EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, Plaintiff-Appellee, v. INDIANA BELL TELEPHONE CO., INC., d/b/a Ameritech Indiana, and Ameritech Corp., Defendants-Appellants, 214 F.3d 813

FLAUM, Circuit Judge. The defendants, Indiana Bell Telephone Co., doing business as Ameritech Indiana, and Ameritech Corp. (collectively referred to as “Ameritech”) appeal the judgment entered against them following a jury trial in the United States District Court for the Southern District of Indiana. The defendants contend that the evidence presented at trial was insufficient to support the jury’s verdict. In addition, the defendants allege various errors by the district court concerning the admission of evidence and the jury instruction's.

For the reasons stated below, we reverse and remand this case to the district court for further proceedings consistent with this opinion. I. Facts A. This appeal arises out of a suit brought by the Equal Employment Opportunity Commission (“EEOC” or “Commission”) on behalf of the claimants alleging that Ameritech engaged in unlawful employment discrimination in violation of Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq.

The sexual harassment claims upon which the EEOC’s suit is based stem from a course of sexually offensive conduct that former Ameritech employee Gary Amos directed at several of his female co-workers. Although only those incidents that occurred after November 21, 1991 can serve as a basis for holding Am-eritech liable for Amos’s actions, all of the incidents are relevant to Ameritech’s knowledge of Amos’s propensity to harass women and to the reasonableness of Amer-itech’s response. As such, it is necessary to recount the entire series of incidents constituting Amos’s allegedly offensive conduct.

In 1975, Amos was employed in Ameri-tech’s coin center with Barbara Huckeba. At trial, Huckeba testified that Amos exposed himself to her on three separate occasions. Huckeba also stated that she reported these incidents to her supervisor. Ameritech discharged Huckeba on October 24, 1975, citing her problems with Amos and its belief that Huckeba, as a white female, could more readily find another job than Amos, a black male. All of the complaints surrounding Huckeba’s encounters with Amos were expunged from Amos’s employment record, but two complaints about Amos’s behavior during 1975 were not expunged.

These complaints indicate that Amos brushed one co-worker’s buttocks as she bent over, and that Amos partially exposed his penis to another coworker. In February 1988, Amos engaged in conduct that Jacquelyn Stine, a co-worker with whom he was training to be a customer service representative, found offensive. Stine testified that this conduct included telling Stine he was in love with her, smelling Stine’s hair and telling her it was beautiful, and running a strand of Stine’s hair through his mouth.

During Stine’s last encounter with Amos, Amos pushed himself against Stine as she stood at a vending machine and Stine noticed that Amos had an erection. As a result of these problems with Amos, Stine left the customer service training program and returned to her previous job as an operator. A copy of Stine’s complaint against Amos was placed in his file, but Ameritech did not discipline Amos at this time. An Ameritech report indicates that on July 18,1989, Amos continued his offensive conduct by partially exposing his penis to a co-worker while seated in the back of a van.

Janie Kern, the co-worker involved in this incident, reported Amos’s conduct to Ameritech. At this point, Ameritech warned Amos that he would be disciplined if he were found at fault in any future allegations of sexual harassment. In 1990, six female Ameritech employees formally complained to Ameritech about Amos’s conduct in the small business office where he worked. Of these six women, five indicated that Amos had rubbed his penis against them. Ameritech investigated these complaints and suspended Amos for two weeks.

In addition, Ameritech stripped Amos of a sales award and informed him that he faced termination for any such future incidents. At the time the decision to suspend Amos was made, Am-eritech did not review Amos’s personnel files, nor were any of the supervisors involved in the decision aware of Amos’s past history of misconduct. Despite the two-week suspension, Amos continued his harassing behavior. In early 1991, Debbie Murray, one of Amos’s coworkers in the small business office, asked to move to a different desk because Amos was making improper comments.

These comments included inviting Murray over to his house and asking her whether she ate breakfast alone. That same year, Am-eritech received an anonymous letter claiming that Amos was still sexually harassing women in the workplace. In the investigation that followed, at least three women confirmed that Amos was still engaging in sexually harassing conduct. In February 1992, Jennifer Rice, another employee in Ameritech’s small business office, complained about Amos’s conduct. Rice stated that Amos rubbed himself against her, rubbed her neck, • and - made inappropriate comments about her body.

