Paula Coughlin v. the Las Vegas Hilton: 1994

With the investigation closed, Lieutenant Paula Coughlin sued both the Tailhook Association and the Las Vegas Hilton for compensatory damages for emotional distress. Then, citing emotional stress brought on by the lawsuits, and writing that "the covert attacks on me that followed have stripped me of my ability to serve," she resigned from the Navy on February 7, 1994. Her resignation letter made note of a newsletter titled The Gauntlet put out by former Navy pilots who used the pseudonym, "Paul A. Coffin."

On September 8, 1994, the Tailhook Association settled for an undisclosed amount. Four days later, the Hilton suit opened in the Las Vegas courtroom of Judge Philip M. Pro of the Federal District Court before a jury of four men and four women.

During a seven-week trial, Coughlin accused the Hilton Hotels Corporation and its subsidiaries of failing to set up proper security for the Tailhook convention, despite the fact that they had hosted 19 earlier Tailhooks, at many of which drunkenness and debauchery had been exhibited. Witnesses testified that during at least one convention, Hilton security guards found a teenage girl, in a Tailhook hospitality suite, nude from the waist down while in a drunken stupor.

Coughlin's lead lawyer, Dennis Schoville, argued that Tailhook had changed his client's life by bringing on a serious post-traumatic stress disorder. Testimony by psychiatrists and psychologists on both sides observed that she was deeply depressed and Coughlin herself testified that she had become suicidal as a result of the Las Vegas experience.

Hilton Defense Attorney Eugene Walt, however, produced a deposition made in August 1993 by Navy Lieutenant Roland Diaz that said Lieutenant Coughlin had allowed him to shave her legs while she was in uniform the night before she was assaulted in the gauntlet. Coughlin emphatically denied the allegation. Her attorney commented that the Diaz testimony was a setup and that the defense lawyers would do almost anything to win, including "destroying her reputation."

Walt admitted that the gauntlet incident had occurred but said it was overdramatized, and he argued that the post-traumatic stress "appears to be mild and closer to anger and less to a victim who has been sexually molested." Attorney Schoville ridiculed Walt's use of the word "mild," saying, "She feels used and dirty," and implored the jury to award his client $5–$10 million in damages.

As Coughlin ended her testimony, Attorney Walt questioned why she had resigned from the Navy after agreeing in April 1992 to re-enlist for at least six years, enabling her to earn a bonus of $60,750. "I was drummed out of the Navy," she replied.

On October 28, 1994, its second day of deliberation, the jury found the Las Vegas Hilton negligent in failing to provide adequate security during the 1991 Tailhook convention. It awarded the former Navy lieutenant $1.7 million in compensatory damages for emotional distress and $5 million in punitive damages.

Almost six months later, on March 9, 1995, Judge Pro reduced the award. Revealing that the Tailhook Association's settlement, which had not been disclosed in September, was $400,000, the judge ruled that the amount must be subtracted from the $1.7 million compensatory-damages award. Furthermore, citing Nevada law that limits punitive damages to three times compensatory damages, Judge Pro cut the punitive award to $3.9 million. Thus Coughlin's total award stood at $5.2 million. The Las Vegas Hilton and its parent, the Hilton Hotels Corporation appealed the judgment; however, an appeals court upheld both the decision and the award in 1997.

The reputation of the Tailhook Association was damaged but not totally destroyed by the scandal. As the 1990s came to an end, the navy slowly began the process of possibly restoring ties with Tailhook. The navy sought complete guarantees from Tailhook that no sexual misconduct would ever happen again. In early January 2000, satisifed with the organization's public assurances, the navy officially restored ties to the Tailhook Association.