Taxes on Civil Rights Damages Need Adjustment

Posted on February 22, 2009 by Ellen Simon

A recent ruling can have a positive financial impact for winning employees in discrimination cases and both plaintiffs and their counsel should know about it. The Third Circuit decision in Eshelman v. Agere Systems addresses a long term tax problem the employment bar has been struggling with for years. 

Here’s the explanation. Awards in discrimination cases usually entail an amount called “backpay” which compensates the victim for wages lost as a result of the discriminatory conduct. So, for example, if a person was wrongfully discharged because of his race and it took him three years to find a new job, the jury is entitled to award three years of “backpay.”

The problem is that when awarded in a lump sum, the taxes owed are more than they would have been had the employee paid the taxes in three consecutive years of work or in the normal course of employment. This result doesn’t jive with the law which entitles the employee to be restored to the economic position he would have been in but for the employer’s conduct.

The lawyer representing Joan Eshelman, who won this important disability discrimination case discussed  here on February 18th, asked the judge in a post-trial motion for an amount to compensate Eshelman for the negative tax consequences of the lump sum back pay award.

The judge granted the request and the Third Circuit Court of Appeals agreed:

We hold that a district court may, pursuant to its broad equitable powers granted by the ADA, award a prevailing employee an additional sum of money to compensate for the increased tax burden a back pay award may create. Our conclusion is driven by the “make whole” remedial purpose of the anti-discrimination statutes. Without this type of equitable relief in appropriate cases, it would not be possible ‘to restore the employee to the economic status quo that would exist but for the employer’s conduct.'

In order to obtain the additional award, employees must be prepared to prove the loss. In Eshelman, the plaintiff provided an affidavit from an economic expert who calculated the amount of tax effect, the applicable tax rates, and Eshelman’s tax returns for the years in question, a method of proof which was approved by the court.

Several years ago, as reported in Lawyers Weekly USA, we got the trial court  in one of our cases to instruct the jury on this issue. In other words, the jury charge included language informing them that the award to the plaintiff would be taxed at a higher rate as a result of the lump sum award than if the plaintiff employee had collected the same amount in income over several years. We provided economic testimony on the issue so that the jury had the appropriate calculations.

Groups advocating for both employers and employees have been trying to address this tax problem for years. We now have precedent to address this issue on a case by case basis. When the Civil Rights Tax Relief Act is reintroduced, Congress should pass it and rectify this situation once and for all.

Image:hffo.cuna.org

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Federal Bench is Biased Against Discrimination Cases

Posted on February 19, 2009 by Ellen Simon

The Wall Street Journal  Law Blog  today discussed a Wall Street Journal article about the disproportionate rate at which plaintiffs' employment  discrimination cases are lost in federal court and asked: Is the federal bench biased against discrimination cases?  As reported:

From 1979 through 2006, federal plaintiffs won 15% of job-discrimination cases. By comparison, plaintiffs in other cases not involving alleged job discrimination enjoyed a 51% win rate, according to this study due to be published later this month by the Harvard Law & Policy Review, the official journal of the American Constitution Society for Law and Policy. 

This is no coincidence. To those of us who have been representing employees in discrimination cases for many years the data comes as no surprise.  We know this because we have lived it. 

Our experience is that many federal judges are hostile to our cases and so are their law clerks.  All you have to do is read the comments to the WSJ Law Blog  today where the former federal law clerk refers to these cases as "dogs" to get a flavor of the attitude.

It is indisputable that far too many federal judges decide to disregard the Federal Rules of Civil Procedure and Evidence when it comes ruling on discrimination cases:

  • Rather than let the juries decide when material facts are in dispute as the rules require, judges routinely decide to parse through the evidence, weigh each piece separately, and decide why each is not enough to support a claim.  
  • They routinely and improperly assess the credibility of the testimony, a task specifically assigned to juries not judges.
  • They routinely disregard the employee's evidence, and that of their co-workers, while giving credence to the self serving evidence of the employer. 
  • Even when there is direct evidence of discrimination -- like "you're too old to do this job" -- or "women just be at home with their kids"-- it will often be dismissed as a "stray remark" too remote in time to be considered, or not made by someone influential enough in the decision.
  • In sexual harassment cases, the judges often decide that the harassment may indeed have occurred but that it wasn't severe enough for a jury to consider.

These are just a few of the improprieties that are regularly faced in representing victims of discrimination I can think of off the top of my head   I'm sure I could be here all day adding to this list if there was a reason to do so.

