Suits for compensatory and punitive damages will benefit no one but lawyers.
The quota issue continues to dominate debate about the Civil Rights Act of 1990, obscuring several serious practical problems presented by the bill. Foremost among these is the proposal to allow compensatory and punitive damages under Title VII of the Civil Rights Act of 1964. The omnibus federal employment discrimination statute, Title VII currently allows monetary relief for economic injuries alone. An employee improperly discharged because of his race can be reinstated to his job and recover lost wages and benefits; a woman wrongfully refused promotion because of her sex can obtain the lost promotion and back pay as well. Neither can recover damages for mental anguish or pain and suffering, nor can either obtain punitive damages. The Civil Rights Act of 1990 would change this, and allow their claims to be tried before a jury rather than before a judge.
This proposal to create a federal tort law system for employment discrimination cases is likely to benefit no one but lawyers. Authorizing recovery of compensatory and punitive damages will lead to a dramatic increase in Title VII litigation, with accompanying judicial delays. At present, Title VII emphasizes obtaining full economic redress quickly and without litigation. Discrimination charges must be filed promptly, the Equal Employment Opportunity Commission is supposed to investigate expeditiously and if reasonable cause exists to believe that the stature has been violated, the EEOC must attempt to conciliate prior to suit.
Early in the process, even full recompense for an employee's economic injury is relatively slight in comparison to the employer's projected litigation costs, to say nothing of the plaintiff's legal fees that the employer will incur in the event of a loss. While some cases involve matters of principle, most cases are resolved early in the process because the employer has strong economic incentives to settle rather than to litigate.
An employer's economic incentive to settle is largely destroyed if compensatory and punitive damages become available. Experience in state wrongful discharge litigation reveals that compensatory and punitive damage awards regularly average in the hundreds of thousands of dollars. Six-figure liability automatically will increase settlement costs in most individual cases beyond the employer's projected litigation costs, and thus employers will have an economic incentive to litigate rather than settle. In cases where an employer believes he has a reasonable chance of prevailing, the proverbial reasonable person would choose litigation on the basis of economics alone, contrary to the current situation.
Such an increase in litigation is not justified by the claim that Title VII remedies are inadequate. Title VII's remedial structure certainly is not unique. Congress repeatedly has concluded that employment principally is an economic relationship and that employment injuries do not required tort remedies. Almost every federal statute addressed specifically to the employment relationship -- the National Labor Relations Act and ERISA spring to mind -- provides relief for economic injuries alone rather than pain and suffering or punitive damages. These statutes, like Title VII, long have been regarded as successful. The multimillion-dollar Title VII class actions that have resulted in redesign of so many employment practices have not required the enhanced remedial scheme envisioned by the Civil Rights Act of 1990.
Our tort system, long renowned for its unfairness and glacial pace, has little to recommend it in employment discrimination cases. It is ironic that a majority of the Senate and at least 180 representatives apparently support creating a new federal tort system for employment discrimination cases at the same time that legislators on both the federal and state levels actively are seeking alternatives to the tort system itself in areas such as products liability and medical malpractice.
This irony is even more pronounced given the increasing congestion in the federal courts, evidenced by the recent Report of the Federal Courts Study Commission, which concluded that the "recent surge in federal criminal trials ... is preventing federal judges in major metropolitan areas from scheduling civil trials, especially civil jury trials, of which there is a rapidly growing backlog." That report recommended arbitration rather than federal litigation of individual employment discrimination cases.
Proponents of the Civil Rights Act of 1990 argue that compensatory and punitive damages and jury trials already are available to blacks under the Civil Rights Act of 1866 and that the new law merely seeks to preserve parity among groups by making such remedies available to all victims of employment discrimination. But this argument does not address whether it makes practical sense to extend tort remedies any further. The Civil Rights Act of 1866 initially was extended to employment discrimination by a Supreme Court decision in 1976, more than a century after its passage, and there is no evidence that Congress (either in 1866 or subsequently) ever debated the wisdom of applying the statute to the workplace.
More thoughtful proponents of the bill claim that certain injuries actionable under Title VII have no economic component. In 1986, the Supreme Court held that pervasive racial or sexual harassment in the workplace was actionable under Title VII even absent an economic injury. Shouldn't there be some financial remedy for this conduct?
Perhaps so. But even assuming it is appropriate to create a greater financial remedy for harassment in the workplace, surely this limited lacuna in the law does not justify creating a federal tort system that would apply to almost every employment discrimination case.
That certainly is the purport of this legislation. Courts traditionally distinguish between disparate treatment cases -- in which an individual claims to have been treated less favorably because of his race or her sex -- and disparate impact cases, which generally involve systemic barriers to equality. The Civil Rights Act of 1990 would provide compensatory relief in all disparate treatment cases, not just those involving egregious intentional misconduct. Thus a run of the mill absenteeism discharge, in which a black or a woman claims that his or her absenteeism record was not as bad as that of another employee who was retained, would fall within the ambit of compensatory relief even though there was no direct evidence of race or sex animus in the workplace. So would broadly based class actions that allege that the employer engages in a "pattern or practice" of discrimination, thus inveigling juries in adjudicating sophisticated statistical issues with millions in compensatory and punitive damages hanging in the balance.
The monumental delays and the inordinate expense involved in litigating such cases before juries are daunting. Only lawyers would want to multiply this type of litigation by making settlements less likely or making it normal to introduce psychiatric testimony attempting to quantify the pain and suffering of an employee who has been discharged. The remedial provisions of the Civil Rights Act of 1990 need to be amended if the bill is to benefit anyone but members of the bar.
The writer is a Washington attorney.