Lessons from a Blockbuster Section 1981 Jury Verdict

Wednesday, June 29 2022 18:56 Written by  Patricia Collins

Reprinted with permission from the April 14th edition of The Legal Intelligencer. (c) 2021 ALM Media Properties. Further duplication without permission is prohibited.

42 U.S. § 2000e, et seq. (“Title VII”) imposes caps on damages that limit the recovery for plaintiffs in employment discrimination cases. The plaintiffs in Yarbrough, et al v. Glow Networks (United States District Court for the Eastern District of Texas, 4:19-cv-00905) employed an interesting theory to avoid those caps, and the strategy paid off. On February 18, 2022, a Texas jury returned a verdict of $70 Million Dollars for ten race discrimination and retaliation plaintiffs, who asserted claims pursuant to 42 U.S.C. § 1981 (“Section 1981”). The Yarbrough Plaintiffs asserted no claims under Title VII.

The Yarbrough Plaintiffs alleged discrimination in the workplace at Glow Networks. They alleged that Glow Networks treated Africans and African-Americans differently than other employees and subjected them to a hostile environment in several ways. For example, they alleged that Glow Networks monitored their workspaces in a manner that they did not monitor other employees; that they were written up and reprimanded for conduct that Glow Networks ignored in other employees; and, that they did not receive promotions despite recommendations from their managers, and that the promotions went to non-Africans and non-African Americans. The Yarbrough Plaintiffs included white managers of the African and African American employees who reported the alleged discrimination to management. The African and African American plaintiffs also asserted retaliation. Some of the employees were terminated, and others resigned, alleging a constructive discharge. Plaintiffs alleged one count of violation of Section 1981. The case was tried by a jury from February 7, 2022 through February 18, 2022, when the jury returned a verdict. For each of the ten plaintiffs, the jury awarded $2 Million in past pain and suffering damages; $1 Million in future pain and suffering; and $4 Million in punitive damages, resulting in a $70 Million verdict. On April 6, 2022, Glow Networks stated in a Response to plaintiffs’ Motion to Enter Judgment that it intends to file post-trial motions for judgment as a matter of law and for a new trial.

Courts generally analyze claims under Section 1981 and Title VII in the same manner, using the burden-shifting framework set out in McDonnell Douglas Corp. v. Green, 411 U.S. 792 (1973). Castleberry v. STI Group, 863 F.2d 259, 263 (3d Cir. 2017). While both statutes prohibit discrimination on the basis of race, Section 1981 contains no damages cap. The most a plaintiff can recover in “non-economic” compensatory and punitive damages in a Title VII is $300,000.00. 42 U.S.C. § 1981a(b). The complaint in the Yarbrough case does not allege Glow Networks’ number of employees, but assuming the maximum would apply, the damages in the case would have been limited to $3 Million, instead of the $70 Million alleged. This difference alone requires race discrimination plaintiffs to consider asserting claims under Section 1981.

But there are other differences to consider. While Title VII prohibits “disparate impact” discrimination, Section 1981 does not. If the Yarbrough Plaintiffs’ claim was that a particular policy of Glow Networks that was neutral on its face had a disparate impact on African or African American employees, that claim would fail under Section 1981, which prohibits “intentional” discrimination.” To assert a claim under Section 1981, plaintiffs need not file a complaint with the Equal Employment Opportunity Commission (“EEOC”). The statute of limitations for a Section 1981 claim is four years. And, of course, Section 1981 only applies to race or ethnicity, while Title VII applies to a wider range of protected classes. Finally, a plaintiff cannot assert a Section 1981 claim even if the employer has fewer than fifteen employees, as is required to state a Title VII claim.

Yarbrough represents a lesson in choosing the proper cause of action in a race discrimination case. The longer statute of limitations and the ability to proceed directly to court without filing a claim with the EEOC are attractive elements, but such a plaintiff will give up disparate impact claims. Under 42 U.S.C. § 1981a(a), compensatory and punitive damages are not available for disparate impact claims. For such cases, a plaintiff could carefully plead both disparate impact claims under Title VII and intentional discrimination claims under Section 1981. The Yarbrough Plaintiffs chose to proceed under Section 1981 alone, allowing them to avoid statutory damages caps, or any argument that Title VII, rather than Section 1981, applied to their claims.
There are lessons for employers as well. Although the Title VII statute of limitations for filing with the EEOC may have passed, a tardy plaintiff may still have a remedy under Section 1981. Further, while there are technical and substantive evidentiary burdens for plaintiffs in race discrimination cases, there are cases where the level of conduct and the employer’s refusal to address it will outrage a jury. The Yarbrough plaintiffs alleged a pattern of continued conduct and retaliation, even after complaints from employees and their managers, that clearly impacted the jury’s assessment of damages. Disregard of employee complaints is a recipe for a bad outcome, even where the disregard was not intentional. Retaliation cases continue to be the most frequently asserted cases before the EEOC, and are available even if the discrimination claims fail as a matter of law. Employers must ensure meaningful complaint and remediation procedures, and that such complaints are taken seriously. Employers should conduct investigations in a professional manner, led by an uninterested party. Plaintiffs’ response to summary judgment indicates that a human resources manager at Glow Networks claimed to have investigated the claims “internally” but that no details were provided. One can imagine a different outcome of this case if Glow Networks had conducted an investigation and documented the results.

