Retaliation law in recent years has been one of those developing areas, and much more often than not the movement in the case law has been in the direction of expanding protections for employees against retaliation. The US Supreme Court especially has focused on retaliation law, and has “plugged gaps” in the law for federal employees to include protection for retaliation claims, has lowered the threshold for what is actionable retaliation, and has broadened the definition of “opposition” which entitles employees to protection.

One of the dangers for employers from retaliation claims is that, after an employee complains about alleged discrimination, the employer may be guilty of retaliation even if a jury decides there was no discrimination to support the employee’s original complaint. An employee may succeed in a retaliation claim as long as his complaint was made in good faith, even if the employee was wrong about the complaint of discrimination.

In the prior 2 years at the annual conference for WVELA, I spoke and wrote articles on awards of attorneys’ fees under employment discrimination laws, and on age discrimination.

Mr. Rice was represented by Mark Atkinson and Paul Frampton at Atkinson & Polak, PLLC, and the defendants were represented by Roger Wolfe at Jackson & Kelly PLLC in Charleston, and Kevin Hyde at Foley & Lardner, LLP in Jacksonville, Florida.

Here is a quick run-down of what was awarded in the case:

• Back pay: $142,659 awarded by jury.
• Pre-judgment interest: $11,791.84 from date of termination through trial.
• Front pay: $1,991,332.00 awarded by jury (from roughly age 48 through retirement age at 67).
• Emotional distress: $0.
• Punitive damages: Jury did not answer question affirmatively which would have allowed award of punitive damages.
• Total judgment based on jury’s verdict: $2,145,782.84, plus post-judgment interest on that amount at 7% per annum.
• Attorneys’ fees: $117,235 awarded by judge (based on $450 an hour for Mark Atkinson and $300 per hour for Paul Frampton).
• Litigation expenses: $20,324.16 awarded by judge.
• Total award: $2,283,342.00 (based on jury verdict, pre-judgment interest, attorneys’ fees and expenses) plus post-judgment interest at 7% per annum.

The Rice case illustrates the risk employers face when they terminate an older, good, long-standing employee, and replace him or her with a much younger person with little or no experience for the employer.

What Happened?

Mr. Rice at the time of his termination (in 2009) was age 47 and had worked for Burke-Parsons-Bowlby Corporation for 24 years. When Mr. Rice was terminated he was the corporate controller.

In the year or so preceding Mr. Rice’s termination, in 2008, Burke-Parsons-Bowlby Corporation was acquired by Stella-Jones, Inc.  Then on February 16, 2009, the company hired Jeremy Stover, age 27-28, as the "assistant controller" under Mr. Rice. There was testimony that Mr. Rice was instructed to teach Mr. Stover "everything you do". There was also evidence that, between the time of the decision to terminate Mr. Rice and the actual termination, there was a significant company audit which required Mr. Rice’s expertise.

The kicker for the defendants was that apparently the company made the decision to terminate Mr. Rice’s employment before hiring younger Mr. Stover. So the sequence of events, according to evidence presented by Mr. Rice,  was: purchase of the old company by Stella-Jones, decision to terminate 47-year-old Mr. Rice (with 24 years of experience), hiring of Mr. Stover at age 27 or 28 (with no experience with the company), getting Mr. Rice to train Mr. Stover, completing the company audit with Mr. Rice’s help, then firing 47-year-old Mr. Rice, and then getting 28 year old Mr. Stover to take over the bulk of Mr. Rice’s job.

Evidence of Discrimination: Conflicting Explanations for the Termination

For proving an age discrimination claim (or, for that matter, any other kind of discrimination claim), one of the standard threads of evidence which supports an inference of discrimination is proof of conflicting explanations by the employer for the reason for the employment decision.

In Mr. Rice’s case, there were allegations that the company had conflicting versions of why it terminated Mr. Rice. The company originally claimed that part of the reason for terminating Mr. Rice was his inadequate performance quality. Then later, the company apparently shifted to the explanation that it simply eliminated Mr. Rice’s position.

Evidence of Discrimination: Replacing an Older Worker with a Substantially Younger One

Another type of evidence which is considered to be supportive of a finding of discrimination is the replacement of the plaintiff-employee in the "protected class" with an employee outside the protected class.

For his age discrimination claim, Mr. Rice was age 47, which meant that he satisfied the statutory requirement for being protected on the basis of age — he was 40 years or older. Mr. Rice was replaced by an employee substantially younger than him, Mr. Stover at age 27 or 28.

