McKinnon v. Kwong Wah Restaurant

UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT

No. 95-1597

CHARISSA MCKINNON AND BEATRICE POULIN,

Plaintiffs - Appellees,

v.

KWONG WAH RESTAURANT, ET AL.,

Defendants - Appellants.

No. 95-1635

CHARISSA MCKINNON AND BEATRICE POULIN,

Plaintiffs - Appellants,

v.

KWONG WAH RESTAURANT, ET AL.,

Defendants - Appellees.

APPEALS FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MAINE

[Hon. Morton A. Brody, U.S. District Judge]

Before

Torruella, Chief Judge,

Coffin and Rosenn,* Senior Circuit Judges.

* Of the Third Circuit, sitting by designation.

Daniel L. Lacasse for Kwong Wah Restaurant, et al.

Catherine R. Connors, with whom Fall Ferguson and Pierce,

Atwood, Scribner, Allen, Smith & Lancaster were on brief for

Charissa McKinnon and Beatrice Poulin.

May 1, 1996

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ROSENN, Circuit Judge. This appeal and cross-appeal
ROSENN, Circuit Judge.

present several procedural issues as well as substantive issues

relating to damages arising out of alleged acts of sexual

harassment in violation of Title VII, 42 U.S.C. 2000e et seq.

Charissa McKinnon and Beatrice Poulin brought suit in the United

States District Court for the District of Maine against their

former employer, the Kwong Wah Chinese Restaurant ("Kwong Wah"),

its owners, and several current and former employees. The

plaintiffs alleged that they suffered sexual harassment while

working as waitresses at Kwong Wah, in violation of Title VII;

the Maine Human Rights Act, 5 M.R.S.A. 4572; and state tort

law.1

The court entered default judgment against the

defendants, and awarded back pay, compensatory damages and

attorneys' fees to both plaintiffs. The defendants filed a

Motion to Lift the Default and File Late Answer, which the court

denied. McKinnon and Poulin appeal the district court's damages

awards. Specifically, they assert that the court erred in its

failure to award punitive damages, and in its calculation of

compensatory damages. The defendants appeal the court's denial

of their motion to lift default and file late answer. Further,

1 In their Complaint, the plaintiffs alleged the following:
Count I--sexual harassment in violation of Title VII; Count II--
further violations of Title VII for discriminating against
McKinnon for her pregnancy; Counts III and IV--violations of the
Maine Human Rights Act; Count V--Intentional Infliction of
Emotional Distress; Count VI--Negligent Retention or Supervision;
Count VII--Assault and Battery; and Count VIII--Invasion of
Privacy.

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they assert that the district court lacked jurisdiction over some

of the named defendants, because plaintiffs failed to name the

individual defendants before the Equal Employment Opportunity

Commission ("EEOC"). We affirm, except we remand for

clarification by the district court with respect to punitive

damages.

I.
I.

Both plaintiffs commenced employment as waitresses at

the Kwong Wah Restaurant in Calais, Maine in July 1991.

Plaintiffs testified that the owners and employees at Kwong Wah

subjected them to repeated offensive sexual harassment, both

verbal and physical. Plaintiff McKinnon further alleged that

they subjected her to additional discrimination because she was

pregnant while employed at Kwong Wah. McKinnon testified that

one of the restaurant owners tried to force her to sign a release

exempting the Kwong Wah from liability if she was injured on the

job, and that the Kwong Wah cut back her working hours in

retaliation for her refusal to sign the release. The plaintiffs

alleged that they were constructively discharged in July 1992.

Plaintiffs filed timely charges of discrimination with

the Maine Human Rights Commission ("MHRC") and the federal Equal

Employment Opportunity Commission. The MHRC determined that

reasonable grounds existed to believe that unlawful

discrimination had occurred. After failed attempts at a

conciliation agreement, the MHRC authorized suit, and the EEOC

issued a right to sue letter.

