Worldwide Network Services, LLC v. Dyncorp International, LLC

UNPUBLISHED

UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT

No. 08-2108

WORLDWIDE NETWORK SERVICES, LLC; WORLDWIDE NETWORK SERVICES,
INTERNATIONAL, FZCO,

Plaintiffs - Appellees,

v.

DYNCORP INTERNATIONAL, LLC,

Defendant – Appellant.

------------------------------------

CHAMBER OF COMMERCE OF THE UNITED STATES OF AMERICA,

Amicus Supporting Appellant,

LAWYERS’ COMMITTEE FOR CIVIL RIGHTS UNDER LAW; THE NATIONAL
URBAN LEAGUE,

Amici Supporting Appellees.

No. 08-2166

WORLDWIDE NETWORK SERVICES, LLC; WORLDWIDE NETWORK SERVICES,
INTERNATIONAL, FZCO,

Plaintiffs - Appellants,

v.

DYNCORP INTERNATIONAL, LLC,

Defendant – Appellee.
------------------------------------

CHAMBER OF COMMERCE OF THE UNITED STATES OF AMERICA,

Amicus Supporting Appellee,

LAWYERS’ COMMITTEE FOR CIVIL RIGHTS UNDER LAW; THE NATIONAL
URBAN LEAGUE,

Amici Supporting Appellants.

Appeals from the United States District Court for the Eastern
District of Virginia, at Alexandria. Gerald Bruce Lee, District
Judge. (1:07-cv-00627-GBL-JFA)

Argued: September 22, 2009 Decided: February 12, 2010

Before NIEMEYER and DUNCAN, Circuit Judges, and James P. JONES,
Chief United States District Judge for the Western District of
Virginia, sitting by designation

Affirmed in part and reversed in part by unpublished opinion.
Judge Duncan wrote the majority opinion, in which Judge Niemeyer
concurred as to Part II.D(1)&(2), and in which Judge Jones
concurred as to Parts II.A, II.B, and II.C. Judge Niemeyer
wrote a separate opinion concurring in part and dissenting in
part. Judge Jones wrote a separate opinion concurring in part
and dissenting in part.

ARGUED: Carter Glasgow Phillips, SIDLEY & AUSTIN, LLP,
Washington, D.C., for Dyncorp International, LLC. Patricia Ann
Millett, AKIN, GUMP, STRAUSS, HAUER & FELD, LLP, Washington,
D.C., for Worldwide Network Services, LLC, and Worldwide Network
Services, International, FZCO. ON BRIEF: Eric D. McArthur,
SIDLEY & AUSTIN, LLP, Washington, D.C.; George D. Ruttinger,
Keith J. Harrison, Clifton S. Elgarten, CROWELL & MORING, LLP,
Washington, D.C., for Dyncorp International, LLC. Thomas P.
Goldstein, Anthony T. Pierce, Michele A. Roberts, Merrill C.
Godfrey, Monica P. Sekhon, Won S. Shin, Michael S. Bailey, AKIN,
GUMP, STRAUSS, HAUER & FELD, LLP, Washington, D.C., for
Worldwide Network Services, LLC, and Worldwide Network Services,

2
International, FZCO. Charles P. Roberts, III, CONSTAGY, BROOKS
& SMITH, LLP, Winston-Salem, North Carolina; Robin S. Conrad,
Shane B. Kawka, NATIONAL CHAMBER LITIGATION CENTER, INC.,
Washington, D.C., for Chamber of Commerce of the United States
of America, Amicus Supporting Dyncorp International, LLC.
Bernard J. DiMuro, Jonathan R. Mook, Michael E. Barnsback,
DIMURO GINSBERG, PC, Alexandria, Virginia; John Brittain, Sarah
Crawford, Tricia Jefferson, LAWYERS’ COMMITTEE FOR CIVIL RIGHTS
UNDER LAW, Washington, D.C., for Lawyers’ Committee for Civil
Rights Under Law, Amicus Supporting Worldwide Network Services,
LLC, and Worldwide Network Services, International, FZCO. Sean
A. Lev, Priya R. Aiyar, Kfir B. Levy, KELLOGG, HUBER, HANSEN,
TODD, EVANS & FIGEL, PLLC, Washington, D.C., for The National
Urban League, Amicus Supporting Worldwide Network Services, LLC,
and Worldwide Network Services, International, FZCO.

Unpublished opinions are not binding precedent in this circuit.

3
DUNCAN, Circuit Judge:

Worldwide Network Services, Inc. (“WWNS”) sued DynCorp

International, LLC (“DynCorp”) for discrimination under 42

U.S.C. § 1981 and various torts after DynCorp terminated a

subcontract with WWNS related to government work in Iraq and

Afghanistan. Upon finding DynCorp liable, a jury awarded WWNS

$10 million in punitive damages. On appeal, DynCorp challenges

three evidentiary rulings, two jury instructions, and the

district court’s denial of DynCorp’s motions under Federal Rule

of Civil Procedure 50. For the reasons stated below, we affirm

in part and reverse in part, vacating the award of punitive

damages.

I.

A.

DynCorp contracted with the United States Department of

State to provide services in Iraq and Afghanistan for the

Worldwide Personal Protective Services program (“WPPS”) and

Civilian Police program (“CivPol”). WPPS protects United States

personnel and certain foreign officials abroad. CivPol provides

law enforcement, criminal justice, and other assistance to

societies undergoing post-conflict reconstruction. DynCorp

carried out the services through its International Technical

4
Services Division (“ITS Division”). The CivPol Program Manager

was Richard Cashon.

In February 2004 DynCorp entered into subcontracts with

WWNS to provide communication and information-technology

services for WPPS and CivPol (“WPPS Subcontract” and “CivPol

Subcontract”). DynCorp then issued task orders that would

expire between August and October 2006. 1 WWNS had been

designated a Small Disadvantaged Business by the United States

Small Business Administration under the Small Business Act of

1953 § 8(a), 15 U.S.C. § 637(a), because its owners Walter Gray

and Reginald Bailey are African American. WWNS was awarded the

WPPS and CivPol Subcontracts after well-known entrepreneur Ross

Perot introduced Gray and Bailey to Steven Cannon, who was then

President and CEO of DynCorp.

B.

The quality of WWNS’s work remains unclear. In January

2006 the State Department twice complained about WWNS and

threatened to terminate DynCorp as a result. One complaint

1
Regarding “task orders,” see 48 C.F.R. § 16.501-1 (“Task
order contract means a contract for services that does not
procure or specify a firm quantity of services (other than a
minimum or maximum quantity) and that provides for the issuance
of orders for the performance of tasks during the period of the
contract.”).

5
stated, “WWNS’s technical performance has in general been

inadequate to the point where it has disrupted critical

communications in the field.” J.A. 117. Also, DynCorp had

previously complained to WWNS about radio failures.

Notwithstanding, Cashon gave WWNS glowing evaluations in January

and March 2006. His March evaluation deemed WWNS “excellent” or

“good” in every category and stated that DynCorp would hire WWNS

again.

After receiving the State Department complaints, DynCorp

investigated WWNS’s work and generated two internal reports.

First, the CivPol Iraq IT Evaluation (“Iraq Report”) completed

by June 19, 2006, evaluated WWNS’s work at the Baghdad Hotel,

the CivPol headquarters for Iraq. Second, the Middle East

Information Technology Tiger Team Site Assessment Report (“Tiger

Report”) dated July 22, 2006, evaluated WWNS’s work at locations

in Afghanistan. The reports’ principal author was Christopher

Kellogg (“Kellogg”), but other DynCorp employees also

contributed. Each report was highly critical of WWNS.

C.

DynCorp’s relationship with WWNS began to deteriorate in

December 2005 when DynCorp hired new executives in the ITS

Division. Robert Rosenkranz became President, Richard Walsh

became Vice-President of Operations, Walter Merrick became

6
Deputy CivPol Program Manager, and Leon DeBeer became

Information-Technology Manager. With these arrivals, DynCorp

began excluding WWNS personnel from planning meetings, ignoring

emails from WWNS managers in Iraq, and failing to provide WWNS

employees with needed access to worksites and equipment. In

particular, DynCorp failed to provide WWNS employees with

security badges needed to move around in Iraq.

The tension between DynCorp and WWNS reached breaking point

in summer 2006. On July 17, 2006, Cannon resigned as President

and CEO of DynCorp. Immediately thereafter, DynCorp decided not

to issue further task orders under the CivPol Subcontract or to

renew the subcontract. DynCorp alleges that Cashon was solely

responsible for this decision. Cashon’s testimony and other

evidence, however, indicate that Cashon, Rosenkranz, Merrick,

and Walsh made the decision collectively.

Prior to the CivPol Subcontract’s expiration, DynCorp

engaged in certain questionable behavior toward WWNS. For

example, DynCorp had Charles Jones, WWNS’s Iraq Country Manager,

escorted from his workplace at gunpoint. DynCorp then recruited

WWNS’s non-managerial employees in Iraq and Afghanistan to join

DynCorp or EDO Corporation (“EDO Corp”), the non-minority-owned

company that would eventually replace WWNS. Moreover, Walsh

directed DynCorp’s accounting department to stop processing or

7
paying invoices from WWNS for work already completed. 2 In

stopping payment, DynCorp did not provide WWNS with notice or

the opportunity to cure alleged deficiencies in the work.

Because almost all of WWNS’s business came from DynCorp,

DynCorp’s actions in ending the CivPol Subcontract, recruiting

WWNS’s employees, and stopping payment on its invoices nearly

destroyed WWNS.

D.

Beyond the above questionable behavior, the record contains

evidence of DynCorp’s racial animus toward WWNS. John Mack, a

consultant for DynCorp, testified that Walsh called Gray “a

stupid black mother . . . .” J.A. 1723. Also, Rosenkranz

terminated DynCorp’s only minority executive Richard Spencer, a

Latino, who testified to “some underlying discriminatory things”

behind his termination. J.A. 1019.

DeBeer in particular expressed racial animus, often calling

Gray “nigger” and “kaffir.” 3 J.A. 872. According to Jones,

DeBeer expressed “[t]wo to three times a week” that “people of

2
In February 2008 DynCorp paid WWNS over $3.3 million for
outstanding invoices that dated back two years. It offered no
explanation for the delay.
3
The term “kaffir” is “[u]sed especially in southern Africa
as a disparaging term for a Black person.” American Heritage
Dictionary of the English Language 952 (4th ed. 2006).

