King v. CVS Caremark Corporation et al
Memorandum Opinion on Post-trial Motions Signed by Chief Judge Karon O Bowdre on 8/2/16. (Attachments: # 1 Exhibit A)(SAC )
2016 Aug-02 PM 02:57
U.S. DISTRICT COURT
N.D. OF ALABAMA
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ALABAMA
JAMES R. KING,
CVS HEALTH CORPORATION
CASE NO.: 1:12-cv-01715-KOB
Memorandum Opinion on Post-trial Motions
On February 19, 2015, after a two-week trial before Judge Hopkins, the jury
returned a verdict in favor of Plaintiff James R. King on his claim that CVS
Caremark Corporation1 willfully and illegally terminated his employment as a
pharmacist because of his age. The jury awarded $1,065,383.15 in compensatory
damages, and also found that CVS willfully violated the ADEA. (Doc. 153). The
finding of willful violation entitled Mr. King to liquidated damages in an equal
amount to his compensatory damages, so on June 3, 2015, the court entered a final
judgment in favor of Mr. King for $2,130,766.30. (Doc. 179). That amount was
CVS Caremark Corporation changed its name in September of 2014 to “CVS Health
Corporation,” but never filed a corporate disclosure statement and did not file a notice of name
change. The name on the docket sheet remained CVS Caremark Corp. until June 3, 2016 when
the Plaintiff filed a notice of name change.
later remitted to $1,230,766.30. (Doc. 213).
This case was transferred to this judge on June 13, 2016, when Judge
Hopkins granted CVS’s request that she recuse for the reasons explained below.
With the reassignment of the case came five post-trial motions, including CVS’s
request that “all orders or rulings made after [August 24, 2015] should be
vacated.” (Doc. 236 at 10).
The court held a hearing on those motions on July 29, 2016, and made the
following rulings for the reasons more fully stated on the record and summarized
1. Defendant’s request to vacate all of Judge Hopkins’ orders or rulings
after August 24, 2015 (Doc. 236) is DENIED IN ITS ENTIRETY.
2. Plaintiff’s Re-Filed Motion for Equitable Relief: Reinstatement and
Related Relief (Doc. 229) is GRANTED IN PART/DENIED IN PART. The
court orders that CVS reinstate Mr. King to his former position with the same
terms and conditions of his employment as soon as possible; IF new pharmacists
are required to take an assessment test, Mr. King’s reinstatement is subject to
passage of such assessment; the Defendant shall expunge from Mr. King’s
employment records all references to the adverse employment actions that the jury
found were pretextual, including any reference that he is “not eligible for rehire”;
and Cody Berguson is NOT to supervise the pharmacy where Mr. King works.
The court further orders that the award of back pay to the date of the final
judgment shall continue at the daily rate of $516.10 for Mr. King’s normal
schedule that he worked before September 20, 2011, until the date he is reinstated,
fails the assessment, or chooses not to work. But the court denies Plaintiff’s
requests for additional conditions and oversight.
3. Plaintiff’s Re-filed Rule 59(e) Motion for Equitable Relief: Prejudgment
Interest (Doc. 230) is GRANTED. The Plaintiff shall recover pre-judgment
interest on the full amount of the damages awarded to him from the date of his
termination on September 20, 2011 until the date of the final judgment entered this
date at the IRS Prime Rate for underpayment by corporations, which is 5% until
April 1, 2016, then 6% to the date of judgment, compounded quarterly.
4. Plaintiff’s Re-Filed Motion for Supplemental Back Pay and Liquidated
Damages from the Date of the Verdict to the Entry of Final Judgment (doc. 215) is
GRANTED. The court awards Mr. King back pay in the amount of $266,307.16
and liquidated damages in the same amount for a total additional damage award of
5. Plaintiff’s Re-Filed Motion for Equitable Relief: Tax Consequences of
Judgment (doc. 183) is DENIED.
Having ruled on all post-trial motions, except Plaintiff’s Motion for
Attorney Fees, which is not under submission, the court will enter a separate
Third Amended Final Judgment in favor of the Plaintiff James R. King and against
CVS Health Corp. in the total amount of $1,880,296.87, which includes
$881,690.76 as back pay from September 20, 2011 to the date of this judgment, an
equal amount for liquidated damages ($881,690.76), plus interest at 5% until April
1, 2016, then interest at 6% compounded quarterly; and will order the immediate
reinstatement of Mr. King to the same position and pay as he held when
terminated, subject to the additional terms contained in this Memorandum
I. Defendant’s Motion to Vacate (Doc. 236)
In response to Judge Hopkins’ Conflict Disclosure Notice (Doc. 224)
entered on March 14, 2016, CVS filed Defendant’s Response to Conflict
Disclosure and Motion to Disqualify (Doc. 236), which also included the request
that “all orders or rulings made after [August 24, 2015] be vacated.” (Doc. 236 at
10, 11). Judge Hopkins gave the Plaintiff an opportunity to respond. (Doc. 237).
