F I L E D United States Court of Appeals Tenth Circuit UNITED STATES CO URT O F APPEALS January 25, 2007 FO R TH E TENTH CIRCUIT Elisabeth A. Shumaker Clerk of Court
JA M ES H A RD M A N ,
Plaintiff-Appellant, No. 05-3347 v. (D.C. No. 02-CV-2291-KHV) (D . Kan.) AUTOZONE, IN C.,
Defendant-Appellee.
OR D ER AND JUDGM ENT *
Before T YM KOV IC H, A ND ER SO N, and BALDOCK , Circuit Judges.
Plaintiff-appellant James H ardman, an African-American and a former parts
sales manager for defendant-appellee AutoZone, Inc., sued AutoZone claiming
racial harassment, discrimination, and retaliation in violation of Title VII,
42 U.S.C. §§ 2000e to 2000e-17. Following a jury verdict in M r. Hardman’s
favor on the racial harassment claim, the district court determined that it had
* After examining the briefs and appellate record, this panel has determined unanimously that oral argument would not materially assist the determination of this appeal. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is therefore ordered submitted without oral argument. This order and judgment is not binding precedent except under the doctrines of law of the case, res judicata and collateral estoppel. It may be cited, however, for its persuasive value consistent with Fed. R. App. P. 32.1 and 10th Cir. R. 32.1. given an erroneous punitive-damage jury instruction. Consequently, the court
ordered a new trial on the harassment claim and ordered that the issues of
damages and liability regarding that claim would both be retried because they
were intertwined. A second jury found AutoZone not liable for harassment.
The new trial was based on the district court’s determination that AutoZone
was prejudiced because the punitive damages instruction presented to the first
jury failed to incorporate AutoZone’s “Kolstad defense.” In Kolstad v. American
Dental Ass’n, the Supreme Court recognized that punitive damages may be
awarded for a Title VII violation “if the complaining party demonstrates that the
respondent engaged in a discriminatory practice or discriminatory practices with
malice or with reckless indifference to the federally protected rights of an
aggrieved individual.” 527 U.S. 526, 534 (1999) (quotation omitted). The Court
held, however, that an employer may not be held vicariously liable for punitive
damages “for the discriminatory employment decisions of managerial agents
where these decisions are contrary to the employer’s good-faith efforts to comply
with Title VII.” 1 Id. at 545 (quotation omitted).
1 This exception to vicarious liability has come to be known as the “good faith” or “Kolstad” defense to punitive damages. W e shall continue to use these terms below, but recognize that:
[w]e have not yet decided whether this so-called ‘defense’ represents an affirmative defense on which the defendant bears the burden of proof or whether the plaintiff must disprove the defendant’s good faith compliance with Title VII. A number of other courts have (continued...)
-2- In the instant case, the district court held that the punitive damage
instruction presented to the first jury “did not adequately explain that as to
vicarious liability, any conduct by defendant’s supervisor that was inconsistent
with its good faith policy to comply with Title VII should not be considered to
constitute conduct of the corporation.” A plt. App. at 430. Specifically, the court
held that to the extent that the jury had found AutoZone vicariously liable for the
actions of Troy Raber, the assistant manager at the AutoZone where M r. Hardman
worked and M r. Hardman’s chief harasser, the jury should have been instructed
that it “could not consider malicious or reckless conduct by Raber which was
inconsistent with [AutoZone’s] good faith efforts to comply with Title VII.” Id.
at 431.
On appeal, M r. Hardman claims that the district court first erred by denying
his motion for partial summary judgment before the first trial. He also alleges
four errors concerning the district court’s grant of a full retrial: (A) AutoZone’s
anti-discrimination policy was not sufficient to merit a Kolstad defense; (B) a
Kolstad defense was precluded because M r. Raber was designated to accept
discrimination complaints; (C) any instructional error was harmless; and (D) even
1 (...continued) determined that the defense is an affirmative one and place the burden to establish it on the defendant.
M cInnis v. Fairfield Communities, Inc., 458 F.3d 1129, 1137 n.3 (10th Cir. 2006) (quotations omitted). W e need not resolve this issue because our result would be the same under either standard.
-3- if prejudicial error occurred, a full retrial was not required. M r. Hardman also
asserts that the district court erred following the second trail by (A) not granting
his motion for a new trial, and (B) not granting him attorneys fees. Our appellate
jurisdiction to review final district court orders arises under 28 U.S.C. § 1291.
For the reasons set forth below, we affirm.
I.
M r. Hardman alleged that M r. Raber, parts sales manager M ike M iller, and
counter salesman M ike W ilson harassed him over a period of several months.
