DIVISION XVI -- DAMAGES AND REMEDIES
SUBDIVISION A -- GENERALLY
[Last updated March 13, 2007]
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XVI. Damages and remedies
- A. Generally
The American Jobs Creation Act of 2004 includes a "civil rights tax relief" provision at Section 703 , establishing a deduction from gross income for attorneys' fees and court costs incurred by, or on behalf of, individuals who prevail in employment discrimination and other enumerated types of cases. H.R. 4520, signed by the President on October 22, 2004.
[Editor's note: Pending before the Supreme Court is Commissioner v. Banks , No. 03-892, in which oral argument was conducted on November 1, 2004. In Banks , the government took the position that a taxpayer's gross income from the proceeds of litigation includes that portion of the damages recovery that is paid to the litigant's attorney pursuant to a contingent fee agreement. Two taxpayers argued that "the governing principle of law should be that income is not to be attributed to anyone who lacks dominion and control or the power of disposition over the amount in question...." Taxes: Justices Hear Arguments on Treatment of Contingency Fees Paid to Attorneys , 211 DLR AA-2 (BNA Nov. 2, 2004).]
[Nuclear and Environmental Whistleblower Digest XVI A]
INTERLOCUTORY APPEAL; BIFRUCATED HEARING
In Walsh v. Resource Consultants, Inc. , ARB No. 05-123, ALJ No. 2004-TSC-1 (ARB Aug. 10, 2005), the ALJ had issued a recommended decision on the merits, reserving the damages issues for additional briefing and consideration. The ALJ's decision included a notice of appeal rights, and the Respondent filed a appeal. Later, the parties filed a joint motion recognizing that the ALJ's order was interlocutory and not yet ripe for review, and requesting that the matter be remanded to the ALJ for calculation of damages and attorney's fees. The ARB granted the motion.
XVI.A.1. Damages; general description of Secretary's responsibilities
In the event that a respondent is found to have violated the ERA, "the Secretary shall order the person who committed such violation to (i) take affirmative action to abate the violation, and (ii) reinstate the complainant to his former position together with the compensation (including back pay), terms, conditions, and privileges of his employment . . . ." 42 U.S.C. § 5851(b)(2)(B). See generally Wells v. Kansas Gas & Elec. Co., 85-ERA-72 (Sec'y Mar. 21, 1991), slip op. at 17. In addition, "the Secretary may order such person to provide compensatory damages to the complainant." Id. Finally, the Secretary shall assess costs and expenses, including attorney's fees, reasonably incurred in bringing the complaint. Id.; DeFord v. Secretary of Labor, 700 F.2d 281, 288-289, 191 (6th Cir. 1983).
Nichols v. Bechtel Construction, Inc., 87-ERA-44 (Sec'y Oct. 26, 1992), slip op. at 17-18.
[Nuclear & Environmental Whistleblower Digest XVI A]
NO SHOWING OF DAMAGES WHERE COMPLAINANT WAS PLACED ON PAID LEAVE; COMPLAINT DISMISSED
In Smith v. Western Sales & Testing , ARB No. 02 080, 2001 CAA 17 (ARB Mar. 31, 2004), the ARB found that the Respondent's sending the Complainant on paid leave for three months as a "cooling off" period was in retaliation for protected activity. The Complainant testified that it was stressful to be on leave, but did not present specific evidence as to damages, nor did he request such damages. Accordingly, the ARB dismissed the complaint.
XVI A 1 DOL has no authority to impose criminal liability
The Department of Labor does not have any authority to pursue criminal prosecution and sanctions against a respondent under the ERA. The remedies provided by the ERA's employee protection provision are only civil in nature: abatement of the discrimination and reinstatement to former position and its terms and privileges, including back pay, compensatory damages, and attorney fees. See 42 U.S.C. § 5851(b)(2)(B).
The Department of Labor has no authority to order other Federal or state agencies to investigate.
The fact that the Department of Labor's investigator continued investigation even though Complainant told him that he desired only criminal sanctions did not confer jurisdiction to order criminal prosecution or punishment. Further, Complainant's request to discipline NRC employees for misleading him had no basis in an ERA employee protection action, and the DOL could not so discipline an NRC employee in any event. In addition, the Secretary noted that there appeared not to be any misconduct by the NRC employees.
Bonanno v. Northeast Nuclear Energy Co., 92-ERA-40 and 41 (Sec'y Aug. 25, 1993).
