Document: 112 S.Ct. 1867 504 U.S. 229 119 L.Ed.2d 34 UNITED STATES, Petitionerv.Therese A. BURKE, Cynthia R. Center, and Linda G. Gibbs. No. 91-42. Argued Jan. 21, 1992. Decided May 26, Syllabus As part of the settlement a sex discrimination claim under Title VII Civil Rights Act 1964, Tennessee Valley Authority (TVA) paid backpay to affected employees, including respondents, from which it withheld federal income taxes. The Internal Revenue Service (IRS) disallowed respondents' claims for refund In subsequent action, District Court ruled that, since respondents had obtained only due them as result TVA's discriminatory underpayments rather than compensatory or other damages, proceeds could not be excluded their gross incomes "damages received . on account personal injuries" 26 U.S.C. § 104(a)(2). Appeals reversed, holding that constituted personal, tort-like injury rejecting Government's attempt distinguish VII, authorizes no punitive statutes thought redress injuries. Held: Backpay awards in are excludable Pp. 233-242. (a) IRS regulations formally link identification "personal injury" purposes 104(a)(2) traditional tort principles, referring "prosecution legal suit action based upon type rights." CFR 1.104-1(c). order fall within exclusion, must show basis recovery backpay, redresses injury. 233-234. (b) A hallmark liability is availability broad range damages compensate plaintiff harm sustained. however, permits award injunctive relief. Congress sought through restore victims wage employment positions they would have occupied absent discrimination, but declined, contrast antidiscrimination statutes, recompense any harms associated with injury, such pain suffering, emotional distress, reputation, consequential damages. Thus, cannot said meaning applicable regulations. 234-242. 929 F.2d 1119 (CA6 1991), reversed. BLACKMUN, J., delivered opinion Court, REHNQUIST, C.J., WHITE, STEVENS, KENNEDY, JJ., joined. SCALIA, SOUTER, filed opinions concurring judgment. O'CONNOR, dissenting opinion, THOMAS, Jeffrey P. Minear, Washington, D.C., argued, petitioner. Joseph E. Finley, Baltimore, Md., argued respondents. Justice BLACKMUN Court. 1 this case we decide whether payment 78 Stat. 253, amended, 42 2000e et seq., recipient's Code, 104(a)(2), injuries." 2 * relevant facts dispute. 1984, Judy Hutcheson, an employee (TVA), United States Eastern alleging TVA discriminated unlawfully salaries sex. Office Professional Employees International Union, represented intervened. Among employees were Therese Burke, 3 complaint alleged increased certain male-dominated pay schedules, female-dominated schedules. addition, lowered some App. 90-5607 (CA6) (hereinafter App.), pp. 28-32 (Second Amended Complaint). plaintiffs relief well all female employees. Id., at 33-34. defendants counterclaim against Union alleging, among things, fraud, misrepresentation, breach contract. 35. 4 After denied cross-motions summary judgment, parties reached settlement. agreed $4,200 Hutcheson total $5,000,000 distributed formula length service rates pay. 70-71, 76-77. Although did withhold taxes withhold, pursuant agreement, amounts allocated three here.1 5 Respondents payments. those claims. then brought Tennessee, claiming payments should respective Code (whether by agreement lump sums periodic payments) injuries sickness." because backwages 1990 WL 56155, 90-1 USTC ¶ 50,203 (1990). 6 Sixth Circuit, divided vote, (1991). concluded exclusion turns nature." 1121. "If answer affirmative," court held, "then beginning end inquiry" (internal quotation omitted). 1123. unlawful rejected damages,2 See id., 1121-1123. was 7 dissent Appeals, F.2d, 1124, took view earned unpaid differentials—wages been subjected tax discrimination—did constitute compensation "loss tort," required 1126. 8 We granted certiorari resolve conflict Courts concerning 104(a)(2).3 --- ----, 47, 116 25 II 9 definition sweeps broadly. Section 61(a), provides "gross means whatever source derived," subject exclusions specifically enumerated elsewhere Code. has recognized, intended 61(a) its statutory precursors exert "the full measure taxing power," Helvering v. Clifford, 309 331, 334, 60 554, 556, 84 L.Ed. 788 (1940), bring "accessio[n] wealth." Commissioner Glenshaw Glass Co., 348 426, 431, 75 473, 477, 99 483 (1955). There dispute reach 61(a). Brief 9-10. 