Bains LLC v. Arco Products Company

Facts

Paul, Gary, and Deep Bains (Ps) are American citizens who were born in the Punjab region of India. Ps bought a gas station and convenience store in Okanogan, Washington. They did business under the name 'Flying B.' Flying B soon owned five gas stations and employed thirty people. Ps bought a tanker truck for about $100,000 and got the necessary permits to haul gasoline to their stations. The Olympic pipeline ruptured and D needed help. In March 2000 P signed a contract with D to haul fuel. By then Flying B was doing business as a corporation, the stock of which was owned solely by Ps. After getting the necessary permits and safety clearances from D, P bought three more trucks and hired more drivers. After four and a half months P's work ended on October 30, 2000, when D terminated it. During the contract period, Ps and their drivers had to endure a considerable abuse from Bill Davis, the lead man at D's Seattle terminal where the drivers dropped off their fuel. Davis did not like P's drivers and purposely made their unloading work at the Seattle terminal difficult. He made a point of delaying the P's drivers by ignoring their presence when they needed their papers signed after a delivery. D paid by the load and delays meant that P's drivers could haul fewer loads and make less money. Davis made them stand out in the rain while other drivers were allowed to stay in their trucks or seek shelter. Davis also falsely accused P drivers of various safety violations and made them clean up spills left by other drivers instead of making those responsible clean up their own spills. Davis made known his ethnic animus against Sikhs. Ps and many of their drivers were religiously observant Sikhs who wore turbans and long beards. Davis started his relationship with Paul Bains by refusing to shake his hand. He called Paul a 'diaperhead' to his face despite Paul's protest that his turban was an important religious symbol. 'Mr. Bains' or 'Paul' were apparently too hard for Davis to say -- he preferred 'raghead.' One of P's hired drivers said Davis commonly called him 'stupid Indian,' 'motherfucking Indian,' and similar sobriquets, and when he asked for a rag after Davis had told him to clean up a spill, Davis refused and told him to take the 'fucking rag from your head and clean it.' Even the non-Sikh drivers felt degraded by Davis's attitude toward their association with their company. Davis asked both Patrick Dauer and A.C. Morgan, the only two Caucasian P drivers, 'How did you get hooked up with these fuckers?' P reported the abuse to Al Lawrence, the manager of the Seattle terminal and Davis's boss. Deep told Lawrence all about Davis's behavior, such as the names that Davis had called them -- 'diaperhead,' 'stupid fucking Indian,' 'raghead,' and 'towelhead' -- as well as how Davis had told them to go back to India, and how he made the Flying B drivers use slower pumps and stand outside in the rain. Deep told Lawrence that the P drivers were threatening to quit because of the hostile atmosphere. Lawrence responded that perhaps Davis was upset about something and asked Deep to let him know if anything happened in the future. The abuse continued. P drivers were subjected to lengthy security checks when other drivers were not. Deep complained to Lawrence again, but it did not do any good. Bains again went to Lawrence and advised him yet again of the continuing abuse. Lawrence and D terminated P without giving a reason and without notice, not even the thirty-day minimum notice required by their contract. Deep contacted Tim Reichert, the Los Angeles central dispatch manager, who was above Lawrence in the ARCO hierarchy, to contest the termination, but to no effect. Reichert claimed that there were too many trucks for the job. P sued D and D claimed that P had committed various safety violations, including driving unsafe trucks, drivers smoking or using cell phones while delivering fuel, and drivers failing to clean up spills. Davis claimed that he called P's drivers 'ragheads' only behind their backs, not to their faces. Lawrence never disciplined or reprimanded Davis, but Davis claimed that he quit using the term after his chat with Lawrence. An economist testified that P suffered a $576,000 loss on account of the termination. He calculated this based solely on the profits the company would have made from November 1, 2000, when P was terminated, to June 30, 2001, when the pipeline was fixed and D no longer needed drivers to move the fuel. Tim Reichert, the manager above Lawrence who had the authority to terminate P and did so, testified that he knew nothing about the ethnicity of Flying B's owners or drivers. Reichert said that his motivations for terminating the contract were Al Lawrence's assertions that P had a large number of safety violations and his own concern that there were too many carriers transporting fuel to the terminal. Al Lawrence testified that Davis had advised him of numerous infractions by P, such as not using buckets to catch spills, leaving valves open, using cell phones while pumping, and lining up trucks improperly so as to inconvenience other drivers. Lawrence said that he suspended Flying B exclusively because of safety violations, and that race was never a factor. Lawrence conceded he had not documented any of these safety concerns when they occurred. The jury found that D had breached P's contract and awarded $ 50,000 in compensatory damages for the breach. It found that D had discriminated against P on account of race, in violation of 42 U.S.C. § 1981, but that the actual damages to the corporation on account of this discrimination were nominal and awarded only one dollar in compensatory damages on the § 1981 claim. The jury awarded five million dollars in punitive damages for the racial discrimination. D moved for judgment as a matter of law or a new trial, or alternatively, to set aside or remit the punitive damages. The district court denied the motions. The district court awarded $392,065 in attorneys' fees and $10,017.40 in costs, plus $50,000 in additional fees and $916.36 in additional costs, based on the post-trial proceedings. D appealed.

Issues

Rule of Law

Holding and Decision

Legal Analysis

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