Umholtz v. Kansas Department of Social and Rehabilitation Services
Filing
165
MEMORANDUM AND ORDER: Judgment in favor of Plaintiff on her Rehabilitation Act claim be entered in this case as follows: $31,157.64 in lost income for the years 2009 and 2010, plus prejudgment interest that shall run from the date of contract termination to the date of judgment, and $20,772.30 in damages for emotional distress, mental anguish, anger, and loss of enjoyment of life, plus costs. Signed by District Judge Julie A. Robinson on 10/28/2013. (mb)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF KANSAS
BRENDA UMHOLTZ,
)
)
Plaintiff,
)
)
vs.
)
)
STATE OF KANSAS, DEPARTMENT )
OF SOCIAL AND REHABILITATION )
SERVICES,
)
)
Defendant. )
)
Case No. 11-4018-JAR
MEMORANDUM AND ORDER
On August 16, 2013, the jury returned a verdict in favor of Plaintiff Brenda Umholtz on
her retaliation claim under the Rehabilitation Act against Defendant State of Kansas, Department
of Social and Rehabilitation Services (“SRS”), where she had worked as an independent
contractor providing vocational assessment and placement services. The jury awarded Plaintiff
$31,157.64 in lost income for the years 2009 and 2010, and found no damages for lost income
for the period 2010 through the date of the verdict. The jury further awarded Plaintiff
$20,772.30 in damages for emotional distress, mental anguish, anger, and loss of enjoyment of
life. The Court now considers Plaintiff’s request for an additional award of prejudgment interest,
equitable relief in the form of reinstatement or front pay, and injunctive relief prohibiting further
retaliation by SRS. As described more fully below, the Court orders judgment in this case on the
verdict and for an additional award of prejudgment interest on the lost income award. The Court
denies Plaintiff’s remaining requests for equitable relief.
I.
Prejudgment Interest
Plaintiff requests prejudgment interest on the lost income award in the amount of 10%
per annum, the Kansas statutory rate, from the time the service provider agreement was
terminated to the time of the verdict. Defendant does not object to Plaintiff’s request for
prejudgment interest, but argues that it should be limited to the period March 12, 2009 through
June 30, 2009, when her contract expired. Defendant argues that the rate to be applied should be
lower than the 10% Kansas statutory rate given the jury’s limited lost income award.
Courts are authorized to grant prejudgment interest on a back pay award under Title VII
and other discrimination statutes.1 The Court agrees that an award of prejudgment interest on the
lost compensation award is appropriate here because it is analogous to back pay. The Court
further exercises its discretion in finding that 10% per annum is an appropriate and reasonable
interest rate. While the rate of prejudgment interest on a federal claim is a question of federal
law, courts generally look to state law to determine the rate.2 The Court need not halve the
statutory rate in order to give credence to the jury’s limited back pay award. The fact that the
jury found no damages after 2010 accounts fully for its limited back pay award by limiting the
principle amount of the damage award. Defendant relies on Baty v. Willamette Industries, Inc.3
in arguing for a lower interest rate. In Baty, Judge Lungstrum focused on the periodic nature of
the plaintiff’s back pay loss in determining that the full statutory rate should not be applied.4
1
Daniel v. Loveridge, 32 F.3d 1472, 1478 (10th Cir. 1994) (Title VII); see Carr v. Ft. Morgan Sch. Dist., 4
F. Supp. 2d 989, 996 (D. Colo. 1998) (ADA).
2
See Welch v. UNUM Life Ins. Co. of Am., No. 00-1439-WEB, 2008 WL 3876319, at *1–2 (D. Kan. Aug.
18, 2008).
3
985 F. Sup. 987 (D. Kan. 1997).
4
Id. at 999.
2
The court reasoned that because the plaintiff had not lost her entire back pay award on the date
of termination, but instead, suffered a back pay loss that aggregated over time, the full statutory
interest rate would overcompensate her.5 Here, the jury’s back pay award was limited to a
relatively short period of time, 2009 and 2010. Based on the jury’s verdict, from sometime in
2010 until the date of judgment, Plaintiff was due the entire back pay award. Under these
circumstances, the Court does not find that a reduction in the statutory rate of prejudgment
interest is warranted and will apply the 10% Kansas statutory rate.
The Court further finds that the period of prejudgment interest should run from the date
the contract was terminated until the date of judgment. Prejudgment interest is intended to
prevent the Defendant from essentially taking an interest free loan on Plaintiff’s wages. That
interest free loan continued past the date that the contract terminated and continued through the
date of judgment.
II.
Reinstatement and Front Pay
Plaintiff requests reinstatement and front pay between the period of judgment and
reinstatement. “‘[F]ront pay is simply money awarded for lost compensation during the period
between judgment and reinstatement or in lieu of reinstatement.’”6 Front pay is an equitable
appropriate remedy under the Rehabilitation Act.7 Reinstatement is the preferred remedy, but it
is not always a viable option.8 The Tenth Circuit has explained that when “‘reinstatement is not
5
Id.
