Opinion ID: 752355
Heading Depth: 1
Heading Rank: 3

Heading: Calculation of Relief

Text: 28 We review a district court's designation of the beginning of a back pay period for an abuse of discretion. See EEOC v. Wilson Metal Casket Co., 24 F.3d 836, 840 (6th Cir.1994). Abuse of discretion is defined as a definite and firm conviction that the trial court committed a clear error of judgment. Logan v. Dayton Hudson Corporation, 865 F.2d 789, 790 (6th Cir.1989). In its March 1996 decision, the district court determined that the back pay compensation would begin to accrue for all claimants in this case as of October 31, 1984, two years before the United States filed its complaint. The United States contends that its letter of February 7, 1986, informing Warren that it would investigate the city's employment practices, provided the city with sufficient notice such that the back pay period should begin on February 7, 1984. The district court declined to use the February 7 letter to measure the beginning of back pay accrual because the United States had not provided the court with the contents of the letter. However, when the district court was provided with the letter, it concluded that it was insufficient to provide Warren notice of its questionable practices in order for back pay to begin to accrue February 7, 1984. 29 Section 706(g) of Title VII as amended in 1972 provides that [b]ack pay liability shall not accrue from a date more than two years prior to the filing of a charge with the [Equal Employment Opportunity] Commission. 42 U.S.C. § 2000e-5(g). See, e.g., Winbush v. State of Iowa by Glenwood State Hosp., 66 F.3d 1471, 1477 n. 8 (8th Cir.1995); Bereda v. Pickering Creek Indus. Park, Inc., 865 F.2d 49, 54 (3d Cir.1989). However, Title VII is silent as to how the two-year back pay provision of Section 706(g) applies to civil rights suits that are brought by the Attorney General under her authority to bring pattern or practice suits under Section 707(a), 42 U.S.C. § 2000e-6(a). In Wilson Metal Casket Co., we noted that the purpose of Title VII's requirement that claimants file charges with the EEOC is to give notice of potential Title VII liability to an alleged wrongdoer and allow the EEOC to attempt to conciliate with the wrongdoer rather than go to court. 24 F.3d at 839 (citation omitted). To this end, in a pattern or practice case, the back pay period should begin whenever the United States provides the employer with notice and information comparable to that normally contained in a charge of discrimination filed with the EEOC. 11 30 The narrower question before us, then, is whether the district court abused its discretion in finding that the United States' letter of February 7, 1986 did not identify sufficiently the relevant facts of the alleged discrimination such that it could substitute for a complaint filed with the EEOC. We believe that the February 7 letter failed to provide such notice. The much-disputed letter stated in relevant part that the United States had received information indicating that the City of Warren may have been conducting employment practices which discriminated against blacks unlawfully on the basis of race; the letter cited the residency requirement and indicated that the United States would investigate in order to garner additional information. The letter did not mention the city's recruiting practices, which have since become a central issue in this case. More significantly, the letter served more to inform Warren of the pending investigation than to give the city notice that specific practices were in violation of Title VII. Therefore, we hold that the district court did not abuse its discretion in refusing to accrue back pay beginning February 7, 1984. 31 The United States, however, sent Warren a determination letter dated September 23, 1986, identifying both the recruiting practices and the residency requirement as violating Title VII. The determination letter provides the city with ample notice of the claims against it and of its challenged practices. Therefore, it would appear that Fears's back pay should accrue beginning September 23, 1984. Thus, we believe that the district court abused its discretion by failing to consider that date. We therefore remand this issue for the district court to determine whether Fears's back pay should accrue beginning September 23, 1984. In addition, we note that the date ultimately determined by the district court would apply to back pay relief for any claimants previously excluded by the district court's erroneous holding in City of Warren II, discussed in Part II, above.
