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.

 

 

Understandably, this is the most important question a client will ask his lawyer when deciding whether to settle a lawsuit or defend the case at trial.   It is also one of the most difficult things for lawyers to predict.   That’s why jury verdict research is so valuable, and why this post at Manpower Employment Blawg is a must read for employers and HR professionals.    It turns out that 2009 was not a very good year at the courthouse for employers defending employment related lawsuits.  Here is a summary of the some of the jury verdict data:

  • The median jury award in discrimination cases rose 16%, from $208,000 to $241,119.
  • Employers won 39% of the time (or lost 61% of the time, depending upon your perspective).   In age cases, employers were successful only 33% of the time, and in disability cases, 52% of the time.
  • Age discrimination claims resulted in the largest verdicts, followed by disability, sex, and race.
  • Employers are generally better off in federal court: they won 43% of the time there, versus 37% of cases in state court. The median award was also lower in federal court ($164,925 vs. $270,000). Federal Court is also more favorable for employers because of the relatively high percentage of cases for which summary judgment is granted.
  • The median settlement amount for all cases: $90,000, 20% higher than last year.