6
Abuan v. Level 3 Commcn’s, Inc. 353 F.3d 1158, 1176 (10th Cir. 2003) (quoting Pollard v. E.I. du Pont de
Nemours & Co., 532 U.S. 843, 846 (2001)).
7
See Smith v. Diffee Ford-Lincoln-Mercury, Inc., 298 F.3d 955, 964 (10th Cir. 2002).
8
Abuan, 353 F.3d at 1176.
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viable because of continuing hostility between the plaintiff and the employer or its workers, or
because of psychological injuries suffered by the plaintiff as a result of the discrimination, courts
have ordered front pay as a substitute for reinstatement.’”9 “In such cases an award of front pay
as a substitute for reinstatement is ‘a necessary part of the make whole relief mandated by
Congress.’”10 Front pay is only appropriate however “when the other damages awarded will not
fully compensate the plaintiff for [her] injury.”11 The Court “must attempt to make the plaintiff
whole, yet the court must avoid granting the plaintiff a windfall.”12
Plaintiff seeks both reinstatement and front pay, or if reinstatement is not found to be
viable, front pay only. Defendant argues that Plaintiff is entitled to neither reinstatement nor
front pay. The Court denies Plaintiff’s request for both reinstatement and front pay. The law is
clear that front pay is only awarded in the event that reinstatement is not a viable option unless it
is awarded for the period between termination and reinstatement. While the Court is cognizant
that the facts of this case are different than typical retaliation cases because Plaintiff served as an
independent contractor rather than an employee, the Court declines to give Plaintiff a windfall by
ordering both reinstatement and front pay when the law clearly views them as mutually exclusive
remedies to the extent they cover the same time period. Therefore the Court turns to whether
reinstatement is a viable option.
A.
Reinstatement
9
Id. (quoting Pollard, 532 U.S. at 846).
10
Id. (quoting Pollard, 532 U.S. at 850).
11
Hudson v. Chertoff, 473 F. Supp. 2d 1292, 1302 (S.D. Fla. 2007) (quoting Weaver v. Casa Gallardo, Inc.,
922 F.2d 1515, 1529 (11th Cir. 1991)).
12
Goico v. Boeing Co., 347 F. Supp. 2d 986, 991 (D. Kan. 2004) (quotation omitted).
4
Plaintiff argued at the damages hearing that she should be reinstated for a period of three
years, the length of her original contract with SRS. Her counsel argued that there was no
evidence of substantial hostility between her and her co-workers and supervisors. Defendant
argued that reinstatement was not a viable option. The Court agrees that the evidence in this
case, both at trial and at the damages hearing, shows that hostility between Plaintiff and the SRS
employees prevents reinstatement of her provider contract from being a viable option. Plaintiff
implicitly acknowledges this by requesting both front pay and reinstatement—she argues that
front pay is necessary because of the unease and unfamiliarity between herself and the vocational
counselors at SRS who she would depend on for her referrals. She asks for front pay in an
amount equivalent to a three-year contract in order to compensate for the lag in referrals that
would necessarily stem from the lack of familiarity and unease between the counselors and
Plaintiff. Plaintiff testified it would take her six years to get to her 2008 reference and income
levels. Plaintiff’s position that the Court would be required to order front pay in addition to
reinstatement in order to make her whole is clear evidence that reinstatement is not a viable
option.
Plaintiff herself testified that while she would like to make reinstatement work, there
could be animosity because the SRS counselors are aware of her lawsuit and saw some of the
evidence presented at trial. Plaintiff testified that she was not confident she would receive
referrals from caseworkers who had received reprimands for working with her in the past. She
further testified that there could be retaliation against her or others who chose to send her
referrals. Indeed, Plaintiff believes an injunction is warranted prohibiting future retaliation in the
event that Plaintiff is reinstated. The Court finds that reinstatement is not a viable option here.
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As such, the request for injunctive relief is moot.
B.
Front Pay
The Court now turns to whether front pay is required in order to make Plaintiff whole.
The amount of front pay, if any, is within the Court’s discretion.13 In determining whether front
pay is warranted, and if so, how much, the Court is to consider the following factors:
work life expectancy, salary and benefits at the time of
termination, any potential increase in salary through regular
promotions and cost of living adjustment, the reasonable
availability of other work opportunities, the period within which
the plaintiff may become re-employed with reasonable efforts, and
methods to discount any award to net present value.
In formulating a front-pay award the district court may consider all
evidence presented at trial concerning the individualized
circumstances of both the employee and employer, but it must
avoid granting the plaintiff a windfall.14
The Court has considered the evidence presented at trial and at the hearing and finds that other
damages awarded in this case have made Plaintiff whole, and that a further award of front pay
would be entirely speculative.
First, the Court is limited by the jury’s finding that Plaintiff was not entitled to any
damages for lost compensation after the year 2010. “[W]hen legal and equitable issues to be
decided in the same case depend on common determinations of fact, such questions of fact are
submitted to the jury, and the court in resolving the equitable issues is then bound by the jury’s
findings on them.”15 The jury determined that Plaintiff only suffered loss of income due to
13
McInnis v. Fairfield Communities, Inc., 458 F.3d 1129, 1145 (10th Cir. 2006).
