Background
Sarah Budd, an employee at SkyWest Airlines, endured extreme sexual harassment from coworkers, including threats of prostitution and rape jokes. She reported the abuse to supervisors who failed to take effective action. After an inadequate internal investigation, Budd took early retirement and the Equal Employment Opportunity Commission sued on her behalf. A jury awarded compensatory and punitive damages, finding the harassment was based on sex and the employer failed to remedy the situation.
The court’s reasoning
The court affirmed the denial of a new trial on evidentiary grounds, ruling that text messages describing the harassment were admissible as present sense impressions or statements of mental condition. On damages, the court held that the statutory scheme of Section nineteen hundred eighty-one A does not require plaintiffs to mitigate emotional distress damages, as no well-established common law principle mandates such mitigation. Regarding punitive damages, the court found sufficient evidence that a manager acted with malice or reckless indifference and that the employer’s investigation was insufficient to establish a good-faith defense.
We conclude that a plaintiff is not required to mitigate damages for emotional distress for two reasons. First, based on the statutory scheme Congress adopted, there is no textual requirement that a plaintiff must mitigate compensatory damages at all.
SkyWest Airlines, Inc., No. 25-10491, slip op. at 8 (5th Cir. July 9, 2026)
What it means going forward
Employers in the Fifth Circuit can no longer argue that plaintiffs must mitigate emotional distress damages to reduce Title VII liability. The ruling reinforces that superficial investigations and failure to discipline harassers can expose employers to punitive damages even if they have written anti-discrimination policies.