Purcell v. Seguin State Bank and Trust Co. , 999 F.2d 950 ( 1993 )

United States Court of Appeals,
Fifth Circuit.
No. 92-5598.
Walter P. PURCELL, Plaintiff-Appellee, Cross-Appellant,
v.
SEGUIN STATE BANK AND TRUST COMPANY, Defendant-Appellant, Cross-
Appellee.
Sept. 2, 1993.
Appeals from the United States District Court for the Western
District of Texas.
Before REYNALDO G. GARZA, WILLIAMS, and JONES, Circuit Judges.1
JERRE S. WILLIAMS, Circuit Judge:
In early 1989, Seguin State Bank and Trust Company replaced
60-year-old plaintiff, Walter P. Purcell, as manager of the Bank's
trust department. His replacement was a man 37 years of age;
Purcell was 60. Purcell brought suit in federal court, claiming
violations of the Age Discrimination in Employment Act (ADEA) and
of the Employee Retirement Income Security Act of 1974 (ERISA).
Purcell also asserted a state claim of self-compelled defamation.
The district court granted the Bank judgment as a matter of law on
the defamation claim, and the jury found for Purcell on the ADEA
claim. The Bank timely appealed the judgment against it, and
Purcell has cross-appealed the judgment on the defamation claim.
After a thorough review of the record, we affirm the judgment
that the Bank discharged Purcell because of his age. We also
affirm the district court's judgment for defendant on the
1
Judge Williams authored this opinion before his death on
August 29, 1993.
defamation claim and its award of attorney's fees. We reverse and
remand for new trial the finding of willfulness, necessarily
reversing the award of liquidated damages. Finally, we remand the
award of compensatory damages for remittitur or for a new trial on
damages only.
In 1984, Seguin State Bank and Trust Company (the Bank) hired
Walter P. Purcell to help create and to manage a trust department.
Purcell was 55 years old when he was hired. Purcell had worked
previously in the Estate and Gift Tax Division of the Internal
Revenue Service for sixteen years. In early 1989, however, the
Bank hired a 37-year-old replacement for Purcell, citing Purcell's
poor management techniques and technical deficiencies. Despite
some conversation about the possibility of a marketing position for
him, Purcell left the bank.
Joe Bruns, president of the Bank, had thought Purcell was 56
when he was hired. Purcell was thus ineligible to participate in
the Bank's retirement program because employees at that time had to
work ten years before vesting, which had to occur by the time an
employee reached 65. Bruns subsequently learned that Purcell had
been 55 when he was hired and informed him of his eligibility for
the retirement program.
Problems arose during Purcell's years in the trust department.
First, Bruns repeatedly counseled Purcell about improving his
marketing efforts. Second, monthly computer reports prepared by
Purcell's secretary sometimes contained mistakes and
miscategorization of assets. Purcell claimed these errors resulted
from his secretary's inability to understand and manipulate the
accounting software the department was using. The Bank worried, on
the other hand, that Purcell did not fully grasp substantive trust
accounting procedures. Third, Purcell incorrectly advised the Bank
that it did not need to comply with a particular tax code
provision. Fourth, the trust department realized net profit for
the first time in 1988. The Bank noted, however, that Purcell
arrived at the profit figure by collecting fees in 1988 for work
not performed until 1989. Fifth, clerical employees in the trust
department complained of Purcell's poor management and requested
transfers. The Bank's officers thus became concerned that Purcell
was mismanaging trust assets and subjecting the bank to serious
potential liability.
The Bank also faced changes in its retirement plan. These
changes had been mandated by the 1986 amendments to ERISA and were
to go into effect on November 1, 1989. One amendment shortened the
vesting period from ten years to five, allowing Purcell's
retirement benefits to vest while he was between the ages of 60 and
65.
In late 1988, Bruns consulted an employment law attorney for
advice regarding the situation with Purcell. He also advertised
anonymously for applicants to replace Purcell and interviewed Mike
Barrow in January 1989. Barrow was then in his thirties. The Bank
hired Barrow as trust department manager on January 19, 1989.
Bruns, however, did not inform Purcell that he was being replaced
until February 3, three days before Barrow was to begin working.