10 question, qualify special 104(a), does include— 11 "(2) amount sickness. ."4 12 Neither text nor legislative history offers explanation term injuries."5 Since 1960, linked principles: "The 'damages agreement)' prosecution rights, entered into lieu prosecution." Fed.Reg. 11490 (1960); 1.104-1(c) Threlkeld Commissioner, 87 T.C. 1294, 1305 (1986) ("The essential element section involved derive sort payor. result, common law concepts helpful deciding taxpayer being compensated 'personal injury' ") omitted), aff'd, 848 81 1988). 13 "tort" defined broadly "civil wrong, contract, will provide remedy form damages." W. Keeton, D. Dobbs, Keeton & Owen, Prosser Law Torts (1984). Remedial principles thus figure prominently conceptualization torts. Heuston, Salmond (12th ed. 1957) (noting "an damages" characteristic every true even where relief, injunction, may available, "in cases solely virtue right wrong complained classed tort"). Indeed, one hallmarks "fairly caused violation his Carey Piphus, 435 247, 257, 98 1042, 1049, 55 252 (1978). these often described terms, see Memphis Community School Dist. Stachura, 477 299, 306, 106 2537, 2542, 91 249 (1986), many larger necessary reimburse actual monetary loss sustained anticipated plaintiff, intangible elements "deemed important, though pecuniary [their] immediate consequence[s]." Remedies 136 (1973). Cf. Molzof States, ---- - 711, 715-716, 731 (1992) (compensatory exceed prohibited "punitive" Federal Tort Claims Act). 14 For example, victim physical permitted, state law, recover lost wages, medical expenses, diminished future earning capacity also distress suffering. 540-551; T.C., 1300. Similarly, "dignitary" nonphysical tort6 defaation (e.g., business customers), "impairment reputation standing community, humiliaion, mental anguish suffering." Gertz Robert Welch, Inc., 418 323, 350, 94 2997, 3012, 41 789 (1974). 510-520. Furthermore, exemplary generally available instances defendant's misconduct intentional reckless. 204-208; supra. 15 agree Appeals' analysis insofar focused, nature underlying award. 1121; 1305. Respondents, part, appropriate inquiry, dissent. 9-12; post, 250.7 come therefore accord foregoing principles. turn next inquiry. B 16 19648 makes practice employer "to discriminate individual respect compensation, conditions, privileges employment, individual's race, color, religion, sex, national origin." 2000e-2(a)(1). If administrative remedies unsuccessful, aggrieved file district court, 2000e-5(f)(1), although held plaintiffs, unlike ordinary entitled jury trial. See, e.g., Johnson Georgia Highway Express, 417 1122, 1125 (CA5 1969). Curtis Loether, 415 189, 192-193, 1005, 1007-1008, 39 260 (1974) (describing trials forms action); 196-197, n. 13, S.Ct., 1009-1010, (citing cases). finds engaged practice, enjoin "order affirmative appropriate, include, limited to, reinstatement hiring without back equitable deems appropriate." 2000e-5(g). 17 It beyond question classifications protected is, argue consistently invidious causes grave victims. 35-39; Griggs Duke Power 401 424, 849, 28 158 (1971). fact individuals automatically imply, there exists law. 18 discussed above, allow damages; instead, limits injunctions, 2000e-5(g); Patterson McLean Credit 491 164, 182, 4, 109 2363, 2375, 105 132 (1989) "limited backpay"); Great American Fed. Sav. Loan Assn. Novotny, 442 366, 374-375, 2345, 2350, 957 (1979); Sparrow 292 U.S.App.D.C. 259, 262-263, 949 434, 437438 (1991) (collecting An wrongfully discharged equal wages date discharge reinstatement, along fringe benefits vacation pension benefits;9 similarly, promotion or, case, salary differential between services performed, benefits. 19 previously observed focuses "legal economic character," Albemarle Paper Co. Moody, 422 405, 418, 95 2362, 2372, 45 280 (1975), consisting deprivation opportunity earn wrongful termination. remedy, correspondingly, consists restoring victims, discrimination. 421, 2373 118 Cong.Rec. 7168 (1972)). Nothing remedial scheme purports ruined credit rating). Walker Ford Motor 684 1355, 1364-1365, (CA11 1982). 20 No doubt if cause evidenced conception remedy. 