8
Anglo descent . . . had made a grave error” because they “had

taken the black man as a youth and attempted to clothe him and

send him to school” and that “the proper role of the black man

was to go out and kill a lion, proving his manhood, at which

point in time he should be put to work to feed his family . . .

and mated with a woman so that he would have more children, who

could then be put to work feeding their family.” J.A. 874.

Jones said DeBeer predicted that DynCorp’s relationship with

WWNS would end and explained that “that ending was being

manufactured by . . . factions within DynCorp” that opposed

Cannon. J.A. 869. Jones noted that DeBeer was “consumed by

. . . hatred” for “Cannon and everybody associated with him.”

J.A. 873.

Finally, DynCorp celebrated WWNS’s demise during a company

dinner in October 2006 hosted by Rosenkranz. At the dinner,

Walsh received a T-shirt that read, “WWNS - I took them down,

and all I got was this lousy T-Shirt.” J.A. 1139. After Walsh

put on the T-shirt, DynCorp employee Bill Cavanaugh presented a

letter purportedly from Gray to Walsh and read it aloud in mock

Ebonics. According to a DynCorp executive, Rosenkranz “was

laughing his ass off.” J.A. 1029.

9
 E.

In October 2006 WWNS brought this action against DynCorp

and EDO Corp in the District of Columbia. The case was later

transferred to the Eastern District of Virginia. The complaint

asserted claims of discrimination under 42 U.S.C. § 1981

(Count 1); tortious interference with contract (Count 3);

tortious interference with prospective economic advantage

(Count 4); civil conspiracy (Count 5); conspiracy under the

Virginia Conspiracy Act, Va. Code Ann. § 18.2-499 (Count 6);

breach of the CivPol Subcontract (Count 7); breach of the WPPS

Subcontract (Count 8); and breach of the implied covenant of

good faith and fair dealing (Count 9). 4 In turn, DynCorp filed

counterclaims of breach of the CivPol Subcontract, breach of the

WPPS Subcontract, and breach of warranty. WWNS and DynCorp

proceeded to trial by jury in May 2008. WWNS and EDO Corp

settled on the eve of trial.

Before trial, DynCorp planned to introduce the Iraq and

Tiger Reports into evidence through Kellogg, who would testify

about his observations during DynCorp’s internal investigation.

However, the district court granted WWNS’s motion to exclude the

testimony, saying the reports contained hearsay. The court also

found the reports and Kellogg’s proposed testimony inadmissible

4
Count 2 was dismissed before trial.

10
under Federal Rule of Evidence 701, which prohibits lay

witnesses from giving expert testimony.

During trial, DynCorp objected to Spencer’s testimony about

his termination by Rosenkranz based on Federal Rules of Evidence

401 and 403. 5 The district court overruled this objection,

reasoning that Spencer’s testimony was “relevant to the issue of

pretext as it demonstrates DynCorp’s corporate attitude toward

minorities and provides insight into what factors contributed to

DynCorp’s decision to terminate its relationship with WWNS.”

J.A. 1891. Later, DynCorp tried to offer rehabilitative

testimony from Jasbir Gill, a Sikh employee at DynCorp. The

court held, “Well, I’ll allow Ms. Gill to testify about her

interaction with Mr. DeBeer, and whether or not he used any

racial slurs in her presence,” but “[h]ow she was treated by the

company is irrelevant.” J.A. 1568.

Finally, DynCorp objected to the testimony of John Mack.

When WWNS called him on rebuttal, Mack testified that Walsh

called Gray “a stupid black mother . . . .” J.A. 1723. About

5
Rule 401 defines “relevant evidence” to mean “evidence
having any tendency to make the existence of any fact that is of
consequence to the determination of the action more probable or
less probable.” Fed. R. Evid. 401. Rule 403 provides that
“evidence may be excluded if its probative value is
substantially outweighed by the danger of unfair prejudice,
confusion of the issues, or misleading the jury, or by
considerations of undue delay, waste of time, or needless
presentation of cumulative evidence.” Fed. R. Evid. 403.

11
ten questions later, DynCorp objected and moved to strike

because WWNS had failed to notify DynCorp about Mack’s testimony

under Federal Rule of Civil Procedure 26(e), which requires

parties to supplement discovery when new evidence surfaces.

During a bench conference, WWNS admitted its failure to notify

DynCorp pursuant to Rule 26(e). Nonetheless, the court denied

DynCorp’s motion to strike and instead instructed the jury to

take into consideration WWNS’s failure to notify DynCorp about

Mack’s testimony.

Following the close of evidence, the district court granted

WWNS’s motion under Federal Rule of Civil Procedure 50(a) for

judgment as a matter of law regarding unpaid invoices totaling

almost $2.8 million. The court then instructed the jury.

Regarding the § 1981 discrimination claim, DynCorp had

requested an instruction based on Hill v. Lockheed Martin

Logistics Mgmt., Inc., 354 F.3d 277 (4th Cir. 2004). The

proposed instruction stated:

DynCorp asserts that the person who made the decision
not to renew or extend the WWNS CIVPOL subcontract or
task orders was not improperly motivated by
discrimination. To the extent that WWNS rests its
discrimination claim upon the discriminatory
motivations of a subordinate employee, WWNS must show
by the greater weight of the evidence that the
subordinate employee possessed such authority as to be
viewed as the one principally responsible for the
decision or the actual decisionmaker for DynCorp.

J.A. 1185. The district court refused to give this instruction,

12
explaining: “I don’t think I need to. I think you can prove

that they [DynCorp] were responsible or not, and the jury

doesn’t have to specify which person did what.” J.A. 1656.

Instead, the court instructed: “WWNS must prove that DynCorp

intentionally discriminated against WWNS. That is, the race of

WWNS’s owners must be proven to have been a motivating factor in

DynCorp’s decision not to renew WWNS’s CIVPOL subcontract or

issue further task orders thereunder.” J.A. 1762.

Regarding punitive damages, the district court gave the

following instruction:

[Y]ou may award punitive damages if WWNS . . . [has]
shown by clear and convincing evidence that DynCorp
maliciously, or with reckless indifference,
discriminated against WWNS, and/or that DynCorp
tortiously interfered with the contracts between
[WWNS] and its employees, and/or conspired with EDO to
interfere with the contracts between [WWNS] and its
employees, and/or that DynCorp tortiously interfered
with WWNS’s prospective economic advantage.

J.A. 1771. By contrast, DynCorp had requested an instruction

that began, “WWNS claims the acts of DynCorp were done with

malice or reckless indifference to WWNS’s federally protected

rights.” J.A. 1186 (emphasis added).

After several days of deliberation, the jury returned a

split verdict. It found in DynCorp’s favor on Counts 4-6 and

one of DynCorp’s counterclaims, awarding DynCorp $178,000 for

breach of the WPPS Subcontract. The jury found in WWNS’s favor

on all other claims. It awarded WWNS compensatory damages of

13
$3.42 million for Count 1 (§ 1981 discrimination), $83,000 for

Count 3 (tortious interference with contract), $558,510.42 for

Count 7 (breach of CivPol Subcontract), $42,092.62 for Count 8

(breach of WPPS Subcontract), and $720,000 for Count 9 (breach

of implied covenant of good faith and fair dealing). The jury

also awarded WWNS $10 million in punitive damages.

The district court denied DynCorp’s renewed Federal Rule of

Civil Procedure 50(b) motion for judgment as a matter of law,

Rule 59(a) motion for a new trial, and Rule 59(e) motion to

alter or amend the judgment. This appeal followed. We have

jurisdiction under 28 U.S.C. §§ 1331 and 1291. 6

II.

On appeal, DynCorp asserts (1) that the district court

should have given DynCorp’s proposed jury instruction regarding

the § 1981 discrimination claim; (2) that DynCorp should have

been awarded judgment as a matter of law on that claim; (3) that

Kellogg’s testimony and the Iraq and Tiger Reports should have

been admitted; (4) that Spencer’s testimony should have been

excluded; (5) that Mack’s testimony should have been struck;

6
WWNS filed a cross-appeal, arguing that Alexis Maniatis’s
proposed testimony calculating WWNS’s lost profits was
erroneously excluded. Because we do not remand for another
trial to determine compensatory damages, we do not reach WWNS’s
cross-appeal.

14
(6) that the jury instruction on punitive damages for § 1981

discrimination was erroneous; and (7) that the record does not

support punitive damages for § 1981 discrimination. 7 We consider

each contention below.

A.

We first consider DynCorp’s challenge to the district

court’s failure to give its proposed jury instruction regarding

the § 1981 discrimination claim. “A district court commits

reversible error in refusing to provide a proffered jury

instruction only when the instruction (1) was correct; (2) was

not substantially covered by the court’s charge to the jury; and

(3) dealt with some point in the trial so important, that

failure to give the requested instruction seriously impaired the

defendant’s ability to conduct his defense.” United States v.

Passaro, 577 F.3d 207, 221 (4th Cir. 2009) (internal quotations

omitted). “We review the district court’s decision to give or

refuse to give a jury instruction for abuse of discretion.” Id.

“Moreover, we do not view a single instruction in isolation;

rather we consider whether taken as a whole and in the context

7
DynCorp also asserts that the award of punitive damages
violates the Due Process Clause, but we do not reach this issue
because we vacate that award.

15
of the entire charge, the instructions accurately and fairly

state the controlling law.” Id. (internal quotations omitted).

Because DynCorp’s proposed instruction regarding the § 1981

claim was based on Hill, in reviewing the district court’s

failure to give that instruction we must consider Hill’s

applicability to this case. Ethel Hill was a Lockheed mechanic

who repaired aircraft at military bases under contracts between

Lockheed and the United States. Her work was overseen by a

“lead person” who reported to her supervisor. Lockheed also

assigned a safety inspector to each jobsite who reported to the

lead person but lacked supervisory authority. Hill received

three written reprimands based on errors discovered by her

jobsite’s safety inspector and was terminated pursuant to

company policy. Hill alleged discrimination by that inspector,

who had often called her a “damn woman” and “useless old lady”

who should retire. Hill, 354 F.3d at 283.

Hill sued Lockheed under Title VII of the Civil Rights Act,

42 U.S.C. § 2000e (“Title VII”), and the Age Discrimination in

Employment Act, 29 U.S.C. §§ 621-34 (“ADEA”), arguing that but

for the inspector’s discrimination she would have received fewer

reprimands and avoided termination. The district court granted

summary judgment to Lockheed on the ground that the inspector’s

bias could not be imputed to Lockheed. Hill, 354 F.3d at 283.

