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LIMITING
DOUBLE RECOVERY OF NON-ECONOMIC DAMAGES
ISSUE How to stop a plaintiff’s double-recovery of punitive damages in the same lawsuit, when lawsuit is brought under both state and federal law. BACKGROUND Title VII of the Civil Rights Act of 1964 (Title 42, United States Code, Section 2000) was amended in 1991 to allow for the recovery of non-economic damages, such as punitive damages and emotional distress. Consequently, an employer may be liable for $50,000 to $300,000 in non-economic damages, depending on the size of the company. Prior to 1991, plaintiffs could not recover for non-economic damages. Oftentimes, the facts which give rise to a Civil Rights suit also give rise to state claims. Take, for example, an employer who terminates a minority employee. The federal act could give rise to a Civil Rights lawsuit. At the same time, it may give rise to such state claims as outrageous conduct, intentional interference with business relationships, or even negligent supervision. This grouping is not theoretical, because plaintiffs normally include every conceivable state claim in a lawsuit. Plaintiffs can recover exemplary (non-economic) damages under the state claims, as well. Generally, these damages will be equal to the economic damages, but if a court finds the presence of certain aggravating circumstances, they may be as large as three times compensatory damages. A civil rights violation can easily lead to a finding of aggravating circumstances. By including both federal and state claims, plaintiffs may recover separate awards of non-economic damages under both federal and state law. Thus, if a plaintiff were entitled to $300,000 in non-economic damages under federal law and $500,000 under state law, the plaintiff could recover a total of $800,000 in non-economic damages. Compare this to a case in which a plaintiff brings five state claims in a single lawsuit. There, the plaintiff would be eligible for one award of non-economic damages – not five awards, one for each independent claim. Without an offset provision, the plaintiff can essentially receive double-recovery for federal and state claims in the same lawsuit. The Colorado General Assembly established the exemplary damage guidelines well before the 1991 federal amendments to the Civil Rights Act. It is highly unlikely that Colorado legislators ever intended to allow for double-recovery of non-economic damages, and they could not have foreseen this issue. PROPOSED SOLUTION The Colorado Revised Statutes concerning exemplary damages should be amended to prevent the double recovery of non-economic damages in the same lawsuit, when a plaintiff brings both state claims and federal claims under Title VII of the Civil Rights Act of 1964. The Legal Advisory Board of the Colorado Civil Justice League is in the process of drafting specific language. However, the proposal will include two key components. First, any non-economic damages received pursuant to a claim under Title VII of the Civil Rights Act of 1964 must be subtracted from non-economic damages under state law. Second, this bar to double-recovery operate with respect to the same, or substantially similar, set of facts giving rise to both federal and state claims.
Civil Justice Fact Sheet House Bill 1270 HB 1270 limits the double-award of non-economic damages when a litigant brings claims for the same matter under both state and federal law. Normally, a single incident may only give rise to one award for non-economic damages (otherwise known as exemplary or punitive damages). However, if a litigant brings claims under both federal and state law for the same incident, a defendant may be forced to pay exemplary damages twice once under federal law, and once under state law. Not only is this unfair to defendants, but the potential of a double award at trial substantially increases the settlement value of employment cases. Given the prevalence of combining state and federal claims on employment cases, it is obvious that contingency fee lawyers are leveraging this double dipping strategy to get more money in settlements. Leveraging the threat of double awards increases the amount of non-economic damages far beyond what either the Colorado General Assembly or U.S. Congress intended. In 1986 Colorado limited exemplary damages in most cases to $250,000. Five years later, in 1991, the U.S. Congress Amended Title VII of the Civil Rights Act of 1964 (Title 42, United States Code, Section 2000) to allow for the award of additional non-economic damages, such as punitive damages and emotional distress. Specifically, an employer may be liable for $50,000 to $300,000 in non-economic damages, depending on the size of the company. Before the 1991 amendments, plaintiffs could not get punitive damages under most federal employment laws, including Title VII. The Colorado General Assembly could not predict the federal law amendment and never anticipated the possibility of a double-award of non-economic damages. Oftentimes, the facts which give rise to a Civil Rights suit also give rise to state claims, particularly because litigants normally include every possible state and federal claim in a lawsuit. HB 1270: · Removes the possibility of a double award of non-economic damages for the same incident. · Protects Colorado small businesses from greater liability due to the unintended combination of both federal and state non-economic damages. · Coordinates State and Federal law with regards to non-economic damages · Does not affect the substantive rights of individuals or the responsibilities of employers · Limits contingency fee lawyers from leveraging the threat of double awards. PREVENT THE UNINTENDED, DOUBLE-AWARD OF NON-ECONOMIC
DAMAGES IN COLORADO. Vote ‘YES’ on HB 1270 |
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