The cap looked automatic. Watch how three missed steps erased it
A small employer skipped one defense in its court filing. The slip cost it an extra $300,000 in a sex-discrimination case.
That is the takeaway from a sex-discrimination case the Eleventh Circuit decided on May 28, 2026, and it is a cautionary tale for anyone who runs an HR function at a smaller company.
Malak Khatabi worked for about four months at a Miami Fiat dealership operated by Car Auto Holdings LLC, under the supervision of a manager, Carlos Rios. She sued for sex discrimination under Title VII of the federal Civil Rights Act and the Florida Civil Rights Act. A jury sided with her and awarded $831,028, the bulk of it - $750,000 - in punitive damages.
Then came the math fight. The trial court found that a Title VII rule capping damages at $50,000 for employers with fewer than 101 workers applied here, and on that basis reduced Khatabi's award to $181,028. Rios had testified the dealership had roughly 20 employees.
The appeals court saw it differently, and the reason matters more than the dollar figure.
The Eleventh Circuit ruled that the small-employer cap is not automatic. It is what lawyers call an affirmative defense – a protection an employer has to raise on its own, in writing, early. The dealership never did. It did not plead the cap in its answer. It did not flag its employee count as a disputed fact before trial. It did not ask the judge to instruct the jury on headcount. Having skipped all...
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