In affirming, we announced this rule:

16
 [T]o survive summary judgment, an aggrieved employee
who rests a discrimination claim under Title VII or
the ADEA upon the discriminatory motivations of a
subordinate employee must come forward with sufficient
evidence that the subordinate employee possessed such
authority as to be viewed as the one principally
responsible for the decision or the actual
decisionmaker for the employer.

Id. at 291 (emphasis added). Accordingly, we found summary

judgment appropriate because Hill had not shown evidence that

the safety inspector could be considered the actual

decisionmaker or the one principally responsible for the

decision to terminate Hill. Id. at 297-98.

DynCorp argues that the Hill rule governs the case now

before us. After carefully studying Hill, we disagree. In that

case, the ultimate question was whether Lockheed intentionally

discriminated in deciding to terminate Hill. This required

evidence that her “‘protected trait . . . actually motivated the

employer’s decision,’” that is, that the trait “‘actually played

a role in the employer’s decisionmaking process and had a

determinative influence on the outcome.’” Id. at 286 (quoting

Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 141

(2000)). Accordingly, we considered “who is a ‘decisionmaker’

for purposes of discrimination actions brought under Title VII

and the ADEA.” Hill, 354 F.3d at 286. We said agency

principles guided our decision because both statutes defined

“employer” to include “any agent” thereof. Id. at 287; see also

17
Burlington Indus., Inc. v. Ellerth, 524 U.S. 742, 754-65 (1998).

We then noted Ellerth, where the Supreme Court explained that

“[t]he supervisor has been empowered by the company as a

distinct class of agent to make economic decisions affecting

other employees under his or her control,” and that “tangible

employment actions are the means by which the supervisor brings

the official power of the enterprise to bear on subordinates.”

Id. at 762. Therefore, the Court said that “a tangible

employment action taken by the supervisor becomes for Title VII

purposes the act of the employer.” Id.

The case most important to our Hill decision was Reeves.

Roger Reeves supervised assembly-line workers for Sanderson

Plumbing Products, Inc., which made toilet seats and covers.

Upon learning that Reeves made various mistakes, Powe Chestnut,

the director of manufacturing and the husband of company

president Sandra Sanderson, told Sanderson that Reeves should be

fired. Sanderson followed his recommendation. Reeves then sued

under the ADEA, alleging that his termination resulted from

discrimination by Chestnut, who had often showed discriminatory

animus toward him. Reeves, 530 U.S. at 138. The Supreme Court

found that Reeves had overcome judgment notwithstanding the

verdict because, although Sanderson “made the formal decision to

discharge” Reeves, Chestnut “was principally responsible for”

and “the actual decisionmaker behind his firing.” Id. at 151-

18
52. Reeves had produced evidence that Chestnut “exercised

‘absolute power’ within the company.” Id. at 152.

Ultimately, Reeves’s rationale dictated the rule that Hill

announced. See Hill, 354 F.3d at 288-89 (“Reeves informs us

that the person allegedly acting pursuant to a discriminatory

animus need not be the ‘formal decisionmaker’ to impose

liability upon an employer for an adverse employment action, so

long as . . . the subordinate was the one ‘principally

responsible’ for, or the ‘actual decisionmaker’ behind, the

action.” (quoting Reeves, 530 U.S. at 151-52)). For our

purposes, Reeves also clarifies the Hill rule. Reeves

distinguishes between the “formal decisionmaker,” which under

Ellerth would be the person authorized to make the relevant

decision, and “subordinate” employees who lack this authority,

such as Chestnut or the safety inspector in Hill. Accordingly,

we believe the term “subordinate employee” in the Hill rule

invokes that distinction. Hill, 354 F.3d at 291.

Using this interpretation, and assuming for purposes of

this appeal that Hill applies under § 1981, we conclude that

DynCorp can take no comfort from Hill on the facts before us.

DynCorp relies on Hill to argue that, because it alleges that

Cashon was solely responsible for the decision to terminate the

CivPol Subcontract, the jury should not have been allowed to

consider the racial animus of anyone other than Cashon. We

19
note, however, that Hill does not enable DynCorp to self-select

the decisionmaker whose motives are the purest. Furthermore, we

find Hill inapplicable for two separate reasons.

First, the Hill rule’s initial premise, namely, that the

plaintiff “rests a discrimination claim . . . upon the

discriminatory motivations of a subordinate employee,” assumes

that a formal decisionmaker can be identified. Id. at 291. In

this case, however, WWNS and DynCorp offered conflicting

evidence regarding who had authority to terminate the CivPol

Subcontract. Cashon testified to having this authority but also

admitted that he answered to Rosenkranz regarding his decision.

Moreover, other evidence indicated that Cashon, Merrick,

Rosenkranz, and Walsh were authorized to make that decision

collectively. Significantly, Walsh was the one who directed

DynCorp’s accounting department to stop payment to WWNS for

completed work. By contrast, this problem of identification was

absent from Hill and Reeves, where none debated who had formal

decisionmaking authority.

Second, even assuming that only Cashon could be considered

the formal decisionmaker, we are unwilling to conclude that

Walsh and Rosenkranz, who supervised Cashon, should be treated

like the Hill and Reeves subordinate employees who lacked

authority over the formal decisionmaker. Because Hill thus does

not apply to this case, we conclude that the district court’s

20
refusal to give DynCorp’s proposed instruction was not an abuse

of discretion. 8

B.

Next, we consider DynCorp’s challenge to the district

court’s denial of DynCorp’s renewed Rule 50(b) motion for

judgment as a matter of law on the § 1981 claim. “We review de

novo the grant or denial of a motion for judgment as a matter of

law.” Robinson v. Equifax Info. Servs, LLC, 560 F.3d 235, 240

(4th Cir. 2009) (internal quotations omitted). “Judgment as a

matter of law is proper when, without weighing the credibility

of the evidence, there can be but one reasonable conclusion as

to the proper judgment.” U.S. ex rel. DRC, Inc. v. Custer

Battles, LLC, 562 F.3d 295, 305 (4th Cir. 2009) (internal

quotations omitted); see also Saunders v. Branch Banking & Trust

8
We note as well that DynCorp’s proposed jury instruction
was “substantially covered by the court’s charge to the jury.”
Passaro, 577 F.3d at 221. As mentioned, the district court
instructed that “the race of WWNS’s owners must be proven to
have been a motivating factor in DynCorp’s decision not to renew
WWNS’s CIVPOL subcontract or issue further task orders
thereunder.” J.A. 1762. Following this instruction’s clear
import, the jury could not have considered evidence of racial
bias regarding DynCorp employees that neither made nor had
authority to make that decision. Thus, DynCorp’s proposed
instruction differed from the actual one only by wrongly
insinuating that just one person could have made or been
responsible for the decision to terminate the CivPol
Subcontract.

21
Co. of Va., 526 F.3d 142, 147 (4th Cir. 2008) (“A court may

award judgment as a matter of law only if there is no legally

sufficient evidentiary basis for a reasonable jury to find for

the non-moving party.”). On this issue, we must view the

evidence in the light most favorable to the non-moving party,

drawing all reasonable inferences in that party’s favor. Dennis

v. Columbia Colleton Med. Ctr., Inc., 290 F.3d 639, 645 (4th

Cir. 2002).

In this case, § 1981 liability required proof that race

actually motivated DynCorp’s decision to terminate the CivPol

Subcontract, that is, that race “actually played a role in the

. . . decisionmaking process and had a determinative influence

on the outcome.” Reeves, 530 U.S. at 141. DynCorp alleges that

only Cashon made the decision to terminate the CivPol

Subcontract. Accordingly, DynCorp concludes that all other

DynCorp executives’ alleged racial animus must be ignored under

Hill. In that light, DynCorp asserts that the verdict cannot

stand. We disagree with the initial premise that only Cashon

made the decision. 9 The record contains sufficient evidence from

9
We do not dispute the characterization in Judge Niemeyer’s
opinion, dissenting in part, that Cashon had authority to
terminate the CivPol Subcontract. However, that opinion fails
to reckon with Cashon’s own testimony that he made the decision
collectively with Merrick, Rosenkranz, and Walsh — the
discriminatory animus of at least Rosenkranz and Walsh having
been set out.

22
which a reasonable jury could conclude that Cashon, Rosenkranz,

Merrick, and Walsh made a collective decision to terminate the

CivPol Subcontract. The record also contains evidence that

Rosenkranz and Walsh harbored racial animus against Gray and

Bailey. This evidence includes Walsh’s racial slur, Spencer’s

termination by Rosenkranz, Walsh stopping payments to WWNS, and

the checkered October 2006 dinner celebrating WWNS’s

misfortune. 10 Therefore, sufficient evidence of discrimination

was presented for § 1981 liability.

Moreover, we note that WWNS presented adequate evidence to

establish § 1981 liability through the burden-shifting analysis

of McDonnell Douglas Corp. v. Green, 411 U.S. 792 (1973), and

its progeny. See Patterson v. McLean Credit Union, 491 U.S.

164, 186 (1989) (extending McDonnell Douglas to § 1981 cases),

superseded on other grounds by statute, Civil Rights Act of

1991, Pub. L. No. 102-166, 105 Stat. 1071. Under this analysis,

the plaintiff carries an initial burden to establish a prima

facie case of discrimination. A company alleging discriminatory

contract termination may carry this burden by showing that

(1) the defendant terminated a contract with it, (2) it was

10
To the extent that Judge Niemeyer’s opinion argues that,
but for evidence about DeBeer, the record contained insufficient
evidence to establish § 1981 discrimination, we note that that
opinion fails to account for Walsh’s otherwise unexplained
decision to stop payments to WWNS.

23
within a protected class, (3) its performance under the contract

met the defendant’s legitimate expectations, and (4) the

defendant instead contracted with a company not in a protected

class. See Holland v. Washington Homes, Inc., 487 F.3d 208, 214

(4th Cir. 2007). Once the prima facie case has been

established, the burden shifts to the defendant “to articulate a

legitimate, nondiscriminatory reason” for the contract

termination. Id. (internal quotations omitted). Once the

defendant carries this burden of production, the burden shifts

back to the plaintiff to prove that the defendant’s stated

reasons “were not its true reasons, but were a pretext for

discrimination.” Id. (internal quotations omitted). At this

point, “the McDonnell Douglas framework — with its presumptions

and burdens — disappear[s] . . . and the sole remaining issue

[i]s discrimination vel non.” Reeves, 530 U.S. at 142-43

(internal quotations omitted).

