Filed: Feb. 12, 2010
Latest Update: Mar. 28, 2017
Summary: UNPUBLISHED UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT No. 08-2108 WORLDWIDE NETWORK SERVICES, LLC; WORLDWIDE NETWORK SERVICES, INTERNATIONAL, FZCO, Plaintiffs - Appellees, v. DYNCORP INTERNATIONAL, LLC, Defendant – Appellant. - CHAMBER OF COMMERCE OF THE UNITED STATES OF AMERICA, Amicus Supporting Appellant, LAWYERS’ COMMITTEE FOR CIVIL RIGHTS UNDER LAW; THE NATIONAL URBAN LEAGUE, Amici Supporting Appellees. No. 08-2166 WORLDWIDE NETWORK SERVICES, LLC; WORLDWIDE NETWORK SERVICES, INT
Summary: UNPUBLISHED UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT No. 08-2108 WORLDWIDE NETWORK SERVICES, LLC; WORLDWIDE NETWORK SERVICES, INTERNATIONAL, FZCO, Plaintiffs - Appellees, v. DYNCORP INTERNATIONAL, LLC, Defendant – Appellant. - CHAMBER OF COMMERCE OF THE UNITED STATES OF AMERICA, Amicus Supporting Appellant, LAWYERS’ COMMITTEE FOR CIVIL RIGHTS UNDER LAW; THE NATIONAL URBAN LEAGUE, Amici Supporting Appellees. No. 08-2166 WORLDWIDE NETWORK SERVICES, LLC; WORLDWIDE NETWORK SERVICES, INTE..
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UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 08-2108
WORLDWIDE NETWORK SERVICES, LLC; WORLDWIDE NETWORK SERVICES,
INTERNATIONAL, FZCO,
Plaintiffs - Appellees,
v.
DYNCORP INTERNATIONAL, LLC,
Defendant – Appellant.
------------------------------------
CHAMBER OF COMMERCE OF THE UNITED STATES OF AMERICA,
Amicus Supporting Appellant,
LAWYERS’ COMMITTEE FOR CIVIL RIGHTS UNDER LAW; THE NATIONAL
URBAN LEAGUE,
Amici Supporting Appellees.
No. 08-2166
WORLDWIDE NETWORK SERVICES, LLC; WORLDWIDE NETWORK SERVICES,
INTERNATIONAL, FZCO,
Plaintiffs - Appellants,
v.
DYNCORP INTERNATIONAL, LLC,
Defendant – Appellee.
------------------------------------
CHAMBER OF COMMERCE OF THE UNITED STATES OF AMERICA,
Amicus Supporting Appellee,
LAWYERS’ COMMITTEE FOR CIVIL RIGHTS UNDER LAW; THE NATIONAL
URBAN LEAGUE,
Amici Supporting Appellants.
Appeals from the United States District Court for the Eastern
District of Virginia, at Alexandria. Gerald Bruce Lee, District
Judge. (1:07-cv-00627-GBL-JFA)
Argued: September 22, 2009 Decided: February 12, 2010
Before NIEMEYER and DUNCAN, Circuit Judges, and James P. JONES,
Chief United States District Judge for the Western District of
Virginia, sitting by designation
Affirmed in part and reversed in part by unpublished opinion.
Judge Duncan wrote the majority opinion, in which Judge Niemeyer
concurred as to Part II.D(1)&(2), and in which Judge Jones
concurred as to Parts II.A, II.B, and II.C. Judge Niemeyer
wrote a separate opinion concurring in part and dissenting in
part. Judge Jones wrote a separate opinion concurring in part
and dissenting in part.
ARGUED: Carter Glasgow Phillips, SIDLEY & AUSTIN, LLP,
Washington, D.C., for Dyncorp International, LLC. Patricia Ann
Millett, AKIN, GUMP, STRAUSS, HAUER & FELD, LLP, Washington,
D.C., for Worldwide Network Services, LLC, and Worldwide Network
Services, International, FZCO. ON BRIEF: Eric D. McArthur,
SIDLEY & AUSTIN, LLP, Washington, D.C.; George D. Ruttinger,
Keith J. Harrison, Clifton S. Elgarten, CROWELL & MORING, LLP,
Washington, D.C., for Dyncorp International, LLC. Thomas P.
Goldstein, Anthony T. Pierce, Michele A. Roberts, Merrill C.
Godfrey, Monica P. Sekhon, Won S. Shin, Michael S. Bailey, AKIN,
GUMP, STRAUSS, HAUER & FELD, LLP, Washington, D.C., for
Worldwide Network Services, LLC, and Worldwide Network Services,
2
International, FZCO. Charles P. Roberts, III, CONSTAGY, BROOKS
& SMITH, LLP, Winston-Salem, North Carolina; Robin S. Conrad,
Shane B. Kawka, NATIONAL CHAMBER LITIGATION CENTER, INC.,
Washington, D.C., for Chamber of Commerce of the United States
of America, Amicus Supporting Dyncorp International, LLC.
Bernard J. DiMuro, Jonathan R. Mook, Michael E. Barnsback,
DIMURO GINSBERG, PC, Alexandria, Virginia; John Brittain, Sarah
Crawford, Tricia Jefferson, LAWYERS’ COMMITTEE FOR CIVIL RIGHTS
UNDER LAW, Washington, D.C., for Lawyers’ Committee for Civil
Rights Under Law, Amicus Supporting Worldwide Network Services,
LLC, and Worldwide Network Services, International, FZCO. Sean
A. Lev, Priya R. Aiyar, Kfir B. Levy, KELLOGG, HUBER, HANSEN,
TODD, EVANS & FIGEL, PLLC, Washington, D.C., for The National
Urban League, Amicus Supporting Worldwide Network Services, LLC,
and Worldwide Network Services, International, FZCO.
Unpublished opinions are not binding precedent in this circuit.
3
DUNCAN, Circuit Judge:
Worldwide Network Services, Inc. (“WWNS”) sued DynCorp
International, LLC (“DynCorp”) for discrimination under 42
U.S.C. § 1981 and various torts after DynCorp terminated a
subcontract with WWNS related to government work in Iraq and
Afghanistan. Upon finding DynCorp liable, a jury awarded WWNS
$10 million in punitive damages. On appeal, DynCorp challenges
three evidentiary rulings, two jury instructions, and the
district court’s denial of DynCorp’s motions under Federal Rule
of Civil Procedure 50. For the reasons stated below, we affirm
in part and reverse in part, vacating the award of punitive
damages.
I.
A.
DynCorp contracted with the United States Department of
State to provide services in Iraq and Afghanistan for the
Worldwide Personal Protective Services program (“WPPS”) and
Civilian Police program (“CivPol”). WPPS protects United States
personnel and certain foreign officials abroad. CivPol provides
law enforcement, criminal justice, and other assistance to
societies undergoing post-conflict reconstruction. DynCorp
carried out the services through its International Technical
4
Services Division (“ITS Division”). The CivPol Program Manager
was Richard Cashon.
In February 2004 DynCorp entered into subcontracts with
WWNS to provide communication and information-technology
services for WPPS and CivPol (“WPPS Subcontract” and “CivPol
Subcontract”). DynCorp then issued task orders that would
expire between August and October 2006. 1 WWNS had been
designated a Small Disadvantaged Business by the United States
Small Business Administration under the Small Business Act of
1953 § 8(a), 15 U.S.C. § 637(a), because its owners Walter Gray
and Reginald Bailey are African American. WWNS was awarded the
WPPS and CivPol Subcontracts after well-known entrepreneur Ross
Perot introduced Gray and Bailey to Steven Cannon, who was then
President and CEO of DynCorp.
B.
The quality of WWNS’s work remains unclear. In January
2006 the State Department twice complained about WWNS and
threatened to terminate DynCorp as a result. One complaint
1
Regarding “task orders,” see 48 C.F.R. § 16.501-1 (“Task
order contract means a contract for services that does not
procure or specify a firm quantity of services (other than a
minimum or maximum quantity) and that provides for the issuance
of orders for the performance of tasks during the period of the
contract.”).
5
stated, “WWNS’s technical performance has in general been
inadequate to the point where it has disrupted critical
communications in the field.” J.A. 117. Also, DynCorp had
previously complained to WWNS about radio failures.
Notwithstanding, Cashon gave WWNS glowing evaluations in January
and March 2006. His March evaluation deemed WWNS “excellent” or
“good” in every category and stated that DynCorp would hire WWNS
again.
After receiving the State Department complaints, DynCorp
investigated WWNS’s work and generated two internal reports.
First, the CivPol Iraq IT Evaluation (“Iraq Report”) completed
by June 19, 2006, evaluated WWNS’s work at the Baghdad Hotel,
the CivPol headquarters for Iraq. Second, the Middle East
Information Technology Tiger Team Site Assessment Report (“Tiger
Report”) dated July 22, 2006, evaluated WWNS’s work at locations
in Afghanistan. The reports’ principal author was Christopher
Kellogg (“Kellogg”), but other DynCorp employees also
contributed. Each report was highly critical of WWNS.
C.
DynCorp’s relationship with WWNS began to deteriorate in
December 2005 when DynCorp hired new executives in the ITS
Division. Robert Rosenkranz became President, Richard Walsh
became Vice-President of Operations, Walter Merrick became
6
Deputy CivPol Program Manager, and Leon DeBeer became
Information-Technology Manager. With these arrivals, DynCorp
began excluding WWNS personnel from planning meetings, ignoring
emails from WWNS managers in Iraq, and failing to provide WWNS
employees with needed access to worksites and equipment. In
particular, DynCorp failed to provide WWNS employees with
security badges needed to move around in Iraq.
The tension between DynCorp and WWNS reached breaking point
in summer 2006. On July 17, 2006, Cannon resigned as President
and CEO of DynCorp. Immediately thereafter, DynCorp decided not
to issue further task orders under the CivPol Subcontract or to
renew the subcontract. DynCorp alleges that Cashon was solely
responsible for this decision. Cashon’s testimony and other
evidence, however, indicate that Cashon, Rosenkranz, Merrick,
and Walsh made the decision collectively.
Prior to the CivPol Subcontract’s expiration, DynCorp
engaged in certain questionable behavior toward WWNS. For
example, DynCorp had Charles Jones, WWNS’s Iraq Country Manager,
escorted from his workplace at gunpoint. DynCorp then recruited
WWNS’s non-managerial employees in Iraq and Afghanistan to join
DynCorp or EDO Corporation (“EDO Corp”), the non-minority-owned
company that would eventually replace WWNS. Moreover, Walsh
directed DynCorp’s accounting department to stop processing or
7
paying invoices from WWNS for work already completed. 2 In
stopping payment, DynCorp did not provide WWNS with notice or
the opportunity to cure alleged deficiencies in the work.