Mr. King filed his Response to the Court’s Conflict Disclosure and Opposition to
Defendant’s Motion to Disqualify (Doc. 241); he distinguished the cases cited by
CVS and argued that this situation comes within the safety valve provided by 28
U.S.C § 455(f) and did not require Judge Hopkins’ disqualification. Nevertheless,
on June 13, 2016, Judge Hopkins granted CVS’s motion for disqualification but
did not address its request to vacate all orders entered from August 24, 2015 until
April 14, 2016. (Doc. 248). When the case was transferred to this judge, the
motion to vacate came along with the other pending post-trial motions.
CVS argues that “the appropriate remedy is retroactive disqualification and
vacatur” and seeks “to vacate all of Judge Hopkins’ orders entered after August
24, 2015.” (Doc. 236 at 10, 11). Before addressing the substance of the orders
CVS seeks to vacate, the court first examines whether vacating any of Judge
Hopkins’ entered orders during the eight months she held CVS stock is required.
The question of judicial disqualification is addressed by 28 U.S.C. § 455,
which reads in part as follows:
(a) Any justice, judge, or magistrate judge of the United States
shall disqualify himself in any proceeding in which his impartiality
might reasonably be questioned.
(b) He shall also disqualify himself in the following
(4)He knows that he, individually or as a fiduciary, or his
spouse or minor child residing in his household, has a
financial interest in the subject matter in controversy or
in a party to the proceeding, or any other interest that
could be substantially affected by the outcome of the
Subsection (d)(4) defines “financial interest” as “ownership of a legal or equitable
interest, however small.” Thus, under § 455(b)(4), Judge Hopkins should have
disqualified herself when she purchased stock in “CVS Health Corp.” if she knew
of the conflict.
Indeed, prior to the addition of subsection (f) to § 455 in November of 1988,
any judge who inadvertently was or became disqualified would be removed from a
case, regardless of the circumstances or the effect on the litigation. See In re
Cement & Concrete Antitrust Litigation, 515 F. Supp. 1076 (D. Ariz. 1981). But
as the Supreme Court recognized, “A conclusion that a statutory violation
occurred does not, however, end our inquiry. As in other areas of the law, there is
surely room for harmless error committed by busy judges who inadvertently
overlook a disqualifying circumstance. There need not be a draconian remedy for
every violation of § 455(a).” Liljeberg v. Health Servs. Acquisition Corp., 486
U.S. 847, 861 (1988).
Congress itself recognized the disruption caused in cases and to litigants
when a “draconian remedy” is imposed, and added section (f) “specifically as a
safety valve to avoid costly and inefficient disruption of cases when the financial
interests at stake are de minimis.” Key Pharmaceuticals, Inc. v. Mylan
Laboratories, Inc., 24 F. Supp. 2d 480, 483 (W.D. Pa. 1998) (citing 1988 U.S.
Code Cong. & Admin. News at 6029-30).
After the Liljeberg decision, Congress amended 28 U.S.C. § 455 to add
section (f), which reads:
Notwithstanding the preceding provisions of this section,
if any justice, judge, magistrate judge, or bankruptcy judge to whom a
matter has been assigned would be disqualified, after substantial
judicial time has been devoted to the matter, because of the
appearance or discovery, after the matter was assigned to him or her,
that he or she individually or as a fiduciary, or his or her spouse or
minor child residing in his or her household, has a financial interest in
a party (other than an interest that could be substantially affected by
the outcome), disqualification is not required if the justice, judge,
magistrate judge, bankruptcy judge, spouse or minor child, as the case
may be, divests himself or herself of the interest that provides the
grounds for the disqualification.
CVS acknowledged that “Judge Hopkins, having divested herself of the
stock, has cured the need to disqualify herself under 28 U.S. C. § 455(b)(4).”
(Doc. 236 at 2). However, it argued that she was required to disqualify herself
under § 455(a) because her “impartiality might reasonably be questioned.” Id.. The
facts that CVS cites for such impartiality are that the “relationship of CVS Health
to CVS Caremark is obvious” and that Judge Hopkins “made significant decisions
on the merits.” (Doc. 236 at 9).
If such allegations were sufficient to mandate disqualification, § 455(f)
would have very little opportunity to serve its purpose as a safety valve and avoid
inefficient disruption of cases in which “substantial judicial time has been devoted
to the matter.” It could only apply in cases where the judge devoted “substantial
judicial time” to babysitting a case without any significant decisions on the merits.