At that meeting, Bruns first told Purcell he was being replaced
because of poor management and technical deficiencies. Bruns then
told Purcell that if Purcell would maintain a positive attitude,
cure his technical deficiencies, and help train Barrow, the Bank
would pay him three months' salary. At the end of that indefinite
period of time, Bruns said, he would evaluate Purcell and possibly
create a marketing position for him at a substantially reduced
salary.
In the days following Purcell's replacement, Bruns told
Purcell that he had not been fired and that the officers wanted
Purcell to return to the Bank to concentrate on sales. By February
23, however, Purcell notified the Bank that he had no intention of
continuing to work there. Purcell then practiced law in Seguin for
about one year, moved to Galveston where his son was attending
school, and worked most recently as a substitute school crossing
guard.
Purcell's case was tried before a jury in March 1992. After
Purcell rested, the Bank moved for Judgment as a Matter of Law
under Federal Rule of Civil Procedure 50(a). The district court
granted judgment for the Bank on the self-compelled defamation
claim, which was based upon Purcell's assertion that he was forced
to defame himself by telling prospective employers why he left his
position with the Bank. The court then sent the ADEA claim to the
jury for decision. The jury reached a verdict, finding that:
1. Purcell was discharged;
2. age was a "determining" factor in Purcell's discharge;
3. the Bank's actions were willful; and
4. Purcell had sustained damages in the amount of $250,000.
The Bank filed a Motion for Judgment as a Matter of Law, a
Motion for New Trial, and a Motion for Remittitur and Denial of
Liquidated Damages. The district court denied all motions and
entered final judgment, awarding Purcell $250,000 compensatory
damages; $250,000 liquidated damages for willfulness;
reinstatement; $75,000 in attorney's fees; and post-judgment
interest. The Bank timely appealed, and Purcell cross-appealed the
district court's judgment on the self-compelled defamation claim.
Pending appeal, the Bank filed a supersedeas bond with the court,
which stayed all facets of the judgment, including reinstatement.
ERISA Claim
Purcell offers as support for his ADEA claim evidence that
the Bank discharged him to prevent him from vesting in his pension
benefits. Vesting in the Bank's pension program, however, was
triggered by years of service instead of by reaching a certain age.
Because Purcell's vesting was not age-based, any interference with
his pension benefits may have been actionable under ERISA, but not
under the ADEA. Hazen Paper Co. v. Biggins, --- U.S. ----, ----,
113 S. Ct. 1701, 1707-08, 123 L. Ed. 2d 338 (1993). There is "no
disparate treatment under the ADEA when the factor motivating the
employer is some feature other than the employee's age." Id. at --
--, 113 S. Ct. at 1705.
Purcell pleaded that the Bank had violated ERISA by
discharging him so that he would not vest in the retirement
program. He presented evidence at trial to support this
contention. He failed, however, to request that the jury make a
finding about whether the Bank violated ERISA. Only the ADEA and
defamation claims were presented to the jury. Under Federal Rule
of Civil Procedure 49(a), Purcell waived his right to a trial by
jury on the claim that the Bank violated ERISA. In re Letterman
Bros. Energy Sec. Litig., 799 F.2d 967, 976 (5th Cir.1986). Rule
49(a) authorizes the court to make a finding on omitted issues, but
here the district court made no mention of the ERISA claim in its
judgment. Consequently, "it shall be deemed to have made a finding
in accord with the judgment on the special verdict." Because the
ERISA and ADEA claims are separate, there is no court finding on
the ERISA claim. See, e.g., MBank Forth Worth, N.A. v. Trans
Meridian, Inc., 820 F.2d 716, 723-24 (5th Cir.1987) (finding waiver
of plaintiff's RICO counterclaim). We do not consider it.
ADEA Claim
The ADEA makes it unlawful for employers "to discharge any
individual or otherwise discriminate against any individual with
respect to his compensation, terms, conditions, or privileges of
employment, because of such individual's age." 29 U.S.C. § 623(a).
