Worldwide Network Services, LL v. Dyncorp International, LLC
Filing
920100212
UNPUBLISHED UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT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Affirmed in part and reversed in part by unpublished opinion.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 International, U.S.C. § 1981 Network LLC and Services, Inc. for ("WWNS") sued DynCorp 42 a
("DynCorp") various torts
discrimination DynCorp
under
after
terminated
subcontract with WWNS related to government work in Iraq and Afghanistan. Upon finding DynCorp liable, a jury awarded WWNS On appeal, DynCorp challenges jury instructions, and the
$10 million in punitive damages. three evidentiary rulings, two
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 State to contracted with the in United and States Department for of the and
provide Personal
services
Iraq
Afghanistan program
Worldwide
Protective
Services
("WPPS")
Civilian Police program ("CivPol").
WPPS protects United States CivPol provides assistance to
personnel and certain foreign officials abroad. law enforcement, criminal justice, and other
societies carried
undergoing the
post-conflict through
reconstruction. its International
DynCorp Technical
out
services
4
Services Division ("ITS Division"). was Richard Cashon. In WWNS February 2004 DynCorp
The CivPol Program Manager
entered and
into
subcontracts
with
to
provide
communication
information-technology
services for WPPS and CivPol ("WPPS Subcontract" and "CivPol Subcontract"). expire between DynCorp August then and issued task 2006. 1 orders WWNS that had would been
October
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. 2006 the State to Department twice as complained a result. about One In January WWNS and
threatened
terminate DynCorp
complaint
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.").
1
5
stated,
"WWNS's to
technical the point
performance where it
has has
in
general
been
inadequate
disrupted
critical
communications in the field." previously complained to
J.A. 117. WWNS about
Also, DynCorp had 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 WWNS's the work State and Department complaints, internal DynCorp reports.
investigated
generated
two
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. Kellogg The reports' principal author was Christopher but other DynCorp employees also
("Kellogg"),
contributed.
Each report was highly critical of WWNS.
C. DynCorp's relationship with WWNS began to deteriorate in December Division. became 2005 when DynCorp hired new executives in the ITS
Robert
Rosenkranz of
became
President, Walter
Richard Merrick
Walsh became
Vice-President
Operations, 6
Deputy
CivPol
Program
Manager,
and
Leon
DeBeer
became DynCorp
Information-Technology
Manager.
With
these
arrivals,
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. particular, DynCorp failed to provide WWNS employees In 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 Immediately thereafter, DynCorp decided not
and CEO of DynCorp.
to issue further task orders under the CivPol Subcontract or to renew the subcontract. DynCorp alleges that Cashon was solely Cashon's testimony and other Cashon, Rosenkranz, Merrick,
responsible for this decision. evidence, however, indicate that
and Walsh made the decision collectively. Prior engaged in to the CivPol Subcontract's behavior expiration, toward DynCorp For
certain
questionable
WWNS.
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 almost to all cure of alleged WWNS's deficiencies came in from the work.
Because
business
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. consultant stupid for DynCorp, testified ." that Walsh John Mack, a Gray "a
called Also,
black
mother
. . .
J.A.
1723.
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. 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).
3
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." Jones WWNS said would DeBeer end by predicted that DynCorp's "that J.A. 874. with being opposed
relationship ending was
and . . .
explained factions
that
manufactured Cannon.
within
DynCorp"
that
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 The complaint U.S.C. § 1981
transferred to the Eastern District of Virginia. asserted (Count 1); tortious (Count 4); claims of discrimination interference with under with 42
tortious interference civil
contract economic conspiracy
(Count 3); advantage under the
prospective (Count 5);
conspiracy
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. settled on the eve of trial.
WWNS and EDO Corp
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 J.A. decision to terminate DynCorp its relationship to offer with WWNS."
1891.
Later,
tried
rehabilitative The
testimony from Jasbir Gill, a Sikh employee at DynCorp.
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 About
called Gray "a stupid black mother . . . ."
5
J.A. 1723.
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 to Rule of Civil Procedure when 26(e), new which requires surfaces.
parties
supplement
discovery
evidence
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. Regarding requested Logistics an the The court then instructed the jury. § 1981 discrimination based F.3d on Hill (4th claim, v. DynCorp had
instruction Inc.,
Lockheed 2004).
Martin The
Mgmt.,
354
277
Cir.
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. that they [DynCorp] were responsible
I think you can prove 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." Regarding punitive damages, the J.A. 1762. 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. on all other claims. The jury found in WWNS's favor
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). 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 The jury
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; 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.
