Darr v. Phillips 66 Company

569 F.Supp.3d 753

Michelle J. DARR, Plaintiff,

v.PHILLIPS 66 COMPANY, Defendant.

Case No. 3:17-CV-1355-NJR

United States District Court, S.D. Illinois.

Signed November 2, 2021

Jill A. Silverstein, Joshua M. Pierson, Ferne P. Wolf, Sowers & Wolf, LLC, St. Louis, MO, Russell C. Riggan, Samuel W. Moore, Riggan Law Firm LLC, Kirkwood, MO, for Plaintiff.

Ian P. Cooper, Mollie Gentry Mohan, Jenna M. Lakamp, John M. Reynolds, Tueth, Keeney, St. Louis, MO, for Defendant.

MEMORANDUM AND ORDER

ROSENSTENGEL, Chief Judge:

This matter is before the Court on a Motion for Leave to File Second Amended Answer to Plaintiff's Complaint (Doc. 80) filed by Defendant Phillips 66 Company ("Phillips 66"). For the following reasons, the motion is granted.

FACTUAL AND PROCEDURAL BACKGROUND

For nearly four years, the parties have been litigating whether Phillips 66 violated the Americans with Disabilities Act, 42 U.S.C. § 12101, et seq., ("ADA"), by terminating Michelle Darr from her employment because of her multiple sclerosis ("MS"). (Doc. 1). On March 1, 2018, Phillips 66 answered the complaint. (Doc. 13). On March 28, 2018, the Court approved and entered the parties’ Proposed Scheduling and Discovery Order. (Doc. 20). In the parties’ Proposed Scheduling and Discovery Order, the parties agreed that motions to amend the pleadings shall be filed by June 25, 2018. (Doc. 20-1).

Phillips 66 now seeks leave to file a Second Amended Answer to include the affirmative defense that Darr is not entitled to punitive damages under Kolstad v. Am. Dental Ass'n , 527 U.S. 526, 119 S.Ct. 2118, 144 L.Ed.2d 494 (1999). Darr timely filed an opposition to the motion for leave. (Doc. 81).

ANALYSIS

I. The Kolstad Defense

Phillips 66 filed this motion for leave because of a recent district court case from Wisconsin, Equal Emp. Opportunity Comm'n v. Wal-Mart Stores, Inc. , 503 F. Supp. 3d 801 (W.D. Wis. 2020). In Wal-Mart Stores , the court held that the defendant employer was required to plead the Kolstad defense as an affirmative defense. Thus, "out of an abundance of caution and in compliance with the district court's admonition in Wal-Mart , [Phillips 66] respectfully seeks leave to add a single affirmative defense asserting that [Darr] is not entitled to punitive damages under Kolstad ." (Doc. 80, p. 2).

The Seventh Circuit has repeatedly reminded courts and counsel that district court opinions have no precedential value. See, e.g., Midlock v. Apple Vacations West, Inc. , 406 F.3d 453, 457–58 (7th Cir. 2005). With that said, Wal-Mart Stores is on appeal, and the Seventh Circuit held oral argument on September 24, 2021. The Court also agrees that "Seventh Circuit has not ruled expressly that the Kolstad good faith defense is an affirmative defense." Wal-Mart Stores, Inc. , 503 F.Supp.3d at 817. Thus, exploring whether the Kolstad defense is an affirmative defense is necessary for the Court's analysis.

A. Affirmative Defense Analysis

In Kolstad , 527 U.S. 526, 119 S.Ct. 2118, 144 L.Ed.2d 494, the Supreme Court "consider[ed] the circumstances under which punitive damages may be awarded in an action under Title VII." Id. at 530, 119 S.Ct. 2118. Much of the Court's analysis centered on whether the plaintiff had to demonstrate that her employer had acted egregiously. Id. at 534, 119 S.Ct. 2118. 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, 119 S.Ct. 2118. The Court continued, "in the punitive damages context, an employer may not be vicariously liable for the discriminatory employment decisions of managerial agents where these decisions are contrary to the employer's ‘good-faith efforts to comply with Title VII.’ " Id. at 545, 119 S.Ct. 2118 (citing Kolstad v. Am. Dental Ass'n , 139 F.3d 958, 974 (D.C. Cir. 1998) (Tatel, J., dissenting)).

The Seventh Circuit characterizes the Supreme Court's punitive damages analysis under 42 U.S.C. § 1981a as a three-part inquiry. See E.E.O.C. v. AutoZone, Inc. , 707 F.3d 824, 835 (7th Cir. 2013). "First, the plaintiff must show that the employer acted with ‘malice’ or ‘reckless indifference’ toward the employee's rights under federal law." Id. (citing Kolstad , 527 U.S. at 533-39, 119 S.Ct. 2118 ). "Second, the plaintiff must establish a basis for imputing liability to the employer based on agency principles." Id. (citing Kolstad, 527 U.S. at 539–44, 119 S.Ct. 2118 ). "Third, when a plaintiff imputes liability to the employer through an agent working in a ‘managerial capacity ... in the scope of employment,’ the employer has the opportunity to avoid liability for punitive damages by showing that it engaged in good-faith efforts to implement an anti-discrimination policy." Id. (citing Kolstad, 527 U.S. at 544–46, 119 S.Ct. 2118 ).

