Title VII and the Collateral Source Rule: Evaluating the Not-So Equitable Remedy in EEOC v. Consol Energy
Title VII and the Collateral Source Rule: Evaluating the Not-So Equitable Remedy in EEOC v. Consol Energ y
Virginia Calistro 0 1 2
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1 See U.S. EQUAL EMP’T OPPORTUNITY COMM’N, CHARGE STATISTICS (CHARGES FILED WITH
EEOC) FY 1997 THROUGH FY 2017, https://www.eeoc.gov/eeoc/statistics/enforcement/charges.cfm
[http://perma.cc/5ZQB-Z7PP] (Oct. 15, 2017) (reporting an average of 89,889 charges resolved by the
U.S. Equal Employment Opportunity Commission (“EEOC”) between the years of 2014 through2016).
2 See 42 U.S.C. § 2000e-4, -5 (2012) (charging the EEOC with preventing unlawful employment
practices through the investigation and litigation of discrimination claims).
3 See U.S. EQUAL EMP’T OPPORTUNITY COMM’N, OVERVIEW, https://www.eeoc.gov/eeoc/index.
cfm [http://perma.cc/4USU-895X] (identifying the vision of the EEOC as “JusticeandEqualityinthe
Workplace” and their mission to put a stop to, and remedy, unemployment discrimination).
4 Complaint and Jury Trial Demand at 1, 6–8, U.S. Equal Emp't Opportunity Comm'n v. Consol
Energy, Inc., 860 F.3d 131 (4th Cir. 2017) (No. 1:13CV00215), 2013 WL 5397409 (statingthe nature
of the action as an effort to remedy the unlawful discrimination against Beverly Butcher by Consol
Energy and praying for relief in the form of a p ermanent injunction,
compensationforemotionaldamages, past and future losses to income, and punitive damages).
whose award of nearly half a million dollars in damages was affirmed by the
U.S. Court of Appeals for the Fourth Circuit in U.S. Equal Employment
Opportunity Commission v. Consol Energy, Inc . in 2017. 5 In rendering this dec
ision, the Fourth Circuit clarified its own position regarding the incorporation
of fringe benefits into an equitable damages award : that all benefits not issued
directly by the employer to the employee are considered collateral and ther
efore cannot be offset from an award of front or back pay. 6 This rule is similar
to the position adopted by the U.S. Court of Appeals for the Third and Seventh
Circuits, and at odds with the discretionary approach advocated by the U.S.
Court of Appeals for the First, Second, and Fifth Circuits.7
This Comment argues that the Fourth Circuit erred in removing a matter
of discretion from the capable determination oftrial courts.8 This Comment
further argues that the Second Circuit hasadopted a rule that better fits the
statutory goals of Title VII , specifically that of providing an equitable remedy
to the victim of unlawful discrimination.9 Part I of this Comment introduces
the collateral source rule, discusses the split in authority betweenfederal courts
of appeals regarding the offset of certain benefits from damage awards, and
examines the factual and procedural history of Consol Energy.10 Part II of this
Comment discusses the different approaches the Fourth Circuit has takenin
categorizing fringe benefits over time.11 Finally, Part III advocates for a rule
affording district courts broad lati tude in deciding issues of equitable relief. 12
I. OVERVIEW OF THE COLLATERAL SOURCE RULE
Courts have adopted a number of different approaches in calculating
damage awards following employment discrimination verdicts. Section A of this
Part examines the remedy provision of Title VII and describes theinterplay
between the collateral source rule and damage awards. Section B of this part
5 860 F.3d at 140, 152 (affirming the district court’s award of $434,860.74 in damages).