6
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 each contention below. We consider
A. We first consider DynCorp's challenge to the district
court's failure to give its proposed jury instruction regarding the § 1981 discrimination error in claim. to "A district a court commits jury
reversible
refusing
provide
proffered
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 Id.
refuse to give a jury instruction for abuse of discretion."
"Moreover, we do not view a single instruction in isolation; rather we consider whether taken as a whole and in the context
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.
7
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 to based give on Hill, in reviewing we the must district consider court's Hill's
failure
that
instruction
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 Lockheed also
"lead person" who reported to her supervisor.
assigned a safety inspector to each jobsite who reported to the lead person but lacked supervisory authority. three written reprimands based and on errors Hill received by her to
discovered
jobsite's
safety
inspector
was
terminated
pursuant
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. In affirming, we announced this rule: 16 Hill, 354 F.3d at 283.
[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 or the could one be considered the actual for the
decisionmaker
principally Id. at 297-98.
responsible
decision to terminate Hill. DynCorp before us. argues that
the
Hill
rule
governs
the
case
now
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." guided Hill, our 354 F.3d at 286. both We said agency defined
principles
decision
because
statutes
"employer" to include "any agent" thereof. 17
Id. at 287; see also
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. under Sanderson followed his recommendation. the ADEA, alleging that his Reeves then sued resulted from
termination
discrimination by Chestnut, who had often showed discriminatory animus toward him. found that Reeves Reeves, 530 U.S. at 138. had overcome judgment The Supreme Court the
notwithstanding
verdict because, although Sanderson "made the formal decision to discharge" Reeves, Chestnut "was principally responsible for"
and "the actual decisionmaker behind his firing." 18
Id. at 151-
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 . . . for, the or subordinate the `actual 530 was the one `principally behind, For the our
responsible' action." purposes,
decisionmaker' at 151-52)). Hill
(quoting Reeves
Reeves, also
U.S.
clarifies "formal
the
rule. which the
Reeves under
distinguishes Ellerth would
between be the
the
decisionmaker," to make
person
authorized
relevant
decision, and "subordinate" employees who lack this authority, such as Chestnut or the safety inspector in Hill. we believe the term "subordinate employee" in Accordingly, the Hill rule
invokes that distinction. Using this
Hill, 354 F.3d at 291. and assuming for purposes of
interpretation,
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. 19 We
note, however, that Hill does not enable DynCorp to self-select the decisionmaker whose motives are the purest. find Hill inapplicable for two separate reasons. First, the Hill rule's initial premise, namely, that the plaintiff "rests a discrimination claim . . . upon the Furthermore, we
discriminatory motivations of a subordinate employee," assumes that a formal decisionmaker can be identified. this case, however, WWNS and DynCorp Id. at 291. In
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, Rosenkranz, other and evidence Walsh were indicated authorized that to Cashon, make that Merrick, decision
collectively. DynCorp's
Significantly, Walsh was the one who directed department to stop payment to WWNS for
accounting
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, court's we consider of DynCorp's challenge Rule to the district for
denial
DynCorp's
renewed
50(b)
motion
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 "Judgment as a
(4th Cir. 2009) (internal quotations omitted).
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." Battles, LLC, 562 F.3d U.S. ex rel. DRC, Inc. v. Custer 295, 305 (4th Cir. 2009) (internal
quotations omitted); see also Saunders v. Branch Banking & Trust
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.
8
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." only Cashon Reeves, 530 U.S. at 141. the decision DynCorp to DynCorp alleges that the all CivPol other
made
terminate that
Subcontract.
Accordingly,
concludes
DynCorp executives' alleged racial animus must be ignored under Hill. stand. In that light, DynCorp asserts that the verdict cannot We disagree with the initial premise that only Cashon The record contains sufficient evidence from
made the decision. 9
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. contract (1) the
10
A company alleging discriminatory this burden with by showing (2) it that was
termination defendant
may
carry a
terminated
contract
it,
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. (4th See Holland v. Washington Homes, Inc., 487 F.3d 208, 214 Cir. 2007). Once the prima facie case has been
established, the burden shifts to the defendant "to articulate a legitimate, termination. nondiscriminatory Id. (internal reason" quotations for the contract Once the
omitted).
defendant carries this burden of production, the burden shifts back to the "were plaintiff not its Id. to true prove that the but defendant's were a stated for
reasons
reasons,
pretext
discrimination."