This judge does not question Judge Hopkins’ sincere decision to recuse when CVS
challenged her appearance of impartiality; Judge Hopkins takes her ethical
responsibilities very seriously. The hyperbole in CVS’s submission, however,
may reflect its strategic interest in further delaying Mr. King’s recovery or in
“judge shopping” rather than concerns about ethics. This court discusses the
disqualification standards and CVS’s argument as they form the foundation from
which to consider CVS’s motion to vacate all rulings after August 24, 2015 when
Judge Hopkins inadvertently purchased CVS stock.
In making its argument, CVS relies on two cases decided before the
addition of section (f),2 and the extreme case of Chase Manhattan Bank v.
Affiliated FM Ins. Co., 343 F.3d 120 (2d Cir. 2003), where the Second Circuit
The Supreme Court decision in Liljeberg and its underlying decision
Health Servs. Acquisition Corp. v. Liljeberg, 796 F.2d 796, 802 (5th Cir. 1986).
ordered the disqualification of a judge who presided over a bench trial, awarded a
multimillion dollar judgment in favor of the entity in which he held several
hundred thousand dollars of stock, and then handled remand proceedings – all
after the conflict appeared; the Circuit Court also vacated all of his rulings. See
(Doc. 236 at 3-9).
In Chase Manhattan Bank, the style of the case originally identified one of
the six plaintiffs as Chemical Bank; Chemical Bank merged with The Chase
Manhattan Bank, and the merged entity continued to operate under the Chase
Manhattan name. After the merger, but before the case was assigned to him,
Judge Pollack, his wife, and a family trust purchased between $250,000 and
$300,000 of stock in Chase Manhattan Bank. When the case was reassigned to
Judge Pollack, neither the style of the case nor the corporate disclosure statement
had been revised to reflect the merger or Chemical Bank’s new name. 343 F. 2d at
124. Judge Pollack then presided over a bench trial that lasted three-and-a-half
weeks, and rendered a $92 million judgment in favor of the banks in 1997. After
being partially reversed and receiving the mandate for remand in August of 2000,
Judge Pollack, while reviewing the record, saw that Chemical Bank was now
known as Chase Manhattan Bank. For the first time, he realized that Chemical
Bank had merged with the Chase Manhattan Bank prior to his ruling in 1997.
Judge Pollack immediately divested himself of the stock, advised the parties of the
discovery and his divestiture, and then conducted the requisite proceedings on
remand over the stringent objections of the defendant. Id. at 125-26.
The Second Circuit held that Judge Pollack’s divestiture in that case could
not cure the past appearance of a disqualifying financial interest at the time of trial
and entry of the $92 million verdict in favor of Chase and the other five banks.
Chase Manhattan, 343 F.3d at 123. The court noted that Judge Pollack’s
disqualifying circumstance appeared in 1997, and he should have disqualified
himself at the very latest before issuing his decision on the merits in July 1997. Id.
at 128. The court pointed to numerous indications that the judge should have
known of his conflict; they included the intense media coverage of the merger,
references early in his involvement with the case to “Chemical Bank (now known
as The Chase Manhattan Bank),” the testimony of witnesses at trial about the
merger of Chemical and Chase, and the judge’s written findings of fact that
referred to the lead plaintiff as “Chemical Bank (now know [sic] as The Chase
Manhattan Bank).” The court found that these factors might lead a reasonable
person to conclude that the judge knew of his $250,000 to $300,000 financial
interest in Chase Manhattan Bank at the time he rendered the $92 million verdict
for the plaintiffs. Id. at 128-29.
The court found that § 455(f) divestiture in 2000 after entry of judgment
would not go far enough to eliminate the appearance of partiality. Id. at 132. In
doing so, the court noted: “While Section 455(f) allows a judge to divest a newlydiscovered qualifying interest and continue to preside of over a case, that
divestiture cannot cure circumstances in which recusal was required years before
and important decisions have been rendered in the interim.” Id. at 131. Therefore,
the Second Circuit found Judge Pollack’s denial of the recusal motion was an
abuse of discretion, vacated all decisions made in the case after it was assigned to
him, and remanded the case for resolution with a different judge.
In its motion to disqualify Judge Hopkins and vacate her rulings, CVS
argues that, during the eight months she owned CVS stock, her “role in presiding
over this case since she purchased CVS stock has been anything but ‘technical’ –
she has made significant decisions on the merits.” (Doc. 236 at 9). It compares her
role in presiding over this case to that of the judge in Chase Manhattan Bank.
