Wal-Mart on the Hook?

A federal appeals court has ruled that Wal-Mart Stores Inc. can be hit with punitive damages for refusing to hire a pregnant job applicant, but now the U.S. Supreme Court may have the last word on the matter.

The ruling by the U.S. 9th Circuit Court of Appeals in San Francisco meant that Bentonville, Ark.-based Wal-Mart could be liable for up to $300,000 in damages, the limit in federal employment discrimination cases.

But last week, the Supreme Court agreed to review a similar case involving punitive damages, which juries award to punish and deter wrongdoing.

In the EEOC suit against Wal-Mart, a job applicant named Jamey Stern said managers at the retail giant’s Green Valley, Ariz., store said they couldn’t hire her for a layaway position because she was pregnant.

Jurors awarded Stern $1,500 in lost pay and interest. The trial judge refused to let them consider punitive damages, saying that such awards should be reserved for the most egregious cases of discrimination.

That decision was reversed by a three-judge panel of the 9th Circuit. Punitive damages can be awarded against an employer who shows “reckless indifference to a [worker’s] federally protected rights,” the court said in September.

But the U.S. Circuit Court of Appeals in Washington, D.C., set a different standard in a similar case, ruling that punitive damages can be awarded only for “truly outrageous acts of discrimination.”

The plaintiff in that case, Carol Kolstad, who had won her gender discrimination suit against her former employer, the American Dental Assn., successfully sought a Supreme Court review of that circuit court decision.

Kolstad, who is supported by several civil rights groups, noted in her Supreme Court brief that in 1991 Congress specifically amended civil rights laws to make punitive damages available in job discrimination cases.

The high court’s ruling in Kolstad’s case will eventually determine whether Wal-Mart will have to pay punitive damages to Stern, lawyers said.