Tuesday, July 8, 2008

$600k in compensatory damages for disability discrimination

There are two ways to evaluate a damages award under state law. In a recent case, the Court of Appeals had to figure out what to do about a large jury award for a case of disability discrimination. It appears there is a fork in the road when it comes to reviewing a damages award, and, as Yogi Berra would say, the Court of Appeals did not take it.

The case is Brady v. Wal-Mart Stores, decided on July 2. I write about the liability findings here. After finding that Wal-Mart discriminated against an employee because of his Cerebral Palsy, the jury awarded the plaintiff $2.5 million in compensatory damages, $9,114 in economic damages, $5 million in punitive damages, and $2 in nominal damages. As the Second Circuit noted, "The district court apportioned all of the compensatory damages to the state law claim and all of the punitive damages to the ADA claim. The court struck the economic damages award because Brady did not prevail on his constructive discharge claim. And . . . the punitive damages award was reduced to the statutory cap of $300,000." The plaintiff then accepted a remittitur of the compensatory damages award from $2.5 million to $600,000." In other words, the trial court held the compensatory damages were too much and that plaintiff had to accept $600,000.

Wal-Mart appeals, arguing that the trial court should have reduced the compensatory damages even further and that the court used the wrong legal standard in assessing the damages at $600,000. The Second Circuit identifies two ways to assess whether the trial court did the right thing under state law.

First, under the state law governing damages awards, "a compensatory damages award is excessive 'if it deviates materially from what would be reasonable compensation.'" That law is CPLR § 5501(c). But under the state court decisions dealing with these matters, the standard is:

"whether the relief was reasonably related to the wrongdoing, whether the award was supported by evidence before the Commissioner, and how it compared with other awards for similar injuries.” The Second Circuit thinks the three-part test is more favorable to plaintiffs.

The problem is not only that it's not clear which standard the trial court used in this case, but that the plaintiff did not "protest" this issue on appeal, according to the Second Circuit: "either the district court correctly applied the Transit Authority standard, or it erred in a way that harmed Appellee—by applying the “deviates materially” standard—but Appellee has not protested. Either way, there is no cause for remand. Therefore, the judgment of the district court is affirmed."

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