A federal appeals court has ruled that a former Novant Health Inc. executive, who claimed in a lawsuit he was fired from his job because he is a white male, still should receive at least $3.89 million from the not-for-profit system.
However, the three-judge panel of the Fourth Circuit Court of Appeals determined March 12 that Novant would not be required to pay $300,000 in punitive damages, which had already been reduced from the $10 million awarded by a jury in October 2021.
David Duvall, who worked in Charlotte, accused Novant of violating Title VII of the Civil Rights Act, which prohibits race and gender discrimination in the workplace.
In his 2019 lawsuit, Duvall claimed he lost his job as senior vice president of marketing and communication after five years in July 2018 because Novant fired him to achieve racial and gender diversity — or more specifically, to hit certain diversity “targets” — within its leadership.
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The jury determined Duvall proved that his race and gender were motivating factors in Novant’s decision to terminate him. The jury also indicated Novant failed to prove it would have dismissed Duvall regardless of his race.
“There was substantial evidence at trial that Duvall performed superbly in his role at Novant Health,” according to court documents. “Not even Novant Health disputes this evidence.”
Novant appealed the jury decision, saying “insufficient evidence was presented at trial to sustain the jury’s finding of liability” in how the system implemented its diversity and inclusion initiatives, in particularly in how it was connected to Duvall’s employment ending.
In August 2022, U.S. Magistrate Judge David Cayer reduced the punitive damages from $10 million to $300,000, and ordered that Duvall be awarded back pay of $2.34 million with 8% interest added to that amount. He also would receive $1.08 million in front pay.
Novant had sought to limit the back pay owed to Duvall to $180,000, according to Duvall’s attorney Luke Largess with Tin Fulton Walker and Owen PLLC.
“After a careful review of the record, we hold that sufficient evidence was presented at trial to sustain the jury’s finding of liability, but not its award of punitive damages,” the appellate panel ruled.
“We also find that the district court did not abuse its discretion in awarding Duvall back pay and front pay,” citing that “back pay and front pay are equitable remedies generally available to a successful Title VII plaintiff,” in particular if they are unsuccessful in pursuing new employment.
Duvall said in a statement submitted by his attorneys that “I am so grateful that the jury, a trial judge and now a unanimous panel of appellate court judges gave me a voice against a powerful employer.”
“The trial and appellate courts concluded that this employer invented and publicized shifting, conflicting and unsubstantiated reasons for my unlawful termination, causing immeasurable damage to my employment, my professional reputation and my career.”
Novant said in a statement that “we are pleased that the Fourth Circuit reversed entirely the trial court’s award of punitive damages, finding no evidence that Novant Health perceived any risk of violating federal law.”
“However, we are disappointed by the court affirming, and we continue to disagree with, the finding of liability and the award of front/back pay in favor of Mr. Duvall.”
Novant said it has no plans to pursue further litigation in the case.
Novant said it “firmly stands by our commitment to diversity and inclusion, and to assuring equal employment opportunities to all of our current and prospective employees.”
“We continue to believe having a workforce that reflects the communities we serve allows us to provide the personalized care our patients need to reach their best possible health.”
Appellate court findings
The appellate panel, in its ruling, upheld evidence presented at the 2021 trial that “Novant Health — a multibillion-dollar company with tens of thousands of employees and an extensive human resources department — had no record of any documented criticism of Duvall’s performance or reasons for his termination.”
“Immediately after firing Duvall, Novant Health elevated two of Duvall’s deputies, a white woman and a black woman, to take over his duties. It then later hired another black woman to permanently replace Duvall.”
The panel said Duvall and his attorneys did not prove that his former boss at Novant, chief consumer officer Jesse Cureton, was aware of laws forbidding discriminatory practices.
According to court documents, Cureton testified at trial (in October 2021) that he fired Duvall because he lacked “engagement” and “support from the executive team,” even though Duvall received positive reviews and praises from chief executive Carl Armato and then-chief operating officer Jeff Lindsay.
Duvall said he was told by Cureton the reason for his termination was Novant was “going in a different direction.”
The court documents listed that Duvall was not the only white male whose employment was terminated by Cureton, citing Rick Brajer’s dismissal as senior vice president of business strategy. Cureton assigned Brajer’s duties to a black male employee.
According to court documents, “after remaining gaps in the Hispanic and Asian workforce were identified, Novant Health adopted a long-term financial incentive plan that tied executive bonuses to closing those gaps by achieving a specific percentage of each group.”
Novant responded by saying “that evidence of these race-based bonuses is irrelevant, as the financial incentive plan instituting them was not formally adopted until after Duvall was fired.”
“It further argues that in any event, the bonuses related only to furthering the goal of increasing the Hispanic and Asian workforce, a goal that would not have been furthered by Duvall’s firing since he was replaced by a black woman.”
However, the panel determined that “we do not think that either fact would preclude a jury from properly considering this evidence.”
The panel said that “if a jury could rationally find that Novant Health’s justifications were false, then it could also infer that Novant Health was ‘dissembling to cover up a discriminatory purpose.’ “
In a footnote, the panel wrote “To be clear, employers may, if they so choose, utilize D&I-type programs.”
“What they cannot do is take adverse employment actions against employees based on their race or gender to implement such a program. As recounted above, the evidence presented at trial in this case was more than sufficient for a reasonable jury to conclude that is precisely what Novant Health did to Duvall.”
The panel explained in striking the punitive damages that Duval “has failed to meet his burden on the second showing, which requires evidence that the employer discriminated ‘in the face of a perceived risk that its actions [would] violate federal law.’ “
The panel determined “Duvall offered no evidence as to the training or qualification that Novant Health offered to or required of Cureton, or a comparable executive, to establish the requisite knowledge of federal anti-discrimination law.”
“He instead relies solely on an inference that Cureton had the requisite knowledge given his career as a corporate executive.”