitive damages.
Lawrence A. Bohm of Bohm Law Group in Sacramento, Calif., who represented Juarez, told Bloomberg BNA Nov. 19 that the $185 million in punitive damages is the most ever awarded to a single employee.
In rejecting AutoZone's challenge to that award, Magistrate Judge William V. Gallo found that Autozoner Relations, the company's legal department, could be an AutoZone officer, director or managing agent, because it authorized or ratified the malicious conduct, “even though no one individual within Autozoner Relations was specifically identified as being involved in the personnel decisions affecting Plaintiff.”
Juarez originally sued AutoZone in California state court in January 2008, and the company removed the case to federal court.
In her second amended complaint, Juarez asserted that after she was promoted from customer sales representative to parts sales manager in April 2001, she discovered that AutoZone had only 10 female store managers in the 98 stores it operated in the San Diego region. The dearth of female store managers was the result of a “glass ceiling” that the company perpetuated through an “opaque promotion process,” she alleged.
According to Juarez, her own efforts for promotion to store manager were frustrated by the “glass ceiling.” She was only promoted in October 2004, she alleged, because she complained and effectively asked, “what, do I have to sue.”
Juarez became pregnant in September 2005. District Manager Kent McFall learned of her pregnancy a month later and immediately told her she could no longer handle the store manager position and should step down. Even though she assured McFall that she could still handle the job, he continued to “chide her” about not being able to do so, Juarez alleged.
Bohm told Bloomberg BNA that McFall also “became more aggressive, mean and critical of Ms. Juarez. Suddenly, nothing was being done correctly.” Juarez was forced to redo time consuming work assignments, was yelled at and publicly humiliated, and was put on a performance improvement plan, Bohm said.
Autozoner Relations, the company's legal department, could be an AutoZone officer, director or managing agent, because it authorized or ratified the malicious conduct, “even though no one individual within Autozoner Relations was specifically identified as being involved in the personnel decisions affecting Plaintiff,” Judge Gallo said.
According to Juarez, AutoZone's human resources department failed to investigate when she complained about McFall's harassment. In addition, all evidence of her complaint was destroyed, she said, which was consistent with a division-wide effort to reduce the number of female managers. For example, Rick Smith, the vice president of operations for AutoZone's Western Division, once commented, “what are we running here, a boutique? Get rid of those women,” Juarez alleged.
After Juarez's son was born, McFall continued to insist that she step down from her store manager position. Despite her complaints to human resources and a regional training manager, Juarez was ultimately demoted back to parts sales manager in February 2006.
The company subsequently took advantage of her store manager skills while paying her as a parts sales manager, Juarez asserted. It also rejected her repeated requests to be promoted back to store manager and instead promoted less qualified male employees.
Juarez was terminated in November 2008, after filing a discrimination charge with the California Department of Fair Employment and Housing and suing. To create a pretext for firing her, she alleged, the company falsely blamed her for a cash envelope that went missing even though she had followed proper procedures.
According to Bohm, the missing amount was $400.
Following a trial on the merits, the jury found for Juarez on her discriminatory demotion, discriminatory and retaliatory termination, hostile work environment and failure to prevent discrimination claims.
It awarded her $393,760 for past economic loss, $228,960 for future economic loss and $250,000 in noneconomic damages. The jury also found that the discrimination, harassment and retaliation was committed with malice, oppression or fraud, requiring further trial on the issue of punitive damages.
In rejecting AutoZone's challenge to the record $185,000,000 punitive damages award, Gallo agreed with the company that none of the managers cited by Juarez qualified as managing agents for purposes of imposing corporate liability for punitive damages. He also agreed that Smith's alleged comment about ridding stores of female managers was a stray remark that likewise wasn't enough to hold AutoZone accountable for the malicious conduct.
However, the court found that whether the company's legal department—Autozoner Relations—could be an officer, director or managing agent presented a “much closer question.”
The court concluded that the punitive damages verdict was supported by the trial record. It cited evidence that “most, if not all, personnel decisions were directed to Autozoner Relations, which provided advice and counsel, if not actually made hiring/firing and other decisions” and that Autozoner Relations also spoke on the company's behalf in responding to Juarez's DFEH charge.
A reasonable jury could find that AutoZone's legal department “committed, authorized and/or ratified” the actions of the company's regional manager and the divisional human resources manager in demoting and firing Juarez and ignoring her complaints, Gallo ruled.
Bohm said he expects AutoZone to “challenge every aspect of the verdict.”
Until the company's “motions are heard and decided the verdict stands and so does the message,” Bohm said. “Legal departments of large corporations must be held accountable for architecting and/or approving the violation of a person's civil rights.”
He added that Juarez is entitled to statutory attorneys' fees as the prevailing party. “These fees are expected to be in excess of $1 million,” Bohm said.
Juarez was also represented by Chuck E. Moore in San Diego. Liliya Stanik in San Diego and Nancy E. Pritikin in San Francisco, both of Littler Mendelson, represented AutoZone.
Littler Mendelson declined to comment, and AutoZone didn't respond Nov. 19 to Bloomberg BNA's request for comment.
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