6 Id. at 149 (discussing the court's treatment of pension payments as a collateral source).
7 See Gelof v. Papineau, 829 F.2d 452, 455 (3d Cir. 1987) (holding that unemployment compe
nsation payments could not be offset from back pay awards); McDowellv.AvtexFibers,740F.2d214,
110–11 (3d Cir. 1984), vacated on other grounds , 469 U.S. 1202 (1985) (concluding that it is
impermissible to deduct pension plan benefits from back pay awards); Craig v. Y & Y Snacks, Inc., 721
F.2d 77, 85 (3d Cir. 1983) (rejecting the argument that deductibility questions should be left within
the trial court’s discretion). But see Dailey v. Societe Generale, 108 F.3d 451, 460 (2d Cir. 1997)
(holding that district court s may exercise discretion in offsetting unemployment benefits from a back
pay award); Lussier v. Runyon, 50 F.3d 1103, 1107 (1st Cir. 1995) (affirming the decision by the
United States District Court for the District of Maine to offset a lump sum pension payment from a
front payaward) ; Guthrie v. J.C. Penney Co., 803 F.2d 202, 210 (5th Cir. 1986) (orderinganoffs etfor
retirement plan benefits from an age discrimination damage award).
8 See infra notes 110–122 and accompanying text.
9 See infra notes 118–122 and accompanying text.
10 See infra notes 13–51 and accompanying text.
11 See infra notes 55–95 and accompanying text.
12 See infra notes 98–102 and accompanying text.
details the split of authority regarding the application of the collateral source
rule to retirement benefits.
A. Fringe Benefits as Collateral Source Benefits
According to the U.S. Supreme Court, Title VII of the Civil RightsAct of
1964 (“Title VII”) has two primary objectives: ending unlawful discrimination
in the workforce, and making victims whole who have endured unlawful di
scrimination.13 To achieve these ends, the enforcement provision of Title VII
provides courts with a full suite of equitable remedies and broad discretion in
fashioning damage awards, which are determined in a separate evidentiary
hearing following a jury verdict. 14 These evidentiary hearings feature testim
ony from economic experts on both sides, each attempting to quantify the mon
etary benefits the victim would have received but for the unlawful
discrimination.15 One issue during such proceedings is whether fringe benefits should be
classified as either collateral sources or interim earnings.16
Under the collateral source rule, benefits received by a plaintiff wholly
independent of and collateral to the tortfeasor do not diminish the damages the
plaintiff can receive.17 This ensures that tortfeasors are not able to minimize
their liability simply because the victim received incidental ben efits as a result
of the tort. 18 Generally speaking, payments that serve as additional compens
ation from a source other than the employer are categorized as collateral. 19 This
distinction becomes less clear when an employer bears some financial respo
nsibility for a payment received by an aggrieved employee, but the payment
itself is issued by a third party. 20 For example, state -issued unemployment be
nefits funded by mandated tax contributions from the employer cannot be said
to be entirely distinct from the em ployer’s responsibilities to the employee. 21
Thus, courts have reached different conclusions regarding the offset of
nonwage compensation that is partially or entirely funded by the employer.22
The Supreme Court considered the issue of collateral sources within the
context of an employment discrimination pay award in its 1951 decision,
National Labor Relations Board v. Gullet Gin Co .23 The Court held that the N
ational Labor Relations Board (“NLRB”) was correct not to deduct payments
from the state unemployment fund in its calculation of a back pay award, even
though the unemployment payments were partially funded through employer
tax contributions.24 The Court concluded that the unemployment payments
belonged to an independent social policy because the employer maintained a
duty to make contributions independent from the employee's right to receive
the benefits. 25 The payments were not derived from a distinct obligation to the
aggrieved employee (as per a settlement agreement, for example) and were
therefore determined to be collateral in nature.26 Accordingly, the Court
reasoned that the injured employee was not made more than whole in receiving
both the pay award and unemployment compensation.27
B. Applying the Collateral Source Rule to Retirement Benefits
Despite this precedent, there continues to be a clear divide among federal
courts of appeal on whether employer-funded benefits should be offset from
from both medical payments coverage and other sources has long been both recognized and accepted
in Arizona and elsewhere.”).