Because almost all of WWNS’s business came from DynCorp,
DynCorp’s actions in ending the CivPol Subcontract, recruiting
WWNS’s employees, and stopping payment on its invoices nearly
destroyed WWNS.
D.
Beyond the above questionable behavior, the record contains
evidence of DynCorp’s racial animus toward WWNS. John Mack, a
consultant for DynCorp, testified that Walsh called Gray “a
stupid black mother . . . .” J.A. 1723. Also, Rosenkranz
terminated DynCorp’s only minority executive Richard Spencer, a
Latino, who testified to “some underlying discriminatory things”
behind his termination. J.A. 1019.
DeBeer in particular expressed racial animus, often calling
Gray “nigger” and “kaffir.” 3 J.A. 872. According to Jones,
DeBeer expressed “[t]wo to three times a week” that “people of
2
In February 2008 DynCorp paid WWNS over $3.3 million for
outstanding invoices that dated back two years. It offered no
explanation for the delay.
3
The term “kaffir” is “[u]sed especially in southern Africa
as a disparaging term for a Black person.” American Heritage
Dictionary of the English Language 952 (4th ed. 2006).
8
Anglo descent . . . had made a grave error” because they “had
taken the black man as a youth and attempted to clothe him and
send him to school” and that “the proper role of the black man
was to go out and kill a lion, proving his manhood, at which
point in time he should be put to work to feed his family . . .
and mated with a woman so that he would have more children, who
could then be put to work feeding their family.” J.A. 874.
Jones said DeBeer predicted that DynCorp’s relationship with
WWNS would end and explained that “that ending was being
manufactured by . . . factions within DynCorp” that opposed
Cannon. J.A. 869. Jones noted that DeBeer was “consumed by
. . . hatred” for “Cannon and everybody associated with him.”
J.A. 873.
Finally, DynCorp celebrated WWNS’s demise during a company
dinner in October 2006 hosted by Rosenkranz. At the dinner,
Walsh received a T-shirt that read, “WWNS - I took them down,
and all I got was this lousy T-Shirt.” J.A. 1139. After Walsh
put on the T-shirt, DynCorp employee Bill Cavanaugh presented a
letter purportedly from Gray to Walsh and read it aloud in mock
Ebonics. According to a DynCorp executive, Rosenkranz “was
laughing his ass off.” J.A. 1029.
9
E.
In October 2006 WWNS brought this action against DynCorp
and EDO Corp in the District of Columbia. The case was later
transferred to the Eastern District of Virginia. The complaint
asserted claims of discrimination under 42 U.S.C. § 1981
(Count 1); tortious interference with contract (Count 3);
tortious interference with prospective economic advantage
(Count 4); civil conspiracy (Count 5); conspiracy under the
Virginia Conspiracy Act, Va. Code Ann. § 18.2-499 (Count 6);
breach of the CivPol Subcontract (Count 7); breach of the WPPS
Subcontract (Count 8); and breach of the implied covenant of
good faith and fair dealing (Count 9). 4 In turn, DynCorp filed
counterclaims of breach of the CivPol Subcontract, breach of the
WPPS Subcontract, and breach of warranty. WWNS and DynCorp
proceeded to trial by jury in May 2008. WWNS and EDO Corp
settled on the eve of trial.
Before trial, DynCorp planned to introduce the Iraq and
Tiger Reports into evidence through Kellogg, who would testify
about his observations during DynCorp’s internal investigation.
However, the district court granted WWNS’s motion to exclude the
testimony, saying the reports contained hearsay. The court also
found the reports and Kellogg’s proposed testimony inadmissible
4
Count 2 was dismissed before trial.
10
under Federal Rule of Evidence 701, which prohibits lay
witnesses from giving expert testimony.
During trial, DynCorp objected to Spencer’s testimony about
his termination by Rosenkranz based on Federal Rules of Evidence
401 and 403. 5 The district court overruled this objection,
reasoning that Spencer’s testimony was “relevant to the issue of
pretext as it demonstrates DynCorp’s corporate attitude toward
minorities and provides insight into what factors contributed to
DynCorp’s decision to terminate its relationship with WWNS.”
J.A. 1891. Later, DynCorp tried to offer rehabilitative
testimony from Jasbir Gill, a Sikh employee at DynCorp. The
court held, “Well, I’ll allow Ms. Gill to testify about her
interaction with Mr. DeBeer, and whether or not he used any
racial slurs in her presence,” but “[h]ow she was treated by the
company is irrelevant.” J.A. 1568.
Finally, DynCorp objected to the testimony of John Mack.
When WWNS called him on rebuttal, Mack testified that Walsh
called Gray “a stupid black mother . . . .” J.A. 1723. About
5
Rule 401 defines “relevant evidence” to mean “evidence
having any tendency to make the existence of any fact that is of
consequence to the determination of the action more probable or
less probable.” Fed. R. Evid. 401. Rule 403 provides that
“evidence may be excluded if its probative value is
substantially outweighed by the danger of unfair prejudice,
confusion of the issues, or misleading the jury, or by
considerations of undue delay, waste of time, or needless
presentation of cumulative evidence.” Fed. R. Evid. 403.
11
ten questions later, DynCorp objected and moved to strike
because WWNS had failed to notify DynCorp about Mack’s testimony
under Federal Rule of Civil Procedure 26(e), which requires
parties to supplement discovery when new evidence surfaces.
During a bench conference, WWNS admitted its failure to notify
DynCorp pursuant to Rule 26(e). Nonetheless, the court denied
DynCorp’s motion to strike and instead instructed the jury to
take into consideration WWNS’s failure to notify DynCorp about
Mack’s testimony.
Following the close of evidence, the district court granted
WWNS’s motion under Federal Rule of Civil Procedure 50(a) for
judgment as a matter of law regarding unpaid invoices totaling
almost $2.8 million. The court then instructed the jury.
Regarding the § 1981 discrimination claim, DynCorp had
requested an instruction based on Hill v. Lockheed Martin
Logistics Mgmt., Inc., 354 F.3d 277 (4th Cir. 2004). The
proposed instruction stated:
DynCorp asserts that the person who made the decision
not to renew or extend the WWNS CIVPOL subcontract or
task orders was not improperly motivated by
discrimination. To the extent that WWNS rests its
discrimination claim upon the discriminatory
motivations of a subordinate employee, WWNS must show
by the greater weight of the evidence that the
subordinate employee possessed such authority as to be
viewed as the one principally responsible for the
decision or the actual decisionmaker for DynCorp.
J.A. 1185. The district court refused to give this instruction,
12
explaining: “I don’t think I need to. I think you can prove
that they [DynCorp] were responsible or not, and the jury
doesn’t have to specify which person did what.” J.A. 1656.
Instead, the court instructed: “WWNS must prove that DynCorp
intentionally discriminated against WWNS. That is, the race of
WWNS’s owners must be proven to have been a motivating factor in
DynCorp’s decision not to renew WWNS’s CIVPOL subcontract or
issue further task orders thereunder.” J.A. 1762.
Regarding punitive damages, the district court gave the
following instruction:
[Y]ou may award punitive damages if WWNS . . . [has]
shown by clear and convincing evidence that DynCorp
maliciously, or with reckless indifference,
discriminated against WWNS, and/or that DynCorp
tortiously interfered with the contracts between
[WWNS] and its employees, and/or conspired with EDO to
interfere with the contracts between [WWNS] and its
employees, and/or that DynCorp tortiously interfered
with WWNS’s prospective economic advantage.
J.A. 1771. By contrast, DynCorp had requested an instruction
that began, “WWNS claims the acts of DynCorp were done with
malice or reckless indifference to WWNS’s federally protected
rights.” J.A. 1186 (emphasis added).
After several days of deliberation, the jury returned a
split verdict. It found in DynCorp’s favor on Counts 4-6 and
one of DynCorp’s counterclaims, awarding DynCorp $178,000 for
breach of the WPPS Subcontract. The jury found in WWNS’s favor
on all other claims. It awarded WWNS compensatory damages of
13
$3.42 million for Count 1 (§ 1981 discrimination), $83,000 for
Count 3 (tortious interference with contract), $558,510.42 for
Count 7 (breach of CivPol Subcontract), $42,092.62 for Count 8
(breach of WPPS Subcontract), and $720,000 for Count 9 (breach
of implied covenant of good faith and fair dealing). The jury
also awarded WWNS $10 million in punitive damages.
The district court denied DynCorp’s renewed Federal Rule of
Civil Procedure 50(b) motion for judgment as a matter of law,
Rule 59(a) motion for a new trial, and Rule 59(e) motion to
alter or amend the judgment. This appeal followed. We have
jurisdiction under 28 U.S.C. §§ 1331 and 1291. 6
II.
On appeal, DynCorp asserts (1) that the district court
should have given DynCorp’s proposed jury instruction regarding
the § 1981 discrimination claim; (2) that DynCorp should have
been awarded judgment as a matter of law on that claim; (3) that
Kellogg’s testimony and the Iraq and Tiger Reports should have
been admitted; (4) that Spencer’s testimony should have been
excluded; (5) that Mack’s testimony should have been struck;
6
WWNS filed a cross-appeal, arguing that Alexis Maniatis’s
proposed testimony calculating WWNS’s lost profits was
erroneously excluded. Because we do not remand for another
trial to determine compensatory damages, we do not reach WWNS’s
cross-appeal.
14
(6) that the jury instruction on punitive damages for § 1981
discrimination was erroneous; and (7) that the record does not
support punitive damages for § 1981 discrimination. 7 We consider
each contention below.
A.
We first consider DynCorp’s challenge to the district
court’s failure to give its proposed jury instruction regarding
the § 1981 discrimination claim. “A district court commits
reversible error in refusing to provide a proffered jury
instruction only when the instruction (1) was correct; (2) was
not substantially covered by the court’s charge to the jury; and
(3) dealt with some point in the trial so important, that
failure to give the requested instruction seriously impaired the
defendant’s ability to conduct his defense.” United States v.
Passaro, 577 F.3d 207, 221 (4th Cir. 2009) (internal quotations
omitted). “We review the district court’s decision to give or
refuse to give a jury instruction for abuse of discretion.” Id.
“Moreover, we do not view a single instruction in isolation;
rather we consider whether taken as a whole and in the context
7
DynCorp also asserts that the award of punitive damages
violates the Due Process Clause, but we do not reach this issue
because we vacate that award.
15
of the entire charge, the instructions accurately and fairly
state the controlling law.” Id. (internal quotations omitted).
