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The U.S. Supreme Court recently agreed to settle a split in the federal circuit courts regarding an issue of paramount importance to employment law practitioners: whether the $300,000 cap on compensatory damages in the Civil Rights Act of 1991 applies to awards of front pay. Pollard v. E.I. duPont de Nemours Co., 213 F.3d 933 (6th Cir. 2000), cert. granted, 121 S.Ct. 756 (U.S. Jan. 8, 2001). In 1991, Congress enacted the Civil Rights Act of 1991. That statute amended Title VII of the Civil Rights Act of 1964, inter alia, by authorizing awards of compensatory damages up to $300,000. 42 U.S.C. 1981(a). The relevant language in Section 1981(a) provides: “In an action brought by a complaining party … [t]he sum of the amount of compensatory damages awarded under this section for future pecuniary losses … and other nonpecuniary losses … shall not exceed … $300,000.” Prior to 1991, successful Title VII plaintiffs were not entitled to recover compensatory damages; their monetary remedies were limited to back pay (and interest thereon) and attorney fees. The 1991 Act also expressly excludes certain remedies from the compensatory damages cap: back pay, interest on back pay or “any other type of relief authorized under Section 706(g) of the [1991 Act].” PRIOR CASE LAW The first case dealing with this issue was Hudson v. Reno, 130 F.3d 1193 (6th Cir. 1997). In Hudson, a female attorney sued her former employer, the U.S. Department of Justice, for sex discrimination in violation of Title VII. The jury awarded her compensatory damages for each of her separate claims, for a total award of more than $1 million. The district court, however, reduced this amount to $300,000 based on the cap contained in Section 1981(a). The district court also held that the plaintiff was not entitled to an award of front pay because she had other job opportunities immediately after leaving the Justice Department and presented no evidence that she suffered any loss of income. The plaintiff appealed. With respect to the $300,000 cap issue, the Sixth Circuit upheld the district court’s holding that her total compensatory damages were limited to $300,000 under Section 1981(a). The court focused on the language of this section, which provides that the $300,000 cap applies to each “action.” Thus, concluded the court, the plaintiff’s compensatory damages were limited to $300,000 in total, regardless of the number of claims asserted in her action. The court also held that, in light of its holding that the plaintiff’s compensatory damages were capped at $300,000, her appeal of the district court’s denial of her claim for front pay was moot because the $300,000 cap had already been exhausted by the jury’s award of compensatory damages. The court based this decision on its finding that front pay constituted “compensatory damages” for purposes of Section 1981(a), and thus were limited by its cap on compensatory damages. The court arrived at this conclusion by determining that front pay constitutes “future pecuniary losses,” which are subject to Section 1981(a)’s cap, and not “any other type of relief authorized under � 706(g) of the [1991 Act],” which are excluded from the cap. According to the court, the ordinary meaning of “future pecuniary losses” — an amount of money which will be lost at a later time — is materially similar to the definition that courts have ascribed to “front pay,” which is the salary that an employee would have received had he or she not been subjected to discrimination. Prior to the enactment of the 1991 Act, courts often awarded front pay as an alternative to reinstatement under Section 706(g) of Title VII, which could be construed to mean that front pay is encompassed by the exception to the compensatory damages cap. However, the court noted that front pay is not specifically “authorized” under Section 706(g). Courts generally treat front pay as a legal rather than an equitable remedy, principally because they permit juries to decide the amount of front pay awards. OTHER CIRCUITS DISAGREE In subsequent decisions, courts in the D.C., Tenth and Eighth Circuits have disagreed with the Sixth Circuit’s holding in Hudson. See Martini v. Federal Nat’l Mortgage Ass’n, 178 F.3d 1336, 1348-49 (D.C. Cir. 1999); Medlock v. Ortho Biotech Inc., 164 F.3d 545, 556 (10th Cir. 1999); Kramer v. Logan County Sch. Dist. No. R-1, 157 F.3d 620, 625-26 (8th Cir. 1998). In those cases, the courts unanimously held that, because front pay has been traditionally treated as an equitable remedy available under Section 706(g) of Title VII in lieu of reinstatement, front pay is exempt from the compensatory damages cap set forth in the 1991 Act. THE POLLARD DECISION The plaintiff in Pollard sued her employer for, inter alia, sexual harassment under Title VII. The court found in her favor, but capped her compensatory damages at $300,000, including those representing front pay, based on the Sixth Circuit’s prior decision in Hudson. On appeal, the Sixth Circuit agreed with the plaintiff’s arguments that front pay was not subject to the compensatory damages cap in the 1991 Act, including the following: (i) that Section 1981(a), by its very terms, explicitly excludes from the cap remedies that were traditionally available under Title VII, including front pay, and (ii) the legislative history of the compensatory damages cap in the 1991 Act indicates that front pay was not intended to be included in the cap. The court also cited, with approval, the aforementioned decisions of the D.C., Tenth and Eighth Circuits. Ironically, however, the Pollard court deemed itself constrained by the prior decision in Hudson issued by the Sixth Circuit. A GREAT DEAL AT STAKE Employment law practitioners and their clients have a great deal at stake in the Supreme Court’s resolution of this issue. Inasmuch as an award of front pay can be substantial, a holding that front pay is not included in the 1991 Act’s compensatory damages cap of $300,000 — a holding that would be consistent with the views of most courts that have opined on the issue — may result in monetary awards for Title VII damages substantially higher than the cap. For example, in the aforementioned Medlock case, the jury awarded the plaintiff over $185,000 in front pay. The resolution of this issue will not be known until sometime during the Supreme Court’s 2001-02 term.

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