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Employment & Labor Law for Public Safety Agencies
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Damages, Remedies and Enforcement of Settlements
Mointhly Law Journal Article: Validity of Settlement Agreements Containing a "Will Not Reapply for Employment" Provision, 2009 (8) AELE Mo. L. J. 201.
An ATF agent assigned to undercover work infiltrated the Hells Angels motorcycle gang, and assisted in the indictment of 36 people for racketeering and murder. During the prosecutions, the disclosure of his identity resulted in threats against him and his family. The ATF’s alleged failure to appropriately respond to the threats and to adequately conceal his identity during an emergency relocation, led him to seek compensation. Subsequently, the ATF reached a settlement agreement and agreed to pay him a lump sum. It then withdrew his and his family’s fictitious identities despite a recent threat assessment. An arson attack substantially damaged his home, but his family escaped without injury. The ATF pursued the agent as a suspect. But the ATF’s Internal Affairs Division found that there was no valid reason for the withdrawal of the fictitious identities, that risks to the family had been ignored, and that the response to the arson had been mismanaged. He sued, claiming breach of the settlement agreement. The U.S. Court of Federal Claims ruled that there was no breach of any express provision of the agreement but that he was entitled to emotional distress damages of $173,000 for breach of the implied duty of good faith and fair dealing. He alleged misconduct by the Justice Department during the litigation and asked to set aside the judgment, and award additional remedies. The court determined that none of the alleged misconduct warranted relief because, even if they occurred, there was no showing that these acts could have affected the case. A federal appeals court overturned the judgment as to the breach of the implied duties because the United States Court of Federal Claims failed to ground the supposed duties (ensuring the plaintiff’s security and not discriminating against him) in the specific provisions of the settlement agreement contract, and upheld the rest of the decision. Dobyns v. U.S., #15-5020, 915 F.3d 733 (Fed. Cir. 2019).
A federal employee of the U.S.
Office of Personnel Management (OPM) who worked as a criminal investigator
appealed his termination to the Merit Systems Protection Board (MSPB), claiming
that his firing constituted marital status discrimination. He agreed to
withdraw that claim when the employer agreed to pay him a $50,000 settlement.
Part of the settlement agreement provided that the OPM's director of human
resources would be the contact for reference inquiries and only disclose the
dates of his service, with a termination letter to be removed from his
personnel file and both parties barred from disclosing the grievance of the
settlement agreement. He later took a job with a private firm that contracts
with federal agencies to carry out background investigations. He was suspended
from the job without pay, however, when OPM employees, allegedly at the
direction of the OPM's security office, discussed his termination with the
employer. The OPM's director of human resources was not involved in that
discussion. A MSPB ALJ found that the OPM had materially breached the
settlement agreement, but found that the MSPB lacked jurisdiction to award
damages for breach, so the only remedy available there would be to rescind the
agreement and reinstate the initial appeal of the termination, along with the
employee returning the $50,000 settlement amount. He did not want to accept
that course of action, so the ALJ dismissed his enforcement action. A federal
appeals court ruled that the employee was not barred from filing a breach of
contract lawsuit for damages in the U.S. Court of Claims, since a damages
remedy had not been available before the MSPB. Cunningham v. United States,
#13-5055, 2014 U.S. App. Lexis 6493 (Fed. Cir.).
A former firefighter won a judgment against a
city in excess of $1 million under the Family and Medical Leave Act (FMLA). He
later filed a Chapter 7 bankruptcy petition, but did not list the judgment as
an asset of the bankruptcy estate. After his bankruptcy discharge was granted,
the judgment was discovered, the discharge revoked, and the bankruptcy case
reopened, with the bankruptcy trustee seeking to collect the judgment from the
city for the benefit of the firefighter's creditors. A federal appeals court,
ruling en banc, rejected the argument that the firefighter's fraudulent
concealment of the judgment judicially estopped the trustee's claim. Reed v.
City of Arlington, #08-11098, 2011 U.S. App. Lexis 16652 (5th Cir.). Editor's
note: The fact that the majority of the funds paid would go to the lawyer who
represented the firefighter in the prior FMLA case did not alter the result, as
the attorney had no knowledge of the filing of the bankruptcy petition.
When a Hispanic police officer was denied a
requested transfer to Internal Affairs after repeatedly complaining of racial
discrimination, there was sufficient evidence to support a jury verdict finding
unlawful retaliation. The jury's award of $90,000 under Title VII and $90,000
under a District of Columbia law, however, was an improper double recovery,
since both retaliation claims involved the same facts and were seeking the same
relief. The jury rejected the officer's racial discrimination claims. Medina v.
District of Columbia, #10-7094, 643 F.3d 323 (D.C. Cir. 2011)
City does not have to pay a $580,000 settlement
to a terminated battalion chief. The former firefighter had filed for Ch. 7
bankruptcy, listing over $300,000 in credit card debt, and concealed the
settlement. Reed v. City of Arlington, #08-11098, 2010 U.S. App. Lexis 19319
(5th Cir.).