Because DynCorp’s proposed instruction regarding the § 1981
claim was based on Hill, in reviewing the district court’s
failure to give that instruction we must consider Hill’s
applicability to this case. Ethel Hill was a Lockheed mechanic
who repaired aircraft at military bases under contracts between
Lockheed and the United States. Her work was overseen by a
“lead person” who reported to her supervisor. Lockheed also
assigned a safety inspector to each jobsite who reported to the
lead person but lacked supervisory authority. Hill received
three written reprimands based on errors discovered by her
jobsite’s safety inspector and was terminated pursuant to
company policy. Hill alleged discrimination by that inspector,
who had often called her a “damn woman” and “useless old lady”
who should retire. Hill, 354 F.3d at 283.
Hill sued Lockheed under Title VII of the Civil Rights Act,
42 U.S.C. § 2000e (“Title VII”), and the Age Discrimination in
Employment Act, 29 U.S.C. §§ 621-34 (“ADEA”), arguing that but
for the inspector’s discrimination she would have received fewer
reprimands and avoided termination. The district court granted
summary judgment to Lockheed on the ground that the inspector’s
bias could not be imputed to Lockheed. Hill, 354 F.3d at 283.
In affirming, we announced this rule:
16
[T]o survive summary judgment, an aggrieved employee
who rests a discrimination claim under Title VII or
the ADEA upon the discriminatory motivations of a
subordinate employee must come forward with sufficient
evidence that the subordinate employee possessed such
authority as to be viewed as the one principally
responsible for the decision or the actual
decisionmaker for the employer.
Id. at 291 (emphasis added). Accordingly, we found summary
judgment appropriate because Hill had not shown evidence that
the safety inspector could be considered the actual
decisionmaker or the one principally responsible for the
decision to terminate Hill. Id. at 297-98.
DynCorp argues that the Hill rule governs the case now
before us. After carefully studying Hill, we disagree. In that
case, the ultimate question was whether Lockheed intentionally
discriminated in deciding to terminate Hill. This required
evidence that her “‘protected trait . . . actually motivated the
employer’s decision,’” that is, that the trait “‘actually played
a role in the employer’s decisionmaking process and had a
determinative influence on the outcome.’” Id. at 286 (quoting
Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 141
(2000)). Accordingly, we considered “who is a ‘decisionmaker’
for purposes of discrimination actions brought under Title VII
and the ADEA.” Hill, 354 F.3d at 286. We said agency
principles guided our decision because both statutes defined
“employer” to include “any agent” thereof. Id. at 287; see also
17
Burlington Indus., Inc. v. Ellerth, 524 U.S. 742, 754-65 (1998).
We then noted Ellerth, where the Supreme Court explained that
“[t]he supervisor has been empowered by the company as a
distinct class of agent to make economic decisions affecting
other employees under his or her control,” and that “tangible
employment actions are the means by which the supervisor brings
the official power of the enterprise to bear on subordinates.”
Id. at 762. Therefore, the Court said that “a tangible
employment action taken by the supervisor becomes for Title VII
purposes the act of the employer.” Id.
The case most important to our Hill decision was Reeves.
Roger Reeves supervised assembly-line workers for Sanderson
Plumbing Products, Inc., which made toilet seats and covers.
Upon learning that Reeves made various mistakes, Powe Chestnut,
the director of manufacturing and the husband of company
president Sandra Sanderson, told Sanderson that Reeves should be
fired. Sanderson followed his recommendation. Reeves then sued
under the ADEA, alleging that his termination resulted from
discrimination by Chestnut, who had often showed discriminatory
animus toward him. Reeves, 530 U.S. at 138. The Supreme Court
found that Reeves had overcome judgment notwithstanding the
verdict because, although Sanderson “made the formal decision to
discharge” Reeves, Chestnut “was principally responsible for”
and “the actual decisionmaker behind his firing.” Id. at 151-
18
52. Reeves had produced evidence that Chestnut “exercised
‘absolute power’ within the company.” Id. at 152.
Ultimately, Reeves’s rationale dictated the rule that Hill
announced. See Hill, 354 F.3d at 288-89 (“Reeves informs us
that the person allegedly acting pursuant to a discriminatory
animus need not be the ‘formal decisionmaker’ to impose
liability upon an employer for an adverse employment action, so
long as . . . the subordinate was the one ‘principally
responsible’ for, or the ‘actual decisionmaker’ behind, the
action.” (quoting Reeves, 530 U.S. at 151-52)). For our
purposes, Reeves also clarifies the Hill rule. Reeves
distinguishes between the “formal decisionmaker,” which under
Ellerth would be the person authorized to make the relevant
decision, and “subordinate” employees who lack this authority,
such as Chestnut or the safety inspector in Hill. Accordingly,
we believe the term “subordinate employee” in the Hill rule
invokes that distinction. Hill, 354 F.3d at 291.
Using this interpretation, and assuming for purposes of
this appeal that Hill applies under § 1981, we conclude that
DynCorp can take no comfort from Hill on the facts before us.
DynCorp relies on Hill to argue that, because it alleges that
Cashon was solely responsible for the decision to terminate the
CivPol Subcontract, the jury should not have been allowed to
consider the racial animus of anyone other than Cashon. We
19
note, however, that Hill does not enable DynCorp to self-select
the decisionmaker whose motives are the purest. Furthermore, we
find Hill inapplicable for two separate reasons.
First, the Hill rule’s initial premise, namely, that the
plaintiff “rests a discrimination claim . . . upon the
discriminatory motivations of a subordinate employee,” assumes
that a formal decisionmaker can be identified. Id. at 291. In
this case, however, WWNS and DynCorp offered conflicting
evidence regarding who had authority to terminate the CivPol
Subcontract. Cashon testified to having this authority but also
admitted that he answered to Rosenkranz regarding his decision.
Moreover, other evidence indicated that Cashon, Merrick,
Rosenkranz, and Walsh were authorized to make that decision
collectively. Significantly, Walsh was the one who directed
DynCorp’s accounting department to stop payment to WWNS for
completed work. By contrast, this problem of identification was
absent from Hill and Reeves, where none debated who had formal
decisionmaking authority.
Second, even assuming that only Cashon could be considered
the formal decisionmaker, we are unwilling to conclude that
Walsh and Rosenkranz, who supervised Cashon, should be treated
like the Hill and Reeves subordinate employees who lacked
authority over the formal decisionmaker. Because Hill thus does
not apply to this case, we conclude that the district court’s
20
refusal to give DynCorp’s proposed instruction was not an abuse
of discretion. 8
B.
Next, we consider DynCorp’s challenge to the district
court’s denial of DynCorp’s renewed Rule 50(b) motion for
judgment as a matter of law on the § 1981 claim. “We review de
novo the grant or denial of a motion for judgment as a matter of
law.” Robinson v. Equifax Info. Servs, LLC, 560 F.3d 235, 240
(4th Cir. 2009) (internal quotations omitted). “Judgment as a
matter of law is proper when, without weighing the credibility
of the evidence, there can be but one reasonable conclusion as
to the proper judgment.” U.S. ex rel. DRC, Inc. v. Custer
Battles, LLC,
562 F.3d 295, 305 (4th Cir. 2009) (internal
quotations omitted); see also Saunders v. Branch Banking & Trust
8
We note as well that DynCorp’s proposed jury instruction
was “substantially covered by the court’s charge to the jury.”
Passaro, 577 F.3d at 221. As mentioned, the district court
instructed that “the race of WWNS’s owners must be proven to
have been a motivating factor in DynCorp’s decision not to renew
WWNS’s CIVPOL subcontract or issue further task orders
thereunder.” J.A. 1762. Following this instruction’s clear
import, the jury could not have considered evidence of racial
bias regarding DynCorp employees that neither made nor had
authority to make that decision. Thus, DynCorp’s proposed
instruction differed from the actual one only by wrongly
insinuating that just one person could have made or been
responsible for the decision to terminate the CivPol
Subcontract.
21
Co. of Va., 526 F.3d 142, 147 (4th Cir. 2008) (“A court may
award judgment as a matter of law only if there is no legally
sufficient evidentiary basis for a reasonable jury to find for
the non-moving party.”). On this issue, we must view the
evidence in the light most favorable to the non-moving party,
drawing all reasonable inferences in that party’s favor. Dennis
v. Columbia Colleton Med. Ctr., Inc.,
290 F.3d 639, 645 (4th
Cir. 2002).
In this case, § 1981 liability required proof that race
actually motivated DynCorp’s decision to terminate the CivPol
Subcontract, that is, that race “actually played a role in the
. . . decisionmaking process and had a determinative influence
on the outcome.” Reeves, 530 U.S. at 141. DynCorp alleges that
only Cashon made the decision to terminate the CivPol
Subcontract. Accordingly, DynCorp concludes that all other
DynCorp executives’ alleged racial animus must be ignored under
Hill. In that light, DynCorp asserts that the verdict cannot
stand. We disagree with the initial premise that only Cashon
made the decision. 9 The record contains sufficient evidence from
9
We do not dispute the characterization in Judge Niemeyer’s
opinion, dissenting in part, that Cashon had authority to
terminate the CivPol Subcontract. However, that opinion fails
to reckon with Cashon’s own testimony that he made the decision
collectively with Merrick, Rosenkranz, and Walsh — the
discriminatory animus of at least Rosenkranz and Walsh having
been set out.
22
which a reasonable jury could conclude that Cashon, Rosenkranz,
Merrick, and Walsh made a collective decision to terminate the
CivPol Subcontract. The record also contains evidence that
Rosenkranz and Walsh harbored racial animus against Gray and
Bailey. This evidence includes Walsh’s racial slur, Spencer’s
termination by Rosenkranz, Walsh stopping payments to WWNS, and
the checkered October 2006 dinner celebrating WWNS’s
misfortune. 10 Therefore, sufficient evidence of discrimination
was presented for § 1981 liability.
Moreover, we note that WWNS presented adequate evidence to
establish § 1981 liability through the burden-shifting analysis
of McDonnell Douglas Corp. v. Green, 411 U.S. 792 (1973), and
its progeny. See Patterson v. McLean Credit Union,
491 U.S.
164, 186 (1989) (extending McDonnell Douglas to § 1981 cases),
superseded on other grounds by statute, Civil Rights Act of
1991, Pub. L. No. 102-166, 105 Stat. 1071. Under this analysis,
the plaintiff carries an initial burden to establish a prima
facie case of discrimination. A company alleging discriminatory
contract termination may carry this burden by showing that
(1) the defendant terminated a contract with it, (2) it was
10
To the extent that Judge Niemeyer’s opinion argues that,
but for evidence about DeBeer, the record contained insufficient
evidence to establish § 1981 discrimination, we note that that
opinion fails to account for Walsh’s otherwise unexplained
decision to stop payments to WWNS.