The courts have concluded that, for age discrimination, the inference of discrimination arises if the replacement employee is "substantially younger" than the plaintiff, even if the replacement employee is over 40 years of age. In Mr. Rice’s case there were no complications on that issue — Mr. Stover was both under age 40 and substantially younger than Mr. Rice (about 20 years younger).

There was a dispute over whether Mr. Stover in fact "replaced" Mr. Rice, but the following facts were in the record which could have supported the conclusion that the younger Mr. Stover replaced the older Mr. Rice: Mr. Rice was the corporate controller, a decision was made to terminate Mr. Rice, Mr. Stover was hired as "assistant controller", management instructed Mr. Rice to teach Mr. Stover "everything you do", the company then conducted a significant audit (with Mr. Rice’s assistance) to a successful conclusion, the company then terminated Mr. Rice, and Mr. Stover took over most of Mr. Rice’s job responsibilities.

Evidence of Discrimination: Contradicting the Employer’s Explanation

There is a third type of evidence which supports a finding of discrimination: the contradicting of the company’s stated legitimate, non-discriminatory reason for terminating the plaintiff.

The defendants’ initial description of the reason for termination was inadequate job performance. Mr. Rice presented evidence that he had an excellent work history with the company that was free of any disciplinary action.

Damages

The awarded damages in this case are interesting. First, the jury awarded $142,659 in "back pay", which is essentially lost income and lost benefits from the point of termination through the date of trial.

The jury also awarded $1,991,332 for “front pay", which is future (from date of trial) lost income through some point in the future. An expert witness for Mr. Rice calculated future lost income through a projected retirement age of 67. The expert’s calculation of front pay was as I understand it, nearly exactly what the jury awarded: $1,991,332.

So the jury awarded Mr. Rice front pay from his age at trial, which appears to me to have been age 48 or 49, through retirement at age 67 — a total of about 19 years.

An important facet of the jury’s decision on front pay is that it did not reduce its award of front pay by the amount of any income Mr. Rice would be receiving in the future from employment after termination by the defendants. West Virginia has a somewhat unusual characteristic on awards of lost income, both past and future. Ordinarily, and this is also true in West Virginia, the jury would be instructed to take its prediction of lost income in the future (which is calculated by projecting the annual salary and benefits for the plaintiff’s last position with the defendant), and then subtract what the jury believes will be income to be earned by the plaintiff during that same time future time period.

For example, let’s assume that the jury knows that the plaintiff was making $100,000 a year in the last position for the defendant-employer that terminated the plaintiff. In awarding front pay, the jury would first project out that $100,000 each of the next 10 years. Let’s also assume that at time of trial the plaintiff is making $50,000 year at a new job (after his termination), and that job is likely to continue into the future. (For these calculations, I am ignoring the prospects of pay raises, I am ignoring benefits, and I am ignoring any effort to apply a “discount rate” to the future income amounts.) Under this scenario, the jury would subtract the $50,000 of annual wage from the $100,000 figure, for a yearly front pay damage amount of $50,000, and a total front pay award of $500,000 (10 years at $50,000 per year).

Under West Virginia law, however, the jury is instructed that if it concludes termination of the plaintiff was "malicious", then the jury should not subtract the subsequent replacement  income (in my example, $50,000 a year), and should instead award  a “flat” amount for front pay consisting solely of the calculation of the annual wage from the employee’s income with the defendant (in my example, $100,000 per year). That would mean an award of $100,000 per year, and a total award of $1,000,000 (10 years times $100,000).

Obviously, the "malice" rule makes a big difference. In the example I provided above, with 10 years of future lost income, wages of $100,000 per year at the defendant, and wages of $50,000 per year in a subsequent job:  the plaintiff would receive $500,000 in front pay damages if the termination was not malicious. However, the plaintiff would receive $1,000,000 in front pay if the jury concludes that the termination was malicious and does not subtract any of the replacement (post-defendant) job income.

In Mr. Rice’s case, my understanding is the jury awarded the $1,991,332 in front pay based on a conclusion of malice, so the jury did not subtract any income Mr. Rice might receive in the future from any subsequent employment.

The West Virginia Supreme Court most recently reiterated this "malicious termination rule" for back and front pay awards in Peters v. Rivers Edge Mining, Inc., 224 W. Va. 160, 680 S.E.2d 791, 814-815 (2009).