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Plaintiffs filed a complaint on June 28, 1994, and an

amended complaint with minor changes on July 7, 1994. Thus,

pursuant to Fed. R. Civ. P. 12(a)(1)(A), Kwong Wah's Answer was

due on August 18, 1994. The defendants, however, did not respond

by the due date. One week after the answer was due, the

defendants moved for an enlargement of time to respond to the

complaint. The district court extended the due date to September

28, 1994. Again, the defendants did not file an answer. On

September 27, 1994, the defendants moved for an additional

extension; the court denied the motion. The defendants took no

action subsequent to the denial. The clerk of the court entered

default against the defendants on October 11, 1994. The

defendants again took no action. On October 24, 1994, the

plaintiffs moved for the entry of default judgment; the court

granted the motion the next day. One month later, November 25,

1994, defendants moved to lift the default judgment.

In their motion to lift the default, the defendants

claimed that they had difficulty in retaining counsel; that

counsel did not keep them informed of their obligations to file a

timely answer; and that their inability to understand the

complaint rendered them unable to respond. In reply, the

plaintiffs asserted that the defendants hired and fired counsel

as a delaying tactic. The plaintiffs further alleged that

defendants' counsel contacted defendants by phone and letter

alerting them to their obligation to file a timely answer. The

court held a hearing on the issue, and found that the defendants

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did not meet their burden of showing good cause to set aside the

default. See Fed. R. Civ. P. 55(c) (court may set aside default

for good cause).

In addition, the defendants moved to dismiss the

plaintiffs' Title VII claims against the individual defendants

named in the suit. The defendants asserted that the court lacked

jurisdiction to hear the matter because the plaintiffs failed to

include the named defendants in the charges they had filed with

the MHRC and EEOC. The court denied the motion, holding that

Title VII's charging requirements were nonjurisdictional. The

court found that the defendants waived their right to raise the

charging issue by their default.

The district court held a hearing without a jury to

determine damages, and awarded $13,094.84 to McKinnon, and

$13,189.45 to Poulin, plus attorneys' fees. The award included

135 weeks of back pay (adjusted for mitigation) and $2,500 per

plaintiff in compensatory damages. The court declined to award

front pay, punitive damages, or prejudgment interest.

II.
II.

The defendants claim that the district court erred in

denying their motion to lift default judgment and file late

answer. We must review the court's denial of the motion for an

abuse of discretion. See The General Contracting & Trading Co.

v. Interpole, 899 F.2d 109, 112 (1st Cir. 1990) (motions to set

aside default judgments are left to "the sound discretion of the

district court"). This court may not reverse unless the district

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court's decision is clearly wrong. Id. at 112.

Fed. R. Civ. P. 55(c) provides:

(c) Setting Aside Default. For good
(c) Setting Aside Default.
cause shown the court may set aside an
entry of default and, if a judgment by
default has been entered, may likewise
set it aside in accordance with Rule
60(b).2

The parties in the instant case offer differing

accounts of the events leading up to the default judgment. The

plaintiffs filed their amended complaint in July 1994. They

contend that the defendants ignored the first due date for their

answer, requested and were granted a thirty day extension, and

then ignored the second due date. The plaintiffs further contend

that the defendants ignored the court's rejection of their

request for a second extension; ignored the plaintiffs' motion

for default judgment; ignored the entry of default judgment; and

waited until November 25, 1994 to file a motion to lift the

default judgment. According to the plaintiffs, the defendants

switched attorneys on several occasions beginning with the

administrative proceedings before the MHRC. Finally, the

plaintiffs contend that the evidence shows that defendants were

fully aware of all due dates. In sum, the plaintiffs argue that

the defendants neglected the suit with full awareness of the

legal consequences. In contrast, the defendants claim that they

were unable to retain suitable counsel, and that they were not

2 Fed. R. Civ. P. 60(b) provides, in relevant part, relief from
judgment or order for mistake, inadvertence, surprise, or
excusable neglect.

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aware of the due dates or the consequences of missing the due

dates.