23
within a protected class, (3) its performance under the contract
met the defendant’s legitimate expectations, and (4) the
defendant instead contracted with a company not in a protected
class. See Holland v. Washington Homes, Inc., 487 F.3d 208, 214
(4th Cir. 2007). Once the prima facie case has been
established, the burden shifts to the defendant “to articulate a
legitimate, nondiscriminatory reason” for the contract
termination. Id. (internal quotations omitted). Once the
defendant carries this burden of production, the burden shifts
back to the plaintiff to prove that the defendant’s stated
reasons “were not its true reasons, but were a pretext for
discrimination.” Id. (internal quotations omitted). At this
point, “the McDonnell Douglas framework — with its presumptions
and burdens — disappear[s] . . . and the sole remaining issue
[i]s discrimination vel non.” Reeves, 530 U.S. at 142-43
(internal quotations omitted).
WWNS established a prima facie case of discrimination by
showing that (1) DynCorp terminated the CivPol Subcontract,
(2) WWNS had been designated a Small Disadvantaged Business by
the SBA because Gray and Bailey are African American, (3)
Cashon’s glowing evaluations of WWNS in January and March 2006
rated WWNS “excellent” or “good” across the board and stated
that DynCorp would hire WWNS again, and (4) EDO Corp. was not
minority-owned. In turn, DynCorp articulated a legitimate,
24
nondiscriminatory reason for terminating the CivPol Subcontract.
Cashon testified that the reason was WWNS’s poor performance.
We believe a reasonable jury could have concluded that DynCorp’s
stated reason was merely a pretext for discrimination. For
example, the jury might have disbelieved Cashon’s testimony
about DynCorp’s stated reason because Cashon himself had given
WWNS glowing evaluations. Therefore, we affirm the district
court’s denial of DynCorp’s Rule 50(b) motion regarding the
§ 1981 claim.
C.
We next consider three evidentiary rulings that DynCorp
challenges. We review each for abuse of discretion. United
States v. Basham, 561 F.3d 302, 325 (4th Cir. 2009).
1.
First, DynCorp argues that the district court committed
reversible error by excluding Kellogg’s testimony and the Iraq
and Tiger Reports. This evidence was excluded under Federal
Rule of Evidence 701, which “forbids the admission of expert
testimony dressed in lay witness clothing.” United States v.
Perkins, 470 F.3d 150, 156 (4th Cir. 2006). Kellogg’s excluded
testimony and the Iraq and Tiger Reports were technical
evaluations of WWNS’s performance. Discussed topics include
25
whether WWNS’s chosen method of encrypting wireless
communication provided enough security. We believe such matters
are well beyond the scope of permissible lay testimony under
Rule 701. See Certain Underwriters at Lloyd’s, London v.
Sinkovich, 232 F.3d 200, 203 (4th Cir. 2000) (noting that Rule
701 “generally does not permit a lay witness to express an
opinion as to matters which are beyond the realm of common
experience and which require the special skill and knowledge of
an expert witness” (internal quotations omitted)). Therefore,
we conclude that the district court’s decision to exclude that
evidence was not an abuse of discretion.
2.
Second, DynCorp challenges the district court’s failure to
exclude Spencer’s testimony about his termination by Rosenkranz
under Federal Rules of Evidence 401 and 403. The court below
reasoned that Spencer’s testimony was “relevant to the issue of
pretext as it demonstrates DynCorp’s corporate attitude toward
minorities and provides insight into what factors contributed to
DynCorp’s decision to terminate its relationship with WWNS.”
J.A. 1891. We believe that Spencer’s testimony was indeed
relevant because of Rosenkranz’s apparent participation in
DynCorp’s decision to terminate the CivPol Subcontract.
Moreover, we believe this probative value outweighed any danger
26
of undue prejudice. Thus, we affirm the district court’s
decision to allow Spencer’s testimony.
3.
Finally, DynCorp challenges the district court’s failure to
strike Mack’s testimony that Walsh called Gray “a stupid black
mother . . . .” J.A. 1723. Federal Rule of Civil Procedure
26(e) provides that a party who has made a disclosure or
responded to an interrogatory “must supplement or correct its
disclosure or response . . . in a timely manner if the party
learns that in some material respect the disclosure or response
is incomplete or incorrect.” Fed. R. Civ. P. 26(e)(1)(A).
Mack’s allegation became known to WWNS several days before
trial, but DynCorp was not made aware of it until Mack testified
at trial. WWNS thus clearly violated Rule 26(e), which it does
not dispute.
Upon discovering that WWNS had not disclosed Mack’s
allegation, DynCorp objected and moved to strike because of
WWNS’s Rule 26(e) violation. The district court denied this
motion, stating: “[T]he difficulty that I have is, you’re asking
me to tell the jury to disregard the hot poker that has just
been put in front of their face. I don’t think I can undo it
that way.” J.A. 1730. Instead, the court instructed the jury
to take into consideration WWNS’s failure to notify DynCorp
27
about Mack’s allegation. DynCorp later moved for a new trial,
arguing that Mack’s testimony should have been struck, but the
court denied this motion.
Federal Rule of Civil Procedure 37(c)(1) provides: “If a
party fails to provide information or identify a witness as
required by Rule 26(a) or (e), the party is not allowed to use
that information or witness to supply evidence . . . at a trial,
unless the failure was substantially justified or is harmless.”
Fed. R. Civ. P. 37(c)(1). WWNS asserts that the Rule 26
violation was harmless but concedes that no substantial
justification existed.
We have said that a court determining harmlessness under
Rule 37(c)(1) should consider five factors:
(1) the surprise to the party against whom the
evidence would be offered; (2) the ability of that
party to cure the surprise; (3) the extent to which
allowing the evidence would disrupt the trial; (4) the
importance of the evidence; and (5) the nondisclosing
party’s explanation for its failure to disclose the
evidence.
S. States Rack & Fixture, Inc. v. Sherwin-Williams Co., 318 F.3d
592, 597 (4th Cir. 2003). Based on these factors, we believe
WWNS’s Rule 26 violation was indeed harmless. Although DynCorp
was surprised by Mack’s testimony, the trial continued
undisturbed. Moreover, the record contains abundant evidence of
racial animus aside from Mack’s testimony. This includes
Spencer’s termination by Rosenkranz, the racially charged
28
October 2006 dinner celebrating WWNS’s misfortune, and Walsh
directing DynCorp’s accounting department to stop paying WWNS
for work already completed. We therefore decline to reverse on
this ground.
D.
Finally, we consider alleged errors regarding the
$10 million punitive-damages award. DynCorp argues that
punitive damages for the § 1981 claim are unsupported by the
record and that the jury instruction on that issue was
erroneous.
1.
We begin by considering the district court’s denial of
DynCorp’s renewed Rule 50(b) motion for judgment as a matter of
law with regard to WWNS’s prayer for punitive damages for the
§ 1981 claim. We review this decision de novo. Lowery v.
Circuit City Stores, Inc., 206 F.3d 431, 442-43 (4th Cir. 2000).
A plaintiff who prevails under § 1981 “is entitled under
the common law to punitive damages . . . for conduct . . .
exhibiting malice, an evil motive, or recklessness or callous
indifference to a federally protected right.” Id. at 441
(internal quotations omitted). The Supreme Court developed this
standard in Smith v. Wade, 461 U.S. 30 (1983), for actions under
29
42 U.S.C. § 1983. Congress later adopted the standard in the
Civil Rights Act of 1991, which allows punitive damages in Title
VII actions where the employer discriminated “with malice or
with reckless indifference to the federally protected rights of
an aggrieved individual.” 42 U.S.C. § 1981a(b)(1).
Interpreting this statute, the Supreme Court held that “[t]he
terms ‘malice’ or ‘reckless indifference’ pertain to the
employer’s knowledge that it may be acting in violation of
federal law, not its awareness that it is engaging in
discrimination.” Kolstad v. Am. Dental Ass’n, 527 U.S. 526, 535
(1999). Accordingly, the Court held that “an employer must at
least discriminate in the face of a perceived risk that its
actions will violate federal law to be liable in punitive
damages.” Id. at 536. Because § 1981a was intended to mirror
Smith, we have held that “any case law construing the punitive
damages standard set forth in § 1981a, for example Kolstad, is
equally applicable to clarify the common law punitive damages
standard with respect to a § 1981 claim.” Lowery, 206 F.3d at
441. Therefore, upon reviewing § 1981 punitive damages, we have
required evidence that the defendant acted “in the face of a
perceived risk that [its] decision would violate federal law.”
Id. at 443.
30
Regarding this requirement, Kolstad noted hypotheticals
that are particularly relevant to the case before us. The
Supreme Court explained:
There will be circumstances where intentional
discrimination does not give rise to punitive damages
liability under this standard. In some instances, the
employer may simply be unaware of the relevant federal
prohibition. There will be cases, moreover, in which
the employer discriminates with the distinct belief
that its discrimination is lawful. The underlying
theory of discrimination may be novel or otherwise
poorly recognized.
Kolstad, 527 U.S. at 536-37. Accordingly, even a defendant who
discriminates while intending to cause injury might escape
liability for punitive damages under § 1981 if he thought his
conduct was lawful. This informs our remark that punitive
damages are “an extraordinary remedy” and “not every lawsuit
under section 1981 calls for submission of this extraordinary
remedy to a jury.” Stephens v. S. Atl. Canners, Inc., 848 F.2d
484, 489-90 (4th Cir. 1988).
Soon after Kolstad, we reviewed a § 1981 punitive-damages
award in Lowery. Renee Lowery and Lisa Peterson alleged that
Circuit City Stores, Inc. (“Circuit City”) failed to promote
them because of racial animus. Circuit City was found liable
under Title VII and § 1981, and the jury awarded punitive
damages of $225,000. On appeal, Circuit City asserted that the
record did not support punitive damages. Notably, we found
31
punitive damages recoverable only under § 1981 and limited our
analysis accordingly. Lowery, 206 F.3d at 441.
We explained, “Kolstad teaches that we . . . must first ask
whether the record contains sufficient evidence for a reasonable
juror to find that in intentionally refusing to promote the
plaintiff . . . the decision maker did so in the face of a
perceived risk that her decision would violate federal law.”
