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March 16 — An employer asserting the direct threat defense under the Americans with Disabilities Act must prove only that it reasonably believed an impaired worker's job performance would pose a “significant risk of substantial harm” to himself or others, not that a threat actually existed, the U.S. Court of Appeals for the Tenth Circuit ruled March 16.
Reversing a judgment for the Equal Employment Opportunity Commission, the appeals court said the trial judge erroneously instructed the jury that Beverage Distributors Co. must prove former employee Michael Sungaila, who is legally blind, actually posed a direct threat to the health or safety of himself or others to avoid ADA liability for withdrawing a warehouse job from Sungaila.
Instead, the court said under Tenth Circuit case law, Beverage Distributors would establish the ADA defense by proof it “reasonably determined” Sungaila in the warehouse job posed a significant risk of substantial harm to health or safety and that the risk couldn't be eliminated or reduced by reasonable accommodation.
The trial judge “overstated” the defendant's burden and “required Beverage Distributors to prove more than was legally necessary,” Judge Robert E. Bacharach wrote.
The company “should have avoided liability if it had reasonably believed the job would entail a direct threat; proof of an actual threat should have been unnecessary,” the Tenth Circuit said.
Since the jury might have relied on the erroneous instruction in reaching its verdict for the EEOC, the judgment must be reversed and the case remanded for a new trial, the court ruled.
The trial judge also instructed the jury it should consider the reasonableness of the employer's belief regarding the existence of a direct threat, the EEOC pointed out.
But the judge never explained to the jury why it should consider reasonableness, the Tenth Circuit said.
“Thus, the error was not cured by a reference in the instruction to the reasonableness of the company's subjective belief,” the court said.
“The inaccurate standard appeared prominently in the instruction, and the verdict form directed the jury to consider that erroneous standard,” Bacharach wrote. “Because the instructions and the verdict form could have misled the jury on the standard, we must reverse.”
Judges Timothy M. Tymkovich and Jerome A. Holmes joined in the decision.
The case arose when Sungaila's job with Beverage Distributors in Colorado was eliminated,and he obtained a new, higher-paying position in the company warehouse.
Sungaila passed a required physical exam for the new job, but the doctor said workplace accommodations would be needed to mitigate the risks of a legally blind employee in the warehouse job.
Beverage Distributors decided it couldn't reasonably accommodate Sungaila, and it withdrew the warehouse job offer. Sungaila took a lower-paying job with another employer. The EEOC sued on Sungaila's behalf, alleging the company violated the ADA. A jury found Beverage Distributors liable, but it also found Sungaila had failed to mitigate damages and reduced his back pay award accordingly.
On EEOC's post-trial motions, the district court found the evidence didn't support a failure to mitigate and it restored full back pay. It also granted the EEOC's request for an additional amount to offset the extra taxes Sungaila would incur from a lump sum back pay award.
The Tenth Circuit declined to reach the mitigation of damages issue, saying more evidence likely would be introduced at a new trial and either the issue won't recur or review can take place later.
But the appeals court affirmed the district court didn't abuse its discretion by granting the tax penalty offset.
Beverage Distributors argued an offset was unwarranted because Sungaila's added tax burden wouldn't be “significant.”
But Sungaila can't lighten his tax burden because Congress in 1986 eliminated “averaging” provisions that allowed taxpayers to space out the taxation of lump sums, the court said.
The company also argued no tax offset is appropriate because Sungaila's case is “typical” of prevailing plaintiffs.
But the court has never held that tax offsets are limited to atypical cases, the Tenth Circuit said. “[T]he district court acted within its discretion even if Mr. Sungaila's situation might be considered ‘typical,' ” the appeals court said.
The EEOC in Washington represented the commission. Littler Mendelson represented Beverage Distributors Co.
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Text of the opinion is available at http://www.bloomberglaw.com/public/document/EEOC_v_Beverage_Distributors_Company_Docket_No_1401012_10th_Cir_J/1.
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