On July 9, 2026, the United States Court of Appeals for the Fifth Circuit issued a significant decision in EEOC v. SkyWest Airlines, Inc., addressing an issue of first impression in the Circuit concerning emotional distress damages under Title VII. In affirming a jury verdict in favor of the Equal Employment Opportunity Commission (EEOC), the court held that Title VII plaintiffs are not required to mitigate emotional distress damages. The opinion also provides insight into the types of investigative deficiencies a jury may consider when determining whether an employer made a good-faith effort to comply with Title VII and properly handled the complaint and ensuing investigation.
Background
Sarah Budd worked as a parts clerk for SkyWest Airlines at Dallas-Fort Worth International Airport. According to the evidence presented at trial, she was subjected to repeated sexually explicit comments and inappropriate conduct by coworkers and supervisors over an extended period. She reported the conduct to her supervisor, but testified that the harassment continued and ultimately escalated.
The evidence showed that Budd experienced significant physical symptoms from emotional distress (e.g., headaches, vomiting, diarrhea, nightmares, self-harm, and suicidal ideation). After additional incidents of harassment, she submitted written complaints to management and later reported the conduct to Sky West’s Human Resources department, which investigated the matter. Before learning the outcome of the investigation, Budd accepted an early retirement package after assuming that the workplace environment would not improve.
Following trial, the jury found that Budd had been subjected to unlawful sexual harassment and that SkyWest failed to take prompt remedial action; it awarded her both compensatory and punitive damages. Although the jury rejected Budd’s retaliation claim, the district court denied SkyWest’s post-trial motions seeking a new trial and judgment as a matter of law. The Fifth Circuit affirmed.
No Duty to Mitigate Emotional Distress Damages
The principal legal issue before the Fifth Circuit was whether a Title VII plaintiff has a duty to mitigate emotional distress damages. SkyWest argued that the district court should have instructed the jury to reduce any award for emotional distress if Budd failed to lessen her injuries by seeking therapy or medication. The Fifth Circuit rejected that argument.
The court explained that, while Title VII expressly requires plaintiffs seeking back pay to mitigate lost wages through reasonable diligence, Congress did not include a comparable mitigation requirement for compensatory damages under 42 U.S.C. § 1981a. The court declined to judicially impose a mitigation requirement where Congress chose not to include one.
The court also rejected the argument that mitigation of emotional distress damages was a well-established common law principle that should be presumed to apply. The court discerned no comparable, well-settled rule with respect to emotional distress damages.
Examination of the Employer’s Investigation Indicated Multiple Deficiencies Supporting the Jury’s Conclusion
Although the mitigation holding represents the opinion’s most significant legal development, much of the court’s analysis focused on SkyWest’s response to Budd’s complaints and whether the company established its good-faith defense to punitive damages. The opinion identifies several aspects of the investigation that the jury was entitled to consider.
1. Scope of the Investigation
After Budd reported the unlawful conduct to Human Resources, an HR representative initiated an investigation. The evidence showed that the investigator ordinarily interviewed every identified witness during workplace investigations. In this instance, however, she elected to interview only a random selection of witnesses. Moreover, the HR investigator did not ask follow-up questions to the witnesses who acknowledged the existence of the workplace harassment. For example, she failed to ask what witnesses meant in the context of their statements or the extent of the conduct being described.
2. Deficient Collection of Evidence
The court further observed evidence that the HR representative failed to obtain potentially corroborating evidence related to one of the reported incidents.
3. Deficient Corrective Action
At the conclusion of the investigation, several employees received written warnings and were directed to attend additional training. However, neither the supervisor who allegedly received Budd’s initial complaint and failed to properly handle the complaint nor the supervisor who allegedly participated in the inappropriate conduct received discipline.
The evidence also showed that Budd was not informed of the outcome of the investigation before she elected to accept SkyWest’s early retirement offer.
4. No Good-Faith Exception
The court acknowledged that SkyWest maintained an anti-discrimination policy and provided employees with sexual harassment training. However, the existence of written policies alone did not establish the company’s good-faith defense. Viewing the evidence in the light most favorable to the verdict, the Fifth Circuit held there was sufficient evidence for the jury to conclude that SkyWest failed to make a good-faith effort to comply with Title VII, thereby supporting the punitive damages award.
Key Takeaways
The Fifth Circuit’s decision establishes that Title VII plaintiffs within the Fifth Circuit are not required to mitigate emotional distress damages by seeking therapy, medication, or other mental health treatment before recovering compensatory damages for emotional harm.
The opinion also underscores how an employer’s investigation may play in subsequent litigation and outcome. In affirming the verdict, the court repeatedly discussed the way SkyWest investigated Budd’s complaints, including the scope of witness interviews, the failure to pursue additional information after witnesses acknowledged inappropriate conduct, the collection of evidence, and the disciplinary decisions that followed. The court held that those particular facts ultimately supported the jury’s finding that the employer failed to establish its good-faith defense to punitive damages.
As a result, EEOC v. SkyWest Airlines, Inc. is likely to become an important decision in Fifth Circuit employment litigation, not only because it resolves the question of mitigation of emotional distress damages under Title VII, but also because it illustrates how a jury may evaluate an employer’s response to workplace harassment complaints and conclude that the employer’s efforts to investigate and handle its conclusions were insufficient and thus how a jury may properly award punitive damages.
For more information on this case or other employment-related matters, please contact Clarke Perkins at cperkins@gordonarata.com or 504.679.9813
Clarke Perkins is an associate attorney who supports clients on employment, commercial litigation, banking, and transactional matters.