Back

Lost Future Earning Capacity - Damages for Lost Future Earning Capacity

January 17, 2022

New York

,

United States of America

Issue

Are damages for lost future earning capacity available in a claim for loss of career opportunities due to discrimination under Title VII?

Conclusion

Damages for lost future earning capacity may be awarded in Title VII cases. Lost future earning capacity falls within the catchall category of "other nonpecuniary losses" found at 42 U.S.C. § 1981a(b)(3). (United States v. Vulcan Soc., Inc., Williams v. Pharmacia, Inc., Gulino v. Bd. of Educ. of the City Sch. Dist. of N.Y.)

Reputational injury is also compensable under Title VII. (Sanders v. Madison Square Garden, L.P., Fitchett v. City of New York)

There is no conceptual barrier between allowing a Title VII plaintiff to recover for future losses and allowing a Title VII plaintiff to present evidence of reputational injury in order to accurately quantify that loss. (Sanders v. Madison Square Garden, L.P.)

Lost future earning capacity is a form of compensatory damages which is limited to cases of intentional discrimination. (Gulino v. Bd. of Educ. of the City Sch. Dist. of N.Y.)

A plaintiff seeking to recover for lost future earning capacity must produce competent evidence suggesting that their injuries have narrowed the range of economic opportunities available to them, or in other words, that their injury has caused a diminution in their ability to earn a living. (Williams v. Pharmacia, Inc., United States v. Vulcan Soc., Inc., Gulino v. Bd. of Educ. of the City Sch. Dist. of N.Y.)

To recover lost future earnings the plaintiff must show that the discrimination they suffered caused reputational harm including injury to their professional standing, character, or reputation and that this reputational harm resulted in a narrowing of economic opportunities. (United States v. Vulcan Soc., Inc.)

Caselaw permits damages for lost future earnings only if the discrimination tainted the existing reputation of the victim and if this reputational harm resulted in diminished employment opportunities. (United States v. Vulcan Soc., Inc.)

In United States v. Vulcan Soc., Inc., the United States District Court for the Eastern District of New York rejected the plaintiffs' argument that the denial of the reputational benefits of a position, such as the loss of the prestige of being a firefighter, could entitle them to damages for lost future earning capacity.

In Fitchett v. City of New York, the plaintiff argued that the City of New York violated Title VII and the New York State Human Rights Law when it delayed promoting him to Detective Third Grade in the New York City Police Department because of his race. The plaintiff argued that his delayed promotion constituted an adverse employment action even though he was given a fully retroactive promotion, with retroactive pay, because it harmed his reputation in the police department. However, the plaintiff did not provide testimony or evidence supporting his claim of reputational harm. Additionally, while damages from reputational injuries are recoverable under Title VII, reputational harm alone generally cannot constitute an adverse action.

Law

Subsection (b)(3) of 42 U.S.C. § 1981a sets out the limitations on compensatory damages in cases of intentional discrimination in employment:

(b) Compensatory and punitive damages

(1) Determination of punitive damages

A complaining party may recover punitive damages under this section against a respondent (other than a government, government agency or political subdivision) if the complaining party demonstrates that the respondent engaged in a discriminatory practice or discriminatory practices with malice or with reckless indifference to the federally protected rights of an aggrieved individual.

(2) Exclusions from compensatory damages

Compensatory damages awarded under this section shall not include backpay, interest on backpay, or any other type of relief authorized under section 706(g) of the Civil Rights Act of 1964 [42 U.S.C. 2000e-5(g)].

(3) Limitations

The sum of the amount of compensatory damages awarded under this section for future pecuniary losses, emotional pain, suffering, inconvenience, mental anguish, loss of enjoyment of life, and other nonpecuniary losses, and the amount of punitive damages awarded under this section, shall not exceed, for each complaining party-

(A) in the case of a respondent who has more than 14 and fewer than 101 employees in each of 20 or more calendar weeks in the current or preceding calendar year, $50,000;

(B) in the case of a respondent who has more than 100 and fewer than 201 employees in each of 20 or more calendar weeks in the current or preceding calendar year, $100,000; and

(C) in the case of a respondent who has more than 200 and fewer than 501 employees in each of 20 or more calendar weeks in the current or preceding calendar year, $200,000; and

(D) in the case of a respondent who has more than 500 employees in each of 20 or more calendar weeks in the current or preceding calendar year, $300,000.

(4) Construction

Nothing in this section shall be construed to limit the scope of, or the relief available under, section 1981 of this title.

