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Scott v. Peterson

August 11, 2010


The opinion of the court was delivered by: Judge Virginia M. Kendall


Plaintiff Jeffrey R. Scott ("Scott") filed a two-count complaint against Defendants John Rita ("Rita") and Larry Peterson ("Peterson") (collectively "Defendants") alleging, pursuant to 42 U.S.C. §§ 1981 and 1983, that Defendants unlawfully terminated his employment because of his race. On March 17, 2010, the Court entered a default judgment against Peterson according to Federal Rule of Civil Procedure 55(a). A prove-up hearing of Scott's damages was held on May 26, 2010. The Court now awards damages of $245,475 for back pay and losses incurred for early IRA withdrawals, both including prejudgment interest, as well as for front pay. The Court also enters and continues Scott's Petition for Plaintiff's Attorneys' Fees, ordering Scott to submit additional evidence on or before August 30, 2010 showing the reasonableness of the specific rates charged for each of its attorneys and paralegals.


The following facts are taken from Scott's Second Amended Complaint and are deemed to be true for purposes of the default judgment against Peterson. See Dundee Cement Co. v. Howard Pipe & Concrete Prods., Inc., 722 F.2d 1319, 1323 (7th Cir. 1983). Scott alleged that he was wrongfully terminated from his employment with the Illinois Youth Center Joliet ("IYCJ") because of racial discrimination. (Am. Compl. ¶¶ 14, 18.) Scott, who is African-American, began work with the Illinois Department of Corrections in 1993 and was transferred to IYCJ in 1998. (Am. Compl. ¶ 9.) Scott worked at the IYCJ until his termination in 2008. (Am. Compl. ¶ 10.) During that time, Peterson was employed as a supervisor at the facility. (Am. Compl. ¶ 21.) Over the course of Scott's employment at IYCJ, he received positive evaluations. (Am. Compl. ¶ 11.) However, in June of 2006, IYCJ initiated an investigation into alleged misconduct by Scott. (Am. Compl. ¶ 13.) At the conclusion of the investigation, IYCJ discharged Scott for violating IYCJ rules. (Am. Compl. ¶ 14.) Similarly situated non-African-Americans violated the same or similar rules, but were not discharged for their misconduct. (Am. Compl. ¶ 14.)

On March 17, 2010, the Court dismissed all claims against Rita pursuant to Federal Rule of Civil Procedure 12(b)(6). (See R. 65.) On the same date, the Court entered a default judgment against Peterson pursuant to Federal Rule of Civil Procedure 55(a) because Peterson had been properly served with the Second Amended Complaint but had failed to answer or otherwise plead in response to the claims against him. (See id.) A prove-up hearing was then held on May 26, 2010 in which Scott testified in support of the damages he has claimed. Scott requests compensation for $164,147 in back pay, $112,821 in front pay, $3,011 in penalties incurred for withdrawals from his IRA, $50,000 for pain and suffering, and $25,000 in punitive damages. (See R. 70, Information and Materials Supporting Plaintiff Jeffrey Scott's Damages Prove-up ¶¶ 8-16) (hereinafter "Scott Supporting Materials.")


A default judgment establishes as a matter of law "that defendants [are] liable to plaintiff as to each cause of action alleged in the complaint." Breuer Elec. Mfg. Co. v. Toronado Sys. of Am., Inc., 687 F.2d 182, 186 (7th Cir. 1982). "Upon default, the well-pleaded allegations of a complaint relating to liability are taken as true." Dundee, 722 F.2d at 1323. However, while the allegations of the complaint relating to liability must be taken to be true, allegations regarding damages do not. See id. at 1323. When a default judgment has been entered, the plaintiff must adequately prove the amount of his damages. See id. "Even when a default judgment is warranted based on a party's failure to defend... [t]he district court must... conduct an inquiry in order to ascertain the amount of damages with reasonable certainty." In re Catt, 368 F.3d 789, 793 (7th Cir. 2004) (citing Credit Lyonnais Secs. (USA), Inc. v. Alcantara, 183 F.3d 151 (2d Cir. 1999)).

