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Steak ‘n Shake Sex Harassment Appeal Tests Punitive Damages Curb

June 10, 2021, 10:16 AM

The $50,000 in punitive damages a jury assessed against Steak n’ Shake Inc. for subjecting an Ohio teenager to workplace sexual harassment and awarding her $1,308 in actual damages is valid under federal anti-bias and due process laws, the EEOC will argue to the Sixth Circuit Thursday.

Hannah Corbin’s case “raises two important legal issues,” according to the Equal Employment Opportunity Commission.

The first is whether punitive damages awards below an applicable statutory damages cap set in Title VII of the 1964 Civil Rights Act “necessarily” satisfy constitutional due process concerns, the agency said in an amicus brief backing Corbin.

Four federal appeals courts take the view that “punitive damages awards conferred under” Title VII’s damages provisions “comport with due process,” and the U.S. Court of Appeals for the Sixth Circuit should join them, the EEOC said in its brief and will urge during oral arguments.

Title VII’s damages cap for employers the size of Steak ‘n Shake is $300,000, the EEOC said. The award to Corbin necessarily satisfies due process because it’s less than the cap, which has been in place since 1991, giving the company fair notice of its potential legal exposure for egregious workplace bias, the agency said.

The second issue is whether, if punitive damages below a Title VII cap aren’t per se constitutional, the jury’s Oct. 21, 2019, verdict still met due process parameters, the agency said.

The $50,000 award to Corbin did because the evidence showed the graphic sexual harassment she experienced was reprehensible, according to the EEOC. The 38:1 ratio of actual to punitive damages also isn’t excessive, and the award is less than workers have received in comparable cases, the agency said.

Teens Allegedly Harassed

Corbin sued in 2017 after leaving her server job at a Newark, Ohio, restaurant, where she was hired at age 17. She worked there for just nine months.

She said older male co-workers sexually harassed her, including one who regularly made crude comments about and slapped her buttocks. The company ignored her repeated complaints about the man, who also harassed her 16-year-old friend and co-worker, Corbin said.

The jury found for Corbin on her co-worker sexual harassment claim but rejected her claim of supervisory harassment, and the U.S. District Court for the Southern District of Ohio denied Steak n’ Shake’s post-trial motion to alter or amend the judgment.

The punitive damages award is unconstitutional because it exceeded “to a significant degree” the single-digit ratio referenced in U.S. Supreme Court precedent, according to Steak n’ Shake.

The justices said awards above a single-digit ratio typically won’t comport with due process, and the reprehensibility finding here was based on an incident that didn’t involve Corbin or occur while she was still an employee, the company said in its pre-argument briefing.

An employer’s wealth doesn’t justify otherwise unconstitutional punitive damages awards, and the Title VII caps don’t eliminate the need to perform a due process analysis, it said.

The finding that the award was in line with comparable cases was also unsupported, the company said.

Steak ‘n Shake is also expected to argue that “me too” testimony from Corbin’s 16-year-old friend and co-worker was wrongly admitted at trial, and that the company was wrongly barred from presenting evidence of statements it obtained while investigating the alleged harassment.

It sought admission of the latter evidence to “demonstrate its prompt, appropriate” response once Corbin complained, according to the company.

The trial court’s evidentiary rulings were proper and any error was harmless, Corbin said in her pre-argument briefing.

Further, she will argue on cross-appeal that her retaliation claim should have also gone to the jury and that the trial court abused its discretion in awarding her only $92,978 in attorneys’ fees instead of the $273,681 she requested.

Spitz Law Firm LLC represents Corbin. Ogletree Deakins Nash Smoak & Stewart PC represents Steak ‘n Shake. EEOC attorneys in Washington represent the commission.

The case is Corbin v. Steak ‘N Shake, Inc., 6th Cir., No. 20-03519, oral argument 6/10/21.

To contact the reporter on this story: Patrick Dorrian in Washington at pdorrian@bloomberglaw.com

To contact the editors responsible for this story: Rob Tricchinelli at rtricchinelli@bloomberglaw.com; Patrick L. Gregory at pgregory@bloomberglaw.com; Steven Patrick at spatrick@bloomberglaw.com

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