The cap looked automatic. Watch how three missed steps erased it
A small employer skipped one defense in its court filing. The slip cost it an extra $300,000 in a sex-discrimination case.
That is the takeaway from a sex-discrimination case the Eleventh Circuit decided on May 28, 2026, and it is a cautionary tale for anyone who runs an HR function at a smaller company.
Malak Khatabi worked for about four months at a Miami Fiat dealership operated by Car Auto Holdings LLC, under the supervision of a manager, Carlos Rios. She sued for sex discrimination under Title VII of the federal Civil Rights Act and the Florida Civil Rights Act. A jury sided with her and awarded $831,028, the bulk of it - $750,000 - in punitive damages.
Then came the math fight. The trial court found that a Title VII rule capping damages at $50,000 for employers with fewer than 101 workers applied here, and on that basis reduced Khatabi's award to $181,028. Rios had testified the dealership had roughly 20 employees.
The appeals court saw it differently, and the reason matters more than the dollar figure.
The Eleventh Circuit ruled that the small-employer cap is not automatic. It is what lawyers call an affirmative defense – a protection an employer has to raise on its own, in writing, early. The dealership never did. It did not plead the cap in its answer. It did not flag its employee count as a disputed fact before trial. It did not ask the judge to instruct the jury on headcount. Having skipped all three, it lost the benefit of the cap entirely.
The court's logic is worth sitting with. The number of employees is not part of what a discrimination plaintiff has to prove. So Khatabi had no reason to dig into headcount during discovery or challenge Rios's testimony at trial. To spring the cap on her afterward, the court said, would be an unfair surprise. The burden was on the employer to put the issue on the table, and it didn't.
That said, the appeals court did not hand Khatabi the full $831,028. Because she won under both the federal and state statutes, and the jury never divided the award between them, her ceiling was the two caps combined. Florida's law does not limit compensatory damages, so she kept all $81,028 of those. Punitive damages were capped at $400,000 - $300,000 from Title VII and $100,000 from Florida. The final judgment: $481,028.
One detail HR leaders should not gloss over. Rios was named in the original judgment, but the district court erased his personal liability, because both statutes target the employer, not individual managers. The court also pointed out that the jury generally did not believe Rios, who denied ever taking part in or witnessing sexual harassment aimed at Khatabi.
So, what does this mean for how you run your function? Two things. First, the protections you assume the law hands you may come with strings attached – and the string here was a pleading requirement. A defense not raised on time is a defense lost. Second, this is a litigation-strategy story as much as a workplace-conduct story. When a complaint lands, the employer's early procedural choices – what goes in the answer, what gets listed as a disputed fact – can swing the final number by hundreds of thousands of dollars. Loop in counsel early, and make sure every available protection is actually on the record.