WWNS established a prima facie case of discrimination by

showing that (1) DynCorp terminated the CivPol Subcontract,

(2) WWNS had been designated a Small Disadvantaged Business by

the SBA because Gray and Bailey are African American, (3)

Cashon’s glowing evaluations of WWNS in January and March 2006

rated WWNS “excellent” or “good” across the board and stated

that DynCorp would hire WWNS again, and (4) EDO Corp. was not

minority-owned. In turn, DynCorp articulated a legitimate,

24
nondiscriminatory reason for terminating the CivPol Subcontract.

Cashon testified that the reason was WWNS’s poor performance.

We believe a reasonable jury could have concluded that DynCorp’s

stated reason was merely a pretext for discrimination. For

example, the jury might have disbelieved Cashon’s testimony

about DynCorp’s stated reason because Cashon himself had given

WWNS glowing evaluations. Therefore, we affirm the district

court’s denial of DynCorp’s Rule 50(b) motion regarding the

§ 1981 claim.

C.

We next consider three evidentiary rulings that DynCorp

challenges. We review each for abuse of discretion. United

States v. Basham, 561 F.3d 302, 325 (4th Cir. 2009).

1.

First, DynCorp argues that the district court committed

reversible error by excluding Kellogg’s testimony and the Iraq

and Tiger Reports. This evidence was excluded under Federal

Rule of Evidence 701, which “forbids the admission of expert

testimony dressed in lay witness clothing.” United States v.

Perkins, 470 F.3d 150, 156 (4th Cir. 2006). Kellogg’s excluded

testimony and the Iraq and Tiger Reports were technical

evaluations of WWNS’s performance. Discussed topics include

25
whether WWNS’s chosen method of encrypting wireless

communication provided enough security. We believe such matters

are well beyond the scope of permissible lay testimony under

Rule 701. See Certain Underwriters at Lloyd’s, London v.

Sinkovich, 232 F.3d 200, 203 (4th Cir. 2000) (noting that Rule

701 “generally does not permit a lay witness to express an

opinion as to matters which are beyond the realm of common

experience and which require the special skill and knowledge of

an expert witness” (internal quotations omitted)). Therefore,

we conclude that the district court’s decision to exclude that

evidence was not an abuse of discretion.

2.

Second, DynCorp challenges the district court’s failure to

exclude Spencer’s testimony about his termination by Rosenkranz

under Federal Rules of Evidence 401 and 403. The court below

reasoned that Spencer’s testimony was “relevant to the issue of

pretext as it demonstrates DynCorp’s corporate attitude toward

minorities and provides insight into what factors contributed to

DynCorp’s decision to terminate its relationship with WWNS.”

J.A. 1891. We believe that Spencer’s testimony was indeed

relevant because of Rosenkranz’s apparent participation in

DynCorp’s decision to terminate the CivPol Subcontract.

Moreover, we believe this probative value outweighed any danger

26
of undue prejudice. Thus, we affirm the district court’s

decision to allow Spencer’s testimony.

3.

Finally, DynCorp challenges the district court’s failure to

strike Mack’s testimony that Walsh called Gray “a stupid black

mother . . . .” J.A. 1723. Federal Rule of Civil Procedure

26(e) provides that a party who has made a disclosure or

responded to an interrogatory “must supplement or correct its

disclosure or response . . . in a timely manner if the party

learns that in some material respect the disclosure or response

is incomplete or incorrect.” Fed. R. Civ. P. 26(e)(1)(A).

Mack’s allegation became known to WWNS several days before

trial, but DynCorp was not made aware of it until Mack testified

at trial. WWNS thus clearly violated Rule 26(e), which it does

not dispute.

Upon discovering that WWNS had not disclosed Mack’s

allegation, DynCorp objected and moved to strike because of

WWNS’s Rule 26(e) violation. The district court denied this

motion, stating: “[T]he difficulty that I have is, you’re asking

me to tell the jury to disregard the hot poker that has just

been put in front of their face. I don’t think I can undo it

that way.” J.A. 1730. Instead, the court instructed the jury

to take into consideration WWNS’s failure to notify DynCorp

27
about Mack’s allegation. DynCorp later moved for a new trial,

arguing that Mack’s testimony should have been struck, but the

court denied this motion.

Federal Rule of Civil Procedure 37(c)(1) provides: “If a

party fails to provide information or identify a witness as

required by Rule 26(a) or (e), the party is not allowed to use

that information or witness to supply evidence . . . at a trial,

unless the failure was substantially justified or is harmless.”

Fed. R. Civ. P. 37(c)(1). WWNS asserts that the Rule 26

violation was harmless but concedes that no substantial

justification existed.

We have said that a court determining harmlessness under

Rule 37(c)(1) should consider five factors:

(1) the surprise to the party against whom the
evidence would be offered; (2) the ability of that
party to cure the surprise; (3) the extent to which
allowing the evidence would disrupt the trial; (4) the
importance of the evidence; and (5) the nondisclosing
party’s explanation for its failure to disclose the
evidence.

S. States Rack & Fixture, Inc. v. Sherwin-Williams Co., 318 F.3d

592, 597 (4th Cir. 2003). Based on these factors, we believe

WWNS’s Rule 26 violation was indeed harmless. Although DynCorp

was surprised by Mack’s testimony, the trial continued

undisturbed. Moreover, the record contains abundant evidence of

racial animus aside from Mack’s testimony. This includes

Spencer’s termination by Rosenkranz, the racially charged

28
October 2006 dinner celebrating WWNS’s misfortune, and Walsh

directing DynCorp’s accounting department to stop paying WWNS

for work already completed. We therefore decline to reverse on

this ground.

D.

Finally, we consider alleged errors regarding the

$10 million punitive-damages award. DynCorp argues that

punitive damages for the § 1981 claim are unsupported by the

record and that the jury instruction on that issue was

erroneous.

1.

We begin by considering the district court’s denial of

DynCorp’s renewed Rule 50(b) motion for judgment as a matter of

law with regard to WWNS’s prayer for punitive damages for the

§ 1981 claim. We review this decision de novo. Lowery v.

Circuit City Stores, Inc., 206 F.3d 431, 442-43 (4th Cir. 2000).

A plaintiff who prevails under § 1981 “is entitled under

the common law to punitive damages . . . for conduct . . .

exhibiting malice, an evil motive, or recklessness or callous

indifference to a federally protected right.” Id. at 441

(internal quotations omitted). The Supreme Court developed this

standard in Smith v. Wade, 461 U.S. 30 (1983), for actions under

29
42 U.S.C. § 1983. Congress later adopted the standard in the

Civil Rights Act of 1991, which allows punitive damages in Title

VII actions where the employer discriminated “with malice or

with reckless indifference to the federally protected rights of

an aggrieved individual.” 42 U.S.C. § 1981a(b)(1).

Interpreting this statute, the Supreme Court held that “[t]he

terms ‘malice’ or ‘reckless indifference’ pertain to the

employer’s knowledge that it may be acting in violation of

federal law, not its awareness that it is engaging in

discrimination.” Kolstad v. Am. Dental Ass’n, 527 U.S. 526, 535

(1999). Accordingly, the Court held that “an employer must at

least discriminate in the face of a perceived risk that its

actions will violate federal law to be liable in punitive

damages.” Id. at 536. Because § 1981a was intended to mirror

Smith, we have held that “any case law construing the punitive

damages standard set forth in § 1981a, for example Kolstad, is

equally applicable to clarify the common law punitive damages

standard with respect to a § 1981 claim.” Lowery, 206 F.3d at

441. Therefore, upon reviewing § 1981 punitive damages, we have

required evidence that the defendant acted “in the face of a

perceived risk that [its] decision would violate federal law.”

Id. at 443.

30
 Regarding this requirement, Kolstad noted hypotheticals

that are particularly relevant to the case before us. The

Supreme Court explained:

There will be circumstances where intentional
discrimination does not give rise to punitive damages
liability under this standard. In some instances, the
employer may simply be unaware of the relevant federal
prohibition. There will be cases, moreover, in which
the employer discriminates with the distinct belief
that its discrimination is lawful. The underlying
theory of discrimination may be novel or otherwise
poorly recognized.

Kolstad, 527 U.S. at 536-37. Accordingly, even a defendant who

discriminates while intending to cause injury might escape

liability for punitive damages under § 1981 if he thought his

conduct was lawful. This informs our remark that punitive

damages are “an extraordinary remedy” and “not every lawsuit

under section 1981 calls for submission of this extraordinary

remedy to a jury.” Stephens v. S. Atl. Canners, Inc., 848 F.2d

484, 489-90 (4th Cir. 1988).

Soon after Kolstad, we reviewed a § 1981 punitive-damages

award in Lowery. Renee Lowery and Lisa Peterson alleged that

Circuit City Stores, Inc. (“Circuit City”) failed to promote

them because of racial animus. Circuit City was found liable

under Title VII and § 1981, and the jury awarded punitive

damages of $225,000. On appeal, Circuit City asserted that the

record did not support punitive damages. Notably, we found

31
punitive damages recoverable only under § 1981 and limited our

analysis accordingly. Lowery, 206 F.3d at 441.

We explained, “Kolstad teaches that we . . . must first ask

whether the record contains sufficient evidence for a reasonable

juror to find that in intentionally refusing to promote the

plaintiff . . . the decision maker did so in the face of a

perceived risk that her decision would violate federal law.”

Id. at 443. We continued, “If the answer is no, we should

vacate the portion of the judgment awarding the plaintiff

punitive damages and direct entry of judgment as a matter of law

in favor of Circuit City on that issue.” Id. In the end, we

found that the record did contain sufficient evidence because

Circuit City had presented “evidence that it required every

person in management to attend a week-long training seminar that

included education on the federal anti-discrimination laws.”

Id. (citing E.E.O.C. v. Wal-Mart Stores, Inc., 187 F.3d 1241,

1246 (10th Cir. 1999) (finding sufficient evidence where the

offending manager “testified that he was familiar with the

accommodation requirements of the ADA and its prohibition

against discrimination and retaliation in the workplace”)).

We considered the same legal issue in subsequent cases.

Sufficient evidence was found where a supervisor who engaged in

sexual harassment “testified that he had seen an EEOC poster

regarding sexual harassment” at work that read, “Sexual

32
harassment is unlawful and unacceptable in the workplace.”

