It’s been a difficult three months for central Iowa employers.   May, June, and July each saw a million dollar plus plaintiff verdict in an employment discrimination lawsuit.    One such verdict in these parts is notable, but three in three months is unheard of until now.  Back in January, we noticed juries in other parts of the country had returned some substantial plaintiff verdicts, and wondered then whether more and larger plaintiff verdicts were becoming a trend.     It remains uncertain whether the recent Iowa verdicts are evidence of a continuing pattern, or if it was simply a coincidence these particular cases were tried in three consecutive months.   But, whether this is the new normal or not, these types of verdicts have a significant impact on how lawyers and clients perceive the risk of employment claims.  Perception effectively becomes reality when clients settle cases that otherwise might be tried, or pay more than they otherwise would, to avoid the risk of being a victim of a headline grabbing and ruinous jury verdict.

The first verdict was issued May 4.   The plaintiff was a former athletic administrator at the University of Iowa who alleged she was discriminated against on the basis of sex and sexual orientation, and was subject to retaliation when she was reassigned to a position outside the athletic department and then had her position eliminated.   Verdict:  $1.4 million, including past and future emotional distress of $1.056 million.

The second was returned June 18.   The plaintiff was the former communications director for the Iowa Republican Senate Caucus who alleged she was subject to years of sexual harassment and then terminated when she complained about it.  Verdict: $2.195 million, which consisted entirely of damages for past and future emotional distress.

The third was just a couple of weeks ago, on July 25.    The plaintiff was a 40 year employee of the Grinnell Regional Medical Center who claimed he was terminated because of age and disability.  Verdict:  $4.5 million, including $4.28 million in emotional distress.

What is most eye-opening about these verdicts is not necessarily the total dollar amount, but that the lion’s share of the damages awarded in all three was because of emotional distress.    In the suit against the Republican Caucus, there were no economic damages awarded at all; the verdict consisted entirely of damage for past and future emotional distress.   In the other two cases, the ratio of emotional distress to back pay was 3 to 1 (U of I Athletic Dept.) and 19 to 1 (Grinnell Medical Center).

What should we make of these stunning awards for emotional distress?    The value of discrimination cases used to be driven by hard numbers like lost wages or back pay.   That certainly made it easier to assess the risk of employment claims.  Back pay or other economic damage is fairly objective and calculable.  Emotional distress, on the other hand, is almost entirely subjective and quite unpredictable.   It is possible that increased emotional distress verdicts simply reflect the modern cultural attitude of greater sensitivity to emotional and mental distress resulting from traumatic events in life, and a willingness to put a dollar value on it.

Unfortunately, the knee jerk reaction among many is to panic and think runaway verdicts are more common than they really are.   We lawyers often contribute to the problem by using these big verdicts as examples of “what might happen to you” if you don’t follow the policies and practices we recommend in our client seminars.   Not that the standard advice is bad, but we should also not ignore the data that shows most employment discrimination cases that are tried result in an employer win.

The response I propose to these out-sized verdicts seems like common sense but is not very common:  employers should try more and settle fewer employment lawsuits.   So few cases are tried nowadays, we really don’t have a benchmark on how to reliably value the claims.   Instead, we look to the few outliers that are being tried and those verdicts are used to place settlement values on future cases.   Is this approach risky?  Sure.  Would you lose some cases?  Naturally.  Would it be expensive? Of course, at least in the short term.   But, over time, the defense bar would get better at responding to and countering claims of emotional damage.    Perhaps we would find out whether most of these cases are defensible like we think they are.    If we are right, it just might discourage the filing of cases just because the plaintiff expects to get a settlement.

 

Two Des Moines lawyers, Karin Johnson and Angela Morales, recently wrote in The Iowa Lawyer about a study their firm conducted of employment law trials in Iowa.    With the exception of one county (out of 99), there is very little data available to lawyers on trial outcomes in this state, particularly in employment cases.    I commend Karin and Angela for their work, and particularly for sharing some of it with the rest of the bar. I expect the study will be frequently relied upon by lawyers, both plaintiff and defense, in evaluating their cases.

Some of the most interesting information from the study includes the following:

·          The study was based upon 134 bench and jury trials between 2000 and 2011, in both state and federal courts.   Included in the sample were claims involving wrongful discharge, discrimination, and harassment.   More unusual types of claims, such as whistleblower, wage claims, and ERISA ,claims were excluded.

·          It is not clear whether the 134 cases includes each and every employment cases tried in Iowa during the period in question, although the goal of the study was presumably to capture every case.   134 trials jury trial in eleven years is a fairly low incidence of trials, but nonetheless seems consistent with statistics showing most cases get resolved in ways other than by trial.

·          Most interesting was that the plaintiff prevailed 57 percent of the time.

·          Damages awarded ranged from a low of $3,000 to a high of $3 million. If the outlying awards (those over $1 million) were eliminated, the average damage award was $179,000.

·          In those cases where emotional distress damages were awarded, a vast majority of the time (two-thirds) the award was less than $100,000.

·          Punitive damages were awarded in less than half the cases.

·          The study focused on awards by a fact-finder (judge or jury) and did not consider any reductions in awards post-trial, application of damages caps, or reversals on appeal.  Nor did the awards consider other remedies awarded by the judge post-trial, such as front pay or attorney’s fees. 

Remember Jack Gross? Back in 2003 he claimed a demotion from his management job at West Des Moines based FBL Financial Services constituted age discrimination.   A federal jury in the Southern District of Iowa agreed and awarded him $47,000 in damages. From there his case had a remarkable journey: first stopping in St. Louis at the Eighth Circuit, then to Washington, D.C. and the U.S. Supreme Court, back to St. Louis for another stop at the Eighth Circuit, and ultimately back to Des Moines for another jury trial. In the meantime, Gross became moderately famous, testifying before Congress about his case and inspiring legislation to change the law.

About two weeks ago Gross presented his case to a second jury. This time, however, Gross ran out of luck.  The jury found in favor of FBL Financial Services.  

Why the long journey with all the stops along the way? Because of two phrases: “a motivating factor” and “but for”.    In the first trial, the court instructed the jury that, under the federal Age Discrimination in Employment Act (ADEA), they must find for Gross if his age was “a motivating factor” in the demotion decision.   The Supreme Court ruled that was the wrong instruction. In the second trial, the jury was instructed to find for Gross on his ADEA claim if FBL would have not demoted him “but for” his age. 

Did a few words in the jury instructions result in a different outcome in the second trial?  While it is impossible to know for certain, there probably is more to it than that.   What has generally gone unreported about the Gross case is that he also claimed his demotion violated the Iowa Civil Rights Act.    In both the first and second trials, the jury was instructed they must find for Gross on the ICRA claim if his age was "a motivating factor" in the decision.    Thus, the same question was presented to both juries, but with a different result.

The case may not be over yet.   It appears grounds may exist to appeal this decision as well.   In particular, the instruction incorporated a version of the “same decision” defense for the ICRA claim.  In other words, not only did Gross have to prove his age was “a motivating factor”, but also had to prove “the adverse action would not have otherwise occurred.”    As we have discussed  here previously, it is far from clear that the "same decision" defense is available under the ICRA. 

We will be watching to see what happens…