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Fifth Circuit Addresses Damages in an Age Discrimination Case

The Fifth Circuit considered an age discrimination case in Miller v. Raytheon Co., No. 11-10586 (5th Cir. May 2, 2013) (published).  The most interesting aspect of the decision is the Fifth Circuit's rulings on the various categories of damages.

The facts are fairly straightforward.  The plaintiff worked for Raytheon for around 30 years in supply chain management.  Raytheon had a reduction in force in 2008.  The company instructed the plaintiff's supervisor to divide his employees into "decisional groups."  The ages of the employees in the plaintiff's decisional group were 34, 49, 53 (the plaintiff), 54, and 55.  The supervisor evaluated the group members and recommended that everyone other than the 34 year old employee be terminated.  Raytheon reviewed the recommendation and accepted it.  The company told the plaintiff that there were no other openings at the company for which he was qualified (which was allegedly false) and eventually told him that he would not be considered for another job in the supply chain group.

The plaintiff filed suit under the ADEA and Chapter 21 of the Texas Labor Code.  The jury found in favor of the plaintiff and awarded a large amount of damages, including $15 million in punitive damages (which was eliminated by the trial court, as discussed below).  The Fifth Circuit affirmed the finding of liability.

The ADEA provides for an award of 100% liquidated damages on back pay awards if the violation was willful.  The Fifth Circuit affirmed the jury's finding of willfulness:

This is a close case, as the district court understood, because it is undisputed that Raytheon had to undertake a reduction in force and that it instituted facially age-neutral policies and processes according to which a nondiscriminatory basis for Miller’s termination could be justified.  Following facially neutral RIF procedures, however, does not necessarily insulate an employer from ADEA liability or from a sustainable finding of a willful violation.  Even if Raytheon superficially applied its nondiscriminatory RIF standards to Miller, considerable circumstantial evidence added to the inference of age discrimination that Raytheon went out of its way to avoid rehiring Miller, in contravention of its usual procedures, and to obscure the reasons for its decisions.

The court thus affirmed an award of back pay of $352,179 plus 100% liquidated damages.

Next, the court considered the jury's finding that Miller lost $277,000 in pension benefits.  The question was whether those benefits were back pay, and thus subject to 100% liquidated damages, or whether they were better characterized as front pay.  The court held that the lost pension benefits should be treated as front pay, though it suggested that the result might have been different if the benefits were discounted to present value:

Although Miller became 55 a few months before trial occurred, he had not been employed by Raytheon for nearly two years.  Whether he would have stayed with the company during that period and actually qualified for the enhancement is in this case a forward-looking determination from the point of his termination and thus a judgment call like the equitable decision to award front pay.  This is reinforced by Miller’s testimony that he intended to work until age 70.  Any claim for present damages based on enhanced pension benefits he would not receive until up to fifteen years later would have had to be discounted to present value in order to represent Miller’s actual loss.  As this court noted, “awarding ‘present monetary damages for the loss of a prospective benefit that either may not ultimately be earned, or that may be actually earned and collected in full in the future, would go beyond making plaintiffs’ [sic] whole for the unlawful discrimination they suffered. It would provide a windfall bonus.’”  Absent such proof, the enhanced benefits should have been treated as front pay. The judgment must be changed to treat this pension enhancement as front pay and eliminate it as a basis for liquidated damages.

(citations omitted).  In a footnote, the Court stated, "we decline to set out an inflexible rule on the treatment of 'pension benefits' as damages or front pay under ADEA."

Next, the court reversed an award of $100,000 (originally $1,000,000) for mental anguish, because the plaintiff's proof was insufficient:

The district court remitted the jury award for mental anguish from $1 million to $100,000. This claim is premised solely on the testimony of Miller and his wife.  Miller presented no expert medical or psychological testimony of the extent of his mental anguish.  While Miller testified that he suffered chest pain, back pain, sleep disturbances, he also admitted that he did not take any over-the-counter pain or sleep medications. Nor did Miller seek the assistance of any health care professional or counselor.  DeCorte is distinguishable because testimony from a psychologist supported the plaintiffs’ claims.  Because the Millers’ self-serving testimony is legally insufficient, we vacate the mental anguish award.

(citation omitted).

Next, the court considered whether the plaintiff could recover both liquidated damages under the ADEA and punitive damages under Chapter 21 of the Texas Labor Code.  Under Chapter 21, punitive damages are capped at $300,000 for a large company like Raytheon.  The district court found that the plaintiff could recover punitive damages under Chapter 21 or liquidated damages under the ADEA, but not both.  The district court awarded only the liquidated damages, because it was the greater amount.  The Fifth Circuit affirmed:

When a federal claim overlaps with a pendant state claim, the plaintiff is entitled to the maximum amount recoverable under either the federal or state claim.  Miller brought an action for a single injury under a federal statute and a state statute, both of which protect against age discrimination.  Accordingly, Miller may recover under only one statute, and the district court correctly granted him the higher recovery available under the ADEA.

(citation omitted).  The court also held that the $300,000 cap on punitive damages under Chapter 21 of the Texas Labor Code is constitutional.

David C. Holmes is a Houston employment lawyer with The Law Offices of David C. Holmes