Anderson v. G.D.C., Inc., 281 F.3d 452, 460 (4th Cir. 2002).

Although the supervisor denied reading the poster, we found that

“a reasonable jury could nevertheless infer that [his] awareness

of the poster suggested at least a rudimentary knowledge of its

import.” Id. Sufficient evidence was also found where a

manager “was specifically aware of FedEx’s internal ADA

compliance policy, and had received training from FedEx on the

ADA’s compliance requirements.” E.E.O.C. v. Fed. Express Corp.,

513 F.3d 360, 373 (4th Cir. 2008).

By contrast, we declined to find sufficient evidence in

Ocheltree v. Scollon Productions, Inc., 335 F.3d 325 (4th Cir.

2003) (en banc). Lisa Ocheltree sued her employer Scollon

Productions, Inc., under Title VII because she “was the victim

of severe or pervasive sex-based harassment in her workplace.”

Id. at 327. We “combed the record,” however, and found “no

evidence that would allow a jury to find that Scollon

Productions knew, either directly or by imputation, that it

might have been acting in violation of Ocheltree’s ‘federally

protected rights.’” Id. at 336. Thus, we upheld the verdict on

liability but vacated punitive damages. Id.

The case before us presents a scenario comparable to

Ocheltree. WWNS has been unable to cite any evidence that

DynCorp terminated the CivPol Subcontract “in the face of a

33
perceived risk that [its] decision would violate federal law.” 11

Lowery, 206 F.3d at 443. The district court likewise failed to

cite such evidence, and we could find none upon combing the

record. 12 Accordingly, we conclude that the award of punitive

damages should be vacated. 13

11
WWNS cites only 41 C.F.R. § 60-1.4, which requires
government contractors to adopt contractual language that
pertains to discrimination against employees or applicants for
employment under Title VII. However, the language nowhere
mentions discrimination against minority-owned corporate
subcontractors under § 1981.
12
Judge Jones’s opinion, dissenting in part, states that
WWNS’s July 26, 2006, letter to DynCorp indicates that DynCorp
was warned about WWNS’s federal right under § 1981. The letter
itself, however, shows that this warning came after DynCorp had
already terminated the CivPol Subcontract. The letter demands
that DynCorp “comply with its obligations under the terms of the
February 16, 2004, Subcontract and related Task Orders
(collectively ‘the Agreements’),” but makes clear that DynCorp
had already repudiated them. The letter states that “DynCorp
has taken it upon itself to inform . . . WWNS employees . . .
that the Agreements have been terminated,” and that WWNS
“consider[ed] DynCorp’s conduct to constitute . . . a material
breach of the Agreements.” J.A. 2692. Because WWNS sent the
letter after DynCorp had already terminated the CivPol
Subcontract, the letter tells nothing about whether DynCorp
previously acted “in the face of a perceived risk that [its]
decision would violate federal law.” Lowery, 206 F.3d at 443.
13
Added to our rationale, DynCorp argues that the legal
theory WWNS advanced was “novel or otherwise poorly recognized,”
Kolstad, 527 U.S. at 537, because whether a corporation may sue
under § 1981 was never crystal clear. See Domino’s Pizza, Inc.
v. McDonald, 546 U.S. 470, 473 n.1 (2006) (noting that “we have
no occasion to determine whether, as a corporation, it could
have brought suit under § 1981” (emphasis omitted)); Vill. of
Arlington Heights v. Metro. Housing Dev. Corp., 429 U.S. 252,
263 (1977) (holding that “a corporation . . . has no racial
(Continued)
34
 2.

Even aside from the above error, the award of punitive

damages could not stand because the district court’s jury

instruction on punitive damages was also erroneous.

“Instructions are adequate if construed as a whole, and in light

of the whole record, they adequately inform the jury of the

controlling legal principles without misleading or confusing the

jury to the prejudice of the objecting party.” S. Atl. Ltd.

P’ship of Tenn., L.P. v. Riese, 284 F.3d 518, 530 (4th Cir.

2002) (internal quotations omitted). “Even if instructions are

flawed, there can be no reversal unless the error seriously

prejudiced the challenging party’s case.” Id. (internal

quotations omitted). Because DynCorp’s objection to the

district court’s instruction on punitive damages was not

preserved according to Federal Rule of Civil Procedure 51(d)(1),

reversal would be proper “only when we can conclude that [the]

particular jury instruction must necessarily have caused the

jury to act in complete ignorance of, or to have misapplied,

fundamentally controlling legal principles to the inevitable

prejudice of an aggrieved party.” Spell v. McDaniel, 824 F.2d

1380, 1399 (4th Cir. 1987); see also Fed. R. Civ. P. 51(d)(2).

identity and cannot be the direct target of . . .
discrimination”).

35
 In this case, the district court gave the following

instruction: “[Y]ou may award punitive damages if WWNS . . .

[has] shown by clear and convincing evidence that DynCorp

maliciously, or with reckless indifference, discriminated

against WWNS.” J.A. 1771. Notably, the court never defined

“malice” or specified to what “reckless indifference” refers.

The word “malice” ordinarily means: “A desire to harm others or

to see others suffer; extreme ill will or spite.” American

Heritage Dictionary of the English Language 1059 (4th ed. 2006).

Unless properly instructed, a layperson would not know that

“malice” also has a technical legal meaning relating to

awareness that one may be breaking the law. Cf. Perry v.

McCaughtry, 308 F.3d 682, 694 (7th Cir. 2002) (Posner, J.,

dissenting) (arguing that a layperson would not without

instruction know that “cause” had the technical meaning

“substantial factor in”). Nor would a layperson assume that

“reckless indifference” in the instruction specifically means

“reckless indifference to federally protected rights.”

Accordingly, the jury could not have known that “‘malice’ or

‘reckless indifference’ pertain to [DynCorp’s] knowledge that it

may be acting in violation of federal law,” Kolstad, 527 U.S. at

535, or that punitive damages are improper unless DynCorp acted

“in the face of a perceived risk that [its] decision would

violate federal law,” Lowery, 206 F.3d at 443. Therefore, we

36
believe the challenged instruction “caused the jury to act in

complete ignorance of . . . fundamentally controlling legal

principles.” Spell, 824 F.2d at 1399.

Regarding whether DynCorp was prejudiced by the

instruction, we note again that WWNS has not identified any

evidence that DynCorp suspected that terminating the CivPol

Subcontract might violate federal law, and we found no such

evidence in the record. Notwithstanding, the jury awarded

$10 million of punitive damages, which the district court

concluded was “for DynCorp’s Section 1981 violation.” J.A.

1911. Therefore, we believe serious prejudice necessarily

resulted from the challenged instruction.

3.

Although the punitive-damages award based on the § 1981

claim should be vacated, the jury’s verdict complicates our

disposition. The district court instructed that punitive

damages may be awarded on Counts 1 and 3-5. Among this group,

DynCorp was found liable only on Count 1 (§ 1981 discrimination)

and Count 3 (tortious interference with contract). The jury

awarded $10 million of punitive damages, but the verdict does

not specify how much was allocable to Count 1 rather than

Count 3. For this reason, we cannot vacate the award without

unwittingly vacating any punitive damages allocable to Count 3.

37
Accordingly, the case must be remanded for retrial on punitive

damages for Count 3. 14

III.

For the reasons stated above, we affirm the district

court’s refusal to give DynCorp’s proposed jury instruction

pertaining to Hill, the court’s denial of DynCorp’s Rule 50(b)

motion regarding the § 1981 claim, and all evidentiary rulings

challenged by DynCorp. However, we reverse the court’s denial

of DynCorp’s Rule 50(b) motion regarding WWNS’s prayer for

punitive damages based on the § 1981 claim, vacate the award of

punitive damages, and remand the case for retrial on punitive

damages for Count 3. Accordingly, we

AFFIRM IN PART AND REVERSE IN PART.

14
Any reconsideration should take into account the standard
for awarding punitive damages under Virginia law.

38
NIEMEYER, Circuit Judge, concurring in part and dissenting in
part:

After DynCorp International, LLC refused to renew its

subcontract with Worldwide Network Services, LLC for

information-technology services, Worldwide Services commenced

this action, alleging that DynCorp’s termination of the

subcontract was motivated by racial animus and thus constituted

racial discrimination in contracting, in violation of 42 U.S.C.

§ 1981. The subcontract had been entered into to assist

DynCorp’s performance of its contract with the State Department

to support civilian police programs in Iraq and Afghanistan.

DynCorp maintained that it terminated its relationship with

Worldwide Services because of Worldwide Services’ poor

performance and that the conceded racial animus of a mid-level

manager, who lacked authority to end the relationship, was not

imputable to the corporation under Hill v. Lockheed Martin

Logistics Management, Inc., 354 F.3d 277, 291 (4th Cir. 2004)

(en banc) (holding that an employer will not be liable under

Title VII of the Civil Rights Act of 1964 or the Age

Discrimination in Employment Act of 1967 (“ADEA”) “for the

improperly motivated person who merely influences the decision,

but [only] for the person[s] who in reality make[] the decision”

(emphasis added)). The district court refused DynCorp’s request

to apply Hill to this case and declined to give an instruction

39
to the jury that would have barred imputation of the mid-level

manager’s racial animus to the corporation for purposes of

determining liability under § 1981. The court stated, “[T]he

jury doesn’t have to specify which person did what.” The jury

was thus allowed to consider the racial animus of individuals,

including the mid-level manager, who may have influenced those

who made the decision on behalf of DynCorp, but who were not

themselves decisionmakers, in violation of Hill.

The majority approves this error by concluding that Hill

does not apply to this case because some of the other DynCorp

employees alleged to have acted with racial animus were high-

level executives who may have had authority to decide not to

renew Worldwide Services’ subcontract, whereas Hill applies when

the plaintiff’s claim “rests . . . upon the discriminatory

motivations of a subordinate employee.” Hill, 354 F.3d at 291.

What this reasoning overlooks, I respectfully submit, is the

extent to which Worldwide Services’ claim was based on the

conceded racial animus of the mid-level manager, who clearly

lacked authority to end the relationship between the two

companies, but who was in a position to influence the decision

to such an extent that the jury may have found that his racial

bias was “a motivating factor in DynCorp’s decision,” which was

all the district court required the jury to find before imposing

liability on the corporation. Because Worldwide Services

40
presented considerable evidence of this mid-level manager’s

racial bias and his role in the deterioration of the companies’

relationship, the jury needed to be told that only the racial

animus of DynCorp’s actual decisionmakers could be considered in

determining whether race motivated the corporation’s decision.