The district court in Wal-Mart Stores , 503 F. Supp. 3d 801, then expanded on the Supreme Court and Seventh Circuit's punitive damages analysis by noting that the "court of appeals has interpreted Kolstad as placing the burden of proof on the defendant to show good faith and not making it an element of a punitive damages claim." Id. at 817 (citing Bruso v. United Airlines, Inc. , 239 F.3d 848, 858-59 (7th Cir. 2001) ). By finding that the third-part of the Kolstad inquiry is defendant's burden, the district court in Wal-Mart Stores found that the Kolstad defense is an affirmative defense. Id. at 817 (acknowledging that the Kolstad defense is an affirmative defense because "an affirmative defense is one on which defendant bears the burden of proof") (citing to Winforge, Inc. v. Coachmen Indus., Inc. , 691 F.3d 856, 872 (7th Cir. 2012) ).

In Winforge , however, the Seventh Circuit noted "a defense is an affirmative defense (a) ‘if the defendant bears the burden of proof’ under state law or (b) ‘if it [does] not controvert the plaintiff's proof. ’ " Id. at 872 (quoting Brunswick Leasing Corp. v. Wisconsin Cent., Ltd. , 136 F.3d 521, 530 (7th Cir. 1998) ) (emphasis added). Applying Winforge , the Seventh Circuit in Reed v. Columbia St. Mary's Hosp. , 915 F.3d 473 (7th Cir. 2019), held that the religious exemption defense under ADA Title III is an affirmative defense "because it assumes the plaintiff can prove everything she must to establish her claim but may still act to defeat her claim." Id. at 477. The Court noted that "[t]he religious exemption defense does not controvert the plaintiff's proof. " Id. at 478. (emphasis added).

The Kolstad defense, however, does not fit within the Seventh Circuit's analysis in Winforge and Reed . Unlike the religious exemption in Reed , where a plaintiff's claim is defeated even if plaintiff can prove everything to establish her claim, the Kolstad defense does not defeat a plaintiff's claim if a plaintiff proves everything to establish punitive damages. See Bruso , 239 F.3d at 860-61 (acknowledging that the "[plaintiff] presented sufficient evidence to allow a reasonable jury to conclude that [defendant] did not engage in a good faith effort to comply with Title VII"). Indeed, the Kolstad defense "is a fact-intensive analysis, and ‘although the implementation of a written or formal antidiscrimination policy is relevant to evaluating an employer's good faith efforts ..., it is not sufficient in and of itself to insulate an employer from a punitive damages award.’ " AutoZone, Inc. , 707 F.3d at 835 (quoting Bruso , 239 F.3d at 858 ).

Further, the Kolstad defense controverts plaintiff's proof. "When a plaintiff imputes liability to the employer through an agent working in a ‘managerial capacity ... in the scope of employment,’ the employer has the opportunity to avoid liability for punitive damages by showing that it engaged in good-faith efforts to implement an antidiscrimination policy." AutoZone, Inc. , 707 F.3d at 835. In other words, the employer is controverting the plaintiff's proof of punitive damages by disputing the liability imputed on it through its employees’ actions. As noted in Cooke v. Stefani Mgmt. Servs., Inc. , 250 F.3d 564, (7th Cir. 2001) :

In a case involving vicarious liability, the plaintiff must also establish a basis for imputing liability to the employer by showing that the employee who discriminated against him was a manager, acting within the scope of his employment. Bruso v. United Airlines, Inc. , 239 F.3d 848, 858 (7th Cir. 2001). An employer may escape punitive damages liability for its manager's acts, however, if it can demonstrate a good faith attempt to establish and enforce an antidiscrimination policy.

Id. at 568.

The Court is not persuaded by circuit court cases that conclusively acknowledge the Kolstad defense as an affirmative defense. The First, Second, Fourth, Sixth, and Ninth Circuit cases do not provide reasoning as to why the Kolstad defense is an affirmative defense. Rather, these cases appear to conclusively characterize the Kolstad defense as an affirmative defense. See e.g., Romano v. U-Haul Int'l , 233 F.3d 655, 670 (1st Cir. 2000) (mentioning the phrase "affirmative defense" once when noting that "[a]lthough Kolstad does not state specifically which party must put forth such evidence, the good-faith aspect of Kolstad has subsequently been characterized as an affirmative defense") (emphasis added); Zimmermann v. Assocs. First Cap. Corp. , 251 F.3d 376, 385 (2d Cir. 2001) (mentioning the phrase "affirmative defense" three times without explaining why the Kolstad defense is an affirmative defense); White v. BFI Waste Servs., LLC , 198 F. App'x 283, 287 (4th Cir. 2006) ("[w]hile the ineffectiveness of an antiharassment policy defeats an employer's affirmative defense, as we have already noted, a policy's ineffectiveness alone cannot demonstrate the lack of good faith required for justifying an award of punitive damages"); E.E.O.C. v. New Breed Logistics , 783 F.3d 1057, 1076 (6th Cir. 2015) ; Passantino v. Johnson & Johnson Consumer Prod., Inc. , 212 F.3d 493, 516 (9th Cir. 2000).¹

For these...