Among other complaints, M r. Hardman alleged that they called him “nigger” and
other derogatory names; that minority customers had been mistreated; that he had
been treated less favorably than other employees; that M r. Raber had physically
threatened him; that M r. M iller had jumped out at him from behind an aisle with a
paper bag over his head, pretended to be a Ku Klux Klan member, and said, “hey
nigger”; and that he had found a noose and a picture of a man hanging from a
rope near his mailbox. He further alleged that the store manager did not respond
to his complaints regarding these and other incidents, and told him to stop
complaining. Nearly all of M r. Hardman’s allegations were denied by the other
employees.
After an investigation, AutoZone fired M r. W ilson, Aplt. App. at 716, after
determining that he had said “what’s up, my nigger?” to M r. H ardman, id. at 633,
-4- 716. 2 M r. M iller was given serious corrective action reviews for failing to report
overhearing M r. W ilson’s statement, and for admitting to putting a brown paper
bag over his head to scare another employee. M r. Raber and M r. Hardman were
each given corrective actions for arguing with each other in front of employees
and customers and M r. Raber was transferred to a different store. M r. Hardman
alleged that the investigation was a sham and the corrective action was
inadequate.
II.
Before turning to M r. Hardman’s arguments regarding the grant of a new
trial, we first decline to review his argument that the district court erred when it
failed to grant his motion for summary judgment as to AutoZone’s affirmative
defense under Faragher v. City of Boca Raton, 524 U.S. 775 (1998), prior to the
first trial. “[T]his court has held that the denial of summary judgment based on
factual disputes is not properly reviewable on an appeal from a final judgment
entered after trial.” Haberman v. The Hartford Ins. Group, 443 F.3d 1257, 1264
(10th Cir. 2006). Under Faragher, where no tangible employment action is taken,
an employer is not vicariously liable for a hostile w ork environment if it
reasonably tried to prevent and correct harassing behavior and the plaintiff
unreasonably failed to avail himself of preventative or corrective opportunities
2 M r. Hardman testified that M r. W ilson was quoting a line from a movie in an attempt at humor and that he found it offensive. Aplt. App. at 633.
-5- provided by the employer. Faragher, 524 U.S. at 807. Here, M r. Hardman relied
on his own deposition and affidavit in arguing that the evidence showed that
AutoZone could not prove its Faragher affirmative defense. AutoZone offered
the affidavits of four of its employees to dispute M r. Hardman’s description of the
evidence. The district court denied summary judgment based on this factual
dispute, holding: “A lthough [M r. Hardman] has stated a version of the facts
under which he might prevail, a reasonable jury could find otherwise under
[AutoZone’s] version of the facts”; and “[a] jury will have to weigh the relative
credibility of the witnesses in order to determine whether [AutoZone] permitted a
racially hostile work environment.” A plt. App. at 170. Thus, because summary
judgment was denied based on a factual dispute, we do not review this issue and
turn to the district court’s order of a full retrial.
III.
In determining that a full retrial was required, the district court held that
Kolstad was violated because the punitive damages instruction failed to inform
the jury that to the extent that it found AutoZone vicariously liable for the actions
of M r. Raber, it could not consider any malicious or reckless conduct by
M r. Raber that was inconsistent with AutoZone’s good faith efforts to comply
with Title VII. The decision to grant a motion for new trial is committed to the
trial court’s sound discretion. Unit Drilling Co. v. Enron Oil & Gas Co.,
108 F.3d 1186, 1193 (10th Cir. 1997). “In reviewing a court’s determination for
-6- abuse of discretion, we will not disturb the determination absent a distinct
showing it was based on a clearly erroneous finding of fact or an erroneous
conclusion of law or manifests a clear error of judgment.” Id. at 1194 (quotation
omitted).
A.
M r. Hardman first argues that AutoZone’s anti-discrimination policy was
not sufficient to merit a Kolstad defense because (1) its policy did not have a
non-retaliation provision and failed to specifically address racial harassment, and
(2) A utoZone did not make a good faith effort to enforce its policy because it
took no corrective action and its harassment investigation was a “sham.” A plt.
Br. at 7.
Under federal law, an instruction is properly given if supported by competent evidence; only where there is sufficient evidence to support an issue or theory is the party offering an instruction entitled to have the instruction given. The evidence necessary to justify an instruction must be more than conjecture and speculation.
Brownlow v. Aman, 740 F.2d 1476, 1490 (10th Cir. 1984) (citations omitted).