Every lawyer knows, and the federal rules specifically state, that  judges are supposed to grant summary judgment only when there is no genuine issue as to any material fact. Inferences are supposed to be made in favor of the employee, not the employer when the employer requests that the case be thrown out.  All relevant evidence is supposed to considered by the jury. The rules are supposed to be interpreted liberally, not conservatively which means in favor of the employee in these circumstances, not the employer.

The Supreme Court of the United States made all of this abundantly clear in the Reeves v. Sanderson Plumbing case almost ten years ago,  a case in which the Court of Appeals ignored the evidence presented by the plaintiff. (including the remark that he "looked so old he must have come over on the Mayflower" ) In reversing, the Reeves Court plainly set forth the appropriate standards for review:

    • The court must draw all reasonable inferences in favor of the nonmoving party, and it may not make credibility determinations or weigh the evidence.

    • Credibility determinations, the weighing of the evidence, and the drawing of legitimate inferences from the facts are jury functions, not those of a judge.

    •  Although the court should review the record as a whole, it must disregard all evidence favorable to the moving party that the jury is not required to believe.

    • The court should give credence to the evidence favoring the nonmovant as well as that “evidence supporting the moving party that is uncontradicted and unimpeached, at least to the extent that that evidence comes from disinterested witnesses.

In spite of this very clear language, it  seems like there are a whole lot of federal judges who can't seem to break  their old patterns. They need to get rid of those pre-Reeves canned opinions used to dump these cases, and do their duty to follow precedent set forth by the United States Supreme Court.  That's really not too much to expect.

Discrimination is hard to prove, but even with the proof of disparate treatment,  stereotyping, or racially and sexually charged remarks, many federal judges simply  decide that these particular parties are not entitled to their day in court.

Is it because there are not enough women and minorities on the federal bench?  Is it because they are insensitive to discrimination?  Is it because they care more about reducing the size of their dockets than the administration of justice? Is it because they are simply pro-business and anti-little guy? All we know is that  whatever the reason, the result is quite often arbitrary , erroneous,  and unfair, and it's about time that the discrimination is exposed.

 image: http://images.google.com/imgres?imgurl=http://www.fotosearch.com/comp/BDX/BDX341/judge-handing-down_~bxp64659.jpg&im
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Cancer Victim Wins Discrimination Case

Posted on February 18, 2009 by Ellen Simon

Three cheers for the Third Circuit Court of Appeals. In Eshelman v. Agere Systems, Inc., the Court issued a much needed opinion in favor of a cancer victim under the American with Disabilities Act . 

While it might seem obvious to some that discriminating against people who have cancer is against the law, it’s not all that obvious to most courts.

I represented a woman named Christine Hood several years back who was fired for going to chemotherapy treatments. Though it sounds outrageous to most, both the trial court and the court of appeals threw out the case finding that Chris was not protected under the law (the Ohio anti-discrimination statute).

The case, Hood v. Diamond Products, Inc. went all  the way to the Ohio Supreme Court which ultimately found that yes indeed, "cancer could be considered a handicap."  The decision allowed Ms. Hood to have her day in court and proceed with her claim (it took ten years). So while it saddened me to see that cancer victims are still fighting for their right to be protected from discrimination, it warmed my heart to read about this recent victory. 

Joan Eshelman was a twenty year employee diagnosed with and treated for breast cancer. As a side effect of her chemotherapy Eshelman suffered  a cognitive dysfunction resulting in short term memory loss.To compensate, she carried a notebook  and also made arrangements for help with appointments which required driving.

With these adjustments, the parties agreed that she excelled at her job and she continued to receive outstanding performance evaluations. In spite of her strong record, Eshelman was selected for layoff  during a company restructuring in 2001.

Eshelman sued under the American with Disabilities Act. She didn’t allege that she was disabled, but instead claimed that she  was terminated  based on her employer’s belief that she was disabled, or because of her record of disability. The jury found in her favor and awarded $170,000 in back pay and $30,000 in compensatory damages in 2005. On appeal, the Third Circuit affirmed the verdict on January 30,2009.

Because Bailey's testimony afforded the jury a sufficient basis to conclude that Agere slated Eshelman for termination based on its perception -- whether accurate or not -- that her cancer-related memory problems rendered her unfit for any job . . . we must not disturb the verdict insofar as it is based on  a "regarded as" disabled theory.