32 We review the trial court's calculation of prejudgment interest for an abuse of discretion. See Thurman v. Yellow Freight Systems, Inc., 90 F.3d 1160, 1170 (6th Cir.1996). A court abuses its discretion when it relies on clearly erroneous findings of fact, or when it improperly applies the law or uses an erroneous legal standard. Phelan v. Bell, 8 F.3d 369, 372 (6th Cir.1993) (quoting Christian Schmidt Brewing Co. v. G. Heileman Brewing Co., 753 F.2d 1354, 1356 (6th Cir.1985)). The award or denial of prejudgment interest is within the sound discretion of the trial judge. See Scales, 925 F.2d at 908 (citation omitted). 33 Prejudgment interest is usually appropriate to make a discrimination plaintiff whole. An award of prejudgment interest is an element of complete compensation in a Title VII back pay award. Thurman, 90 F.3d at 1170 (citing Wilson Metal Casket, 24 F.3d at 841-42) (Prejudgment interest helps to make victims of discrimination whole and compensates them for the true cost of money damages they incurred.). We commonly award prejudgment interest on back pay awards. See Wilson Metal Casket, 24 F.3d at 841-42. Moreover, victims of discrimination should not be penalized for delays in the judicial process, and discriminating employers should not benefit from such delays. See Thurman, 90 F.3d at 1170 (citing Wilson Metal Casket, 24 F.3d at 842). The purpose of awarding prejudgment interest under Title VII, however, is to compensate victims both for the time value of the lost money as well as for the effects of inflation. See EEOC v. O'Grady, 857 F.2d 383, 392 (7th Cir.1988). 34 The district court awarded one claimant, Joseph Fears, prejudgment interest on his back pay award. In calculating that interest, the court equated the interest rate with the consumer price index (CPI), in accordance with the opinion of the City of Warren's expert witness. The United States contends that the district court abused its discretion in its calculation of Fears's interest, primarily because the consumer price index does not compensate victims for the time value of the lost money; rather, the CPI simply ensures that inflation does not erode the value of money. 35 Although we generally afford the district court great discretion in the calculation of prejudgment interest, no authority in the courts of appeals or in the Supreme Court supports the use of the CPI as a substitute for a market interest rate, and the circuit courts that have ruled on this issue explicitly hold that the CPI is not an adequate basis for prejudgment interest. Both the Second Circuit and the D.C. Circuit have held that merely adjusting the dollars the plaintiff would have earned to compensate for diminished purchasing power because of inflation does not compensate for the lost use of the money in the intervening time. See Chandler v. Bombardier Capital, Inc., 44 F.3d 80, 84 (2d Cir.1994); Clinchfield Coal Co. v. Federal Mine Safety and Health Review Comm'n, 895 F.2d 773, 780 (D.C.Cir.1990) (Interest rates based on the CPI award claimants compensation for losses through inflation but none for the capacity of wealth to generate more wealth (and lenders' insistence on corresponding compensation), which a market interest rate reflects.). 36 The lack of authority supporting the district court's use of the CPI, coupled with the failure of the CPI to make victims of discrimination whole according to the purposes of Title VII, clearly establish that the trial court improperly applied the law by using an erroneous legal standard. Therefore we find that the district court abused its discretion. 12 See Phelan, 8 F.3d at 372. Accordingly, we remand the issue of prejudgment interest to the district court to determine an appropriate interest rate for Fears's award. 37
38 The United States appeals the district court's refusal to include overtime as part of Joseph Fears's back pay award. We review a district court's calculation of back pay and its decision not to award back pay for abuse of discretion. See Wilson Metal Casket, 24 F.3d at 840. A victim of discrimination is to be placed, as near as may be, in the situation he would have occupied if the wrong had not been committed. Albemarle Paper Co. v. Moody, 422 U.S. 405, 418-19, 95 S.Ct. 2362, 2372, 45 L.Ed.2d 280 (1975). Moreover, we have acknowledged that lost overtime pay should be included in back pay, Meadows v. Ford Motor Co., 510 F.2d 939, 947 (6th Cir.1975), and a district court must ensure that back pay awards completely redress the economic injury the claimant has suffered as a result of the discrimination. Rasimas v. Michigan Dep't of Mental Health, 714 F.2d 614, 626 (6th Cir.1983). In excluding overtime compensation from Fears's back pay compensation, the district court relied on the testimony of former Warren police commissioner Paul Pash who stated that officers in police departments other than Warren's would not have earned the same amount of overtime as Warren police officers with whom they were compared, unless they had previously held jobs with similar functions as those performed by the comparable Warren officers. However, the district court did not address the city's calculations showing that the people it hired as police officers at the time Fears would have been hired earned between $12,000 and $35,000 in overtime. Rather, the district court declined to award Fears overtime on the theory that it would provide a windfall by compensating him for work he did not perform. 39 Because lost overtime is a well-established part of a back pay award under Title VII, the district court's reasoning that including overtime in Fears's award would be a windfall is inconsistent with that court's finding that Warren would have hired Fears but for discrimination. The district court's exclusion of back pay from Fears's award does not place him as near as possible to the position he would have occupied absent discrimination. Therefore, the district court did not apply the law properly, and we find that it abused its discretion with regard to this issue. However, this court is not a fact-finding court. Therefore, we remand the overtime issue to the district court to determine whether all police officers whom Warren hired during the time Fears applied earned overtime and whether Fears's position with the Detroit Police Department was comparable to that of Warren police officers who earned overtime. 40 The United States also appeals the district court's application of an attrition factor to Fears's back pay calculation. The district court provided no discernible reason for its application of the attrition factor. However, the attrition of police officers from the Warren Police Department was not an appropriate factor to consider in this case because the district court had already terminated Fears's back pay as of November 1990, the date that he left the Detroit Police Department. The court's limitation of Fears's back pay by both the time that he actually stopped working and the time that similarly situated Warren police officers left their jobs amounts to double-counting, an improper application of the law and therefore an abuse of discretion. Accordingly, we remand this issue, and note that in calculating Fears's back pay award, the district court should apply either the actual date that Fears stopped working, or the attrition factor, keeping in mind that ambiguity in what the claimant would have received but for the discrimination should be resolved against the discriminating employer. Rasimas, 714 F.2d at 628; see also Wooldridge v. Marlene Industries Corp., 875 F.2d 540, 549 (6th Cir.1989) ([G]uidelines for back pay awards under Title VII have effectively shifted the risk of error in favor of the back pay claimant.).