I. Back Pay

At the May 26, 2010 prove-up hearing and in his related exhibits, Scott claimed $164,147 in back pay for the period from June 2006, when he was placed on suspension pending discharge, to March 17, 2010, the date on which the Court ruled on Peterson's default. (Scott Supporting Materials ¶ 8.) In both § 1981 and § 1983 cases, back pay is assumed to be appropriate in order to make the plaintiff whole. See, e.g., Williamson v. Handy Button Mach. Co., 817 F.2d 1290 (7th Cir. 1987); see also Barbour v. Merrill, 48 F.3d 1270 (D.C. Cir. 1995); Coleman v. Lane, 949 F. Supp. 604 (N.D. Ill. 1996); Mister v. Ill. Cent. Gulf R. Co., 790 F. Supp. 1411 (S.D. Ill. 1992). Proper calculations of back pay represent the wages the plaintiff would have earned but for the adverse employment decision, less the amount of mitigating wages earned during that time. See Waters v. Wis. Steel Works of Int'l Harvester Co., 502 F.2d 1309, 1321 (7th Cir. 1974) ("[D]amages for the relevant period are to be determined by measuring the difference between plaintiff's actual earnings for the period and those which he would have earned absent the discrimination of defendants."). Prejudgment interest is also presumed to be appropriate in an award of back pay under § 1981 and § 1983, even if the employee has not requested it. See Williamson, 817 F.2d at 1298 ("Prejudgment interest therefore must be an ordinary part of any award for back pay... under § 1981."); DeLaCruz v. Pruitt, 590 F. Supp. 1296 (N.D. Ind. 1984) (prejudgment interest furthers the Congressional purpose underlying § 1983 and is necessary in order to make the wronged party whole).

Scott submitted IRS income transcripts establishing his wages for the years 2003 to 2005, while he was employed by IYCJ, and his wages for the period following his suspension and termination, from 2006 to March 17, 2010. Based on the average increase in earnings over his three years of documented wages with IYCJ, Scott used a five percent growth rate in his computations. (Scott Supporting Materials ¶ 14.) With that figure, Scott calculated his projected earnings from 2006 through March 17, 2010 with IYCJ by multiplying the previous year's projected earnings (or actual 2005 earnings in the case of the 2006 projection) by 1.05. From that projected figure, he subtracted his actual earnings for each year as reflected in the submitted IRS income transcripts to give his annual lost pay as a result of his termination from IYCJ. (See R. 70-9, Exhibit I, Plaintiff's Back Pay Calculation.) (hereinafter "Plaintiff's Back Pay Calculation"). The majority of these figures have been accurately calculated; however, in determining the back pay from January 1, 2010 through March 17, 2010, Scott mistakenly asserts that the period from January 1 to March 17 covers 3.5 months. However, January to mid-March represents approximately 2.5 months; the Court has therefore corrected this error in its calculation of Scott's back pay award.*fn1 While more data on annual wages with IYCJ for the years before 2003 would be preferable to more substantially establish a realistic growth rate of Scott's wages, Scott has reasonably supported his claim for back pay by submitting the IRS transcripts and accompanying calculations notwithstanding his minor accounting error. The Court therefore awards $158,044 in back pay.

While Scott has not requested prejudgment interest, such an award is appropriate in this case in order for the award to be fully compensatory. See Williamson, 817 F.2d at 1297. District courts are directed to "use the prime rate for fixing prejudgment interest where there is no statutory interest rate." Gorenstein Enters., Inc. v. Quality Care-U.S.A., Inc., 874 F.2d 431, 436 (7th Cir. 1989). Compound, rather than simple, interest is also proper. See id. Therefore, using the weighed average annual prime rate, compounding annually, Scott is awarded $14,468 in prejudgment interest on his back pay.*fn2

