In 2004, the Texas Supreme Court issued a ruling that gave employers an added measure of protection from large jury verdicts in employment discrimination and harassment cases.
The case was Hoffman-La Roche, Inc. v. Zeltwanger. Ms. Zeltwanger sued her former employer, Hoffman-La Roche ("Roche"), alleging a myriad of claims against the company and her former supervisor, Mr. Webber, for Webber's alleged sexual harassment and other misconduct. Although there were plenty of sordid details, Zeltwanger's allegations went something like this: Webber made repeated jokes and conversation regarding his sexual encounters and Zeltwanger's physique. When Zeltwanger informed a management official, she was told that complaining would only jeopardize her chances of advancement. After Zeltwanger filed a formal complaint with the company, Webber gave her a scathing performance review, which resulted in the termination of her employment.
At trial, the jury believed Zeltwanger's story. In fact, the jury was so angered by the case that it awarded her approximately $8.5 million for the statutory sexual harassment claim and another $9 million for a claim called "intentional infliction of emotional distress." Intentional infliction of emotional distress is a judicially created claim that allows a plaintiff to recover damages if:
- the defendant acted intentionally or recklessly;
- the defendant's conduct was extreme and outrageous;
- the defendant's actions caused the plaintiff emotional distress; and
- the resulting emotional distress was severe.
Such claims are regularly added to harassment and discrimination lawsuits, especially where sexual harassment is alleged.
Roche sought relief from the verdict, noting that Zeltwanger's damages were statutorily limited or "capped" at $300,000 for a sexual harassment claim under the Texas Commission on Human Rights Act. In response, the court allowed Zeltwanger to opt for her $9 million in damages under her intentional infliction of emotional distress claim, which carries no damage limitation. Put another way, the trial court allowed Zeltwanger to do an end-run around the sexual harassment damage caps of the Texas Commission on Human Rights Act by placing her claims under the heading of intentional infliction of emotional distress. The result was that Zeltwanger stood to recover $9 million dollars, as opposed to only $300,000.
On appeal, the Texas Supreme Court established that intentional infliction of emotional distress is only a "gap-filler" claim. In other words, it can only be used where other causes of action do not provide for recovery. In Zeltwanger's case, she had another avenue for recovery -- her sexual harassment claim under the Texas Commission on Human Rights Act.
The Supreme Court held that there could be instances where the emotional distress claim is based on different facts than the harassment or discrimination claim, which would allow the plaintiff to assert a claim for intentional infliction of emotional distress. However, in most cases, where the basis of the intentional infliction of emotional distress claim is the same as the harassment or discrimination claim, the plaintiff will be limited to proceeding under the Texas Commission on Human Rights Act (or Title VII), and will not be allowed to recover for intentional infliction of emotional distress.
The Supreme Court's decision in Zeltwanger provided much needed protection for employers. At the end of the day, it meant that the damage caps provided by the Texas Commission on Human Rights Act and Title VII will be impossible, or at least extremely difficult, to circumvent in harassment and discrimination lawsuits.
Hoffmann-La Roche, Inc. v. Zeltwanger, 2004 WL 1908322 (Tex. Aug. 27, 2004)