Id. at 443. We continued, “If the answer is no, we should
vacate the portion of the judgment awarding the plaintiff
punitive damages and direct entry of judgment as a matter of law
in favor of Circuit City on that issue.” Id. In the end, we
found that the record did contain sufficient evidence because
Circuit City had presented “evidence that it required every
person in management to attend a week-long training seminar that
included education on the federal anti-discrimination laws.”
Id. (citing E.E.O.C. v. Wal-Mart Stores, Inc., 187 F.3d 1241,
1246 (10th Cir. 1999) (finding sufficient evidence where the
offending manager “testified that he was familiar with the
accommodation requirements of the ADA and its prohibition
against discrimination and retaliation in the workplace”)).
We considered the same legal issue in subsequent cases.
Sufficient evidence was found where a supervisor who engaged in
sexual harassment “testified that he had seen an EEOC poster
regarding sexual harassment” at work that read, “Sexual
32
harassment is unlawful and unacceptable in the workplace.”
Anderson v. G.D.C., Inc., 281 F.3d 452, 460 (4th Cir. 2002).
Although the supervisor denied reading the poster, we found that
“a reasonable jury could nevertheless infer that [his] awareness
of the poster suggested at least a rudimentary knowledge of its
import.” Id. Sufficient evidence was also found where a
manager “was specifically aware of FedEx’s internal ADA
compliance policy, and had received training from FedEx on the
ADA’s compliance requirements.” E.E.O.C. v. Fed. Express Corp.,
513 F.3d 360, 373 (4th Cir. 2008).
By contrast, we declined to find sufficient evidence in
Ocheltree v. Scollon Productions, Inc., 335 F.3d 325 (4th Cir.
2003) (en banc). Lisa Ocheltree sued her employer Scollon
Productions, Inc., under Title VII because she “was the victim
of severe or pervasive sex-based harassment in her workplace.”
Id. at 327. We “combed the record,” however, and found “no
evidence that would allow a jury to find that Scollon
Productions knew, either directly or by imputation, that it
might have been acting in violation of Ocheltree’s ‘federally
protected rights.’” Id. at 336. Thus, we upheld the verdict on
liability but vacated punitive damages. Id.
The case before us presents a scenario comparable to
Ocheltree. WWNS has been unable to cite any evidence that
DynCorp terminated the CivPol Subcontract “in the face of a
33
perceived risk that [its] decision would violate federal law.” 11
Lowery, 206 F.3d at 443. The district court likewise failed to
cite such evidence, and we could find none upon combing the
record. 12 Accordingly, we conclude that the award of punitive
damages should be vacated. 13
11
WWNS cites only 41 C.F.R. § 60-1.4, which requires
government contractors to adopt contractual language that
pertains to discrimination against employees or applicants for
employment under Title VII. However, the language nowhere
mentions discrimination against minority-owned corporate
subcontractors under § 1981.
12
Judge Jones’s opinion, dissenting in part, states that
WWNS’s July 26, 2006, letter to DynCorp indicates that DynCorp
was warned about WWNS’s federal right under § 1981. The letter
itself, however, shows that this warning came after DynCorp had
already terminated the CivPol Subcontract. The letter demands
that DynCorp “comply with its obligations under the terms of the
February 16, 2004, Subcontract and related Task Orders
(collectively ‘the Agreements’),” but makes clear that DynCorp
had already repudiated them. The letter states that “DynCorp
has taken it upon itself to inform . . . WWNS employees . . .
that the Agreements have been terminated,” and that WWNS
“consider[ed] DynCorp’s conduct to constitute . . . a material
breach of the Agreements.” J.A. 2692. Because WWNS sent the
letter after DynCorp had already terminated the CivPol
Subcontract, the letter tells nothing about whether DynCorp
previously acted “in the face of a perceived risk that [its]
decision would violate federal law.” Lowery, 206 F.3d at 443.
13
Added to our rationale, DynCorp argues that the legal
theory WWNS advanced was “novel or otherwise poorly recognized,”
Kolstad, 527 U.S. at 537, because whether a corporation may sue
under § 1981 was never crystal clear. See Domino’s Pizza, Inc.
v. McDonald, 546 U.S. 470, 473 n.1 (2006) (noting that “we have
no occasion to determine whether, as a corporation, it could
have brought suit under § 1981” (emphasis omitted)); Vill. of
Arlington Heights v. Metro. Housing Dev. Corp.,
429 U.S. 252,
263 (1977) (holding that “a corporation . . . has no racial
(Continued)
34
2.
Even aside from the above error, the award of punitive
damages could not stand because the district court’s jury
instruction on punitive damages was also erroneous.
“Instructions are adequate if construed as a whole, and in light
of the whole record, they adequately inform the jury of the
controlling legal principles without misleading or confusing the
jury to the prejudice of the objecting party.” S. Atl. Ltd.
P’ship of Tenn., L.P. v. Riese, 284 F.3d 518, 530 (4th Cir.
2002) (internal quotations omitted). “Even if instructions are
flawed, there can be no reversal unless the error seriously
prejudiced the challenging party’s case.” Id. (internal
quotations omitted). Because DynCorp’s objection to the
district court’s instruction on punitive damages was not
preserved according to Federal Rule of Civil Procedure 51(d)(1),
reversal would be proper “only when we can conclude that [the]
particular jury instruction must necessarily have caused the
jury to act in complete ignorance of, or to have misapplied,
fundamentally controlling legal principles to the inevitable
prejudice of an aggrieved party.” Spell v. McDaniel,
824 F.2d
1380, 1399 (4th Cir. 1987); see also Fed. R. Civ. P. 51(d)(2).
identity and cannot be the direct target of . . .
discrimination”).
35
In this case, the district court gave the following
instruction: “[Y]ou may award punitive damages if WWNS . . .
[has] shown by clear and convincing evidence that DynCorp
maliciously, or with reckless indifference, discriminated
against WWNS.” J.A. 1771. Notably, the court never defined
“malice” or specified to what “reckless indifference” refers.
The word “malice” ordinarily means: “A desire to harm others or
to see others suffer; extreme ill will or spite.” American
Heritage Dictionary of the English Language 1059 (4th ed. 2006).
Unless properly instructed, a layperson would not know that
“malice” also has a technical legal meaning relating to
awareness that one may be breaking the law. Cf. Perry v.
McCaughtry, 308 F.3d 682, 694 (7th Cir. 2002) (Posner, J.,
dissenting) (arguing that a layperson would not without
instruction know that “cause” had the technical meaning
“substantial factor in”). Nor would a layperson assume that
“reckless indifference” in the instruction specifically means
“reckless indifference to federally protected rights.”
Accordingly, the jury could not have known that “‘malice’ or
‘reckless indifference’ pertain to [DynCorp’s] knowledge that it
may be acting in violation of federal law,” Kolstad, 527 U.S. at
535, or that punitive damages are improper unless DynCorp acted
“in the face of a perceived risk that [its] decision would
violate federal law,” Lowery, 206 F.3d at 443. Therefore, we
36
believe the challenged instruction “caused the jury to act in
complete ignorance of . . . fundamentally controlling legal
principles.” Spell, 824 F.2d at 1399.
Regarding whether DynCorp was prejudiced by the
instruction, we note again that WWNS has not identified any
evidence that DynCorp suspected that terminating the CivPol
Subcontract might violate federal law, and we found no such
evidence in the record. Notwithstanding, the jury awarded
$10 million of punitive damages, which the district court
concluded was “for DynCorp’s Section 1981 violation.” J.A.
1911. Therefore, we believe serious prejudice necessarily
resulted from the challenged instruction.
3.
Although the punitive-damages award based on the § 1981
claim should be vacated, the jury’s verdict complicates our
disposition. The district court instructed that punitive
damages may be awarded on Counts 1 and 3-5. Among this group,
DynCorp was found liable only on Count 1 (§ 1981 discrimination)
and Count 3 (tortious interference with contract). The jury
awarded $10 million of punitive damages, but the verdict does
not specify how much was allocable to Count 1 rather than
Count 3. For this reason, we cannot vacate the award without
unwittingly vacating any punitive damages allocable to Count 3.
37
Accordingly, the case must be remanded for retrial on punitive
damages for Count 3. 14
III.
For the reasons stated above, we affirm the district
court’s refusal to give DynCorp’s proposed jury instruction
pertaining to Hill, the court’s denial of DynCorp’s Rule 50(b)
motion regarding the § 1981 claim, and all evidentiary rulings
challenged by DynCorp. However, we reverse the court’s denial
of DynCorp’s Rule 50(b) motion regarding WWNS’s prayer for
punitive damages based on the § 1981 claim, vacate the award of
punitive damages, and remand the case for retrial on punitive
damages for Count 3. Accordingly, we
AFFIRM IN PART AND REVERSE IN PART.
14
Any reconsideration should take into account the standard
for awarding punitive damages under Virginia law.
38
NIEMEYER, Circuit Judge, concurring in part and dissenting in
part:
After DynCorp International, LLC refused to renew its
subcontract with Worldwide Network Services, LLC for
information-technology services, Worldwide Services commenced
this action, alleging that DynCorp’s termination of the
subcontract was motivated by racial animus and thus constituted
racial discrimination in contracting, in violation of 42 U.S.C.
§ 1981. The subcontract had been entered into to assist
DynCorp’s performance of its contract with the State Department
to support civilian police programs in Iraq and Afghanistan.
DynCorp maintained that it terminated its relationship with
Worldwide Services because of Worldwide Services’ poor
performance and that the conceded racial animus of a mid-level
manager, who lacked authority to end the relationship, was not
imputable to the corporation under Hill v. Lockheed Martin
Logistics Management, Inc., 354 F.3d 277, 291 (4th Cir. 2004)
(en banc) (holding that an employer will not be liable under
Title VII of the Civil Rights Act of 1964 or the Age
Discrimination in Employment Act of 1967 (“ADEA”) “for the
improperly motivated person who merely influences the decision,
but [only] for the person[s] who in reality make[] the decision”
(emphasis added)). The district court refused DynCorp’s request
to apply Hill to this case and declined to give an instruction
39
to the jury that would have barred imputation of the mid-level
manager’s racial animus to the corporation for purposes of
determining liability under § 1981. The court stated, “[T]he
jury doesn’t have to specify which person did what.” The jury
was thus allowed to consider the racial animus of individuals,
including the mid-level manager, who may have influenced those
who made the decision on behalf of DynCorp, but who were not
themselves decisionmakers, in violation of Hill.
The majority approves this error by concluding that Hill
does not apply to this case because some of the other DynCorp
employees alleged to have acted with racial animus were high-
level executives who may have had authority to decide not to
renew Worldwide Services’ subcontract, whereas Hill applies when
the plaintiff’s claim “rests . . . upon the discriminatory
motivations of a subordinate employee.” Hill, 354 F.3d at 291.
