Labor & Employment Law Daily Emotional distress, punitive damages awards upheld in ‘Onionhead’ religious discrimination suit
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Thursday, March 12, 2020

Emotional distress, punitive damages awards upheld in ‘Onionhead’ religious discrimination suit

By Kathleen Kapusta, J.D.

The court found sufficient evidence that the employer’s highest-ranking officials were aware of and perpetrated practices that created, contributed, and maintained a hostile work environment.

United Health Programs of America, and its parent company, Cost Containment Group, failed to convince a federal court in New York to grant any of their post-trial motions after a jury found in favor of 10 employees on their hostile work environment claims in a suit brought by the EEOC alleging they had been coerced into engaging in the religious practices of “Onionhead” or “Harnessing Happiness” in violation of Title VII and the NYSHRL. Although the jury had awarded the employees more than $5.1 million in compensatory and punitive damages, the awards exceeded Title VII’s damages cap and thus the parties had agreed to reduce the judgment without prejudice to the defendants’ right to move for remittitur. The defendants subsequently moved for judgment as a matter of law and a new trial or in the alternative for remittitur and the court denied their motions (EEOC v. United Health Programs of America, Inc., March 6, 2020, Matsumoto, K.).

According to the EEOC and three intervening plaintiffs, the defendants forced employees to engage in a variety of religious practices at work, including prayer, workshops, and spiritual cleansing rituals. These practices were part of a belief system called “Harnessing Happiness” or “Onionhead,” created by the aunt of Cost Containment’s CEO, who worked for the company as a consultant, spent substantial time in the company’s offices, and had a role in hiring and firing. The employees claimed the religiously infused atmosphere created a hostile work environment.

In prior proceedings, the court found that Onionhead was indeed a religion. As one employee described it, employees “would have to sit there and hold hands and close our eyes and she’d like chant and she would just, you know, pray to these spirits, whoever they were, to keep us safe.” Others described being told to burn candles and incense to “cleanse the workplace.” They also were expected to hold hands, hug, kiss, and express love at workplace meetings.

The employees sued and the court denied the defendants’ motion for summary judgment on the claims for reverse religious discrimination and hostile work environment premised on reverse religious discrimination.

5.1M verdict. After a three-week trial, a jury returned a unanimous verdict, awarding $3,011,000 in compensatory damages and $2,091,060 in punitive damages, for a total of $5.1 million. It found that the 10 employees had been coerced into engaging in religious practices in violation of Title VII. It also found that the employer created a hostile work environment for nine of them and fired another who opposed these practices. After the parties agreed to reduce the judgment in accordance with Title VII’s damages cap, the defendants asserted various post-trial motions.

Hostile work environment. Although the defendants first argued that no reasonable jury could have found for two of the employees on their hostile work environment claims, the court found abundant evidence supporting the jury’s determination. There was evidence that the spiritual and religious changes implemented by the aunt—including the requirement that employees attend Onionhead workshops, wear Onionhead pins, hold hands and pray, and hug and kiss the aunt and each other—adversely affected the workplace environment.

While the defendants contended that the employees failed to show the conduct was sufficiently severe or pervasive, the employees testified that the office environment was permeated with a religious, spiritual atmosphere with dim or no overhead lighting, that the Onionhead workshops were intense and emotionally draining, that being required to hug their coworkers and tell them “I love you” was “uncomfortable,” that one of the employees was told to leave her husband and was also warned not to disagree with the workplace culture. Their claims, said the court, were not founded on a few isolated remarks over many months “but rather on a pervasive daily presence of religiously-based employment conditions and conduct, religious imagery, and religious practices that would cause a reasonable employee to find that the conditions of her employment were altered for the worse.” Thus, there was a legally sufficient basis for a jury to find for the two employees on their hostile work environment claims, said the court, denying the defendants’ motion for judgment as a matter of law and for a new trial on those claims.

