Opinion ID: 2786368
Heading Depth: 1
Heading Rank: 3

Heading: Tax Offset

Text: Beverage Distributors argues that the district court abused its discretion in awarding Mr. Sungaila a tax penalty offset. 4 This issue is affected by our reversal of the EEOC’s award. On remand, this issue might or might not recur. But, unlike mitigation of damages, the tax offset issue is primarily legal rather than factual. Thus, we will address the issue. Doing so, we conclude that the district court did not err in awarding a tax offset. 3 The EEOC has suggested that we might lack jurisdiction over this part of the appeal. Appellee’s Supp. Resp. Br. at 12 n.5 (Feb. 5, 2015). Because we are declining to address the issue on other grounds, we need not address the EEOC’s suggestion that we lack jurisdiction. 4 Beverage Distributors also asserts that the offset award constituted unlawful additur in violation of the Seventh Amendment. But, the company did not raise this argument in district court. See Appellee’s Supp. App. at 7-8. Thus, this argument has been forfeited. See Cummings v. Norton, 393 F.3d 1186, 1190 (10th Cir. 2005). Though we can consider forfeited arguments under the plain-error standard, Beverage Distributors has not argued plain error. See Bishop v. Smith, 760 F.3d 1070, 1095 (10th Cir. 2014) (stating that we will not consider the possibility of plain error on a forfeited theory when the claimant fails to argue for plain error), cert. denied, __ U.S. __, 135 S. Ct. 271 (2014). 9
The EEOC argues that we lack jurisdiction because the notice of appeal preceded the district court’s entry of judgment and computation of the amount. See EEOC v. Wal-Mart Stores, Inc., 187 F.3d 1241, 1250 (10th Cir. 1999) (discussing prematurity of an appeal involving a post-judgment award of attorneys’ fees). But, we conclude that we have jurisdiction on the tax offset issue. Even if the notice of appeal had been premature, Beverage Distributors filed a post-judgment motion for a stay pending appeal. This motion (1) specified that Beverage Distributors was taking the appeal, (2) stated that the company was appealing the “monetary components” of the district court’s amended order, which would necessarily include the tax offset award, and (3) stated that the appeal was to our court. Def.’s Mot. for Stay Pending Appeal at 1, EEOC v. Beverage Distributs. Co., LLC, No. 1:11-cv-02557-CBA-CBS (filed May 13, 2014), Doc. No. 137. Thus, the motion for a stay served as the “functional equivalent” of a notice of appeal under Federal Rule of Appellate Procedure 3. See Smith v. Barry, 502 U.S. 244, 248-49 (1992) (“If a document . . . gives the notice required by Rule 3, it is effective as a notice of appeal.”). In these circumstances, we have appellate jurisdiction. 10
Courts have broad discretion in prescribing remedies for victims of discrimination. See Franks v. Bowman Transp. Co., 424 U.S. 747, 763 (1976). One such remedy is a tax penalty offset, which compensates victims for additional tax liabilities they would incur as a result of a lumpsum payment. See Sears v. Atchison Topeka & Santa Fe Ry., Co., 749 F.2d 1451, 1456 (10th Cir. 1984) (awarding a tax offset for victims of discrimination). The district court determined that Mr. Sungaila was entitled to a tax penalty offset. Mr. Sungaila obtained a lump-sum damage award, which would increase his tax liability. 5 Given this result, the court concluded that an offset would compensate Mr. Sungaila for the added liability and “restore [him] to the position he would have been but for his wrongful separation from Beverage Distributors.” EEOC v. Beverage Distribs. Co., LLC, No. 11-cv-02557, 2013 WL 6458735, at  (D. Colo. Dec. 9, 2013). This award fell within the district court’s discretion. Mr. Sungaila obtained a lump-sum damage award that would increase his tax liability. And the court acted within its discretion in compensating Mr. Sungaila for the added burden. 5 The parties do not dispute that the lump-sum award would increase Mr. Sungaila’s tax liability. 11 Beverage Distributors disagrees. In its view, Mr. Sungaila is not entitled to the offset because his added tax burden would not be “significant.” Appellant’s Opening Br. at 39. This argument is based on Blim v. W. Elec. Co., 731 F.2d 1473 (10th Cir. 1984). We are not persuaded. In Blim, we concluded that a tax offset award was improper because the plaintiffs would “suffer no significant tax penalty.” 731 F.2d at 1480. The penalty would not have been “significant” because the plaintiffs could eliminate “nearly all” of their additional tax liability by using the tax code’s averaging provisions. Id. That reasoning is inapplicable here. Unlike the plaintiffs in Blim, Mr. Sungaila cannot lighten his additional tax liability because Congress repealed the averaging provisions in 1986. See Tax Reform Act of 1986, Pub. L. No. 99-514, § 141(a), 100 Stat. 2117 (repealing 26 U.S.C. §§ 13021305). Without other ways of reducing the added tax liability, Mr. Sungaila would experience a tax disadvantage that the Blim plaintiffs were able to avoid. Beverage Distributors also contends that Mr. Sungaila is not entitled to an offset because his case is “typical.” Appellant’s Opening Br. at 39. This contention is based on our opinion in Sears v. Atchison, Topeka & Santa Fe Ry., Co., where we affirmed an offset award while suggesting that such an award “may not be appropriate in a typical [discrimination] case.” 12 749 F.2d 1451, 1456 (10th Cir. 1984). But, we did not hold that tax offsets were limited to atypical cases. In our view, the district court acted within its discretion even if Mr. Sungaila’s situation might be considered “typical.” See, e.g., EEOC v. N. Star Hospitality, Inc., __ F.3d __, No. 141660, 2015 WL 363997, at  (7th Cir. Jan. 29, 2015) (upholding an award of a tax offset in an EEOC claim on behalf of a single plaintiff in order to make the plaintiff “whole”). Accordingly, we conclude that the district court did not err in awarding a tax offset.