At an evidentiary hearing, the district court found

that the defendants did not demonstrate the necessary "good

cause" pursuant to Fed. R. Civ. P. 55(c). In addressing the

defendants' counsel at the hearing, the court asserted:

What the defendants have done in their
actions, Mr. Lacasse, speaks so loudly
that I have difficulty hearing your voice
today in this proceeding. There simply
has not been a showing of good cause
pursuant to Federal Rule 55C to set aside
the entry of default. There has been no
reasonable excuse presented for the
default. There have been a lot of
explanations as to the defendants'
inability to understand what's going on
and the fact that they haven't had any --
that they didn't have any funds and the
result of all the testimony and the
affidavits and the presentation to the
court leaves the court with the clear
understanding that the defendants did not
act reasonably even under these
circumstances.

The defendants assert that the record does not support the

court's decision: thus, the court abused its discretion.

Although in Coon v. Grenier, 867 F.2d 73 (1st Cir.

1989), this court observed that "good cause" is a mutable

standard, varying from situation to situation, it is "not so

elastic as to be devoid of substance." Id. at 76. No precise

formula is suggested, for each case necessarily turns on its own

unique facts. Nonetheless, this court found some general

guidelines that appear to have universal application and warrant

consideration by a district court in determining whether a

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default judgment should be lifted: (1) whether the default was

willful; (2) whether setting it aside would prejudice the

adversary, (3) whether a meritorious defense is presented; (4)

the nature of the defendant's explanation for the default; (5)

the good faith of the parties; (6) the amount of money involved;

and (7) the timing of the motion. Id. at 76. The court then

noted that in reviewing the district court's weighing of these

factors for an abuse of discretion, judicial discretion has

limitations:

Judicial discretion is necessarily broad-
-but it is not absolute. Abuse occurs
when a material factor deserving
significant weight is ignored, when an
improper factor is relied upon, or when
all proper and no improper factors are
assessed, but the court makes a serious
mistake in weighing them.

Id. at 78 (quoting Independent Oil & Chemical Workers v. Proctor

&

Gamble Mfg. Co., 864 F.2d 927, 929 (1st Cir. 1988)).

The record shows that the plaintiffs served each named

defendant with the complaint. Further, the record reflects that

at least some of the defendants were aware of pending legal

problems through their participation in the administrative

proceedings before the MHRC. Additionally, it appears that the

defendants hired and fired at least three attorneys during the

administrative process. The defendants' attorney for the instant

appeal at one time represented the defendants before the MHRC.

In the Commission's correspondence with the attorney, it stated:

Would you please inform Kwong Wah
officials that I will under no

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circumstances accept further postponement
of this matter? I do not wish to appear
harsh towards you. The history with this
case, however, has been that each time we
approach a critical point . . . they hire
a new Attorney. You may or may not be
aware that you are the third person I
have dealings with to date.

Thus, it appears that the defendants were aware of a pending

legal problem, were capable of retaining legal counsel, but were

uncooperative with their counsel and administrative officials.

The firm of Eaton, Peabody, Bradford and Veague entered

an appearance on behalf of all the defendants, and applied for

the extensions of the defendants' filing deadlines. The record

contains several letters from Eaton, Peabody urging the

defendants to contact counsel and notifying them of the need to

file an answer with the court by the end of the month.3

Thad Zmistowski, an associate with Eaton, Peabody,

testified to his attempts, on several occasions, to reach the

corporate contact at Kwong Wah by phone. He finally reached Judy

Canniff, his contact, on the day before the second deadline for

filing an answer. Canniff allegedly informed Zmistowski that the

defendants did not have the money to retain Eaton, Peabody, and

would proceed on their own. Eaton, Peabody filed a second Motion

to Extend the Deadline, and moved the court to withdraw from its

3 The letters evidence the attorneys' frustration in trying to
pin down the client. Apparently, Eaton, Peabody was concerned
that Kwong Wah's insurance would not cover a sexual harassment
suit. Thus, the firm requested a $25,000 retainer. The firm was
trying to get a commitment from the defendants as to whether they
wished to proceed with Eaton, Peabody as counsel.

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representation of the defendants. The court denied the

defendants' second request to extend the time of filing on

October 5, 1994. As previously stated, the defendants did not

respond until November 25, 1994, when they moved to lift the

default judgment.