In response to Rice’s complaint, Brian Bauer, the direct supervisor of both Amos and Rice, and Darlene Olberding, who was in charge of the managers in the small business office, met with Amos. Amos was informed that he could not have any physical contact with anyone in the office, and that further misconduct could result in his suspension or termination. Amos expressed interest in moving out of the small business office, but Bauer told him that a transfer would not be the answer.

One of the claimants in this case, Debbie Wentland, was also employed in the small business office and was seated in a four-person cubicle directly across the aisle from Amos’s cubicle. Initially, Amos and Wentland engaged in only innocuous conversations, but during one encounter Amos walked behind Wentland’s chair and placed his hands on her shoulders. Wentland also testified that Amos rubbed and touched his crotch area on a daily basis. At various times, Amos would approach Wentland and touch her, including standing close enough to her desk that their legs touched and rubbing his hand up and down her back.

Wentland asked Amos to stop touching her. She complained to Bauer in November 1992 after an incident in which Amos patted her stomach and said “Oh, so you are going to be a mom,” and then followed her to her desk where he continued to talk to her while rubbing his erect penis through his pants. Bauer met with Wentland on November 25, 1992 and informed her that he would forward her complaint to Monica Sharp, Ameritech’s Equal Employment Opportunity (“EEO”) Coordinator. Sharp first met with Wentland to discuss Amos’s conduct, and then met with Amos on two occasions.

Sharp informed Amos that he had violated the previous warning not to touch anyone in the office. On December 18, 1992, Sharp recommended that Amos be terminated based on her conclusion that Amos “d[id not] seem able to control himself at Indiana Bell.” After forwarding this recommendation to Ameritech’s legal department, Sharp went on vacation. On December 28, 1992, Labor Relations manager Joyce Leek returned from vacation and, after reviewing Sharp’s recommendation that Amos be terminated, noticed that the thirty-day period for disciplinary action provided for in the collective bargaining agreement had expired.

Because Ameritech missed the deadline for disciplining Amos, the company did not take any action against him. However, Sharp did meet with Leek and an official from Ameritech’s legal department. They agreed that the next complaint against Amos would result in an immediate suspension pending investigation in order to avoid missing any deadlines. Amos was then informed that he was not being disciplined because of an administrative error, but that any further misconduct could result in his suspension or termination.

In January 1993, Sharp began an investigation to determine whether Amos was continuing to harass Wentland or any of the other service representatives. While Wentland stated that Amos had not harassed her again, she did recommend that Sharp speak to Lori Everts or Patricia Black. Everts, a chief union steward and a claimant in this case, refused to talk to Sharp because she regarded it as a conflict of interest to assist the company in investigating a member of the union.

After an unproductive meeting with Black, during which a union steward continually interrupted the interview, Sharp became angry at what she regarded as union interference with the investigation. Sharp informed Leek, Ameritech’s Labor Relations manager, of her concerns. Leek then informed the union president that the company intended to hold the union liable if it were sued as a result of Amos’s conduct. On April 15, 1993, Everts filed a charge with the EEOC based on Amos’s conduct. In her charge, Everts stated that Amos walked around the office with his hands in his pockets fondling his genitalia.

Everts also testified that Amos began directing his behavior toward her in February 1993 by brushing up against her with his penis erect. Everts stated that at different times Amos brushed his hand over her buttocks, grabbed her waist, and stared at her and stuck out his tongue. Despite the filing of the EEOC charge Amos’s misconduct continued, including tapping his fingers on Everts’s back, placing his hand on her back as she walked down the hall, and yelling out to her that her legs looked nice.

When Ameritech received notice of Everts’s EEOC complaint, it acted according to established company procedures for handling external complaints and referred the matter to Ameritech’s legal department. Ameritech did not investigate the complaint, but rather cooperated with the EEOC investigation. Because Everts had refused to cooperate in Sharp’s investigation, Leek believed that the complaint was in response to the company’s threat to hold the union liable. An attorney in Am-eritech’s legal department ultimately concluded that Everts’s charge had no merit.

Amos was not disciplined as a result of the Everts complaint. In June 1993, Patricia Wolter, a supervisor in the small business office, found a note on her desk that read: “Patti, you look so sexy today.” Wolter was upset by the note, and she asked Amos if he was the author. Amos admitted having written the note, but he claimed that it was just a joke. Wolter reported the incident to Carol Mer-riwether, who was serving as EEO Coordinator while Sharp was out of the office. As a result of this incident, Ameritech suspended Amos for thirty days.