Emotional distress damages. As to the defendants’ assertion that the trial evidence did not support the jury’s award of emotional distress damages for seven of the employees, the court first determined that the EEOC sought garden variety emotional distress damages. Turning to two of the employees, the jury awarded the first $225,000 in compensatory damages and the second $180,000 and the court subsequently reduced each award to $50,000. Upholding those awards, the court noted evidence that one testified the Onionhead workshops, which she abhorred, were emotionally intense and materially draining; she found the practice of hugging her coworkers and telling them she loved them “uncomfortable,” “weird,” and “not normal,” and she was offended and “vulnerable” regarding the aunt’s comments directing her to leave her husband. Noting that $50,000 was toward the low end of garden variety emotional distress damages in the Second Circuit, the court found the award of $50,000 to each of the two did not shock the judicial conscience.

Also rejected was the defendants’ assertion that the testimony of a third employee did not support emotional distress damages of $50,000. Arguing that her damages should be reduced to $20,000 from $50,000, the defendants noted that she relied on her own “representation regarding her condition and the source of her distress.” However, said the court, medical diagnosis, medical treatment, or third-party corroboration is not required to sustain garden variety emotional distress damages. And here, the court found ample evidence she suffered such damages as a result of the hostile work environment. Not only did she testify that she understood she was terminated because “they found out [she] was speaking about the company [She was] warning new hires when they were coming in, be aware that this is a cult, there are certain things that you are going to have to agree to, otherwise, you’re not going to be able to stay here,” she testified she saw multiple doctors for several months for rashes she was told were stress induced and she suffered from headaches and abdominal pain. Thus, the court upheld her compensatory damages award.

Nightmares. As to a fourth employee, who worked as an HR manager, an accountant, and in a data entry role, the court also upheld her reduced award of $50,000 in emotional distress damages (the jury had awarded her $570,000 in compensatory damages). The employee testified about the “unwelcome” worsening changes to the workplace environment after the aunt joined and about the daily pressure at the workplace to comply with the Onionhead requirements. She also testified that the smell of incense was over-powering and the dim lighting hurt her eyes and exacerbated her headaches. Further, after the termination of her coworkers, intervenors in the case, she felt defeated, disappointed, and sad and began having work-related nightmares.

Spiritual cleansing. Similarly, the court upheld the $40,000 damages award (reduced from $160,000) to another employee who testified regarding her changing job responsibilities after the aunt brought Onionhead into the business. Not only was she tasked with lighting candles in the aunt’s office to keep the bad spirit’s away, whenever an employee was fired or left, she had to spiritually cleanse the office to eliminate any lingering bad energy. In addition, when the aunt or the CEO would visit, she had to clean up their house by lighting candles and chanting and praying in each room.

She also testified that she was highly influenced by the aunt in the beginning and as a result “became a different person.” She later realized, she testified, that she was being “brainwashed” and controlled, and as of the date of the trial she was “still mentally disturbed” by what had happened to her. There was also testimony that after she warned a coworker to be careful regarding the aunt, she was fired.

Punitive damages. The court also upheld the $10,000 punitive damages awards to two employees (who had been awarded $400,000 and $160,000 before the court reduced them in accordance with Title VII’s statutory maximums). Although the defendants, in arguing for remittitur, pointed to their anti-harassment policy, the court found a lack of evidence showing they had engaged in good-faith efforts to enforce the policy. Several of the employees testified that they were either unaware of the policy or that they believed it would have been futile to report the discrimination to management because it was management that was exposing them to Onionhead. Further, there was evidence indicating that when they did complain, the complaints were ignored. To the extent they took any remedial action, it was minimal and ineffective, said the court, noting the defendants’ “own policies and inaction demonstrate their knowledge of the unlawfully discriminatory hostile work environment that they created and implemented in the face of a perceived legal risk.”

Novelty. Also rejected was the assertion that punitive damages were not warranted because “management did not view any of their actions as discriminatory or in potential violation of federal law,” and because “the theory of discrimination is novel” or “poorly recognized.” But a reverse religious discrimination case, said the court, “while somewhat less commonplace than a typical religious discrimination case involving an employee’s religious practice, cannot be characterized as a ‘novel’ theory.” Further, the court pointed out that it had previously held that Onionhead’s teachings and practices were religious for Title VII purposes. Noting sufficient trial evidence that the defendants’ highest-ranking officials, as well as others with supervisory authority, were aware of and perpetuated practices that contributed to and maintained a hostile work environment, the court found that a reasonable jury would not have been compelled to rule in the defendants’ favor regarding punitive damages.

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