Even though laws prohibiting disability discrimination have been around since 1974, it’s still really tough for cancer victims to fight prejudice in the workplace. The New York Times reported today that cancer surviviors are 37 percent more likely to be unemployed than healthy peers. That’s why this new Third Circuit decision is such an important case. People with cancer are often discriminated against but are unable to meet the requirement of permanent disability under the ADA and a result their cases are often dismissed. The ADA prohibits discrimination of those “regarded as” having a disability, or having “a record of” a disability in addition to those individuals who are actually disabled.

This case sets forth a clear and well reasoned decision for cancer victims seeking to challenge discriminatory employment decisions which affect their lives. The new ADA amendments should also help.

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Sexual Harassment Not Observed by Victim Can be Used Against Employer

Posted on February 16, 2009 by Ellen Simon

Can a plaintiff support her sexual harassment claim with evidence of sexual harassment she did not observe? According to the Fourth Circuit Court of Appeals in Ziskie v. Mineta the answer is yes.

Cynthia Ziskie sued the Federal Aviation Administration for creating a sexually hostile work environment.

In support of her claim, Ziskie submitted affidavits from co-workers containing examples of crude and inappropriate behavior (i.e. making fun of pregnant worker’s breasts, commenting that women should be home taking care of children instead of working, calling a woman "an alien with big boobs" , calling a woman a “stupidvisor”, telling a female supervisor to “fuck off ”, etc.)

The District Court threw out Ziskie’s case holding that Ziskie’s sexual harassment was not severe enough to support the claim. The District Court refused to consider the affidavits of the other female employees and would only consider what Ziskie personally experienced. In reversing the decision of the District Court, the Fourth Circuit Court of Appeals said:

 When examining all the circumstances of a plaintiff’s workplace environment, evidence about how other employees were treated in that same workplace can be probative of whether the environment was indeed a sexually hostile one, even if the plaintiff did not witness the conduct herself. Hostile conduct directed toward a plaintiff that might of itself be interpreted as isolated or unrelated to gender might look different in light of evidence that a number of women experienced similar treatment.

The opinion noted that the district court’s “blanket refusal” to consider the testimony of the other women was inconsistent with the Federal Rules of of Civil Procedure  and Evidence which require that all relevant evidence be considered:

Even if  Ziskie did not witness the conduct  described herein, it is nonetheless relevant because it could contribute to the evidence offered to show that the workplace environment at the Washington Center was indeed a hostile one.

This is a hugely important decision for victims of sexual harassment. In order to prevail in these cases, the plaintiff must prove that the harassment was severe or pervasive. Far too often claims of sexual harassment fail, as did this one initially, because the judge finds that the victim’s testimony alone does not meet that burden. In other words, yes some harassment may have happened, but it wasn’t “severe or pervasive” so you lose and the case is thrown out.

This decision, which allows the testimony of the co-workers to establish the severity or pervasiveness of the sexual hostility in the workplace, will go a long way in helping women assert their rights.     

image: http://www.worktrauma.org/CKF60026.JPG

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Supreme Court Surprise

Posted on February 7, 2009 by Ellen Simon

 This post was originally published in Today's Workplace www.workplacefairness.org on September 10, 2008

Three years ago, I was interviewed by Court TV about the John Roberts nomination. In preparation, I painstakingly reviewed his record. In so doing, I reached the unpleasant conclusion that Roberts was philosophically opposed to civil rights and other legislation for the public good which Roberts deemed to an improper exercise of congressional power.

 The Roberts point of view, it seemed to me, was that since Congress should not have authored this legislation to begin with, it must be as narrowly construed as possible. This was the only logic I could discern which connected a long record of what appeared to be outright hostility to plaintiffs in civil rights cases.

 I was extremely worried about what might happen with Roberts at the helm of the Court. The Alito nomination, with a record equally as hostile to plaintiffs in civil rights cases as that of Roberts, made me feel even more concerned. The harsh reality of Thomas and Scalia combing with these forces was a truly frightening prospect.

But the fact remains; we never really know with any precision what one will do after ascension to the Supreme Court actually occurs. Nothing surprised me more than the Court’s decision this past year in the decision of Sprint v Mendelsohn 128 S. Ct. 1140 (2008) – and it was a very pleasant surprise indeed. 

Civil rights cases are hard to prove. There is seldom direct evidence of discrimination. People don’t go around saying, “we’re not going to hire you because you’re black,” or “we’re firing you because you’re old.” More often than not, we have to prove our cases by circumstantial evidence. Part of that evidence is proving that the reason give by the employer’s decision to fire, or not hire, is not true or not believable.