Seventh Circuit lowers an award of compensatory
damages for reverse race discrimination from $200,000 to $20,000. The plaintiff
also received awards of back pay, front pay and attorney's fees. Marion Co.
Coroner's Office v. EEOC, #09-3595, 612 F.3d 924, 2010 U.S. App. Lexis 16236
(7th Cir.).
Federal merit board rejects an attempt to set
aside a settlement agreement. The employee's assertion that a medical condition
prevented him from having the mental capacity necessary to enter into a valid
settlement agreement did not meet the heavy burden of proof required or
outweigh the sworn statements of the agency's witnesses present during the
negotiations. Parks v. U.S. Postal Service, #AT-0752-06-0166-C-1, 2010 M.S.P.B.
6, 2010 MSPB Lexis 164 (MSPB 2010).
California Supreme Court limits punitive damage
awards. The justices ruled that the maximum permissible punitive award should
be 1.4 times the amount of compensatory damages. The plaintiff alleged that she
was wrongfully terminated because of a medical condition and a related
disability (panic attacks and medication-induced body odor). Although public
employers in California are exempt from punitive awards, managers and
supervisors are not. Roby v. McKesson Corp., #S149752, 47 Cal.4th 686, 2009
Cal. Lexis 12374.
Settlement agreements negotiated between a N.Y.
police union and the city manager are enforceable, without further approval by
the city council. Under N.Y. bargaining laws, there is no requirement that
legislative approval is needed to formalize a labor-management legal
obligation. Patrolmen's Benev. Assn. v. City of Long Beach, Index No. 10692/06,
2007-07305, 2008 NY Slip Op 9573, 868 N.Y.S.2d 306, 2008 N.Y. App. Div. Lexis
9328 (2nd Dept.).
"... in the absence of a showing of fraud,
duress, or other circumstances suggesting that the settlement was not knowing
or voluntary, the district court need not examine the circumstances surrounding
the settlement ... Buyer's remorse, however, cannot undo a contract to which
all parties have given their assent and for which all of the conditions
precedent have been fulfilled." Newkirk v. Vil. of Steger, #06-3140, 2008
U.S. App. Lexis 16608 (7th Cir.).
In a 5-to-3 decision, the Supreme Court reduced a
large punitive damage award to 100% of the amount of compensatory relief that
was paid. The litigation followed an oil spill caused by the negligence of an
employee. Exxon Shipping Co. v. Baker, #07-219, 125 S.Ct. 2605, 2008 U.S. Lexis
5263.
Oregon's split recovery statute, under which 60
percent of all punitive damages awarded in a state law tort action are
allocated to the state, does not violate the Fifth Amendment's prohibition
against taking private property by public use, without just compensation.
Engquist v. Oregon Dept. of Agriculture, #07-474, 2008 U.S. Lexis 4705.
An award of compensatory damages need not
accompany punitive damages awards under Title VII or 42 U.S. Code §1981. Abner
v. KCS RR, # 06-30476, 2008 U.S. App. Lexis 27, 102 FEP Cases (BNA) 616 (5th
Cir.).
In a wrongful termination action brought by a
former sheriff's employee, a federal court can enforce the intent of a Rule 68
consent judgment and enjoin the plaintiff from pursuing claims for similar
relief in state court. Fafel v. DiPaola, 04-1718, 399 F.3d 403, 2005 U.S. App.
Lexis 3747 (1st Cir. 2005). {N/R}
NYPD officer who was awarded, in a sexual
harassment case, $400,000 in compensatory damages against two superiors and $1
million in punitive damages against the city, cannot recover punitive damages
from the city. Krohn v. N.Y. City Police Dept., #2004-22, 2004 N.Y. Lexis 926
(2004). {N/R}
Fourth Circuit affirms an award of $410,000 in
back pay and interest to a wrongfully demoted employee, and a punitive damages
award of $100,000. Although there was no award of compensatory damages,
punitive damages are allowed to compliment a back-pay award. Corti v. Storage
Technology Corp., #01-1833, 304 F.3d 336, 2002 U.S. App. Lexis 19228, 89 FEP
Cases (BNA) 1477 (4th Cir. 2002). {N/R}
President signs H.R. 169, requiring federal
agencies to pay the settlement costs for discrimination an whistleblower cases
from agency budgets. Notification and Federal Anti-Discrimination and
Retaliation Act, 5 U.S. Code §2301 (§101 et seq.), Pub. L. No.
107-174 (2002). [2002 FP Aug]
The statutory cap on Title VII compensatory and
punitive damages does not apply to front pay awards or to claims under state
law. Hemmings v. Tidymans, #99-35932, 285 F.3d 1174, 88 FEP Cases (BNA) 945,
2002 U.S. App. Lexis 6686 (9th Cir. 2002). [N/R]
Supreme
Court holds that damages for "front pay" awarded against an employer
is not limited by the $300,000 maximum liability for civil rights
discrimination claims. Pollard v. E. I. du Pont de Nemours, #00-763, 121 S.Ct.
