Ignorance of Employee Rights Proves Costly – Jury Awards Hundreds of Millions in Pregnancy Discrimination Suit

By: Kathleen Connelly, Esq.

The Los Angeles Times and other news outlets have reported that following eight years of protracted litigation, a San Diego jury awarded nearly $186 million dollars to a former AutoZone manager who claimed she was demoted by AutoZone after she announced her pregnancy and was terminated after she filed a lawsuit challenging her demotion.  The reported testimony of trial witnesses serves as a perfect illustration how an employer’s ignorance of basic employee rights can lead to obscenely high jury verdicts.  

Rosario Juarez claimed that when she announced her pregnancy to her district manager in 2005 he responded “Congratulations . . . I guess” adding “I feel sorry for you.”  Thereafter, Juarez’s performance was increasingly criticized and she was demoted.  After Juarez filed suit to challenge her demotion, she was terminated for allegedly misplacing $400 of company funds.  However, AutoZone’s defense of the case was crippled by the testimony of its loss prevention officer who investigated the missing funds that she never suspected wrongdoing by Juarez and thought she was being targeted by the company.  To make matters worse, a former district manager testified that he was scolded by an AutoZone vice president for hiring too many women. Such testimony undoubtedly provoked the jury to award $185 million dollars in punitive damages as a punishment to AutoZone, in addition to the $872,000 awarded to Juarez for lost wages. 

In more than 20 years of employment practice I have witnessed plenty of excessive jury verdicts, but this one is purported to be for the record books.   Although the punitive damage award will likely reduced during AutoZone’s avowed appeal, the case nonetheless serves as a teachable moment for corporate America.  The testimony in this case suggests that AutoZone did properly train management about the consequences that could befall the company if backward perceptions about abilities of pregnant women to function in the workplace are permitted to endure.   Presumably AutoZone has since implemented meaningful workplace sensitivity training for management, but like many employers, its lesson has come too late and with a hefty price tag. To avoid a similar fate, employers should invest in appropriate training aimed at educating managers about the ever-expanding employee workplace protections and their responsibility to refrain from actions that could land the employer in costly litigation.