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Application of Caps on Non-Economic Damages in State and Federal Employment Claims

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By Kenton H. Steele and Melvin J. Davis

Employment Practices Liability Winter Newsletter 2019
February 2019

One question that frequently surfaces in any employment lawsuit that involves allegations implicating both state and federal law is whether and to what extent non-economic damages caps apply. Obviously, this is a critical determination to make in gauging the potential exposure at the outset of the matter. As is so often, however, the devil is in the details, and this article aims to guide business operators and claims handlers on the issues that must be considered when seeking to minimize total exposure for non-economic damages in a case involving a “blend” of state and federal employment law.

Employment law claims available under state law often closely mirror claims a plaintiff may bring under federal law. For instance, both the Ohio Supreme Court and 6th Circuit Court of Appeals have held that employment law claims under R.C. Chapter 4112 are virtually identical to federal claims under Title VII. See Mengelkamp v. Lake Metro. Hous. Auth., 549 F.Appx. 323, 329-30 (6th Cir. 2013). State statutory and federal Title VII claims are so similar they can be considered by a jury simultaneously through a single interrogatory based on Title VII standards. This is permissible because if liability is found under Title VII, liability on the state law claims is a logical necessity. Therefore, providing separate interrogatories and instructions would be wholly redundant.

While this simultaneous consideration of state and federal claims is practical, it can create issues if the plaintiff prevails and is awarded significant damages. This is because unlike the claims themselves, state law caps on damages do not always mirror the limitations on damages found in Title VII. Thus, when a plaintiff prevails on dual state and federal claims in an employment discrimination case, issues can arise as to which limit on a plaintiff’s damages will apply.

Under Title VII, a plaintiff may recover compensatory and punitive damages for intentional discrimination. But the amount of damages a plaintiff may recover for punitive damages and damages attributed to “future pecuniary losses, emotional pain, suffering, inconvenience, mental anguish, loss of enjoyment of life, and other nonpecuniary losses” is capped. 42 U.S.C. § 1981a(b)(3). The cap applicable to a plaintiff’s non-economic and punitive damages varies based on the number of employees working for the employer at the time the discriminatory action occurred.

The statutory limits that may apply are:

  • $50,000 for employers of 15 – 100 employees;
  • $100,000 for employers of 101 – 200 employees;
  • $200,000 for employers of 201 – 500 employees; and,
  • $300,000 for employers of 501+ employees.

It is important to note that these caps do not place a limit on damages attributed to front pay, and do not limit recovery under state anti-discrimination statutes. See Pollard v. E.I. du Pont de Nemours & Co., 532 U.S. 843, 852 (2001).

State laws frequently impose different limitations on recovery in employment cases. For instance, in Ohio there is no cap on the compensatory damages a plaintiff may recover for economic loss. But recovery for non-economic loss is limited by R.C. § 2315.18(B)(2). Under this statute, the most a single plaintiff may recover in a tort action is the greater of $250,000 or three times the economic loss up to a maximum limit of $350,000. In Ohio, courts have held that the caps on damages found in R.C. § 2315.18 apply to employment claims. SeeLuri v. Republic Sers., 193 Ohio App.3d 682, 2011-Ohio-2389 (8th Dist.), rev’d on other grounds, 132 Ohio St.3d 316, 2012-Ohio-2914 (finding that caps apply to retaliatory discharge action brought under R.C. Chapter 4112).  There are additional caps that limit the amount of punitive damages a plaintiff may recover, which are found in R.C. § 2315.21(D). The exact limit on punitive damages imposed by this statute in any given case may vary based on whether the defendant is “small employer” or individual, the liable defendant’s net worth, and/or the amount of compensatory damages awarded. R.C. § 2315.21(D)(2).

When a jury considers state and federal employment discrimination claims simultaneously, and awards damages on those claims, the plaintiff is permitted to elect the claim under which they will receive damages. Mengelkamp, 549 F.Appx., at 329-30. It is a safe assumption that plaintiffs will elect to recover under whichever claim provides the greatest recovery. Furthermore, when an un-apportioned award on combined state and federal claims exceeds the state and federal cap, a court may allocate the award of damages between the state and federal claims to enable the plaintiff the maximum recovery under both statutes. See Rodrigues-Torres v. Caribbean Forms Mfr., Inc., 399 F.3d 52, 66 (1st Cir. 2005) (upholding the district court’s decision to allocate compensatory damages to the state law claim and punitive damages to the federal claim). Some courts, however, have refused to permit this creative allocation of an award because it amounts to a “stacking” of limitations that defeats the purpose of both the state and federal damage caps. See Williams v. Sims Bros., Inc., 889 F.Supp.2d 1007, 1008-10 (N.D. Ohio 2012).

Given the high number of variables that can affect the maximum amount a plaintiff is entitled to recover, attorneys who receive an adverse verdict on this type of claim will often need to file a motion to alter the judgement under federal Rule 59(e) to ensure the correct caps are applied. Depending on how a plaintiff’s damages are allocated by the jury and/or the court, limitations on recovery may be imposed based on the number of employees working for an employer found liable for non-economic damages or may be limited by the net worth of an individual defendant liable for punitive damages.

Attorneys who receive an unfavorable verdict in a case involving dual state and federal claims should be prepared to consider all potential limitations on recovery and be prepared to assemble the evidence necessary to prove a particular limit applies. Taking these steps can be an effective in limiting the amount that must be paid even after a client employer is found liable.

This has been prepared for informational purposes only. It does not contain legal advice or legal opinion and should not be relied upon for individual situations. Nothing herein creates an attorney-client relationship between the Reader and Reminger. The information in this document is subject to change and the Reader should not rely on the statements in this document without first consulting legal counsel.
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