Top Ten Jury Verdicts of 2006:$61 million total verdict in workplace discrimination case

AT-A-GLANCE

Verdict: $61 million total; $50 million in punitives

State: California

Type of case: Workplace discrimination

Trial: 6 weeks

Deliberations: Compensatory damages - 2 hours; Punitive damages - 1 hour

Status: Award reduced to $12.4

Case name: Issa v. Roadway Package Systems

Date of verdict: May 24 (compensatories); June 2

(punitives)

Plaintiffs' attorney: Christopher B. Dolan of The Dolan Law Firm in San Francisco.

Defense attorneys: James M. Nelson of Seyforth Shaw in Sacramento, Calif. (compensatory damages); Debra S. Belaga of O'Melveney & Myers in San Francisco for FedEx (punitive damages); Bobbie J. Wilson of Howard Rice Nemerovski Canady Falk & Rabkin in San Francisco for Shoun (punitive damages).

Employers who lack workplace harassment policies received a wake- up call on June 2, 2006, when a California jury awarded $61 million to two Lebanese-American Federal Express drivers who were victims of ethnic discrimination and harassment at the company.

FedEx Ground spokesman Perry Colosimo called the verdict "excessive," and Alameda County Superior Court Judge Stephen Dombrink eventually agreed, whittling the award to $12.5 million on Sept. 5.

"The harassment was mostly just offensive name-calling," he wrote to explain the reduction.

The plaintiffs accepted the smaller award, but their lawyer, Christopher B. Dolan, is adamant that the case was more than a matter of name-calling.

"It was a brave statement by this jury, after hearing all the evidence, that this conduct will not be tolerated in a decent, law- abiding society," he said.

Dolan, who practices in San Francisco, called it "a landmark civil-rights case" that has sent a message to employers about the importance of workplace non-harassment policies.

The verdict should send a strong message, agreed John G. McDonald, a partner who practices labor and employment law at Helms Mulliss Wicker in Charlotte, N.C.

"You have to remember that juries are made up of employees," he said. "When they're in the jury box, that's the time when they can say what's fair and what's not fair. Many of them have had their own bad experiences at work and this is their chance to right that wrong."

He said the verdict illustrates the importance of establishing good anti-harassment policies to prevent legal problems. (FedEx's harassment policy didn't apply to the plaintiffs because they were independent contractors).

First impression

Prior to meeting with Dolan, Kamil Issa and Edgar Rizkallah had gone to 10 other law firms and the NAACP, none of whom wanted to take on the case. Dolan said other lawyers shied away from the case because Issa and Rizkallah were contractors - and contractors weren't covered by California's Fair Employment and Housing Act (FEHA).

But Dolan took the case anyway.

"I just thought it was wrong," he said. "I felt it was my chance to make a difference."

Issa and Rizkallah told Dolan that they had experienced ongoing harassment by several FedEx Ground workers, including the terminal manager.

"It was terrible," Dolan said. "They were called 'sand niggers,' 'terrorists,' 'camel jockeys.'"

Dolan filed suit against both terminal manager Stacey Shoun, for personal conduct, and FedEx Ground, for failing to take steps to prevent workplace harassment from occurring.

The plaintiffs were born in Lebanon, but came to the U.S. as children when their families fled to escape persecution from Hezbollah.

At FedEx Ground, the harassers sometimes called the plaintiffs "Hezbollah," Dolan said, "which is akin to calling a child who lost their parents to the death machine at Auschwitz a Nazi."

Dolan received his first big break on Jan. 1, 2000, when sweeping changes to FEHA were enacted, including the extension of anti- harassment protection to independent contractors. But liability remained unclear since most of the harassment took place before the amendments went into effect.

Because Issa and Rizkallah were now members of a new protected class under FEHA - independent contractors - the case was one of first impression

The lawsuit sought to include pre-2000 conduct, but Dolan said the judge ruled that Shoun could not be held liable for anything that happened prior to 2000.

