Appeals court tosses $366 million verdict against FedEx in discrimination case

The U.S. Fifth Circuit Court of Appeals on Thursday reversed a $366 million verdict against FedEx in a case where a Black district sales manager alleged she was fired in retaliation for accusing her supervisor of racial discrimination.

The initial jury verdict awarded Jennifer Harris, who was a district sales manager in Texas, $120,000 for prior personal damages, $1,040,000 for future damages and $365,000,000 in punitive damages — totaling $366,160,000 in damages that FedEx was required to pay.

FedEx appealed the original judgment, asking the court whether a provision in her contract barred her from bringing the lawsuit, whether Harris presented enough evidence to support the retaliation claim, whether the maximum-recovery rule limited the amount of damages Harris could be awarded, whether she presented enough evidence to be granted punitive damages and if those damages were excessive and whether FedEx should be granted a new trial based on one of the expert’s testimony being allowed at trial.

Harris' contract included a provision that only allowed her to bring a legal action against FedEx "within the time prescribed by law or six months from the date of the event forming the basis of [her] lawsuit, whichever expires first."

The district court that initially presided over the trial first ruled against FedEx, citing that the provision violated public policy. In a later motion, the court ruled against FedEx again, but this time reasoned that the provision should only apply to lawsuits that stemmed from Harris' employment contract.

The appeals court reversed that ruling, saying that the provision barred Harris from filing the lawsuit.

"The limitation provision in Harris’ contract is reasonable and enforceable, and the district court erred by allowing Harris’… claims to proceed to trial,” the appeals court ruled. “That determination has outsized importance here because [racial discrimination] claims are not subject to statutory caps, but Title VII [of the civil rights act] claims are… Because we reverse the court’s denial of FedEx’s motion for judgement as a matter of law as to Harris’ [racial discrimination] claims, the most she can recover is $300,000."

The appeals court did agree with Harris, finding that evidence supported the allegation that FedEx retaliated against Harris.

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On the maximum recovery rule question, the appeals court found that it had to decide whether $300,000 in damages would be excessive since it decided earlier in its ruling that the maximum amount she could recover was $300,000.

FedEx argued that she should be awarded no more than $15,000, claiming the harm she suffered was not specific. Harris presented evidence that she sought medical treatment for physical ails, like gaining weight and stomach problems, along with mental anguish, such as anxiety and depression.

The appeals court ruled she was entitled to more than the $15,000, but not $300,000, saying "a base sum of $100,000 is more appropriate." After adjusting for inflation, and to avoid substituting their judgment for the jury’s, the court said Harris was entitled to nearly $250,000 in compensatory damages.

When looking at whether she should be awarded punitive damages, the court found that even if ]Harris’ supervisor acted with malice and reckless indifference, FedEx made efforts to comply with Title VII. Due to that, the court said punitive damages should not be awarded.

The court also found that the original district court abused its discretion by allowing one of Harris’ experts to testify in the case. The expert, on cross-examination, said she did not have knowledge of FedEx’s human resource policies and that her testimony was based only on Harris’ complaint.

However, the appeals court found that the testimony from the expert did not prejudice FedEx, and, even if the testimony caused the jury to award punitive damages, the appeals court reversing punitive damages removed any prejudice. That reasoning caused the court to deny a new trial.

The full damages FedEx should now owe Harris, the appeals court ruled, were only the compensatory damages totaling $248,619.57.

FedEx, in an email statement about the appeals court's ruling, said it believes it acted properly in firing Harris.

"We remain confident that we acted properly regarding the termination of Ms. Harris and are pleased with the court's decision to reduce the damages," FedEx said in the statement.

Why did Harris sue FedEx?

FedEx hired Harris in 2007 and her contract contained a provision that only allowed her to bring a legal action against the company “within the time prescribed by law or six months from the date of the event forming the basis of [her] lawsuit, whichever expires first.”

Harris was promoted to a district sales manager position in 2017. In that role, she led eight account executives, and the ruling said FedEx measured Harris’ success through the number of sales her team made.

She was successful initially and was given an award in 2018, but the company then said the performance of Harris and her team began to decline in mid-2018. Between October 2018 and February 2019, the court said Harris and her direct supervisor, a white woman named Michelle Lamb, met to talk over strategy and how to improve performance.

In March 2019, the court said Lamb suggested Harris step down as sales manager. Shortly after that, Harris sent an email to a company vice president alleging Lamb was discriminating based on Harris’ race.

A human resources investigation was opened and ended in early June that year, saying Harris’ claims were unsubstantiated.

FedEx policy prevented Lamb from disciplining Harris during the investigation, but about three weeks after it had ended, Lamb required Harris to create a “performance improvement plan.”

“It further advised Harris that ‘recurrent patterns of [her] performance [would] not be tolerated’ and might result in her termination,” the ruling read.

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Harris filed another complaint, alleging the requirement from her supervisor was retaliation for her first complaint, and another FedEx investigation found her allegations unsubstantiated.

After that investigation, Lamb sent another letter to Harris requiring her to submit another performance improvement plan. Harris filed another complaint, and another FedEx investigation found the claim to be unsubstantiated.

That investigation ended on Dec. 31, 2019, and Lamb submitted a request for termination to human resources seven days later, citing "Harris’ continued poor performance and failure to meet the terms of her two performance improvement plans. HR approved the request, and FedEx fired Harris, effective January 8.”

Harris filed her lawsuit in May 2021, 16 months after being fired by FedEx.

Lucas Finton is a criminal justice reporter with The Commercial Appeal. He can be reached at Lucas.Finton@commercialappeal.com, or (901)208-3922, and followed on X, formerly known as Twitter, @LucasFinton.

This article originally appeared on Memphis Commercial Appeal: FedEx discrimination suit: $366 million verdict reversed by federal court