To succeed on his claim, Purcell had to prove both that he was
discharged and that his age had "a determinative influence on the
outcome." Hazen Paper Co. v. Biggins, --- U.S. ----, ----, 113
S. Ct. 1701, 1706, 123 L. Ed. 2d 338 (1993). Congress additionally
created a "two-tiered liability scheme" in the ADEA by providing
that "some but not all ADEA violations would give rise to
liquidated damages." Id. at ----, 113 S. Ct. at 1709. Section 7(b)
of the ADEA provides for liquidated damages in the event of a
willful violation. 29 U.S.C. § 626(b). A defendant has acted
willfully when it knows or shows reckless disregard for whether its
conduct violated the ADEA. Biggins, --- U.S. at ----, 113 S. Ct. at
1710. But a willful violation does not necessarily occur just
because the employer knew that the ADEA was "in the picture." When
an employer believes in good faith that its decision is permissible
under the ADEA, then liquidated damages are unwarranted. Id. at --
--, 113 S. Ct. at 1709. Further, even when the plaintiff has proved
willfulness, the court has discretion about whether to award
liquidated damages. Elliott v. Group Medical and Surgical Serv.,
714 F.2d 556, 558 n. 2 (5th Cir.1983), cert. denied, 467 U.S. 1215,
104 S. Ct. 2658, 81 L. Ed. 2d 364 (1984).
The jury found that the Bank willfully discharged Purcell and
that a determining factor in the discharge was his age. The court
then denied the Bank's Motion for Judgment on the ADEA claim. The
Bank asserts that the evidence was insufficient to support the
jury's findings of discharge, of age discrimination, and of
willfulness.
Waiver
We must first decide whether the Bank has properly preserved
these points of error. After Purcell rested his case, the Bank
moved for Judgment as a Matter of Law under Federal Rule of Civil
Procedure 50(a).1 The Bank then renewed its Motion for Judgment
after the verdict, in accordance with Rule 50(b).2 It did not,
however, reurge its motion at the close of all the evidence. The
failure to renew the motion for judgment at the close of all
evidence can have two consequences. First, the Bank may have
1
Before the 1991 amendments to Rule 50, this motion was
known as the motion for directed verdict.
2
Before the 1991 amendments to Rule 50, this motion was
known as the motion for Judgment Non Obstante Verdicto, or JNOV.
waived its right to complain on appeal about the sufficiency of the
evidence. Second, the Bank may have also waived its right to file
a post-verdict Motion for Judgment. McCann v. Texas City Ref.,
Inc., 984 F.2d 667, 671 (5th Cir.1993); FED.R.CIV.P. 50(b).
We have construed Rule 50(b) to allow review when the
purposes of the rule have been satisfied because the court has had
the opportunity to reconsider sufficiency as a matter of law and
because the nonmovant has had the opportunity to cure any
insufficiencies. See, e.g., Davis v. First Nat'l Bank, 976 F.2d
944, 948-49 (5th Cir.1992), cert. denied, --- U.S. ----, 113 S. Ct.
2341, 124 L. Ed. 2d 251 (1993). We hold generally that "when the
trial court reserves its ruling on the defendant's motion for a
directed verdict and the only evidence introduced after the motion
is not related to the motion, the defendant's failure to renew his
motion should not preclude a judgment n.o.v. in his favor." Miller
v. Rowan Cos., Inc., 815 F.2d 1021, 1025 (5th Cir.1987). In such
cases, the judge took the defendant's motion under advisement or
declined to grant it "at this time." The defendants then offered
little or no evidence, and there was little or no rebuttal. Very
little time passed between the first motion and the close of all
evidence. In Davis, for example, the defendant called one witness,
the plaintiff was recalled, and the case was closed within a few
minutes of the original motion. Finally, if the defendant objected
to the proposed jury instructions on grounds pertaining to
sufficiency of the evidence, we have held that to satisfy the
purposes of Rule 50(b). Villanueva v. McInnis, 723 F.2d 414, 417-
18 (5th Cir.1984).
On the other hand, when those purposes have not been
satisfied, the operation of the rule results in waiver. See, e.g.,
McCann, 984 F.2d at 671-73; Hinojosa v. City of Terrell, Texas,
834 F.2d 1223, 1228 (5th Cir.1988), cert. denied, 493 U.S. 822, 110
S. Ct. 80, 107 L. Ed. 2d 46 (1989). In Hinojosa, the defendant did
not move for judgment at any time before the verdict was returned.
In McCann, the judge flatly denied the motion at the close of
plaintiff's evidence, the defendant offered its case followed by
rebuttal, and it then failed to renew the motion in any way.