In Williams v. Pharmacia, Inc., 137 F.3d 944, 1998 WL 81258 (7th Cir. 1998) ("Williams"), the United States Court of Appeals for the Seventh Circuit held that lost future earning capacity is a nonpecuniary injury which plaintiffs may be compensated for under Title VII. To recover for lost earning capacity, a plaintiff must produce competent evidence suggesting that their injuries have narrowed the range of economic opportunities available to them. The Court explained that the remedial scheme in Title VII is designed to make the plaintiff whole and when reputational injury caused by an employer's unlawful discrimination diminishes a plaintiff's future earning capacity, the plaintiff cannot be made whole without compensation for the lost future earnings they would have received absent the employer's unlawful activity (at 952-953):

The jury's award for lost future earnings is also appropriate under Title VII. The Civil Rights Act of 1991 added new remedial provisions to Title VII to authorize compensatory damages for a plaintiff's "future pecuniary losses, emotional pain, suffering, inconvenience, mental anguish, loss of enjoyment of life, and other nonpecuniary losses". 42 U.S.C. § 1981a(b)(3). The district court characterized the jury's award for lost future earnings as "an intangible nonpecuniary loss." In doing so, the court analogized lost future earnings to an "injury to professional standing" and to "injury to character and reputation," both of which have been identified by the Equal Employment Opportunity Commission as examples of nonpecuniary losses compensable under the 1991 Act. Memorandum & Order of November 21, 1996 at 17 (citing EEOC Policy Guidances on Damages Provisions of 1991 Civil Rights Act, 8 FEPM 405:7091, 7095).

An award of lost future earnings is a common-law tort remedy. "To recover for lost earning capacity, a plaintiff must produce 'competent evidence suggesting that his injuries have narrowed the range of economic opportunities available to him.... [A] plaintiff must show that his injury has caused a diminution in his ability to earn a living.' " McKnight v. General Motors Corp., 973 F.2d 1366, 1370 (7th Cir.1992) (McKnight III) (quoting Gorniak v. National R.R. Passenger Corp., 889 F.2d 481, 484 (3d Cir.1989)) (alteration in original), cert. denied, 507 U.S. 915, 113 S.Ct. 1270, 122 L.Ed.2d 665 (1993). Williams's expert witness testified that the poor evaluations Williams received and Pharmacia's eventual termination of her employment taint Williams's employment record. The jury was entitled to rely on this testimony in finding that Pharmacia's acts of discrimination diminish Williams's future earning capacity in the same way that a physical injury may diminish the earning capacity of a manual laborer.

We have noted previously that "the remedial scheme in Title VII is designed to make the plaintiff whole." McKnight v. General Motors Corp., 908 F.2d 104, 116 (7th Cir.1990) (McKnight II) (citing Albemarle Paper

Page 953

Co. v. Moody, 422 U.S. 405, 418, 95 S.Ct. 2362, 2372, 45 L.Ed.2d 280 (1975)), cert. denied, 499 U.S. 919, 111 S.Ct. 1306, 113 L.Ed.2d 241 (1991). The broad compensatory remedies added to Title VII in the 1991 Civil Rights Act, which provide for damages for both "pecuniary" and "nonpecuniary" losses, are further evidence of this goal. When reputational injury caused by an employer's unlawful discrimination diminishes a plaintiff's future earnings capacity, she cannot be made whole without compensation for the lost future earnings she would have received absent the employer's unlawful activity. Lost future earning capacity is a nonpecuniary injury for which plaintiffs may be compensated under Title VII.

In United States v. Vulcan Soc., Inc., 897 F.Supp.2d 30 (E.D. N.Y. 2012) ("Vulcan"), the United States District Court for the Eastern District of New York held that damages for lost future earning capacity may be awarded in Title VII cases. The Court adopted the reasoning from Williams, supra, and explained that 42 U.S.C. § 1981a does not explicitly authorize damages for lost future earning capacity, but that this form of damages falls within the catchall category of "other nonpecuniary losses" found at subsection (b)(3). A plaintiff seeking to recover for lost future earning capacity must produce competent evidence suggesting that their injuries have narrowed the range of economic opportunities available to them, or in other words that their injury has caused a diminution in their ability to earn a living. To recover lost future earnings the plaintiff must show that the discrimination they suffered caused reputational harm including injury to their professional standing, character, or reputation and that this reputational harm resulted in a narrowing of economic opportunities. The Court rejected the plaintiffs' argument that the denial of the reputational benefits of a position, such as the loss of the prestige of being a firefighter, could entitle them to damages for lost future earning capacity. The Court noted that case law permits damages for lost future earnings only if the discrimination tainted the existing reputation of the victim and if this reputational harm resulted in diminished employment opportunities (at 48-49):

