• San Diego jury’s $185 million punitive damages verdict not the last word Friday, November 21, 2014

    By J.G. Preston

    A San Diego County Superior Court jury did exactly what it set out to do when it returned a $185 million punitive damages verdict Nov. 17 against retail giant AutoZone for blatant employment discrimination: it got your – and the company’s – attention.

    But plaintiff Rosario Juarez and her attorney know AutoZone will never have to pay $185 million as punishment for the way she was treated. AutoZone knows it too, and so does every other business either operating in or considering operating in California. So please, hold off on the moaning about “runaway juries” and outrageous lawsuit verdicts.

    AutoZoneWithout that eye-catching amount, AutoZone’s misdeeds may have gone largely ignored even in San Diego, and certainly never would have reached the worldwide audience that has been drawn to the size of the verdict.

    This is a case where a citizen jury, representing the conscience of San Diego County, came to the unanimous conclusion that AutoZone’s actions deserved far more than a figurative slap on the wrist. The jurors decided a stronger message was warranted after they heard a former district manager testify he was offered a promotion if he fired all the women working at his stores. Even the U-T San Diego editorial board, which attacked the verdict in an editorial, noted there was “compelling, disturbing evidence” that Ms. Juarez was a victim of gender discrimination.

    So the jury did the only thing it could do to show AutoZone’s board of directors how disgusted it was by the company’s conduct: it issued a punitive damages verdict that represents less than two percent of AutoZone’s $9.5 billion in sales in the most recent fiscal year. Investors were so unconcerned about the verdict that AutoZone’s stock price actually went up when the market opened the day after the verdict was announced.

    Nobody at AutoZone is expecting to write a check for $185 million. As Wall Street Journal reporter Jacob Gershman wrote, “The verdict is a good reminder that when juries award blockbuster damages, they’re telling a company that they should fork over that much money. But juries don’t get the final word.”

    Appellate courts have a great deal of discretion to reduce punitive damages awards, after a 2003 ruling by the U.S. Supreme Court that, as a general rule, punitive damages should be no more than nine times the amount of compensatory damages awarded in the case. (Ms. Juarez was awarded nearly $900,000 in compensatory damages for being demoted and later fired after being told she couldn’t perform her store manager duties properly in her “situation” – the “situation” being that she was pregnant. Under the Supreme Court’s formula, punitive damages would be limited to about $8 million, less than five percent of what the jury awarded.)

    This is how is our civil justice system works. Citizen jurors have their say, but under the guidance and oversight of judges trained in the law. AutoZone has the right to appeal the verdict, including the finding that they were at fault in Ms. Juarez’s case, and judges may independently decide to reduce the verdict. Or attorneys for the company and Ms. Juarez may reach a mutually agreeable settlement to end the case. In any event, no one involved expects anything close to $185 million to change hands.

    It makes no sense to talk about about “runaway juries” and “preposterous” damage awards, as the U-T San Diego editorial board did, until the case has resolved. Nor is it right to say this verdict will “further add to California’s reputation as a risky place to do business,” as the U-T San Diego editorial board wrote, when every corporate executive who has a legal department knows this verdict will be reduced.

    Of course, there is one surefire way to avoid the possibility of facing $185 million in punitive damages: don’t treat women the way AutoZone did.

    J.G. Preston is press secretary of Consumer Attorneys of California, an organization of which the lead attorney in Juarez v. AutoZone is a member.

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