Wendy Pollard, the third claimant in this case, began working with Amos in the small business office in November 1993. After approximately one month in the office, Amos began touching and grabbing Pollard’s hair and shoulders when he passed. Amos also frequently stared at Pollard while she was working, often with his belt unbuckled.

One afternoon, after overhearing a conversation about Pollard’s new jeans, Amos stood up, stared at Pollard’s crotch, and said “Wendy, I think you are right, those jeans are a little too tight.” In other incidents, Amos told Pollard that he would try to stop touching her hair but that he was obsessed, and brought in pictures of topless women and women in lingerie to show Pollard and another female co-worker. The final incident during Amos’s tenure at Ameritech occurred on March 7, 1994.

While Pollard was moving her belongings, she looked over the partition next to her new desk and saw Amos sitting in a chair masturbating. Pollard reported the incident to Ameritech’s EEO Coordinator. Ameritech suspended Amos pending investigation and it terminated his employment later that month. B. On February 21, 1995, the EEOC filed a complaint in federal district court against Ameritech. The Commission alleged that Ameritech violated. Title VII of the Civil Rights Act of 1964, 42 U.S.C. •§ 2000e et seq., by subjecting Everts and other similarly situated females to sexual harassment.

The EEOC sought both compensatory and punitive damages. Before the trial on the sexual harassment claims against Ameritech began, the district court considered whether to allow Ameritech to present evidence at trial related to its collective bargaining agreement with Amos’s union.

Ameritech wanted to present evidence that its decision regarding the timing of Amos’s discharge was influenced by management’s concern that if Amos were discharged in violation of the “just cause” provision of the collective bargaining agreement, Amos would have filed a union grievance, prevailed on that grievance, and been reinstated by an arbitrator. After healing argument on the issue, the district court excluded testimony relating to Ameritech’s concern that Amos might be reinstated under the “just cause” standard.

As the court read the relevant law, Title VII required Ameritech to- “act adequately and reasonably to end the harassment.” The district court found that Am-eritech’s collective bargaining agreement, or its fears that an arbitrator might reinstate Amos, were'not relevant in determining the reasonableness of Ameritech’s actions under Title VII. . The district court reaffirmed its eviden-tiary ruling as to the collective bargaining agreement and the-arbitration evidence in a-written’order dated September 15, 1997.

In that order, the court stated that “any concerns by an employer that an arbitrator might undo the discipline it has meted out for misconduct does not excuse taking no, or very little, action when [Title VII] requires them [sic] to act promptly to halt any violations of its provisions.” The court also noted its fear that if an employer was entitled to delay taking action against an employee because of the risk of arbitration, employment discrimination law would be subject to “the vagaries of collective bargaining and negotiated grievance and arbitration procedures.” During the course of trial, Ameritech moved for judgment as a matter of law as to punitive damages.

Ameritech argued that the EEOC had presented no evidence that would support an award of such damages., The district court denied Ameritech’s motion,- and held that it would instruct the jury on punitive damages.

The court’s decision with regard to this instruction was based on the understanding that punitive damages are available if “an employer exhibits a consistent attitude of indifference to the protected rights of the claimant in the face of evidence indicating that corrective action that has already been taken has not stopped the harassment.” The court further stated that the EEOC would have to establish Ameritech’s reckless indifference to the claimants’ Title VII rights by clear and convincing evidence.

Near the close of trial, and again at the end of trial, Ameritech renewed its motion for judgment as a matter of law. Ameri-tech argued that the evidence presented by the EEOC did not establish a hostile working environment or liability on the part of Ameritech, and further contended that the evidence failed to show damages in connection with Everts’s claim. The district court denied both of these motions and the case went to the jury.

The jury returned a verdict for the EEOC in the following amounts: $10,000 in compensatory damages and $500,000 in punitive damages on Wentland’s claim; $0 in compensatory damages and $50,000 in punitive damages on Everts’s claim; and $5,000 in compensatory damages and $500,000 in punitive damages on Pollard’s claim. Ameritech immediately moved for judgment notwithstanding the verdict and remittitur and the district court took both of these motions under advisement. On October 3, 1997, the district' court entered judgment in favor of the Commission.