Other circumstantial evidence routinely offered is that the same thing or something similar happened to co-employees. The admissibility of this kind of evidence, labeled by the defense bar as “me too evidence” has been a battleground since we started trying to prove these cases over a quarter century ago.

Lawyers who represent employees want to call other employees as witnesses to testify about the discrimination that happened to them at the same company. Simply put, these lawyers contend that co-employee testimony is circumstantial evidence that this company discriminated in this particular case because it did the same thing to other employees. In their view, the jury ought to be able to consider this evidence and give it whatever weight they choose in making the ultimate determination as to whether the plaintiff was discriminated against or not.   Lawyers who represent companies don’t want those witnesses to take the stand. They say that what happened to others is not relevant, proves nothing, is confusing and prejudicial, and will result in a bunch of mini-trials about other people who are not parties to the case. 

Some courts have let the evidence in. Some courts have barred it. The significance of this kind of ruling can not be overstated since one’s ability to put on co-employee testimony before a jury can make the difference as to whether the case will be won or lost. For example, where a story about why one thirty year employee got terminated may seem plausible in isolation, it certainly seems less plausible when there are five or six other long term employees whose performance was suddenly not good enough for a company where each has worked without incident for twenty or thirty years. 

Ellen Mendelsohn was terminated in a reduction of the workforce by Sprint, a company where she had worked for many years. She claimed age discrimination. Mendelsohn’s lawyer attempted to introduce evidence from five other older workers who also claimed they were discriminated against because of their age when they were terminated. Three of the five were prepared to testify about denigrating remarks made about older workers. Another claimed that he was banned from working at Sprint because of his age. One was going to testify that he was required to get permission before hiring anyone over the age of forty. None were in the same department as Mendelsohn. The judge ruled the evidence inadmissible because there was no shared decision maker and no temporal proximity. The Tenth Circuit Court of Appeals reversed and held that the evidence was admissible.

The Supreme Court accepted the case. In a decision which has a profound effect on the future of employment discrimination cases, the Court held that the trial court judge was wrong. The unanimous decision, shockingly authored by Justice Thomas, stated that a blanket rule of law excluding evidence of discrimination from co-workers in a discrimination case was wrong as a matter of law. The Court relied in its opinion on the Federal Rules of Evidence with respect to relevance, admissibility, and prejudice which vests the trial court with broad discretion on these matters.  The trial court should determine whether the evidence has probative value and whether sufficient prejudice or confusion may outweigh it. It is a fundamental and liberal standard of evidence which leans toward the admission of evidence given the proper context and foundation.

 So while the decision did not endorse the 10th’Circuit’s view in concluding that the evidence was admissible, the opinion is earth shattering in the world of employment law for what it didn’t say – that is, that the evidence was not per se inadmissible.    In other words, the Court ruled, “me too evidence” should be treated just like any other evidence in any other case.

It may seem odd that it took a pronouncement of the Supreme Court to let judges and lawyers know that the same rules that apply to evidence in all civil cases also apply in discrimination cases. But in the tortured history of discrimination litigation, the same rules unfortunately have not been applied (i.e. the granting of summary judgment where material facts are in dispute, the improper weighing of evidence by the court instead of the jury)

 An opinion by the Supreme Court which held the evidence inadmissible would have been a huge blow to employees faced with the already formidable task of proving that discrimination has occurred. Fortunately, the Supreme Court in an exceedingly pleasant surprise made an important inroad just by reciting and reinforcing the rules of evidence and thereby neutralizing the playing field.

image: http://www.biojobblog.com/surprise(1).jpg
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What's Going on with Male on Male Sexual Harassment?

Posted on January 13, 2009 by Ellen Simon

Why are we reading so much about male on male sexual harassment lately? 

Just last week the New York Times reported that Knicks basketball player, Ed Curry, was accused of sexual harassment by his former driver. On the same day, the ABA Journal reported  a story about a Nixon Peabody lawyer who sued for discrimination stating that he was  was regularly taunted, ridiculed, and subjected to partner's and co-workers  homophobic statements and comments about oral sex during his time at the law firm.

 A few days earlier, the 6th Circuit Court of Appeals decided, in Patterson v. Hudson Area Schools, that a school district could be held liable for its failure to stop the harassment of one of its students who was  taunted and victimized by name calling (ie. "queer " "fagot"  "pig")  and pushing  and shoving over a period of years all which escalated into an episode of sexual assault in the locker room.

