I ran across this interesting opinion from the Federal Third Circuit Court of Appeals. I am reporting on it because the Fifth Circuit apparently has not yet commented on this damage recovery and the issue could impact Texas state law.
In Eshelman v. Agere Systems, Inc., No. 05-4895, the Third Circuit Court of Appeals holds that a plaintiff in a disability discrimination case may recover an additional sum of money to pay for taxes that the plaintiff might be subject to as a result of receiving an award for back pay. Back pay awards are taxable in the year paid. To the extent such an award might push the plaintiff into a higher tax bracket causing the plaintiff to pay additional taxes, the Court holds that the plaintiff can recover an additional sum to compensate her for that additional tax burden. In arriving at this result, the Court joins the Tenth Circuit in that result. The District of Columbia Circuit reached a contrary result.
As part of its reasoning, the Third Circuit Court observes that the Americans with Disabilities Act gives the courts broad equitable powers to effectuate the purpose of making the plaintiff whole. This reasoning may be critical to the Court’s logic and to its power to fashion this remedy. Given that the Texas Commission on Human Rights Act is largely patterned after federal law, it is conceivable that a similar argument might find its way into Texas courtrooms. The opinion may be found at this link.