The court ordered that damages be paid to the claimants in the following amounts: $10,000 in compensatory damages and $290,000 in punitive damages to Wentland; $0 in compensatory damages and $0 in punitive damages to Everts; and $5,000 in compensatory damages and $295,000 in punitive damages to Pollard. The court then denied a motion by the Commission to amend the judgment, and denied Ameritech’s motions for judgment notwithstanding the verdict, new trial, and remittitur beyond the reduction in damages reflected in the court’s order.

Ameri-tech filed a notice of appeal with this Court, and the Commission cross-appealed. The two appeals were consolidated for argument. On October 27, 1998, the district court issued an order indicating it was inclined to grant the Commission’s motion to reconsider the issue of Everts’s damages. The case was then remanded to the district court for modification of final judgment. Upon remand, the district court reinstated the jury’s verdict awarding $50,-000 in punitive damages to Everts. Ameri-tech now appeals from the district court’s amended judgment of December 22, 1998. II. Analysis A.

We review the district court’s denial of Ameritech’s motions for judgment as a matter of law de novo. See Emmel v. Coca-Cola Bottling Co. of Chicago, 95 F.3d 627, 629 (7th Cir.1996). Our review is limited to “whether all evidence presented, ‘combined with all reasonable inferences that may be drawn from it, is sufficient to support the verdict when viewed in the light most favorable to the party winning the verdict.’ ” Hennessy v. Pemril Data-comm Networks, Inc., 69 F.3d 1344, 1354 (7th Cir.1995) (quoting Mathewson v. National Automatic Tool Corp., 807 F.2d 87, 90 (7th Cir.1986)).

As to punitive damages, we ask only if “a reasonable jury could have awarded punitive damages against [Ameritech].” Tincher v. Wal-Mart Stores, Inc., 118 F.3d 1125, 1132 (7th Cir.1997). Ameritech first contends that the district court erred in denying its motion for judgment as a matter of law as to the issue of punitive damages because the evidence presented at trial did not support a punitive damages award. Punitive damages “require more than ... ‘intentional unlawful discrimination.’ ” Tincher, 118 F.3d at 1133 (quoting Emmel, 95 F.3d at 636).

The EEOC must also “prove that the defendant employer engaged in the discriminatory practice ‘with malice or reckless indifference to the federally protected rights of the employee.’ ” Emmel, 95 F.3d at 636 (quoting 42 U.S.C. § 1981a(b)(l)). A showing of “malice or reckless indifference” under 42 U.S.C. § 1981a requires proof “that the defendant almost certainly knew that what he was doing was wrongful and subject to punishment.” Soderbeck v. Burnett County, Wis., 752 F.2d 285, 291 (7th Cir.1985).

In evaluating Ameritech’s insufficiency of the evidence claim as to punitive damages, we must consider the evidence in light of the entire record to determine whether a reasonable jury could have determined that Ameritech acted with “malice or reckless indifference” to the claimants’ Title VII rights. See Emmel, 95 F.3d at 636.

When examined against the backdrop of Amos’s past history, it is apparent that a reasonable jury could have concluded that Ameritech acted with “malice or reckless indifference.” In this regard, it is significant that by November 21, 1991, Ameritech had accumulated a history of complaints against Amos going back to 1975. Ameritech had received at least eleven complaints against Amos indicating a pattern and history of misconduct directed at women.

These complaints, and Ameritech’s disciplinary actions in response, indicate that as of November 21, 1991, Ameritech was on notice of Amos’s recurring problems with female co-workers. See Jonasson v. Lutheran Child & Fam. Serv., 115 F.3d 436, 439 (7th Cir.1997) (stating that although incidents prior to November 21, 1991 cannot serve as a basis for employer liability, they may be used to provide the jury a context for evaluating the reasonableness of the employer’s response).

Despite its knowledge of Amos’s misconduct and the futility of its prior disciplinary efforts, Ameritech continued to allow Amos to work in the small business office where ninety percent of the employees were female. Even after the company learned in February 1992 that Amos had sexually harassed Jennifer Rice, the company issued another warning to Amos and refused his request to be transferred out of the small business office.

