Well, at least compensatory and punitive damages are capped in discrimination cases, right? Not so fast, Pennsylvania employers!

What's the worst case scenario in a discrimination claim? In terms of liability, federal discrimination claims under the ADA and Title VII have a statutory cap for compensatory damages (like emotional distress) and punitive damages combined. See, 42 USC s1981a.

It depends on the size of the employer:

• <101 employees: $50,000
• 101 - 200 employees: $100,000
• 201-500 employees: $200,000
• >500 employees: $300,000

In Pennsylvania (and I suspect other jurisdictions as well), plaintiffs can get around that cap by allocating damages to a state discrimination statute.

Not official use.

The PHRA does not allow for punitive damages. Hoy v. Angelone, 720 A.2d 745, 749 (Pa. 1998) But, it allows for unlimited emotional distress damages. Let's say a jury verdict in a sex discrimination case includes:

• $2 million in emotional distress; and 
• $300,000 in punitive damages.

The employer has more than 500 employees. Now, the employer hopes that the $2.3 million gets knocked down to $300,000 (the statutory cap), right! What a relief that would be!

Not so fast! The Court could allocate the emotional
distress to the PHRA claim, and the punitive damages to the Title VII claim. The result would be $2 million for emotional distress under the PHRA, and $300,000 (the statutory cap) in punitive damages under Title VII. Instead of a $300,000 total, the employer is still getting hit with the full $2.3 million total! 

This plaintiff-friendly allocation method received the express approval of the Third Circuit Court of Appeals in Gagliardo v. Connaught Labs., 311 F.3d 565 (3d Cir. 2002). Suddenly, that cap is not quite as useful as many employers think it is.  

Can plaintiffs recover punitive and liquidated damages under the Pennsylvania Human Relations Act?

Can plaintiffs recover punitive and liquidated damages under the Pennsylvania Human Relations Act (PHRA)? That's actually two separate questions. Let's start with the easy one.

Punitive Damages

The Pennsylvania Supreme Court has clearly said that punitive damages are not available under the PHRA. Hoy v. Angelone, 720 A.2d 745 (Pa. 1998).

Liquidated Damages

Liquidated damages are a little murkier. Some statutes expressly provide for liquidated damages. For example, an ADEA plaintiff can recover liquidated damages equal to their back pay (i.e. doubling their back pay award).

Under the case law, liquidated damages under the PHRA seem like a long shot. The gist of the PA Supreme Court's holding in Hoy is that the PHRA provides remedial damages and not punitive damages. Given that liquidated damages are punitive in nature (and not merely remedial), then courts could (and have) conclude that liquidated damages are not available:

[B]oth the Supreme Court and Third Circuit have held, albeit in the context of the ADEA, that liquidated damages are intended to be punitive in nature . . . . Given these conclusions, Plaintiffs are not entitled to the submission of a liquidated damages charge to the jury on their PHRA claims.

Potoski v. Wilkes Univ., No. 3:06-CV-2057, 2010 U.S. Dist. LEXIS 99731, at *8-9 (M.D. Pa. Sep. 22, 2010).

Some courts, however, have adopted more of a we-don't-know so let's wait and see approach:

[A]nother court within the Third Circuit held that the defendant was not entitled to dismissal of the plaintiff's PHRA liquidated damages claim at the early stage of proceedings because no case law established that "liquidated damages are excluded from 'any other legal or equitable relief' expressly authorized in the PHRA." Craig v. Thomas Jefferson University, Civil Action No. 08-4165, 2009 U.S. Dist. LEXIS 57819, 2009 WL 2038147, at *9 (E.D. Pa. July 7, 2009). Because the issue is not as straight forward as Defendants assert and because Defendants' sparse briefing does not sufficiently address matters this Court considers relevant to deciding the issue, we will follow Craig's path of not striking the demand for liquidated damages at the motion to dismiss stage. 

Bellas v. WVHCS Retention Co., 2012 U.S. Dist. LEXIS 128133, *19, 96 Empl. Prac. Dec. (CCH) P44,642, 2012 WL 3961227 (M.D. Pa. September 10, 2012). Even that is hardly a ringing endorsement.

SCOTUS will not review 9-figure wage and hour judgment against Wal-Mart

I've covered this case before... it has been working its way through the Pennsylvania court system for a while. A bunch (like 187,000) of Wal-Mart employees filed a class action lawsuit under the Pennsylvania Wage Payment and Collection Law claiming that they were not paid for missed breaks and time spent working during their breaks.

Corporate logo used in discussion of
Wal-Mart. Not official use.

