Minority firm gets to keep $15.2M

October 31, 2008

Holding a celebration at a company dinner after the firing of a minority subcontractor probably isn’t a good idea.

And it’s definitely not a good idea to read a letter written in Ebonics that ostensibly was from the president of the deposed company.

Those incidents at the dinner provided the smoking gun in the claim of Worldwide Network Services LLC that DynCorp International LLC was motivated by racial discrimination in the termination of its subcontract with WWNS, a firm certified by the Small Business Administration as a small disadvantaged company.

WWNS did information technology and communications work in Afghanistan and Iraq as part of DynCorp’s contract with the U.S. State Department. DynCorp has a market capitalization of about $1 billion and says it “provides innovative solutions to the diverse technology and professional services needs of government and commercial industry worldwide.”

An all-white federal jury in Alexandria awarded WWNS $15.2 million in compensatory and punitive damages in May at the end of a three-week trial. The bulk of the compensatory damages, $3.42 million, was based on WWNS’s claim under 42 U.S.C. § 1981, which covers racial discrimination in contracts.

In affirming the jury verdict in a 64-page opinion last month in Worldwide Network Services LLC v. DynCorp International LLC, U.S. District Judge Gerald Bruce Lee inferred that the bulk of the $10 million in punitive damages were attributable to the discrimination count as well.

In addition to affirming the jury verdict, Lee awarded WWNS $2.55 million on its contract claims based on unpaid invoices and $1.82 million in attorneys’ fees. DynCorp has noted an appeal to the 4th U.S. Circuit Court of Appeals.

In his opinion, Lee said that initial performance evaluations by DynCorp described WWNS’s work as “exceptional” and “very good,” but the evaluations became more critical in late 2005 after the DynCorp team supervising the subcontract changed. Finally in July 2006, the DynCorp manager responsible for hiring WWNS resigned and DynCorp terminated its relationship with the subcontractor.

Before the termination, DynCorp and another small company it had selected to replace WWNS began soliciting certain WWNS employees in Iraq and Afghani-stan for employment with DynCorp and the new company, Lee said.

DynCorp also withheld payment on WWNS’s unpaid invoices. Because the contract accounted for 95 percent of WWNS’s business, it was left with few employees and no money to compete for other contracts in the war zones, Lee concluded.

At the company dinner in 2006, a manager involved in the termination of WWNS was presented with a T-shirt that said, “I Took Down WWNS and all I got was this Lousy T-Shirt.” The letter purporting to be from WWNS President Walter Gray, an African-American, was read aloud in Ebonics supposedly to imitate Gray.

“Not only does this event exhibit DynCorp’s intent to destroy WWNS, but it conveys the racial animus DynCorp harbored against WWNS,” Lee wrote.

“No matter how poorly a subcontractor performed on a government contract, or any contract for that matter, the subcontractor’s termination would not be accompanied by a celebration that the termination of the subcontract destroyed the subcontractor,” he said.

The principal argument DynCorp raised in its motion for judgment as a matter of law was a contention that WWNS had failed to show that the person responsible for terminating the subcontract had a racial motive. DynCorp relied on the en banc opinion of the 4th Circuit in Hill v. Lockheed Martin Logistics Management, which applied that general rule in a case alleging age and gender discrimination.

Lee found, however, that the 4th Circuit was “painstakingly careful to limit its holding to ‘employer liability under Title VII and the [Age Discrimination in Employment Act].’ “

The distinction between discrimination in the making and enforcing of contracts and discrimination in employment is significant, Lee said, especially in light of the provision in § 1981 that provides for a general award of punitive damages while Title VII bars such an award.

Moreover, Lee said, no court has extended the Hill rationale to a § 1981 case.

Even if the Hill standard applied, the credibility of DynCorp’s evidence that the person responsible for terminating the contract had no racial bias and based his decision on WWNS’s poor performance, “when viewed in light of WWNS’s significant evidence of mendacity, was a question of fact for the jury,” Lee said.

Michele A. Roberts, the Washington attorney who led WWNS’s trial team, said the good news is that the “mendacity” demonstrated at the company dinner is seldom so blatant. “Discrimination is not as overt as it used to be.”

Written by Alan Cooper  |  Filed Under Home Page Items, Weekly Update 

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