Finally, Plaintiff–Intervenors seek damages for “lost future earning capacity.” (Int. Supp. Mem. at 16–18.) According to Plaintiff–Intervenors, this nonpecuniary injury “is distinct from the loss of income that would been earned from the job itself (which is remedied by an award of back and front pay),” and “compensates victims for the intangible loss of experiences that would have resulted in enhanced earning capacity, such as additional schooling, experience in a trade or profession, or the building of a business.” (Id. at 16.) They argue that because “FDNY firefighters have significant opportunity to pursue education, e.g., studying to become nurses and lawyers, and to work a second job or run a business, many subclass members may assert a claim for lost future earning capacity.” (Id. at 16–17 (internal quotation marks and citations omitted) (citing Int. FOF ¶¶ 10–11).) The court agrees that damages for lost future earning capacity may be granted in Title VII cases, but finds this category of damages to be more limited than Plaintiff–Intervenors suggest.

Section 1981a does not explicitly authorize damages for lost future earning capacity, but this form of damages is properly swept within its catchall category of “other nonpecuniary losses.” 42 U.S.C. § 1981a(b)(3). As the Seventh Circuit has noted, “[a]n award of lost future earnings is a common-law tort remedy” and is therefore an “appropriate” form of damages “under Title VII.” Williams II, 137 F.3d at 952. The court has further held that a plaintiff seeking to recover for lost future earning capacity “must produce competent evidence suggesting that his injuries have narrowed the range of economic opportunities available to him,” i.e., “that his injury has caused a diminution in his ability to earn a living.” Id. (internal quotation marks omitted).

Importantly, however, the case law makes clear that the “injury” resulting in a diminution in the plaintiff's ability to earn a living cannot be simply a denial of employment; a plaintiff must show that the discrimination he suffered caused a reputational harm—injury to his professional standing, character, or reputation—which in turn resulted in a narrowing of economic opportunities. See, e.g., id. at 953 (“The lost future earnings award ... compensates [plaintiff] for a lifetime of diminished earnings resulting from the reputational harms she suffered as a result of [defendant's]

[897 F.Supp.2d 49]

discrimination.”); Sanders v. Madison Square Garden, L.P., No. 06–CV–589 (GEL), 2007 WL 2254698, at *13 (S.D.N.Y. Aug. 6, 2007) (“[W]here an employee can expect to encounter increased difficulty in finding comparable employment due to injury to her professional standing caused by an employer's unlawful conduct, the employee may recover for the added difficulty in the form of compensatory damages.” (internal quotation marks and alteration omitted)); Mahony v. KeySpan Corp., No. 04–CV–554 (SJ), 2007 WL 805813, at *7 (E.D.N.Y. Mar. 12, 2007) (“When reputational injury caused by an employer's unlawful discrimination diminishes a plaintiffs future earnings capacity, [she] cannot be made whole without compensation for the future earnings she would have received absent the employer's discrimination” (quoting Williams II, 137 F.3d at 953)); Hite v. Vermeer Mfg. Co., 361 F.Supp.2d 935, 947 (S.D.Iowa 2005) (plaintiff could not obtain damages for lost future earnings because she had “offered nothing to support her assertion that her unlawful discharge taint [ed] her employment record”); Mattenson v. Baxter Healthcare Corp., No. 02–CV–3283, 2004 WL 2967428, at *4 (N.D.Ill. Nov. 30, 2004) (“[L]ost future earnings is a common-law tort remedy available to plaintiffs in a Title VII case ... [that] compensates a plaintiff for a lifetime of diminished earnings resulting from the reputational harms the plaintiff suffers as a result of the employer's discrimination.”); Williams v. Pharmacia Inc., 956 F.Supp. 1457, 1466 (N.D.Ind.1996) (“ ‘[L]ost earning capacity’ [ ] is closest to the notion of an injury to professional standing, and akin to injuries to reputation or character.”). In other words, damages for lost future earning capacity are akin to those available in the common law tort of defamation. Cf. Varela, 2006 WL 2091711, at *2 (“An action for damages to reputation ‘lies ... in the tort of defamation.’ ” (quoting Fleming, 837 F.2d at 409)).

The court is aware of no case awarding damages for lost future earning capacity based on an injury other than reputational harm. Plaintiff–Intervenors have provided no authority for an award of damages based merely on the fact that the position they were denied would have permitted them significant free time to pursue other employment or educational opportunities, and the court concludes that claimants' inability to pursue further work or education would not cause them the kind of “reputational injury” recognized at common law. Plaintiff–Intervenors have also failed to provide support in the common law for their theory that the denial of the reputational benefits of a position—such as the “[l]oss of the[ ] extraordinary prestige of being a firefighter” (Int. Supp. Mem. at 18)—can entitle them to damages for lost future earning capacity. The case law permits damages only if the discrimination tainted the existing reputation of the victim and if this reputational harm resulted in diminished employment opportunities.

