Third Circuit holds that the district court erred in denying plaintiff prejudgment interest and refusing to modify the verdict to reflect negative tax consequences in an age discrimination case.

The employees prevailed at trial and were, collectively, awarded approximately $2 million in monetary damages. Following the trial, the employer appealed the jury's finding, and the employees appealed the court's denial of prejudgment interest and the court's failure to mold the verdict to compensate the employees for their increased tax burden as a result of a lump sum award. The Third Circuit upheld the verdict in favor of the employees, holding that "[w]hile some language in the instructions, read in isolation, strayed from the stringent but-for standard" for proving an age discrimination claim, as articulated by the Supreme Court in Gross v. FLB Financial Services, Inc., the court mentioned "but for" or "because of" no fewer than four times, and the instructions as a whole correctly stated the burden of proof. The Third Circuit further found that the district court erred in not awarding prejudgment interest or compensation for negative tax consequences. In so holding, the Third Circuit stated the district court "failed to recognize the presumption in favor of prejudgment interest and offer a valid reason for departing from it." Similarly, the Third Circuit noted that they "reach[ed] a similar conclusion with respect to the issue of negative tax consequences, even though there is no presumption in favor of an adjustment to account for them, because the District Court did not acknowledge the differing interests in compensation and punishment."

Case Law Alert - 2nd Qtr 2012