Is male on male sexual harassment on the rise?  Are men more willing to report the harassment? Was male on male sexual harassment reported but were the courts unwilling to recognize it?

I tried one of the first male on male sexual harassment cases in the country in 1998 -- Hampel v. Food Ingredients Specialties, Inc. . The plaintiff Laszlo Hampel worked at FIS- Nestle in Solon, Ohio  in the production line as a cook.  In short,  the case involved one disgusting outburst of sexual provocation by my client's supervisor,  followed by reporting of the incident, a failure to act on the part of the company to take prompt, remedial action (required under the law) continued harassment by the supervisor, and homicidal behavior on the part of my client. These kinds of cases were simply unheard of ten years ago. 

Shortly before the trial, my father asked my what kind of case I was working on.  When I told him he responded,  "I wouldn't give you five dollars for that case. Why didn't he just punch him in the nose."  While my father's reaction certainly concerned me, fortunately the jury did not see it that way and awarded $1.6 million dollars the majority of which constituted punitive damages.

The case was of course appealed. The  Ohio Supreme Court  decision in Hampel   recognized male on male sexual harassment as a valid claim in line with Oncale v Sundowner Offshore Services, Inc   a case recently decided by the  United States Supreme Court. Interestingly though,  it  held that there  was no sexual harassment in our case, a decision which to this day I completely fail to understand no matter how many times I read it.  Fortunately for Mr. Hampel, the Court affirmed the verdict in sustaining the claim for intentional infliction of emotional distress.

So I come back to, how come we practice for over twenty five years and we see little to no cases of male on male sexual harassment and then we see three in  in one week? Does it have  anything to do with my father's "why doesn't he just punch him in the nose" method of resolving the problem?

Let's assume that employees out there are simply more aware of their rights and courts are more enlightened.

Images: http://www.gpac.org/images/PressReleasePics/maleworkplace.jpg and http://img.dailymail.co.uk/i/pix/2007/10_04/bullyingDM2810_468x720.jpg

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Firing Because of Abortion is Illegal Gender Discrimination

Posted on January 12, 2009 by Ellen Simon

What happens when a woman gets fired because she has an abortion? The Third Circuit Court of Appeals, in Doe v. C.A.R.S Protection Plus decided that the discharge was gender discrimination and reversed the lower court which had thrown out the case.

The Jane Doe plaintiff worked as a graphics designer for CARS, a car insurance business with offices in several states. During her pregnancy, Doe learned that the baby had severe deformities. In accordance with her physician’s recommendation she and her husband chose to terminate the pregnancy.

Doe’s husband called CARS on his wife's behalf and asked for a week’s vacation for her.  According to his testimony  the request was approved.  CARS discharged Doe several days later  -- on the same day as the baby’s funeral.

In a question of first impression for the Third Circuit, the Court held that the Pregnancy Discrimination Act’s coverage extended to women who elected to terminate their pregnancies. In so doing, the Court relied on:

  1. Precedent from the Sixth Circuit Court of Appeals in Turic v. Holland Hospitality , Inc.
  2. EEOC guidelines ( which state that “a woman who is affected by pregnancy and related conditions must be treated the same as all other employee … and is therefore protected against such practices as being fired merely because she is pregnant or has had an abortion”) ;and
  3. Language from the legislative history of the Pregnancy Discrimination Act ( “no employer may fire or refuse to hire a woman simply because she has exercised her right to have an abortion” and concluded:

Clearly, the plain language of the statute, together with the legislative history and the EEOC guidelines, support a conclusion that an employer may  not discriminate against a woman employer because she has exercised her right to have an abortion.

In comparing Doe to other employees who were temporarily disabled, the Court found evidence that Doe had been treated differently when she was fired instead of given leave.

Although we have held that the 'PDA does not require that employers treat pregnant employees better than other temporarily disabled employees '... the PDA does require that employers treat pregnant employees no worse.

The judgment of the district court was reversed and Jane Doe was given the right to have her day in court.

The opinion is certainly an important one for all working women. There is certainly no room in the law for discrimination in the workplace based upon a woman’s Constitutional right of privacy and freedom of choice. Fortunately there are some courts which agree.

Image: http://www.methodist.org.uk/static/interface/if_distressedwoman_05.07.jpg

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