Labor & Employment Law Daily Wrap Up, REMEDIES, DAMAGES—11th Cir.: Failure to affirmatively raise employee-headcount cap defense results in maximum Title VII damages, (May 29, 2026)

By Todd Harrison, J.D.

Because the employer failed to affirmatively raise the employee-headcount cap defense, which would have limited damages to $50,000, it was instead on the hook for the $300,000 maximum.

Reversing a district court’s judgment reducing a former car dealership employee’s sex discrimination damages award to $181,028, the Eleventh Circuit determined that she was in fact entitled to total damages of $481,028—the maximum allowed by the jury’s unallocated verdict under Title VII and the Florida Civil Rights Act. The appellate court further noted that Title VII’s $50,000 cap on damages for defendants with fewer than 101 employees could have further reduced the damages award, but the cap is an affirmative defense, which the employer waived because it failed to plead or otherwise preserve the defense (Khatabi v. Car Auto Holdings LLC dba Palmetto Alfa Romeo Fiat, No. 24-12573 (11th Cir. May 28, 2026)).

Sexual harassment. For four months, the employee in this case worked at a car dealership under the direction of an individual supervisor. During that time, she experienced near-constant harassment from her colleagues, who, among other things, called her “hot for an 18-year-old” and forced her to accompany male customers on test drives. The harassment escalated from verbal to physical, forcing the employee to quit and subsequently file a lawsuit for sexual harassment against the dealership and her supervisor under Title VII and the Florida Civil Rights Act.

Trial and verdict. Ultimately, the case went to trial, which lasted three days. During the trial, the supervisor testified that the dealership had “around 20, 22” employees. The jury returned a verdict in favor of the employee, awarding her $80,000 for “emotional pain and anguish,” $1,028 for lost employment benefits, and $750,000 in punitive damages. The district court entered an initial judgment against the dealership and the supervisor for the amount of $831,028.

Post-judgment motions. After the verdict, the dealership and the supervisor filed two post-judgment motions. In the first, they sought judgment as a matter of law, a new trial, and a reduction of the damages award. They contended the employee was “limited to [a] recovery under a single statutory path,” and because Title VII caps damages at $50,000 for employers with fewer than 101 employees, and the Florida Civil Rights Act caps punitive damages at $100,000, the most the employee could recover was $181,028—her full mental-anguish and lost-benefit damages plus $100,000 in punitive damages under the Florida Civil Rights Act.

In the second post-judgment motion, the supervisor sought to amend the judgment, arguing there should not have been a judgment against him because Title VII forecloses individual liability.

Motions reinstated. Before the employee could respond to the motions, the court referred the parties to a magistrate judge for mediation. In the meantime, the motions would be administratively terminated. Nothing came from the mediation, so the dealership and the supervisor moved to reinstate their post-judgment motions. The district court took up the second post-judgment motion, finding “binding law” precluded the supervisor’s individual liability and vacated the judgment against him.

Having left the first post-judgment motion unaddressed, the court explained that it wanted to give the employee an opportunity to respond, directing the dealership to file another motion raising those arguments after entry of the amended judgment. The dealership did so, again arguing the employee should have been allowed to recover $50,000 under Title VII or $181,028 under the Florida Civil Rights Act, but not both.

Partly granting the first post-judgment motion, the district court reduced the damages award to $181,028. The court agreed that the employee could not recover more than $50,000 in damages under Title VII because the dealership had fewer than 101 employees. However, because the employee prevailed under both Title VII and the Florida Civil Rights Act, she was entitled to recover the larger of the two caps available under those statutes. The district court entered a second amended judgment consistent with this ruling, leading to this appeal.

Jurisdiction. First, the employee argued that the initial judgment became final when it went unappealed within the 30-day window for doing so. She contended that the district court “dispos[ed] of” the defendants’ post-judgment motions when it administratively terminated them pending mediation. At that point, she asserted, the initial judgment became final, and the parties had 30 days to appeal. Because there was no appeal within this window, it was closed, said the employee. The court was not persuaded.

