Jottings By An Employer's Lawyer

Friday, September 07, 2007

Discrimination Damages and Remedies in the 5th Circuit - the Palasota Story Continues


Today, a 5th Circuit panel issued the second substantive decision in the case of Palasota v. Haggar Clothing Co. (5th Cir. 9/7/07). Its first decision almost 4 years to the day earlier, overturned the trial court's granting of a judgment notwithstanding the verdict.

On remand after the first decision, the trial court entered a judgment in favor of Palasota for

  • $840,000 in economic damages,
  • a like amount as liquidated damages,
  • ordered reinstatement,
  • with interim pay of $14,500 a month until he was offered a position,
  • and awarded a lump sum of back pay in the amount of $525,000 for the period of time from the end of trial to the date of the second judgment

The Court found that the issue of liability was foreclosed by its first decision and that there was sufficient evidence (detailed in the opinion) to support a willful finding, and the accompanying $840,000 liquidated damage award.

In what appears to be a throw-away comment and without any citation, the Court added this unhelpful language:

Haggar’s unsuccessful efforts to have Palasota release it from ADEA claims upon his termination tended to show that Haggar had knowingly violated the ADEA or recklessly disregarded whether its conduct toward Palasota was prohibited by the statute.

Given that requesting a release is a standard practice when a severance package is being given, such evidence standing alone is unlikely to be sufficient to sustain a finding of willfulness. It's the sort of thing that if the Court is asked to revisit its opinion should be eliminated as being unnecessary, but not necessary harmless, dicta.

Given the size of the judgment and that liability was already decided, the opinion is the rare case where the Court talks at length about damages and remedies. Among the holdings --

  • affirmed the jury's finding of compensatory damages as supported by the evidence, even though it took into account the effect of improper discriminatory actions occurring before the limitations period;
  • discussed the shifting burdens of proof on the issue of mitigation, outlining the burden on the defendant when challenging an adverse jury finding;
  • reversed the court's order on reinstatement, finding that it would not be the same position he had before, would either displace or harm the income of existing employees and that there likely existed ill will among the parties that made reinstatement not a satisfactory remedy;
  • sent the $525,000 front pay award back to the trial court to re-consider, with a strong hint that perhaps the liquidated damages would negate the need for such an award since it might well result in a windfall for Palasota and "ADEA damages are not meant to be punitive."

Although they may not be intended to be "punitive" given that the trial court did not believe that discrimination was proved, my guess is it would be hard to convince the employer of that.

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