Finally, if the first motion for judgment fails to state specific
grounds that the defendant then urges in the post-verdict motion,
we cannot consider the motion. McCann, 984 F.2d at 672 (citing
FED.R.CIV.P. 50(a)).
Examining the facts before us, we conclude that the Bank has
waived its right to complain about sufficiency of the evidence in
a post-verdict motion for judgment. As in McCann, the judge flatly
denied the Bank's initial motion for judgment instead of taking the
motion under advisement. The Bank then presented its case.
Although the time between the close of Purcell's evidence and the
close of the case was a matter of hours, the Bank offered five
witnesses, followed by rebuttal testimony from Purcell. The Bank
did not object to the proposed jury instructions and charge.
Finally, also as in McCann, the initial motion focused on the
evidence of age discrimination. The Bank's post-verdict motion
specifically challenged the sufficiency of the evidence of
willfulness for the first time. We find that McCann controls.
It follows that the Bank is raising these issues for the first
time on appeal. We can review them only for plain error. Under
the plain error standard, we reverse a judgment only if it results
in the "manifest miscarriage of justice." McCann, 984 F.2d at 673
(quoting Coughlin v. Capitol Cement Co., 571 F.2d 290, 297 (5th
Cir.1978)). We consider "not whether there was substantial
evidence to support the jury verdict, but whether there was any
evidence to support the jury verdict." Id.
Age Discrimination
To prove age discrimination, a plaintiff must first establish
a prima facie case by showing (1) that he was within the protected
age group, (2) that he was adversely affected (in this case,
discharged), (3) that he was replaced by a younger person, and (4)
that he was qualified for the job. Then the burden of production
shifts to the defendant to articulate a legitimate,
non-discriminatory reason for its employment decision. If the
defendant presents non-discriminatory reasons, the plaintiff has
the burden of persuading the factfinder that those reasons are
pretexts for unlawful discrimination. St. Mary's Honor Center v.
Hicks, --- U.S. ----, ---- - ----, 113 S. Ct. 2742, 2750-55, 125
L. Ed. 2d 407 (1993) (reaffirming Texas Dep't of Community Affairs v.
Burdine, 450 U.S. 248, 253-56, 101 S. Ct. 1089, 1093-95, 67 L. Ed. 2d
207 (1981)). Because the case before us was tried fully on the
merits, we need not consider the adequacy of either party's showing
at these three stages. We instead focus on the record as a whole
to determine the sufficiency of the evidence. Atkin v. Lincoln
Property Co., 991 F.2d 268, 271 (5th Cir.1993) (quoting Molnar v.
Ebasco Constructors, Inc., 986 F.2d 115, 118 (5th Cir.1993)).
The Bank claims that it neither discharged Purcell nor
replaced him because of his age. Applying the plain error
standard, however, we find the record contains some evidence to
support the jury verdict. Most of Purcell's evidence was
circumstantial, which is not unusual in an employment
discrimination case. Burns v. Texas City Ref., Inc., 890 F.2d 747,
750-51 (5th Cir.1989). The accumulation of circumstantial evidence
more than meets the "any evidence" requirement of the plain error
standard.
On the question of discharge, the Bank points to Bruns's notes
from the February 3 meeting, where the officers informed Purcell he
was being replaced. The Bank presented evidence that the officers
told Purcell he would continue with the Bank, albeit for an
unspecified time, and then move into a newly-created marketing
position at a reduced salary. The Bank further cites evidence that
Bruns informed the executive officers of Purcell's move into the
marketing position; that Bruns reiterated the offer in a letter to
Purcell on February 21, 1989; that the Bank reconfirmed Purcell as
an officer on February 16, 1989; and that Purcell had told a
friend, John Donegan, that he was refusing to accept the more
"menial" marketing job.
Purcell in turn considers Bruns's notes, which were titled
"TERMINATION COMMENTS." Purcell's evidence argues that Bruns made
a vague, conditional offer by saying that IF Purcell maintained a
positive attitude and helped with the transition, and IF Purcell
acquired some unspecified technical knowledge, then the Bank would
pay three months' salary and "would consider creating a sales
position for [Purcell], but at a reduced salary" (emphasis added).
Purcell offered further evidence that Bruns's letter of February 21
and reconfirmation of Purcell as a bank officer were merely
self-serving acts and that the Bank contested Purcell's right to
unemployment compensation, to which Purcell would not have been
entitled if he had resigned. On the question of whether discharge
occurred, there clearly was enough evidence to support the jury
finding as not in plain error.