1946, 85 FEP Cases (BNA) 1217, 2001 U.S. Lexis 4123, 69 L.W. 4419. [2001 FP
99-100]
U.S. Supreme Court holds that the test for
federal courts of appeals is to apply a de novo, rather than abuse of
discretion standard when reviewing district court determinations of the
constitutionality of punitive damages awards. Cooper Industries v. Leatherman
Tool Group, #99-2035, 532 U.S. 424, 121 S.Ct. 1678, 2001 U.S. Lexis 3520, 69
L.W. 1679 (5/14/01). {N/R}
Federal appeals court reiterates a four-part test
for honoring settlement agreements between an employee and employer, that are
not negotiated and or approved by their attorneys:
(1) whether the complaining party, the employer,
and any other pertinent parties have agreed to be bound;
(2) whether the settlement is reasonable in light
of the nature of the violations alleged, the risks inherent in litigation, and
the stage of the litigation;
(3) whether there has been any fraud, coercion,
or duress by any of the parties in reaching the settlement; and
(4) whether the employer has a history of labor
law violations or has breached previous settlement agreements.
Beverly California Corp. v. NLRB, #99-4121, 253
F.3d 291, 2001 U.S. App. Lexis 11890, 167 LRRM (BNA) 2409 (7th Cir.). {N/R}
The 1991 Civil Rights Act cap on compensatory
damages applies to each lawsuit, and not to each successful claim. Fogg v.
Ashcroft, #00-5138, 254 F.3d 103, 2001 U.S. App. Lexis 13924, 85 FEP. Cases
(BNA) 1705 (D.C. Cir 2001). {N/R}
Supreme Court decision on punitive damages in ADA
cases applied to a Chicago verdict. To recover, a claimant must prove that
management knew that its was violating federal law. Gile v. United Airlines,
#99-2509, 2000 U.S. App. Lexis 11354 (7th Cir). [2000 FP 117-8]
N.Y. Court of Appeals holds that a public
employee's verdict against his employing agency is not to be reduced by the
amount of funds received from collateral sources. Iazzetti v. City of N.Y., 94
N.Y.2d 183, 723 N.E.2d 81, 1999 N.Y. Lexis 3750 (1999). {N/R}
A public entity in California cannot be sued for
fraudulently inducing an applicant to relocate for employment purposes. Govt.
Code 818.8 immunizes a city or county from damages arising from
misrepresentations, whether negligent or intentional. Burden v. Co. of Santa
Clara, #H019329, 00 C.D.O.S. 4429, 2000 Cal.App. Lexis 440. {N/R}
Joining the Second Circuit and disagreeing with
the Fifth Circuit, the Fourth Circuit holds that a volunteer fire department is
a state actor for purposes of 42 U.S. Code 1983. Goldstein v. Chestnut Ridge
Vol. Fire Co., 218 F.3d 337 (4th Cir. 2000). {N/R}
Agreeing with four circuits but disagreeing with
the Sixth Circuit, the Seventh Circuit holds that the cap on compensatory
damages in 42 U.S. Code 1981a(b)(3) does not apply to front pay awards. Pals v.
Schepel Buick & GMC Truck Inc., 220 F.3d 495 (7th Cir. 2000). {N/R}
Punitive damages may be awarded for Title VII
violations. Kolstad v. Amer. Dental Assn., 119 S.Ct. 2118, #98-208 (1999).
{N/R}
Kansas statute which limits noneconomic damages
to $2500,000 is not invalid under the ADA or Equal Protection Clause, because
it applies to all plaintiffs. Patton v. TIC United, 64 LW 2562 (10th Cir.
1996). {N/R}
Supreme Court disallows use of "after
acquired evidence" to avoid liability in discrimination cases, but
later-discovered evidence which impairs a plaintiff's fitness for continued
employment bars reinstatement or front pay and limits the amount of back pay
due. McKennon v. Nashville Banner, 115 S.Ct. 879 (1995). [1995 FP 52-3]
$40 million in punitive awards for two workers
who complained of racial discrimination is erroneous per se. New trial ordered.
Lane v. Hughes Aircraft, 66 FEP Cases (BNA) 1122 (Cal. Super. 1994). {N/R}
Supreme Court upholds punitive damage awards;
they do not violate the eighth amendments "excessive fines" clause.
Browning-Ferris Industries of Vt., Inc. v. Kelco Disposal, Inc., 57 L.W. 4985,
109 S.Ct. 2909 (6/26/89).
Supreme court allows punitive damages in civil
rights suits without a showing of malicious intent; could affect termination
cases. Smith v. Wade, 103 S.Ct. 1625 (1983).
See also: Civil Liability;
Wrongful Discharge Damage Awards.