Compliance called it illegal – then told leadership to just reword it
A federal appeals court has upheld a $3.39 million verdict against a transportation company whose president directed HR to hire only white candidates.
The United States Court of Appeals for the Eleventh Circuit, in a decision filed on April 7, affirmed the full jury award in a case involving Dimerco Express USA Corp., finding that the company's racially discriminatory hiring practices were orchestrated by its top executive and carried out through its human resources department.
The case began in 2019, when Kenny Faulk, a Black man with both a bachelor's and a master's degree in business administration, applied for an account executive role at the Atlanta office of Dimerco Express USA, the U.S. subsidiary of Taiwan-based Dimerco Express Group. The company's HR manager and the Atlanta branch manager offered Faulk the position at $90,000 a year, pending a background check.
That check turned up a 2014 misdemeanor conviction for disorderly conduct. The Atlanta branch manager flagged the result in an email to the HR manager and copied Herbert Liou, the president of the U.S. subsidiary. Attached to the email was a screenshot that also identified Faulk as Black. Liou instructed HR to pull the offer.
The problem was not the background check. According to evidence presented at trial, Liou had been steering the company's hiring toward a whites-only policy since taking the role of president the year before. His management plan, submitted during the interview process, included proposals to hire and leverage Caucasian sales managers across offices. He told the HR manager that he preferred white applicants because they were more effective at getting through the door for sales. The HR manager's own supervisor confirmed that Liou wanted only white men – preferably under 40 – in account executive positions.
By October 2019, the policy had become so entrenched that the HR manager presented a slide deck to her team identifying ideal sales candidates as American and Caucasian, a preference she attributed directly to Liou.
The double standard in how background checks were handled made the discrimination even harder to ignore. Just two months after Faulk's offer was rescinded over a single misdemeanor, Dimerco's Dallas office hired a white applicant whose background check revealed four misdemeanor convictions. The HR manager gave that candidate a chance to explain. Liou approved the hire. When the HR manager asked why a candidate with a worse record was acceptable, Liou told her it was because he wanted to hire only white people.
The HR manager challenged the practice in writing, emailing Liou in January 2020 to tell him that screening candidates by race was discriminatory. Liou forwarded the email to Dimerco's director of administration and compliance, attaching a proposed reply stating the company was focused on the Caucasian market. The compliance director did not tell Liou to stop. She warned him that putting a racial preference in writing could expose both him and the company to a guilty verdict and a large damages award, and suggested he reword the message. The HR manager resigned two months later.
She eventually reconnected with Faulk and told him what had happened. Faulk sued under Section 1981 of the Civil Rights Act. A jury found that Dimerco had refused to hire him because of his race and awarded him $90,000 in lost wages, $300,000 in emotional distress damages, and $3 million in punitive damages. The trial court added more than $406,000 in attorney's fees and costs.
Dimerco challenged the verdict on appeal, arguing that trial errors and excessive damages warranted a new trial or a reduction. The Eleventh Circuit rejected every argument. The court found Dimerco's conduct to be exceedingly reprehensible, noting that company leadership had maintained its discriminatory hiring plan despite repeated internal warnings that it was illegal – and had chosen to conceal the practice rather than end it. The 7.69-to-1 ratio of punitive to compensatory damages, the court held, was well within constitutional limits given the severity of the conduct.
Dimerco also asked the court to cap punitive damages at the $100,000 limit that applies to companies its size under Title VII. The court declined, pointing out that Congress chose not to impose caps on claims brought under Section 1981.
The case stands as a stark reminder that discriminatory hiring directives – no matter where they originate – create enormous legal and financial exposure, particularly when HR professionals are pressured to carry them out, when compliance teams fail to act, and when the paper trail tells the whole story.
