A U.S. appeals court panel on Thursday sounded likely to mostly uphold a $4 million award for a white male former healthcare executive who claimed he was fired so the company could further its diversity goals.
A three-judge 4th U.S. Circuit Court of Appeals panel in Richmond, Virginia heard arguments in an appeal by hospital operator Novant Health Inc, which claims former senior vice president David Duvall's lack of leadership skills, and not his race or sex, led to his termination.
The appeal comes as corporate diversity initiatives are facing increased scrutiny and legal challenges, largely from conservative groups who say they amount to unlawful bias against white and male workers.
Two 4th Circuit judges at Thursday's argument signaled that Novant was unlikely to convince them to overturn the jury's finding that the company had engaged in discrimination.
Circuit Judges A. Marvin Quattlebaum and G. Steven Agee cited evidence that six other white executives were fired around the same time as Duvall, who was replaced by a Black woman, that Duvall's Black supervisor received lower performance scores than Duvall but kept his job, and that Novant could not produce any documentation to back up its stated reasons for firing him.
"The jury's entitled to look at these things and come to a reasonable conclusion ... that there's a pattern of eliminating white males in order to accommodate another group," Quattlebaum said to Novant's lawyer, Stephen Cox.
Duvall was fired in 2018 after Novant adopted a plan to make its workforce more reflective of the communities it serves. He sued in 2019, accusing the North Carolina-based of race and sex discrimination in violation of Title VII of the Civil Rights Act of 1964.
A jury had sided with Duvall and awarded him $10 million in punitive damages. A federal judge in North Carolina last year cut that to $300,000 - the cap for punitive damages under federal anti-discrimination law - while granting him more than $3.4 million plus interest for lost pay.
Cox on Thursday argued that Duvall failed to show a direct connection between the diversity plan and his firing, which Cox said was a legitimate business decision that should not be second-guessed by courts. He also said the judge's award for lost pay was unjustified because Duvall did not make a diligent effort to find a new job.
The panel includes Circuit Judge Henry Floyd, who said little during the nearly hour-long argument.
While the panel seemed unlikely to toss out the jury verdict, Agee and Quattlebaum suggested that the punitive damages, which require proof of malice or reckless disregard for the law, were inappropriate because of a lack of evidence that Duvall's supervisor knew his firing was discriminatory.
Luke Largess, Duvall's lawyer, argued that the supervisor had to be aware of the sensitivities involved in the decision because of his lengthy history as a high-ranking executive, including at a major U.S. bank.
“Someone at that level understands the basic principle that it’s illegal to fire people because of their race and gender,” he said.
But the judges said there still needs to be some proof that someone who makes an employment decision had specific knowledge that it was illegal.
“What you’re saying makes sense in a commonsense sort of way, but it’s coming awfully close to saying ‘I don’t really have to prove this,’” Quattlebaum said.
The case is Duvall v. Novant Health Inc, 4th U.S. Circuit Court of Appeals, No. 22-2142.
For Duvall: S. Luke Largess of Tin Fulton Walker & Owen
For Novant: Stephen Cox of Robinson Bradshaw & Hinson
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