This judge finds that, contrary to CVS’s assertion, the Chase Manhattan
Bank case did not involve a “situation nearly factually identical to the one this
Court confronts.” (Doc. 236 at 4). The situation in this case is far from the scenario
in Chase Manhattan Bank. Unlike the disqualified judge in that case, Judge
Hopkins did not own stock in CVS by any name when the case was assigned to her
in 2012; she did not preside over a bench trial – or a jury trial – while she owned
CVS stock; she did not enter a multi-million dollar judgment in favor CVS when
she owned hundreds of thousands of dollars of its stock; and she did not realize
her conflict three years after she entered findings of fact specifically naming the
entity in which she knew she owned stock. Cf. Chase Manhattan Bank, 343 F.3d
at 123-126. Instead, she inadvertently purchased CVS stock six months after the
jury trial of this case and two months after the entry of the Amended Final
Judgment Order in favor of the Plaintiff and against CVS for $2,130,766.30.
Further, during six of the eight months in which she owned the stock, nothing at
all is reflected on the docket sheet of this case; the first entry after her purchase was
on February 16, 2016 when one of CVS’s attorneys moved to withdraw and Judge
Hopkins granted the request. (Docs. 209 & 210)3.
The court finds that Judge Hopkins, unlike the judge in Chase Manhattan
Bank, only entered one substantive ruling while holding CVS shares. On February
23, 2016, she issued the Memorandum Opinion and Order (Doc. 211), in which she
denied CVS’s motions under Rule 50 and 59, but granted its request for remittitur;
the court made the common sense ruling that Mr. King’s damages should not
Although CVS in its written submission argued that all rulings during those
eight months must be vacated, at the hearing, counsel conceded that this ruling
should stand, and that only “substantive” rulings should be vacated.
include the $450,000 face amount of life insurance death benefits because he has
not died. Mr. King accepted the remittitur of $900,000, which included the
liquidated damage award (Doc. 212), and Judge Hopkins entered the Second
Amended Final Judgment Order (Doc. 213) on March 1, 2016. Because the
Second Amended Final Judgment Order only effectuated the remittitur ordered in
the prior ruling, the court does not consider it to be a separate, stand-alone
CVS argued at the hearing that the Order lifting the stay on briefing of the
Plaintiff’s post-trial motions (Doc. 223) was also a “substantive” ruling that must
be vacated. As noted in that Order, Judge Hopkins had previously granted CVS’s
motion to stay “all further proceedings on Plaintiff’s post-trial motions pending the
disposition of CVS’ post-trial motions.” (Doc. 190). That stay expired on its own
when Judge Hopkins ruled on CVS’s post-trial motions on February 23, 2016. See
(Doc. 211). The Order further allowed the Plaintiff to refile his previously filed
post-judgment motions and gave the Defendant the opportunity to respond to those
motions. This court cannot fathom how this Order that does not rule on any
material matter but merely allows proceedings to continue can be deemed
substantive. Indeed, until the court rules on the Plaintiff’s post-trial motions,
except for his motion for attorney fees, CVS cannot proceed with its appeal, which
it filed prematurely. See (Doc. 216, 217, 218, 219, and 222).
Thus, the only substantive ruling this court will consider as to CVS’s motion
to vacate is the Memorandum Opinion and Order (Doc. 211) entered February 23,
2016. That Opinion addressed CVS’s Motion for Judgment as a Matter of Law
(Doc. 197); Motion for New Trial (Doc. 198); and Motion for Suggestion of
Remittitur in the Alternative to the Motion for Judgment as a Matter of Law and
Motion for New Trial (Doc. 199). The Motion for Judgment as a Matter of Law
and the Motion for New Trial renewed and rehashed the motions made by CVS at
the close of the Plaintiff’s case (Doc. 148); at that time, Judge Hopkins granted the
motion as to all the Plaintiff’s state law claims and dismissed Cody Berguson as a
Defendant, but reserved ruling on the motions as to the age discrimination claim.
CVS renewed that Motion at the close of all the evidence (Doc. 149); Judge
Hopkins orally denied that motion as to the age discrimination claim, and
submitted that claim to the jury. See (Doc. 171 at p. 56). After the jury returned its
verdict in favor of Mr. King, Judge Hopkins allowed briefing on CVS’s motion
(see Doc. 156) but subsequently clarified and confirmed on June 3, 2015 that she
had denied CVS’s motion at trial. (Doc. 178).
This court finds that Judge Hopkins’ rulings on the renewed motions for
judgment as a matter of law and new trial reflected her prior rulings on the same or
similar issues. Her denial of those motions was consistent with her reasoning in the
Memorandum Opinion and Order on Defendants’ Motion for Summary Judgment
(Doc. 71) and her Orders at trial on the initial Rule 50 motions. In all those rulings,
she found sufficient evidence to submit the age discrimination claim to the jury.