What this reasoning overlooks, I respectfully submit, is the
extent to which Worldwide Services’ claim was based on the
conceded racial animus of the mid-level manager, who clearly
lacked authority to end the relationship between the two
companies, but who was in a position to influence the decision
to such an extent that the jury may have found that his racial
bias was “a motivating factor in DynCorp’s decision,” which was
all the district court required the jury to find before imposing
liability on the corporation. Because Worldwide Services
40
presented considerable evidence of this mid-level manager’s
racial bias and his role in the deterioration of the companies’
relationship, the jury needed to be told that only the racial
animus of DynCorp’s actual decisionmakers could be considered in
determining whether race motivated the corporation’s decision.
Because Hill applies to determine when the racial animus of
an employee is imputable to a corporation, it was error for the
district court to have refused to give an instruction under
Hill. And because, in this case, the mid-level manager with
racial animus may, as a factual matter, have substantially
influenced the decision not to renew Worldwide Services’
subcontract, the error was prejudicial. Accordingly, I believe
that a new trial is necessary to permit the jury to resolve who
DynCorp’s decisionmaker or decisionmakers were and whether they
were actually motivated by racial animus in deciding not to
renew Worldwide Services’ subcontract. Because I would grant
DynCorp’s request for a new trial, I would not reach the other
issues addressed by the majority, with one exception. In view
of the majority’s determination to affirm on liability and to
provide Judge Duncan with a majority on her discussion of
punitive damages, I join her discussion of punitive damages, as
contained in Parts II(D)(1) and (2).
41
I.
In February 2004, the ITS (International Technical
Services) Division of DynCorp won a contract from the State
Department to provide support for civilian police (“CIVPOL”)
programs in Iraq and Afghanistan. Thereafter, DynCorp awarded a
subcontract to Worldwide Services to perform communication and
information-technology services for the CIVPOL program pursuant
to “task orders” issued by DynCorp. The subcontract’s term
extended one year (February 2004 to February 2005) and was
renewable under four one-year options. DynCorp renewed the
subcontract in February 2005 and again in February 2006, but not
thereafter.
Worldwide Services was headed by Walter Gray and Reginald
Bailey, both African Americans, and the company was certified by
the Small Business Administration as a Section 8(a)
disadvantaged company. Before its subcontract with DynCorp,
Worldwide Services’ annual revenue was about $100,000, which was
produced primarily by providing information-technology services
to local businesses. During the first year of its subcontract
with DynCorp, however, Worldwide Services received over $20
million in revenues.
Richard Cashon, a DynCorp vice president and its program
manager for the CIVPOL program, was charged with formally
evaluating Worldwide Services’ performance under the
42
subcontract, and he gave it positive marks. In January 2006,
Cashon rated Worldwide Services’ performance as “exceptional”
and “very good,” noting Worldwide Services’ “technical depth in
terms of the number of technically competent individuals on
their staff” and “flexib[ility] in terms of operating in a
dynamic environment.” Cashon wrote that he would have no
reservations about using Worldwide Services in the future. A
few months later, Cashon again rated Worldwide Services’ work as
“good” or “excellent” in every category and again stated that
DynCorp “[w]ould . . . hire this contractor again.”
Despite Cashon’s positive evaluations, in early 2006
DynCorp received two letters from the State Department
criticizing both DynCorp and Worldwide Services’ performance.
In the first letter, the Principal Deputy Assistant Secretary
for the State Department’s Bureau of International Narcotics and
Law Enforcement Affairs wrote a letter to DynCorp’s CEO to
complain about a number of defects in DynCorp’s performance,
including its supervision of Worldwide Services. The letter
stated that “[Worldwide Services’] technical performance has in
general been inadequate to the point where it has disrupted
critical communications in the field.” The letter also made
clear that DynCorp’s relationship with the State Department
could be jeopardized if the problems were not resolved.
43
About three weeks later, a State Department representative
in Baghdad sent a second letter to DynCorp that focused
exclusively on the services provided by Worldwide Services in
Iraq, and this letter was even more critical of Worldwide
Services’ performance. It concluded that “[a] great deal must
be accomplished to improve many aspects of [Worldwide Services’]
service provision, levels of expertise, project management and
implementation strategies to effect acceptable standards of
IT/communications support.”
After receiving these letters, DynCorp developed a plan to
manage Worldwide Services more actively. Bob Rosenkranz, the
President of DynCorp’s ITS Division, designated Richard Walsh,
the Vice President for Operations, to serve as a “mentor” to
help Worldwide Services improve its performance. Walsh began by
having weekly meetings with Worldwide Services’ executives Gray
and Bailey, and in the first meeting Walsh emphasized that
Worldwide Services was “in danger of losing [DynCorp’s] business
altogether” if its performance did not improve. In February
2006, Walsh traveled to Afghanistan to observe Worldwide
Services’ performance on the ground and, as Walsh later
testified, he found “[t]he situation . . . much worse than I had
thought” and observed that “the basics were not being taken care
of.” Walsh was particularly concerned that those traveling into
hostile areas were at greater risk because the high-frequency
44
radio network, for which Worldwide Services had responsibility,
was not working properly.
When Walsh shared his observations with Rosenkranz,
Rosenkranz expressed hope that DynCorp could still “whip
[Worldwide Services] into shape.” Rosenkranz also described
Worldwide Services as “one of the favored ones,” suggesting that
he shared Walsh’s view that Worldwide Services received
“protection” from Steve Cannon, DynCorp’s CEO and the DynCorp
executive most responsible for DynCorp’s relationship with
Worldwide Services.
In addition to Walsh’s efforts, DynCorp also conducted
internal investigations into Worldwide Services’ performance in
both Iraq and Afghanistan, and DynCorp’s management received
separate reports from these investigations. The report from
Iraq, completed by June 19, 2006, noted that the “concern
regarding the status of IT and the [Worldwide Services] team
that provides that service to [DynCorp] is well-founded.” But
it also noted that “recent efforts by the [Worldwide Services]
team to improve the situation are typically reaching positive
results” and that “[t]he current situation is a contrast from
what is typically perceived as a rather negative history.” The
report from Afghanistan, completed between July 22-31, 2006,
found that “the CIVPOL Afghanistan program suffers from a
45
serious IT and [c]ommunications problem that is resulting in
reduced program efficiency and effectiveness.”
DynCorp’s relationship with Worldwide Services suffered an
additional serious blow when DynCorp received a third letter
from the State Department -- this time from the contracting
officer overseeing the CIVPOL contract -- complaining about
Worldwide Services’ performance. This letter, dated June 23,
2006, emphasized the State Department’s “concern[s] about
pervasive information technology (IT) performance deficiencies
on all DynCorp Task Orders.” After describing a number of
specific issues, the letter concluded by requesting a meeting
“to discuss this broad spectrum of information technology
deficiencies,” noting that “[t]he varied nature of these
problems and their pervasiveness suggests that they are
systemic.” Shortly after DynCorp received this letter, its
Board of Directors held a meeting, at which Cannon was
questioned about the State Department’s complaints. Cannon
responded that “it might become necessary to replace the
subcontractor in question.” Four days later, however, Cannon
resigned as President and CEO of DynCorp.
Cashon, the program manager, then decided not to issue any
additional CIVPOL task orders to Worldwide Services in Iraq.
While it was typical for the program manager to make such
decisions, in this case there was evidence that Rosenkranz and
46
Walsh participated in the decision. During the last week of
July, Cashon also decided to allow all remaining CIVPOL task
orders directed to Worldwide Services to expire and not to renew
DynCorp’s subcontract with Worldwide Services.
Worldwide Services commenced this action alleging, among
other things, that DynCorp’s decision not to issue further task
orders and not to renew its CIVPOL subcontract was the product
of intentional racial discrimination, in violation of 42 U.S.C.
§ 1981. At trial, Worldwide Services presented five items of
direct evidence to demonstrate racial animus.
First, Charles Jones, Worldwide Services’ Deputy Program
Manager in Iraq from March 2006 to August 2006, testified about
racially offensive statements made by Leon DeBeer, DynCorp’s
Iraq IT Manager and the DynCorp employee to whom Worldwide
Services’ employees reported in Iraq. Specifically, Jones
testified that in private conversations, DeBeer, a white South
African, regularly referred to Worldwide Services’ Walter Gray
as a “nigger,” a “bush native,” and a “kaffir.” He also
testified that DeBeer regularly complained that white people
“had made a grave error” by “tak[ing] the black man as a youth
and attempt[ing] to clothe him and send him to school” because
“the proper role of the black man was to go out and kill a lion,
proving his manhood, at which point in time he should be put to
work to feed his family” and “be mated with a woman so that he
47
would have more children, who could then be put to work feeding
the family.”
Second, Jones testified that while he was in Iraq, he heard
Mike Kehoe, DynCorp’s Deputy Program Manager in Iraq for another
State Department contract, describe the acronym for Worldwide
Network Services, “WWNS,” as standing for “where white men never
stay.”
Third, John Mack, a part owner of Worldwide Services,
testified that he once heard Walsh refer to Gray as “a stupid
black mother --.”
Fourth, Richard Spencer, a former DynCorp executive in the
ITS Division who is Hispanic, testified about the lack of racial
diversity among DynCorp’s ITS executives and about his belief
that his ethnicity played a role in the termination of his own
employment. *
*
The majority attributes Spencer’s termination to
Rosenkranz and repeatedly refers to it as evidence of
Rosenkranz’s racial animus. But Spencer testified that while
Rosenkranz signed his termination letter, Spencer had a “fairly
good” relationship with Rosenkranz, who is “not a bad guy.”
Spencer instead suggested that his termination was the decision
of Herb Lanese, DynCorp’s CEO at the time, who did not like
Spencer “for whatever reason.” Moreover, Spencer did not
attribute any racial motivation to Rosenkranz in signing the
letter. Considered in its full context, Spencer’s testimony
about his termination should not be used to impute racial animus
to Rosenkranz.
48
Finally, Spencer also testified about a dinner he attended
in October 2006 for all of Rosenkranz’s direct subordinates and
their guests -- approximately 40 persons -- at which Bill
Cavanaugh, DynCorp’s Vice President for Business Development,
presented Walsh with a shirt that said, “WWNS -- I took them
down, and all I got was this lousy T-shirt.” Cavanaugh then
proceeded to read a series of fictitious letters, the last of
which purported to be from Gray. According to Spencer,
Cavanaugh read the letter, “mak[ing] a bad impression of Walter”
by talking like “the character on Fat Albert” and using “his
interpretation of Ebonics.” Spencer testified that everybody
laughed and that specifically Rosenkranz “was laughing his ass
off” and Walsh was “laughing, happy.”
