3d Cir: Employees’ Failure to Plead State-Law Discrimination Claim Will Cost $9m

The cat’s-paw theory of liability in the context of an employment-discrimination claim was upheld by the Third Circuit last week in McKenna v. City of Philadelphia last week. The case has far-reaching consequences, though-about $9.1 million farther.

At trial, the jury awarded the three plaintiffs a total of $10 million dollars. The trial-court judge reduced the verdict to $300,000 each, for a total of $900,000, in accordance with the compensatory-damage cap prescribed by Title VII. The plaintiffs argued that the damages should not have been reduced because the applicable state law, the Pennsylvania Human Rights Act, does not provide for caps on damage awards. The judge disagreed and found that the time to amend the complaint was before the jury returned the damages award. The Third Circuit affirmed the decision and the plaintiffs’ significantly reduced damages remain in place.

Many employee-plaintiffs allege a claim under federal law, as well as under the applicable state law, when filing a complaint of discrimination against their current or former employer. But, if they don’t, there can be significant consequences-more than $9 million worth in this case.