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Eshelman v. Agere Systems Inc, No. 05-4895 (3d Cir. Jan. 30, 2009); EEOC v. Lee’s Log Cabin, Inc., No. 06-3278 (7th Cir. Feb. 2, 2009) (dissent from denial of rehearing en banc)

| Feb 1, 2009 | Daily Developments in EEO Law |

In the course of an otherwise (merely) good ADA decision, affirming a $200,000 jury verdict for a plaintiff undergoing chemotherapy and suffering memory loss (under a “regarded as”/”record of” theory), the panel drops in something really exquisite — a make-whole award that includes a gross-up for income taxes.

Eshelman v. Agere Systems Inc, No. 05-4895 (3d Cir. Jan. 30, 2009): Here are the facts in a nutshell

“In 1998, Eshelman was diagnosed with breast cancer, and took a medical leave of absence from September 1998 until March 1999 while she was treated. . . . Eshelman informed [her supervisors] DiSandro and Baily that as a result of her condition — colloquially known as ‘chemo brain’ — she was struggling with short-term memory loss. The duration of this malady is indefinite. Here, it is undisputed that Eshelman suffered from memory loss well after she returned to work following her chemotherapy-related leave of absence. Eshelman was able to cope with her memory deficiencies by carrying a notebook and taking more notes than she had prior to undergoing chemotherapy.”

Despite her continued good performance, when a layoff was declared, one of her supervisors adjusted her “Force Management Program” (FMP) score downward

“from one of the highest scores of any Agere employee to one of the lowest. At trial, Baily testified that the change in Eshelman’s score was based in part on Agere’s perception that Eshelman would be unable to travel to Agere’s Allentown and Breinigsville sites, a limitation Baily attributed to Eshelman’s chemotherapy. Baily further testified that another factor that led Agere to change Eshelman’s FMP score was its belief that Eshelman lacked ‘the ability to perform the job in Breinigsville and Allentown.'”

In a subsequent lawsuit, a jury awarded the plaintiff $170,000.00 in back pay and $30,000.00 in compensatory damages under the ADA and Pennsylvania Human Relations Act (PHRA). Post trial, plaintiff “filed a motion for an addition al monetary award to offset the negative tax consequences of receiving the back pay the jury awarded her in a single lump sum. On October 20, 2005, the District Court granted Eshelman’s motion to augment her back pay award and denied Agere’s motion to set aside the jury verdict.”

The employer makes four claims of error — all fail before the Third Circuit. 

The employer first contends that there was insufficient evidence that it ever “regarded” the employee as substantially limited in the major life activities of work and thinking; at most, it argues, that it might have considered her limited in driving, which is not generally regarded as a “major life activity.” The panel holds:

“While it is true that Baily testified at trial that Eshelman’s inability to drive was one reason why Agere decided to change her score, his testimony makes clear that this was not the only reason. Indeed, Baily specifically identified other reasons Agere changed Eshelman’s FMP score, including its concerns about Eshelman’s ‘ability to perform the job in Breinigsville and Allentown [following the restructuring.]’ App. 651; see also App. 673 (Baily testified a factor in her changed score was her ‘ability to function at the other two sites . . . .’). While it certainly would have been plausible for the jury to conclude that Agere’s concerns about Eshelman’s memory deficiencies were limited to her ability to drive to and from a new work location, the jury was by no means compelled to do so. To the contrary, the jury could just as easily have inferred, based on Baily’s testimony, that Agere’s concerns were broader, extending to Eshelman’s ability to perform any job at Agere following the planned restructuring. Other than its own ipse dixit, Agere offers no reason why the jury would have necessarily been unreasonable to reach such a conclusion.”

Second, the employer argues that there was no “record” of disability, as defined by the ADA, because the employee’s absence from work was at most temporary.  The panel rejects this argument, as well:

“It is true that a relatively short-term absence from work, without any long-term impairment, is generally held to be insufficient to create a record of disability. See, e.g., Colwell, 158 F.3d at 646; Halperin v. Abacus Tech. Corp., 128 F.3d 191, 200 (4th Cir. 1997); Sanders v. Arneson Prods., Inc., 91 F.3d 1351, 1353-54 (9th Cir. 1996). In the instant case, however, Eshelman’s actual period away from work was not the beginning, nor the end, of the evidence the jury heard regarding her record of impairment.” 

