Appeals Court rules fired white Novant Health executive can collect back pay

A white male executive fired from Novant Health in North Carolina in a diversity-related corporate shakeup in 2018 can collect back pay, based on a ruling Tuesday from a federal Appeals Court.

But David Duvall cannot collect punitive damages, according to the unanimous 4th US Circuit Court of Appeals panel.

A jury initially awarded Duvall $10 million in punitive damages against the healthcare provider. A trial court order dropped that award to $300,000 in August 2022. The appellate decision now limits Duvall’s award to back pay and front pay, covering lost compensation since 2018 when he held no job.

 Judge Steven Agee’s 30-page opinion spelled out details of Duvall’s case against Novant.

Jesse Cureton, the company’s executive vice president and chief consumer officer, hired Duvall in 2013 as senior vice president of marketing and communications. Duvall was based in North Carolina and reported to Cureton throughout his employment. Cureton is black.

“Evidence presented at trial demonstrated that Duvall performed exceptionally in his role, receiving strong performance reviews and gaining national recognition for himself and the marketing program he developed for Novant Health,” Agee wrote. “Despite all that, Cureton fired Duvall in July 2018, a decision that came as a shock to both Duvall and his colleagues. Moreover, Novant Health — a multibillion-dollar company with tens of thousands of employees and an extensive human resources department — had no record of any documented criticism of Duvall’s performance or reasons for his termination.”

“Immediately after firing Duvall, Novant Health elevated two of Duvall’s deputies, a white woman and a black woman, to take over his duties,” Ageed added. “It then later hired another black woman to permanently replace Duvall.”

All three candidates for the permanent job were black women.

Duvall filed suit, arguing that Novant Health fired him “merely to achieve racial and gender diversity — or more specifically, to hit certain diversity ‘targets,’” Agee wrote.

Agee’s opinion highlighted a Diversity and Inclusion Strategic Plan developed at Novant Health after its CEO appointed a senior vice president for diversity and inclusion in 2015. The company agreed “to fully ‘embed[]’ D&I by 2019.”

Cureton and Duvall both served on a company D&I Council. It reviewed data in May 2018 showing a “decline in female leaders” and a “higher representation of whites” in leadership positions. In addition, “the data reflected that ‘African-American representation in management decrease[d] at each level [of management] with the exception of the executive team,’” Agee wrote.

In February 2019, after Duvall’s firing, the council reviewed a report showing that the “company still had a gap in black leadership as compared to industry benchmarks and census data. … To address that gap, the report recommended a ‘3-4 percentage point increase’ in black leaders over the next three years.” The report also “recommended explicit targets” for addressing Hispanic and Asian workforce gaps.

A September 2019 report detailed changes linked to the D&I plan. “The report showed a 3.9 percent decrease in the white workforce and a 5.6 percent decline in white leaders from 2016 to 2019, compared to a 2 percent increase in the black workforce and a 0.9 percent increase in black leaders over the same period,” Agee wrote. “The report also reflected a 21.1 percent increase in female leaders from 2018 to 2019 alone.”

Appellate judges rejected Cureton’s statements explaining Duvall’s dismissal. In December 2018, after the dismissal, Cureton “spoke very highly of Duvall and praised his performance” during a conversation with an executive recruiter from Johns Hopkins. Cureton told the recruiter he would hire Duvall again.

“In sum, the jury heard evidence that Duvall performed well in his role but was nonetheless fired and replaced, at one point or another, by three women, two of whom were racial minorities, amid a substantial D&I initiative that called for remaking Novant Health’s workforce to reflect a different racial and gender makeup,” Agee wrote. “And it also heard conflicting and uncorroborated reasons for Duvall’s termination.”

“Viewing this collective evidence in the light most favorable to Duvall, as we must, we do not find that ‘the only conclusion a reasonable jury could have reached is one in favor of [Novant Health].’ Quite the opposite. There was more than sufficient evidence for a reasonable jury to determine that Duvall’s race, sex, or both motivated Novant Health’s decision to fire him,” Agee wrote.

Duvall cannot collect punitive damages. He failed to provide “evidence that the employer discriminated ‘in the face of a perceived risk that its actions [would] violate federal law,’” Agee explained.

“He offered no evidence as to the training or qualification that Novant Health offered to or required of Cureton, or a comparable executive, to establish the requisite knowledge of federal anti-discrimination law,” Agee wrote. “Duvall even cross-examined Cureton yet never elicited from him testimony establishing his personal knowledge of federal anti-discrimination law, let alone that he perceived a risk that his decision to fire Duvall would violate it.”

“It was Duvall’s burden to come forward with sufficient evidence at trial that Cureton acted ‘in the face of a perceived risk that [his] actions [would] violate federal law.’ Based on our review of this record, Duvall failed to meet that high burden. Accordingly, the jury’s award of punitive damages must be set aside,” Agee wrote.

Judges Marvin Quattlebaum and Henry Floyd joined Agee’s opinion.