A divided federal appellate court panel on Thursday reinstated a $3.5 million punitive damages award to a pipefitter at a Chrysler Group L.L.C. plant, agreeing with a jury that the company had inadequately responded to the three years of harassment suffered by the plaintiff.

According to the ruling by the 7th U.S Circuit Court of Appeals in Chicago in Otto May Jr. v. Chrysler Group L.L.C., the Cuban-born Mr. May, a pipefitter at Auburn Hills, Mich.-based Chrysler's Belvidere, Ill., plant, was the target of racist, xenophobic, homophobic and anti-Semitic graffiti that appeared in and around the company's paint department between 2002 and 2005, as well as the recipient of death threats.

A trial in United States District Court for the Northern District of Illinois in Rockford on Mr. May's hostile work environment resulted in his being awarded $709,000 in compensatory damages and $3.5 million in punitive damages. Mr. May accepted the reduction of the compensatory damages award to $300,000 but appealed the lower court's decision to vacate the punitive damages award, according to the ruling.

The appellate court held in its 2-1 ruling that “the jury was presented ample evidence to conclude that Chrysler did not 'promptly and adequately' respond to the harassment. During the first year of written threats and harassment what had Chrysler done? They held a meeting. They interviewed May. And, one year in, they hired” a forensic document examiner.

Chrysler also failed to interview anyone on Mr. May's list of suspects, nor did it respond to Mr. May's request and install a single surveillance camera to record the harassment, said the ruling, noting the jury did not agree with Chrysler's suggestion that Mr. May himself may have been the source of the harassment.

Chrysler's “response was shockingly thin as measured against the gravity of May's harassment,” said the ruling. “And that would have been true if this kind of harassment would have lasted only for months or a year. The harassment in this case continued for over three years … the threats were extremely serious and there was scant evidence of an increased effort over time,” said the court in reinstating the punitive damages award.

The court also ruled the $3.5 million award was not excessive. “The award is substantial … but Chrysler's long-term recklessness in the face of repeated threats of violence against May and his family is sufficiently reprehensible to support it,” said the ruling, which also affirmed the district court's liability award and reversed its conditional grant of a new trial.