Because Hill applies to determine when the racial animus of

an employee is imputable to a corporation, it was error for the

district court to have refused to give an instruction under

Hill. And because, in this case, the mid-level manager with

racial animus may, as a factual matter, have substantially

influenced the decision not to renew Worldwide Services’

subcontract, the error was prejudicial. Accordingly, I believe

that a new trial is necessary to permit the jury to resolve who

DynCorp’s decisionmaker or decisionmakers were and whether they

were actually motivated by racial animus in deciding not to

renew Worldwide Services’ subcontract. Because I would grant

DynCorp’s request for a new trial, I would not reach the other

issues addressed by the majority, with one exception. In view

of the majority’s determination to affirm on liability and to

provide Judge Duncan with a majority on her discussion of

punitive damages, I join her discussion of punitive damages, as

contained in Parts II(D)(1) and (2).

41
 I.

In February 2004, the ITS (International Technical

Services) Division of DynCorp won a contract from the State

Department to provide support for civilian police (“CIVPOL”)

programs in Iraq and Afghanistan. Thereafter, DynCorp awarded a

subcontract to Worldwide Services to perform communication and

information-technology services for the CIVPOL program pursuant

to “task orders” issued by DynCorp. The subcontract’s term

extended one year (February 2004 to February 2005) and was

renewable under four one-year options. DynCorp renewed the

subcontract in February 2005 and again in February 2006, but not

thereafter.

Worldwide Services was headed by Walter Gray and Reginald

Bailey, both African Americans, and the company was certified by

the Small Business Administration as a Section 8(a)

disadvantaged company. Before its subcontract with DynCorp,

Worldwide Services’ annual revenue was about $100,000, which was

produced primarily by providing information-technology services

to local businesses. During the first year of its subcontract

with DynCorp, however, Worldwide Services received over $20

million in revenues.

Richard Cashon, a DynCorp vice president and its program

manager for the CIVPOL program, was charged with formally

evaluating Worldwide Services’ performance under the

42
subcontract, and he gave it positive marks. In January 2006,

Cashon rated Worldwide Services’ performance as “exceptional”

and “very good,” noting Worldwide Services’ “technical depth in

terms of the number of technically competent individuals on

their staff” and “flexib[ility] in terms of operating in a

dynamic environment.” Cashon wrote that he would have no

reservations about using Worldwide Services in the future. A

few months later, Cashon again rated Worldwide Services’ work as

“good” or “excellent” in every category and again stated that

DynCorp “[w]ould . . . hire this contractor again.”

Despite Cashon’s positive evaluations, in early 2006

DynCorp received two letters from the State Department

criticizing both DynCorp and Worldwide Services’ performance.

In the first letter, the Principal Deputy Assistant Secretary

for the State Department’s Bureau of International Narcotics and

Law Enforcement Affairs wrote a letter to DynCorp’s CEO to

complain about a number of defects in DynCorp’s performance,

including its supervision of Worldwide Services. The letter

stated that “[Worldwide Services’] technical performance has in

general been inadequate to the point where it has disrupted

critical communications in the field.” The letter also made

clear that DynCorp’s relationship with the State Department

could be jeopardized if the problems were not resolved.

43
 About three weeks later, a State Department representative

in Baghdad sent a second letter to DynCorp that focused

exclusively on the services provided by Worldwide Services in

Iraq, and this letter was even more critical of Worldwide

Services’ performance. It concluded that “[a] great deal must

be accomplished to improve many aspects of [Worldwide Services’]

service provision, levels of expertise, project management and

implementation strategies to effect acceptable standards of

IT/communications support.”

After receiving these letters, DynCorp developed a plan to

manage Worldwide Services more actively. Bob Rosenkranz, the

President of DynCorp’s ITS Division, designated Richard Walsh,

the Vice President for Operations, to serve as a “mentor” to

help Worldwide Services improve its performance. Walsh began by

having weekly meetings with Worldwide Services’ executives Gray

and Bailey, and in the first meeting Walsh emphasized that

Worldwide Services was “in danger of losing [DynCorp’s] business

altogether” if its performance did not improve. In February

2006, Walsh traveled to Afghanistan to observe Worldwide

Services’ performance on the ground and, as Walsh later

testified, he found “[t]he situation . . . much worse than I had

thought” and observed that “the basics were not being taken care

of.” Walsh was particularly concerned that those traveling into

hostile areas were at greater risk because the high-frequency

44
radio network, for which Worldwide Services had responsibility,

was not working properly.

When Walsh shared his observations with Rosenkranz,

Rosenkranz expressed hope that DynCorp could still “whip

[Worldwide Services] into shape.” Rosenkranz also described

Worldwide Services as “one of the favored ones,” suggesting that

he shared Walsh’s view that Worldwide Services received

“protection” from Steve Cannon, DynCorp’s CEO and the DynCorp

executive most responsible for DynCorp’s relationship with

Worldwide Services.

In addition to Walsh’s efforts, DynCorp also conducted

internal investigations into Worldwide Services’ performance in

both Iraq and Afghanistan, and DynCorp’s management received

separate reports from these investigations. The report from

Iraq, completed by June 19, 2006, noted that the “concern

regarding the status of IT and the [Worldwide Services] team

that provides that service to [DynCorp] is well-founded.” But

it also noted that “recent efforts by the [Worldwide Services]

team to improve the situation are typically reaching positive

results” and that “[t]he current situation is a contrast from

what is typically perceived as a rather negative history.” The

report from Afghanistan, completed between July 22-31, 2006,

found that “the CIVPOL Afghanistan program suffers from a

45
serious IT and [c]ommunications problem that is resulting in

reduced program efficiency and effectiveness.”

DynCorp’s relationship with Worldwide Services suffered an

additional serious blow when DynCorp received a third letter

from the State Department -- this time from the contracting

officer overseeing the CIVPOL contract -- complaining about

Worldwide Services’ performance. This letter, dated June 23,

2006, emphasized the State Department’s “concern[s] about

pervasive information technology (IT) performance deficiencies

on all DynCorp Task Orders.” After describing a number of

specific issues, the letter concluded by requesting a meeting

“to discuss this broad spectrum of information technology

deficiencies,” noting that “[t]he varied nature of these

problems and their pervasiveness suggests that they are

systemic.” Shortly after DynCorp received this letter, its

Board of Directors held a meeting, at which Cannon was

questioned about the State Department’s complaints. Cannon

responded that “it might become necessary to replace the

subcontractor in question.” Four days later, however, Cannon

resigned as President and CEO of DynCorp.

Cashon, the program manager, then decided not to issue any

additional CIVPOL task orders to Worldwide Services in Iraq.

While it was typical for the program manager to make such

decisions, in this case there was evidence that Rosenkranz and

46
Walsh participated in the decision. During the last week of

July, Cashon also decided to allow all remaining CIVPOL task

orders directed to Worldwide Services to expire and not to renew

DynCorp’s subcontract with Worldwide Services.

Worldwide Services commenced this action alleging, among

other things, that DynCorp’s decision not to issue further task

orders and not to renew its CIVPOL subcontract was the product

of intentional racial discrimination, in violation of 42 U.S.C.

§ 1981. At trial, Worldwide Services presented five items of

direct evidence to demonstrate racial animus.

First, Charles Jones, Worldwide Services’ Deputy Program

Manager in Iraq from March 2006 to August 2006, testified about

racially offensive statements made by Leon DeBeer, DynCorp’s

Iraq IT Manager and the DynCorp employee to whom Worldwide

Services’ employees reported in Iraq. Specifically, Jones

testified that in private conversations, DeBeer, a white South

African, regularly referred to Worldwide Services’ Walter Gray

as a “nigger,” a “bush native,” and a “kaffir.” He also

testified that DeBeer regularly complained that white people

“had made a grave error” by “tak[ing] the black man as a youth

and attempt[ing] to clothe him and send him to school” because

“the proper role of the black man was to go out and kill a lion,

proving his manhood, at which point in time he should be put to

work to feed his family” and “be mated with a woman so that he

47
would have more children, who could then be put to work feeding

the family.”

Second, Jones testified that while he was in Iraq, he heard

Mike Kehoe, DynCorp’s Deputy Program Manager in Iraq for another

State Department contract, describe the acronym for Worldwide

Network Services, “WWNS,” as standing for “where white men never

stay.”

Third, John Mack, a part owner of Worldwide Services,

testified that he once heard Walsh refer to Gray as “a stupid

black mother --.”

Fourth, Richard Spencer, a former DynCorp executive in the

ITS Division who is Hispanic, testified about the lack of racial

diversity among DynCorp’s ITS executives and about his belief

that his ethnicity played a role in the termination of his own

employment. *

*
The majority attributes Spencer’s termination to
Rosenkranz and repeatedly refers to it as evidence of
Rosenkranz’s racial animus. But Spencer testified that while
Rosenkranz signed his termination letter, Spencer had a “fairly
good” relationship with Rosenkranz, who is “not a bad guy.”
Spencer instead suggested that his termination was the decision
of Herb Lanese, DynCorp’s CEO at the time, who did not like
Spencer “for whatever reason.” Moreover, Spencer did not
attribute any racial motivation to Rosenkranz in signing the
letter. Considered in its full context, Spencer’s testimony
about his termination should not be used to impute racial animus
to Rosenkranz.

48
 Finally, Spencer also testified about a dinner he attended

in October 2006 for all of Rosenkranz’s direct subordinates and

their guests -- approximately 40 persons -- at which Bill

Cavanaugh, DynCorp’s Vice President for Business Development,

presented Walsh with a shirt that said, “WWNS -- I took them

down, and all I got was this lousy T-shirt.” Cavanaugh then

proceeded to read a series of fictitious letters, the last of

which purported to be from Gray. According to Spencer,

Cavanaugh read the letter, “mak[ing] a bad impression of Walter”

by talking like “the character on Fat Albert” and using “his

interpretation of Ebonics.” Spencer testified that everybody

laughed and that specifically Rosenkranz “was laughing his ass

off” and Walsh was “laughing, happy.”