20 See Hamlin v. Charter Twp. of Flint, 165 F.3d 426, 435 (6th Cir. 1999) (engagingin a
prolonged analysis to determine if a disability pension is collateral).
21 See Phillips v. W . Co. of N. Am., 953 F.2d 923, 931 (5th Cir. 1992) (recognizing the collateral
source determination as necessitating consideration of not only the source of the benefits but of their
character as well).
22 Compare Orzel v. City of Wauwatosa Fire Dep’t, 697 F.2d 743, 756 (7th Cir. 1983) (affirming
the order of a United States Magistrate to deduct unemployment compensation benefits from a back
pay award under the Age Discrimination in Employment Act), with Craig, 721 F.2d at 85 (adoptinga
rule that unemployment benefits may never be deducted from a back pay award under Title VII).
23 N.L.R.B. v. Gullet Gin Co., 340 U.S. 361, 363 (1951).
24 See id. at 364 (disagreeing with the defendant’s argument that the payments constitute direct
benefits rather than collateral payments).
25 See id. (citing In re Cassaretakis, 289 N.Y. 119, 126 (1942) (creatingthedistinctionbetween an
employer’s duty to its employees versus its duty to the State)).
26 See id. (noting that the payments were not made to discharge the employer ofliabilityforthetort).
27 See id. at 365 (concluding that the employee was not overcompensated).
back and front pay awards as a matter of law. 28 The U.S. Court of Appeals for
the Third and Seventh Circuits have both incorporated the analysis of Gullet
Gin Co. into their determinations that benefits funded in part by the tortfeasor
should be deemed collateral sources and, accordingly, remain exempt from
award reductions.29 By contrast, the U.S. Court of Appea ls for the First,
Second, and Fifth Circuits have specifically declined to issue a rule barring an
offset for retirement benefits by labeling such payments as collateral source
income.30 In doing so, the courts have reduced damage awards arising out of
successful employment discrimination litigation by the amount collected in
retirement benefits following discharge.31
The Third and Seventh Circuits have implemented a rule against
offsetting employer -funded benefits, also known as fringe benefits, from an award of
back or front pay when such payments are received incidentally as a result of
the wrongful discharge or involuntary retirement in employment
discrimination cases.32 In McDowell v. Avtex Fibers, Inc., the Third Circuit specifically
considered the question of offsetting pension benefits from a back pay award
in an age discrimination settlement and concluded that doing so was improper
for a number of interrelated reasons. 33 First, allowing such an offset would u
n28 See Equal Emp’t Opportunity Comm’n v. O’Grady, 857 F.2d 383, 389–91 (7th Cir. 1988)
(following the U.S. Court of Appeals for the Third Circuit in adopting a “flat ruleforbidding thesetoff
of pension . . . benefits”); McDowell, 740 F.2d at 217 –18 (holding that pension plan benefits are
collateral). But see Guthrie, 803 F.2d at209– 10 (stating that retirement benefitscoming
fromanemployer are not collateral and should be offset from a damages award); Hagelthorn v. Kennecott Corp., 710
F.2d 76, 86–87 (2d Cir. 1983) (offsetting pension benefits from an award of back pay).
29 See O’Grady, 857 F.2d at 389–91 (noting with approval the reasoning in Gullet Gin that
retirement benefits belong to a state policy rather than the policy driving discrimination pay awards);
McDowell, 740 F.2d at 217 –18 (citing to Gullet Gin in reaching its determination that awards of back
pay should not be affected by pension payments received following termination).
30 See Lussier, 50 F.3d at 1111 (rejecting the invitation by claimants to create a bright-line rule
forbidding the deduction of collateral source payments); Guthrie, 803 F.2d at 209–10 (holding that
payments from a retirement fund are not collateral); Hagelthorn, 710 F.2d at 86 –87 (omitting
reference to the collateral source rule in affirming a decision to offset pension payments from a damages
31 See Lussier, 50 F.3d at 1113 (affirming a decision to reduce a front pay award by the excess
compensation received in retirement benefits);Guthrie, 803 F.2d at 210 (ordering that a back pay
award be reduced by amount of pension payments received); Hagelthorn, 710 F.2d at 87 (finding no
error in the decision to offset a back pay award by a portion of the lump sum pensi on payment collec
ted following retirement).