195-196, 10, 1008-1009, "under logic development insult indignity, racial might treated dignitary tort" omitted)). circumscribed stand marked well.10 1981 race-based obtain trial "both and, circumstances, awarded." Railway Express Agency, 421 454, 460, 1716, 1720, 44 295 (1975). similarly VIII 1968, whose fair housing provisions "sounds basically "contrasts sharply" VII. U.S., 195, 197, 1009, 1010; 3613(c).11 21 Notwithstanding common-law tradition existence offering remedies, declined anything properly them—wages course, fully taxable. L. Frolik, Tax Aspects Injury, Damage, Loss 70 (1987). say statute VII,12 sole focus backwages, regulations.13 22 Accordingly, hold judgment 23 so ordered. 24 excludes (emphasis added). accepts outset regulation (dating 1960) identifies of, generically, "tort rights," (1991)1—thus extending coverage provision " 'dignitary' tort[s] defamation," ante, 235-236 (footnote Thereafter, simply considers criterion determining rights" stake, issue disagrees my accepting, qualification, IRS's formulation, reasonable interpretation text. Chevron U.S.A. Inc. Natural Resources Defense Council, 467 837, 842-845, 104 2778, 2781-2783, 694 isolation, I suppose, can read encompass noncontractual interest "for Ante, 234 (quoting (1984)). That assuredly not, permissible term. more connotation embraces person (as when consequences auto accident "property damage"),2 perhaps, person's health. 27 "Under decisional phrase denotes primarily body person. At least courts, narrowly term, person, necessarily involve contact injured mere bodily injuries, embrace actionable himself." S. Speiser, C. Krause, Gans, (1983). Black's Dictionary 786 (6th 1990). 29 words go narrow normal here, critical factor, view, appears isolation repeatedly, "[t]he maxim noscitur sociis, word known company keeps, while inescapable rule, wisely applied capable meanings avoid giving unintended breadth Acts Congress." Jarecki G.D. Searle 367 303, 307, 1579, 1582, 859 (1961). "sickness" connotes "[d]iseased condition; illness; [or] ill health," Webster's New 2329-2330 (2d 1950), think companion connote (or mental) almost odd believe first sickness" encompasses defamation, "five feet, two inches" refers pedal extremities. 30 common-sense suggest supported several factors: First, used times each instance sense 104(a)(1) (gross include "amounts workmen's acts sickness added)); 104(a)(3) health insurance 104(a)(4) pension, annuity, similar allowance resulting active armed forces disability annuity payable Foreign Act" added)). When, sandwiched provisions, sees sickness," little what intended, defamation invasions "personal" interests do necessity, victim's health). Second, here exemption, category adopted rule construction, see, Centennial Savings Bank FSB, 499 111 1512, 1519, 113 608 (1991).3 31 then, "received injuries"—viz., "on of" recipients' health—so not. Though quite possible race- sex-based suffer psychological harm, her entitlement depend showing. Whether she experienced disturbances describes, claimant "restor[ed] positio[n] [she] discrimination." 239; 420-421, 2372-2373, (1975) ("[G]iven finding reasons which, generally, frustrate central eradicating throughout economy ."). dignifies status redressable antecedent produced place. Albermarle supra, 2372 ("Title deals character conclude receive (in backpay) reverse Appeals. 32 Secretary's current regulation, IRS, 1, contradicts set forth above. But agencies bound issued scope lawful discretion (at until modified rescinded approriate means, Vehicle Mfrs. State Farm Mutual Automobile Ins. 463 29, 41-42, 103 2856, 2865-2866, 77 443 (1983)), contrary Otherwise, Secretary Treasury effectively empowered repeal enacts. Personnel Management Richmond, 496 414, 427-428, 110 2465, 387 ever-so-rare "taxpayer-friendly" (however inconsistent text) penalties blameworthy failure assessed, Cheek 498 604, 610-612, 617 (1991), control determination owing according Congress's command. 33 Finally (and relatedly), acknowledge reversing rely below. points considered just prudential convenience; observance, vast majority cases, distinguishes our adversary system justice inquisitorial one. Pryce, 291 84, 96, 938 1343, 1355 (Silberman, part). Even so, enough play joints Supreme need render nonexistence apparent face it—particularly reinforce error already prevalent system. Arcadia Ohio 415, 374 here. reasons, concur 35 36 exclude taxable unless "based On assumption reflects dichotomy contract posited dissent, 2-3, good put side line. definite parallels between, say, vindicates plaintiff's name, suit, arguably dignity human judged merit. Our have, indeed, recognized (though different purposes) Goodman Lukens Steel 482 656, 661, 107 2617, 2621, 96 572 (1987) (similarity personal-injury limitations); Wilson Garcia, 471 261, 277-278, 1938, 1947-1948, 85 254 (1985) (same 1983). 