For the past several years, companies have been focused on creating and executing meaningful diversity, equity and inclusion (DE&I) programs to address the multi-faceted challenges—and opportunities—of diversifying their workforces. In so doing, however, some employers have opted for strategies that could be categorized as overly robust in attempting to achieve their goals.  On the practical eve of Halloween, and in what may be viewed as a truly scary setback for many companies that are implementing their own DE&I initiatives, this week, a jury delivered a stunning $10 million verdict to the plaintiff in Duvall v. Novant Health, Inc., Civil Action No. 3:19-cv-00624 (W.D.N.C. Oct. 26, 2021), when they found the plaintiff’s race (white) and sex (male) were motivating factors when the employer terminated his employment. 

In this case, the jury found that plaintiff’s termination was part of an overall promotional tactic aimed at increasing diversity within the upper echelons of the employer’s leadership ranks, as he was just one of at least five other highly evaluated, white male, executive peers who were also replaced by underrepresented minorities (URMs) and females in the same general timeframe.

Background

The employer hired the plaintiff in August 2013 as its Senior Vice President for Marketing and Communications. The plaintiff was hired by the employer’s Executive Vice President and Chief Consumer Officer (EVP), and the plaintiff reported to that individual during his employment. Throughout the plaintiff’s tenure, he received positive performance reviews and the EVP had never criticized the plaintiff’s work.

In 2016, the employer’s Diversity & Inclusion (D&I) officer presented its board with a five-year strategic D&I plan to embed diversity organization within its leadership ranks by 2019; that plan was approved by the health system’s board.  Notably, the employer’s D&I plan included (1) the use of a diversity “lens” in its decision-making; and, (2) the implementation of a long-term incentive (LTI) plan for senior leadership members who could demonstrate they improved D&I in various areas between 2017-2019.  In fact, 50% of the LTI plan was specifically dependent on senior leaders’ ability “to meet their underrepresented minority hiring targets.”

In 2017, the health system also received a less-than-favorable scorecard from an independent diversity organization that highlighted several opportunities for enhancing D&I. In 2018, the employer formed a Diversity and Inclusion Executive Council (DIEC), in which it discussed the scorecard and its efforts to improve in those areas.  To accelerate the implementation of its D&I initiative in response to its scorecard rating, the employer also purportedly set diversity hiring “targets”, which included hiring within their senior leadership levels.  This confluence of events, according to the plaintiff, was at the root of his employer’s actions in deciding to swiftly replace him and other white male senior leaders with URMs and females. The plaintiff’s job was terminated on July 30, 2018, and he was replaced by two women – one Black and one white.

The Case and the Verdict

On November 18, 2019, the plaintiff filed a lawsuit in the United States District Court for the Western District of North Carolina alleging that he had been wrongfully terminated and that his termination had been motivated by his race and sex in violation of Title VII of the Civil Rights Act of 1964.  The court denied the parties’ cross motions for summary judgment and the matter was set for trial on the plaintiff’s claims.  In the plaintiff’s trial brief, he asserted that he could prove discrimination using a “mixed motive” approach and that circumstantial evidence could be used to demonstrate that his race and gender were motivating factors in the employer’s decision to remove him.¹  The plaintiff’s evidence at trial focused on the employer’s diversity “targets”; its use of metrics to measure its progress towards meeting those targets; an array of terminations of white male senior leaders within the relevant time period; and the replacements of those employees with URMs and females. 

The centerpiece of the plaintiff’s evidence at trial included a document with the employer’s “nine-box” performance ratings from 2017 for all senior leaders. The plaintiff was able to demonstrate that by 2019, every white male on the document had been terminated and every woman and minority on that same document had been promoted.  The plaintiff also presented evidence that the employer’s diversity statistics from 2016-2019 showed a 5.9% decrease in white employees at or above the Vice President level as well as contemporaneous increases in the numbers of women and underrepresented minorities. What’s more is that when a recruitment firm contacted the health system to enquire about plaintiff’s employability following his termination, the EVP specifically indicated that his performance was not the reason for his termination.  This unfortunate assortment of facts was apparently enough to convince a jury that the health system was motivated by the plaintiff’s race and gender when it terminated him and awarded the plaintiff with $10 million in punitive damages. 

Trick or Treat – Employer Takeaways

This decision has significant implications for those employers whose own DE&I programs may be viewed as “aggressive” with respect to how they are being communicated and implemented, and as they react and respond to diversity scorecards as well as broad social movements calling for change in the composition of their workforces.  Accordingly, while the ultimate foundation for and goals of such initiatives remain relevant, meritorious, and indeed necessary, companies looking to avoid a similarly chilling blow to their own efforts should seize the opportunity to take a closer look at their DE&I programs - in light of this rather ghoulish verdict.