32 O’Grady, 857 F.2d at 389–91; McDowell, 740 F.2d at 217–18. Back pay and front pay are
among the remedies explicitly authorized by the remedy provision of Title VII. 42 U.S.C. §
2000e5(g)(1) (2012). Back pay , awarded in most employment discrimination cases, compensates individuals
for the wages and other employment benefits she would have enjoyed had she not suffered unlawful
discrimination. See Moody, 422 U.S. 405 at 421 (stating that back pay should be consistently granted
in Title VII cases in order to further the statutory purposes of the Act). Front pay exists to compensate
a victim of discrimination for her future lost earnings in the event that reinstatement is not possible or
appropriate. See Duke v. Uniroyal, Inc., 928 F.2d 1413, 1423 (4th Cir. 1991) (explainingtheawardof
front pay as an alternative remedy to reinstatement).
33 McDowell, 740 F.2d at 217–18.
dermine the mission to end workplace discrim ination by reducing the damages
owed by the defendant.34 Second, as noted by Gullet Gin Co., pension plans
are intended to serve a larger social policy and are therefore collateral despite
being funded through employer contributions. 35 Lastly, and most importantly
in the view of the Third Circuit, allowing a deduction would provide a windfall
to the discriminatory employer by significantly reducing the amount of liqu
idated damages the employee would be entitled to otherwise.36
In 1988, the Court of Appeals for the Seventh Circuit similarly adopted a
flat rule barring an offset for pension payments inEEOC v. O'Grady.37 The
court cited with approval the Third Circuit's reasoning that pension plan
benefits are independent in nature because they belong to a social policy separate
from that dictating payment for lost wages.38 The Seventh Circuit, however,
went further in articulating its sympathy for discrimination plaintiffs by
acknowledging the possibility of double compensation for the claima nt, and
concluding that such an outcome was preferable to giving a break to the emplo
yer.39 Simply put, the court stated its acceptance for occasionally providing a
windfall to the victim of discrimination.40
By contrast, the U.S. Court of Appeals for theFirst, Second, and Fifth
Circuits have avoided adopting this rule, instead emphasizing the need to
retain discretion over the offset of such benefits to ensure that pay awards are
calculated equitably and in accordance with the idiosyncraticcircumstances of
each case.41 In 1983, the Second Circuit engaged in a lengthy analysis in
Hagelthorn v. Kennecott Corp., to determine whether the plaintiff received a
larger pension payment from his early discharge than he would have had he
34 Id. at 217 (reasoning that every reduction to a discrimination damage award servesto dil utethe
purpose of ending discrimination).
36 See id. (finding that a reduction in the amount of liquidated damagesowedprovidesa benefitto
the tortfeasor, a result which is offensive to the intention of the discrimination statute).
37 O’Grady, 857 F.2d at 390.
38 Id. The court identified the Third Circuit as a persuasive authority on the interplay between
retirement benefits and damage awards because of the number of cases in which the Third Circuithas
applied a flat rule barring offset. Id. The court vaguely defines the social policy backing
unemployment and retirement benefits as “social betterment for the benefit of the entire state.”Id.
39 See id. at 391 (noting that refusing an offset for the pension benefits will allow the claimant to
enjoy the benefits of both working and not working, but that such a windfall is preferable when the
alternative is a “discrimination bonus” for the tortfeasor).
40 See id. (acknowledging with approval that the plaintiff in question would be overcompensated
by the adoption of the rule barring offset).