However, Dolan said, the pre-2000 evidence was admissible insofar as it "demonstrated the hostile environment that existed once the law changed."

Trial without experts

Dolan and other attorneys from the six-lawyer firm conducted "extensive depositions" of the harassers and senior management, who denied any knowledge of alleged abuses.

Company lawyers would not comment on the trial, but Dolan characterized their defense as "essentially blanket denial."

"The defense theme was they could not really have been harassed since they were not fired and they were paid well," he said.

With this defense in mind, Dolan emphasized during jury selection that this was a civil rights case, asking panel members whether they "thought that it was OK to call someone a sand nigger so long as you did not fire him and paid him well."

He characterized jurors as conservative and noted that several stated that they were opposed to both emotional-distress and punitive damages.

During the seven-week trial, neither Dolan nor the defense lawyers used any experts, focusing their cases instead on statements of employees and managers.

Dolan relied on seven FedEx Ground employees who "testified that they had complained and witnessed both conduct and complaints being made to management."

The defense, in turn, relied on the testimony of Shoun and other management personnel. Dolan attacked their credibility by focusing on inconsistencies in their testimony and "the failure to produce available stronger evidence, such as surveys of the management, completed by all drivers, which would have reflected how drivers felt about management."

Dolan contended that FedEx knew of the harassment and tried to cover it up. He introduced evidence that FedEx had destroyed contractor surveys after the suit was filed, asserting it did this because the surveys would have shown that Issa and Rizkallah had complained to management to no avail. He said other potentially damaging records also disappeared, such as notes to management by supervisors about racist statements by Shoun.

He told the jury that the conduct was "systematic, pervasive and severe," causing extreme emotional distress.

Jurors double damage request

The first phase of the trial focused on compensatory damages. Dolan told the jury he believed that his clients deserved $2.5 million each.

The jury awarded twice that much. After just two hours of deliberations, they ordered FedEx to pay the plaintiffs $5 million each and the station manager to pay them $500,000 each, for a total of $11 million in compensatory damages.

The jury was also asked to determine whether the defendant's behavior was malicious, and when the jury answered yes, the judge scheduled a second phase of the trial to determine punitive damages.

Judge Dombrink asked the jurors if they wanted to proceed with the second phase, since the award for emotional damages was so high. The jury said yes.

Bouyed by the jurors' apparent animosity towards the defendants, Dolan decided to swing for the fence in phase two of the trial, telling jurors that his clients deserved 1 percent of the reported net worth of FedEx Ground - $23.7 million each.

After deliberating for just one hour, the jury again exceeded Dolan's suggestion, awarding Issa and Rizkallah $25 million each.

At his clients' suggestion, Dolan asked the jury to go easy on Shoun, who had already suffered a $1 million hit. The jury complied, ordering the manager to pay the plaintiffs just $28 each in punitive damages.

The total award - $61,000,056 - was reportedly the biggest ever under FEHA. It was also a record for Dolan - even after the reduction by Judge Dombrink three months later. Dolan said he's had several seven-figure verdicts and settlements, but this is his first eight-figure award.

FedEx attorneys have declined to discuss the case. During the compensatory trial, the defense used one law firm - Seyfarth Shaw of San Francisco - to represent both FedEx Ground and Shoun. But after suffering the $11 million verdict, the defendants turned to an entirely new set of lawyers, with separate counsel for the company and Shoun.

If this was an attempt by the company to distance itself from Shoun's behavior, it didn't work, since FedEx suffered an even bigger hit in the punitive phase.

The only defense lawyer to comment on the case was Shoun's new lawyer in the punitive phase, Bobbie J. Wilson of Howard Rice Nemerovski Canady Falk & Rabkin in San Francisco. But she said she could offer little insight into the broader case because most of what she knew of it was from reading the court transcript.

"I was trying to figure out what made this jury so angry," she said. "I really don't know."

She speculated, however, that the jurors may have been reacting to the defense's blanket-denial in the face of plaintiffs' witnesses who testified that harassment was occurring.