Opinion ID: 791237
Heading Depth: 3
Heading Rank: 2

Heading: The Transit Authority's Exemption from Liquidated Damages

Text: 48 The Transit Authority contends that, as a matter of law, it is not subject to liquidated damages under the ADEA because such damages are punitive rather than compensatory, and government entities are exempt from punitive damages. The plaintiffs assert that ADEA liquidated damages are distinguishable from punitive damages. In any event, they submit that Congress expressly intended liquidated damages to be recoverable from any employer who willfully engaged in age discrimination, even public entities. 49 The question of whether public employers are exempt from the liquidated damages provision of the ADEA is a matter of first impression in this circuit. Although this court has upheld liquidated damages awards against municipal entities on at least two occasions, the question of a public-entity exemption from punitive damages appears not to have been litigated in either case. See Stratton v. Dep't for the Aging, 132 F.3d 869, 881 (2d Cir.1997); Padilla v. Metro-North Commuter R.R., 92 F.3d at 123-24. Not surprisingly, district courts have been uncertain about what weight, if any, to give these decisions and have reached conflicting conclusions on the issue of government immunity from liquidated damages. Compare Epter v. New York City Transit Auth., 216 F.Supp.2d 131, 136-37 (E.D.N.Y.2002) (upholding liquidated damages against the government in light of the Second Circuit's unwillingness to strike down the liquidated damages awards in Stratton and Padilla ), and Fink v. City of New York, 129 F.Supp.2d 511, 523 (E.D.N.Y.2001) (imposing an award of liquidated damages against the City of New York under Uniform Services Employment and Reemployment Rights Act, which is very similar to 29 U.S.C. § 626(b), a provision allowing liquidated damages for willful violations under the ADEA), with Vernon v. Port Auth. of N.Y. & N.J., No. 95 Civ. 4594(PKL), 2003 WL 1563219, at  (S.D.N.Y. Mar. 26, 2003) (holding that, since liquidated damages in this [ADEA] context would be deemed punitive damages and Port Authority is immune from punitive damages, liquidated damages would not be available under the ADEA). We here clarify that state and local government employers are subject to liquidated damages under the ADEA. 50 At the outset, we acknowledge the Supreme Court's recent instruction that [s]ince municipalities' common law resistance to punitive damages still obtains, `the general rule today is that no punitive damages are allowed unless expressly authorized by statute.' Cook County v. United States ex rel. Chandler, 538 U.S. 119, 129, 123 S.Ct. 1239, 155 L.Ed.2d 247 (2003) (quoting Newport v. Fact Concerts, Inc., 453 U.S. 247, 260 n. 2, 101 S.Ct. 2748, 69 L.Ed.2d 616 (1981)). Thus, in considering the Transit Authority's challenge to the liquidated damages award in this case, we must first determine whether ADEA liquidated damages are properly viewed as punitive and, if so, whether the statute explicitly authorizes their award against public employers. 51 On the first issue, plaintiffs argue that ADEA liquidated damages are unlike punitive damages because they are statutorily capped at an amount equal to back pay. See 29 U.S.C. § 626(b) (incorporating provision of Fair Labor Standards Act (FLSA) providing for liquidated damages in an amount equal to the employee's unpaid minimum wages, or their unpaid overtime compensation, 29 U.S.C. § 216(b)). Thus, the traditional concern with allowing punitive damages against government entities — the danger of subjecting the government to crippling and open-ended damage awards for the actions of its agents — is not at issue under the ADEA. Cf. Cook County v. United States ex rel. Chandler, 538 U.S. at 132, 123 S.Ct. 1239 (noting, in False Claims Act case, that the jury's open-ended discretion over the amount [of a punitive damage award] is a reason to disallow such awards against municipal defendants). Whatever the logical appeal of plaintiffs' argument, we are bound by the Supreme Court's ruling that Congress intended for [the ADEA's] liquidated damages to be punitive in nature. Trans World Airlines, Inc. v. Thurston, 469 U.S. at 125, 105 S.Ct. 613; see also Commissioner v. Schleier, 515 U.S. 323, 331-32, 115 S.Ct. 2159, 132 L.Ed.2d 294 (1995) (relying on Thurston to hold ADEA liquidated damages punitive for purposes of calculating recipient's tax obligations). Indeed, this court has similarly concluded that ADEA liquidated damages may fairly be characterized as `punitive in nature' [because] they do after all provide an ADEA victim with more than his or her out-of-pocket damages or any other strictly compensatory amounts. McGinty v. New York, 193 F.3d 64, 70-71 (2d Cir.1999) (citing Reichman v. Bonsignore, Brignati & Mazzotta, P.C., 818 F.2d 278, 282 (2d Cir.1987)) (internal citations omitted). 