41 Lussier, 50 F.3d at 1110–11 (1st Cir. 1995) ; see Guthrie, 803 F.2dat210 (rejectingthecreation
of a rule that would forbid the offset of pension plan benefits from a back pay award);Hagelthorn,
710 F.2d at 87 (finding that the value of pension benefits was properly offset from a back pay award
because the plaintiff received a greater lump payment at the time of his discharge than he would have
received had he retired as planned).
retired at normal retirement age.42 The court concluded that the plaintiff was
better situated by receiving the payments earlier and an offset was accordingly
due to avoid overcompensation. 43 Similarly, in Lussier v. Runyon in 1995, the
First Circuit affirmed an offset on the basis that an unlawful discharge
triggered increases to other streams of income, putting the plaintiff in a better sit
uation financially than if he had not been discharged at all. 44 These courts thus
emphasized evaluating the totality of circumstances in order ot arrive at the
most equitable damages award.45
The Fifth Circuit approached the question of offsetting pension payments
more generally in its 1986 decision of Guthrie v. J.C. Penney Co. 46 There, the
Fifth Circuit distinguished between pension payments and the unemployment
benefits discussed in Gullet Gin Co. by noting that the unemployment benefits
derive from a public benefit plan with legislatively -mandated employer contr
ibutions, whereas pension payments are funded from a company's general a
ssets.47 Thus, the court determined these two benefits to be categorically distinct
and requiring different treatment.48
The Fourth Circuit added a new variation to this circuit split in EEOC v.
Consol Energy.49 There, the court relied upon a distinction between retirement
benefits paid from a singl-eemployer pension plan and retirement benefits
housed in a collective fund in refusing to offset to an award of front and back
pay by the amount received in pension payments .50 The effect of this holding
is to vary a discrimination damage award based on the type of pension admi
n42 See Hagelthorn, 710 F .2d at 86 –87 (comparing the lump sum payment receivedbytheplaintiff
at age sixty-three with the payment that he would have received at age sixty -five and concluding that
the greater life expectancy possessed at the time of his unlawful discharge resulted in a larger lump
43 Id. The award was reduced by the difference between the two lump sum amounts. Id.
44 See Lussier, 50 F.3d at 1106. The plaintiff received VA benefits for a military -service related
disability, which were significantly increased as the result of his discharge. Id.
45 Id. at 1111; see Hagelthorn, 710 F.2d at 86– 87 (evaluating the calculationofthedamageaward
based on the specific idiosyncratic circumstances surrounding the plaintiff's discharge).
46 See Guthrie, 803 F.2d at 209– 10 (determining that back payawards shouldingeneralbereducedby
amounts received from a retirement fund).
47 See id. (reasoning that unemployment benefits are funded by contributions the employer is
statutorily obligated to make, but that pension payments are simply “not collateral”). The court does
not acknowledge the possibility that employers may be under a similar legal obligation to contribute
to a retirement fund. See id. (noting an absence of such discussion).
48 See id. (refusing an offset for social security benefits while ordering that theback payawardbe
reduced by the total amount received in pension payments).
49 See Consol Energy, 860 F.3d at 149 (adopting a rule forbidding fringe benefits to be offset
from a discrimination award of front pay or back pay in the absence of two exceptions: when the
payment is made directly by the employer to the employee as a form of compensation, and when the
payment is made in an effort to relieve the employer of liability for the tort).
50 See id. (reasoning that a deduction for the pension payments was not owed because they were
issued by a commingled fund with a third-party administrator).