Interestingly, the jury did not award any compensation for emotional distress.

The jury also did not award any punitive damages.

Thus, when you add prejudgment interest to the award of back pay (and the prejudgment interest was $11,791.84), the total amount of damages that the judge awarded based on the jury’s verdict was $2,145,782.84

Attorney’s Fees and Expenses

Because Mr. Rice was the prevailing party in an age discrimination claim under the West Virginia Human Rights Act, he also received from the trial judge after the jury’s verdict an award of reasonable attorney’s  fees and expenses. The lead lawyer for Mr. Rice was Mark Atkinson, who has been practicing about 27 years. Mr. Atkinson has tried several employment discrimination and other wrongful discharge cases in West Virginia to jury verdicts of roughly $1-$3 million each. The trial court approved an hourly rate for Mr. Atkinson of $450. Paul Frampton also tried the case with Mr. Atkinson, has been practicing law for about 7 years, and the trial judge approved an hourly rate for Mr. Frampton of $300. The trial court also approved an hourly rate of $125 for paralegal time.

The trial court then multiplied those hourly rates by the number of hours expended by the lawyers and their legal assistants, and awarded attorneys’ fees of $117,235. The trial court also awarded expenses incurred by counsel for Mr. Rice in the amount of $20,324.16.

Post-Judgment Interest

Under West Virginia law "post-judgment interest" would then be applied to all of those awarded amounts at the rate of 7% per year.

Appeal?

The defendants have filed a motion for new trial, and I don’t have significant information on that motion (it has not been ruled upon as of this date). Given the size of the verdict, it seems likely that an appeal will follow, assuming the trial court does not grant the motion for new trial.

Prepared by Drew M. Capuder (contact information)

This was an age discrimination case under the Age Discrimination in Employment Act of 1967 (ADEA). The plaintiff was a member of a union, and the collective bargaining agreement (union contract) required submitting age discrimination claims to binding arbitration.

The US Supreme Court had previously ruled, but not in a labor union setting, that arbitration agreements for ADEA claims were enforceable under the Federal Arbitration Act, 9 U.S.C. sections 3-4 (Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 26-33 (1991)). So the real issue in Penn Plaza was whether there would be a different result because of the union contract setting and the National Labor Relations Act.

The Supreme Court in Penn Plaza, in a divided decision (5-4), held that the arbitration agreement contained in the union contract was enforceable.

The enforceability of arbitration agreements for employment disputes has been a political hot potato, and The Arbitration Fairness Act of 2009 (H.R. 1020) was introduced in the US House on February 12, 2009. The bill has 36 co-sponsors, and has been referred to the House Committee on the Judiciary. If it passes, it would essentially overrule Penn Plaza and other cases which have held that employment dispute arbitration agreements are enforceable.

Written by Drew M. Capuder (contact information)

That verdict consists of:

• $200,450 for past lost wages and benefits,

• $900,000 for future lost wages and benefits,

• $150,000 for humiliation,

• $150,000 for emotional distress, and

• $350,000 in punitive damages.

Under the West Virginia Human Rights Act (which prohibits age and other forms of discrimination in the workplace), Nagy’s counsel will file a motion additionally requesting attorneys’ fees and expenses.

James Nagy filed suit in Charleston in March 2008 against West Virginia American Water Company, alleging that he was fired in March 2007 because of his age at 53, after 23 years of employment.

James Nagy was represented by Maria W. Hughes and Stephen Weber at Kay Casto & Chaney PLLC. West Virginia American Water Company was represented by Mychal Schulz at Dinsmore & Shohl LLC.

The case is pending in Circuit Court in Kanawha County, West Virginia, before Judge Jennifer Bailey-Walker.

Prepared by Drew M. Capuder (contact information)

This was an age discrimination case under the Age Discrimination in Employment Act of 1967 (ADEA). The plaintiff was a member of a union, and the collective bargaining agreement (union contract) required submitting age discrimination claims to binding arbitration.

The US Supreme Court had previously ruled, but not in a labor union setting, that arbitration agreements for ADEA claims were enforceable under the Federal Arbitration Act, 9 U.S.C. § 1 et seq. (Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 26-33 (1991)). So the real issue in Penn Plaza was whether there would be a different result because of the union contract setting and the National Labor Relations Act.