Employee filed claim with Department of Labor, alleging that his job transfer was the result of deliberate discrimination by employer (TVA) against him due to his participation in the NRC inspection process. The Secretary awarded relief to employee, and ordered that he be placed retroactively on administrative leave with full pay. The court held that the Secretary cannot order any type of relief whatsoever that he might deem appropriate, and the statute does not by its terms allow the creation of administrative leave that would not otherwise exist.
DeFord v. Secretary of Labor, 700 F.2d 281, 289 (6th Cir. 1983).
[Nuclear and Environmental Digest XVI A 2]
REMEDIES; CLAIMS FOR PREMATURE DEATH, LOSS OF LIFE
In Ricketts v. Northeast Utilities Corp. , 1998-ERA-30 (ALJ Jan. 4, 1999), Complainant (the employee's estate) argued that adverse treatment of the employee by Respondents was a causative factor of his fatal heart attack, and sought compensatory damages for loss of life ( e.g. , lost wages for remaining work expectancy, lost pension, lost employee benefits) and damages for premature death. The ALJ held that such damages were not compensable under the ERA employee protection provision; that the estate was entitled to no more and no less than the employee had he pursed the action during his lifetime.
[Nuclear and Environmental Digest XVI A 2]
REMEDIES; MUST BE CONSEQUENCES OF DISCRIMINATION, NOT EXPOSURE
TO HAZARD
In Fabricius v. Town of Braintree/Park Dept. , 1997-CAA-14 @ 6-7 (ARB Feb. 9, 1999), the ARB affirmed the ALJ's recommended finding that Respondent violated the employee protection provision of the CAA when it disciplined Complainant for leaving the work site without permission, and tardiness, because it was pretext for the real motive of retaliation for Complainant's seeking of information about asbestos on the work site. Complainant had made inquiries after debris and dust fell on him and a co-worker during a demolition, and Complainant suspected that the material contained asbestos. Later testing confirmed that asbestos was present.
The ARB affirmed the ALJ's order that Respondent repay Complainant for the cost of obtaining medical treatment and medications for his emotional upset caused by Respondent's wrongful conduct, clarifying that Respondent's liability is limited to the medical costs paid by Complainant himself. The ARB, however, rejected the ALJ's recommended order that Respondent pay for medical treatment for Complainant's exposure to asbestos and the cost of his contaminated clothing, because such costs were not a consequence of Respondent's discrimination.
[N/E Digest XVI A 2]
PREJUDGMENT BOND
In Creekmore v. ABB Power Systems Energy Services, Inc. , 93-ERA-24 (ALJ Jan. 9, 1997), Complainant filed an application for prejudgment remedy -- an order that Respondent place a cash bond with the Clerk of the USDOL in the amount of $500,000. The ALJ, assuming arguendo that he had the authority to seize Respondent's assets through FRCP 64 (as theoretically made applicable through 29 C.F.R. § 18.1), denied the application on the ground that Complainant failed to comply with the applicable state law (FRCP 64 ties such remedies to the law of the State in which the District Court is located).
XVI A 2 REMEDY; ESSENTIAL PARTY THAT DID NOT PARTICIPATE IN DISCRIMINATION
In Klock v. Tennessee Valley Authority, 95-ERA-20 (ALJ Sept. 29, 1995), the Complainant named both the nuclear power plant and his employer, a contract provider of startup engineers, as Respondents. At the commencement of the hearing, the contract provider moved for summary judgment on the ground that it did not take adverse action against the Complainant. The Complainant conceded that the contract provider did not discriminate against him in violation the ERA. The ALJ denied the motion, however, on the ground that the contract provider may be a necessary party to formulating a remedy. The contract provider renewed the motion after the conclusion of the hearing, and the ALJ concluded, upon reconsideration, that since the contract provider did not violate the ERA, the Secretary has no jurisdiction to order it to take any action toward the complainant. The ALJ also concluded that the contract provider was not essential to formulating a remedy, as the power plant could be ordered to reinstate the complainant either as a contract employee or as its own employee.
XVI A 2 Creative relief
In DeFord v. Tennessee Valley Authority, 81-ERA-1 (Sec'y Aug. 16, 1984), the Secretary issued an Order on Remand from the Sixth Circuit, see DeFord v. Secretary of Labor, 700 F.2d 281 (6th Cir. 1983), in which he implemented the court's direction to revise DeFord's remedies. In his original decision, the Secretary had ordered that DeFord be placed retroactively on administrative leave until he was able to return to work. This relief was reversed by the Sixth Circuit because DeFord did not meet the criteria for the granting of administrative leave in TVA regulations (e.g., jury duty, military service), and to grant such leave would go beyond a "make whole" remedy by providing a benefit to which DeFord would not have been entitled.