Furthermore, after Wentland complained to Ameritech about Amos’s conduct and a subsequent investigation found that Amos sexually harassed Wentland, Ameritech did not discharge Amos within the thirty-day limit for disciplinary action imposed by the collective bargaining agreement. In addition, Ameritech concluded that Everts’s EEOC charge had no merit and thereby failed to act on it, and repeatedly refused to discipline Amos on other occasions.

This Court has previously held that the failure of an employer to act to remedy an employee’s misconduct, when coupled with the employer’s knowledge of that conduct, can be sufficient to justify an award of punitive damages. See Jonas son, 115 F.3d at 438. While the evidence in this case may not compel the conclusion that Ameri-tech acted with “malice or reckless indifference” to the claimants’ Title VII rights, it certainly provides a sufficient basis for a reasonable jury to find in favor of the Commission.

In addition to its claim as to the insufficiency of the evidence on punitive damages, Ameritech also contends that the evidence presented by the EEOC was insufficient to support a conclusion that Ameritech was negligent, or that the claimants suffered a hostile work environment. However, given our conclusion that the record supports an award of punitive damages against Ameritech, we find the company’s additional insufficiency of the evidence arguments to lack merit. First, any question as to the sufficiency of the evidence on negligence, and consequently as to Ameritech’s liability, see Perry v.

Harris Chemin, Inc., 126 F.3d 1010, 1013 (7th Cir.1997) (“[E]mployers are liable only when they have been negligent either in discovering or remedying the harassment.”), is necessarily answered by our discussion of punitive damages. “Malice or reckless indifference” establishes a higher standard than negligence, so evidence supporting the former supports the latter. Similarly, we conclude that the evidence in this case was sufficient to establish the existence of a hostile work environment.

All of the claimants experienced various incidents with Amos involving suggestive comments, inappropriate touching, or indecent exposure. Furthermore, all of the claimants testified that they were disturbed by this conduct. There is no question that the evidence presented by the EEOC was enough to establish a hostile work environment from both an objective and a subjective perspective, see id., and that the evidence presented was sufficient to justify an award of both compensatory and punitive damages. B.

With regard to Ameritech’s evidentiary challenges, we review the rulings of the district court for an abuse of discretion. See Buckner v. Sam’s Club, Inc., 75 F.3d 290, 292 (7th Cir.1996). “[T]he relevant inquiry is not how the reviewing judges would have ruled if they had been considering the case in the first place, but rather whether any reasonable person could agree with the district court.” Geitz v. Lindsey, 893 F.2d 148, 150 (7th Cir. 1990).

If we determine that the district court has abused its discretion in making an evidentiary ruling, we nonetheless affirm the district court if the erroneous ruling is determined to be harmless. See Holmes v. Elgin, Joliet & E. Ry. Co., 18 F.3d 1393,1397 (7th Cir.1994). Ameritech challenges the district court’s decision to exclude evidence regarding Ameritech’s obligations under its collective bargaining agreement and the effect those obligations had on the timing of Amos’s dismissal.

The district court held that such evidence was “not relevant to a determination of the reasonableness of an employer’s response to sexual harassment in the workplace.” According to Ameritech, the district court’s ruling in this regard was erroneous as a matter of law. The reasonableness of Ameritech’s response should be determined according to whether it was “ ‘reasonably calculated to prevent further harassment under the particular facts and circumstances of the case at the time the allegations were made.’ ” McKenzie v. Illinois Dep’t of Trans., 92 F.3d 473, 480 (7th Cir.1996) (quoting Brooms v.

Regal Tube Co., 881 F.2d 412, 421 (7th Cir.1989)). Ameritech contends that its obligations under its collective bargaining agreement were part of the facts and circumstances that informed Ameri-tech’s judgment as to Amos’s discipline, and as such they are relevant to a jury’s determination of the reasonableness of its response. Ameritech also argues that the exclusion of the arbitration evidence was erroneous in light of the punitive damages instruction given to the jury, and the large punitive damages awards that were returned.

As has been previously discussed, in order to receive an award of punitive damages the EEOC must show that Ameritech acted with “malice or reckless indifference” to the claimants’ Title VII rights. Emmel, 95 F.3d at 636. According to Ameritech, it acted not out of “malice or reckless indifference,” but rather out of concern for its obligations under the collective bargaining agreement and its fear that Amos would be reinstated by an arbitrator if he were fired.