52 This conclusion, however, does not end the inquiry. Notwithstanding the punitive nature of the ADEA's liquidated damages provision, we must consider whether the statute expressly authorizes their recovery against a government employer. We note that a number of our sister circuits, like this court in the past, have upheld liquidated damages awards against government employers without specifically construing the intent of the statute. See, e.g., Ray v. Iuka Special Mun. Separate Sch. Dist., 51 F.3d 1246, 1253 (5th Cir.1995) (upholding award of liquidated damages against a school district under the ADEA when the issue on appeal was whether the school district had willfully violated the ADEA); Lee v. Rapid City Area Sch. Dist. No. 51-4, 981 F.2d 316, 319-20 (8th Cir.1992) ( en banc ) (remanding for assessment of full liquidated damages against the school district under the ADEA when the issue on appeal was whether the district court erred in reducing such damages); Orzel v. City of Wauwatosa Fire Dep't, 697 F.2d 743, 758-59 (7th Cir.1983) (upholding liquidated damages award against municipal fire department under the ADEA when issue on appeal focused on willfulness). More recently, however, the Third Circuit in Potence v. Hazleton Area School District, 357 F.3d 366, 372-73 (3d Cir.2004), examined the language and structure of the ADEA in some detail and concluded that it does authorize liquidated damages awards against government employers. We find its analysis convincing and adopt it as our own. 53 Potence notes that [t]he ADEA makes it unlawful for an employer `to fail or refuse to hire or to discharge' an individual because of his or her age. Id. at 373 (quoting 29 U.S.C. § 623(a)(1)). Because state and municipal entities are expressly included within the ADEA definition of an employer, see 29 U.S.C. § 630(b), the statute could not be more explicit in imposing liability for age discrimination against municipalities and agencies thereof. Potence v. Hazleton Area Sch. Dist., 357 F.3d at 373. 54 Potence further notes that the ADEA specifically incorporates many of the enforcement powers, remedies, and procedures of the FLSA, see 29 U.S.C. § 626(b), notably 29 U.S.C. § 216(b), which states that [a]ny employer who violates [the FLSA] shall be liable to the employee or employees affected in the amount of their unpaid wages, or their unpaid overtime compensation, as the case may be, and in an additional equal amount as liquidated damages. 357 F.3d at 372. That same section further specifies that an action to recover such damages may be maintained against any employer (including a public agency). Id. § 216(b); see also id. § 203(x) (defining public agency to include a State or political subdivisions thereof). Thus, as Potence concludes and we agree, the language of this integrated statutory scheme, read as a whole, makes it clear that Congress intended to subject municipalities . . . to the liquidated damages provision of the ADEA. Potence v. Hazleton Area Sch. Dist., 357 F.3d at 373. 55 In urging us not to follow Potence, defendants contend that the Third Circuit failed to consider the fundamental difference between liquidated damages under the FLSA, which the Supreme Court has identified as compensatory, see Overnight Motor Transp. Co. v. Missel, 316 U.S. 572, 583-84, 62 S.Ct. 1216, 86 L.Ed. 1682 (1942) (recognizing FLSA damages as compensation, not a penalty or punishment, because such damages might compensate for damages too obscure and difficult of proof for estimate); accord Reich v. Southern New England Telecomm. Corp., 121 F.3d 58, 71 (2d Cir.1997), and liquidated damages under the ADEA, which, as already noted, have been recognized as punitive, see generally Commissioner v. Schleier, 515 U.S. at 331-32, 115 S.Ct. 2159 (rejecting argument that incorporation of FLSA's liquidated damages provision evidenced Congress's intent for ADEA liquidated damages to be viewed as compensatory; recognition of such damages as punitive in Trans World Airlines, Inc. v. Thurston, 469 U.S. at 125, 105 S.Ct. 613, controlled). Defendants point us to the Supreme Court's specific acknowledgment that Congress's incorporation of the FLSA remedies in the ADEA was selective, not wholesale: in enacting the