Gracia v. Sigmatron International, Inc.
Filing
222
MEMORANDUM Opinion and Order signed by the Honorable Edmond E. Chang. For the reasons stated in the Opinion: (1) on the claim for equitable relief, Plaintiff is awarded $74,478.14; and (2) the defense motion for sanctions 170 is denied. A se parate AO-450 judgment shall be entered for the total judgment amount, namely, $374,478.14. Status hearing of 09/24/2015 is vacated. The parties shall engage in the Local Rule 54.3 process for attorney's fees and costs. Civil case terminated.Emailed notice(slb, )
UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
MARIA N. GRACIA,
Plaintiff,
v.
SIGMATRON INTERNATIONAL, INC.
Defendant.
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No. 11 C 07604
Judge Edmond E. Chang
MEMORANDUM OPINION AND ORDER
Following a trial in December 2014, a jury found that Defendant Sigmatron
International, Inc. had unlawfully retaliated against Plaintiff Maria Gracia by
firing her in December 2008 after she complained about workplace discrimination,
in violation of Title VII of the Civil Rights Act of 1964.1 The jury awarded Gracia
$57,000 in compensatory damages (later lowered to $50,000 by the Court on
remittitur to comply with a statutory cap) and $250,000 in punitive damages. See
Gracia v. Sigmatron Int’l, Inc., — F. Supp. 3d —, 2015 WL 1841407 (N.D. Ill. Apr.
21, 2015) (denying any further remittitur and Sigmatron’s motions for judgment as
matter of law and new trial). Gracia now seeks equitable relief, including back pay;
lost
benefits
1The
like
retirement
contributions,
medical
insurance,
and
Court has subject matter jurisdiction over this federal-question case under 28
U.S.C. § 1331. Citations to the docket are “R.” followed by the entry number and, when
necessary, the page/paragraph number.
vacation/personal time; prejudgment interest; and a tax offset. See R. 208, Pl.’s
Claim for Equitable Relief.
The parties agreed to submit the equitable-damages issues on documentary
submissions, without an evidentiary hearing. See R. 205, Parties’ Joint Status
Report dated 04/28/2015. The Court therefore draws on such submissions, including
affidavits and tax documents, as well as testimony from the trial and pre-trial
depositions, for any necessary findings of fact, as noted throughout the discussion
below. Gracia asks for an award of $107,835.46 in equitable relief, not including
prejudgment interest. Pl.’s Claim at 3. Sigmatron urges the Court to deny any claim
to equitable relief based on Gracia’s alleged failure to mitigate damages or, in the
alternative, to award $54,774.51. R. 210, Def.’s Resp. at 11-12. For the reasons that
follow, the Court finds that Gracia is entitled to $74,478.14.
Also pending before the Court is a motion that Sigmatron filed during the
course of the trial, seeking sanctions under Federal Rule of Civil Procedure 37(c)(1)
against Gracia for displaying modified exhibits to the jury without giving proper
notice. R. 170, Mot. Sanctions. As explained below, that motion is denied.
I. Legal Standard for Equitable Relief
Under Title VII, after an employer has been found to have intentionally
engaged in an unlawful employment practice, the district court may order back pay,
reinstatement, and “any other equitable relief as the court deems appropriate.” 42
U.S.C. § 2000e-5(g)(1). If reinstatement is inappropriate, a court can award front
pay. Williams v. Pharmacia, 137 F.3d 944, 952 (7th Cir. 1998) (“As the equivalent of
2
reinstatement, front pay falls squarely within the statutory language [of § 2000e5(g)(1)] authorizing ‘any other equitable relief.’”). Front pay represents the wages
the plaintiff would have earned had she not been fired measured from the date of
the judgment to some reasonable point in the future. See McKnight v. General
Motors Corp., 908 F.2d 104, 116 (7th Cir. 1990). Back pay, on the other hand,
represents the wages the plaintiff would have earned had she not been fired
between the time of the firing and the date of judgment. See 7th Cir. Pattern Civil
Jury Instruction 3.11 (2015). Because both are equitable remedies, any award of
back pay and front pay is to be decided by the court, rather than a jury. See David v.
Caterpillar, Inc., 324 F.3d 851, 865 (7th Cir. 2003) (“The district court has broad
equitable discretion to fashion back pay awards to make the Title VII victim
whole.”); Pals v. Schepel Buick & GMC Truck, Inc., 220 F.3d 495, 499-501 (7th Cir.
2000) (“Back pay and front pay are equitable remedies … and therefore matters for
the judge.”); Williams, 324 F.3d at 951-52 (approving district court’s conclusion that
front pay is an equitable remedy and a matter for the court to decide). “The district
court has broad equitable discretion to fashion back pay awards to make the
[discrimination] victim whole.” David, 324 F.3d at 865.