On the age discrimination issue itself, the Bank cites
evidence that Purcell's performance evaluations began in 1987 to
reflect concerns about how Purcell was reporting and managing trust
accounts; that the problems with the monthly reports indicated
Purcell's lack of technical trust knowledge; that Purcell's pay
raises were consistently lower than those of other officers; that
a trust department customer actually sued the bank over mishandling
of the customer's account; and that significant personnel problems
beginning in 1988 resulted from Purcell's management style. The
Bank also offered evidence of its pro-age policy.
Purcell's evidence, on the other hand, emphasizes that Bruns
questioned Purcell about his age in the interview. More important,
Purcell cites Bruns's response to problems with the
computer-generated reports. Bruns stated that Purcell was being
replaced in part because of "technical deficiencies," which led to
errors on the monthly reports. Purcell asserts, however, that
these errors were the result of incompetent clerical help; that he
had continually requested more effective clerical help to catch up
on a backlog of work; that Bruns did not respond to Purcell's
requests until three months before Purcell's discharge; that most
of the computer errors were corrected by training the new
employees; and that Bruns believed a younger employee would more
likely have computer knowledge than an older employee. Bruns
testified: "[M]ost younger trust officers that I've seen, as well
as most younger officers, have the ability to make entries in
computers. Because they've been trained in that way.... The older
ones have tended not to be as knowledgeable about computers."
"It is the very essence of age discrimination for an older
employee to be fired because the employer believes that
productivity and competence decline with old age." Hazen Paper Co.
v. Biggins, --- U.S. ----, ----, 113 S. Ct. 1701, 1706, 123 L. Ed. 2d
338 (1993). While the Bank offered strong evidence of its pro-age
attitude, Purcell offered evidence answering the Bank's emphasis on
the problems with the computer and the report errors. Purcell's
evidence suggested that Bruns believed Purcell to be incompetent on
the computer and incapable of learning to use it, in large part
because of his age. He presented adequate evidence to deny a plain
error claim attacking the jury verdict that age was a determining
factor in Purcell's discharge.
Willfulness
In addition to finding that the Bank had discharged Purcell
because of his age, the jury found that the Bank had acted
willfully. The Bank claims that the only evidence of willfulness
was the fact that it consulted an employment law attorney before
replacing Purcell, and it argues that this evidence indicates only
its effort to avoid liability. Purcell counters that all of the
Bank's actions indicate reckless disregard of the ADEA's mandates.
Purcell claims that Bruns began making notes of problems with
Purcell only after he had decided to replace Purcell. According to
Purcell, the Bank's complaint that Purcell was not versed in
general tax matters rings hollow because those matters were beyond
his job purview. Likewise, Purcell points out his evidence showed
that he had no control over the personnel in his department and
repeatedly asked for more or better-trained clerical help, all to
no avail.
A review of the record reveals no evidence of willfulness.
True, the Bank consulted an attorney about Purcell and knew the
ADEA was "in the picture." But the evidence does not show that the
Bank violated the ADEA either knowingly or with reckless disregard.
We find, therefore, that the district court erred in denying the
Bank's Motion for Judgment on the issue of willfulness. Because we
review this question under the plain error standard, however,
relief is limited to ordering a new trial. McCann, 984 F.2d at 673
(citing Hinojosa v. City of Terrell, Texas, 834 F.2d 1223, 1228
(5th Cir.1988), cert. denied, 493 U.S. 822, 110 S. Ct. 80, 107
L. Ed. 2d 46 (1989)); see also 5A JAMES W. MOORE & JO D. LUCAS, MOORE'S
FEDERAL PRACTICE ¶ 50.05[1] (2d ed. 1993). We therefore remand for
a new trial on the issue of willful violation of the ADEA.
Defamation Claim
The district court granted the Bank's Motion for Judgment on
Purcell's defamation claim. Purcell cross-appeals this decision,
arguing that there was sufficient evidence of both self-compelled
defamation and malice to justify submitting this claim to the jury.
We review all the evidence in the light most favorable to the party
opposed to the motion and consider whether there was substantial
evidence of defamation so that reasonable jurors could exercise
impartial judgment and arrive at differing conclusions. If so, the
district court erred in granting judgment as a matter of law.