14
Whittington v. Nordam Grp. Inc., 429 F.3d 986, 1000–01 (10th Cir. 2005).
15
Smith v. Diffee Ford-Lincoln-Mercury, Inc., 298 F.3d 955, 964 (10th Cir. 2002).
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retaliation in 2009 and 2010 and explicitly found no lost compensation after 2010. The jury
made a factual determination that Plaintiff suffered no damage after this period of time and the
Court will not ignore that factual determination and award Plaintiff a windfall by finding she lost
income during a period of time after which the jury determined no damages were incurred.
The Court also finds that Plaintiff’s request for prospective damages is unduly
speculative. Defendant urges that Plaintiff must show an amount of lost future compensation
with reasonable certainty—the standard that applies to determinations of lost profits damages
calculations.16 The Court is mindful however that “determining a front pay award requires the
district court to predict future events and consider many complicated and interlocking factors,”17
which necessarily makes a future damages calculation difficult. And “‘the mere fact that
damages may be difficult of computation should not exonerate a wrongdoer from liability. The
most elementary conceptions of justice and public policy require that the wrongdoer shall bear
the risk of the uncertainty which his own wrong has created.’”18
Plaintiff’s request for prospective damages asks the Court to assume that her 2008
receipts from the State, approximately $62,000, would have continued had her contract not been
terminated. Unlike most front pay cases where the Court can extrapolate an award based on an
employee’s salary, Plaintiff’s contract did not guarantee any income from SRS. Indeed, the
evidence showed the Plaintiff’s income from her SRS contract grew over the course of her 2006
contract term and Mike Donnelly testified that the providers’ incomes were not
16
See, e.g., Kelley Metal Trading Co. v. Al-Jon/United, Inc., 877 F. Supp. 1478, 1484 (D. Kan. 1995)
(discussing lost profits standard under Kansas law).
17
Abuan v. Level 3 Commcn’s, Inc. 353 F.3d 1158, 1177 (10th Cir. 2003) (quotation omitted).
18
Id. at 1180 (quoting EEOC v. Prudential Sav. & Loan Assn’n, 753 F.2d 1166, 1173 (10th Cir. 1985)).
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predictable—they varied up and down depending on the services needed at any particular time.
Plaintiff’s service provider agreement with SRS was for a three-year period; it was terminated
with almost four months remaining on the contract term. The contract did not automatically
renew. Although Paul Meals testified that over 80% of service provider agreements are renewed
after their terms expire, only four of the eleven vocational assessment providers with whom the
Wichita SRS office had service provider contracts in 2008 still had a contract with SRS in 2013.
Even assuming Plaintiff would have renewed her service provider agreement two more
times, it is undisputed that the agreement would not guarantee her a fixed income. Her referrals,
and therefore her income, were dependent on the SRS counselors referring cases to her for
vocational assessments. It was also dependent on the universe of SRS referrals being large
enough to maintain her 2008 income.
Importantly, economic conditions shifted after 2008, calling into question Plaintiff’s
ability to sustain her 2008 levels of income had her contract not been terminated. In the years
after Plaintiff’s contract was terminated, the referrals to vocational service providers decreased:
in 2009 only between $12,000 and $13,000 was paid out for all vocational assessments, and in
2010, there were only nine total referrals with a total pay out of $3800 for vocational
assessments.19 These figures are far below the $62,000 Plaintiff made from her SRS contract in
2008, which she asks the Court to use as a benchmark. Donnelly further testified that SRS has
retained a consulting firm to evaluate whether the provider agreements under which Plaintiff
19
Plaintiff testified that her income on the 2006 contract was from both vocational assessments and
placements. She testified at the trial of her co-Plaintiff Tina Bruce that she contacted Meals in the fall of 2008 and
told him she would no longer perform vocational placements. At that time, she believed her other work was a
priority and the changing labor market was making placements more difficult. She advised Meals that she might
pick the placements back up “later.” Doc. 162-1 at 16–17.
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operated should continue. He indicated that an assessment is forthcoming in May 2014, at which
point external vocational assessments may cease altogether in favor or strictly internal vocational
assessments. Given this potential outcome, it is entirely speculative to assume that Plaintiff’s
contract would have been renewed for the length of time she requests, and that she would have
received referrals that generated an amount approximating her 2008 income from SRS.
IT IS THEREFORE ORDERED BY THE COURT that judgment in favor of Plaintiff
on her Rehabilitation Act claim be entered in this case as follows: $31,157.64 in lost income for
the years 2009 and 2010, plus prejudgment interest that shall run from the date of contract
termination to the date of judgment, and $20,772.30 in damages for emotional distress, mental
anguish, anger, and loss of enjoyment of life, plus costs.
IT IS SO ORDERED.
Dated: October 28, 2013
S/ Julie A. Robinson
JULIE A. ROBINSON
UNITED STATES DISTRICT JUDGE
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