Nevertheless, the Secretary noted that the court did say that "[i]n conjunction with reinstatement, the compensation and damages provided for by statute should allow the formulation of a complete and proper remedy . . ." See DeFord, 700 F.2d at 291 (quotation is as edited by the Secretary, the rest of the sentence is "without the creation of administrative leave or other novel benefits.").
Finding Respondent's discriminatory action to be the cause of Complainant's mental distress and medical symptoms which had kept him out of work, the Secretary found that while an employee who is absent due to illness ordinarily must take sick leave, it would be unfair and deprive Complainant of complete relief to require him to use such leave for an absence due to illness caused by Respondent's illegal conduct. Accordingly, the Secretary ordered Respondent to pay Complainant back pay from September 12, 1980 (the day after he stopped work) until the date of reinstatement without the expenditure of sick leave.
XVI A 3 Request for enforcement should be directed to Solicitor
A request to initiate enforcement action under 42 U.S.C. § 5851(d) should be directed to the Solicitor of Labor rather than to the Office of the Secretary. Goldstein v. Ebasco Constructors, Inc., 86-ERA-36 (Sec'y Aug. 31, 1992) (order denying stay).
RELIEF; PRELIMINARY ORDER UPON RECOMMENDED DECISION IN FAVOR
OF COMPLAINANT; ERA AMENDMENTS
[N/E Digest XVI A 3 (see also XVI B 3 and XVI E 7)]
The plain meaning of 42 U.S.C. § 5851(b)(2)(A) & (B) (1988 and Supp. V) requires a preliminary order enforcing all relief recommended by the ALJ, except compensatory damages. ( e.g. , backpay, interest and costs, and the expungement of Complainant's employment record). See C. D. Varnadore Oak Ridge National Laboratory and Lockheed Martin Energy Systems, Inc. ,94- CAA-2 and 3, slip op. at 5 (Sec'y Sept. 11, 1995) (preliminary order).
Klock v. Tennessee Valley Authority , 95-ERA-20 (Sec'y Dec. 11, 1995); Keene v. Ebasco Constructors, Inc. , 95-ERA-4 (Sec'y Dec. 11, 1995).
XVI A 3
Enforcement of Secretary's orders by
district court; ministerial duty
Kansas Gas & Elec. Co. v. Brock,
780 F.2d 1505
(10th Cir. 1985),
cert. denied,
478 U.S. 1011, 92 L.Ed.2d
724, 106 S. Ct. 3311 (1986).
The statutory language of ERA is clear that a district court shall enforce the Secretary's orders and that this duty is a ministerial one. 42 U.S.C. 5851(d). An appeal from the Secretary's decision can lie only with the court of appeals. 42 U.S.C. 5851(c)(1).
XVI A 4 Submission of evidence following remand
In Pogue v. United States Dept. of the Navy , 87- ERA-21 (Sec'y Apr. 14, 1994), the ALJ had originally recommended that Complainant be awarded certain remedies and damages. The Secretary had found against Complainant, but the Court of Appeals for the Ninth Circuit reversed the Secretary and remanded the case for a determination of damages, reasonable attorney's fees, and any other remedies that may be warranted. Pogue v. United States Dept. of Labor , 940 F.2d 1287, 1291 (9th Cir. 1991).
On remand, Complainant moved to remand to the ALJ for a determination of damages and appropriate remedies. The Secretary denied this motion, noting that the ALJ had earlier denied Complainant's motion to bifurcate the hearing into hearings on the merits and on damages and remedies. Thus, Complainant had notice that the issues of damages and remedies would be addressed at the hearing, and Complainant in fact did testify about damage to her reputation and mental pain and suffering.
The Secretary also noted the similar case of DeFord v. Tennessee Valley Authority, 81-ERA-1 (Sec'y Aug. 16, 1984), in which the Secretary had denied the complainant's motion for reconsideration to supplement the relief to account for damages occurring after the hearing. In DeFord , the Secretary stated that the complainant "has the burden . . . [at trial] of proving each element of damage including future medical expenses and future pain and suffering." DeFord, slip op. at 2. A hearing record can be reopened to supplement the proof of damages only in a narrow class of cases involving complex and poorly understood conditions. Id . at 3.
[N/E Digest XVI A 4]
SCOPE OF REMAND
In Creekmore v. ABB Power Systems Energy Services, Inc. , 93-ERA-24 (ALJ Dec. 1, 1997), the ALJ had, in an earlier decision, found that reinstatement was not appropriate under the factual scenario, and had recommended front pay instead. The Deputy Secretary (the Secretary having recused himself), however, had found that the front pay award was not appropriate because "the observed tension between the parties at the hearing is not sufficient to demonstrate the impossibility of a productive and amicable working relationship in this case." Creekmore v. ABB Power Systems Energy Services, Inc. , 93-ERA-24, slip op. at 18 (Dep. Sec'y Feb. 14, 1996).
