On July 9, 2026, the U.S. Court of Appeals for the Fifth Circuit upheld a jury's $2.17 million verdict against SkyWest Airlines for sexual harassment, rejecting the airline's request for a new trial.
The court affirmed that the airline bore responsibility for severe, persistent harassment against Sarah Budd, a parts clerk at its Dallas-Fort Worth facility, and that it had failed to take meaningful corrective action. SkyWest argued it deserved a retrial or that the damages should be dismissed as a matter of law. The Fifth Circuit rejected both arguments, setting important legal standards about harassment liability, the limits of employer defenses, and what evidence courts can use to prove the conduct occurred.
Table of Contents
- What the Harassment Looked Like
- The Evidence the Court Allowed
- Why SkyWest's Defense Collapsed
- What This Ruling Means for Employers
- The Damage Award Under Title VII Caps
What the Harassment Looked Like
Sarah Budd endured a workplace environment of sexual harassment by her supervisor, Dallin Hansen, and coworkers who made comments about prostitution, "whips and chains," and rape. The harassment included more than 40 rape jokes in a single day, according to the EEOC.
This conduct created a hostile work environment that affected Budd's emotional and physical health. A Dallas federal jury found the harassment conduct proven and awarded Budd $170,000 in compensatory damages for emotional distress in November 2024. However, Title VII of the Civil Rights Act caps total damages at $300,000 per plaintiff, so the final award was reduced from the jury's initial $2.17 million verdict, which included $2 million in punitive damages.
The Evidence the Court Allowed
SkyWest challenged the trial court's decision to admit Budd's text messages to her husband and others describing the harassment as it happened. The Fifth Circuit held that these messages qualified as present-sense impressions—statements describing events as they occur—and were admissible under the Federal Rules of Evidence. This ruling means harassment victims' contemporaneous communications are typically admissible to prove what occurred.
The court also upheld the damages award itself. SkyWest argued that Budd should have mitigated her emotional distress damages by seeking psychiatric treatment. The Fifth Circuit rejected this argument, holding that Title VII plaintiffs have no legal duty to mitigate emotional distress damages, distinguishing emotional harm from economic losses. This clarifies that harassment victims cannot be penalized for not pursuing treatment as a condition of recovering compensation.
Why SkyWest's Defense Collapsed
Despite receiving regular sexual harassment training, maintenance supervisor Hansen actively participated in the harassment, and SkyWest's investigation of the complaints was inadequate. The airline's HR personnel randomly selected only some witnesses to interview, failed to ask follow-up questions, and took no disciplinary action against Hansen.
The Fifth Circuit found these investigation deficiencies critical to the jury's decision to award punitive damages. An employer's good-faith remedial response—documenting complaints, conducting a thorough investigation, and disciplining wrongdoers—is an affirmative defense against punitive damages. By failing to investigate properly and discipline Hansen despite his supervisor-level role in the harassment, SkyWest forfeited this defense and exposed itself to punitive liability.
What This Ruling Means for Employers
This Fifth Circuit decision establishes three enforceable standards for employers defending harassment claims: (1) harassment training alone does not insulate an employer from liability if a trained supervisor ignores complaints, (2) a cursory investigation with selective witness interviews and no follow-up is not a good-faith remedial response, and (3) employees cannot be required to mitigate emotional distress through treatment as a condition of damages recovery. Employers facing similar allegations should expect courts to scrutinize whether investigations were thorough, whether follow-up questions were asked, and whether discipline was actually imposed. Random or incomplete witness selection will likely be viewed as evidence of indifference rather than good faith.
The Damage Award Under Title VII Caps
The final $300,000 award to Budd represents the statutory ceiling under Title VII: $150,000 maximum for compensatory damages plus $150,000 maximum for punitive damages. A jury verdict can exceed these amounts, but courts are required to reduce awards to the cap, as happened here.
The Dallas jury's initial $2.17 million verdict was reduced to $300,000 to comply with the federal cap. Harassment victims in states with parallel state law claims—such as claims under state civil rights statutes that lack damage caps—may recover additional amounts above the federal Title VII ceiling.