The Supreme Court in Penn Plaza, in a divided decision (5-4), held that the arbitration agreement contained in the union contract was enforceable.

The enforceability of arbitration agreements for employment disputes has been a political hot potato, and The Arbitration Fairness Act of 2009 (H.R. 1020) was introduced in the US House on February 12, 2009. The bill has 36 co-sponsors, and has been referred to the House Committee on the Judiciary. If it passes, it would essentially overrule Penn Plaza and other cases which have held that employment pre-dispute arbitration agreements are enforceable.

Prepared by Drew M. Capuder (contact information)

The Gap In the Federal Employee Section of the ADEA

This was the problem under the ADEA: The ADEA‘s main section, in prohibiting discrimination against employees 40 and older, only deals with private industry employees and state government employees. I will call this section of the ADEA, the "private and state employee sections".

To address age discrimination against federal government employees, the ADEA has a separate section, 29 U.S.C. § 633a, which contains a separate statement of the prohibitions against age discrimination. While the private and state employee sections of the ADEA contain expressly an anti-retaliation provision (29 U.S.C. § 623(d)), the federal employees section does not. The original ADEA was passed in 1967, but the federal employees were not covered until the statute was amended in 1974 to cover them.

So that gets us to US Postal Service employee Myrna Gomez-Perez in Puerto Rico, who asked for a transfer. The transfer was refused so she filed a complaint of age discrimination (she was 45). After she filed the age discrimination complaint, she claimed she was subjected to various forms of retaliation. So she eventually filed suit in the United Stated District Court for the District of Puerto Rico, claiming retaliation. Ms. Gomez-Perez’s lawsuit was dismissed for a different reason (sovereign immunity), and she then appealed to the US Court of Appeals for the First Circuit ("First Circuit"). The First Circuit ruled in her favor on the sovereign immunity issue, but said her case was properly dismissed for a different reason–she was a federal employee and the ADEA‘s federal employee section (29 U.S.C. § 633a) did not prohibit retaliation. Under the First Circuit‘s logic, nothing ADEA prohibited retaliation against federal employees.

The US Supreme Court Fills the Gap

So Ms. Gomez-Perez appealed to the US Supreme Court, which ruled that the federal employee section of the ADEA prohibits “discrimination based on age” (29 U.S.C. § 633a(a)), and that implicitly prohibits retaliation that arises out of prior complaint of age discrimination. The controversy between the majority opinion and the dissenting judges was whether it was appropriate to read into the age discrimination prohibition a corresponding prohibition for retaliation related to an age discrimination complaint. The majority relied on prior decisions which had done precisely the same thing in the context of other anti-discrimination laws.

For example, in Jackson v. Birmingham Board of Education, 544 U. S. 167 (2005), Title IX of the Education Amendments of 1972 prohibited “discrimination” on “the basis of sex” in connection with any education program receiving federal aid. The controversy in that case was over retaliation after a complaint of sex discrimination, and that statute, like the federal employee sections of the ADEA, did not expressly prohibit retaliation again someone who complained about sex discrimination. The US Supreme Court there concluded that “retaliation” was covered by the sex discrimination prohibition. In essence, the US Supreme Court held that if you retaliate against someone who has complained about sex discrimination, then the retaliation is an act of sex discrimination.

So the US Supreme Court for Ms. Gomez-Perez applied the same logic for the ADEA: Since the ADEA prohibited age discrimination against federal employees, then it was an act of age discrimination to retaliate against someone who complained of age discrimination.

The real issue then, in a setting where a statute does not expressly prohibit age retaliation, is whether retaliation is a subset of age discrimination (and therefore covered by the prohibition against age discrimination); or whether the retaliation is conceptually and analytically different. The US Supreme Court, for Ms. Gomez-Perez, and in comparable discrimination settings, has found concluded that retaliation is a subset of the broader prohibition of discrimination.

Prepared by Drew M. Capuder (contact information)

The employer (Sprint) contended that evidence of other alleged age discrimination victims was not admissible where the decision-makers for those other victims were different from the decision-makers who took action against the plaintiff.

The Supreme Court rejected the employer’s argument and said that the evidence of other victims might be admissible, even if different decision-makers were involved. The trial court should conduct a "balancing test" for admissibility of discrimination against other employees by different supervisors, where the relevance of the other employees’ situation is balanced against unfair prejudice to the employer.

Prepared by Drew M. Capuder (contact information); Voice 304-333-5261