In sum, in order to obtain damages for lost future earnings, claimants must produce “competent evidence” that the City's discriminatory practices caused damage to their professional standing, character, and reputation—beyond simply the denial of the prestige benefits of the firefighter position—and that this injury “caused a diminution in [their] ability to earn a living.” Williams II, 137 F.3d at 952.

In Sanders v. Madison Square Garden, L.P., 2007 U.S. Dist. LEXIS 57319, 101 Fair Empl. Prac. Cas. (BNA) 390 (S.D.N.Y. August 6, 2007), a case that was decided before Vulcan, supra, the United States District Court for the Southern District of New York denied the defendants' motion for summary judgment on the plaintiff's reputational damages claim. The Court explained that reputational injury is compensable under Title VII. The plaintiff's claim for reputational damage was distinguished from a defamation claim because the plaintiff did not seek to recover damages for any damage to her general reputation in the community, but instead argued that loss of business reputation was a factor to be considered in assessing purely economic losses that resulted from her retaliatory dismissal. The Court found the Seventh Circuit's reasoning in Williams persuasive and explained that there is no conceptual barrier between allowing a Title VII plaintiff to recover for future losses and allowing a Title VII plaintiff to present evidence of reputational injury in order to accurately quantify that loss (at 37-43):

Title [*38] VII authorizes compensatory damages for a plaintiff's "future pecuniary losses." 42 U.S.C. § 1981a(b)(3). 7 The Second Circuit has not ruled on whether "reputational damage" is specifically recoverable under Title VII as a form of future pecuniary loss. However, at least one court in this district has recently held, without discussion, that reputational injury is compensable under Title VII. See Osorio v. Source Enters., Inc., No. 05 Civ. 10029, 2007 U.S. Dist. LEXIS 18725, 2007 WL 683985, at *1-2, 5 (S.D.N.Y. Mar. 2, 2007) (upholding a jury award of four million dollars for emotional distress and "harm to reputation").

In addition, the Seventh Circuit has held that injury to an employee's reputation is compensable under Title VII where such injury negatively impacts the employee's "lost future earnings." Williams v. Pharmacia, Inc., 137 F.3d 944, 954 (7th Cir. 1998). According to Williams, an award for reputational damages [*39] "compensates [the plaintiff] for a lifetime of diminished earnings resulting from the reputational harm she suffered" as a result of the employer's unlawful conduct. Id. at 953. Thus, where an employee can expect to encounter increased difficulty in finding comparable employment due to "injury to [her] professional standing" caused by an employer's unlawful conduct, the employee may recover for the added difficulty in the form of compensatory damages. Id. at 952, citing EEOC Policy Guidances on Damages Provisions of 1991 Civil Rights Act, 8 FEPM 405:7091, 7095.

Defendants argue that reputational damages are only recoverable in New York as part of a defamation claim. (MSG Mem. 24-25; Mem. of Law of Def. Isiah Thomas In Support of His Mot. for Partial Summ. J. ("Thomas Mem.") 15-18.) Specifically, defendants argue that "when dealing with loss of reputation alone, a state law defamation action for damages is the appropriate means of vindicating that loss." (Thomas Mem. 15, citing Patterson v. City of Utica, 370 F.3d 322, 330 (2d Cir. 2004).) Defendants assert that plaintiff's reputational injury claim is merely an attempt by plaintiff to "bootstrap" a defamation claim to her discrimination [*40] suit. (Thomas Mem. 14.) Thus, defendants argue that plaintiff cannot recover for her reputational injury because she has not stated a claim for defamation.

The parties' respective concessions at oral argument, however, have considerably narrowed, if not eliminated entirely, their disagreement. Plaintiff acknowledged that she does not seek to recover for injury to reputation distinct from her Title VII claims for lost future earnings. (Tr. 9.) Rather, plaintiff seeks to offer evidence of injury to reputation only insofar as defendants' alleged retaliatory conduct has damaged her "career prospects" and caused her to "los[e] future earnings." (Pl. Mem. of Law in Opp'n to Isiah Thomas' Mot. for Partial Summ. J. ("Pl. Opp'n Mem. II") 21.) Plaintiff's claim is thus not, as defendants argue, "defamation in disguise." (Thomas Mem. 16.) A defamation claim seeks to compensate a plaintiff for the non-economic loss of "reputation alone." Patterson, 370 F.3d at 330. The jury is asked to place a value on the plaintiff's "good name," which, as Iago explained, when "filche[d]," renders the victim "poor indeed." William Shakespeare, Othello, act 3, sc. 3. But plaintiff here does not seek redress for [*41] any damage to her general reputation in the community; instead, plaintiff argues that loss of business reputation is a factor to be considered in assessing purely economic losses resulting from her allegedly retaliatory dismissal. (See Tr. 22 ("It is our position . . . [that] reputational damages . . . is part of [our] compensatory damage claim . . . under Title VII.").) She has specifically disavowed the notion that her reputational damages claim should be interpreted either as a defamation claim or as a separate retaliation claim. (Pl. Opp'n Mem. II 15-16; see Tr. 9.)