II. Application of Equitable Relief
Gracia seeks neither reinstatement to her former position at Sigmatron nor
front pay, that is, wages she would have made going into the future had she not
been illegally fired. Pl.’s Claim at 2; see also Gracia Decl. ¶¶ 10-11. Indeed, as
explained below, she now makes more at her new job. Her request for relief instead
3
consists of back pay, the value of certain back and projected future benefits (which
she would have received at Sigmatron but are not available at her new work), a tax
offset, and prejudgment interest. The Court addresses each in turn.
A. Back Pay
1. Presumption of Award
Once the jury has found that there has been employment discrimination,
there is a presumption that the employee is entitled to back pay. See David, 324
F.3d at 865; E.E.O.C. v. Gurnee Inn Corp., 914 F.2d 815, 817-18 (7th Cir. 1990). The
claimant must establish the amount of damages, but she is presumptively entitled
to full relief. Hutchison v. Amateur Elec. Supply, Inc., 42 F.3d 1037, 1044 (7th Cir.
1994); Gurnee Inn, 914 F.2d at 817-18; see also Pollard v. E.I. du Pont de Nemours
& Co., 532 U.S. 843, 847-48 (2001) (holding that back pay includes lost benefits);
EEOC v. O’Grady, 857 F.2d 383, 391 (7th Cir. 1988) (same). “Once a plaintiff has
established the amount of damages she claims resulted from her employer’s
conduct, the burden of going forward shifts to the defendant to show that the
plaintiff failed to mitigate damages or that damages were in fact less than the
plaintiff asserts.” Hutchison, 42 F.3d at 1044; accord Taylor v. Philips Indus., Inc.,
593 F.2d 783, 787 (7th Cir. 1979) (holding that it is “[n]ot until the plaintiff
establishes what she contends are her damages [that] the burden of going forward
to rebut the damage claim or to show plaintiff’s failure to mitigate damages, fall on
defendant”).
4
2. Duty to Mitigate
Sigmatron argues that Gracia is not entitled to back pay because she failed to
mitigate her damages by failing to be reasonably diligent in finding another job
after her firing. Def.’s Resp. at 3-4. Sigmatron further contends that Gracia
“willfully incurred” losses by choosing to take care of her nephew (allegedly in
exchange for room and board), thus foreclosing opportunities to mitigate damages in
higher-paying jobs. Id. at 4-5. Failure to mitigate, however, is an affirmative
defense and Sigmatron has not met its burden of establishing it.
Generally, “a discharged employee must mitigate damages by using
reasonable diligence in finding other suitable employment.” Graefenhain v. Pabst
Brewing Co., 870 F.2d 1198, 1202 (7th Cir. 1989) (internal quotation marks and
emphasis omitted). Any back-pay award to a victim of discrimination must
therefore be reduced by “[i]nterim earnings and amounts earnable [by the
employee] with reasonable diligence.” 42 U.S.C. § 2000e-5(g)(1). Because the
statutory text requires subtracting not only actual “interim earnings” but also
amounts “earnable with reasonable diligence,” a plaintiff “cannot just leave the
labor force after being wrongfully discharged in the hope of someday being made
whole by a judgment,” Hutchison, 42 F.3d at 1044. Nor will a lack of job-seeking
success excuse the plaintiff from this duty to mitigate. A plaintiff’s “discouragement
[may be] understandable, and his lack of success [may be] regrettable, but his duty
to mitigate [does] not evaporate in the face of his difficulties.” Payne v. Security
Saving and Loan Assoc., 924 F.2d 109, 111 (7th Cir. 1991). Although the duty to
5
mitigate falls on the plaintiff, see Ford Motor Co. v. EEOC, 458 U.S. 219, 231 (1982),
it is the employer’s burden to establish that the plaintiff failed to mitigate his
damages, see Hutchison, 42 F.3d at 1044. “To establish the affirmative defense of a
plaintiff’s failure to mitigate damages, the defendant[ ] must show that: (1) the
plaintiff failed to exercise reasonable diligence to mitigate her damages, and
(2) there was a reasonable likelihood that the plaintiff might have found comparable
work by exercising reasonable diligence.” Id.; accord Wheeler v. Snyder Buick, Inc.,
794 F.2d 1228, 1234 (7th Cir. 1986).
Sigmatron contends that Gracia waited ten months after her firing before
sending out emails about jobs, and then only infrequently emailed prospective
employers without even including any cover letters or introductions. Def.’s Resp. at
3-4 (citing chart of Gracia’s job-seeking efforts). If that were right, then Sigmatron
likely would have carried its burden to show lack of reasonable diligence. But there
is no need to definitively decide that issue, because Sigmatron does not make even a
perfunctory effort to meet the second element of its affirmative defense: namely,
that there was a reasonable chance there was comparable work to be found. The
Seventh Circuit has held that an employer “must prove both that the claimants
were not reasonably diligent in seeking other employment, and that with the
exercise of reasonable diligence there was a reasonable chance that the claimants
might have found comparable employment.” Gurnee Inn, 914 F.2d at 818 (internal
alterations and quotation marks omitted) (emphasis in original); see also United
States v. City of Chicago, 853 F.2d 572, 578 (7th Cir. 1988); Wheeler, 794 F.2d at
6
1234. Sigmatron offers no evidence on the availability of work comparable to her
lost position in the months after her discharge. For instance, Sigmatron could have
submitted evidence about Gracia’s application process with her new employer (she
got that job in 2010), such as how long the position was open when she applied (and
how many positions of that type were open at the new employer), and how quickly
she was able to secure that position, to create some circumstantial basis to think
that comparable work was available to her had she looked sooner. Or Sigmatron
could have introduced Bureau of Labor Statistics studies for manufacturing jobs in
Illinois for the relevant time period. But Sigmatron submitted no evidence on this
point, so it has failed to meet its burden. It bears remembering that it is appropriate
to place the burden of proof on the employer to tamp-down damages because the
only reason why this question needs an answer is that the employer has engaged in
illegal discrimination.