In the instant remand proceeding, Complainant presented additional evidence and argument on the reasonableness of reinstatement. In addition, the ALJ concluded that the Deputy Secretary's standard for evaluating the reinstatement/front pay issue had been overruled in Michaud v. B.S.P. Transport , ARB No. 96-198 (Jan. 6, 1997), which adopted a reasonable person standard to evaluate a complainant's decision to refuse to accept a bona fide offer of reinstatement. The ALJ reviewed the circumstances, concluded that no reasonable person would accept reinstatement, and indicated that under Michaud , it was reasonable for Complainant to receive front pay rather than reinstatement.
Nonetheless, the ALJ found that he was constrained to follow the Deputy Secretary's ruling rejecting the ALJ's earlier award of front pay and remanding the case for the limited purpose of determining back pay and other specified damages. The ALJ indicated that another forum would have to resolve whether the original recommendation of front pay was proper under the new Michaud reasonableness test.
[N/E Digest XVI A 4]
SUPPLEMENTAL PROCEEDINGS ON DAMAGES AFTER ALJ ISSUES
RECOMMENDED DECISION
In McCafferty v. Centerior Energy , 96-ERA-6 (ARB Sept. 24, 1997), Complainants filed a motion for supplemental proceedings with the ALJ for a calculation of damages for a period ending after the ALJ had issued his recommended decision but before he had ruled on attorney's fees. The ALJ denied the motion, ruling that it would lead to repetitive proceedings as additional calculations would be needed when the ARB finally ruled, and that the ARB now had jurisdiction over the entire matter except attorney's fees. The ALJ advised Complainants to request a remand for a hearing on supplemental damages after the ARB had ruled on the merits. The ARB held that the ALJ had stated that appropriate procedure to deal with supplemental proceedings on damages.
SCOPE OF REMAND PROCEEDINGS; ALJ NOT TO DISCUSS VIOLATIONS
WHERE REMAND LIMITED ISSUE STRICTLY TO DAMAGES
[N/E Digest XVI A 4]
In Smith v. Littenberg , 92-ERA-52 (Sec'y Sept. 6, 1995), the Secretary noted that in an earlier decision he had held that either a complainant or a respondent has a right to de novo review by an ALJ -- but that where only the complainant requested review based on the Wage and Hour Administrator's decision not to order some of the relief sought, the respondent by not separately and timely requesting a hearing waived its right to a hearing on the issue of liability. Smith v. Littenberg , 92-ERA-52 (Sec'y June 30, 1993). On remand limited to remedies, the ALJ had discussed whether the Respondents had violated the ERA. The Secretary declined to adopt this discussion because he reiterated his finding that Respondents had conceded liability.
XVI A 5 After-acquired evidence; effect on damages award
In Smith v. Tennessee Valley Authority, 89-ERA-12 (Sec'y Mar. 17, 1995), the ALJ had made an initial recommendation that Complainant was unlawfully discriminated against for engaging in activity protected under the ERA. The Secretary stayed consideration of the recommended decision and order pending issuance of the ALJ's supplemental recommended decision on damages. The Respondent then filed a motion for summary judgment before the ALJ based on evidence discovered during the damages inquiry. The ALJ recommended granting the motion based on the after-acquired evidence decisions of the Sixth Circuit, which held that no relief may be awarded in a discrimination complaint where the complainant engaged in misconduct that would have precluded his or her selection for a position, or engaged in misconduct that would have led to his or her discharge, even where evidence of such misconduct is not discovered until later.
While the matter was pending before the Secretary, the United States Supreme Court issued a decision on a case arising in the Sixth Circuit concerning after-acquired evidence in the context of the Age Discrimination in Employment Act, McKennon v. Nashville Banner Publishing Co., 1995 U.S. LEXIS 699 (Jan. 23, 1995). The Supreme Court held that after-acquired evidence of the employee's wrongdoing is not a complete bar to recovery by the employee. The parties in Smith filed a joint motion to remand for reconsideration by the ALJ.
The Secretary in the remand order highlighted that McKennon included a ruling that after- acquired evidence must be taken into account in determining the appropriate remedy, and that, generally, neither reinstatement nor front pay are appropriate in cases of this type. There is no absolute bar on backpay, with a beginning point in the analysis being a calculation of backpay from the date of unlawful discharge to the date the new information was discovered. Finally, the Secretary noted that McKennon indicated that a trial court is permitted to consider extraordinary equitable circumstances that affect the legitimate interests of either party.