“To avail itself of Kolstad’s good-faith-compliance standard, an employer must at
least 1) adopt antidiscrimination policies; 2) make a good faith effort to educate
its employees about these policies and the statutory prohibitions; and 3) make
good faith efforts to enforce an antidiscrimination policy.” M cInnis, 458 F.3d at
1138 (quotations omitted).
-7- 1.
As to M r. Hardman’s claim that AutoZone did not adopt sufficient
anti-discrimination policies, we note that the AutoZone Handbook containing
AutoZone’s employment policies was entered as evidence at the first trial. These
policies include an “[e]qual employment opportunity commitment” that states that
“there is equal opportunity for all AutoZoners without regard to race” and
instructs that the policy “pertains to recruiting, hiring, training, promotions,
compensation, benefits, transfers, education and all other aspects of employment
with the company.” Aplt. App. at 978. There is also a “[f]air treatment” policy
which informs the employee that “AutoZone forbids any form of retaliation
against you if you choose to use AutoZone’s problem-solving procedure or if you
file a charge of discrimination with any public agency or legal system.” Id. at
979. Finally, there is a policy directly regarding “[h]arassment” which states
among other things that AutoZone “is committed to having a cooperative and
harassment-free work environment” and instructs that a harassed employee should
“tell [his or her] manager at once,” may also “report the situation directly to [the
employee’s] area advisor,” or may “contact the vice president of Human
Resources, the director of AutoZoner Services or the AutoZoner Relations
manager” at a given toll-free number. Id. at 979-80. The policy also provides
that employees that engage in harassment “will be subject to corrective action, up
to and including termination.” Id. at 980. Accordingly, AutoZone presented
-8- ample evidence that it adopted sufficient anti-discrimination policies to entitle it
to a Kolstad instruction.
2.
Similarly, AutoZone presented ample evidence that it made good faith
efforts to enforce its anti-discrimination policies. It investigated M r. Hardman’s
claims, interviewed all of the employees, and took the corrective action described
above. The district manager testified that when he received M r. Hardman’s
formal complaint of harassment “it got escalated directly up,” that “AutoZone was
very, very strict on the policy,” that “the human resources [came] in, they [took]
statements from every employee in the store about what exactly happened,” and
that “there was an employee that lost his job out of it.” Aplt. App. at 662. The
district manager further testified that there was subsequently a store meeting
where the employees went through AutoZone’s diversity training again and all the
employees had to re-sign the company policy. Id. at 662-63. Further, the
regional human resources manager for AutoZone testified that the AutoZone
hotline is monitored nine hours a day M onday through Friday and that there is an
answering system the remainder of the week. He also testified that when he
received a harassment complaint he was required by company policy “to contact
the store and/or the complainant within 24 hours.” Id. at 705-06. Accordingly,
we hold that AutoZone presented enough enforcement evidence to entitle it to a
Kolstad instruction.
-9- B.
M r. Hardman next argues that ordering a new trial was error because the
Kolstad instruction the court determined should have been given was precluded
by the scope of M r. Raber’s duties as assistant manager. M r. Hardman argues
that M r. Raber was charged with taking and enforcing harassment complaints and
that under Deters v. Equifax Credit Information Services, Inc., 202 F.3d 1262
(10th Cir. 2000), an employer can not “avail itself of Kolstad’s ‘good faith’
defense [when] the very person the company entrusted to act on complaints of
harassment failed to do so.” Aplt. Br. at 12-13. M r. Hardman’s argument
conflates the concepts of direct liability, at issue in Deters, and vicarious liability,
of concern when considering the propriety of the district court’s order of a new
trial.
“Although Title VII does not explicitly mention hostile w ork environment,
a victim of a racially hostile work environment may nevertheless bring a cause of
action under Title VII.” Ford v. West, 222 F.3d 767, 775 (10th Cir. 2000). An
employer may be either directly or vicariously liable for a hostile work
environment. Baty v. Willamette Indus., Inc., 172 F.3d 1232, 1241 (10th Cir.