37 side, however. While join "intangible injury," 235, VII's limitation ("back pay") counts "tort-type." actions, gainsaid, commonly invariably*) permit 234-237. Back pay, hand, quintessentially contractual 38 further similarity context existing relationship, great resemblance rights guaranteed arising terms conditions contract: ban easily envisioned implied Hishon King Spalding, 69, 74-75, 6, 2229, 2233-2234, 59 (1984) ("Even afford condition [decision promote] fairly made merits, itself impose requirement"); 177, 2378, ("[T]he performance established obligations continuing [are] matters governed VII"). suggested ." Shanor Marcosson, Battleground Divided Court: Employment Discrimination 1988-89, Lab.Law. 145, 174, (1990) sum, tug way. needless harder, outcome follows default construed. (1991); Jacobson, 336 28, 49, 69 358, 369, 93 (1949). accession wealth clearly entails. clear application interpreted Regulation, 40 whom THOMAS joins, dissenting. holds most who secure after suffering recoveries suits This says, "Congress them." 241. agree. fix seek enforce. operation closely analogous determine excludability allows taxpayers defers reasonably interprets received" mean 234; Correll, 389 88 445, 537 (1967). Therefore, asserting type" 43 accept workplace cognizable 239, about point. ("[R]acial fundamental person"); Price Waterhouse Hopkins, 490 228, 265, 1775, 1798, 268 (O'CONNOR, judgment) ("[W]hatever final process, inclusion race consideration both society individual"). disagree Court's assert plaintiffs. Focusing seems me, misapprehends inquiry regulation. same answered reference it. regard arrangements employee. Functionally, operates manner torts: courts free workplace. Like suits, moreover, violations serves public purpose offsetting specific losses. "It prospect 'provide[s] spur catalyst employers unions self-examine self-evaluate practices endeavor eliminate, far possible, last vestiges [discrimination].' 417-418, 2371-2372, N.L. Industries, 479 354, 379 (CA8 1973)). Such fundamentally differs liability, "is imposed protection single, interest, having promises others performed." Prosser, (4th 1971). distinguishable quasi-contractual created prevention unjust enrichment man expense another, restitution conscience belong plaintiff." Ibid. irrelevant profits practices; reassign rightful owner, "eradicat[e] economy." Paper, 2373. 46 found prior occasions, comparison available. (1985), limitations appropriately 1983. looking afforded 1983 essence claim" action." 268, 1943. Of greatest significance designed 1871 civil constitutional post-war South. Because concerned "plainly sounded remained select best "a potential analogies, property infringements liberty." 277, 1947. concluding closest state-law equivalent once emphasized enforceable law: 47 unifying theme reflected language Fourteenth Amendment unequivocally recognizes 'person ' jurisdiction States. Constitution's command 'persons' shall accorded citizenship. person." 48 When asked analogue 1981, again plaintiff. Wilson, clear. 2621. quickly turned actions interference noted partially contracts, "part barring Moreover, "flo[w] guaranteeing engage economically significant activity racially interference." 661-662, 2621-2622. therefore, governing suits. 662, 49 less injurious elsewhere, asserted persons sue §§ 50 additional why taxed. notes awarded leaving impression failing give windfall. 241, 13. Affording benefit, puts footing "[i]f receives damage entire determined injury." 1300 inequity treating litigants like 51 intimates unavailability bears bring. 240,241, 12. Here, apparently assumes expressly address recent occasions. Lytle Household Mfg., 494 545, 549, 1331, 1335, 108 ("This seeking [W]e express here"); Teamsters Terry, 558, 572, 1339, 1348, 519 More importantly, explain relevance suggestion nature. 434 argument, ignores very apply. Instead construing "damages" traditionally defines amount" recovered inclusive renders historical incidents "actions law" "suits equity" proper 52 Finally, asserts changed enacted 1991, Pub.L. 102-166, 1071. By authorizing addition suggests, extended statute's purely losses theory face, before 1991 amendments much aspects employment. always expansive, inequality, 'working environments heavily polluted destroy completely stability minority group workers' 'demeaning disconcerting' Meritor Vinson, 57, 66, 67, 2399, 2405, 2406, Rogers EEOC, 454 234, 238 1971), cert. denied, 406 957, 92 2058, 343 (1972); Henson Dundee, 682 897, 902 1982)). 