It also bears noting that Sigmatron’s other contention—that Gracia took
herself out of the job market by taking care of her nephew—is undeveloped and
likely wrong. At trial, Gracia testified that, after she was fired, she stayed at her
sister’s apartment, where the rent was paid by her sister, and provided some care
for her sister’s son. R. 191, Trial Tr. at 494. Sigmatron urges a reduction in Gracia’s
back pay based on the value of the “free room and board” Gracia received from her
sister. Def.’s Br. at 5. There are a couple of problems with this argument. The
company provides no factual basis to assume that Gracia’s in-family childcare
constituted the equivalent of work that consumed an amount of time that prevented
7
a diligent search for employment. Even if it had, Sigmatron ignores that a plaintiff
must find comparable work to what she has unlawfully lost, and “need not seek
employment which is not consonant with his particular skills, background, and
experience.” Graefenhain, 870 F.2d at 1202 (citation and internal quotation marks
omitted). In any event, Sigmatron also provides no authority for the proposition
that a defendant found liable for a discriminatory firing can seek to reduce its
damages to an unlawfully-fired employee by deducting the value of living expenses
that the employee, now cut off from her wages, necessarily tries to save by relying
on family. All in all, Sigmatron has failed to carry its burden.
3. Calculation
a. 2008 Earnings as Benchmark
With the mitigation defense rejected, the Court turns to the calculation of
Gracia’s back pay. As a threshold matter, the parties dispute the applicable figure
that should serve as the benchmark for the wages Gracia lost due to the retaliatory
firing. Gracia urges that her annual earnings for the last complete calendar year
she worked, 2007, a sum just over $36,000, be used to determine what she would
have continued to make on the job. Pl.’s Claim at 3. Sigmatron counters that
Gracia’s 2008 earnings (projected for the full year, because she was fired a few
weeks shy of the end of December), which are lower, constitute the proper figure.
Def.’s Resp. at 6. Sigmatron has the better argument.
Back pay is “the difference between actual earnings for the period and those
which she would have earned absent the discrimination by defendant.” Horn v.
8
Duke Homes, Div. of Windsor Mobile Homes, Inc., 755 F.2d 599, 606 (7th Cir. 1985).
Calculating the difference in pay is “not an exact science,” ultimately resting on “a
process of conjectures” that are necessarily “imprecise.” Thompson v. Altheimer &
Gray, 2001 WL 1618717, at *2 (N.D. Ill. Dec. 18, 2001) (citations omitted). The
process is somewhat simpler in this case, because Gracia does not make any
arguments about hypothetical raises she might have received moving forward.
Instead, she merely wants to apply the same annual-earnings figure for later years,
until she began to earn more at her current job. Pl.’s Claim at 3. That is perfectly
acceptable, but she offers no reason to use 2007 (rather than 2008) as the
benchmark, aside from the argument, unsupported by any law, that it was the last
full calendar year of employment. Not surprisingly, Gracia prefers 2007 because she
made more that year (as the calculations below show), but there is more current
wage information available, for virtually all of 2008, specifically, through December
7 of that year. See R. 209, Exh. A, Earnings Stmt. for 12/01 to 12/07/2008. It is easy
enough to determine what full-year earnings would have been for 2008, a year that
better reflects Gracia’s projected work hours and pay going forward than a previous
year.2 See R. 209, Gracia Decl. ¶ 2 (stating that Gracia was paid based on an hourly
2Gracia
argues that using 2007 avoids “the need to speculate” because she believes
that she would have earned overtime in late 2008 had she not been fired. R. 214, Pl.’s Reply
Br. at 8 (citing Gracia Affidavit ¶ 12). But Gracia raised this overtime possibility for the
first time in the reply brief, rather than developing an opening argument as to why 2007
was the right year to use. And an examination of Gracia’s affidavit really shows that she is
speculating about the possible overtime. She avers that, on August 1, 2008, Patrick
Silverman told her and others that Sigmatron had committed to shipping an order to
Honeywell by January 19, 2009. Gracia opines that this order probably would have
required significant overtime during late December 2008. But the information about the
Honeywell order was shared with Gracia more than four months before early December
9
rate, not set salary). Gracia’s final pay stub lists $31,609.15 as her gross pay
through December 7, see Earnings Stmt.; projecting her earnings for the remaining
24 days of the year at the same rate, as Sigmatron urges, Def.’s Resp. at 6, the
resulting sum is $33,776.63.
b. Interim Earnings
The next step is to consider any interim earnings, that is, “wages (or the like)
earned by a discriminated upon employee in the period after his discharge but
before judgment that, but for the discrimination, would not have been earned.”