(Doc. 211 at 7). As to CVS’s Motion for New Trial, Judge Hopkins reaffirmed the
evidentiary sufficiency of the jury’s verdict and her evidentiary rulings challenged
by CVS, and rebuffed its challenge to the jury charges and other rulings. In short,
she ruled the same way after she bought CVS stock as she did before she bought
CVS stock. No reasonable person would question Judge Hopkins’ impartiality in
these rulings against CVS.
The only ruling Judge Hopkins made in favor of CVS while she held its
stock was the one granting a remittitur of the life insurance proceeds and
concomitant liquid damages. Judge Hopkins found that “allowing the jury’s award
of $450,000 in death benefit damages to stand would be fundamentally unfair and
excessive under the ADEA’s make-whole remedial purpose.” (Doc. 211 at 58). She
went on to explain that “such damages represent an unwarranted financial windfall
for Mr. King because, if he had remained employed at CVS, this death benefit is
not something he would have ever received as a CVS employee because he did not
die.” (Doc. 211 at 59; emphasis in original).
CVS argues that this remittitur of $900,000 while Judge Hopkins owned its
stock creates the kind of impropriety § 455(a) was intended to prevent. But the test
for recusal under § 455(a) is whether a reasonable person knowing all the facts
would question a judge’s impartiality. Yeyille v. Miami Dade Ctny. Pub. Sch., 2016
WL 3058868 (11th Cir. May 31, 2016) (quoting Parker v. Connors Steel Co., 855
F.2d 1510, 1524 (11th Cir. 1988)) (“The test is whether an objective, disinterested,
lay observer fully informed of the facts underlying the grounds on which recusal is
sought would entertain significant doubt about the judge’s impartiality.”). No
reasonable person knowing that the remittitur was for death benefits for a man who
was still alive would question Judge Hopkins’ impartiality in such a common sense
Having found that no reasonable person knowing all the facts would
question the impartiality of Judge Hopkins’ decisions in the one substantive ruling
she made while holding CVS stock, the court finds no reason to vacate the
Memorandum Opinion and Order entered February 23, 2016 (Doc. 211). As an
alternative ruling, if that Opinion and Order were to be vacated, this judge would
enter the same rulings denying CVS’s post-trial motions, except its motion for
II. Plaintiff’s Motion for Reinstatement (Doc. 229)
Mr. King seeks reinstatement to his employment as a pharmacist with CVS
as part of the equitable relief authorized under the ADEA. In addition to
reinstatement, Mr. King asks the court to impose certain requirements on CVS and
to appoint a special master to oversee employment decisions by CVS that affect
him. As an alternative remedy, he seeks front pay.
The court has discretion in selecting the equitable remedies, so long as the
relief granted is consistent with the purposes of the ADEA. Castle v. Sangamo
Weston, Inc., 837 F.2d 1550, 1561 (11th Cir. 1988). “The purpose of the ADEA . . .
is to make the plaintiff ‘whole,’ to restore the plaintiff to the economic position that
the plaintiff would have occupied but for the illegal discrimination of the
In fact, the ADEA provides that “the court shall have jurisdiction to grant
such legal or equitable relief as may be appropriate to effectuate the purposes of
this chapter, including without limitation judgments compelling employment,
reinstatement or promotion, . . .” 29 U.S.C. § 626 (emphasis added).
“[R]einstatement offers the most likely means of making a plaintiff whole by
allowing h[im] to continue h[is] career as if the discrimination had not occurred.”
Farley v. Nationwide Mutual Ins. Co., 197 F.3d 1322, 1238 (11th Cir. 1999). As a
result, the Eleventh Circuit “ha[s] fashioned a rule of ‘presumptive reinstatement’
in wrongful discharge cases for victorious plaintiffs.” Id. (citing Williams v.
Roberts, 904 F.2d 634, 639 (11th Cir. 1990)).
Reinstatement may not always be feasible. “[W]hen extenuating
circumstances warrant, a trial court may award a plaintiff front pay in lieu of
reinstatement.” Farley, 197 F.3d at 1238; see also Darnell v. City of Jasper, 730
F.2d 653, 655 (11th Cir. 1984).
CVS argues that reinstatement is not appropriate or feasible in this case
because of the current hostile and antagonistic relationship between Mr. King and
his former supervisor Cody Burgeson. CVS points to Mr. King’s request for
special oversight as evidence of the hostile relationship. Indeed, Mr. King named
Mr. Burgeson as a Defendant and asserted state law claims against him for slander,
defamation, and invasion of privacy, which Judge Hopkins dismissed at trial. The
Eleventh Circuit, however, has recognized “that the presence of some hostility
between parties, which is attendant to many lawsuits, should not normally preclude
a plaintiff from receiving reinstatement. Defendants found liable of intentional
discrimination may not profit from their conduct by preventing former employees
unlawfully terminated from returning to work on the grounds that there is hostility
between the parties.” Farley, 197 F.3d at 1339.