1999), overruled on other grounds by Nat’l R.R. Passenger Corp. v. M organ,
536 U.S. 101 (2002).
O n one hand, “D irect liability . . . is premised on a party’s own
malfeasance.” M cInnis, 458 F.3d at 1137 n.4. “An employer is directly liable for
-10- a hostile work environment created by any employee if the employer’s negligence
causes the actionable work environment. An employer is negligent with respect
to [racial] harassment if it knew or should have known about the conduct and
failed to stop it.” Baty, 172 F.3d at 1241-42 (quotation omitted). On the other
hand, vicarious liability is not premised on the employer’s negligence or
malfeasance. “A n employer is vicariously (or indirectly) liable for compensatory
damages w hen ‘a supervisor with immediate (or successively higher) authority
over the employee’ perpetrates the Title VII violation.” M cInnis, 458 F.3d at
1136 (quoting Faragher, 524 U.S. at 807, and Burlington Indus., Inc. v. Ellerth,
524 U.S. 742, 765 (1998)).
In Deters, we held that it was proper to hold Equifax directly liable for the
failure of the manager in question to report the alleged harassment because
Equifax had selected that manager to be the final representative at that particular
branch to implement harassment policy. 202 F.3d at 1271. Thus, Equifax was
negligent and directly liable and the Kolstad good-faith defense to vicarious
liability did not apply. Here, it was impossible to tell whether the first jury found
AutoZone directly or vicariously liable. The district court ordered a new trial
because to the extent the jury found AutoZone vicariously liable based on
M r. Raber’s conduct, the punitive damages instruction was erroneous. Any
argument that the jury in the first trial could also have held AutoZone directly
liable for M r. Raber’s actions is therefore irrelevant to the court’s decision to
-11- grant a new trial. Consequently, our holding in Deters does not support
M r. Hardman’s position.
C.
M r. Hardman next argues that a new trial was not warranted because any
error in not giving a Kolstad instruction was harmless. He contends that the jury
looked at the “same factors” that “would have been looked at even with the good
faith language.” A plt. Br. at 14. “A n instructional error requires reversal only if
the error is determined to have been prejudicial, based on a review of the record
as a whole.” Bangert Bros. Constr. Co. v. Kiewit W. Co., 310 F.3d 1278, 1290
(10th Cir. 2002) (quotation omitted); see Royal M accabees Life Ins. Co. v.
Choren, 393 F.3d 1175, 1179 (10th Cir. 2005) (holding that “[o]ur inquiry . . .
embraces a de novo review of the instructions in their entirety”). “W here an
appellate court determines that the district court has given a legally erroneous
jury instruction, the judgment must be reversed if the jury might have based its
verdict on the erroneously given instruction. Under our precedents, reversal is
necessary even if that possibility is very unlikely.” Wankier v. Crown Equip.
Corp., 353 F.3d 862, 867 (10th Cir. 2003) (quotations, citations, and alteration
omitted); see Royal M accabees Life Ins. Co., 393 F.3d at 1179 (holding “w e must
reverse if we find that the jury might have based its decision on the [legally
erroneous] instruction”); but see U.S. Indus., Inc. v. Touche Ross & Co., 854 F.2d
1223, 1252-53 (10th Cir. 1988) (footnotes omitted), implied overruling on other
-12- grounds recognized by Anixter v. Home-Stake Prod. Co., 77 F.3d 1215, 1231
(10th Cir. 1996) (holding “[w]here the verdict more probably than not was
untainted by the error, the error is harmless and a new trial is not required).
This court has previously “noted its own conflicting precedent regarding
the precise standard for reversal due to erroneous instructions.” Koch v. Koch
Indus., Inc., 203 F.3d 1202, 1233 (10th Cir. 2000). W e need not decide which of
these competing standards controls, however, because our decision would be the
same under either standard. M r. Hardman argues that even if the first jury had
been instructed to disregard malicious or reckless conduct by M r. Raber that was
inconsistent with AutoZone’s good faith efforts to comply with Title VII, it would
necessarily have found no good faith by AutoZone. He argues that this
conclusion is self-evident because the jury was already required by the punitive
damages instruction “to look at ‘the impact or severity of defendant’s actions[,]’
‘the amount of time the defendant conducted itself in this manner[,]’ [and ‘]the
attitudes and action of defendant’s top management after the misconduct was
discovered.’” Aplt. Br. at 15 (quoting instruction). M r. Hardman reasons that
because the jury awarded punitive damages after consideration of those factors, it
could not have found that AutoZone made good faith efforts to comply with Title
VII.
M r. Hardman puts the cart before the horse. The relevant question is
whether the jury should have been allowed to consider M r. Raber as part of the
-13- “defendant,” when considering “defendant’s” actions and conduct. The fact that
the jury might have awarded punitive damages based on vicarious liability when
allowed to consider M r. Raber’s actions does not mean that it necessarily would
have found that AutoZone had not made a good faith effort as a company to
comply with Title VII. Because the jury was not given the chance to make that
determination, the district court did not err in concluding that a new trial was
necessary. 3
D.
M r. Hardman next argues that even if the erroneous jury instruction was
prejudicial, the court should not have ordered a full retrial. He asserts that the
liability issue should not have been retried.