ADEA, Congress exhibited . . . a willingness to depart from those provisions regarded as undesirable or inappropriate for incorporation. Lorillard v. Pons, 434 U.S. 575, 581, 98 S.Ct. 866, 55 L.Ed.2d 40 (1978). Moreover, they note that one such departure is Congress's limitation on ADEA liquidated damages to cases involving willful violations of law. See id. ([W]hile incorporating into the ADEA the FLSA provisions authorizing awards of liquidated damages, Congress altered the circumstances under which such awards would be available in ADEA actions by mandating that such damages be awarded only where the violation of the ADEA is willful.); see also Commissioner v. Schleier, 515 U.S. at 331, 115 S.Ct. 2159 (observing that the liquidated damage provisions of the ADEA . . . were a significant departure from those in the FLSA). 56 This limitation, however, hardly supports the Transit Authority's argument that it is exempt from a liquidated damages award for willful age discrimination. While Congress may have selectively incorporated the FLSA's liquidated damages provision into the ADEA, the very fact that it narrowed its reach to cases involving willful age discrimination only highlights the absence of any limits on the provision's application to all employers, explicitly including public entities. Defendants can point to no language in the ADEA itself evidencing Congress's intent to limit liquidated damages to private employers. The plain language of § 626(b), the ADEA enforcement provision that references liquidated damages, applies equally to all employers. Further, the ADEA, like the FLSA, includes state and local government entities within its definition of employer. 57 In other contexts, Congress has expressed its intent to distinguish public from private employers in creating remedies for employment discrimination. Notably, government entities are exempted from the punitive damages provision of Title VII. See 42 U.S.C. § 1981a(b)(1). No such exemption, however, appears in the ADEA. Defendants argue that any ambiguity created by the lack of a specific ADEA exemption should operate in their favor because express statutory authorization is required to assess punitive damages against a government entity. See Cook County v. United States ex rel. Chandler, 538 U.S. at 129, 123 S.Ct. 1239. What defendants ignore is that it is not the absence of an explicit exemption that supports imposing ADEA liquidated damages against government employers. Rather, it is the specific inclusion of government actors in the ADEA definition of employer, together with the ADEA's unmodified incorporation of the FLSA provision expressly providing for liquidated damages to be recovered from public entities, that compels us to reject their exemption argument. As the Third Circuit observed in Potence, this specific statutory language, read as a whole, provides stronger evidence of congressional intent to impose punitive damages on government entities than the circumstances supporting that conclusion in Cook County: 58 In Cook County, the Supreme Court held that under the False Claims Act (FCA) treble damages could be imposed against municipalities because ever since the statute's creation in 1863 its definition of person was intended to cover local governments, and Congress did not manifest an intent to limit the scope of that definition when it raised the ceiling on the damages in 1986. In contrast to the FCA, which does not explicitly identify a municipality as a person, the ADEA, in the provisions quoted above, does explicitly include state and local governments in the definition of employer. Thus, we need not move beyond the plain language of the statute or go to lengths to consider the historical context of the statute as the Court did in Cook County. Rather, the language of the ADEA itself makes it clear that Congress intended to subject municipalities like the School District to the liquidated damages provision of the ADEA. 59 Inasmuch as the statute expressly authorizes the imposition of liquidated damages against a municipality, even though such damages are punitive in nature, we conclude that the District Court did not err in assessing liquidated damages against the School District. 60 Potence v. Hazleton Area Sch. Dist., 357 F.3d at 373 (internal citation omitted). 61 Because we agree with this reasoning, we similarly conclude that the ADEA authorizes the imposition of liquidated damages against government employers who engage in willful age discrimination. Accordingly, we affirm the liquidated damages award against the Transit Authority.