UNITED STATES DISTRICT COURT FOR THE 

DISTRICT OF NEW HAMPSHIRE

Karen Cook

v. Civil No. 06-cv-58-JD

CTC Communications Corp.

O R D E R

Karen Cook brings claims against her former employer, CTC

Communications Corporation, alleging that she was terminated in

retaliation for her support of other employees' rights under a

variety of federal and state laws. Cook moves to exclude

evidence of unemployment benefits she received after her

employment at CTC was terminated, arguing that under the

collateral source rule those benefits cannot be deducted from a

back pay award. CTC objects, arguing that the collateral source

rule does not apply and that the unemployment benefits should be

deducted from a back pay award.

Discussion

Cook received unemployment benefits from the Commonwealth of

Massachusetts, where CTC has its principal place of business,

between her termination from CTC on November 10, 2005, and her

employment with Brainshark, Inc. on March 7, 2006. In total, she

received $6,636 in unemployment benefits. She claims lost wages

Case 1:06-cv-00058-JD Document 134-1 Filed 11/05/07 Page 1 of 6
2

for the same period in the amount of $20,719.86. Cook contends

that the unemployment benefits are not relevant to her damages

claim for lost wages and benefits because unemployment is a

collateral source and because she may have to repay those

benefits if she recovers her lost wages. CTC contends that the

First Circuit has not treated unemployment benefits as a

collateral source and that under Massachusetts law, CTC not Cook,

would be required to repay the unemployment benefits.

"The collateral source rule has traditionally provided that

benefits received by the plaintiff from a source collateral to

the defendant may not be used to reduce that defendant's

liability for damages." LaRocca v. Borden, Inc., 276 F.3d 22, 30

(1st Cir. 2002). The First Circuit has held that it is within

the discretion of the court whether to give effect to the

collateral source rule in awarding front pay for a federal claim

when that award is equitable in nature and when the collateral

source rule is not barred by statute. Lussier v. Runyon, 50 F.3d

1103, 1107 (1st Cir. 1995) (Rehabilitation Act claim); see also

LaRocca, 276 F.3d at 30 (holding that the Employee Retirement

Income Security Act bars the collateral source rule). The First

Circuit has not decided whether the rule would apply in the

context of back pay awards for federal claims such as those Cook

brings under the Fair Labor Standards Act and the Uniformed

Case 1:06-cv-00058-JD Document 134-1 Filed 11/05/07 Page 2 of 6
1Under Massachusetts law, if an individual receives a back

pay award against her employer that is reduced by the amount of

unemployment benefits she received, her employer is liable to pay

the Commonwealth the amount of unemployment benefits she

received. See Mass. Gen. Laws Ann. 151A, § 69C(b). Accordingly,

"[a]n individual who has received a back pay award which has been

reduced by the receipt of unemployment benefits shall not be

liable with respect to an overpayment caused by receipt of said

award that creates a liability for the employer under subsection

(b)." Id. § 69C(c). 

2See 29 U.S.C. § 216(b); 38 U.S.C. § 4323(d)(1).

3

Services Employment and Reemployment Rights Act. See Quint v.

A.E. Staley Mfg. Co., 172 F.3d 1, 28 n.16 (1st Cir. 1999) (noting

dicta from Lussier: "[W]e tend to agree with those courts that

have held the interplay between collateral benefits and back pay

to be a matter within the district court's discretion." 50 F.3d

at 1109).

CTC represents that because it is a Massachusetts

corporation and the Commonwealth of Massachusetts paid Cook

unemployment benefits, if Cook is awarded back pay with the

amount of benefits deducted from the award, CTC would be required

to reimburse the Commonwealth for the amount of unemployment

benefits paid to Cook.1 Because of that provision, CTC would not

benefit from the fact that Cook received unemployment benefits. 

Both FLSA and USERRA provide for liquidated damages in addition

to the award of lost salary, making it unnecessary to employ the

collateral source rule as a deterrent.2 Therefore, the better

Case 1:06-cv-00058-JD Document 134-1 Filed 11/05/07 Page 3 of 6
4

approach in the circumstances of this case is to deduct the

amount of unemployment benefits Cook received from an award of

back pay on Cook's FLSA and USERRA claims.

In New Hampshire, "[u]nder the collateral source rule if a

plaintiff is compensated in whole or in part for his damages by

some source independent of the tort-feasor he is still permitted

to make full recovery against [the tort-feasor]." Moulton v.

Groveton Papers Co., 114 N.H. 505, 509 (1974). The collateral

source rule applies "to benefits paid under an insurance policy

or by a relief association; employment benefits; gratuitous

payments; social legislation benefits such as social security,

welfare, pensions; and benefits received under certain retirement

acts." Id. When a state employee wins a back pay award against

the state for wrongful termination, however, "[her] award is to

be reduced by the amount of unemployment compensation she

received while wrongfully not employed by the State." Foote v.

State Personnel Comm'n, 118 N.H. 640, 645 (1978). The award

should be calculated "to make the plaintiff whole, to compensate

her, and not to penalize the State." Id. "Of course, if the

plaintiff is required to reimburse the State for any or all of

the unemployment compensation she has received, her back-pay

award will be increased by the amount of such reimbursement." 

Id. at 646. 

Case 1:06-cv-00058-JD Document 134-1 Filed 11/05/07 Page 4 of 6
5

 The New Hampshire Supreme Court has not clarified whether

the rule in Foote is limited to back pay awards against the state

or is a rule of more general application when the plaintiff has

received unemployment compensation. In the circumstances of this

case, where Massachusetts law would require CTC to reimburse the

Commonwealth for the unemployment benefits only if that amount is

deducted from Cook's award, it would appear that the implied

policy in Foote of protecting the state would favor deduction. 

Therefore, the amount of unemployment benefits will also be

deducted from an award of back pay for Cook's wrongful discharge

claim. 

To avoid jury confusion and simplify the presentation of

evidence, the court suggests that the parties stipulate to the

amount of lost back pay and the amount of unemployment benefits

Cook received. If the parties cannot so stipulate, Cook will

prove the full amount of her lost back pay, and CTC will prove

the amount of unemployment compensation she received. The jury

will be instructed that it is not to consider the amount of

unemployment compensation Cook received in calculating any award

of back pay. 

Case 1:06-cv-00058-JD Document 134-1 Filed 11/05/07 Page 5 of 6
6

Conclusion

For the foregoing reasons, the plaintiff's motion to exclude

evidence of her unemployment benefits (document no. 80) is

denied.

SO ORDERED.

/s/Joseph A. DiClerico, Jr.

Joseph A. DiClerico, Jr.

United States District Judge

November 5, 2007

cc: Lauren Irwin, Esq.

 Mary Marshall, Esq.

 Heather Burns, Esq.

 Samantha Halem, Esq.

Case 1:06-cv-00058-JD Document 134-1 Filed 11/05/07 Page 6 of 6