The opinion of the court was delivered by: Warren K. Urbom, United States Senior District Judge
MEMORANDUM AND ORDER ON DEFENDANT'S MOTION
FOR RECONSIDERATION OF THIS COURT'S FEBRUARY
14, 2003 RULING REGARDING BIFURCATED TRIAL PROCEDURES
This is a case brought under the pattern-or-practice provisions of Title VII by EEOC on behalf of some 101 women for alleged sexual harassment at Dial Corporation's Aurora, Illinois, manufacturing plant.*fn1
Each woman has an individual claim for her compensatory and punitive damages, and declaratory and injunctive relief are sought. The class action Rule 23 of the Federal Rules of Civil Procedure is not involved. Because both pattern-and-practice assertions and individual claims are pleaded, I have previously indicated use of a phased approach in determining compensatory and punitive damages.
In responding to a motion by the defendant for clarification of my ordering a "bifurcated trial" I cited the sources of my thinking as follows:
My primary guidance in this description of how I see
the trial in the interpreting of 42 U.S.C. § 1981a
(b)(1) comes from General Telephone Company of the
Northwest, Inc. v. Equal Employment Opportunity
Commission, 446 U.S. 318, 100 S.Ct. 1698 (1980); BMW
of North America Inc., v. Gore, 517 U.S. 559, 116
S.Ct. 1589 (1996), International Brotherhood of
Teamsters v. United States, 431 U.S. 324, 97 S.Ct.
1843 (1977); International Brotherhood of Electrical
Workers v. Foust, 442 U.S. 42, 99 S.Ct. 2121 (1979);
Kolstad v. American Dental Association, 527 U.S. 526,
119 S.Ct. 2118 (1999); Jefferson v. Ingersoll
International Inc., 195 F.3d 894 (7th Cir. 1999);
Hennessy v. Penril Datacomm Networks, 69 F.3d 1344
(7th Cir. 1995); Shea v. Galaxie Lumber &
Construction Co., Ltd., 152 F.3d 729 (7th Cir. 1998);
Timm v. Progressive Steel Treating, Inc., 137 F.3d 1008
(7th Cir. 1998); Segar v. Smith, 738 F.2d 1249 (D.C.
1984); Equal Employment Opportunity Commission v.
Indiana Bell Telephone Company, 256 F.3d 516 (7th
Cir. 2002); United States Equal Employment Commission
v. Foster Wheeler Constructors, Inc., 1999 WL 528200
(N.D.Ill.); and the dissenting opinion of Judge
Reavley in Smith v. Texaco, Inc., 263 F.3d 394
I concluded that the overall scheme for disposition would comprise a configuration of four phases: In Phase I whether a pattern or practice existed and, if so, when; in Phase II whether any such pattern or practice was done with malice or reckless indifference, and if so, an amount, if any, of punitive damages to the class; in Phase III compensatory damages in the individual cases; and in Phase IV an apportionment of any punitive damages.
Dial now asks for reconsideration, based upon the Supreme Court's April 7, 2003, decision in State Farm Mutual Automobile Ins. Co. v. Campbell, No. 01-1289, 2003 WL 1791206 (U.S. April 7, 2003), and the Ninth Circuit's reversal in Beck v. Boeing Co., No. 02-35140, 2003 WL 683797 (9th Cir. February 25, 2003). Dial argues that the State Farm case precludes the option of allowing a determination of punitive damages before compensatory damages have been decided. I have carefully reviewed those two cases and the parties' briefs, and conclude that there will be some change in what I previously had directed, but not to the extent that Dial asks.
The specific problem in this pattern-or-practice case arises from the impracticality of using a single jury for the determination of the existence of a pattern or practice, on the one hand, and the awarding of individual damages to individual claimants, on the other. The combination of Phase I and Phase II is projected to take six or seven weeks. While it is believed that Phase III, in awarding compensatory damages to individuals, may be done in relatively small groups of claimants, several juries will probably be required and the broad scope of any pattern or practice will be much narrower in the Phase III trials. For that reason, I think a determination of an amount of punitive damages for all the persons, as a group, who ultimately are found to be aggrieved by the pattern or practice should be decided by the jury in Phase I and II who has heard all the evidence regarding the nature and scope of the pattern or practice. No jury deciding compensatory damages of an individual or small group of individuals can have the same insight on what will be needed to deter the pattern or practice on a plant-wide basis or for punishment as will the Phase I and II jury. On the other hand, the distribution of those punitive damages needs to be proportionate to the harm done to persons aggrieved, and that can best be done after a determination has been made by the Phase III juries of the compensation to be allowed to each individual. I see no way reasonably to get that accomplished without having both the insight of the Phase I and Phase II jury and the insight of the Phase III juries, as conjoined and distributed proportionately by the trial judge.