Boeing v. Shipman, 411 F.2d 365, 374-75 (5th Cir.1969) (en banc).
In the controlling Texas law, a plaintiff cannot recover for
injuries from publication of defamatory material if the plaintiff
consented to, authorized, invited, or procured the publication.
Lyle v. Waddle, 188 S.W.2d 770 (Tex.1945). The Texas courts,
however, recognize the narrow exception of self-compelled
defamation. For example, in Chasewood Construction Co. v. Rico,
696 S.W.2d 439 (Tex.App.-San Antonio 1985, writ ref'd n.r.e.), the
court held that self-compelled defamation occurred. A
subcontractor was accused of stealing and was fired. The general
contractor then ordered the subcontractor's crew offsite
immediately. The crew demanded to know the reason for its sudden
ouster, and the subcontractor had little choice but to reveal the
defamation by way of explanation. Likewise, in First State Bank of
Corpus Christi v. Ake, 606 S.W.2d 696 (Tex.Civ.App.-Corpus Christi
1980, writ ref'd n.r.e.), the court found defamation occurred when
the plaintiff had to disclose to prospective employers that his
former employer had discharged him and filed a fidelity bond
against him. The bond was later withdrawn as improperly filed.
Purcell argues that the Bank gave him false reasons for his
discharge, and by doing so, created a foreseeable and unreasonable
risk those reasons would be communicated to prospective employers.
Purcell testified that he was forced to admit the reasons given for
his discharge when interviewing for new employment. Because the
Bank had a common interest in Purcell's discharge and the reasons
for it, however, the Bank enjoyed a qualified privilege that could
only be overcome if Purcell proved that the Bank acted with malice.
See RESTATEMENT (SECOND) OF TORTS § 577 cmt. n (1977). Malice has been
defined as "knowledge of falsity or reckless disregard" for the
truth of the statement. Gillum v. Republic Health Corp., 778
S.W.2d 558, 571-72 (Tex.App.-Dallas 1989, no writ). Proof of
malice may be inferred from the circumstances of the case. Buck v.
Savage, 323 S.W.2d 363, 373 (Tex.Civ.App.-Houston 1959, writ ref'd
n.r.e.).
Purcell argues that the standard for malice and for
willfulness under the ADEA are similar. Purcell cites the evidence
he presented to prove willfulness as sufficient to prove malice.
Our review of the record, however, has convinced us that there is
virtually no evidence the Bank willfully violated the ADEA. There
was not sufficient evidence of malice to justify submitting the
defamation issue to the jury. The district court thus did not err
in granting the Bank's Motion for Judgment on the question of
self-compelled defamation.
Damages
The Bank contends that the jury award of $250,000 in
compensatory damages is clearly excessive. Purcell presented
evidence of lost earnings, of the value of his health insurance
benefits, and of pension benefits. Purcell's economist concluded
that his total net loss, discounted to present value, was $308,296.
Although Congress has given courts broad discretion to fashion
remedies, courts prefer in these cases to order reinstatement.
They will award front pay only if they find that reinstatement is
not feasible. Hansard v. Pepsi Cola Metro. Bottling Co., Inc., 865
F.2d 1461, 1468-69 (5th Cir.), cert. denied, 493 U.S. 842, 110
S. Ct. 129, 107 L. Ed. 2d 89 (1989). The district court found that
reinstatement was feasible. It therefore sent to the jury only the
question of lost back pay from discharge to trial. The jury
determined that Purcell was entitled to $250,000.
Purcell presented evidence of back pay of $85,232 and lost
insurance benefits of $27,227. The requested award thus totaled at
most $112,459, less than half of the jury award. The Bank argues
that even $112,459 is too much because the award of insurance
benefits was improper under Pearce v. Carrier Corp., 966 F.2d 958
(5th Cir.1992). In Pearce, we considered whether a successful ADEA
claimant could recoup automatically the value of a health insurance
fringe benefit. We held that the ADEA claimant was limited to
recovery of actual expenses incurred either to purchase replacement
health insurance or to pay for actual medical expenses. And the
record shows that Purcell presented no evidence that he either
purchased substitute insurance or paid for medical treatment that
insurance would have covered.