Recognizing that the evidence most strongly described

racial animus of DeBeer, DynCorp requested a jury instruction

from the district court, based on Hill, limiting those employees

whose racial animus would be imputable to the corporation. Its

requested instruction provided in part:

To the extent that [Worldwide Services] rests its
discrimination claim upon the discriminatory
motivations of a subordinate employee, [Worldwide
Services] must show by the greater weight of the
evidence that the subordinate employee possessed such
authority to be viewed as the one principally
responsible for the decision or the actual
decisionmaker for DynCorp.

49
 The district court refused to give the instruction,

justifying its refusal by making a distinction between this case

and Hill. The court noted that the Hill opinion was limited to

employer liability under Title VII and the ADEA, whereas this

case involves liability under § 1981. The court stated,

“Plaintiffs pursuing claims under Title VII or the ADEA are

subject to stricter scrutiny than those pursuing claims under

Section 1981 because Title VII and ADEA actions must first

proceed through the EEOC process.” The court noted that our

decision in Hill has “never been extended beyond claims brought

under Title VII and the ADEA,” and it “decline[d] to be the

first court to expressly do so.” The court concluded that “the

Hill standard is not a correct statement of law for claims

brought under 42 U.S.C. § 1981.”

Rather than limit DynCorp’s discrimination liability under

§ 1981 to the standard stated in Hill, the district court

instructed the jury that the “race of [Worldwide Services’]

owners . . . must have been a factor that actually led to the

decision . . . not to renew or extend [Worldwide Services’]

CIVPOL subcontract or task orders.” (Emphasis added).

The jury found that DynCorp’s decision not to renew or

extend Worldwide Services’ CIVPOL subcontract or task orders was

based in part on racial animus imputed to the corporation, and

it returned a verdict in favor of Worldwide Services on its

50
§ 1981 claim, awarding it $3.42 million in compensatory damages

and $10 million in punitive damages. From the judgment entered

on the jury’s verdict, DynCorp filed this appeal.

II.

DynCorp’s decision not to renew its subcontract with

Worldwide Services was a corporate decision, and the

corporation’s management testified that the corporate decision

was made by executives whose motive for ending the relationship

with Worldwide Services was only business oriented -- based on

Worldwide Services’ poor performance, as graphically

demonstrated by the three letters of complaint from the State

Department -- and not for any reason of race.

Worldwide Services alleges that race was a motivating

factor, and the vast bulk of its direct evidence of racial

animus bore on DeBeer, the IT Manager in Iraq.

As a middle manager, DeBeer’s views about Worldwide

Services’ performance were influential in that Cashon listened

to executives both below and above him. But DeBeer was not the

decisionmaker or even one of several possible decisionmakers.

Everyone at DynCorp testified that the person who had the

authority to make the decision not to renew Worldwide Services’

subcontract was Cashon, the manager for the CIVPOL program, who

concededly did not have any racial animus toward Worldwide

51
Services. Indeed, he was a strong supporter of the firm until

evidence started coming in about its deficiencies. There was

also testimony that two other DynCorp executives, Rosenkranz and

Walsh, participated in the decision. While there was some

evidence of racial animus imputable to them, it was much weaker

and more isolated than that imputed to DeBeer. Specifically,

testimony showed that Rosenkranz and Walsh laughed at racial

jokes directed at Worldwide Services told at a dinner and that

Walsh once make a racial slur about Worldwide Services’ Walter

Gray.

In short, without the racial animus of DeBeer, no one can

predict how the jury might have ruled. The record amply

supports DynCorp’s suggestion that, absent DeBeer’s racial

animus, the evidence may have been too weak as a matter of law

to support a § 1981 claim and that therefore DeBeer’s racial

animus was critical. Because the district court allowed

DeBeer’s racial animus to be considered by the jury in deciding

whether DynCorp’s decision was racially motivated, it is a real

possibility that it allowed the jury to find § 1981 liability

erroneously. This is because DeBeer, as the subordinate of

Cashon, had influence on Cashon’s decision on behalf of DynCorp.

Without testimony of DeBeer’s racial animus, the jury was

essentially left with direct evidence that Rosenkranz and Walsh

52
laughed at racial jokes about Worldwide Services and Walsh once

spoke a racial slur about Gray.

Thus, it was likely critical to the jury’s verdict whether

DeBeer’s racial animus could be imputed to DynCorp as a

motivating factor in its not renewing Worldwide Services’

subcontract. Had the district court applied Hill, the jury

would have been told that DynCorp was not “liable . . . for the

improperly motivated person [DeBeer] who merely influences the

decision.” Hill, 354 F.3d at 291. We explained in Hill that an

employee, such as DeBeer, does not become a decisionmaker whose

discriminatory motivations may be attributed to the employer

“simply because he had a substantial influence on the ultimate

decision or because he has played a role, even a significant

one, in the adverse employment decision.” Id. (emphasis added).

If Hill had been applied, the jury would have been told that

Worldwide Services had to prove that DeBeer “possessed such

authority as to be viewed as the one principally responsible for

the decision or the actual decisionmaker for the employer”

before it could consider the impact of DeBeer’s racial animus.

Id. (emphasis added). Based on the testimony in this record

that Cashon made the decision with Rosenkranz and Walsh and that

DeBeer did not have the authority of one principally responsible

for the decision but could only be tagged as one having

53
influence on it, DeBeer’s racial animus would not have been

imputable to DynCorp.

In limiting a corporation’s liability for racial

discrimination in Hill to the conduct of persons actually

responsible for the corporation’s action, we carried out

Congress’ intent to hold a corporation responsible for racial

discrimination only when its executives and employees

responsible for the corporation’s decision acted with racial

animus, not when any corporate employee manifested racial

animus.

The district court, however, rejected the application of

Hill to § 1981 and instead instructed the jury that the race of

Worldwide Services’ owners “must have been a factor that

actually led to the decision” to terminate DynCorp’s

relationship with Worldwide Services. As a result, the jury was

permitted to consider the racial animus of any employee whose

influence “actually led to the decision.” The district court

thus extended corporate liability for § 1981 to the actions of

any person who influenced the decision, regardless of whether

that person was a decisionmaker. If Hill was applicable, the

district court’s instruction was legally erroneous.

Not only was the district court’s instruction erroneous

under Hill, if Hill was applicable, the error was material to

the outcome in this case. Without consideration of DeBeer’s

54
racial animus, the evidence to support a verdict was thin,

perhaps even fatally thin, and the district court surely

recognized this. It devoted substantial discussion to why it

decided not to give the Hill instruction, concluding that Hill

was “not a correct statement” of § 1981 law and that corporate

agency for discrimination under Title VII was “subject to

stricter scrutiny” than corporate agency under § 1981. Indeed,

the court acknowledged the importance of Hill when it stated

that it “adopted whole cloth DynCorp’s proffered Section 1981

jury instructions, excluding only the language specifically

addressing Hill’s holding.” (Emphasis added).

The dispositive question on appeal, therefore, reduces to

whether Hill accurately describes when the racial animus of

corporate employees may be imputed to a corporation for purposes

of the corporation’s liability for racial discrimination under

§ 1981. I submit that how racial animus is imputed to a

corporation for corporate liability is the same issue, whether

discrimination is alleged to be in violation of Title VII or of

§ 1981, as we have so recognized. Indeed, the majority, too,

assumes that Hill applies to § 1981 claims. This assumption is,

I believe, correct and determinative of this appeal.

55
 III.

In Hill, a former Lockheed mechanic, whose employment was

terminated on the basis of three written reprimands, brought an

action against her corporate employer under Title VII and the

ADEA, alleging that her team’s safety inspector’s discriminatory

animus led him “to report admittedly valid infractions,”

resulting in her second and third reprimands. Hill, 354 F.3d at

283. Hill’s claim therefore rested on her argument that the

safety inspector’s alleged discriminatory animus should be

imputed to the corporation. Hill did not dispute that she had

violated corporate rules and standards, and she did not assert

that her direct supervisors, who issued the reprimands, or her

two program managers, who terminated her employment, acted with

discriminatory animus. The district court granted Lockheed’s

motion for summary judgment, and we affirmed. We held that Hill

could not base a claim on the safety inspector’s animus because

he was not one of the corporation’s decisionmakers with respect

to the decision to issue reprimands to Hill or to terminate her

employment.

In reaching this result, we held that “an employer will be

liable not for the improperly motivated person who merely

influences the decision [to take an adverse employment action],

but for the person who in reality makes the decision.” Hill,

354 F.3d at 291 (emphasis added). To be sure, we did not limit

56
corporate liability under Title VII and the ADEA to the actions

of only “formal decisionmakers for the employer,” because doing

so might allow employers “to insulate themselves from liability

simply by hiding behind the blind approvals, albeit non-biased,

of formal decisionmakers.” Id. at 290 (emphasis added). But we

also rejected the notion that the discriminatory motivations of

an employee may be attributed to the employer “simply because he

had a substantial influence on the ultimate decision or because

he has played a role, even a significant one, in the adverse

employment decision.” Id. at 291. Thus, we concluded that in

determining a corporation’s liability under Title VII or the

ADEA, the focus must be on the motivations of those agents of

the corporation who actually made the adverse employment

decision on behalf of the corporation:

In sum, to survive summary judgment, an aggrieved
employee who rests a discrimination claim under Title
VII or the ADEA upon the discriminatory motivations of
a subordinate employee must come forward with
sufficient evidence that the subordinate employee
possessed such authority as to be viewed as the one
principally responsible for the decision or the actual
decisionmaker for the employer.

Id.

Even though Hill defined corporate liability under only

Title VII and the ADEA, the agency issue resolved in Hill exists

under any discrimination statute creating corporate liability.

See Burlington Indus., Inc. v. Ellerth, 524 U.S. 742, 754

57
(1998). More to the point, in § 1981 claims, courts must answer

the same “general question [of] the proper extent of a[]

[corporate] employer’s responsibility for the offensive acts of

its employees.” Dennis v. County of Fairfax, 55 F.3d 151, 155

(4th Cir. 1995). And Congress, in drafting § 1981, need not

have provided an explicit direction to be clear that this

question “implicates principles of agency law.” Id. at 155.

Indeed, we have previously recognized that the same general

agency principles apply in interpreting § 1981 as apply in

interpreting Title VII. See Spriggs v. Diamond Auto Glass, 242

F.3d 179, 184, 186–90 (4th Cir. 2001) (noting that under both §

1981 and Title VII there must be “some basis for imposing

liability on [the corporate defendant]” and analyzing the

employer’s liability for a racially hostile work environment

without distinguishing between the two statutes (internal

quotation marks and citation omitted)); Lowery v. Circuit City

Stores, Inc., 206 F.3d 431, 441 (4th Cir. 2000) (using the Title

VII standard for imputing liability to a corporate employer for

conduct alleged to justify punitive damages under § 1981).