At the outset, let me note that the Supreme Court in the State Farm case does not say that a Phase I jury cannot return a verdict for punitive damages before compensatory damages have been awarded. Guideposts were laid down by the Court for the imposition of punitive damages to "ensure that the measure of punishment is both reasonable and proportionate to the amount of harm to the plaintiff and to the general damages recovered." Id. at 12. The technique or procedure for reaching the goal of reasonableness and proportionality was not vice-gripped in a specific mold. That "usually" compensatory and punitive damages are "awarded at the same time by the same decision-maker" Id. at 6, does not mean that always that must be the case.
I think the emphasis of the Supreme Court is that care must be taken in the procedure used at a trial to see that the ultimate award reflects reason, rather than virtually unbridled discretion of a jury. The Court took pains to emphasize the judges' role — both the trial judge and the appellate judges — in deciding the ultimate amount that is to be awarded by way of punitive damages. The plan for the upcoming trial which I now articulate with further refinement is drawn to take advantage of the jury's insights, as well as the tempering hand of the judge.
First, Phase I should result in a finding by the jury of whether and when a pattern or practice of tolerating sexual harassment existed. Because evidence to support the claim of such a pattern or practice necessarily will include some episodes that may tend to show whether the pattern or practice was engaged in "with malice or reckless indifference to the federally protected rights" of aggrieved persons of the class, such state-of-the-mind evidence may be received at Phase I and the malice-or-reckless-indifference issue should be decided by the same jury as decides the pattern-or-practice issue. There may be some evidence that is applicable only to the issue of pattern or practice and not at all to the issue of malice or reckless indifference; such evidence, of course, should be presented in Phase I. There may be some evidence that pertains solely to the malice-or-reckless-indifference issue and that evidence should be retained until Phase II.
Phase II, if Phase I ends in the plaintiff's favor, would end with a verdict of whether the pattern or practice was done with malice or reckless indifference to the federally protected rights of the class*fn2 members, including an amount to be awarded to the aggrieved persons of the class as punitive damages. That will allow the jury to take into account in Phase II the evidence that pertains to the issue of pattern or practice, as well as other evidence that pertains only to the malice-or-reckless-indifference issue.
In Phase II, the jury may be told that the identity of persons who should have compensation will not be decided until a future jury decides it. The jury in Phase II should not know how many women have filed claims and should not know that some of them have signed releases or that the validity of releases is being challenged, but will be instructed to presume that all members of the class who have valid claims have been compensated in full, so the remaining question for this jury is to determine what amount, if any, is needed for purposes of punishment and deterrence of the defendant and others.*fn3 A verdict as to amount should not be sealed.*fn4
Phase III should resolve the issue of compensatory damages, including the subjective feature of the individual claimant, probably requiring the service of more than one jury, if numerous members of the class remain to claim compensatory damages. Each of those juries should also arrive at an amount for punitive damages for each member of the group triable to that jury, if Phase II resulted in a finding by the jury that tolerance of a pattern or practice of sexual harassment was done with malice or reckless indifference. Each jury in Phase III should know:
1. that the Phase II jury decided that the conduct of the
defendant was done with malice or reckless indifference,
if that was the finding, and
2. that the task of the Phase III jury is to decide (A)
whether compensatory damages are warranted for each of
the women in the group triable to that jury, and, if so,
the amount, and (B) if the jury in Phase II found malice
or reckless indifference, whether punitive damages are
needed for punishment and deterrence, and, if so, the
I recognize that this means there may be jury findings of amounts of punitive damages in both Phase II and Phase III. Ultimately, it is the responsibility of the trial judge, as well as the appellate judges, to control punitive damage awards.*fn5
The cases of Cooper Industries, Inc. v. Leatherman Tool Group, Inc., 532 U.S. 424
, 436 (2001); State Farm Mutual Automobile Insurance Company v. Campbell, ___ U.S. ___, 2003 WL 1791206 (2003); and BMW of North America, Inc. v. Gore, 517 U.S. 599 (1996), provide guidelines in that endeavor. An overall award in Phase II will present an amount reflecting the overall reprehensibility, if any, of the defendant's conduct, which is "the most important indicium of the reasonableness of the punitive damages award . . ." Gore, supra, at 575. The amounts in the verdicts in Phase III will reflect more the degree of harm to the particular claimant, thus aiding the judge in Phase IV with respect to proportionality.
Phase IV may consist of the judge's deciding what distribution should be made of punitive damages, guided by both the verdicts in Phase II and Phase III. It seems to me that the verdict in Phase II would be considered a cap, so that the cumulative amounts of the verdicts of Phase III would not be permitted to exceed the amount in the verdict in Phase II.
I understand that an alternative to the plan regarding Phase II could be to allow the jury to know the number of women making claims, as well as the fact of the number of women who have signed releases and that the validity of those releases is being challenged, but has not yet been decided. I prefer the method of the jury's not knowing these features, because they will be tried out in full and reflected in the verdicts in Phase III. The shortcoming of the Phase II jury is that it does not know the validity or specifics of all the individual claims; the shortcoming of the Phase III juries is that they do not know the specifics of the defendant's plant-wide pattern or practice. Receiving verdicts from both should largely offset the ...