Court Opinion

ID: 9489067
Source: CourtListenerOpinion
Date Created: 2023-08-05 13:04:48.191564+00
Date Added: 2024-06-11T17:53:17.972944
License: Public Domain

RYMER, Circuit Judge,
dissenting:
This is a close call but at the end of the day, I believe that whether a settlement consists of back pay that is excludable under 26 U.S.C. § 104(a)(2) turns not on who is making the payment but on what is being compensated. Commissioner of Internal Revenue v. Schleier, — U.S.-,-,- -, 115 S.Ct. 2159, 2164, 2166-67, 132 L.Ed.2d 294 (1995). Arbitrary treatment by a union in breach of its duty of fair representation potentially could cause both personal *877injury and loss of wages.1 In this ease, the parties agreed that Banks suffered a nonphysical, personal injury. However, so far as I can tell, there is no indication that Banks’s lost wages resulted from being out of work because of his intangible personal injuries. Thus, even though the Union’s breach of duty may have caused intangible personal injury, that injury did not cause Banks to lose wages. He lost wages because he was discharged, and because the Union failed to grieve; the personal injury did not affect the amount of back wages recovered. As I read Schleier, the two must be linked in order for a recovery of lost wages to be “on account of’ personal injury. I would, therefore, reverse.

. Although unions don't pay wages, when a union member successfully sues his union for breach of the duty of fair representation for failing appropriately to grieve his wrongful termination, the employee/union member is routinely awarded damages measured by his lost wages. See, e.g., Galindo v. Stoody Co., 793 F.2d 1502 (9th Cir.1986).