The result in Yarbrough v. Glow Networks is instructive for plaintiffs and employers alike. For plaintiffs, the choice of remedy can have a powerful impact on the outcome of a case. The verdict is likewise a reminder that an employer cannot just rely on short statutes of limitations and damages caps to limit exposure, and that the best course is to establish and maintain a meaningful complaint and remediation procedure.

Patricia Collins is a Partner and Employment Law Chair with Antheil Maslow & MacMinn, LLP, based in Doylestown, PA. Her practice focuses primarily on employment, commercial litigation and health care law. Patricia Collins can be contacted at 215.230.7500 ext. 126.

Last modified on Wednesday, August 03 2022 19:15
Patricia Collins

Patricia Collins

Patty has been practicing law since 1996 in the areas of Employment Law, Health Care and Litigation, with extensive experience in advising employers and health care providers as well as complex litigation in federal and state courts. Patty’s knowledge of employment law includes the Employee Retirement Income Security Act; federal and state employment discrimination laws, and employment contracts and wage claims.

To view Patricia Collins' full profile, click here.

Leave a comment

Blogger Bios

  • Alan Wandalowski Alan Wandalowski
    Alan concentrates his practice in Estate Planning, Estate Administration, Elder Law, Estate…
  • Bill MacMinn Bill MacMinn
    Bill concentrates his practice in the area of litigation, including Commercial Litigation,…
  • Christopher D. Wagner Christopher D. Wagner
    Christopher Wagner is an experienced and results-driven business law attorney with a comprehensive understanding…
  • Elaine T. Yandrisevits Elaine T. Yandrisevits
    As an estate planning attorney, Elaine Yandrisevits is committed to guiding individuals…
  • Elizabeth J. Fineman Elizabeth J. Fineman
    Elizabeth Fineman concentrates her practice on domestic relations matters and handles a…
  • Gabriel Montemuro Gabriel Montemuro
    Gabe’s practice focuses on litigation, including commercial litigation, personal injury, estate and…
  • Jennifer Dickerson Jennifer Dickerson
    Jennifer Dickerson is committed to a career focused on helping individuals and…
  • Jessica A. Pritchard Jessica A. Pritchard
    Jessica A. Pritchard, focuses her practice exclusively in the area of family…
  • Joanne Murray Joanne Murray
    Joanne concentrates her practice in the areas of Business Law, Business Transactions,…
  • Lisa A. Bothwell Lisa A. Bothwell
    Lisa Bothwell counsels corporate/business clients on the formation, operation, acquisition, and sale…
  • Lynelle Gleason Lynelle Gleason
    Lynelle A. Gleason has spent her legal career in Bucks County, representing…
  • Megan Weiler Megan Weiler
    Megan Weiler is a skilled advocate dedicated to guiding clients and their…
  • Melanie J. Wender Melanie J. Wender
    Melanie J. Wender is a dedicated and supportive advocate for individuals and families…
  • Michael Klimpl Michael Klimpl
    Michael’s practice areas include Real Estate, Municipal Law, Zoning and Land Use, Employment…
  • Michael W. Mills Michael W. Mills
    Mike is devoted to helping businesses build value and improve working capital,…
  • Patricia Collins Patricia Collins
    Patty has been practicing law since 1996 in the areas of Employment…
  • Peter J. Smith Peter J. Smith
    Pete is a business lawyer and trusted partner to his corporate clients…
  • Stephanie M. Shortall Stephanie M. Shortall
    Throughout her career, Stephanie has developed a practice focused on advising closely…
  • Susan Maslow Susan Maslow
    Sue concentrates her practice primarily in general corporate transactional work and finance…
  • Thomas P. Donnelly Thomas P. Donnelly
    Tom’s practice focuses on commercial litigation and transactions. In litigation, Tom represents…