By excluding evidence of the collective bargaining agreement and the possibility of reinstatement, the district court precluded Ameritech from presenting what Ameritech contends was important evidence that would go toward proving it did not act with the state of mind necessary for the imposition of punitive damages. In evaluating the .district court’s decision excluding evidence of the collective bargaining agreement and the potential outcome of arbitration proceedings, we must first determine what the district court meant when it stated that the evidence in question was irrelevant.

As we understand it, the district court was not considering the question as a matter of logical relevance; the district court did not mean that this evidence was not useful in assessing the probability that Ameritech acted with “malice or reckless indifference.” Fed.R.Civ.P. 401. Nor did the district court indicate that “the probative value [of the evidence was] substantially outweighed” by other considerations. Fed. R.Civ.P. 403.

Rather, the district court stated that “an employer is subjected to separate duties under a positive law, such as Title VII, and under afcollective bargaining agreement],” and when those duties conflict “the positive law controls.” In essence, the district court held that as a matter of law, Ameritech’s obligations under the collective bargaining agreement and its fears as to the possible outcome of arbitration could not be introduced in the face of conflicting duties under Title VII.

To the extent the district court’s ruling reflects the idea that Title VII always trumps the provisions of a collective bargaining agreement, that ruling is erroneous as a matter of law. While it is true that employers cannot use collective bargaining agreements to contract around anti-discrimination laws like Title VII, see Trans World Airlines, Inc. v. Hardison, 432 U.S. 63, 79, 97 S.Ct. 2264, 53 L.Ed.2d 113 (1977) (“[A] collective-bargaining contract ... may [not] be employed to violate the statute.”), that principle is not applicable to this case.

The EEOC does not allege that Ameritech negotiated for the thirty-day limit on disciplinary action in order to avoid Title VII obligations, nor is there any evidence in the record to that effect. Furthermore, this is not a situation where Ameritech is seeking to use its obligations under the collective bargaining agreement as an affirmative defense precluding liability under Title VII.

Rather, Ameritech seeks only to introduce evidence as to its collective bargaining agreement, and its concern over the possible outcome of arbitration, to demonstrate that it did not act with the state of mind necessary for an award of punitive damages and to show that its response to Amos’s misconduct was reasonable. See Deneen v. Northwest Airlines, Inc., 132 F.3d 431 (8th Cir.1998) (holding that proof of discrimination offered by the plaintiff was insufficient to support a punitive damages award in light of the employer’s belief that its actions were required by a collective bargaining agreement).

In this context, the district court erred in finding that evidence of Ameritech’s collective bargaining agreement was irrelevant as a matter of law. The relationship between an employer’s obligations under its collective bargaining agreement and potentially conflicting obligations under an anti-discrimination statute like Title VII is more complex than the district court’s decision indicates.

Title VII and collective bargaining agreements each represent important congressional policies: preventing discrimination in the workplace, and “effecting workable and enforceable agreements between management and labor,” Trans World Airlines, 432 U.S. at 79, 97 5.Ct. 2264. Given the important national policies underlying both Title VII and collective bargaining agreements, it is incorrect to hold, as the district court did, that obligations under Title VII always trump obligations that exist under valid labor agreements.

See id. (holding that an agreed-upon seniority system did not “give way” to an employer’s duty to “reasonably accommodate” religious observance under Title VII); Eckles v. Consolidated Rail Corp., 94 F.3d 1041, 1051 (7th Cir.1996) (holding that a collectively-bargained seniority system was not trumped by the duty to “reasonably accommodate” the disabled under the Americans With Disabilities Act). Because the district court based its decision to exclude the disputed evidence on an error of law, that decision constitutes an abuse of discretion. See Waid v. Merrill Area Pub. Sch., 130 F.3d 1268, 1273 (7th Cir.1997).

While the EEOC concedes that the district court may have been mistaken about the legal relationship between collective bargaining agreements and Title VII, it contends that any such mistake was harmless. We disagree. Although the EEOC correctly points out that Ameritech was able to present evidence as to the thirty-day limit on disciplinary action under the collective bargaining agreement, Ameritech employees were prevented from testifying about the facts and circumstances surrounding the timing of their decision to terminate Amos.

Ameritech was also precluded from presenting evidence that it failed to discharge Amos after the Wentland incident because of concerns about violating the collective bargaining agreement. Furthermore, Ameritech could not present evidence as to the likely outcome of arbitration, and its decisionmakers’ fears that Amos would be reinstated were he to be discharged in violation of the collective bargaining agreement.