“Disposed of.” With regard to the employee’s argument that the post-judgment motions were “disposed of,” the appellate court found that this could not be the case because the district court did not intend for the termination to be final. On the contrary, the district court was clear that its termination of the post-judgment motions “[d]epend[ed] on the outcome of the mediation conference.” When the mediation failed, the district court reached the merits of both motions. The administrative termination left the motions unaddressed so that they could be addressed later, if necessary. Because the administrative termination did not “dispose of” the post-judgment motions, it did not start the 30-day period to appeal the initial judgment, said the court.

Rule 60. Even if the employee were right that the administrative termination “disposed of” the post-judgment motions, the district court was still allowed to correct legal mistakes in the judgment after the close of the 30-day appeal period. The district court fixed the legal mistake of imposing individual liability under Title VII against the supervisor and entered an amended judgment, which functioned as a new final judgment starting a new 30-day appeal period.

Damages reduction. Next, the court addressed the employee’s argument that the district court wrongly applied Title VII’s $50,000 employee-headcount cap and then erroneously awarded her damages only under the Florida Civil Rights Act. The court first considered the statutory maximums the employee was entitled to under Title VII and the Florida Civil Rights Act based on the jury’s verdict.

Statutory maximums. Under Title VII, damages are capped at $300,000. The Florida Civil Rights Act caps punitive damages at $100,000. Absent some additional statutory limitation, the Title VII maximum does not limit the damages under the Florida Civil Rights Act and vice versa.

For that reason, when a plaintiff sues under both statutes and a jury does not allocate its award between the two statutes, the maximum award is limited only by the combined effect of the state and federal law limits on damages, explained the court.

As applied here, the employee is entitled to a maximum award of $481,028, said the court, noting that the employee need not use any of her Title VII apportionment to recover her $81,028 in compensatory damages as the Florida Civil Rights Act does not cap compensatory awards.

Headcount cap. According to the dealership, the punitive damages award must be reduced even further to account for Title VII’s $50,000 damages cap for employers with fewer than 101 employees. Unlike the $300,000 maximum available under Title VII, the employee-headcount damages cap is a waivable affirmative defense.

In this instance, because the dealership did not plead the cap in its answer—or list its employee headcount in the pretrial stipulation as a fact issue to be decided by the jury, or propose jury instructions on its employee headcount—it waived the benefit of the cap, said the court.

Simple denial insufficient. Because the number of employees a defendant has is not an element of a Title VII claim, the headcount cap cannot be raised by a “simple denial,” explained the court. Further, continued the court, “a sex-discrimination plaintiff would be unfairly surprised to learn after the close of discovery—or, as here, after a jury trial—that, all along, the number of employees working for the defendant was a fact issue in the case.” For that reason, a statutory bar to recovery is ordinarily an affirmative defense.

Here, because the employee-headcount cap was an affirmative defense, the dealership had to plead the defense in its answer. Because it did not, the defense was waived, said the court.

Supervisor’s testimony. In response, the dealership pointed to the supervisor’s testimony that the dealership employed around 20 people, which it argued should have been enough to raise the issue. However, the court noted that the jurors never had the opportunity to determine whether they believed this testimony. Further, because the dealership did not put the employee on notice that the number of employees was a fact issue at trial, she did not know, and indeed could not have known, to contest this testimony.

Because the employer waived the benefit of Title VII’s $50,000 damages cap it was error for the district court to apply that cap to reduce the amount of damages to $181,028. The employee was entitled to $481,028—the maximum allowed by the jury’s unallocated verdict under Title VII and the Florida Civil Rights Act, concluded the court.

The case is No. 24-12573.

Judge: Luck, R.

Attorneys: Andrew Paul Kawel (Law Offices of Andrew Paul Kawel) for Malak Khatabi. Alan Keith Marcus (Marcus Law Center) for Car Auto Holdings LLC dba Palmetto Alfa Romeo Fiat and Carlos A. Rios.

Companies: Car Auto Holdings LLC; Palmetto Alfa Romeo Fiat

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