In 1991 Congress amended Title VII which protects
individuals from employment discrimination on the basis of race, color,
religion, sex, or national origin, to allow victims of certain
discriminatory conduct to recover greater compensatory damages from
employers. The Americans with Disabilities Act (ADA), which became
effective in 1992, entitled victims of workplace disability discrimination
to the same remedies. Under these statutes a court is authorized to "order
such affirmative action as may be appropriate which may include, but is
not limited to, reinstatement or hiring of employees, with or without back
pay...or any other equitable relief as the court deems appropriate." 42
U.S.C. §2000e-5(g)(1).
Under Title VII and the ADA victims may be entitled to future
pecuniary losses, emotional pain, suffering, inconvenience, mental
anguish, loss of enjoyment of life, and other non-pecuniary losses as
elements of compensation. While Title VII is silent on front pay as
opposed to future pecuniary losses, several federal circuit courts have
held that front pay is an equitable remedy available in lieu of
reinstatement. See Reed v. A.W. Lawrence & Co., Inc. 95 F.3d 1170
(2d Cir. 1996); Winsor v. Hinckley Dodge, Inc. 79 F.3d 996 (10th
Cir. 1996); Weaver v. Casa Gallardo, 922 F.2d 1515 (11th Cir.
1991); Shore v. Federal Express, Inc. 777 F.2d 1155 (6th Cir.
1985).
Another important aspect of damages in federal employment law
is the issue of punitive damages. The Supreme Court's definition of the
standard for awarding punitive damages is whether the defendant acted with
malice, willfulness, or reckless disregard for the plaintiff's protected
rights. Smith v. Wade, 46 U.S. 30 (1983). The Restatement (Second)
of Torts §908(2) sets forth this standard as follows:
Punitive damages can be awarded for conduct that is outrageous,
because of the defendant's evil motive or his reckless indifference to
the rights of others.
New Jersey - Law Against Discrimination - An Overview
The New Jersey Law Against Discrimination (LAD),
codified at N.J.S.A. 10:5-1 et seq., effective April 16, 1945, was
enacted to protect all persons in their civil rights, to prevent and
eliminate practices of discrimination against certain persons and to
create a division on civil rights. The LAD was amended in 1990 to grant a
plaintiff under the act a right to a jury trial. See comments to
N.J.S.A. 10:5-3.
The prevailing party in an action instituted under the New
Jersey LAD is entitled, upon proper proofs, to an award of compensatory
and punitive damages, together with attorneys fees. N.J.S.A. 10:5-3,
10:5-13 and 10:5-27. Murray v. Newark Housing Authority, 311
N.J.Super. 163 (Law Div. 1998). Punitive damages, however, are not
automatically available simply on the basis of that there was a violation
of the LAD. Instead, an employee must show exceptional or outrageous
action to recover such damages. See Maiorino v. Schering-Plough Corp.
302 N.J. Super. 323 (App. Div. 1997) certif. den. 152
N.J. 189 (1997).
Applicability of the Punitive Damages Act
Importantly, it should be emphasized that the
Punitive Damages Act which took effect on October 27, 1995 does not apply
to punitive damage awards under the LAD. N.J.S.A. 2A:15-5.14
caps damages that any defendant is liable to pay at an amount of five
times the amount of compensatory damages or $350,000, whichever is
greater. However, subsection (c) of the statute states that this
shall not apply to causes of action brought pursuant to P.L.1945, c.169
(C.10:5-1 et seq.) which is the LAD. Attached as Exhibit "A" are
proposed jury instructions from an actual case. Please pay
particular attention to pages 14 - 16 that deal with damages.
Tax Implications
In addition, there are certain tax ramifications
which you must keep in mind when handling an employment discrimination
case. A personal injury damage award is not subject to federal or state
income tax. However, the following types of awards are subject to federal
taxation: 1) punitive damages awards, O'Gilvie. v. U.S., 117
S.Ct. 452 (1996) and 26 U.S.C. 104(a)(2), as amended by the
Small Business Protection Act of 1996, Pub. L. 104-188 (sec. 1605); 2)
emotional distress awards, after August 20, 1996, that are in excess of
the amount paid for medical care, 26 U.S.C. 104(a)(2), as amended
by the Small Business Protection Act of 1996, Pu.b. L. 104-188 (sec.
1605); and 3) discrimination awards under Title VII or the Age
Discrimination in Employment Act (ADEA), United States v. Burke,
504 U.S. 229, 112 S.Ct. 1867 (1992) (backpay awards in Title VII cases);
Commissioner v. Schleier, 115 S.Ct. 2159 (1995) (back pay
and liquidated damages awards in ADEA cases.)
The Use of Expert Witnesses
Although expert testimony is often beneficial to a
plaintiff's case, it is not always necessary. The New Jersey Supreme court
upheld an emotional distress award in favor of a LAD pregnancy
discrimination plaintiff who did not produce an expert to corroborate the
alleged emotional distress. Rendine v. Pantzer, 141 N.J.
292, 312-13 (1995). The United States Supreme Court reached a similar
conclusion in a Title VII case. Harris v. Forklift Systems, Inc.
510 U.S. 17, 114 S.Ct. 367 (1993).
Despite these rulings, expert testimony can be invaluable in
helping jurors understand what your client has gone through. You should
consider using psychiatrist and psychologist testimony to address your
client's mental and emotional condition as a result of the discrimination.
These experts can talk about work performance stress, emotional stress and
physical stress which will go a long way toward enhancing the emotional
distress aspect of your case.
You should also use lay witnesses to establish your client's
emotional and/or physical condition both before and after the
discrimination. Family and friends can testify how this event has changed
their loved one and the differences they see on a daily basis. These
witness lend a great deal of credibility to the case and often are the
most important witnesses in the case.
Important New Changes in Damages Effective April 19,
1999
Economic experts should be utilized to establish
past and future lost wages. Under the recent case of DeHanes v. Rothman,
158 N.J. 90 (1999), a properly qualified expert is permitted to testify to
the aggregate net sums of the economic losses that they have calculated.
It is also proper, subject to qualifications concerning cautioning the
jury against uncritical acceptance, to allow experts to introduce into
evidence the exhibits that they have prepared.
Utilization of Charts and Other Demonstrative Aides
Finally, you should consider using charts and "blow
ups" with your experts so that a jury can visually see your client's
damages. Studies have proven that jurors are more likely to retain
information that they are given visually rather than simply verbally.
These blow ups and charts will help instill this information in the
jurors' minds and will assist you in presenting a clear and focused
closing argument.
Table of Contents
A Federal Overview of Employment Law Damages
................ 1
New Jersey - Law Against Discrimination - An Overview ........ 2
Applicability of the Punitive Damages Act
........................... 3