The Ninth Circuit Court of Appeals recently confirmed a trial court’s decision to order a new trial after a jury returned a $238 million verdict for an employee. The jury’s verdict was irreparably tainted by repeated use of excluded evidence, which provoked the jury and resulted in an excessive award. In Gratton v. U.S. District Court for the Eastern District of Washington, No. 25-1724, 2025 U.S. App. LEXIS 24564 (9th Cir. Sep. 23, 2025), in an unpublished decision, the Ninth Circuit denied the employee’s petition to overturn the new trial order, noting the outsized scale of the award relative to the admissible proof and to comparable benchmarks.
1. Allegation Of Race-Based Discrimination
The employee, a black package delivery driver, alleged supervisors demeaned him, denied him work opportunities, assigned him more burdensome and less desirable routes, and enforced minor rules against him more strictly than against white coworkers. The employee also had disputes over how to record large-volume pickups, route assignments, equipment, dress-code enforcement involving visible tattoos, and the timing of overtime and penalty payments. He made his grievances known to his union and filed an agency charge asserting discrimination and retaliation.
Later, the employee was terminated following an internal investigation into unwanted physical contact with a female supervisor. The company determined it was an unprovoked assault warranting discharge without warning. However, the employee denied this, stating he lost his balance and briefly braced himself by briefly holding onto the female supervisor. He argued animus and retaliation influenced the outcome of the investigation and sued in federal court in Washington state.
2. The Consistent Use Of Inadmissible Evidence
Before trial, the court established firm evidentiary boundaries for the parties to follow during the trial. The court excluded discrete acts alleged in the employee’s prior agency charge that fell outside the limitations period, including an on-road incident in which a supervisor allegedly used the term “boy” to refer to the employee, and a separate episode where a manager told the employee to leave company premises on a day off. The court further limited counsel to argue only admissible theories, avoiding arguments based on claims that had been dismissed before trial.
The district court also cautioned that compensatory damages cannot be driven by references to corporate wealth or punitive themes. Based on this ruling, the court excluded references to the company’s financial situation. The court explained these issues would risk jury confusion or invite punitive motives during an assessment of compensatory damages. A proper damages assessment must be tethered to admissible proof of the plaintiff’s emotional distress and related harm, not to the size of the employer or its financial wellbeing.
Despite those clear instructions, at trial, the employee’s attorney repeatedly placed excluded material before the jury. His counsel read the prior agency charge verbatim, elicited testimony about previously dismissed or excluded harassment allegations, and highlighted the barred excluded incidents in his opening statement and closing argument. The employee’s counsel also repeatedly referenced the company’s size and financial position.
At the end of trial, the jury awarded $238 million to the employee, with $39.6 million for emotional distress and $198 million in punitive damages. This victory was short lived.
3. New Trial Ordered When Award Based On Inadmissible Evidence
Reviewing the scope of admissible evidence, the trial court vacated the punitive award entirely. The trial court then determined the remaining $39.6 million emotional distress award was shocking and vastly outsized relative to the admissible proof and to comparable awards. The only conclusion was the reliance on excluded material permeated the proceedings, inflamed passion or prejudice, and pushed the verdict toward punitive considerations. As a result, the district court ordered a new trial.
On appeal, the Ninth Circuit agreed with the trial court’s order granting a new trial, pointing to the employee’s counsel’s repeated trial conduct of introducing previously excluded evidence and references to the company’s financial condition. The Ninth Circuit noted the improper conduct likely influenced the verdict, as evidenced by the outsized damage award.
4. Practical Considerations
At trial, parties must treat pretrial rulings as binding guardrails and structure trial strategy around them. Once the court excludes evidence, counsel must be vigilant for any attempt to introduce the evidence or repackage excluded theories as “background” to inflate compensatory damages or to revive claims that have already been excluded from the case.
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About The Author
Luke Bickel is an attorney in Sheppard Mullin’s Labor and Employment Practice Group in the firm’s San Diego (Del Mar) office. Mr. Bickel defends employers of all sizes in matters involving discrimination, retaliation, harassment, wrongful termination, and wage and hour. He has experience defending all aspects of employment-related claims, from single plaintiff to class and PAGA matters, in state and federal court. Beyond the realm of litigation, Luke advises clients on employment issues ranging from wage and hour compliance to federal OSHA and Cal/OSHA investigations. Luke’s experience also includes helping clients obtain workplace violence restraining orders and conducting workplace investigations.
Luke is a consistent contributor to Sheppard Mullin’s Labor & Employment Law Blog, Trade Secrets Law Blog, and the California Labor and Employment ALERT.
Mr. Bickel received his law degree from the USC Gould School of Law and his undergraduate degrees from Cal Poly State University, San Luis Obispo, magna cum laude.