Recognizing that the evidence most strongly described
racial animus of DeBeer, DynCorp requested a jury instruction
from the district court, based on Hill, limiting those employees
whose racial animus would be imputable to the corporation. Its
requested instruction provided in part:
To the extent that [Worldwide Services] rests its
discrimination claim upon the discriminatory
motivations of a subordinate employee, [Worldwide
Services] must show by the greater weight of the
evidence that the subordinate employee possessed such
authority to be viewed as the one principally
responsible for the decision or the actual
decisionmaker for DynCorp.
49
The district court refused to give the instruction,
justifying its refusal by making a distinction between this case
and Hill. The court noted that the Hill opinion was limited to
employer liability under Title VII and the ADEA, whereas this
case involves liability under § 1981. The court stated,
“Plaintiffs pursuing claims under Title VII or the ADEA are
subject to stricter scrutiny than those pursuing claims under
Section 1981 because Title VII and ADEA actions must first
proceed through the EEOC process.” The court noted that our
decision in Hill has “never been extended beyond claims brought
under Title VII and the ADEA,” and it “decline[d] to be the
first court to expressly do so.” The court concluded that “the
Hill standard is not a correct statement of law for claims
brought under 42 U.S.C. § 1981.”
Rather than limit DynCorp’s discrimination liability under
§ 1981 to the standard stated in Hill, the district court
instructed the jury that the “race of [Worldwide Services’]
owners . . . must have been a factor that actually led to the
decision . . . not to renew or extend [Worldwide Services’]
CIVPOL subcontract or task orders.” (Emphasis added).
The jury found that DynCorp’s decision not to renew or
extend Worldwide Services’ CIVPOL subcontract or task orders was
based in part on racial animus imputed to the corporation, and
it returned a verdict in favor of Worldwide Services on its
50
§ 1981 claim, awarding it $3.42 million in compensatory damages
and $10 million in punitive damages. From the judgment entered
on the jury’s verdict, DynCorp filed this appeal.
II.
DynCorp’s decision not to renew its subcontract with
Worldwide Services was a corporate decision, and the
corporation’s management testified that the corporate decision
was made by executives whose motive for ending the relationship
with Worldwide Services was only business oriented -- based on
Worldwide Services’ poor performance, as graphically
demonstrated by the three letters of complaint from the State
Department -- and not for any reason of race.
Worldwide Services alleges that race was a motivating
factor, and the vast bulk of its direct evidence of racial
animus bore on DeBeer, the IT Manager in Iraq.
As a middle manager, DeBeer’s views about Worldwide
Services’ performance were influential in that Cashon listened
to executives both below and above him. But DeBeer was not the
decisionmaker or even one of several possible decisionmakers.
Everyone at DynCorp testified that the person who had the
authority to make the decision not to renew Worldwide Services’
subcontract was Cashon, the manager for the CIVPOL program, who
concededly did not have any racial animus toward Worldwide
51
Services. Indeed, he was a strong supporter of the firm until
evidence started coming in about its deficiencies. There was
also testimony that two other DynCorp executives, Rosenkranz and
Walsh, participated in the decision. While there was some
evidence of racial animus imputable to them, it was much weaker
and more isolated than that imputed to DeBeer. Specifically,
testimony showed that Rosenkranz and Walsh laughed at racial
jokes directed at Worldwide Services told at a dinner and that
Walsh once make a racial slur about Worldwide Services’ Walter
Gray.
In short, without the racial animus of DeBeer, no one can
predict how the jury might have ruled. The record amply
supports DynCorp’s suggestion that, absent DeBeer’s racial
animus, the evidence may have been too weak as a matter of law
to support a § 1981 claim and that therefore DeBeer’s racial
animus was critical. Because the district court allowed
DeBeer’s racial animus to be considered by the jury in deciding
whether DynCorp’s decision was racially motivated, it is a real
possibility that it allowed the jury to find § 1981 liability
erroneously. This is because DeBeer, as the subordinate of
Cashon, had influence on Cashon’s decision on behalf of DynCorp.
Without testimony of DeBeer’s racial animus, the jury was
essentially left with direct evidence that Rosenkranz and Walsh
52
laughed at racial jokes about Worldwide Services and Walsh once
spoke a racial slur about Gray.
Thus, it was likely critical to the jury’s verdict whether
DeBeer’s racial animus could be imputed to DynCorp as a
motivating factor in its not renewing Worldwide Services’
subcontract. Had the district court applied Hill, the jury
would have been told that DynCorp was not “liable . . . for the
improperly motivated person [DeBeer] who merely influences the
decision.” Hill, 354 F.3d at 291. We explained in Hill that an
employee, such as DeBeer, does not become a decisionmaker whose
discriminatory motivations may be attributed to the employer
“simply because he had a substantial influence on the ultimate
decision or because he has played a role, even a significant
one, in the adverse employment decision.” Id. (emphasis added).
If Hill had been applied, the jury would have been told that
Worldwide Services had to prove that DeBeer “possessed such
authority as to be viewed as the one principally responsible for
the decision or the actual decisionmaker for the employer”
before it could consider the impact of DeBeer’s racial animus.
Id. (emphasis added). Based on the testimony in this record
that Cashon made the decision with Rosenkranz and Walsh and that
DeBeer did not have the authority of one principally responsible
for the decision but could only be tagged as one having
53
influence on it, DeBeer’s racial animus would not have been
imputable to DynCorp.
In limiting a corporation’s liability for racial
discrimination in Hill to the conduct of persons actually
responsible for the corporation’s action, we carried out
Congress’ intent to hold a corporation responsible for racial
discrimination only when its executives and employees
responsible for the corporation’s decision acted with racial
animus, not when any corporate employee manifested racial
animus.
The district court, however, rejected the application of
Hill to § 1981 and instead instructed the jury that the race of
Worldwide Services’ owners “must have been a factor that
actually led to the decision” to terminate DynCorp’s
relationship with Worldwide Services. As a result, the jury was
permitted to consider the racial animus of any employee whose
influence “actually led to the decision.” The district court
thus extended corporate liability for § 1981 to the actions of
any person who influenced the decision, regardless of whether
that person was a decisionmaker. If Hill was applicable, the
district court’s instruction was legally erroneous.
Not only was the district court’s instruction erroneous
under Hill, if Hill was applicable, the error was material to
the outcome in this case. Without consideration of DeBeer’s
54
racial animus, the evidence to support a verdict was thin,
perhaps even fatally thin, and the district court surely
recognized this. It devoted substantial discussion to why it
decided not to give the Hill instruction, concluding that Hill
was “not a correct statement” of § 1981 law and that corporate
agency for discrimination under Title VII was “subject to
stricter scrutiny” than corporate agency under § 1981. Indeed,
the court acknowledged the importance of Hill when it stated
that it “adopted whole cloth DynCorp’s proffered Section 1981
jury instructions, excluding only the language specifically
addressing Hill’s holding.” (Emphasis added).
The dispositive question on appeal, therefore, reduces to
whether Hill accurately describes when the racial animus of
corporate employees may be imputed to a corporation for purposes
of the corporation’s liability for racial discrimination under
§ 1981. I submit that how racial animus is imputed to a
corporation for corporate liability is the same issue, whether
discrimination is alleged to be in violation of Title VII or of
§ 1981, as we have so recognized. Indeed, the majority, too,
assumes that Hill applies to § 1981 claims. This assumption is,
I believe, correct and determinative of this appeal.
55
III.
In Hill, a former Lockheed mechanic, whose employment was
terminated on the basis of three written reprimands, brought an
action against her corporate employer under Title VII and the
ADEA, alleging that her team’s safety inspector’s discriminatory
animus led him “to report admittedly valid infractions,”
resulting in her second and third reprimands. Hill, 354 F.3d at
283. Hill’s claim therefore rested on her argument that the
safety inspector’s alleged discriminatory animus should be
imputed to the corporation. Hill did not dispute that she had
violated corporate rules and standards, and she did not assert
that her direct supervisors, who issued the reprimands, or her
two program managers, who terminated her employment, acted with
discriminatory animus. The district court granted Lockheed’s
motion for summary judgment, and we affirmed. We held that Hill
could not base a claim on the safety inspector’s animus because
he was not one of the corporation’s decisionmakers with respect
to the decision to issue reprimands to Hill or to terminate her
employment.
In reaching this result, we held that “an employer will be
liable not for the improperly motivated person who merely
influences the decision [to take an adverse employment action],
but for the person who in reality makes the decision.” Hill,
354 F.3d at 291 (emphasis added). To be sure, we did not limit
56
corporate liability under Title VII and the ADEA to the actions
of only “formal decisionmakers for the employer,” because doing
so might allow employers “to insulate themselves from liability
simply by hiding behind the blind approvals, albeit non-biased,
of formal decisionmakers.” Id. at 290 (emphasis added). But we
also rejected the notion that the discriminatory motivations of
an employee may be attributed to the employer “simply because he
had a substantial influence on the ultimate decision or because
he has played a role, even a significant one, in the adverse
employment decision.” Id. at 291. Thus, we concluded that in
determining a corporation’s liability under Title VII or the
ADEA, the focus must be on the motivations of those agents of
the corporation who actually made the adverse employment
decision on behalf of the corporation:
In sum, to survive summary judgment, an aggrieved
employee who rests a discrimination claim under Title
VII or the ADEA upon the discriminatory motivations of
a subordinate employee must come forward with
sufficient evidence that the subordinate employee
possessed such authority as to be viewed as the one
principally responsible for the decision or the actual
decisionmaker for the employer.
Id.
Even though Hill defined corporate liability under only
Title VII and the ADEA, the agency issue resolved in Hill exists
under any discrimination statute creating corporate liability.
See Burlington Indus., Inc. v. Ellerth, 524 U.S. 742, 754
57
(1998). More to the point, in § 1981 claims, courts must answer
the same “general question [of] the proper extent of a[]
[corporate] employer’s responsibility for the offensive acts of
its employees.” Dennis v. County of Fairfax, 55 F.3d 151, 155
(4th Cir. 1995). And Congress, in drafting § 1981, need not
have provided an explicit direction to be clear that this
question “implicates principles of agency law.” Id. at 155.
