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Court agrees Arco biased against NRI Sikh-owned contractor
But $5 million damage award found too high

Okanogan, April 21, 2005

They fled their homeland to escape religious persecution, knew nothing of the English language and arrived here with little more than the clothes on their backs.

But after more than 10 years of hard work, the three Bains brothers -- all Okanogan residents, proud American citizens and observant Sikhs -- were living the American Dream:

They'd parlayed grit and savvy investments into a successful fuel-hauling business and string of Eastern Washington service stations. And they did it under a company name of "Flying B" -- testament the brothers were flying high in American business.

But after winning a contract to haul fuel for the Atlantic Richfield Co. in 2000, the Bainses' dream was tarnished by hatred.

An Arco supervisor at the company's Seattle terminal repeatedly called them "rag heads" and other slurs. He intentionally harassed them to delay their work and cost them money. And after the brothers complained, Arco fired them.

In 2002, a U.S. District Court jury in Seattle found Arco had violated the Bainses' civil rights by discriminating against Flying B. The verdict: Arco was ordered to pay $5 million in punitive damages, among other awards.

Yesterday, in a decision on Arco's appeal of that ruling, a three-judge panel of the 9th U.S. Circuit Court of Appeals upheld the jury's basic findings: That the fuel giant had discriminated against the brothers and their company.

But the court also ruled Arco should pay a substantially smaller sum in punitive damages. Instead of $5 million, case law dictates Arco should pay damages more in the order of $300,000 to $450,000, the ruling found.

Ordering only that the original award be vacated, the appeals court turned the case back over to U.S. District Court in Seattle to set revised damages against Arco.
For the Bains brothers, the ruling was bittersweet.

"We would've preferred the court to uphold the verdict in full," said Erik Heipt, the brothers' lawyer. "But the more important thing for my clients was the finding that Arco had violated their civil rights. They still feel vindicated by this ruling."

A spokesman for Arco's owner, BP, said yesterday that the company was still reviewing the ruling. "Until we can read and digest it, we can't comment," Phil Cochrane said.

The case stems from discrimination that began shortly after Flying B began hauling fuel for Arco in June 2000. After the Olympic pipeline exploded in 1999, disrupting fuel transport in Western Washington, Arco was forced to hire contractors to haul fuel from its Blaine refinery to its Seattle distribution center.

Flying B -- Gary, Paul and Deep Bains' company that grew from one Okanogan gas station into an enterprise that included hauling services, five stations and 30 employees -- was among the firms hired. "It wasn't until after they were hired that Arco realized they'd be working with East Indians," Heipt said. "That's when the egregious behavior began."

Bill Davis, a supervisor at Arco's Seattle terminal, where haulers dropped off fuel, repeatedly called the brothers "diaper heads," "stupid ... Indians" and other slurs, court documents say. The brothers, who were born in the Punjab region of India, and other Flying B drivers, wear long beards and turbans traditional of religiously observant Sikhs.

The Bainses complained at least three times to Al Lawrence, Davis' boss. But the behavior didn't change. After the third complaint, Arco fired Flying B. Another manager declined the brothers' appeal of the firing.

During the ensuing lawsuit, Davis admitted using ethnic slurs and knowing about Arco's policy against discrimination. A witness also testified hearing Davis' bragging he'd "gotten rid of those rag heads" after Flying B was fired. Still, Arco claimed it fired Flying B solely because of safety violations.

The jury found Arco had breached Flying B's contract and awarded the company $50,000 in compensation. It also ruled that the discrimination, while causing nominal actual damages, violated the company's civil rights. In addition to more than $400,000 in legal costs, another $5 million was awarded in punitive damages.

In its appeal, Arco argued the verdict be overturned because a corporation, such as Flying B, cannot be ethnically discriminated against.

The appeals court yesterday disagreed with nearly all Arco arguments -- except that the $5 million in punitive damages was excessive.

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