Moreover, it would be analytically discordant not to apply

Title VII agency principles to § 1981 agency questions. An

employee alleging that his corporate employer intentionally

discriminated against him on the basis of race, in violation of

both Title VII and § 1981, would oddly be able to demonstrate

58
his employer’s liability under § 1981 for the discriminatory

motivations of an employee who substantially influenced, but did

not make, the decision to take an adverse employment action

against him, but he would not be able to do so under Title VII.

Similarly, an employee alleging intentional discrimination on

the basis of sex or religion premised on a subordinate

employee’s influential animus would have no recourse, while her

coworker’s analogous § 1981 claim would succeed. While we must

recognize that Title VII and § 1981 provide “separate, distinct,

and independent” causes of action, Johnson v. Railway Express

Agency, Inc., 421 U.S. 454, 461 (1975), the standard for

imputing racial animus to a corporation in making out each claim

must, out of logical and practical necessity, be the same.

Worldwide Services argues bluntly that Hill should not be

expanded because it was erroneously decided, relying on

decisions in other circuits that have criticized Hill. See

Poland v. Chertoff, 494 F.3d 1174, 1182-83 (9th Cir. 2007)

(finding Hill’s rule too narrow and holding instead that “even

if the biased subordinate was not the principal decisionmaker,

the biased subordinate’s [improper] motive will be imputed to

the employer if the subordinate influenced, affected, or was

involved in the adverse employment decision”); EEOC v. BCI Coca-

Cola Bottling Co. of L.A., 450 F.3d 476, 487 (10th Cir. 2006)

(critiquing Hill’s “peculiar focus on who is a decisionmaker for

59
purposes of discrimination actions” on the ground that, under

agency law principles, an employer’s agents “include[] not only

‘decisionmakers’ but other agents whose actions, aided by the

agency relation, cause injury” (internal quotation marks and

citation omitted)); Lust v. Sealy, Inc., 383 F.3d 580, 584 (7th

Cir. 2004) (criticizing Hill as “inconsistent with the normal

analysis of causal issues in tort litigation”); cf. Ricci v.

DeStefano, 129 S. Ct. 2658, 2689 (2009) (Alito, J., concurring)

(noting circuit split and describing Hill as adopting “[t]he

least employee-friendly standard” by “ask[ing] only whether ‘the

actual decisionmaker’ acted with discriminatory intent”). But,

it would be inappropriate for us to limit Hill arbitrarily,

which is precisely what we would have to do in order to conclude

that the agency principles announced in Hill do not apply to

§ 1981 actions. Worldwide Services’ argument that Hill was

wrongly decided can only be directed to this court sitting en

banc.

In sum, the issue of when to impute the racial animus of an

employee to a corporation for liability under Title VII and

§ 1981 must be and, indeed, is the same. See Spriggs, 242 F.3d

at 184, 186-90; Lowery, 206 F.3d at 441. It was thus

prejudicial error for the district court to have concluded that

the standard was different and to have refused to instruct the

jury on the Hill standard for determining whether the racial

60
animus of DeBeer was imputable to DynCorp in connection with

DynCorp’s decision not to renew the subcontract with Worldwide

Services. Because a new trial on Worldwide Services’ § 1981

claim is thus required, I would vacate the judgment on the

§ 1981 claim, including the award of punitive damages, and

remand for a new trial, requiring the district court to instruct

the jury on Hill.

61
JONES, Chief District Judge, concurring in part and dissenting
in part:

I join with Judge Duncan in affirming the district court’s

refusal to instruct the jury based on Hill v. Lockheed Martin

Logistics Mgmt., Inc., 354 F.3d 277 (4th Cir. 2004), its denial

of a Rule 50(b) motion on the plaintiff’s § 1981 claim, and its

evidentiary rulings. However, I would also affirm the district

court’s refusal to set aside the jury’s punitive damage award. 1

The majority finds that there was insufficient evidence to

support an award of punitive damages as to the § 1981 claim. To

the contrary, I believe that there was ample evidence that

DynCorp International, LLC (“DynCorp”) terminated the

subcontract it entered into with Worldwide Network Services,

Inc. (“WWNS”) to provide communication and information-

technology services for the U.S. State Department’s Civilian

Police programs in Iraq and Afghanistan (“CivPol Subcontract”)

1
The result of the majority holding in this appeal is to
remand the case for a new trial solely on to the issue of
punitive damages as to Count 3, tortious interference with
contract. Punitive damages on that count will be capped by state
law at $350,000. Va. Code Ann. § 8.01-38.1 (2007). Under Judge
Niemeyer’s view of the case, the case would be remanded for a
new trial as to both liability and damages on the § 1981 claim.
Because there is no statutory cap on § 1981 punitives, this
result would preserve the possibility of a larger punitive
damage award –- perhaps as much as $10 million, as awarded by
this jury. If WWNS had its option, it might prefer Judge
Niemeyer’s result, but of course we do not decide legal issues
on the basis of the parties’ preferences.

62
in the face of knowledge that “it may be acting in violation of

federal law.” Kolstad v. Am. Dental Ass’n, 527 U.S. 526, 535

(1999).

Indeed, DynCorp was warned by WWNS that ending the CivPol

Subcontract might violate WWNS’s federally protected rights. On

July 26, 2006, WWNS sent DynCorp’s in-house counsel a letter,

via e-mail and overnight mail, demanding that DynCorp

immediately “comply with its obligations under the” CivPol

Subcontract and informing DynCorp that WWNS had “evidence that

DynCorp’s actions have been racially-motivated in violation of

federal anti-discrimination laws.” (J.A. 2692.) The evidence

also shows that the executives who made the decision to

terminate the CivPol Subcontract were aware of the contents of

this letter. On July 26, 2006, WWNS Chairman and CEO, Walter

Gray, wrote two of DynCorp’s decisionmakers, Richard Cashon and

Robert Rosenkranz -- as well as Herb Lanese, the CEO of DynCorp

-- to confirm that DynCorp’s in-house counsel received the

letter “regarding [DynCorp’s] wrongful and improper conduct in

terminating [WWNS’s] services under the CivPol subcontract.”

(J.A. 2694.) Richard Walsh, Division Vice-President of

Operations for DynCorp, later e-mailed an internal PowerPoint

presentation to other DynCorp executives including Cashon,

outlining the eventual termination of the CivPol Subcontract.

One of the slides of the presentation stated that “[r]ecent

63
correspondence indicate[s] that WWNS is planning legal action

against [DynCorp] based on racial discrimination.” (J.A. 2788.)

Comparing this case to Anderson v. G.D.C., Inc., 281 F.3d

452 (4th Cir. 2002), it is clear a jury could reasonably

conclude from the July 26 letter that DynCorp’s decisionmakers

discriminated against WWNS “in the face of a perceived risk that

its actions will violate federal law.” Kolstad, 527 U.S. at

536. In Anderson, one of the defendant’s employees was found to

have sexually harassed the plaintiff in violation of Title VII,

a federal law prohibiting discrimination on the basis of sex.

281 F.3d at 458-59. The only evidence presented that the

employee knew of the Title VII prohibition was that he looked

at, but did not read, a poster entitled “Sexual Harassment,”

advising employees of proper workplace conduct. Id. at 460.

Nevertheless, this court found that the employee’s mere

“awareness” of the poster “suggested at least a rudimentary

knowledge of its import” sufficient to pass the Kolstad test.

Id.

Here, the DynCorp decisionmakers were directly warned, and

even anticipating, that they would have to confront litigation

for racial discrimination if they continued to pursue the

termination of the CivPol Subcontract. Their level of awareness

of WWNS’s federally protected rights was therefore well beyond

64
that of the employee in Anderson who at most saw the title of a

poster on a wall.

DynCorp argues that, even if the July 26 letter did put the

decisionmakers on notice, it came too late to avoid violating

§ 1981, but I find little merit to this argument. The letter

was sent well before WWNS had ceased operations under the CivPol

Subcontract in either Iraq or Afghanistan. Not only were the

task orders under the CivPol Subcontract still in effect, but

DynCorp had not yet notified WWNS of its intention to let any of

the task orders expire.

The task order in Iraq was not scheduled to end until

August 11, 2006. Although DynCorp formally informed WWNS in a

letter dated July 28, 2006, that DynCorp intended to let the

personnel portion of this task order expire, DynCorp also

extended its purchase of services from WWNS in Iraq another

thirty days.

Moreover, the four task orders in Afghanistan continued

until August 31, September 8, September 30, and October 9, 2006,

months after WWNS’s warning. According to the CivPol Program

Manager Richard Cashon, “The task orders in Afghanistan had a

little bit more time on them . . . . It could have been

conceivable to continue with WWNS in Afghanistan, if the

situation dictated it, even though we were transitioning out of

Iraq.” (J.A. 1678.) According to DynCorp’s own PowerPoint

65
presentation, the “[f]inal transition” from WWNS was not set to

occur until October 9, 2006. (J.A. 2791.) Thus, even if, by

July 26, 2006, DynCorp’s decisionmakers were already scheming to

terminate the CivPol Subcontract, they still had plenty of time

to reverse their decision in order to avoid violating § 1981.

Accordingly, I find that there was sufficient evidence that

DynCorp was aware that its actions might violate WWNS’s

federally protected rights, 2 and I would not vacate the punitive

damage award on this ground.

In addition, because DynCorp did not properly object to the

district court’s punitive damage instruction to the jury, and

because the instruction given did not prejudice DynCorp, I would

not vacate the award on that ground.

Finally, the amount of the punitive damage award does not

violate due process, as argued by DynCorp, and is not assailable

for that reason. See State Farm Mut. Auto. Ins. Co. v.

Campbell, 538 U.S. 408, 425 (2003) (holding that a single digit

ratio, especially four to one or less, between punitive and

compensatory damages is “likely to comport with due process”).

2
It is true, as Judge Duncan points out, that in affirming
the punitive damage award, the district court did not cite any
evidence that DynCorp had knowledge that it might violate
§ 1981. However, DynCorp never claimed below that it lacked
knowledge of WWNS’s federally protected rights.

66
 For these reasons, while I otherwise agree with Judge

Duncan, I respectfully dissent from setting aside the jury’s

punitive damage award.

67