As we have previously noted, this was potentially significant evidence as to Ameritech’s state of mind and to the reasonableness of Ameritech’s actions, and we cannot say that the outcome of the trial would have been the same had the jury been permitted to hear this evidence. See United States v. Stefonek, 179 F.3d 1030, 1036 (7th Cir.1999) (“A ‘harmless error’ as the term is used in law is a trial error that does not alter the trial’s outcome.”); Collins v.

Kibort, 143 F.3d 331, 339 (7th Cir.1998) (stating that an error is not harmless when “a significant chance exists” that the error “affected the out come of the trial”). Our conclusion that this evidence was not harmless is bolstered by the nature of the jury verdict in this case. In the case of all three claimants, the punitive damages awards rendered by the jury far surpassed the awards given for compensatory relief. When punitive damages are such an important part of a jury award, the defendant’s state of mind is a central issue. See Kolstad v.

American Dental Ass’n, 527 U.S. 526, 119 S.Ct. 2118, 2125-26, 144 L.Ed.2d 494 (1999) (“Most often ... eligibility for punitive awards is characterized in terms of a defendant’s motive or intent.”); Ortiz v. John O. Butler Co., 94 F.3d 1121,1127 (7th Cir.1996) (stating that the “requisite showing for punitive damages necessarily focuses upon the defendant’s state of mind”).

By precluding the disputed evidence, the district court deprived Ameritech of potentially valuable evidence that would have allowed it to counter the jury’s impression that it acted negligently or with “malice or reckless indifference” to the claimants’ Title VII rights. The sheer size of the jury’s verdict in this case, when viewed in relation to the amount of compensatory damages awarded, supports our conclusion that the district court’s erroneous preclusion of the arbitration evidence was not harmless. III.

Conclusion Because we have determined that the evidence was sufficient to support the jury’s verdict, we decline to enter judgment on behalf of Ameritech. However, in light of our ruling that the district court erred in excluding evidence of Ameritech’s collective bargaining agreement and its concern about the outcome of arbitration, we Reverse the judgment of the district court and Remand this case for further proceedings consistent with this opinion. .

Both parties agree that November 21, 1991 is the relevant date for purposes of determining Ameritech's liability for punitive damages because that is the date on which 42 U.S.C. § 1981a was enacted. That statute, which provides for punitive damages under Title VII, is not retroactive. See Landgraf v. USI Film Prod., 511 U.S. 244, 281, 114 S.Ct. 1483, 128 L.Ed.2d 229 (1994). Similarly, the district court correctly determined that compensatory damages could not be awarded based on emotional distress for conduct before November 21, 1991.

Recovery of compensatory damages was added by 42 U.S.C. § 1981a, and that provision is non-retroactive as well. Landgraf, 511 U.S. at 281-83, 114 S.Ct. 1483. . Under the terms of the collective bargaining agreement, Ameritech could have terminated Amos outside the thirty-day window for disciplinary action if it had suspended Amos before the thirty-day limit expired. .

The district court properly instructed the jury that in order to hold Ameritech liable for punitive damages, it would have to find that in dealing with Amos after November 21, 1991 Ameritech: (1) was motivated by malice ("ill will, or spite, or grudge”) toward Went-land, Pollard, and Everts, or toward female employees as a class; or (2) acted with both "a high degree of awareness that its conduct would violate Title VII” and "consistent disregard for such a violation.” . Ameritech also contends that the punitive damages awards in this case were clearly excessive.

In support of this contention, Am-eritech points out that two of the punitive damages awards, $290,000 to Wentland and $295,000 to Pollard, were near the statutory maximum of $300,000 established by 42 U.S.C. § 1981a (b)(3)(D). According to Am-eritech, Hennessy v. Penril Datacomm Network, Inc., 69 F.3d 1344 (7th Cir. 1995), held that awards at or near the statutory maximum should be reserved for the most egregious of cases, and that this is not an appropriate case for such a large award. We believe Ameritech has misread our holding in Hennessy, which reduced an award at the statutory maximum. Id. at 1355-56.

Although Hennessy provides support for the idea that punitive damages awards can be excessive, and that awards at or near the statutory maximum should be reserved for egregious cases, the Court in that case limited the decision to its facts and did not purport to establish a per se rule about the availability of punitive damages at or near the statutory maximum. It is well-recognized that the amount of damages is largely within the province of the jury, and that its determination should not generally be disturbed. See EEOC v.