The court recognizes that the relationship between Mr. King and Mr.
Berguson may not be a cordial one, and that Mr. King may have valid reasons to
ask for additional equitable relief to ensure that his supervisor treats him fairly.
Mr. Berguson’s questions and statements to Mr. King about his age and retirement
plans, followed closely by disciplinary actions that ultimately resulted in
termination, as well as other matters too lengthy to discuss here, may have been
part of the jury’s basis for finding that CVS willfully violated the ADEA when it
terminated Mr. King. The evidence at trial also showed that Mr. Berguson had
made similar comments to other pharmacists about their age before they were
terminated, again providing support for the jury’s finding of a willful violation.
This evidence, as well as many of the arguments CVS makes in its briefs, raise
questions for the court about whether Mr. Berguson – and CVS – understand the
full nature of the antidiscrimination laws, particularly the ADEA, and that Mr.
King may need some protection from retaliation by Mr. Berguson and CVS. These
concerns, however, or the argument by CVS about hostility, are neither sufficient
nor of the type of extenuating circumstances that make reinstatement in this case
The court rejects Mr. King’s requests that would in effect make the court the
HR department for CVS. Instead, it finds that requiring CVS to reinstate Mr. King
to the same position at the same store with the same terms and conditions of
employment except prohibiting Mr. Berguson from supervising that store best
accomplishes the remedial nature of the ADEA.
Only after the court indicated its intent at the hearing to order reinstatement
did counsel for CVS begin raising other factors to question the feasibility of
reinstatement. The court refused to consider such challenges not contained in
briefing, but with one exception. Counsel referenced a requirement of an
“assessment” before a pharmacist could be hired, or perhaps the “assessment” only
applied for a pharmacist-in-charge position. IF CVS requires a written assessment
of all newly hired pharmacists before they can begin work, then reinstatement of
Mr. King, who has not practiced pharmacy for five years, is conditioned upon his
ability to pass such assessment. The court cautions CVS that any assessment it
may require must be identical to any such assessment made of any pharmacist who
applies for the position Mr. King held when he was terminated.
As stated on the record at the hearing, the court’s award of back pay shall
continue at the daily rate of $516.10 until Mr. King is either reinstated or fails the
assessment or decides he does not want to return to work.
III. Plaintiff’s Motion for Prejudgment Interest (Doc. 230)
Mr. King requests the court to award him prejudgment interest from the date
of his termination on September 20, 2011 until the time the court enters final
judgment following the resolution of these post-trial motions.
Prejudgment interest is a discretionary remedy available in ADEA cases.
Lindsey v. Am. Cast Iron Pipe, Co., 810 F.2d 1094, 1101 (11th Cir. 1987).
“Prejudgment interest, as a legal matter, is intended to compensate injured parties
both for the time value of lost money as well as for the effects of inflation.” Garner
v. G.D. Searle Pharm. & Co., 2013 WL 568871 (M.D. Ala. Feb. 14, 2013) (citing
United States v. City of Warren, 138 F.3d 1083 (6th Cir. 1998)). Thus, prejudgment
interest is “an element of complete compensation.” Loeffler v. Frank, 486 U.S. 549,
557 (1988) (citing West Virginia v. United States, 497 U.S. 305, 310 (1987)).
CVS argues that the court should not exercise its discretion in awarding
prejudgment interest because its contends that Mr. King’s damages were inflated;
that Mr. King received a “windfall” in the form of liquidated damages; that Mr.
King violated the law and CVS’s governing policy; and the need for prejudgment
interest is reduced because of the relatively low rate of inflation between 2011 and
2016. (Doc. 244 at 3). Alternatively, CVS argues that, if the court chose to award
prejudgment interest, Mr. King’s initial prejudgment interest calculation was
As extensively discussed on the record during the motion hearing, the court
puts no stock in CVS’s continual challenge to the jury verdict. The jury determined
Mr. King’s damages, based largely on unchallenged evidence, and found that CVS
terminated him because of his age willfully. (Doc. 153). The court will not secondguess or ignore the jury’s findings of fact while considering the Plaintiff’s motion
for equitable relief. Additionally, the court may not consider the liquidated
damages in determining prejudgment interests:
A district court may not factor in the liquidated damages award when
considering equitable relief because liquidated damages are punitive in
nature. Punitive damages are imposed on a defendant to punish him or
to set an example for others; they are awarded to plaintiffs in addition
to compensatory or actual damages. Liquidated damages are not
meant to replace equitable relief under the ADEA.