Purcell argues, on the other hand, that in addition to back
pay many elements justify the jury's award. Purcell applies
Pearce, maintaining that it should be read to allow recovery of the
value of insurance he tried to buy but could not afford. And he
says he had to buy expensive medication for his wife. Purcell next
asserts that he was entitled to deferred compensation. He further
points out that employment discrimination awards are not excludable
from income, citing United States v. Burke, --- U.S. ----, ----,
112 S. Ct. 1867, 1874, 119 L. Ed. 2d 34 (1992). See also Johnston v.
Harris County Flood Control Dist., 869 F.2d 1565, 1579-80 (5th
Cir.1989), cert. denied, 493 U.S. 1019, 110 S. Ct. 718, 107 L. Ed. 2d
738 (1990). Purcell claims he should receive an amount that
includes the taxes he will owe. Additionally, because the court
ordered reinstatement but stayed reinstatement pending appeal,
Purcell argues he should receive the amount of loss between trial
and disposition of the appeal. Finally, Purcell contends that he
had to sell his house at a loss after his departure from the Bank.
Because he obtained his loan from the Bank, and because the payment
of the loan was accelerated when Purcell left the Bank's employ,
Purcell asserts that the Bank should cover this loss as well.
Purcell now claims the following amounts to justify the award:
Back Pay: $ 85,232
Fringe Benefits: 27,227
Income Taxes: 33,107
Loss To Date of Appeal: 17,026
Loss on Sale of House: 10,000
_________
TOTAL: $172,592 (plus any additional loss until the appeal
has been exhausted)
-----
Purcell's contentions have little merit. Only the back pay
and fringe benefits were submitted to the jury. Regarding
insurance benefits, Purcell testified that he had elected to
continue his insurance coverage pursuant to the Consolidated
Omnibus Budget Reconciliation Act of 1985 (COBRA), and that since
those benefits expired he had been unable to purchase replacement
insurance because it was too expensive. He nonetheless presented
no specific evidence to prove that he had paid for the COBRA
benefits, that he had attempted to buy replacement insurance, or
that he had purchased medication for his wife. The insurance award
was clearly improper. Regarding deferred compensation, Purcell's
expert mentioned that it would increase the amount of lost
earnings. She nevertheless presented no specific evidence of
deferred compensation.
As far as income taxes are concerned, damages awarded "on
account of personal injuries or sickness" are exempt from federal
income tax. 26 U.S.C. § 104(a)(2). Purcell's economist expressly
excluded income taxes from her calculations before she applied the
discount rate to calculate the nontaxable, net present value of
lost earnings. Back pay awards are nontaxable when they redress a
tort-like injury. When Title VII awarded only backwages, it did
not contemplate a tort-like injury, and back pay awards under Title
VII were taxable. Burke, --- U.S. at ----, 112 S. Ct. at 1873-74.
We have also held that the district court should calculate a Title
VII award without reducing it to reflect income tax liability.
Johnston, 869 F.2d at 1580.
Neither Burke nor Johnston, however, involved the ADEA. The
Third, Sixth, and Ninth Circuit Courts of Appeals view the ADEA as
redressing a tort-like injury. See, e.g., Redfield v. Insurance
Co. of N. Am., 940 F.2d 542 (9th Cir.1991); Pistillo v.
Commissioner, 912 F.2d 145 (6th Cir.1990); Rickel v. Commissioner,
900 F.2d 655 (3d Cir.1990). We have held that age discrimination
is a tort claim for purposes of calculating the statute of
limitations. Jay v. International Salt Co., 868 F.2d 179, 180 (5th
Cir.1989). Recently, the Tax Court reconsidered this issue in
light of Burke, holding that ADEA claims are tort-like and that an
entire ADEA award is nontaxable. Downey v. Commissioner, 100 T.C.
40, 1993 WL 231740 (1993). Applying Downey, we find the evidence
properly presented a lost earnings amount net of tax. Increasing
the award to reflect tax liability is improper.