Defendants, in turn, although arguing in their motion papers that a plaintiff cannot receive damages for reputational injury outside of the defamation law framework, nevertheless conceded at oral argument that a Title VII plaintiff may recover for reputational injury to the extent that such an injury negatively impacts an employee's future earnings capacity, regardless of whether the plaintiff has stated a claim for defamation. (Tr. 18 ("I think the case law recognizes that [reputational damages] may be recovered [under Title VII]"); id. 21 "([L]ost future earnings may . . . be recovered as front pay . . . .").) Therefore, [*42] to the extent that defendants seek summary judgment on plaintiff's reputational damages claim based on the argument that she has not stated a claim for defamation, that argument was rendered moot by the parties' concessions at oral argument. 8

In any event, defendants' concession that harm to a plaintiff's reputation may be recoverable under Title VII as part of a front pay award was well-considered. The Seventh Circuit's reasoning in Williams, although not binding on this Court, is highly persuasive. 9 There is no conceptual barrier between allowing a Title VII plaintiff to recover for future losses and allowing a Title VII plaintiff to present evidence of reputational injury in order to accurately quantify that loss. Indeed, there is significant overlap between the two considerations. Although not every violation of Title VII results in an injury to an employee's reputation, where an employer's allegedly unlawful conduct is publicized or highly visible, [*43] either in society at large or within a specific industry, such conduct may negatively affect the employee's ability to secure future employment. For example, the employee may be deemed too controversial, or prospective employers may base their hiring decisions on accusations that came out during the course of the litigation, regardless of the legitimacy of those accusations. It is undisputed that the circumstances surrounding plaintiff's termination in this case have been widely publicized. (See Tr. 24.) Thus, preventing plaintiff from presenting such evidence here would artificially limit her damages, as the damages award would not accurately reflect plaintiff's actual future earning capacity.

In an Interim Report and Recommendation in Gulino v. Bd. of Educ. of the City Sch. Dist. of N.Y., 2016 U.S. Dist. LEXIS 103132 (S.D.N.Y. June 13, 2016), the Special Master explained that a claim for loss of future earning capacity is available where a discriminatory action has created a reputational injury that depresses a plaintiff's future salary potential. To recover damages for loss of future earning capacity, the plaintiff must produce competent evidence suggesting that their injuries narrowed the range of economic opportunities available to them. Loss of future earning capacity is a form of compensatory damages which is limited to cases of intentional discrimination. The special master noted that the 1991 amendment to Title VII that authorizes compensatory damages for harm to reputation expressly excludes employment practices that are unlawful because of their disparate impact (at 50-51):

Plaintiffs' claim—that the BOE's decision to deny them permanent teaching positions had lingering affects on their entire career that limited their post-BOE earning capacity—is the equivalent of a claim for loss of future earning capacity. This claim is available where a discriminatory action has created a reputational injury that depresses a plaintiffs future salary potential and requires that a plaintiff produce "competent evidence suggesting that his injuries have narrowed the range of economic [*51] opportunities available to him." Williams v. Pharmacia, Inc., 137 F.3d 944, 952 (7th Cir. 1998); see also Sanders v. Madison Square Garden, L.P., No. 06 CIV. 589, 2007 U.S. Dist. LEXIS 57319, 2007 WL 2254698, at *13 (S.D.N.Y. Aug. 6, 2007) (Lynch, J.) ("[W]here an employee can expect to encounter increased difficulty in finding comparable employment due to injury to her professional standing caused by an employer's unlawful conduct, the employee may recover for the added difficulty in the form of compensatory damages." (internal quotation marks and alteration omitted)), opinion withdrawn in part on other grounds on reconsideration, 525 F. Supp. 2d 364 (S.D.N.Y. 2007). A claim for loss of future earning capacity is not available here, however, because it is a form of compensatory damages, which the 1991 Amendment to the Civil Rights Act limits to cases of intentional discrimination. See

Alexsei publishing date:
125