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The 3d U.S. Circuit Court of Appeals has ruled that a plaintiff who wins a hostile-workplace discrimination suit is only halfway home in winning back pay: The plaintiff must also show that workplace conditions were so bad that she had to quit. Spencer v. Wal-Mart Stores Inc., No. 05-2143. “We hold that a successful hostile work environment claim alone, without a successful constructive discharge claim, is insufficient to support a back pay award,” the three-judge panel held. The ruling clarifies an unsettled point in the 3d Circuit, holding that the Civil Rights Act of 1991, which allowed 1964 Civil Rights Act Title VII plaintiffs to have jury trials on compensatory damages, exempted back pay from the damages recoverable. Back pay remains an equitable remedy within the trial court’s discretion, the circuit court said. The judges did, however, allow the plaintiff to recover attorney fees as a prevailing party, despite the fact that her victory had been marginal. The plaintiff, Lily Spencer, a hearing-impaired Wal-Mart Stores Inc. employee, claimed that her former employer failed to accommodate her disability and subjected her to a hostile work environment-both of which were violations of the Americans With Disabilities Act. In October 2004, a Delaware federal jury found that Wal-Mart had reasonably accommodated Spencer’s disability but awarded $15,000 in back pay and $12,000 in emotional distress damages on her hostile work environment claim. Wal-Mart filed a motion for judgment as a matter of law, asking U.S. District Judge Kent Jordan to vacate the back pay award. The company argued that Spencer did not prove a hostile work environment and that even if she had, she never suffered a loss in pay. At the same time, Spencer filed motions to amend the judgment to include injunctive relief and reimbursement of attorney fees. Jordan upheld the jury’s hostile work environment finding but vacated the back pay award. He found that back pay is an equitable remedy that should have been decided by him. Further, had Spencer requested back pay, she would have had to show that she was effectively terminated. The 3d Circuit affirmed. According to the panel, if a hostile work environment doesn’t rise to the level where one is forced to abandon the job, loss of pay is not an issue. The judges cited rulings of the 1st, 7th, 8th, 9th and 10th circuit courts that came the same conclusion. The judges affirmed the attorney fees award that Spencer had appealed as too low and that Wal-Mart wanted completely reversed. The district court had found that Spencer had achieved only limited success at trial, having prevailed only on her emotional distress claim and having recovered only $12,000-far below projected damages of $500,000. In addition, she did not benefit in any tangible way from the litigation because she had agreed to resign from Wal-Mart. As a result, the district court reduced the lodestar fee by 75% and awarded her $38,569. Spencer appealed, arguing that Jordan had erred in vacating her back pay award and cutting her attorney fees award. Wal-Mart cross-appealed, arguing that Spencer was not a prevailing party and deserved no attorney fees. The 3d Circuit found no abuse of discretion in the lowered fee and rejected Wal-Mart’s claim that Spencer was not a prevailing party. Her success on the hostile work environment claim was sufficient to establish her right to fees, albeit reduced. Spencer’s attorneys, Alan Epstein and Nancy Abrams of Philadelphia’s Spector Gadon & Rosen, will decide in early December whether to seek reargument before the entire circuit. Wal-Mart’s attorney, David Fryman of Philadelphia’s Ballard Spahr Andrews & Ingersoll, did not return a call for comment.

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