Castle v. Sangamo Weston, Inc., 837 F.2d 1550, 1562 (11th Cir. 1988) (citations
Nor is the court persuaded by CVS’s argument that “relatively low rate of
inflation” since the time of Mr. King’s termination justifies denying him
prejudgment interest. Although the court considers the inflation rate in determining
prejudgment interest, the award of prejudgment interest does not turn on
consideration of the inflation rate alone. Instead, the court must look at the
At the hearing, CVS argued that the Eleventh Circuit’s prohibition from considering
liquidated damages in deciding prejudgment interest in Castle v. Sangamo Weston, Inc. is dicta
and unbinding on the court. However, even if the court considers Mr. King’s liquidated damage
award, the court’s ruling on prejudgment interest would not differ.
inflation rate and the time value of lost money. See City of Warren, 138 F.3d 1083.
Other factors also affect the court’s exercise of discretion in awarding
prejudgment interest for the lost value of wages to Mr. King. Because CVS
illegally terminated his employment, Mr. King had to apply for Social Security
benefits earlier than he planned and also had to draw from his IRA account to pay
his living expenses for his family. The award of prejudgment interest will help, to
a limited extent, to offset not only the lost value of his wages but also the real
financial consequences of his termination. Under the circumstances of this case, the
court finds that the need to compensate Mr. King both for the time value of lost
money as well as for the effects of inflation necessitate the award of prejudgment
Having decided that Mr. King is entitled to prejudgment interest, the court
must decide the question of which interest rate applies. The parties agree that the
court must base its award of prejudgment interest on the IRS prime rates. The
Eleventh Circuit “decided that the interest rate for prejudgment interest on back pay
awards under Title VII depends on the IRS prime rates as calculated in accordance
with 28 U.S.C. § 1961. . . . We see no reasons that the rate should differ under
ADEA . . . .” McKelvy v. Metal Container Corp., 854 F.2d 448, 453 (11th Cir.
However, multiple prime rates exist under 26 U.S.C. § 6621, and the parties
did not agree on which one should apply here. The statute provides both
underpayment and overpayment rates applicable to corporations and noncorporations. As explained more thoroughly on the record, the court finds that the
corporate underpayment rate best serves the purposes of the ADEA to make Mr.
King “whole.” In making this determination, the court has taken into account Mr.
King’s loss of use of wages, lost investment, loss of continued investment into his
IRA, and his early drawing of social security benefits. The court also considers that
this rate would apply to CVS if it had underpaid taxes; because it failed to pay Mr.
King any of the money due to him, this rate seems most appropriate.
The National Labor Relations Board provides that “interest should be
compounded on a daily basis, rather than annually or quarterly.” Jackson Hosp.
Corp. D/B/A Kentucy River Med. Center, 356 NLRB 6 at *8. However, Mr. King
has only requested interest be compounded quarterly. Therefore, the court
concludes that the interest in this case shall be compounded quarterly, rather than
on a daily basis.
Finally, the court finds that Mr. King is due prejudgment interest from the
date of his termination on September 20, 2011 through the date of the entry of the
final judgment. Notably, in its briefing on this issue, CVS did not assert that the
prejudgment interest calculation stopped prior to the court’s resolution of these
post-trial motions and entry of judgment. Instead, CVS merely challenged which
IRS prime rate applied and whether interest should be compounded. (See Doc. 244
at 4) (CVS calculating prejudgment interest rates through June 30, 2016). In fact,
CVS admits that “[e]ven using the IRS large corporate underpayment rate as the
basis for calculation, . . . quarterly compound interest would yield a total interest of
$100,936.16 as of June 30, 2016.” (Doc. 244 at 5).
However, at the hearing, CVS took a different approach and argued for the
first time that Mr. King’s prejudgment interest should only be calculated to an
earlier date when it contends Mr. King’s damages were ascertainable. In support of
its new contention, CVS cites Johansen v. Combustion Eng’g, Inc., 170 F.3d 1320
(11th Cir. 1999). In Johansen, in a nuisance and trespass action, a jury awarded
plaintiffs punitive damages totaling $45 million, and the district court later reduced
the punitive damage award to $4.35 million. The Eleventh Circuit reviewed
whether plaintiffs were entitled to postjudgment interest on the $4.35 million
judgment from the date of an initial judgment or from when the court actually
entered the reduced judgment. Id. at 1339-40. In determining the plaintiffs were
due postjudgment interest from the date of the initial judgment, the Court
concluded that postjudgment interest began to accrue from the date that damages
were clearly ascertained. Id. at 1340.
