In the case of Carole Kolstad v. American Dental Association, 1998, the U.S Supreme Court examined whether a plaintiff must demonstrate that an employer acted with malice or reckless indifference to employee rights in order to receive punitive damages under Title VII of the Civil Rights Act of 1964. The court ruled in favor of Kolstad, stating that this level of proof was not necessary for a claimant to be eligible for punitive damages. Instead, they held that if an employer discriminates "in the face of a perceived risk" that its actions will violate federal law then it is liable for these damages. This decision expanded potential liability for employers and clarified standards around awarding punitive damages in discrimination cases.

In the dissenting opinion for the case Carole Kolstad v. American Dental Association, Justice Thomas, joined by Chief Justice Rehnquist and Justices Scalia and Kennedy, argued that punitive damages should only be awarded in cases where an employer has acted with malice or reckless indifference to federally protected rights. They disagreed with the majority's view that punitive damages could be awarded even if a discriminatory act was not particularly egregious or outrageous. The dissenters believed this interpretation of Title VII expanded liability beyond what Congress intended when it enacted the Civil Rights Act of 1991. They also expressed concern about potential due process issues related to imposing large punitive damage awards without clear standards for determining whether such punishment is warranted.