Chesser v. State of Ill., 895 F.2d 330, 337 (7th Cir. 1990). Interim earnings “operate
to reduce the back pay otherwise allowable.” 42 U.S.C. § 2000e-5(g)(1). To start,
Sigmatron re-raises the fact that Gracia lodged with her sister after her firing. Pl.’s
Resp. at 7-8. The company relies on a district court case that found that a
discharged discrimination plaintiff who took a second, non-salaried job as a
caretaker for an elderly woman for room and board should have such “in-kind
compensation for services rendered” included as interim earnings. E.E.O.C. v.
Fotios, 671 F. Supp. 454, 457 (W.D. Tex. 1987). Fotios is not the same as this case.
The eldercare job the plaintiff in that case took was precisely that—a part-time job
taken as an afterhours supplement to a 40-hour post. Id. at 456. All that the record
shows for Gracia, by contrast, is that, having been fired illegally by Sigmatron, she
2008, yet Gracia offers nothing more to establish that the order was still on track (for
example, she offers nothing about preparations as of early December 2008, when she was
still at Sigmatron, to work on the order). Nor does Gracia provide any details about the
Honeywell order to establish that overtime would be needed (and how much), even if the
January 19, 2009 ship-date was still in place. Ultimately, this argument is too undeveloped
to credit.
10
did what many might do when faced with a sudden financial shortage: she moved in
with an immediate family member, providing some care for her sister’s son when
living there. Indeed, Gracia attests that rather than benefit from free room, she
cashed out her 401(k) to contribute something in rent to her sister. Gracia Supp.
Decl. ¶ 6. Sigmatron points to nothing in the record to show that Gracia’s informal,
within-family babysitting rose to the level of employment (in terms of hours,
compensation, and so on) such that is would constitute a job that generated
“earnings.” What’s more, Sigmatron offers inadmissible evidence in an attempt to
place a value on the lodging, proffering real-estate listings from the internet, see
Def.’s Resp., Exh. 6, for a one-bedroom apartment in the area of Chicago where
Gracia stayed with her sister. Aside from the inadmissibility of the listings, no
explanation is provided to support using the value of an entire one-bedroom
apartment (there is no reason to believe that Gracia had her own kitchen, living
room, and so on).
There is, however, some evidence of other interim earnings in the record.
First, during her pretrial deposition, Gracia testified that in 2009 she had worked
as a translator, receiving $50 for the one-off job. R. 210, Exh. 7, Gracia Tr. at 25-26.
That amount shall apply as interim earnings. Second, in her declaration submitted
in support of equitable relief, Gracia states that, also in 2009, she worked for a used
furniture business, earning $700 according to her best estimate (she was paid in
cash and no record was kept of the amount). Gracia Decl. ¶ 7. Sigmatron criticizes
Gracia for hiding the existence of this work until this stage of post-trial litigation.
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Def.’s Resp. at 8-9. In response, Gracia explains that she did mention this work
during her deposition and that Sigmatron only confuses it now as a new job
altogether because during her 2012 deposition she had stated, as her then-memory
of her pay, a sum of around $400, as opposed to the $700 she lists now. See R. 215,
Gracia Supp. Decl. ¶ 16. It does appear that Gracia did acknowledge the usedfurniture work in the deposition testimony Sigmatron cites. Gracia Tr. at 23-24
(discussing working for “probably like a week” for a company that bought and resold
old furniture).3 Although Gracia now wishes to apply the lesser amount as the
interim-earnings figure, Pl.’s Reply Br. at 8, the Court will hold her to the $700 she
provided in her affidavit, which was presumably based on careful consideration for
the specific purpose of reconstructing her income history (as opposed to the off-thecuff response she appears to have given at her deposition). Accordingly, the Court
will offset Gracia’s back-pay award for 2009 by a total of $750.
Next, and most significantly, Gracia’s back-pay award must take into
consideration her earnings from a new job she obtained in 2010, at a company called
Imagineering, Inc. Gracia Decl. ¶ 8. According to W-2s submitted by Gracia, these
earnings amounted to $20,016 in 2010 and $30,183 in 2011. See Gracia Decl., Exhs.
E and F, W-2 for 2010 and 2011. Finally, because Gracia earned over $34,000 in
2012, see id., Exh. G, W-2 for 2012, the last year for which she has provided tax
3Sigmatron
suggests that Gracia’s “lack of credibility regarding her back pay
warrants a complete denial of her claim for such relief.” Def.’s Resp. at 9. There is no basis
for such an extraordinary step, premised solely on a discrepancy of $300 on how much
Gracia made on an informal job lasting one or two weeks several years ago, a discrepancy
that Gracia now acknowledges.