53 Given historic Congress' decision authorize comparably naturally suggests legislators insufficient effectuate law's settled purposes. guess new mind, legislature out reason itself, explaining "additional needed deter harassment workplace." 2, authoritative evidence added principally goal speculation, guide decision. 54 resting distinguishing recently amended version make today's Nevertheless, remain 264-265, 1797-1798 judgment). reason, respectfully pre-tax figures ranged $573 $928; $114 $186. Pet. Cert. 25a. Insurance Contributions (FICA), 3101 neither below addressed distinct analytical constitutes "wages" taxation FICA 3101(a) (imposing percentage "wages"), 3121(a) (defining "all remuneration employment"). Hence, confine question. circumstances. nn. 12, infra. Compare Circuit's (Title excludable), Thompson 866 709 (CA4 1989) (same). Johnston Harris County Flood Control Dist., 869 1565, 1579-1580 (noting, computing 104(a)(2)), 493 1019, 718, 738 104, "Compensation worker's programs (§ 104(a)(1)), 104(a)(3)), 104(a)(4)). H.R.Rep. 1337, 83d Cong., 2d Sess., (1954); S.Rep. 1622, 15-16 (1954). briefly 104(a)(2)'s predecessor, 213(b)(6) 1918, 1066, restrict 1384, C.B. 71 (1920) (determining, "history legislation" "it probable injuries,' therein only"); Knickerbocker, Income Treatment Damages, Cornell L.Q. 429, 431 (1962), long encompasses, judicial parlance conceptions, 1990); (1983), individual, affecting emotions, character, well. Rickel 900 655, 658 (CA3 1990) judicially well-established injuries' injuries"); Roemer 716 693, 697 (CA9 1983) "says nothing injuries," one"); Rev. Rule 85-98, 1985-2 (holding "makes distinction 1972-2 3, acquiescing Seay 58 32, (1972) embarrassment," "mental strain," reputation" noting rulings regarding alienation affections defamation). B. Bittker Lokken, Taxation Income, Estates Gifts 13-11 1989); Burke Friel, Employment-Related Personal Injury Awards, Mont.L.Rev. (1989). 1989 amendment support notion includes bill involving "physical 101-247, 1354-1355 proposed 11641 H.R. 3299, 101st 1st Sess. U.S.Code Cong. Admin.News 1989, 1906, 2824, 2825). time, 104(a) 101-239, 7641(a), 2379 enactment addressing shows assumed (i.e., compensatory) SCALIA's contention separate "health"-related 244, authorities establish interests. SCALIA implicitly acknowledges plain view. 243-244. nonetheless contends "misapprehen [d] regulation" "[f]ocusing [the] remedies" 249-250. concept inextricably up actions. "nature statute" "type 250. below, 1071, respects. contend apply case. Tr. Oral Arg. 35-36. examine existed November effective Act. 402(a), 1099. Unless otherwise indicated, references "unamended" Some allowed feasible "front pay" earnings. Shore Corp., 777 1155, 1158-1160 1985). modeled National Labor Relations 419-420, 11, (1975); 160(c) (Board "cease desist" unfair labor take "affirmative pay"). Social Security Board Nierotko, 327 66 637, 90 718 (1946). Respondents' attempts prove relying characterizations unpersuasive light statutes' differing schemes. reliance (1987), misplaced, 1981. 35-37. statement (1974), fails. 32. host grounds. 1009-1010. commits attempting analogize 250-252. expansion supports argument inherently 34. Under trial, "future losses, pain, inconvenience, anguish, enjoyment life, nonpecuniary losses," 1073. Unlike act signals change imported time lawsuit. 102-40, pt. 64-65, 602, 603 (Report Committee Education Labor) ("Monetary whole terrible careers, health, self-respect dignity."); p. Judiciary) real effects discrimination."). longstanding IRS. Rev.Rule 72-341, (payments corporation included employees' income, "were received"). define received," succeeding called interpret today ("personal injuries"), descriptive ambit whole. Rev.Rul. Cum.Bull. 51; 22-23. happens, original understanding 1066. (1920). prospectively shelter "punitive connection 2379, (1988 ed., Supp. I); 7641(b). (whereas not) physical, disease; nevertheless, require unnaturally affect mind body. barred N.J.Stat.Ann. 59:9-2(d) (1982) (action entity employee); Wash.Rev.Code 4.20.046(1) estate deceased), still certainly "action tort-type

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