The record fully supports the district court's finding

that the defendants were aware of the pending legal problem, but

hoped that it "would all go away." Thus, the court found that

the defendants did not exhibit the good faith necessary to

justify the court's lifting of the default judgment. Under the

standard set forth in Coon, supra, the district court did not

abuse its discretion in its denial of the defendants' motion to

lift default judgment. After hearing the testimony, the court

was not convinced of the defendants' explanation of the default

or of their good faith. The court's finding that the defendants

defaulted willfully is well supported. Further, the defendants

did not move to rectify the situation in a timely manner.

Litigants must act punctually and not casually or indifferently

if a judicial system is to function effectively. This court must

uphold the district court's decision absent an abuse of

discretion. We conclude that the district court exhibited

patience and concern for the rights of the parties and did not

abuse its discretion in denying the defendants' motion to lift

default judgment.

III.
III.

The defendants next assert that the district court

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lacked jurisdiction over the Title VII claim against all

defendants except the Kwong Wah Restaurant because the plaintiffs

failed to name the individual defendants in the proceedings

before the EEOC.4 The district court's finding that the

charging requirement of Title VII is nonjurisdictional is subject

to plenary review. See In re Extradition of Howard, 996 F.2d

1320, 1327 (1st Cir. 1993).

There are several requirements that a plaintiff must

meet, pursuant to Title VII, prior to filing suit in federal

court. See 42 U.S.C. 2000e-5. For example, a plaintiff must

file a timely EEOC charge against the discriminatory party, and

receive notice of a right to sue. Id. In addition, a plaintiff

generally may not maintain a suit against a defendant in federal

court if that defendant was not named in the administrative

proceedings and offered an opportunity for conciliation or

voluntary compliance. 42 U.S.C. 2000e-5(f) ("civil action may

be brought against the respondent named in the charge").

In the instant case, the plaintiffs named only the

Kwong Wah Restaurant in the complaint before the MHRC and the

EEOC. The defendants contend that the court must dismiss the

Title VII charges against all individual defendants (not the

Kwong Wah Restaurant) because the plaintiffs failed to name these

defendants in the administrative complaint.

4 The plaintiffs filed their Complaint in federal court against:
the Kwong Wah Restaurant (a Maine corporation); Sarah Elgendi
(co-owner of Kwong Wah); Danny Chan (co-owner of Kwong Wah); Joe
Lam (supervisor); Karen Landry (head waitress); Karen Wong
(Manager); Ming Chen (cook); and Shun Cheung (cook).

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In Curran v. Portland Super. Sch. Committee, 435 F.

Supp. 1063 (D. Maine 1977), the district court held that an

employer may not be named in a civil suit unless it was charged

before the EEOC. Id. at 1073. The court noted that the

administrative charging requirement ensures that the defendant

has notification of the pending proceedings, and that the

requirement furthers the goal of voluntary compliance with Title

VII. Id. at 1074. The Curran opinion noted, however, that the

charging requirement is not absolute:

[S]everal exceptions have been recognized
as sufficient to confer jurisdiction over
defendants in a civil action who were not
named in the EEOC charges. These
exceptions are: (1) if there was
"substantial identity" between the
respondent named in the EEOC charges and
defendants in the civil action; (2) if
the named respondent acted as the "agent"
of the defendant sought to be included in
the civil action, at least when the
latter defendant had notice of and
participated in the conciliation
proceedings; and (3) if the defendant is
an "indispensable party" under Fed. R.
Civ. P. 19 in order to accord complete
relief to the parties.

Id. at 1074; see also Glus v. G.C. Murphy Co., 562 F.2d 880, 888

(3d Cir. 1977) (in determining if a plaintiff may proceed against

parties not named before EEOC, the court should consider whether

the plaintiff could ascertain the role of the unnamed party at

the time of the EEOC filing; whether the interests of unnamed

party are similar to interests of named party; the prejudice to

the unnamed party; and whether the unnamed party has represented

to the plaintiff that its relationship with the plaintiff is

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through the named party.)

In determining whether the defendants waived their

right to raise the charging issue, the district court in the

instant case found that the requirement was nonjurisdictional.

See Fed. R. Civ. P. 12(H)(3) (court shall dismiss action if

lacking jurisdiction). If the charging requirement is merely a

conciliation or compliance procedure prior to filing suit in

federal court, it is subject to waiver, estoppel and equitable

tolling. See Zipes v. Trans World Airlines, Inc., 455 U.S. 385,

392 (1982).

