New York Court of Appeals Sets Punitive Damages Standard for NYCHRL Claims

Lev Craig

Last week, on November 20, 2017, in Chauca v. Abraham, the New York State Court of Appeals set the standard for punitive damages awards in claims brought under the New York City Human Rights Law (NYCHRL). The New York  Court of Appeals, in keeping with the New York State common law standard, held that the NYCHRL entitles a plaintiff to punitive damages “where the wrongdoer’s actions amount to willful or wanton negligence” or “recklessness” or involve “a conscious disregard of the rights of others or conduct so reckless as to amount to such disregard.”

In 2009, Plaintiff Veronika Chauca became pregnant, took a period of maternity leave from her job as a physical therapy aide, and was terminated after her return from leave. She then filed suit in the U.S. District Court for the Eastern District of New York, bringing sex and pregnancy discrimination claims under Title VII of the Civil Rights Act of 1964 (“Title VII”), the New York State Human Rights Law (NYSHRL), and the NYCHRL.

Chauca prevailed at trial and obtained a total jury award of $60,500, representing economic and emotional distress damages. Chauca then appealed the district court’s denial of a jury instruction on punitive damages to the Second Circuit, arguing that the district court had not properly construed the NYCHRL’s standard for punitive damages. The Second Circuit, finding that the statute and existing case law did not provide sufficient guidance, certified the question to the New York Court of Appeals.

Under Title VII, punitive damages can be awarded where the employer has engaged in intentional discrimination with “malice” or with “reckless indifference to the federally protected rights of an aggrieved individual.” In 2001, the Second Circuit held that the Title VII standard also applied to NYCHRL claims for punitive damages.

But in 2005, the New York City Council passed the Restoration Act, which states that the NYCHRL has a “uniquely broad and remedial purpose” and so should “be construed liberally,” regardless of how similarly-worded state and federal statutes have been construed. Since the passage of the Restoration Act, New York courts have treated NYCHRL claims as independent from NYSHRL and federal claims, generally holding NYCHRL claims to less stringent standards than their state and federal counterparts.

The Restoration Act and the text of the NYCHRL do not specifically address the issue of punitive damages, however, and, until Chauca, no court had explicitly defined the NYCHRL’s standard for punitive damages awards, either. Reviewing Chauca on appeal, the Second Circuit concluded that New York case law did not offer any definitive answers, either, and certified the following question to the New York Court of Appeals: “What is the standard for finding a defendant liable for punitive damages under the New York City Human Rights Law?”

Relying upon the legislative intent of the NYCHRL and the language of the Restoration Act, Chauca argued that punitive damages ought to be recoverable upon any finding of liability whatsoever in NYCHRL cases, in keeping with the NYCHRL’s “broad and remedial purpose,” while defendants argued that NYCHRL punitive damages awards should be subject to the Title VII standard. The New York Court of Appeals rejected both arguments.

The New York Court of Appeals looked to the established common law understanding of the term “punitive damages” in New York State. The court cited its 1990 decision in Home Insurance Co. v. American Home Prods. Corp., which defined the punitive damages standard for torts claims as “conduct having a high degree of moral culpability which manifests a conscious disregard of the rights of others or conduct so reckless as to amount to such disregard.”

Applying this definition, the court found that Chauca’s proposed standard would be inconsistent with the purpose of punitive damages, which “differ conceptually from compensatory damages” and are intended to “represent punishment for wrongful conduct that goes beyond mere negligence.” While the NYCHRL is certainly less strict than federal and state anti-discrimination laws, the court concluded that there must nevertheless be “some heightened standard” for a punitive damages award.

The court also disagreed, however, that NYCHRL punitive damages awards should be subject to the Title VII standard. While the NYCHRL should not be construed so liberally as to allow for an automatic punitive damages award upon any finding of liability, the court held that NYCHRL claims should also not be analyzed identically to Title VII claims and therefore adopted the Home Insurance Co. standard for punitive damages under the NYCHRL.

Unlike the Title VII standard, the Home Insurance Co. standard “requires neither a showing of malice or awareness of the violation of a protected right,” but still requires a defendant’s conduct to meet conditions beyond a finding of liability alone in order to merit an award of punitive damages. Accordingly, the court found that the Home Insurance Co. standard was “the most liberal construction of the [NYCHRL] that is ‘reasonably possible’” and remains in keeping with the purpose of the NYCHRL, while still meeting the basic requirement that there be “some heightened standard” for a punitive damages award.

If you believe that your employer has violated your rights under federal, state, or city employment laws, contact The Harman Firm, LLP.