• The end result at the trial court was a $187 million judgment against Wal-Mart. The plaintiffs extrapolated their damages across the entire class based on data for only some of the employees. 
• The Superior Court largely upheld that judgment (with a little trimming for a mathematical error and some reduction of attorney's fees). 
• On appeal, the Pennsylvania Supreme Court affirmed. I wrote a case summary for the PBA Civil Litigation Section Update: Pennsylvania Supreme Court Affirms Extrapolation of Damages Evidence in Wage and Hour Class Action. 
• Wal-Mart sought U.S. Supreme Court review. Today, the Supreme Court denied that request (order here). 

In Wal-Mart v. Dukes (2011), the U.S. Supreme Court reversed the certification of a class of over one million Wal-Mart employees in a discrimination case absent an employment practice generally applicable to all of them. The Court noted that a "Trial by Formula" was insufficient. 

Fast-forward to 2016, in Tyson Foods, Inc. v. Bouaphakeo, and the Supreme Court seems just fine with using a "trial by formula" to assess damages in a wage and hour collective/class action. The plaintiffs used a sample of a few dozen employees, to extrapolate overtime worked for thousands of employees. No problem!

Given Tyson Foods, it should come as no surprise that the Supreme Court denied cert. in the Pennsylvania Wal-Mart case. They have apparently lost interest in protecting employers from "trial by formula" - at least in the context of  calculating damages in wage and hour cases. 

$185 Million Pregnancy Discrimination Award

Discriminating against pregnant employees or employees who oppose discrimination is generally unlawful. That's not news. A California federal jury awarded a woman who worked for AutoZone $872,719 in compensatory damages ($393,759 for past economic loss earnings, $228,960 for future economic loss earnings and $250,000 for emotional distress).Well, that's pretty interesting, but I don't know that I'd call it big news. Oh, one last thing . . .

The jury awarded the woman $185 million in punitive damages!

Now that's newsworthy!

Sidenote: Can we declare a moratorium on the "185 million reasons to . . . . " headlines?

Circuit Split: Attorney's Fees Adjusted for Settlement Offers?

Many employment law statutes allow successful plaintiffs to recover attorney's fees. The amount is set by the court. What happens when a party rejects a settlement offer, and is ultimately successful but not as successful as the prior settlement offer? Can the court take that into consideration? Jeffrey Campololongo picked up on a circuit split on this issue, and wrote about it in Circuit Split on Considering Prior Settlement Offers in Attorney Fees in The Legal Intelligencer (sub. req'd).

The Third Circuit held in Lohman v. Duryea Borough, 574 F.3d 163 (3d Cir. 2009) that the Court could consider prior settlement offers:

Lohman rejected a settlement offer of $75,000.00, an offer more than six times the amount awarded by the jury. Lohman offers no explanation as to why his rejection of this amount is not probative of the amount he sought in damages. Nor does he offer a reason as to why a comparison between the rejected $75,000.00 offer and the ultimate $12,205.00 jury award would not be an indication of his success in the litigation as a whole.

The Court reduced the attorney's fees from the requested amount of $112,883 to a mere $30,000 in fees. Even the lodestar amount was $62,986. In other words, the Court cut the fees . . . by a lot . . . based in part on the prior settlement offer.

Earlier this month, the First Circuit held the other way in Diaz v. Jiten Hotel Mgmt., No. 11-2400 (1st Cir. Oct. 12, 2012). The party rejected a $75,000 settlement offer and proceeded to trial . . . where she won $7,650 in compensatory damages. The trial court determined that the fees should be further adjusted downward.

The [trial] court pointed out that if Diaz had accepted Jiten's $75,000 settlement offer, she would have received more personally and her attorney would have only received about $25,000, and that it created a dangerous incentive to take low value claims to trial instead of settling.

But the First Circuit disagreed, "we conclude the district court's fee reduction improperly focused on Diaz's rejection of the settlement offer." The Court remanded with the instruction to follow the 12 Hensley factors, a reference to Hensley v. Eckerhart, 461 U.S. 424 (1983):

The twelve factors are: (1) the time and labor required; (2) the novelty and difficulty of the questions; (3) the skill requisite to perform the legal service properly; (4) the preclusion of employment by the attorney due to acceptance of the case; (5) the customary fee; (6) whether the fee is fixed or contingent; (7) time limitations imposed by the client or the circumstances; (8) the amount involved and the results obtained; (9) the experience, reputation, and ability of the attorneys; (10) the “undesirability” of the case; (11) the nature and length of the professional relationship with the client; and (12) awards in similar cases.

I don't see prior settlements in there (arguably "results obtained"). So, there appears to be a circuit split. Will SCOTUS take up the case? We shall see . . . .

Image: Third Circuit seal used in commentary on Third Circuit. Not official use.