What is Punitive Damages & Compensatory Damages ?
Punitive damages are awarded in addition to actual damages when the defendant acted with recklessness, malice, or deceit. They are intended to punish and thereby deter blameworthy conduct, and are generally not recoverable for breach of contract.
The Supreme Court has held that three guidelines help determine whether a punitive damages award violates constitutional due process:
- The reprehensibility of the conduct being punished;
- The reasonability of the relationship between the harm and the award;
- And the difference between the award and the civil penalties authorized
in comparable cases.
Punitive damages are awarded in addition to actual damages when the defendant acted with recklessness, malice, or deceit.
Compensatory Damages in Cases
A. Legal basis for compensatory damages. ? 102 of the Civil Rights Act of 1991, 105 Stat. 1071, Pub. L. No. 102-166, 42 U.S.C. ? 1981a. For a detailed explanation see the EEOC?s somewhat dated enforcement guidance on compensatory and punitive damages which is available on the EEOC?s website www.eeoc.gov/docs/damages.txt.
While the EEOC?s guidance also covers punitive damages such damages are not available for cases against federal, state and/or local governmental agencies or entities.
B. What are compensatory damages. Compensatory damages include damages for past pecuniary loss (out of pocket loss), future pecuniary loss, and non-pecuniary loss (emotional harm). These damages are available for cases against federal, state and/or local governmental agencies or entities.
Past Pecuniary losses. Pecuniary losses include moving expenses, job search expenses, medical expenses, and other quantifiable out of pocket expenses.
Future pecuniary losses are the same expenses if they will continue after the litigation.
Non-pecuniary losses. These losses ore for the intangible injuries of emotional harm such as emotional pain, suffering, inconvenience, mental anguish, and loss of enjoyment of life. Other such losses could include injury to professional standing, injury to character and reputation, and loss of health.
C. Need for a causal connection. To recover compensatory damages the Complainant must prove that the employer?s discriminatory was the cause of the loss.
D. Limits on availability.
$300,000. cap on pecuniary damages for each single case.
Past pecuniary losses are excluded from the cap.
Back pay is excluded from the cap it is not considered to be an element of compensatory damages.
Front pay is excluded from the cap for the same reason.
Not available for breach of settlement agreement claims.
Not available in Rehabilitation Act cases where the Employer made a good faith effort to reasonably accommodate the complainant.
Not available for complaints founded on claims the EEO process itself caused damages.
Not available for acts of discrimination occurring before November 21, 1991.
E. Proving or Defending a Claim of Compensatory Damages. Standard of proof is a preponderance of the evidence.
Medical or psychiatric evidence is not required. Testimony of complainant, family, co-workers, etc. sufficient if unrebutted to award damages.
Discovery is essential to defend these claims.
EEOC will allow testimony at hearing even if compensatory damages were never mentioned or claimed prior to hearing. This assumes complainant has not failed to meet the requirements of a pre-hearing order.
Don?t assume that a bifurcated hearing on damages means you don?t need initial discovery on compensatory damages.
Use discovery to tie down the claims and basis for the claims.
Practice strategies must be tailored to the case.
Pro se complainants.
Complainants who are represented by counsel.
F. A practice example ? Hypothetical 1.
Consequential Damages for Whistleblower Cases Before the MSPB.
A. Legal Basis for Consequential Damages. The authority for these damages is found in the 1994 amendments to the Whistleblower Protection Act, which is codified at 5 USC ? 1221(g)(1)(A)(ii).
B. What are consequential damages. The 1994 amendments failed to define consequential damages. It authorized ?back pay and related benefits, medical costs incurred, travel damages, and any other reasonable and foreseeable consequential [damages.]?
C. Need for a Causal Connection. Damages must be reasonable and foreseeable and must stem from the whistleblowing activity.
Limits on Availability.
Monetary losses only. Does not include payment for nonpecuniary losses. See Kinney v. Department of Agriculture, 82 MSPR 338 (1999).
Retroactive to October 29, 1994.
E. Proving or Defending a Claim of Compensatory Damages. Standard of proof is a preponderance of the evidence.
Discovery is essential to defend these claims.
Use discovery to tie down the claims and basis for the claims.
F. A practice example ? Hypothetical 2.
III. Conclusions.
A. Stakes are now much higher, especially for cases involving compensatory damages. Management must be prepared to devote more resources to defending these actions.
B. Discovery has become even more important. Management may need to hire experts to review evidence, conduct investigations and/or testify.
C. Management may need to change its established settlement parameters.
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