12
documents, an amount more than what her earnings would have been at Sigmatron,
calculation of her back-pay award ends with calendar-year 2011.
c. Resulting Award
Using the amounts decided above, the chart below shows the back-pay
calculation. Remember that the annual earnings that Gracia would have made had
she not been fired were $33,776.63, based on her projected full-year 2008 wages.
Year
Earnings
Difference
Owed
2008
$31,609.15 (through Dec. 7)
$2,167.48
(rest of year)
2009
$750.00 ($700 from furniture work, $50 from translating)
$33,026.63
2010
$20,016.00 (from Imagineering)
$13,760.63
2011
$30,183.00 (from Imagineering)
$3,593.63
Accordingly, the total amount of back pay owed to Gracia is $52,548.37.
B. Lost Benefits
1. 401(k) Contributions
With regard to lost benefits, Gracia first seeks the value of employer
contributions to her 401(k). She avers that when she worked at Sigmatron, she
participated in the company’s 401(k) plan, receiving a contribution from Sigmatron
totaling 1% of her annual wages. Gracia Decl. ¶ 12d. Gracia’s new employer did not
provide this sort of benefit until 2013. Pl.’s Claim at 4. She therefore seeks lost
401(k) contributions for 2009 through 2012. Gracia claims that Sigmatron’s 2008-
13
contribution was $399.68, so for the four years, she asks for a total of $1,598.72.
Gracia Decl. ¶ 12d.
It is a close call on whether Gracia has actually met her burden of
“establish[ing] the amount of damages she claims” for this particular benefit.
Hutchison, 42 F.3d at 1044. Gracia assumes that the full value of the contributions
is equivalent to cash in hand when, in reality, 401(k) contributions are not so
straightforward: funds placed into a 401(k) benefit from favorable tax-deferred
treatment on the condition that the money cannot be distributed before the
accountholder reaches retirement age without, generally speaking, incurring an
early-withdrawal penalty. See Internal Revenue Service, 401(k) Resource Guide–
Plan
Sponsors–General
Distribution
Rules,
http://www.irs.gov/Retirement-
Plans/Plan-Sponsor/401%28k%29-Resource-Guide-Plan-Sponsors-GeneralDistribution-Rules (last visited Sep. 10, 2015). By receiving the full contribution
amount now (well before retirement age), Gracia therefore would get something of a
windfall by avoiding that tax hit. Thus, it is not clear that the lump-sum that
Gracia requests is a “correct measure of damages for lost back benefits,” which is
“the out-of-pocket expense incurred by the plaintiff[.]” Best v. Shell Oil Co., 4 F.
Supp. 2d 770, 774 (N.D. Ill. 1998); but see U.S. E.E.O.C. v. Custom Companies, Inc.,
2007 WL 734395, at *13 (N.D. Ill. Mar. 8, 2007) (granting $1,638 lost 401(k)
contributions without further inquiry into true value). A truly accurate damagescalculation based on 401(k) contributions would incorporate some kind of discount
rate (minus the early-withdrawal tax penalty, for instance) taking into
14
consideration true present value. Cf. McKnight v. General Motors, 973 F.2d 1366,
1372 (7th Cir. 1992) (articulating principle, in front pay context, that plaintiff must
“provide court with essential data necessary to calculate” an award, including
“applicable discount rate”).
In any event, because there is a reasonable (if not complete) basis to calculate
this particular award—namely, one-percent of Gracia’s annual earnings—and
Sigmatron does not contest it (indeed, the company would have had to make the
same amount as contribution had it not fired Gracia), Def.’s Resp. at 11, the Court
will grant an award for the 401(k) contributions. But the calculation of the
contribution will be set at one-percent of the same benchmark annual earnings used
to calculate back pay ($33,776.63), for an amount of $337.77 for each of calendar
years 2009, 2010, 2011, and 2012.4 That total is $1,351.08.
2. Health Insurance
Gracia next requests an award for the difference in health insurance costs
between Sigmatron and her current employer, where she now pays more in
employee-contributions than she did at Sigmatron. After initially calculating that
her costs were now $20.16 greater per week (for an insurance plan that covers
herself, her husband, and her young son), Gracia Decl. ¶ 12c, she now puts the
figure at $1.25 more per week (apparently estimating the cost for herself only),
Gracia Supp. Decl. ¶ 15. Gracia’s application for the cost difference is
underdeveloped and cannot be approved.
4Gracia
does not explain how she derives her proposed annual-contribution rate of
$399.68, which is inconsistent with a one-percent contribution by any measure of her
earnings.
15
As Gracia attests, her weekly payroll deduction for health insurance at
Sigmatron, when she was still single, was $33.82. Gracia Decl. ¶ 12c. She married
and had her son after her firing from Sigmatron and is now currently included in an
insurance plan from her husband’s employer, and the plan covers both spouses,
with a monthly cost of $53.98. Id. Gracia therefore does not compare like with like.
