Thursday, April 28, 2016

Let’s not forget about damages when litigating our cases

When employers are sued, they do not put enough thought into damages. The typical response is, “We didn’t discriminate; we aren't liable.” But, the reality is, unless you win a case on summary judgment (sadly, an unlikely result), you need to think about what a case is potentially worth and how much a plaintiff can potentially cover. For starters, it will drive settlement discussions. Moreover, and more importantly, if a case does not settle, you will want to whittle that number down as low as possible to limit the potential exposure at (gasp) trial.

Damages in employment cases come in two basic flavors (not counting punitive damages and attorneys’ fees — we’ll save a discussion of those for a future post):
  • Economic damages: front pay (money awarded for lost compensation during the period between judgment and reinstatement or in lieu of reinstatement) and back pay (money awarded for lost compensation during the period between the date of injury and the date on which damages are determined), which are uncapped.
  • Non-economic damages: emotional distress, pain and suffering, reputational harm, and other “soft” losses, which Title VII caps based on the size of the employer, with a maximum of $300,000 available against the largest employers.
Recently, the 6th Circuit decided an important case on the former — when a plaintiff can, and cannot, recover back pay from a former employer in a discrimination case.

The plaintiff in Szeinbach v. Ohio State alleged that she was retaliated against after she complained to the dean that a colleague was favoring Indian students. Despite the reprisals she alleged to have suffered following her complaints, Dr. Szeinbach never quit her job, nor did the university terminate her. She claimed, however, that the controversy prevented her from focusing on looking for new employment. Her expert witness testified that had she found a new job, she would have earned an additional $213,368 at a different school.

At trial, the jury returned a verdict of $513,368. The first $300,000 represented compensatory damages for emotional suffering, harm to her professional reputation, and other losses (capped at that amount by Title VII’s damage caps on non-economic harm); the remaining $213,368 represented back pay to account for the higher income that Dr. Szeinbach allegedly would have earned in the absence of OSU’s illegal conduct.

OSU claimed that the court correctly threw out the $213,368 portion of the verdict. It argued that because Dr. Szeinbach never left her position at OSU, it was too speculative to consider lost earnings at another job as back pay; therefore, that piece of the verdict is non-economic and falls under Title VII’s $300,000 damage cap.

The 6th Circuit agreed. It concluded that while lost employment opportunities with a new employer properly could be included in the calculation of back pay, Dr. Szeinbach’s claim to that award at trial was too speculative. While she applied for positions at other universities, she never interviewed or received job offers. In the court’s words, “Her claim to back pay, in short, is based on conjecture and speculation about her future job opportunities that are legally insufficient to justify her requested relief.”

This case serves as a good reminder not to forget about damages in your cases. In Szeinbach, it saved OSU more than $200,000. While no employer likes to lose a case, if you have to lose, you might as well lose as little as possible.