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In a significant victory for employment discrimination plaintiffs, the U.S. Court of Appeals for the Third Circuit has ruled that federal caps on damages must be applied in a way that maximizes a plaintiff’s recovery and does not reduce an award made under state law claims. In Gagliardo v. Connaught Laboratories Inc., a unanimous three-judge panel found in November that when Congress passed the federal caps provision in the Civil Rights Act of 1991, it explicitly prohibited using the law to impose limits on state remedies. “Subjecting such state law claims to the federal cap would effectively limit a state’s ability to provide for greater recovery than allowed under the corresponding federal law,” wrote visiting judge Paul Michel of the U.S. Court of Appeals for the Federal Circuit. “Imposing such a limitation would violate the federal law’s prohibition on limiting state remedies,” Michel wrote, in an opinion joined by judges Richard Nygaard and Leonard Garth. The appeals court found that U.S. district court judge Yvette Kane in Harrisburg had correctly held that a jury’s unapportioned verdict of $2.5 million–in a suit brought under the Americans with Disabilities Act (ADA) and the Pennsylvania Human Relations Act (PHRA)–should be apportioned to give the “verdict winner” the maximum amount legally available. The jury had awarded multiple sclerosis sufferer Jane Gagliardo $2 mil-lion in compensatory damages and $500,000 in punitive damages, with no details of how to apportion the award. Kane found that since the Pennsylvania act does not allow punitives, that portion of the award should be assigned to the ADA claim. Then, imposing the federal cap, Kane reduced the punitive award to $300,000–the maximum allowed in a suit against an employer the size of Connaught Laboratories. Kane then assigned the entire $2 million compensatory award to the PHRA claim. Connaught’s lawyers appealed, arguing that Kane’s apportionment was a reversible error because federal damage caps apply to all similar claims in a single lawsuit. The entire verdict should have been reduced to $300,000, they said. The Third Circuit countered that the federal cap “does not prevent a claimant from recovering greater damages under a state law claim that is virtually identical to a capped federal claim.” Michel noted that two other circuits, the Ninth and the District of Columbia, had held that federal caps should not be imposed in a way that limits available state law remedies. Gagliardo was a customer account representative at the Swiftwater, Pennsylvania, facility of Connaught, a vaccine developer. Court papers said she suffered from fatigue and memory and concentration loss as a result of MS and asked supervisors to relieve her of some duties. They refused and issued warnings about her job performance, which, she admitted in court papers, had begun to include errors. In May 1996 she was terminated for those errors and subsequently filed suit against Connaught, winning compensatory and punitive damages, which Kane reduced to $2.3 million. Though Connaught lawyer Carl Greco of Scranton, Pennsylvania, argued in the appeal that Gagliardo offered no proof that she was substantially limited in any major life activity, the Third Circuit found evidence of a “substantial” limitation. The panel also rejected another company argument that Gagliardo did not meet the legal criterion for emotional damages, writing, “Testimony demonstrated the effects of the mental trauma, transforming Gagliardo from a happy and confident person to one who was withdrawn and indecisive.” This article originally appeared in The Legal Intelligencer , a sibling publication of Corporate Counsel.

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