She is now part of an insurance plan that covers two individuals, not just herself,
which, without knowing more, can be assumed to cost more than a plan for a single
person. (And if that is not the case, Gracia, who carries the burden of establishing
her damages, has not presented evidence to allow for a meaningful comparison.)
Further, Gracia provides no basis to substantiate her new estimate that insurance
for herself (presumably culling out the cost of her husband in some unexplained
way) costs $1.25 more per week. Accordingly, the claim for damages in the form of
lost health-insurance benefits is denied.
3. Vacation and Personal Days
Finally, Gracia seeks several thousand dollars representing the value of
vacation and personal days that she would have been eligible for had she not been
fired from Sigmatron, a benefit she does not receive at her current job. Although
Sigmatron does not contest Gracia’s application for some vacation and personal-day
related damages, Def.’s Resp. at 11, Gracia has failed to meet her burden of
accurately establishing the amount of such an award.
According to Gracia, “the maximum amount of paid vacation is two weeks”
per year at her current job, which she has been eligible for since 2012, having had
16
only one week during 2011 and no rights to paid leave during 2010. Gracia Decl.
¶ 12a. She states that when she worked at Sigmatron, she had been eligible for
three weeks of paid vacation each year and, had she remained, would have become
eligible for four annual weeks upon her fifteenth anniversary with the company in
July 2015. Id. Sigmatron also provided three paid personal days per year whereas
Imagineering does not. Id. ¶ 12b. Although Gracia is correct that the loss of more
generous paid-leave benefits is recoverable in theory, her argument that she be
awarded a flat $624 per lost week of vacation and $374.40 per year for personal
days (both based on her last rate of pay at Sigmatron) is flawed. Id. ¶¶ 12a, b; Pl.’s
Claim at 4-5.
The problem is that Gracia assumes that simply tacking on a week or two of
Sigmatron pay, depending on the vacation differential for a given year, directly
reflects the value of the lost leave, when it does not. Any leave that Gracia took
would not have simply been on top of the number of weeks she worked, but in place
of some of that work. To illustrate, for 2011, when she only had one week of paid
leave at Imagineering but would have had three at Sigmatron, Gracia is in essence
asking for two weeks of pay from Sigmatron as damages, on top of the 51 weeks of
work she presumably put in and the one week of paid leave she received at
Imagineering—yet there are, of course, only 52 weeks in a year. To capture the lost
benefit of more paid leave, in other words, what Gracia should have done is
adjusted her earnings (even if they might be larger on a gross basis) from
Imagineering to determine a rate taking into account paid leave—a rate that
17
reflects the fact that she must work more and with less leave at the new company
for comparable remuneration. This would have enabled a true, apples-to-apples
comparison of compensation allowing the Court to fashion an award of back pay
incorporating the value of lost leave. As it is, for instance, it is not even clear if the
2008 year-to-date earnings reported on Gracia’s last 2008 paystub includes a week
of paid leave (presumably it does, as Gracia attests that she “took all of the vacation
for which [she] was eligible at” Sigmatron, Gracia Decl. ¶ 12a). Thus, in calculating
the back-pay award according to the parameters Gracia identified, the Court may
have already taken into account to some degree the value of her paid leave.
Gracia also requests the value of lost vacation and personal days (as well as
the health insurance differential) on a post-judgment basis, essentially as a form of
front pay-related damages, based on a “very conservative projection [of] five years.”
Pl.’s Claim at 5. This contention is rejected too, not only on Gracia’s failure to
provide an accurate means of calculation, but on the separate basis that she
provides no evidence whatsoever to justify such a future-looking award. She sought
to proceed with her claim for equitable damages solely on the basis of documentary
submissions, yet has provided no such evidence to indicate how long she would have
reasonably expected to remain with Sigmatron—which is indispensable to crafting
any future compensation—and certainly nothing to justify a five-year award
period.5 See McKnight, 973 F.2d at 1372 (plaintiff must give court basis of
information like “the length of time the plaintiff expects to work for the defendant”
5Gracia
herself, in renouncing any claim for reinstatement, noted that returning and
remaining at Sigmatron would be undesirable, especially as the manager who was involved
centrally in her initial harassment claims still works there. Pl.’s Claim at 2 and n.1.
18
to support a front-pay award); see also Bruso v. United Airlines, Inc., 239 F.3d 848,
862 (7th Cir. 2001) (“If the plaintiff fails to provide this information to the district
court, the court will not abuse its discretion if it denies his request for front pay.”).
In sum, Gracia’s claim for the value of lost vacation and personal-day leave, up to
the date of judgment and beyond, is denied as not sufficiently proven.
C. Prejudgment Interest
Gracia seeks prejudgment interest on her award of back pay and lost 401(k)
contributions. There is no doubt that “Title VII authorizes prejudgment interest as
part of the backpay remedy in suits against private employers.” Loeffler v. Frank,
486 U.S. 549, 557 (1988) (noting unanimity of courts of appeal); see also Shott v.
Rush-Presbyterian-St. Luke’s Med. Ctr., 338 F.3d 736, 745 (7th Cir. 2003)
(prejudgment interest presumptively available for violations of federal law).