This case at issue is distinguishable from Johansen for several reasons. First
Johansen involved postjudgment interest, not prejudgment interest. And second,
the extent of Mr. King’s damages were not ascertainable upon the jury verdict
awarding him damages and finding CVS in willful violation of the ADEA nor were
they ascertainable when the court entered the remittited judgment. Instead, the
court has had to determine numerous post-trial issues before the extent of Mr.
King’s damages were known and readily ascertainable.
Because the court finds that Johansen is not controlling in this case, that
CVS failed to raise this issue in its briefing opposing Mr. King’s motion, and that
CVS appears to have admitted the prejudgment interest calculation runs through at
least June 30, 2016, the court further finds that Mr. King is due prejudgment
interest from the date of his termination on September 20, 2011 though the date of
the entry of accompanying judgment. Accordingly, the court will award Mr. King
prejudgment interest from September 20, 2011 through August 2, 2016 in the sum
of $116,915.35, as calculated in Exhibit A to the Third Amended Final Judgment.
IV. Plaintiff’s Motion for Supplemental Back Pay and Liquidated Damages (Doc.
Mr. King seeks an award of back pay from the date of the jury’s verdict on
February 19, 2015 until the entry of the final judgment, plus an equal amount in
liquidated damages. As previously noted, the remedial purpose of the ADEA is to
“make the plaintiff ‘whole,’ to restore the plaintiff to the economic position that the
plaintiff would have occupied but for the illegal discrimination of the employer.”
Castle, 837 F.2d at 1561. Without an award of back pay to cover the almost 18
months since the jury verdict, Mr. King would be uncompensated for a significant
amount of time and would not be made whole. In fact, failing to extend a back pay
award to the entry of the final order would be error. See Nord v. U.S. Steel Corp.,
758 F.2d 1462, 1473 (11th Cir. 1985).
As stated at the hearing, the court awards Mr. King back pay at the rate of
$183,732.14 annually and an equal amount as liquidated damages from the date of
the jury award until the entry of final judgment. As a further component of
equitable relief and to support the court’s Order to promptly reinstate Mr. King,
this award of pay shall continue at the rate of $516.10 per day until Mr. King is
reinstated or fails to pass the assessment or otherwise decides not to return to work.
V. Plaintiff’s Motion for Tax Consequences of the Judgment
Mr. King makes a novel but very appealing argument. He correctly asserts
that the lump sum award of back pay in this case will significantly affect his taxes.
Indeed, “receipt of a lump sum back pay award could lift an employee into a higher
tax bracket for that year, meaning the employee would have a greater tax burden
than if [he] were to have received that same pay in the normal course.” Eshelman v.
Agere Systems, Inc., 554 F.3d 426, 441 (3d Cir. 2009). An award of additional
sums to offset that increased tax burden makes logical sense.
However, the Eleventh Circuit has not spoken on this question; it neither
mandates nor prohibits such an award by its silence. Any such award, however,
would need evidentiary support. Garner v. G.D. Searle Pharms. & Co., 2013 WL
568871, at *15 (M.D. Ala. Feb. 14, 2013). As a matter of fact, both Mr. King and
CVS request additional time for discovery on this issue if the court were to grant
Mr. King has waited long enough. CVS wrongfully terminated him on
September 20, 2011. The jury returned a verdict in his favor on February 19, 2014.
He has been unemployed for almost five years without pay. The court does not
want to see his recovery delayed even further in what would surely be a long,
drawn out discovery period that would more than likely devolve into a battle of the
tax experts. He is entitled to a final final judgment, reinstatement to his job, and
payment of the wages and liquidated damages due from CVS. The court, in its
discretion, refuses to award this novel, though appealing, item of damages without
evidentiary support of it, and refuses to delay entry of judgment any longer to allow
the obtaining of such evidentiary support.
Recap and Calculation of Damages
In his submissions prior to the hearing, Mr. King provided a calculation of
damages due. At the hearing, his counsel offered to provide a revised calculation
that reflected the court’s rulings and included back pay and interest. The court
received that calculation via email that was also sent to defense counsel. After the
court emailed all counsel with the request for calculations specifically to August 2,
2016, the court received a revised calculation. CVS has not challenged this
calculation, except to provide its version of calculations consistent with its
Johansen argument, which this court has rejected. The court has relied on the
emailed calculation for the amounts set out in Exhibit A to the Third Amended
Final Judgment entered this day.
By separate Order, the court will enter final judgment in favor of James R.
King and against CVS in the amount of $1,880,296.87, and will order that CVS
promptly reinstate him to the position he held prior to termination under the
conditions contained in this Memorandum Opinion.
DONE and ORDERED this 2nd day of August, 2016.
KARON OWEN BOWDRE
CHIEF UNITED STATES DISTRICT JUDGE
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