AIC Security Investigations, Ltd., 55 F.3d 1276, 1287 (7th Cir.1995) ("[T]he primary responsibility for deciding the appropriate amounts of [punitive] damages rests with the jury.”). Here, a jury could well have determined that Ameritech's conduct was egregious and warranted a large punitive damages award, and the district court's award of punitive damages at or near the statutory maximum was not in error. .

In response to the dissent, we want to emphasize that our opinion should not be read to imply that Ameritech, or any employer, can use a provision in its collective bargaining agreement to shield itself from liability under Title VII. An employer has a clear responsibility under Title VII to act reasonably to end sexual harassment and to protect its employees from harassing behavior, see Brooms v.

Regal Tube Co., 881 F.2d 412, 421 (7th Cir. 1989) (recognizing "that an employer is liable for an employee's action if the employer knew or should have known about an employee’s acts of harassment and fails to take appropriate remedial action”), and Ameritech’s obligations in that regard remain unchanged. However, Ameritech’s obligation to end sexual harassment, and consequently its vicarious liability for the actions of non-supervisory employees, is not absolute. See Meritor Savings Bank, FSB v.

Vinson, 477 U.S. 57, 72, 106 S.Ct. 2399, 91 L.Ed.2d 49 (1986) (stating that there are "some limits on the acts of employees for which employers under Title VII are to be held responsible"); Juarez v. Ameritech Mobile Comm., Inc., 957 F.2d 317, 320 (7th Cir. 1992) ("Employers are not strictly liable under Title VII for sexual harassment engaged in by their employees.”). Under Title VII, employers are liable for compensatory damages only upon a showing of negligence, see Baskerville v.

Culligan Int'l Co., 50 F.3d 428, 432 (7th Cir.1995) ("[T]he criterion for when an employer is liable for sexual harassment is negligence.”), and liability for punitive damages is limited to situations where an employer acts with "malice or reckless indifference,” 42 U.S.C. § 1981a(b)(l). By focusing on an employer’s duty to remedy sexual harassment under Title VII, and not on the issue of Ameritech’s state of mind, we respectfully suggest that both the district court and the dissent misapprehend the purpose for which Ameritech sought to introduce the disputed evidence.

In order to counter the plaintiffs’ allegation that it acted negligently or with "malice or reckless indifference” when it failed to terminate Amos following the Wentland incident, Ameritech should have been allowed to present evidence as to its asserted justification for acting (or failing to act) in the way that it did. Only after hearing this evidence could the jury properly evaluate Ameritech’s state of mind and the reasonableness of its response.

Our holding in this regard does not elevate Ameritech’s obligations under the collective bargaining agreement, or its fears about the possible outcome of arbitration, into a defense to Title VII liability. Having heard this evidence, a jury could conclude that Ameritech should have discharged Amos after the Went-land incident regardless of whether that action would have violated the collective bargaining agreement.

In this case, however, the jury did not have the opportunity to consider Ameritech’s asserted justification for its actions because the district court erroneously determined that Ameritech’s obligations under its collective bargaining agreement were irrelevant to its responsibilities under Title VII.

We reverse and remand this case not, as the dissent characterizes our opinion, because the district court precluded Ameritech from offering evidence of its collective bargaining agreement as a defense to Title VII liability, but rather only because the district court erroneously prevented Ameritech from offering relevant evidence regarding its state of mind and the reasonableness of its response to Amos's harassing acts. . The congressional policies underlying collective bargaining agreements are embodied in the National Labor Relations Act, 29 U.S.C. § 151 et seq. .

The EEOC concedes that the district court’s statement of the law may be incorrect, but argues that this mistake of law did not serve as the basis of the district court’s opinion. Rather, the EEOC asserts that the district court engaged in a Rule 403 analysis and concluded on the facts of this case that Ameri-tech’s concern about violating its collective bargaining agreement was so speculative as to render it irrelevant for purposes of determining the appropriate response to Amos's behavior. We do not read the district court's opinion in this manner.

The district court indicated numerous times that it regarded the disputed evidence to be inadmissible as a matter of law, and we find no support for recharacterizing the court's decision as a discretionary one.