(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 24 articulated a legitimate,
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 the was jury merely might a pretext for discrimination. Cashon's For
example,
have
disbelieved
testimony
about DynCorp's stated reason because Cashon himself had given WWNS glowing evaluations. court's denial of DynCorp's Therefore, we affirm the district Rule 50(b) motion regarding the
§ 1981 claim.
C. We next consider three evidentiary rulings that DynCorp United
challenges.
We review each for abuse of discretion.
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." Perkins, 470 F.3d 150, 156 (4th Cir. 2006). testimony evaluations and of the Iraq and Tiger United States v. Kellogg's excluded were technical include
Reports Discussed
WWNS's
performance. 25
topics
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 as to does not permit a lay witness the to express of an
opinion
matters
which
are
beyond
realm
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 J.A. decision We to terminate that its relationship testimony with was WWNS." indeed in
1891.
believe of
Spencer's
relevant DynCorp's
because
Rosenkranz's to terminate
apparent the
participation
decision
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 . . . ." 26(e) provides J.A. 1723. that a party Federal Rule of Civil Procedure 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." became known Fed. to R. WWNS Civ. P. 26(e)(1)(A). days before
Mack's
allegation
several
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 allegation, discovering DynCorp that WWNS and had moved not to disclosed strike Mack's of
objected
because
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. that way." to take J.A. 1730. I don't think I can undo it
Instead, the court instructed the jury WWNS's 27 failure to notify DynCorp
into
consideration
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. was P. 37(c)(1). but WWNS asserts that no the Rule 26
violation
harmless
concedes
that
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 Although DynCorp trial continued
WWNS's Rule 26 violation was indeed harmless. was surprised by Mack's testimony, the
undisturbed. racial animus
Moreover, the record contains abundant evidence of aside from by Mack's testimony. the This racially includes charged
Spencer's
termination
Rosenkranz, 28
October
2006
dinner
celebrating
WWNS's
misfortune,
and
Walsh
directing DynCorp's accounting department to stop paying WWNS for work already completed. this ground. We therefore decline to reverse on
D. Finally, $10 million we consider alleged award. errors DynCorp regarding argues the that
punitive-damages
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 that its it indifference' may be acting it pertain in is to the of in
employer's federal
knowledge not
violation engaging
law,
awareness
that
discrimination." (1999).
Kolstad v. Am. Dental Ass'n, 527 U.S. 526, 535
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." 441. Lowery, 206 F.3d at
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 that are
this
requirement, relevant to
Kolstad the
noted
hypotheticals us. The
particularly
case
before
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. discriminates while intending Accordingly, even a defendant who 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. under Title VII and § 1981, Circuit City was found liable and the jury awarded punitive
damages of $225,000. record did not
On appeal, Circuit City asserted that the damages. Notably, we found
support punitive
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. vacate the We continued, "If the answer is no, we should 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 of that the he was familiar its with the
accommodation
requirements
ADA
and
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 32 work that read, "Sexual
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." manager Id. "was Sufficient specifically evidence aware of was also found where a
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. evidence that We "combed the record," however, and found "no would allow a jury or to by find that Scollon that it
Productions
knew,
either
directly
imputation,
might have been acting in violation of Ocheltree's `federally protected rights.'" Id. at 336. Thus, we upheld the verdict on Id. scenario cite any "in comparable evidence the face to that of a
liability but vacated punitive damages. The Ocheltree. DynCorp case before has the us been presents unable a to
WWNS
terminated
CivPol
Subcontract 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
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. 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. 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
13 12
11
2. Even damages aside could from not on the above error, the the award of punitive jury
stand punitive
because
district was also
court's
instruction
damages
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). flawed, there prejudiced quotations district the can be no reversal "Even if instructions are unless the error Id. objection damages seriously (internal to was the not
challenging
party's
case."
omitted). court's
Because on
DynCorp's punitive
instruction
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 discrimination").
be
the
direct
target
of
. . .
35
In
this
case,
the
district
court
gave
the
following
instruction: "[Y]ou may award punitive damages if WWNS . . . [has] shown by or clear with and convincing evidence that DynCorp
maliciously, against WWNS."
reckless
indifference,
discriminated
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 also that 308 instructed, has one a may a layperson legal the Cir. would meaning law. 2002) would not know that to v. J.,
"malice" awareness
technical be
relating Cf. Perry
breaking 694 a (7th
McCaughtry, dissenting) instruction
F.3d
682, that
(Posner, not
(arguing know
layperson had the
without meaning
that
"cause"
technical
"substantial factor in"). "reckless "reckless indifference" indifference in
Nor would a layperson assume that the to instruction federally specifically protected means
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. 36
Therefore, we
believe the challenged instruction "caused the jury to act in complete ignorance of . . . fundamentally controlling legal
principles." Regarding instruction, evidence
Spell, 824 F.2d at 1399. whether note DynCorp DynCorp that was WWNS that law, prejudiced has not by the any
we
again
identified the
that
suspected federal
terminating and we the
CivPol no such
Subcontract evidence in
might the of
violate record.
found jury
Notwithstanding, damages, which
awarded court J.A.
