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A federal judge has set aside a jury’s award of $1 million in punitive damages against New York City in a sexual harassment suit brought against the police department by a former civilian employee. In a case of first impression, federal Judge Gerard E. Lynch of the U.S. District Court for the Southern District of New York said the New York City Human Rights Law (NYCHRL) does not abrogate the city’s common law sovereign immunity from punitive damages. The ruling was one of several Lynch made in the case of Katt v. City of New York, 95 Civ. 8283, which ended in March when a jury awarded $400,000 in damages to Alli Katt, and then tacked on $1 million in punitive damages. Katt was fired from her job as a civilian Police Administrative Aide (PAA) in 1992, ostensibly for frequent absences. She had worked for the department for only two years. In 1995, Katt sued under several statutes, including the NYCHRL and the state Human Rights Law, claiming she had been subject to a sexually hostile work environment. Judge Lynch said the city “fervently” disputed Katt’s contentions at the trial, which he said boiled down to the credibility of Katt versus that of her supervisor, Lieutenant Anthony DiPalma. Katt presented during trial a litany of abuse at the hands of DiPalma and other officers who worked in the Seventh Precinct, claiming she was groped, exposed to pornographic images and the subject of several sexual advances. The jury took three days of deliberations to reach its verdict in favor of Katt. Judge Lynch said that during trial, the question arose of whether a party could be awarded punitive damages against New York City under the NYCHRL. “Though it was clear that such damages were not available under federal and state law, the issue under the City’s own ordinance appeared to be one of first impression, which neither party had fully briefed or researched,” he said. So Lynch allowed the jury to proceed to a verdict, telling the lawyers he would address the issue following the submission of post-trial motions. After trial, he said, the city argued that punitive damages are usually unavailable against municipal corporations, and “that a court should not construe a local statute to allow such damages absent a clear expression of contrary legislative intent.” And because there is no such expression of intent in the NYCHRL, the city claimed it was entitled to judgment as a matter of law on punitive damages. “The court agrees,” Lynch said. “Though contrary interpretations of the statute are plausible, principles of New York law governing construction of statutes enacted in derogation of the common law demand a clear statement of legislative intent before a court may conclude that a municipality has intentionally waived its centuries-old sovereign immunity from punitive liability.” Katt contended that the NYCHRL, as amended, had abrogated the common law principle of immunity because of its definitions of who could be considered a “person” and “covered entity” under the law, and because the NYCHRL contains a directive that “covered entities” must comply with the law. “She contends that the NYCHRL is a remedial ordinance, and that its purpose of deterring discrimination would be thwarted if the court were to find that municipal employers were shielded from the statute’s punitive liability provision,” he said. But Katt, he said, could point to no case that clearly stood for the proposition that New York City had agreed to expose itself to punitive damages when it passed or amended the NYCHRL. Judge Lynch, after examining case law concerning construction of New York statutes, said he could “predict with some certainty that the New York Court of Appeals would read the NYCHRL to preserve the City’s common-law immunity from punitive damages absent a clear and plainly expressed statement, within the statute itself, of a contrary legislative intent.” And simply because the city had consented to be sued for compensatory damages under the NYCHRL, he said, it does not follow that it agreed to be subject to punitive damages. “It is not at all surprising that the City would want to remedy discrimination against its own employees with a right of action for compensatory damages,” he said. “Commentators note that the trend over the past 50 years has been away from municipal immunity for compensatory damages.” The NYCHRL, he said, with its “very broad policy against ‘prejudice, intolerance, bigotry and discrimination,’ Section 8-101″ is “in keeping with that trend.” Said Lynch, “It is hardly likely that the legislative body that enacted such a comprehensive statute would have condoned employment discrimination by the City itself. But a private right of action against a municipality for punitive damages is a different proposition, requiring different (and far more demanding) interpretive presumptions.” Assistant Corporation Counsels Kevin J. Smith and Patricia B. Miller represented New York City and DiPalma. Eric F. Leon and Scott R. Samay of Kirkland & Ellis and David A. Kotler of Princeton, N.J.’s Dechert represented Katt.

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