Purcell's other justifications for the jury award come too
late. Purcell's loss pending appeal was not relevant to the jury
determination of back pay. And the loss Purcell incurred on the
sale of his house bears no reasonable relationship to his departure
from the Bank. The parties agreed to submit to the jury back pay
from discharge to trial. Even including taxes, the maximum amount
possible on the evidence was no more than $150,000. A jury may
award a high amount, but it may not speculate beyond the range
presented by the evidence. Brunnemann v. Terra Int'l, Inc., 975
F.2d 175 (5th Cir.1992). The $250,000 award was excessive, and the
district court abused its discretion in refusing to order a
remittitur. We remand the case to the district court to
recalculate the damages.
Purcell's final complaint concerns the district court's order
to stay the judgment pending appeal. The stay also applied to the
reinstatement order. Thus while the appeal has proceeded, Purcell
has not been able to return to work at the Bank. Nevertheless, the
Bank filed a supersedeas bond to cover the costs of appeal and the
damages, including Purcell's loss pending appeal. On remand, the
district court can reconsider its reinstatement order in light of
the passage of time. It can either award compensation to cover the
lost wages during the stay, or it can determine that reinstatement
is no longer feasible and award front pay.
Attorney's Fees
After trial, Purcell requested $92,800 in attorney's fees.
He claimed that his attorney worked outside of court for 552 hours
at a rate of $150 per hour and in court for 50 hours at $200 per
hour. The Bank countered that Purcell's attorney was entitled to
only $37,500, based on 300 hours of work at $125 per hour. The
district court granted Purcell attorney's fees of $75,000 for 500
hours of work at $150 per hour. The Bank now contends that Purcell
failed to support sufficiently its request for attorney's fees. We
review the district court's award for abuse of discretion. Hedrick
v. Hercules, Inc., 658 F.2d 1088, 1097 (5th Cir. Unit B 1981).
The ADEA incorporated the remedies authorized by the Fair
Labor Standards Act. 29 U.S.C. § 626(b). The relevant provision
of the Fair Labor Standards Act, 29 U.S.C. § 216(b), provides that
the "court in such action shall, in addition to any judgment
awarded to the plaintiff or plaintiffs, allow a reasonable
attorney's fee to be paid by the defendant" (emphasis added). The
language of the statute thus mandates that the district court award
attorney's fees to the prevailing party, but it gives the court
discretion in deciding what is reasonable.
To calculate reasonable attorney's fees, the district court
multiplies the number of hours worked by the hourly rate. Both
hours and rate must be reasonable, and the court should consider
only the hours spent on the successful claims. Hensley v.
Eckerhart, 461 U.S. 424, 433-34, 440, 103 S. Ct. 1933, 1939, 1943,
76 L. Ed. 2d 40 (1983). After calculating the basic fee, the
district court can adjust the amount upward or downward to account
for the well-established Johnson factors. Johnson v. Georgia
Highway Express, Inc., 488 F.2d 714, 717-19 (5th Cir.1974). In
this case the district court expressly took into account several of
the Johnson factors when calculating the $75,000. It then declined
to make any further adjustments.
The Bank argues that Purcell failed to present sufficient
evidence because he did not submit detailed timesheets as required
by Fifth Circuit Local Rule 47.8.1. The applicable rule, however,
is the Western District of Texas Local Rule CV-7(j). Under Rule
CV-7(j), a motion for attorney's fees must contain a listing of the
activity, the attorney's name, the date, and the hours expended,
all supported by an affidavit. The requesting attorney should also
be prepared to submit timesheets if required "upon further order of
the court." Purcell complied with the rule by submitting a motion,
a supporting affidavit, a memorandum, and a detailed summary of the
time his attorney spent on each activity. The district court
requested no further documentation. The Bank responded thoroughly.
Because the district court has reasonably calculated the fee and
considered the Johnson factors, we hold that the district court did
not abuse its discretion in awarding $75,000 in attorney's fees.
CONCLUSION
The district court did not err in submitting to the jury the
questions of discharge and age discrimination, in granting the
Motion for Judgment on the slander claim, and in awarding $75,000
in attorney's fees. The district court did err in denying the
Bank's Motion for Judgment on the question of willfulness, and it
abused its discretion in denying the Motion for New Trial or
Remittitur and in awarding the $250,000 compensatory damages. We
affirm the jury verdict's finding of discharge and age
discrimination. We affirm the district court's judgment for the
Bank on the slander claim. We reverse the finding of willfulness
and remand for a new trial on this issue. Finally, we remand the
case to the district court to order remittitur of the damages and
reconsider reinstatement.
AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.