[Nuclear and Environmental Digest XVI A 5]
AFTER ACQUIRED EVIDENCE; VIOLATION OF COMPANY POLICY DOES NOT SUPPORT TRUNCATION OF BACK PAY AWARD WHERE THE POLICY HAD NOT BEEN USED TO SUPPORT DISCIPLINE OF OTHER EMPLOYEES
In Tipton v. Indiana Michigan Power Co. , ARB No. 04-147, ALJ No. 2002-ERA-30 (ARB Sept. 29, 2006), PDF | HTM the Respondent presented evidence it had obtained after the Complainant's termination that the Complainant had violated company e-mail policy, and argued that its liability for back pay should have ended when it discovered this independent basis for firing the Complainant. The ARB recognized that such evidence is relevant to the issue of damages, but reviewing the hearing testimony, concluded that such e-mail violations had not lead in the past to discipline, and therefore, the Respondent's assertion that it would have fired the Complainant for this reason was "tantamount to an acknowledgment that [the Respondent] would have treated the Complainant differently from other employees...." USDOL/OALJ Reporter at 9.
[N/E Digest XVI A 5]
AFTER ACQUIRED EVIDENCE; CALCULATION OF BACK PAY
In McCafferty v. Centerior Energy , 96-ERA-6 (ARB Sept. 24, 1997), Respondent introduced evidence that one Complainant would have been barred from outage work at one of its facilities, although it did not know about this information at the time of the ERA-whistleblower retaliation.
The ARB calculated back pay from the date that Complainant would have been placed for work at the facility to the date that Respondent knew of the information that would have led to his being barred from the facility. See McKennon v. Nashville Banner Pub. Co. , 130 L.Ed.2d 852, 864 (1995) ("The beginning point in the trial court's formulation of a remedy [in an after-acquired evidence situation] should be calculation of back pay from the date of the unlawful discharge to the date the new information was discovered."). Because Respondent did not establish the date it acquired this information, the ARB used the date of the hearing before the ALJ as the end date.
XVI A 5 After acquired evidence may affect relief
In Dean & Lamb v. Houston Lighting & Power Co., 93-ERA-7 and 8 (ALJ Apr. 6, 1995), two Complainants alleged that they were terminated from employment because they had expressed concerns both internally and to the Nuclear Regulatory Commission about breaches of security at a nuclear facility owned and operated by the Respondent.
About one year after his termination from employment with the Respondent, Complainant Dean was discovered apparently to have had possession of a Safeguards Information document that was subject to secure handling procedures. The Respondent moved to dismiss based, first, on a subsection of the whistleblower provision of the ERA that bars redress for a whistleblower who has caused a deliberate violation of any nuclear safety requirement, §210(g), and second, based on the legal doctrine of "after-acquired evidence" which some courts at the time the motion had been filed permitted a complete defense to a discrimination complaint based on the discovery of employee wrongdoing that would have lead to his or her discharge on lawful and legitimate grounds had the employer known of it at the time of the adverse employment action.
In regard to the first ground for dismissal, the ALJ found that there was insufficient evidence to conclude that Dean's possession of the document was a "deliberate" violation of the ERA or the Atomic Energy Act. In regard to the "after acquired evidence" ground for dismissal, the ALJ noted that the Supreme Court had recently issued McKennon v. Nashville Banner Publishing Co. , 115 S. Ct. 879 (1995), in which the Court held that an employee who proves a discriminatory discharge is not barred from all relief if the employer, subsequent to the discharge, discovers evidence of wrongdoing that, by itself, would have led to the employee's discharge on lawful and legitimate grounds had the employer known of it at the time of the discharge.
[ Editor's note: The ALJ did not explicitly discuss what McKennon left intact of the after acquired evidence doctrine: that after acquired evidence of employee wrongdoing is still relevant in regard to the scope of the remedy. It is clear, however, that the ALJ's recommended decision is premised on this part of the after-acquired evidence doctrine.]
The ALJ concluded that although the Complainant's possession of the document was a technical violation, the Respondent would have fired Dean had it known he possessed it (Dean had already been placed on probationary status for prior negligence with Safeguards information).
Thus, although the ALJ found both Dean and Lamb to be entitled to relief, he did not recommend reinstatement of Dean, and recommended limiting Dean's entitlement to back pay to the date the possession of the Safeguards document was discovered and confirmed by the Respondent as a Safeguard's document. In contrast, the ALJ recommended ordering reinstatement of Lamb to his former position or to a substantially equivalent one, and payment of back pay "until the date paid".