Can an employer waive the statutory limitation on liability provisions of the American with Disabilities Act (ADA) and Maine Human Rights Act (MHRA) which limits the amount an employee can recover in a lawsuit for disability discrimination? Put more simply, can a damages cap be waived?
The Federal District Court, District of Maine answered that question in the affirmative. Damages caps can be waived if the employer fails to plead them as an affirmative defense.
On March 15, 2022, in the case Brian Bell v. O’Reilly Auto Parts, LLC., the Court denied Defendant’s Motion to Reduce the Jury’s Verdict, holding that because the employer failed to plead the statutory limitation on liability as an affirmative defense, the employer waived the damages cap provided for under both the ADA and the MHRA, leaving Mr. Bell’s $867,000 jury verdict completely intact.
After a trial on the merits, the jury awarded Mr. Bell $42,000 in lost wages, $75,000 in compensatory damages, and $750,000 in punitive damages to compensate Mr. Bell and punish O’Reilly Auto Parts, LLC for discriminating against Mr. Bell on the basis of his disability. Mr. Bell brought disability discrimination claims under both the ADA and its state counterpart, the MHRA. The MHRA allows an employee to recover up to $500,000 in compensatory and punitive damages, while the ADA only allows an employee to recover $300,000 in compensatory and punitive damages. These limitations are a “statutory limitation on liability,” or more commonly known as a “damages cap” – a damages cap operates to limit and minimize high jury verdicts.
O’Reilly moved the Court to reduce the jury’s award of compensatory and punitive damages to $500,000. Mr. Bell objected to O’Reilly’s motion, arguing that under Rule 8(c) of the Federal Rules of Civil Procedure, a damages cap is an “avoidance” and must be raised in the defendant’s pleadings, Fed. R. Civ. P. 8(c), and because O’Reilly failed to raise the damages cap in its responsive pleadings, O’Reilly waived the damages cap. Mr. Bell cited to a string of First Circuit cases, Carrasquillo-Serrano v. Municipality of Canovanas, 991 F.3d 32, 42–43 (1st Cir. 2021); Knapp Shoes, Inc. v. Sylvania Shoe Mfg. Corp., 15 F.3d 1222, 1225-26 (1st Cir. 1994); Jakobsen v. Massachusetts Port Auth., 520 F.2d 810, 813 (1st Cir. 1975), all of which held that statutory limitation on liability or damages cap is an “avoidance” under Fed. R. Civ. P. 8(c) and must be pled in the defendant’s pleadings.
The Court agreed with Mr. Bell, and citing to O’Brien v. Town of Bellingham, 943 F.3d 514, 528 (1st Cir. 2018), clarified that the only exceptions to Rule 8(c)’s bar on untimely affirmative defenses are when “(1) the defendant asserts the defense without undue delay and there is no prejudice caused by the delay, or (2) when the circumstances necessary to establish entitlement to the affirmative defense did not obtain at the time the answer was filed.” Because neither exception applied to O’Reilly’s failure to plead the damages cap as an affirmative defense, the Court held that O’Reilly waived the damages cap and denied its motion, preserving Mr. Bell’s $867,000 jury verdict.