Indeed, we have previously recognized that the same general
agency principles apply in interpreting § 1981 as apply in
interpreting Title VII. See Spriggs v. Diamond Auto Glass,
242
F.3d 179, 184, 186–90 (4th Cir. 2001) (noting that under both §
1981 and Title VII there must be “some basis for imposing
liability on [the corporate defendant]” and analyzing the
employer’s liability for a racially hostile work environment
without distinguishing between the two statutes (internal
quotation marks and citation omitted)); Lowery v. Circuit City
Stores, Inc.,
206 F.3d 431, 441 (4th Cir. 2000) (using the Title
VII standard for imputing liability to a corporate employer for
conduct alleged to justify punitive damages under § 1981).
Moreover, it would be analytically discordant not to apply
Title VII agency principles to § 1981 agency questions. An
employee alleging that his corporate employer intentionally
discriminated against him on the basis of race, in violation of
both Title VII and § 1981, would oddly be able to demonstrate
58
his employer’s liability under § 1981 for the discriminatory
motivations of an employee who substantially influenced, but did
not make, the decision to take an adverse employment action
against him, but he would not be able to do so under Title VII.
Similarly, an employee alleging intentional discrimination on
the basis of sex or religion premised on a subordinate
employee’s influential animus would have no recourse, while her
coworker’s analogous § 1981 claim would succeed. While we must
recognize that Title VII and § 1981 provide “separate, distinct,
and independent” causes of action, Johnson v. Railway Express
Agency, Inc., 421 U.S. 454, 461 (1975), the standard for
imputing racial animus to a corporation in making out each claim
must, out of logical and practical necessity, be the same.
Worldwide Services argues bluntly that Hill should not be
expanded because it was erroneously decided, relying on
decisions in other circuits that have criticized Hill. See
Poland v. Chertoff, 494 F.3d 1174, 1182-83 (9th Cir. 2007)
(finding Hill’s rule too narrow and holding instead that “even
if the biased subordinate was not the principal decisionmaker,
the biased subordinate’s [improper] motive will be imputed to
the employer if the subordinate influenced, affected, or was
involved in the adverse employment decision”); EEOC v. BCI Coca-
Cola Bottling Co. of L.A.,
450 F.3d 476, 487 (10th Cir. 2006)
(critiquing Hill’s “peculiar focus on who is a decisionmaker for
59
purposes of discrimination actions” on the ground that, under
agency law principles, an employer’s agents “include[] not only
‘decisionmakers’ but other agents whose actions, aided by the
agency relation, cause injury” (internal quotation marks and
citation omitted)); Lust v. Sealy, Inc., 383 F.3d 580, 584 (7th
Cir. 2004) (criticizing Hill as “inconsistent with the normal
analysis of causal issues in tort litigation”); cf. Ricci v.
DeStefano,
129 S. Ct. 2658, 2689 (2009) (Alito, J., concurring)
(noting circuit split and describing Hill as adopting “[t]he
least employee-friendly standard” by “ask[ing] only whether ‘the
actual decisionmaker’ acted with discriminatory intent”). But,
it would be inappropriate for us to limit Hill arbitrarily,
which is precisely what we would have to do in order to conclude
that the agency principles announced in Hill do not apply to
§ 1981 actions. Worldwide Services’ argument that Hill was
wrongly decided can only be directed to this court sitting en
banc.
In sum, the issue of when to impute the racial animus of an
employee to a corporation for liability under Title VII and
§ 1981 must be and, indeed, is the same. See Spriggs, 242 F.3d
at 184, 186-90; Lowery, 206 F.3d at 441. It was thus
prejudicial error for the district court to have concluded that
the standard was different and to have refused to instruct the
jury on the Hill standard for determining whether the racial
60
animus of DeBeer was imputable to DynCorp in connection with
DynCorp’s decision not to renew the subcontract with Worldwide
Services. Because a new trial on Worldwide Services’ § 1981
claim is thus required, I would vacate the judgment on the
§ 1981 claim, including the award of punitive damages, and
remand for a new trial, requiring the district court to instruct
the jury on Hill.
61
JONES, Chief District Judge, concurring in part and dissenting
in part:
I join with Judge Duncan in affirming the district court’s
refusal to instruct the jury based on Hill v. Lockheed Martin
Logistics Mgmt., Inc., 354 F.3d 277 (4th Cir. 2004), its denial
of a Rule 50(b) motion on the plaintiff’s § 1981 claim, and its
evidentiary rulings. However, I would also affirm the district
court’s refusal to set aside the jury’s punitive damage award. 1
The majority finds that there was insufficient evidence to
support an award of punitive damages as to the § 1981 claim. To
the contrary, I believe that there was ample evidence that
DynCorp International, LLC (“DynCorp”) terminated the
subcontract it entered into with Worldwide Network Services,
Inc. (“WWNS”) to provide communication and information-
technology services for the U.S. State Department’s Civilian
Police programs in Iraq and Afghanistan (“CivPol Subcontract”)
1
The result of the majority holding in this appeal is to
remand the case for a new trial solely on to the issue of
punitive damages as to Count 3, tortious interference with
contract. Punitive damages on that count will be capped by state
law at $350,000. Va. Code Ann. § 8.01-38.1 (2007). Under Judge
Niemeyer’s view of the case, the case would be remanded for a
new trial as to both liability and damages on the § 1981 claim.
Because there is no statutory cap on § 1981 punitives, this
result would preserve the possibility of a larger punitive
damage award –- perhaps as much as $10 million, as awarded by
this jury. If WWNS had its option, it might prefer Judge
Niemeyer’s result, but of course we do not decide legal issues
on the basis of the parties’ preferences.
62
in the face of knowledge that “it may be acting in violation of
federal law.” Kolstad v. Am. Dental Ass’n, 527 U.S. 526, 535
(1999).
Indeed, DynCorp was warned by WWNS that ending the CivPol
Subcontract might violate WWNS’s federally protected rights. On
July 26, 2006, WWNS sent DynCorp’s in-house counsel a letter,
via e-mail and overnight mail, demanding that DynCorp
immediately “comply with its obligations under the” CivPol
Subcontract and informing DynCorp that WWNS had “evidence that
DynCorp’s actions have been racially-motivated in violation of
federal anti-discrimination laws.” (J.A. 2692.) The evidence
also shows that the executives who made the decision to
terminate the CivPol Subcontract were aware of the contents of
this letter. On July 26, 2006, WWNS Chairman and CEO, Walter
Gray, wrote two of DynCorp’s decisionmakers, Richard Cashon and
Robert Rosenkranz -- as well as Herb Lanese, the CEO of DynCorp
-- to confirm that DynCorp’s in-house counsel received the
letter “regarding [DynCorp’s] wrongful and improper conduct in
terminating [WWNS’s] services under the CivPol subcontract.”
(J.A. 2694.) Richard Walsh, Division Vice-President of
Operations for DynCorp, later e-mailed an internal PowerPoint
presentation to other DynCorp executives including Cashon,
outlining the eventual termination of the CivPol Subcontract.
One of the slides of the presentation stated that “[r]ecent
63
correspondence indicate[s] that WWNS is planning legal action
against [DynCorp] based on racial discrimination.” (J.A. 2788.)
Comparing this case to Anderson v. G.D.C., Inc., 281 F.3d
452 (4th Cir. 2002), it is clear a jury could reasonably
conclude from the July 26 letter that DynCorp’s decisionmakers
discriminated against WWNS “in the face of a perceived risk that
its actions will violate federal law.” Kolstad, 527 U.S. at
536. In Anderson, one of the defendant’s employees was found to
have sexually harassed the plaintiff in violation of Title VII,
a federal law prohibiting discrimination on the basis of sex.
281 F.3d at 458-59. The only evidence presented that the
employee knew of the Title VII prohibition was that he looked
at, but did not read, a poster entitled “Sexual Harassment,”
advising employees of proper workplace conduct. Id. at 460.
Nevertheless, this court found that the employee’s mere
“awareness” of the poster “suggested at least a rudimentary
knowledge of its import” sufficient to pass the Kolstad test.
Id.
Here, the DynCorp decisionmakers were directly warned, and
even anticipating, that they would have to confront litigation
for racial discrimination if they continued to pursue the
termination of the CivPol Subcontract. Their level of awareness
of WWNS’s federally protected rights was therefore well beyond
64
that of the employee in Anderson who at most saw the title of a
poster on a wall.
DynCorp argues that, even if the July 26 letter did put the
decisionmakers on notice, it came too late to avoid violating
§ 1981, but I find little merit to this argument. The letter
was sent well before WWNS had ceased operations under the CivPol
Subcontract in either Iraq or Afghanistan. Not only were the
task orders under the CivPol Subcontract still in effect, but
DynCorp had not yet notified WWNS of its intention to let any of
the task orders expire.
The task order in Iraq was not scheduled to end until
August 11, 2006. Although DynCorp formally informed WWNS in a
letter dated July 28, 2006, that DynCorp intended to let the
personnel portion of this task order expire, DynCorp also
extended its purchase of services from WWNS in Iraq another
thirty days.
Moreover, the four task orders in Afghanistan continued
until August 31, September 8, September 30, and October 9, 2006,
months after WWNS’s warning. According to the CivPol Program
Manager Richard Cashon, “The task orders in Afghanistan had a
little bit more time on them . . . . It could have been
conceivable to continue with WWNS in Afghanistan, if the
situation dictated it, even though we were transitioning out of
Iraq.” (J.A. 1678.) According to DynCorp’s own PowerPoint
65
presentation, the “[f]inal transition” from WWNS was not set to
occur until October 9, 2006. (J.A. 2791.) Thus, even if, by
July 26, 2006, DynCorp’s decisionmakers were already scheming to
terminate the CivPol Subcontract, they still had plenty of time
to reverse their decision in order to avoid violating § 1981.
Accordingly, I find that there was sufficient evidence that
DynCorp was aware that its actions might violate WWNS’s
federally protected rights, 2 and I would not vacate the punitive
damage award on this ground.
In addition, because DynCorp did not properly object to the
district court’s punitive damage instruction to the jury, and
because the instruction given did not prejudice DynCorp, I would
not vacate the award on that ground.
Finally, the amount of the punitive damage award does not
violate due process, as argued by DynCorp, and is not assailable
for that reason. See State Farm Mut. Auto. Ins. Co. v.
Campbell, 538 U.S. 408, 425 (2003) (holding that a single digit
ratio, especially four to one or less, between punitive and
compensatory damages is “likely to comport with due process”).
2
It is true, as Judge Duncan points out, that in affirming
the punitive damage award, the district court did not cite any
evidence that DynCorp had knowledge that it might violate
§ 1981. However, DynCorp never claimed below that it lacked
knowledge of WWNS’s federally protected rights.
66
For these reasons, while I otherwise agree with Judge
Duncan, I respectfully dissent from setting aside the jury’s
punitive damage award.
67