In Zipes, the Supreme Court held that the timely filing

of an EEOC charge is not jurisdictional. Id. at 392. The Court

reasoned that the filing requirement is listed in a separate

section of Title VII than the section that grants jurisdiction to

the district courts. This court has not ruled directly on the

charging requirement. It has held, however, that Section 2000e-

5(f)(1) is nonjurisdictional. See Rice v. New England College,

676 F.2d 9, 10 (1st Cir. 1982) (requirement that plaintiff file

complaint within 90 days of receipt of right to sue letter is

nonjurisdictional). The charging requirement is found in Section

2000e-5(f)(1). Although generally a plaintiff must name a

defendant in the proceedings before the EEOC in order to proceed

against that defendant in federal court under Title VII, this

charging requirement is subject to exceptions. We conclude that

the charging requirement is nonjurisdictional, thus subject to

waiver, estoppel and equitable tolling. See Zipes, 455 U.S. at

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392; see also Greenwood v. Ross, 778 F.2d 448, 450 (8th Cir.

1985) (Title VII conditions precedent, including charging

requirement, are nonjurisdictional); Liberles v. County of Cook,

709 F.2d 1122, 1125 (7th Cir. 1983) (same); Jackson v. Seaboard

Coast Line R. Co., 678 F.2d 992, 1010 (11th Cir. 1982) (same).

To avoid waiver, a defendant must assert all

affirmative defenses in the answer. See Fed. R. Civ. P. 8(a);

see also Knapp Shoes v. Sylvania Shoe Mfg. Corp., 15 F.3d 1222,

1226 (1st Cir. 1994) ("Affirmative defenses not so pleaded are

waived."). The defendants in the instant case, through their

default, waived their right to raise the issue that they were not

named in the complaint to the Commission.5 We perceive no error

in the district court's denial of the defendants' motion to

dismiss on jurisdictional grounds.

IV.
IV.

The plaintiffs appeal the district court's grant of

$2500 in compensatory damages. In general, this court will not

override a damage determination unless the award is unsupported

by the evidence, grossly excessive, or shocking to the conscious.

See Brown v. Freedman Baking Co., 810 F.2d 6, 11 (1st Cir. 1987);

see also Hall v. Ochs, 817 F.2d 920, 927 (1st Cir. 1987). In the

5 In addition, the plaintiffs' Complaint before the Commission
alleged "At all relevant times, Defendants Kwong Wah, Danny Chan,
Sarah Elgendi, Joe Lam, Karen Wah and Karen Landry were
employers, and the plaintiffs employees, covered by and within
the meaning of Title VII. "When a court enters a default
judgment against a defendant, all allegations in the complaint
must be taken as true." See Brockton Savings Bank v. Peat,

Marwick, Mitchell & Co., 771 F.2d 5, 13 (1st Cir. 1985).

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instant case, the plaintiffs assert that the court below did not

use the correct legal standard in its determination of damages.

Questions of law are subject to plenary review. See In re

Extradition of Howard, 996 F.2d at 1327.

The damages provisions of 42 U.S.C. 1981a, part of

the Civil Rights Act of 1991, provide for the availability of

compensatory damages to victims of intentional discrimination in

violation of Title VII. Pursuant to the statute, compensatory

damages include "future pecuniary losses, emotional pain,

suffering, inconvenience, mental anguish, loss of enjoyment of

life, and other non-pecuniarylosses." See 42 U.S.C. 1981(b)(3).

Prior to Congress's enactment of Section 1981a, victims

of intentional gender or religious discrimination were only

entitled to equitable relief under Title VII. Victims of race

discrimination, however, are entitled to compensatory and

punitive damages under 42 U.S.C. 1981. Section 1981a ensures

that victims of intentional employment discrimination on the

basis of gender or religion are entitled to compensatory, and in

certain egregious cases, punitive damages. See H.R. Rep. No.

40(I), 102d Cong., 1st Sess. at 64-65 (1991). Equitable relief

continues to be the sole remedy available under Title VII in

disparate impact cases.