II. Front Pay

Scott also claims front pay for the period of March 18, 2010 to December 31, 2012 in the amount of $112,821. The goal of a front pay award is to put the victim in the financial position he would have enjoyed but for the wrongful employment action, compensating him for the lost earnings from his former job for as long as he could be expected to have held it. See Barbour, 48 F.3d at 1279; see also Johnson v. Chapel Hill Indep. Sch. Dist., 853 F.2d 375, 382-83 (5th Cir. 1988) (award of front pay appropriate equitable relief in a case involving Title VII, § 1981, and §1983 violations). In § 1981 and § 1983 employment discrimination cases, in order to sufficiently show that he is entitled to front pay, a plaintiff must present evidence that is not overly speculative and that establishes the award with reasonable certainty. See Barbour, 48 F.3d at 1279-80 (citing McKnight v. General Motors Corp., 973 F.2d 1366, 1372 (7th Cir. 1992)); Sagendorf-Teal v. County of Rensselaer, 100 F.3d 270, 277 (2d Cir. 1996) (award of front pay appropriate in a § 1983 case when the court can reasonably predict the plaintiff's prospects for future employment). In calculating front pay, Scott uses similar methodology to that in his back pay accounting, employing a predicted five percent growth rate for both his IYCJ wages and his current wages, multiplying his projected earnings from the previous year by 1.05 and then subtracting his estimated mitigating wages from his projected earnings with IYCJ to give his projected annual loss for the remainder of 2010 and for 2011 and 2012. (R. 70-9, Exhibit I, Plaintiff's Front Pay Calculation.) (hereinafter "Plaintiff's Front Pay Calculation"). Scott fails to explain why he requests front pay through 2012, but in order to provide complete relief, front pay may be awarded for a duration through which Scott could have reasonably been expected to remain employed with IYCJ. See Barbour, 48 F.3d at 1280 (considerations in determining length of front pay include the previous length of employment and probability of future employment with the defendant employer). Here, Scott's requested front pay would provide Scott with just under three additional years of relief. Given the length of his employment with the Illinois Department of Corrections and IYCJ and his positive evaluations prior to being terminated, the duration of Scott's request appears to be reasonable and is a short enough period that Scott's earning capacity or probability of continued employment during that time is not excessively speculative.

While the period of requested front pay is appropriate, Scott's calculations of front pay include the same mistake regarding the January 1 to March 17 period as his calculations for back pay. (Plaintiff's Front Pay Calculation.) While that mistake was relatively minor in the calculation of back pay, it has resulted in an error of over $13,000 in Scott's estimated 2010 mitigating wages, upon which he then bases his 2011 and 2012 estimated mitigating wages.*fn3 The error in number of months between January and March also affected Scott's May 18, 2010 to December 31, 2010 projected IYCJ earnings.*fn4 This error only affects the projected IYCJ earnings for 2010; the 2011 and 2012 figures properly come from the 2010 annual projected figure of $73,240 to which a five percent growth rate was applied. (See Plaintiff's Front Pay Calculation.) Correcting these mistakes and subtracting the new mitigating wage figures from the projected IYCJ earnings, the Court reaches amounts of $20,518 in lost front pay from March 18, 2010 through December 31, 2010, $27,213 in lost front pay for 2011, and $28,573 for 2012.

In addition to his computational error, Scott also failed to discount his expected front pay to its present cash value. Front pay is designed to award the plaintiff the present value of the difference in earnings experienced as a result of termination. See, e.g., Williamson, 817 F.2d at 1297 (time value of money is taken into account by discounting lost future wages back to present value in explaining why prejudgment interest is not awarded on future earnings); see also Wulf v. City of Wichita, 883 F.2d 842, 855-56 (10th Cir. 1989) (upholding an award of future pay discounted to present value). While it is typically the burden of the plaintiff to provide sufficient information for award calculation, including the appropriate discount rate, courts have discretion in resolving uncertainties when awarding damages. See Barbour, 48 F.3d at 1280; see also Standley v. Chilhowee R-IV Sch. Dist., 5 F.3d 319, 322 (8th Cir. 1993). Using the corrected ...

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