$10 million concluded 1911.
punitive "for
the
district
was
DynCorp's we believe
Section
1981
violation."
Therefore,
serious
prejudice
necessarily
resulted from the challenged instruction.
3. Although claim should the be punitive-damages vacated, the award based on the § 1981 our
jury's court
verdict
complicates that
disposition.
The
district
instructed
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 court's the reasons to stated above, we affirm the district
refusal
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. of DynCorp's Rule However, we reverse the court's denial motion regarding WWNS's prayer for
50(b)
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.
Any reconsideration should take into account the standard for awarding punitive damages under Virginia law.
14
38
NIEMEYER, Circuit Judge, concurring in part and dissenting in part: After subcontract DynCorp with International, Worldwide services, that LLC refused to renew LLC its for
Network
Services, Services termination
information-technology this action, alleging
Worldwide
commenced of the
DynCorp's
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 in Civil Rights Act Act of of 1967 1964 or the "for Age the
Discrimination
Employment
("ADEA")
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 The jury
jury doesn't have to specify which person did what."
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 highlevel 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. 40 Because Worldwide Services
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 Hill. racial court to have refused to give an instruction under
And because, in this case, the mid-level manager with animus the may, as a factual not to matter, renew have substantially Services'
influenced
decision
Worldwide
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 Services) Department February Division to 2004, of the ITS won for a (International contract from Technical the State
DynCorp support
provide
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" one year issued by DynCorp. 2004 to The subcontract's 2005) and term was the
extended renewable
(February
February
under
four
one-year
options.
DynCorp
renewed
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 company. Administration Before its as a Section with 8(a)
disadvantaged
subcontract
DynCorp,
Worldwide Services' annual revenue was about $100,000, which was produced primarily by providing information-technology services to local businesses. with DynCorp, During the first year of its subcontract Worldwide Services received over $20
however,
million in revenues. Richard Cashon, a DynCorp vice president and its program manager for the CIVPOL program, Services' 42 was charged with formally the
evaluating
Worldwide
performance
under
subcontract, and he gave it positive marks. Cashon rated Worldwide Services' performance
In January 2006, as "exceptional"
and "very good," noting Worldwide Services' "technical depth in terms their of the number and of technically in wrote competent terms that of he individuals operating would in on a no A
staff"
"flexib[ility] Cashon
dynamic
environment."
have
reservations about using Worldwide Services in the future.
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 DynCorp Cashon's two DynCorp positive letters and evaluations, from the in State early 2006
received both
Department performance.
criticizing
Worldwide
Services'
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." clear that DynCorp's relationship with
The letter also made 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. 2006, Walsh traveled to on Afghanistan the ground to and, In February Worldwide later
observe as
Services'
performance
Walsh
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 Rosenkranz [Worldwide Walsh shared his observations DynCorp with could Rosenkranz, still "whip
expressed Services]
hope into
that 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. Iraq, completed by June 19, 2006, noted
The report from 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." report found from that Afghanistan, "the CIVPOL completed between July 22-31, The 2006, a
Afghanistan
program
suffers
from
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 the -this time from -the contracting about
officer
overseeing
CIVPOL
contract
complaining
Worldwide Services' performance. 2006, emphasized the State
This letter, dated June 23, "concern[s] about
Department's
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 "[t]he of information nature that this which technology of they letter, Cannon these are its was
deficiencies," problems systemic." Board of and
noting their
that
varied suggests received at
pervasiveness after held State might DynCorp a
Shortly Directors about that the "it
meeting,
questioned responded
Department's become
complaints. to
Cannon the
necessary
replace
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 Iraq IT offensive Manager statements the made by Leon DeBeer, to whom DynCorp's Worldwide Jones
and
DynCorp in
employee Iraq.
Services'
employees
reported
Specifically,
testified that in private conversations, DeBeer, a white South African, regularly referred to Worldwide Services' Walter Gray as a "nigger," that a "bush native," and a "kaffir." that He also
testified
DeBeer
regularly
complained
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 ex
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