At the conclusion of the testimony in the instant case,

the court asserted that it was "persuaded" that the plaintiffs

suffered emotionally as a result of persistent and extremely

offensive sexual harassment at Kwong Wah. Thus, the court found

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appropriate an award to the plaintiffs of compensatory damages.

With respect to emotional distress, a plaintiff must

demonstrate that an ordinarily sensitive person could have

suffered the alleged harm. If the plaintiff meets this burden,

then the defendant must "take the victim as he finds her,

extraordinarily sensitive or not." See Theriault v. Swan, 588

A.2d 369 (Me. 1989). See also Gammon v. Osteopathic Hospital of

Maine, Inc., 534 A.2d 369 (Me. 1989). The court may find,

however, that some of the plaintiffs' damages stem from a prior

"injury." See Lovely v. Allstate Ins. Co, 658 A.2d 1091 (D. Me

1995).6 The burden is on the defendant to establish a causal

relationship between the prior injury and the damages claimed by

the plaintiffs. Id. at 1092. If the court finds it impossible

to apportion the damages, then the defendants are liable for the

entire amount. Id.

The testimony in the instant case revealed that both

plaintiffs were suffering from emotional distress caused by

sources independent from their employment at Kwong Wah.

Plaintiff McKinnon separated from her boyfriend (now husband)

during her employment at the restaurant, after discovery of her

6 Lovely addressed a claim for compensatory damages arising from

physical injuries. The accident at issue in the case aggravated
a pre-existing injury to the plaintiff's elbow. The defendant
insurance company asserted that it should not be responsible for
medical bills and loss of income resulting from the injured
elbow. The court found that it was the defendant's burden to
establish a causal relationship between the earlier injury and
the damages claimed by the plaintiff.

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unplanned pregnancy. Plaintiff Poulin testified to having been

sexually abused by her stepfather from when she was five years

old until she was age seventeen. She commenced employment at the

Kwong Wah at the age of twenty. In weighing the evidence the

court found it difficult to distinguish between the emotional

suffering caused by the defendants' behavior, and the suffering

caused by prior independent sources. The court reasoned:

Because the causal connection between the
harassment and Plaintiffs' emotional
trauma is complicated by other factors
similarly causing such suffering, the
Court finds an award of $2500 in
compensatory damages for each Plaintiff
appropriate.

Although the district court encountered some difficulty

in distinguishing between the plaintiffs' trauma caused by the

defendants' harassment and that arising from other causes, it

nonetheless found $2500 to be an appropriate sum to compensate

each plaintiff. We conclude that despite the difficulty, the

trial court was able to determine the damages attributable to the

harassment caused by the defendants. The trial court had the

opportunity to see and hear the plaintiffs, and no doubt took

into account their demeanor as well as other factors, such as

their ages, nature of employment, and earnings, in setting the

damages amount. Apparently, the court carefully considered the

amounts it awarded and, without substantial reasons to the

contrary, it would be particularly inappropriate and injudicious

for an appellate court to set aside the trial court's judgment

under these circumstances. See Freedman Baking Co., 810 F.2d at

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11. We see no error in the district court's $2500 award of

compensatory damages to each of the plaintiffs.

V.
V.

The plaintiffs also contend that the district court

erred in its failure to award punitive damages. The plaintiffs

assert that the district court relied heavily on an incorrect

legal standard in refusing to award punitive damages. The

court's legal interpretations are subject to plenary review. See

In re Extradition of Howard, 996 F.2d at 1327.

The plaintiffs rely for their claim to punitive damages

on the amendment to Section 706(g) of Title VII, 42 U.S.C.

1981a. The damage provisions of this amendment provide that a

court may award punitive damages to a prevailing party in a Title

VII action if the defendant "engaged in a discriminatory practice

. . . with malice or with reckless indifference to the federally

protected rights of an aggrieved individual." See 42 U.S.C.

1981a(b)(1). The amendatory provision permits courts to award

damages in cases of intentional discrimination resulting in

actual injury or loss in the same circumstances as such awards

are permitted under 42 U.S.C. 1981 for race discrimination.

