Vega v. Chicago Park District

CourtDistrict Court, N.D. Illinois
DecidedJuly 20, 2020
Docket1:13-cv-00451
StatusUnknown

This text of Vega v. Chicago Park District (Vega v. Chicago Park District) is published on Counsel Stack Legal Research, covering District Court, N.D. Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Vega v. Chicago Park District, (N.D. Ill. 2020).

Opinion

IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION

LYDIA VEGA, ) ) Plaintiff, ) ) Case No. 13 C 451 v. ) ) Judge Jorge L. Alonso ) CHICAGO PARK DISTRICT, ) ) Defendant. )

MEMORANDUM OPINION AND ORDER

Plaintiff Lydia Vega brought this lawsuit asserting claims of national-origin discrimination against her former employer, the Chicago Park District (“CPD”), arising out of her termination in September 2012. A jury found in her favor on her discrimination claims, and the Court subsequently awarded back pay and other equitable relief. Following an appeal in which the Seventh Circuit vacated the Court’s tax component award, but otherwise affirmed, the Court now reconsiders the tax-component award and awards plaintiff certain attorneys’ fees and costs, as follows. BACKGROUND Plaintiff, a Hispanic woman, was terminated by CPD in 2012, after more than twenty years of service, following an investigation into the falsification of her time sheets. She subsequently filed this lawsuit, and she prevailed at a jury trial on her claim of national-origin discrimination under Title VII, 42 U.S.C. § 2000e. Plaintiff requested certain post-trial equitable relief, including back pay as well as a tax- component award to offset any increased income-tax liability that a lump-sum back-pay award would cause her to incur. Plaintiff argued that, without a tax-component award, her tax liability would virtually cancel out her back-pay award. Initially, the Court could not follow plaintiff’s tax- component-award calculations and declined to make any such award, but it gave plaintiff leave to provide a fuller explanation in a supplemental brief. Plaintiff filed a supplemental brief in which she followed the methodology employed by the

district court in Washington v. Office of the State Appellate Defender, No. 12 C 8533, 2016 WL 3058377, at *9 (N.D. Ill. May 31, 2016), and 2016 WL 5233563, at *4 (N.D. Ill. Sept. 22, 2016). In that case, the court calculated the tax-component award by (1) subtracting the plaintiff’s actual tax burden during the back-pay period from the tax burden she would have born during the same period had she remained employed by the defendant, (2) subtracting the plaintiff’s expected tax burden in the year of the decision, absent any lump-sum back-pay award, from that portion of her expected tax burden attributable to the back-pay award in the event that a lump-sum payment was made in the same year, and (3) subtracting the result of (1) from the result of (2). See 2016 WL 3058377, at *9 n. 11; 2016 WL 5233563, at * 4. Persuaded by plaintiff’s brief, as it stated in a footnote to the final judgment order, this Court

incorporated the amount plaintiff calculated in her supplemental brief into its final judgment. The Seventh Circuit vacated the tax-component award and remanded for reconsideration, reasoning, without mentioning the footnote in the final judgment order, that this Court “did not explain how it arrived” at the amount of the award, and the Seventh Circuit was “unable to readily discern whether the calculation is accurate.” Vega v. Chicago Park Dist., 954 F.3d 996, 1010 (7th Cir. 2020). The parties have updated their briefing, and the Court now considers the tax-component award anew, along with plaintiff’s petition for attorneys’ fees, her bill of costs, and defendant’s motion for sanctions under 28 U.S.C. § 1927.

2 I. TAX-COMPONENT AWARD “Under Title VII, after an employer has been found to have intentionally engaged in an unlawful employment practice, the district court may order back pay, reinstatement, and ‘any other equitable relief as the court deems appropriate.’” Washington, 2016 WL 3058377, at *4

(quoting 42 U.S.C. § 2000e–5(g)(1)). In deciding what forms of equitable relief are appropriate in a particular case, the district court is vested “with broad discretion to fashion a remedy.” EEOC v. Ilona of Hungary, 108 F.3d 1569, 1580 (7th Cir. 1997). The guiding principle in exercising that discretion is that the court “has not merely the power but the duty to render a decree which will so far as possible eliminate the discriminatory effects of the past as well as bar like discrimination in the future.” Albemarle Paper Co. v. Moody, 422 U.S. 405, 418 (1975) (internal quotation marks and citation omitted). “And where a legal injury is of an economic character, [t]he general rule is, that . . . [t]he injured party is to be placed, as near as may be, in the situation he would have occupied if the wrong had not been committed.” Id. at 418-19 (internal quotation marks and citation omitted); see also Ford Motor Co. v. EEOC, 458 U.S. 219, 230 (1982) (the statutory aim is “to make the victims of unlawful discrimination whole by restoring them, so far as possible . . . to a position where they would have been were it not for the unlawful discrimination”) (internal quotations and citation omitted).

Ortega v. Chi. Bd. of Educ., 280 F. Supp. 3d 1072, 1078 (N.D. Ill. 2017) (internal citations altered). The Seventh Circuit has recognized that, when a back pay award will bump a prevailing plaintiff into a higher tax bracket, causing him to pay more in taxes than he would have if he had not been terminated and received his pay on a gradual basis over several years rather than in a lump sum following a lawsuit, a tax-component award may be necessary to make the plaintiff whole and serve the purpose of Title VII’s remedial scheme. EEOC v. N. Star Hosp., Inc., 777 F.3d 898, 904 (7th Cir. 2015). In her post-appeal brief, as in the supplemental brief she filed prior to defendant’s appeal, plaintiff has again walked through the methodology the district court employed in Washington. She calculates that if she had remained employed by CPD for the period of the back pay award 3 (2012-2018), she would have paid $2,800 in income tax (none in any year but 2018, after the 2017 revision of the tax laws), and she actually paid only $837 in income tax during that period, a difference of $1,963. As for 2020, based on the IRS’s 2020 income tax tables, she calculates that she will owe $2,861.76 in federal income tax in the absence of any payment of back pay or

damages, whereas in the event that she receives the back pay and other relief the Court has awarded this year, her income will be $539,993.87, on which she will owe $161,783.23 in federal income taxes at an effective tax rate of 29.96%. Applying that effective tax rate to the back-pay award of $180,402.90 only (not to the compensatory damages), the resulting tax liability attributable to the back-pay award is $54,049.07. The difference between $54,049.07 and $2,861.76 is $51,187.30. To compensate her for the excess tax liability, then, plaintiff asks for $49,224.30, the difference between $51,187.30 and $1,963. Defendant does not appear to object to the theory underlying plaintiff’s methodology, but it argues that plaintiff has not reliably applied it to the facts of this case. According to defendant, plaintiff has not provided sufficient information about how she calculated her tax liability in prior

years or her expected tax liability in 2020, and therefore she has not met her burden of proof. The Court fails to see the deficiency in plaintiff’s calculations.

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Bluebook (online)
Vega v. Chicago Park District, Counsel Stack Legal Research, https://law.counselstack.com/opinion/vega-v-chicago-park-district-ilnd-2020.