Valuing economic damages in employment litigation from a plaintiff's perspective.

• Author: Reiss, Jerry
• Position: Part 1

Valuing economic damages in Title VII cases is more difficult than valuations of personal injury, medical malpractice, and product liability torts, and it is unlike valuing damages for any other plaintiff action (such as breach of contract). Yet the Title VII case often proceeds to trial without a professional valuation. One of the things that distinguishes the Title VII valuation from valuations of all other plaintiff losses is that the Title VII valuation adds a seniority-based benefits loss component which does not fit neatly into a front or back pay calculation. As a loss that generally occurs in the future, when the seniority-based benefits component is the result of a Title VII wrongful termination of employment, it cannot be recovered with new employment even if that employment offers identical benefits. Accordingly, it becomes a permanent loss and this article will demonstrate the permanent loss. As expert testimony before a jury on future damages is often excluded, understanding the Daubert and Kumho Tire line of cases, (1) among other distinctions of the Title VII valuation process, is essential to a proper presentation to the court and jury on the extent of economic damages in the case.

Part I of this article will begin by showing the valuation issues that drive the economic damages. It will compare Title VII valuation issues to those of other types of plaintiff actions. It will show how the valuation report should be structured to deal with the many problems unique to Title VII damage claims and how properly structuring the expert's report can help maximize your client's award. This article will show why the report must be structured differently to deal with the way in which testimony is offered in such cases.

Companies more sensitive to Title VII discrimination problems have certain employee benefit programs designed to deal with those concerns. Whether the company offers such programs or does not is certainly not proof of whether your client suffered discrimination. After all, it is often the employees who work for these companies that are responsible for the discrimination and not company policy. But companies more sensitive to Title VII discrimination problems adopt certain employee benefit programs designed to avoid situations where discrimination might result. Part I will contain a discussion of these programs. Hopefully, this discussion will help the plaintiff's practitioner determine client credibility on whether the client suffered discrimination and whether to accept the case.

Part II of this article, which will appear in the June issue of The Florida Bar Journal, will show the core valuation issues that must be addressed before the valuation is undertaken. It will begin by identifying the components of loss as they relate to classifications of front and back pay damages, including the seniority-based benefits component. It will show why a decision must be made whether the economic loss will be valued explicitly or implicitly. Each method will be defined and the issues for making the choice will be discussed. Part II also will show that most experts value loss with the Alaskan Method. It will explain what this method is and why it is so appealing yet its use can undermine a proper jury award.

Valuation Issues

* Certainty of Loss

The components of Title VII loss are less certain than with personal injury and other torts. Many actions for damages involve loss of wages and benefits. But when the loss is due to Title VII discrimination, the loss can be more devastating, particularly as it relates to ongoing damages, and sometimes even as it relates to past damages, depending upon a number of factors: 1) whether the plaintiff was psychologically harmed; 2) how long the plaintiff worked for the defendant; 3) the level of education of the plaintiff; 4) the size of the industry under which the proposed loss occurred; 5) whether the loss of health insurance-based benefits contributed to health problems (postseparation), making it more difficult to obtain and hold similar work; and most importantly 6) the unknown human factor that some people can recover from major setbacks more easily than others can recover from minor setbacks.

Valuations of damages that occur as a direct result of Title VII termination of employment have one element so different from all other valuation cases that it alone will drive the valuation process in a different direction than all other actions involving loss. This element is that it is human nature to steer clear of people who are involved in unpopular controversy. A person who files a Title VII action against an employer will have far more difficulty finding new work than someone who can return to work after healing from an injury. (2) How difficult the task of finding new work can be should be related to the length of tenure of the defendant and also how much in demand the plaintiff's skills are in the market place. It can also be related to whether the plaintiff was psychologically harmed and how extensive the harm may be. (3) There is also an unknown human factor, as addressed above, that is thrown into the mix of factors to consider.

A second important distinction between Title VII loss and all other valuations is that much of the evidence on the extent of damages is known only by the plaintiff and the defendant. Use of the term defendant as used herein shall be construed to include the employees who work for the defendant. Obviously concerned for their jobs, their testimony will likely be influenced by the defendant. The other major source of information is the plaintiff, who is embittered by the termination and may have a biased outlook. This presents many problems for trying the case. For this...