“[P]rejudgment interest typically accrues from the date of the loss or from the date
on which the claim accrued,” in this case the date of the firing, December 8, 2008
(this date is not contested). Am. Nat. Fire Ins. Co. ex rel. Tabacalera Contreras
Cigar Co. v. Yellow Freight Sys., Inc., 325 F.3d 924, 935 (7th Cir. 2003). Unlike postjudgment interest, however, “there is no statutory rate of prejudgment interest”;
determining an applicable rate is left to the district court’s discretion based on
individual circumstances, although “the best starting point is to award interest at
the market rate, which means an average of the prime rate for the years in
question.” Cement Div., Nat’l Gypsum Co. v. City of Milwaukee, 144 F.3d 1111, 1114
(7th Cir. 1998) (citations omitted).
19
The market rate is perfectly reasonable here and, as Gracia states (and
Sigmatron does not dispute), Pl.’s Claim at 6, the figure to be used for her award is
3.25 percent, as that was the prime rate for almost the whole prejudgment period in
this case, except for a few weeks when it was 3.61 percent. See Board of Governors,
Federal
Reserve
System,
Historical
Data,
Selected
Interest
Rates,
http://www.federalreserve.gov/releases/h15/data.htm (last visited Sep. 10, 2015)
(download spreadsheet for “Bank prime loan” at hyperlink for “monthly” data). The
prejudgment interest will be compounded monthly. See Geraty v. Village of Antioch,
2014 WL 1475574, at *3 (N.D. Ill. Apr. 15, 2014); see also Am. Nat. Fire Ins. Co., 325
F.3d at 938 (“Compound interest generally more fully compensates a plaintiff[.]”).
Accordingly, the total prejudgment interest (modified from Gracia’s chart, see Pl.’s
Claim, Exh. C), up to September 2015, is calculated as follows.
2008
2009
2010
2011
2012
Principal $2,167.48
(Wages)
$33,026.63 $13,760.63 $3,593.63
N/A
Principal N/A
(401(k))
$337.77
$337.77
$2,167.48
Total
Principal
$33,364.40 $14,098.40 $3,931.40
$337.77
Accrued
Months
81
69
57
45
33
Rate
(compounded
monthly)
Interest
3.25%
3.25%
3.25%
3.25%
3.25%
$530.88
$6,845.44
$2,349.99
$508.83
$31.53
Total
$337.77
20
$337.77
$10,266.67
The total award of prejudgment interest to Gracia is $10,266.67.
D. Tax-Component Award
Finally, Gracia asks for a tax-component award to offset the increased tax
burden she will incur as a result of receiving a lump sum award in this case of her
back pay. The Seventh Circuit, joining other circuits, recently adopted the
availability of such an offset in discrimination cases. E.E.O.C. v. N. Star
Hospitality, Inc., 777 F.3d 898, 904 (7th Cir. 2015) (“Put simply, without the taxcomponent award, [a plaintiff] will not be made whole, a result that offends Title
VII’s remedial scheme.”). Here, the Court has determined that Sigmatron owes
Gracia $52,548.37 in unpaid back wages from 2008 to 2011; had Gracia received
that amount spread out over the 2008 to 2011 period, she would undoubtedly have
paid less in taxes than she will now have to, receiving the wages in a lump sum
along with the other damages awarded her in this case, when added to her existing
income. This extra tax hit is due to the increased marginal taxation as certain
income thresholds are crossed.
Gracia attests that had she received the rightful wages in question in the
appropriate years (remember her annual pay should have been $33,776.63 during
that time), the federal income tax rate applied to her after applying the appropriate
standard deduction would have been 15 percent. Gracia Decl. ¶ 14. This contention
appears supported by Internal Revenue Service tax-rate schedules for those years.
See Gracia Decl., Exh. H, I.R.S. Tax Rate Schedules 2008 to 2011 (ceiling for 15percent bracket ranges from pre-deduction income of $32,550 in 2008 to $34,550 in
21
2011).6 Sigmatron does not dispute the underlying tax-offset theory of recovery or
that Gracia would have been subject to the 15-percent rate, but it does question to
what higher marginal rate her lump-sum recovery in this case will take her,
arguing that at most she will fall into the bracket for a 33-percent rate. Def.’s Resp.
at 9-10. Gracia believes her recovery could push her income high enough to be taxed
at the 39.6-percent rate. Pl.’s Claim at 7. As explained below, the Court’s calculation
(based on publicly available tax-rate data) shows that her back-pay award will be
taxed mostly at a 35-percent rate and partly at a 33-percent rate.