The panel notes that the trial record included testimony that her supervisors were specifically aware of plaintiff’s chemotherapy-related memory problems, which were duly noted in her the employer’s medical department’s files. “Paired with Eshelman’s six-month absence and Agere’s knowledge of her condition, this cognitive dysfunction permitted the jury to conclude that Eshelman had demonstrated a record of impairment that substantially limited her ability to think and work.”

Third, the panel finds that the district court did not err in instructing the jury on the issue of whether Agere furnished reasonable accommodations to Eshelman.

Finally, the Third Circuit affirms that it is within a district court’s equitable power to award a prevailing plaintiff enough money to cover the higher taxes that result from receiving a lump sum back pay award in a given year:

“We hold that a district court may, pursuant to its broad equitable powers granted by the ADA, award a prevailing employee an addition al sum of money to compensate for the increased tax burden a back pay award may create. Our conclusion is driven by the ‘make whole’ remedial purpose of the antidiscrimination statutes.”

The court likens such a payment to the well-accepted award to pre-judgment interest:

“an award to compensate a prevailing employee for her increased tax burden as a result of a lump sum award will, in the appropriate case, help to make a victim whole. This type of an award, as with prejudgment interest, represents a recognition that the harm to a prevailing employee’s pecuniary interest may be broader in scope than just a loss of back pay.  Accordingly, either or both types of equitable relief may be necessary to achieve complete restoration of the prevailing employee’s economic status quo and to assure ‘the most complete relief possible.'”

As there is scarcely little court of appeals authority on this issue, this is a very positive development for the plaintiff’s bar!

EEOC v. Lee’s Log Cabin, Inc., No. 06-3278 (7th Cir. Feb. 2, 2009) (dissent from denial of rehearing en banc):  A Seventh Circuit panel split 2-1 last October over a summary judgment appeal by the EEOC, with the majority holding that the agency pled the wrong ADA theory in a hiring case — alleging “HIV infection” as the impairment instead of “AIDS” (see my blog entry on EEOC v. Lee’s Log Cabin, Inc., No. 06-3278 (7th Cir. Oct. 6, 2008)).

It is perhaps small consolation to the agency and the charging party, but on petition for rehearing en banc, four judges out of the ten actives (there is presently one vacancy on the bench) join a dissent that may provide a platform for a petition for writ of certiorari to the U.S. Supreme Court.  Judge Williams (writing for herself and Judges Rovner, Wood and Evans) locates a possible conflict with another circuit:

“An important question is whether an employer must know how far advanced a disability has progressed to be liable under the ADA. The majority says yes, but I do not think the ADA imposes such a requirement. Cf. Sanglap v. LaSalle Bank, FSB, 345 F.3d 515, 520 (7th Cir. 2003) (‘[L]iability for disability discrimination does not require professional understanding of the plaintiff’s condition. . . . It is enough to show that the defendant knew of symptoms raising an inference that the plaintiff was disabled.’). Recently, the D.C. Circuit considered this very question at length in Adams v. Rice and held that ‘it makes no difference whether an employer has precise knowledge of an employee’s substantial limitation; as in [Bragdon v. Abbott, 524 U.S. 624, 641-42 (1998)], it is enough for the employer to know about the impairment.’ 531 F.3d at 953.

“In my view, the majority’s requirement creates an insurmountable hurdle for ADA plaintiffs with complex disabilities. The ADA protects people with disabilities from employers who do not understand the precise nature of their disabilities. I think it is fair to say that most employers who discriminate on the basis of a disability are ill-informed about that disability. Why should an employer’s ignorance about a disease (especially a complicated one like HIV, which has many stages and different names) shield that employer from liability?”

So I’ll be pulling for the EEOC under new leadership to persuade the high court to take this one.

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