One of the reasons that a court may order a full retrial is if “two issues are
inextricably intertwined.” M orrison Knudsen Corp. v. Fireman’s Fund Ins. Co.,
175 F.3d 1221, 1256 (10th Cir. 1999). In such a situation, “[i]f a district court
3 M r. Hardman also briefly argues that “the fact that the jury awarded no compensatory damages to Hardman shows that Raber’s actions were not considered as the jury found that Hardman was not damaged by Raber, but was discriminated against.” Aplt. Br. at 16. W hen considering the Kolstad defense, we are concerned only with the vicarious liability theory, which presumes that no tangible employment action was taken, Faragher, 524 U.S. at 807. Compensatory damages, however, may be awarded for “‘emotional pain, suffering, inconvenience, mental anguish, loss of enjoyment of life, and other non-pecuniary losses.’” Baty, 172 F.3d at 1243 (quoting 42 U.S.C. § 1981a(b)(3)). The fact that the first jury awarded $1.00 for emotional distress, $1.00 for lost wages and benefits, and $87,500.00 in punitive damages may be unusual but it does not provide any insight into whether it relied on the vicarious liability theory or considered M r. Raber’s conduct in aw arding the punitive damages.
-14- were to retry only one of two such intertwined issues to a second jury, while
maintaining the vitality of the first jury’s findings on the other issue, it would
cause confusion and uncertainty and, thus, an unfair trial.” Id.
The district court found that this was just such a case because alternative
theories of liability were submitted to the first jury and a second jury tasked only
with having to determine a new punitive damage award would unfairly be
required to “speculate as to w hat AutoZone conduct formed the basis of the first
jury’s verdict of liability and award of nominal damages.” Aplt. App. at 433. W e
agree with the district court’s analysis and affirm on this point for the reasons
given by the district court in ordering a full retrial.
IV.
W e turn next to M r. Hardman’s claims that the district court erred
following the second trial by (A) not granting him a new trial, and (B) not
granting him attorneys fees.
M r. Hardman argues that the direct liability jury instruction at the second
trial was erroneous because “it stated that Raber’s conduct could not be
considered on the direct theory of liability.” A plt. Br. at 18. The direct liability
instruction provided that liability should be found if “[s]upervisory or
management employees of AutoZone, other than Troy Raber, knew or should have
know n of the harassment by Troy Raber and/or other employees” and that those
-15- employees “did not take prompt, appropriate remedial action to end such
harassment.” A plt. App. at 482. M r. Hardman also claims that the district court
erred in submitting AutoZone’s Faragher affirmative defense to the jury because
“the Faragher defense . . . was not available to defendant as defendant did not
have a policy.” Aplt. Br. at 18.
W e cannot adequately address these points and must affirm. The appendix
provided to us by M r. Hardman includes the transcript and exhibits from the first
trial. The appendix only includes a transcript of the instruction conference from
the second trial. It is therefore impossible to tell what evidence was entered at
the second trial regarding the contents of AutoZone’s anti-discrimination policy
or M r. R aber’s actions and position for purposes of the direct liability claim. See
Scott v. Hern, 216 F.3d 897, 912 (10th Cir. 2000) (holding that we must affirm
when the record is insufficient to permit review of a claim of error).
B.
Finally, M r. Hardman complains without authority that the district court
should have awarded him his attorney’s fees because the first jury found in his
favor on the liability issue as to harassment. Under 42 U.S.C. § 2000e-5(k),
the court may allow a “prevailing party” to recover a reasonable attorney’s fee.
The Supreme Court has held that a “prevailing party” is a party who has obtained
a judgment on the merits, a consent decree, or some other settlement materially
altering the legal relationship of the parties. Buckhannon Bd. & Care Home, Inc.
-16- v. W. Va. Dep’t of Health & Hum an Res., 532 U.S. 598, 602-04 (2001). Said
another way, “a ‘prevailing party’ is one who has been awarded some relief by the
court.” Id. at 603. Here, while the first jury found for M r. Hardman on his
harassment claim, that judgment never had a chance to alter the legal relationship
of the parties. A second trial was ordered regarding the harassment claim and
AutoZone prevailed on that claim at the second trial. Accordingly, M r. Hardman
was awarded no relief by the court and was therefore not a “prevailing party.”
The district court properly denied M r. H ardman’s motion for attorney’s fees.
Aplt. App. at 772-73.
V.
The district court’s judgment is AFFIRMED.
Entered for the Court
Stephen H. Anderson Circuit Judge
-17-