According to Gracia, she and her husband, who will be filing jointly, expect to
have an income of about $90,000 in wages for 2015. Gracia Decl. ¶ 13. In addition to
that amount, Gracia will have to report as taxable income: $300,000 awarded by the
jury in compensatory and punitive damages in this case; the $1,351.08 in lost 401(k)
contributions awarded now as equitable relief; the $10,266.67 in prejudgment
interest also awarded, as calculated above; and, the $52,548.37 in back pay. Gracia’s
anticipated income on her 2015 tax-year filing will therefore be $454.166.12. For
2015, a rate of 39.6 percent will apply to married individuals filing together for
incomes over $464,850, a 35-percent rate applies to all incomes above $411,500, and
a 33-percent rate for income between $230,450 and $411,500. See Internal Revenue
Service, Revenue Procedure 2014-61, available at http://www.irs.gov/pub/irs-drop/rp14-61.pdf.
6Sigmatron
does not raise any objection to the validity of these attached schedules,
which appear to be photocopied from I.R.S. publications.
22
Had Gracia received her $52,548.37 in back pay appropriately and been taxed
at the resulting 15-percent rate, her tax liability on this sum would have been
$7,882.26. At 2015 rates, Gracia will be taxed at 35-percent for the first $42,666.12
of her back-pay award (that rate applying to any income over $411,500), and the
remaining $9,882.25 at 33 percent (which applies to incomes between $230,500 and
$411,500), for a resulting total tax liability at 2015 rates of $18,194.28 on her back
pay. Gracia is accordingly entitled to the differential of $10,312.02 as a taxcomponent award for the back-pay award.
Finally, Gracia also asks for a tax offset to cover any liability for the 401(k)contribution portion of damages, arguing that these contributions would ordinarily
have been tax-deferred. It is true that 401(k) contributions are only taxed upon
distribution to the accountholder, typically during that person’s retirement. Gracia
asks for a tax-component award of 42.75 percent of the 401(k) contributions,
approximating this rate as what she “might be taxed at some unknown point
decades into the future.” Pl.’s Claim at 7. But this request is based on nothing but
conjecture, without any supporting detail as to how that was computed. Moreover,
as already explained, by receiving the present cash value of these contributions,
Gracia is already benefitting by having access to money she ordinarily would not
have for decades. Gracia’s application for a tax-component award for her 401(k)
contributions is denied.
23
III. Motion for Sanctions
During trial, Sigmatron filed a motion for sanctions under Rule 37(c)(1)
against Gracia, alleging that she had displayed for the jury “doctored” versions of
some exhibits which had “never” been produced to Sigmatron, intending to obscure
the fact that Gracia had forwarded one of the emails to her counsel. Mot. Sanctions
at 1-2. The exhibits in question were emails that Gracia’s supervisor at Sigmatron
had sent her (and sent to others), with sexually-oriented photo attachments; unlike
previous versions that had been disclosed and discussed during discovery and up to
the pretrial conference, the versions shown by Gracia’s counsel during opening
statements included the photographs isolated and enlarged, rather than as part of
the text of the email, including a visible header with the sender/recipient
information. Id. at 4. Previous versions of the emails that had been produced during
the course of litigation had included both printouts of the original emails in
question (with smaller versions of the photographs in the body of the email) along
with a separate page with the identical photographs alone. See R. 52-54, 56, Pl.s’
Exhs. in Opp. Def.’s Mot. Summ. J. For relief, Sigmatron requested that the photoonly exhibits be stricken, the jury be informed of the modification, and Gracia be
ordered to pay reasonable attorney’s fees caused by the failure to disclose the exact
version used at trial. Mot. Sanctions at 9.
Although the Court did admonish Plaintiff’s counsel for the improper removal
of the headers without warning, the Court noted that, because there was “no
substantive difference” in the photographs shown from previously disclosed
24
versions, and because Sigmatron could cross-examine Gracia about the fact that she
had also forwarded the email (as well as introduce as an exhibit the email with the
header), Sigmatron would still be free to present to the jury the entire context of the
email. See R. 189, Trial Tr. at 222-23, 227. Thus, there was no need to strike the
exhibits or instruct the jury in some way, although the Court reserved the question
of whether monetary sanctions would be appropriate against Gracia’s counsel for
the failure to notify opposing counsel of modifying previously set trial exhibits at
the very last minute. Id. at 221.
To be sure, as the Court explained during the trial, this failure was certainly
blameworthy. But sanctions are not ultimately warranted. The chief reason is that
there was no discernable effect of the selective focus on the photographs; Sigmatron
had the opportunity to cross Gracia as explained; and, as it turned out, Gracia lost
on her sexual harassment claim anyway, and that was the claim for which the
exhibits were primarily introduced. As a result, Sigmatron’s motion is denied.
25
IV. Conclusion
For the reasons given, Gracia is awarded damages for equitable relief in the
amount of: $52,548.37 in back pay, $1,351.08 in lost 401(k) contributions,
$10,266.67 in prejudgment interest, and $10,312.02 as a tax-component award, for a
total award of $74,478.14. As also explained, Sigmatron’s motion for sanctions is
denied.
ENTERED:
s/Edmond E. Chang
Honorable Edmond E. Chang
United States District Judge
DATE: September 17, 2015
26
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