Opinion ID: 2583898
Heading Depth: 2
Heading Rank: 2

Heading: WLAD Entitles Ms. Blaney to an Offset for the Additional Federal Income Tax Consequences.

Text: This issue of whether WLAD entitles plaintiffs who prevail in discrimination lawsuits to an offset for the additional federal income tax consequences is one of first impression in Washington. Blaney, 114 Wash. App. at 94, 55 P.3d 1208. As a question of statutory interpretation, it is reviewed de novo. State v. Keller, 143 Wash.2d 267, 276, 19 P.3d 1030 (2001). WLAD provides for the following remedies: Any person deeming himself or herself injured by any act in violation of this chapter shall have a civil action in a court of competent jurisdiction to enjoin further violations, or to recover the actual damages sustained by the person, or both, together with the cost of suit including reasonable attorneys' fees or any other appropriate remedy authorized by this chapter or the United States Civil Rights Act of 1964 as amended, or the Federal Fair Housing Amendments Act of 1988 (42 U.S.C. Sec. 3601 et seq.). RCW 49.60.030(2). This court generally reviews only those issues raised by the parties in their petition and answer. RAP 13.7(b). This rule is subject to numerous exceptions. Maynard Inv. Co. v. McCann, 77 Wash.2d 616, 621, 465 P.2d 657 (1970). One such exception provides that [t]his court has the inherent discretionary authority to reach issues not briefed by the parties if those issues are necessary for decision. City of Seattle v. McCready, 123 Wash.2d 260, 269, 868 P.2d 134 (1994). Although the parties' petition and answer did not explicitly brief characterization of Ms. Blaney's requested offset as any other appropriate remedy, [6] we may reach this remedial provision under RAP 13.7(b) because the parties expansively defined the WLAD issue as to whether WLAD entitles Ms. Blaney to the offset. [7] Moreover, we may reach the remedial provision under the common law exception because the provision is necessary to determine whether WLAD entitles prevailing plaintiffs to such an offset.
The legislature added the any other appropriate remedy clause to the WLAD in 1993. Dailey v. N. Coast Life Ins. Co., 129 Wash.2d 572, 575, 919 P.2d 589 (1996). Three years later, this court acknowledged the ambiguity surrounding the new provision in dicta stating: [T]he structure of the language in RCW 49.60.030(2) arguably evinces an intent to incorporate only federal remedies qualifying as costs. While the trial court read the provision as: to recover the actual damages ... together with ... any other remedy ..., we might reasonably read the term including as restrictive: the cost of suit including ... any other remedy.... Id. at 576, 919 P.2d 589. We now resolve any ambiguity by holding that the any other appropriate remedy clause stands on its own as a third WLAD remedy. The structure of RCW 49.60.030(2) supports this reading of the statute; any other' appropriate remedy relates to together with, logically providing a catchall remedy provision in addition to injunctive relief, actual damages, and cost of suit. Moreover, this reading coincides with the liberal construction WLAD requires, [8] RCW 49.60.020, in order to effectuate its purposes of deterrence and eradication of discrimination. Marquis v. City of Spokane, 130 Wash.2d 97, 109, 922 P.2d 43 (1996). Having determined that the any other appropriate remedy clause stands as a third WLAD remedy, we next assess whether this remedy entitles prevailing plaintiffs to an offset for the additional federal income tax consequences. Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e, addresses employment discrimination. Title VII's enforcement provision provides: If the court finds that the respondent has intentionally engaged in or is intentionally engaging in an unlawful employment practice charged in the complaint, the court may enjoin the respondent from engaging in such unlawful employment practice, and order such affirmative action as may be appropriate, which may include, but is not limited to, reinstatement or hiring of employees, with or without back pay (payable by the employer, employment agency, or labor organization, as the case may be, responsible for the unlawful employment practice), or any other equitable relief as the court deems appropriate. 42 U.S.C.2000e-5(g)(1) (emphasis added). The United States Supreme Court has held that the goals of Title VII are to eradicate discrimination and make persons whole for injuries suffered on account of unlawful employment discrimination. Albemarle Paper Co. v. Moody, 422 U.S. 405, 418, 95 S.Ct. 2362, 45 L.Ed.2d 280 (1975). A number of federal courts have used the equitable powers bestowed on them by Title VII to allow offsets for the federal tax consequences of damage awards. See Sears v. Atchison, Topeka & Santa Fe Ry. Co., 749 F.2d 1451, 1456 (10th Cir.1984) (upholding a trial court's inclusion of tax consequences as part of a back pay award); EEOC v. Joe's Stone Crab, Inc., 15 F.Supp.2d 1364, 1380 (S.D.Fla.1998) (acknowledging the propriety of a district court ordered tax offset and noting that such offsets are a prevailing practice in the settlement of Title VII suits, but refusing to grant an offset because the plaintiff failed to submit the evidence necessary to calculate the offset amount). Because WLAD incorporates remedies authorized by the federal civil rights act and that statute has been interpreted to provide the equitable remedy of offsetting additional federal income tax consequences of damage awards, we hold that WLAD allows offsets for additional federal income tax consequences.
Actual damages are a remedy for full compensatory damages, excluding only nominal, exemplary or punitive damages, Martini v. Boeing Co., 137 Wash.2d 357, 368, 971 P.2d 45 (1999), that are proximately caused by the wrongful action, resulting directly from the violation of RCW 49.60. 137 Wash.2d at 371, 971 P.2d 45. Proximate cause is a cause which in a natural and continuous sequence, unbroken by a new, independent cause, produces the event, and without which that event would not have occurred. Bernethy v. Walt Failor's, Inc., 97 Wash.2d 929, 935, 653 P.2d 280 (1982). In applying these definitions, this court characterized back and front pay proximately caused by unlawful discrimination as actual damages, Martini, 137 Wash.2d at 364, 971 P.2d 45, but refused to characterize punitive damages as actual damages. Dailey, 129 Wash.2d at 575, 919 P.2d 589. Consistent with Martini, we refuse to characterize Ms. Blaney's requested offset for additional federal income tax consequences as actual damages because the proximate cause of the additional tax consequences is not the unlawful discrimination, but rather the additional tax liability is a direct result of the tax laws. Thus, the additional tax liability is too attenuated from the unlawful discrimination to be deemed actual damages.
This court defined cost of suit as incurred costs that are reasonable and necessary in the preparation and trial of the case, including statutory costs and litigation expenses such as transportation costs, copying costs, supplies, equipment and lodging. Blair v. Wash. State Univ., 108 Wash.2d 558, 573-74, 740 P.2d 1379 (1987). Consistent with Blair, we refuse to characterize Ms. Blaney's requested offset as a cost of suit because tax liability is incurred after, not during, litigation. C. Ms. Blaney is Entitled to Attorney Fees on Appeal. A plaintiff who prevails on a gender discrimination suit is entitled to reasonable attorney fees at the trial court, RCW 49.60.030(2), and on appeal. RAP 18.1(a); Martini, 137 Wash.2d at 377, 971 P.2d 45. Ms. Blaney is entitled to attorney fees on appeal because she properly requested such fees in her supplemental brief, and she prevailed on the WLAD issue.