See H.R. No. 40(1), 102d Cong., 1st Sess. at 74 (1991).

Although compensatory damages are available to victims

of intentional discrimination under Title VII, a plaintiff must

demonstrate that the defendant acted with malice or reckless

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indifference before he or she can receive punitive damages.

Id.7 The legislative history of the Section notes:

Plaintiff must first prove intentional
discrimination, then must prove actual
injury or loss arising therefrom to
recover compensatory damages, and must

meet an even higher standard

(establishing that the employer acted

with malice or reckless or callous

indifference to their rights) to recover

punitive damages.

H.R. Rep. No. 40(I), 102d Cong., 1st Sess. at 72 (1991) (emphasis

added).

Because plaintiffs' claims arise out of a federal

statute designed to protect federal rights, federal rules of

damages control. "The rule of damages, whether drawn from

federal or state sources, is a federal rule responsive to the

needs whenever a federal right is impaired." Sullivan v. Little

Hunting Park, 396 U.S. 229, 240 (1969).

After hearing the testimony in the instant case, the

district court declined to award punitive damages. The court

found that the plaintiffs had not sustained their burden of

demonstrating that the defendants had acted maliciously or

recklessly or callously indifferent to plaintiffs' rights. In so

finding, the court explained:

7 The court's analysis is the same for the state causes of
action. In Maine, punitive damages are available in a tort
action when the defendant acts with malice. See F.D.I.C. v. S.

Prawer & Co., 829 F. Supp. 439, 453 (D. Me. 1993); see also

Tuttle v. Raymond, 494 A.2d 1353, 1361 (Me. 1985).

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There is no question that Defendants'
repeated sexual harassment was offensive.
In fact, in many cases, this behavior
might be strong evidence of malice or, at
least, reckless indifference to
Plaintiffs' rights. In this case,
however, the Court believes that, the
behavior of at least some Defendants was
influenced by language, cultural, and
educational barriers. With this
consideration and all of the other
evidence in mind, the Court concludes
that Defendants were not acting with
either malice or reckless indifference to
Plaintiffs' rights. No award of punitive
damages is therefore appropriate.

There was no jury in the instant case, and, of course,

the trial judge obviously gave no erroneous instructions. The

plaintiffs, however, contend that the court nonetheless committed

error as a matter of law because it based its decision not to

award punitive damages on an erroneous legal predicate -- "that

the ethnic background [of most of the defendants] is an excuse

negating malice or reckless indifference under Section 1981a."

Moreover, the plaintiffs argue that even if the judge's legal

predicate were correct, there is no evidence whatsoever of record

that the defendants suffered from any ignorance of their duty to

cease their offensive acts as a result of their ethnic

background. As to this alleged deficiency of record, the

standard of review is clearly erroneous. See Reich v.

Cambridgeport Air Systems, Inc., 26 F.3d 1187, 1188 (1st Cir.

1994).

That the defendants' acts "were patently offensive" and

repeated, as the plaintiffs argue, may provide cause for

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compensatory damages but do not necessarily mandate a finding of

punitive damages. Unlike compensatory damages, which are a

matter of right to an injured party once liability is found,

punitive damages are awarded or rejected in a particular case at

the discretion of the fact-finder, in this instance the trial

judge. See Lee v. Southern Home Sites Corp., 429 F.2d 290, 294

(5th cir. 1970). There is no vested right to punitive damages on

the part of the plaintiff and where allowed, they are awarded as

a matter of public policy to punish outrageous conduct by the

defendant or to deter similar conduct in the future. A key

feature of punitive damages is that "they are never awarded as of

right no matter how egregious the defendant's conduct." Smith v.

Wade, 461 U.S. 30, 52 (permitting jury to assess punitive damages

in action under 1983 when defendant's conduct is shown to be

motivated by evil intent or involves reckless or callous

indifference to the federally protected rights of others).

Punitive damages are assessed as punishment or as an

example and warning to others. They are therefore not favored in

the law and are allowed only with caution and within normal

limits. Lee, 439 F.2d at 294; Aladdin Manufacturing Co. v.

Mantle Lamp Co., 116 F.2d 708, 717 (1st Cir. 1941).

