No. 05-2220/2429 ___________ Clyde O. Carter, Jr.; Lawrence Hopkins, * * Plaintiffs, * * Stephen Jeffery, * * Appellant/Cross-Appellee, * * Appeal from the United States v. * District Court for the Western * District of Missouri. The Kansas City Southern Railway * Company, * * Appellee/Cross-Appellant. * ___________

Submitted: January 12, 2006 Filed: August 4, 2006 ___________ Before LOKEN, Chief Judge, McMILLIAN1 and MELLOY, Circuit Judges. ___________ MELLOY, Circuit Judge.

1 The Honorable Theodore McMillian died on January 18, 2006. This opinion is being filed by the remaining judges of the panel pursuant to 8th Cir. Rule 47E. Stephen Jeffery appeals the judgment of the district court2 setting aside punitive damages that had been awarded after a trial by jury. Kansas City Southern Railway Company (“Southern”), in a cross-appeal, argues that the district court erred by not precluding Jeffery’s claims under the doctrine of res judicata and by submitting Jeffery’s claims of race discrimination to the jury. We affirm.

I.

This appeal arises from a racial discrimination complaint filed by Jeffery against Southern under Title VII of the Civil Rights Act. The jury found for Jeffery and awarded $128,000 in actual damages and $900,000 in punitive damages. The district court set aside the punitive damages award, but did not disturb the jury’s verdict or award of actual damages. The history of events that gave rise to the original complaint is described below.3

Jeffery, who is African-American, was an employee of Southern charged with repairing rail vehicles and otherwise keeping the cars rail-worthy. Jeffery worked in the Car Department in Southern’s rail yard. In working for Southern, Jeffery was confronted with racially offensive language. Jeffery and two other African-American employees (Clyde Carter and Lawrence Hopkins) regularly heard other employees use “nigger” and other racial slurs. Carter testified that racial epithets were part of the

2 The Honorable Scott O. Wright, United States District Judge for the Western District of Missouri. 3 Although the timing of events is crucial in this appeal, the record is often silent on when certain events occurred. Consequently, the descriptions contained herein do not always point to precise dates or sequence the events in a definitive order. Further, while the record is replete with significant egregious conduct, the plaintiffs have often failed to provide any evidence concerning Southern’s knowledge of certain events. While we have attempted to read the record in a light most favorable to the jury’s verdict, the record is incomplete in several important respects.

-2- “day-to-day” experience of working for Southern, and he heard the term “nigger” used “at least 10 to 15 times a day.”

According to the allegations of Carter, Hopkins, and Jeffery, one of the chief offenders using racially insensitive conduct was Kelly Fletcher, a co-worker of Carter, Hopkins, and Jeffery. In addition to using racial slurs, Fletcher maintained a locker in the Car Department with a racially charged display. In the locker there was an “afro” wig, a dreadlock wig, and a “pimp” costume that was adorned with gold chains. Fletcher would dress up in the wigs and cost