The allowance of such damages
inherently involves an evaluation of the
nature of the conduct in question, the
wisdom of some form of pecuniary
punishment, and the advisability of a
deterrent. Therefore, "the infliction of
such damages, and the amount thereof are
of necessity within the discretion of the
trier of the fact."

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Lee, 439 F.2d at 294 (citations omitted).

In Rowlett v. Anheuser-Busch, Inc., 832 F.2d 194 (1st

Cir. 1987), this court dealt at length with the appropriateness

of a jury award of punitive damages. Writing for this court,

Judge Torruella held that even in a jurisdiction which authorizes

punitive damages in cases requiring proof of intentional

wrongdoing, this does not mean that punitive damages are

appropriate in every such case. Rather, "in each case the trier

of the fact has the discretion to determine whether punitive

damages are necessary, to punish [the defendant] for his

outrageous conduct and deter him and others like him from similar

conduct in the future." Id. at 205 (citations omitted). The

court therefore reduced the punitive damages award in a Section

1983 case by 90 percent. Id. at 207.

In Hern ndez-Tirado v. Artau, 874 F.2d 866 (1st Cir.

1989), this court vacated entirely the district court's award of

punitive damages in a Section 1983 case. The court carefully

analyzed the Supreme Court's decision in Smith v. Wade, 461 U.S.

30, where the Court made clear that a jury "may" award punitive

damages in Section 1983 cases when a defendant has shown

"reckless or callous indifference to the federally protected

rights of others," as well as when his conduct is "motivated by

evil motive or intent." This court observed, however, that in so

holding, the Supreme Court did not say that the fact-finder must

award punitive damages in every single Section 1983 case that

does involve an intentional tort. The court concluded that the

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defendants' intentional misconduct did not rise to the level

calling for punishment and deterrence over and above that

provided by the compensatory award. It therefore vacated the

award of punitive damages observing that "neither the common law,

nor the Supreme Court in Smith, allows a jury to assess punitive

damages in every single instance where it finds an intentional

tort; rather, they require conduct that is 'outrageous' either

because of a person's 'evil motive' or because of his 'reckless

indifference' to the rights of others." Hern ndez-Tirado, 874

F.2d at 869.

In sum, the law does not require the fact-finder to

award punitive damages in every case under Section 1981a that

involves an intentional tort. The plaintiff must show that the

defendant acted with malice or reckless indifference to the

plaintiff's rights. We believe, however, that heavy reliance on

cultural and educational factors is inappropriate in the instant

case. Ignorance of the law or of local custom is not a defense

under Section 1981a to the alleged offensive conduct of the

defendants.

A defendant's cultural background is not irrelevant in

evaluating the appropriateness of punitive damages. In certain

circumstances, a defendant's background will likely have an

impact on his consciousness of wrongdoing. In the instant case,

however, the district court's only explicit reason for denying

punitive damages was the cultural, ethnic, and educational

background of the defendants, and this is not the dispositive

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factor. The court did not point to any evidence in the record to

support its assumption that the defendants were not acting with

reckless indifference to the plaintiffs' rights. In the context

of this case and on this record, primary reliance on cultural and

educational background is tenuous and appears unsupported.

Although the court also considered "all the other evidence," it

is not clear from the record what "other evidence" the court

considered.

Accordingly, we will remand to the district court for

further clarification and explanation as to what evidence

supported its decision to deny the plaintiffs punitive damages.

VI.
VI.

In sum, we conclude that the district court properly

denied the defendants' motion to lift default and file late

answer. Through their default, the defendants waived their right

to challenge the plaintiffs' Title VII claim on the basis that

the plaintiffs failed to name the individual defendants before

the EEOC or the MHRC. Thus, the order of the district court

denying the defendants' motions is affirmed.

We also conclude that the district court did not abuse

its discretion in arriving at a $2500 compensatory damage award

for each plaintiff and this judgment is affirmed. On the issue

of punitive damages, the matter is remanded to the district court

for clarification and explanation, within thirty days, as to what

evidence the court relied upon in declining to award the

plaintiffs punitive damages. This court will retain jurisdiction

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of the case pending the district court's clarification.

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