istration a company chooses to utilize rather than the individual circumstances
in each case, thus tending towards inequitable results.51
II. COMPOUNDING THE SPLIT IN AUTHORITY
EEOC v. Consol Ener gy is the most recent discussion of the deductibility
of retirement benefits from a discrimination damage award emerging out of the
U.S. Court of Appeals for the Fourth Circuit.52 Section A of this Part details
the factual background, procedural history, and holding of Consol Energy.53
Section B of this Part discusses the varying ways in which the Fourth Circuit
has categorized pension payments over time.54
A. Facts and Procedural History of United States Equal Employment
Opportunity Commission v. Consol Energy
In June 2012, Robinson Run Mine, a subsidiary of Consol Energy, Inc., i
mplemented the use of a biometric hand scanner for the purposes of tracking its
workers’attendance. 55 This systemrequiredall hourlyemployees toplace a hand
in the scanner upon the start and end of a shift. 56 Upon learning of this new sy
stem, Beverly Butcher, a thirty-seven-year employee of Robinson Run Mine,a
pproached mine superintendent, Michael Smith, and human resource manager,
Chris Fazio, to inform them of a religiously based objection to the new techno
logy.57 As an evangelical Christian, Butcher believed the scanner rendered him
with the invisible “Mark of the Beast” thus dooming him to eternal damnation. 58
Smith and Fazio requested that Butcher put this concern into writing, and
Butcher accordingly provided a letter detailing his belief on June 18, 2012. 59
Smith and Fazio then contacted the manufacturer of the hand scanner, who
drafted a response offering Butcher an alternative interpretation of the bible
passage discussing the “Mark of the Beast” and suggested that use of the left
hand eliminated the risk. 60 Butcher maintained his objection, and was then i
nformed by Smith and Fazio that he would be expected to use the hand scanner
and would be disciplined for failure to comply in accordance with the clock -in
policy in place.61
Faced with the choice of being branded by the scanner or being termina
ted, Butcher tendered his retiremen6t2. Shortly thereafter, Butcher became
aware that accommodations had been made for two of his colleagues who were
physically incapable of using the hand scanner.63 The EEOC brought an
enforcement action against Consol Energy on September 23, 2013, in the United
States District Court of West Virgin ia.64 The complaint and jury trial demand
alleged a violation of Title VII, which requires employers to reasonably
accommodate the religious practices and sincerely held beliefs of employees to
the extent that they are able to without suffering undue hardship. 65
In its complaint and jury trial demand, the EEOC alleged that Consol E
nergy maliciously denied religious accommodation to Butcher. 66 For relief, the
EEOC sought a permanent injunction to enjoin Consol Energy from future r
eligious discrimination, compensation for lost earnings, both endured and
expected, emotional damages, and punitive damages .67 The jury found that Title
VII’s reasonable accommodation provision had been violated and awarded
60 Id. at 8 ( explaining that the letter interpreted a different passage from the Book of Revelation
than the one Butcher cited in his objection letter, and stated that the antichrist brands only the right
hand and forehead, rendering the left hand safe for scanning).
61 Id. at 13 (noting that Consol adopted a Hand Scanner Policy imposing escalating penalties for
each missed scan, culminating in effective termination after a fourth occurrence).
63 Id. at 10. Two miners with missing fingers were authorized to manually enter their employee
identification numbers to record their attendance. Id.
64 Complaint and Jury Trial Demand, supra note 4, at 1.
65 42 U.S.C. § 2000e-2 (2012). The anti-discrimination statuteplacesanaffirmativeobligationon
employers to ensure that the employee’s religious needs are met in the workplace. Id. For example,
where there is an overlap between an employee's work schedule and times of worship, the employer
has an obligation to remedy the conflict. See 29 C.F.R. § 1605.2 (2018) (providing methods of allev
iating a religiously-based scheduling conflict). Undue hardship is defined as “more than a de minimis
cost.” Id. Complaint and Jury Trial Demand, supra note 4, at 1. Butcher first sought to redress his
grievance through his labor union, which was forced to withdraw its complaint after finding that the
labor agreement with Consol did not include a requirement to make reasonablereligious accommod
ations. Consol Energy, 860 F.3d at 139.
66 Complaint and Jury Trial Demand, supra note 4, at 6.
67 Id. at 7–9. Title VII provides courts with discretion to issue a broad range of equitable
remedies, including injunctive relief, reinstatement, backpay,frontpay,compensatorydamages,attorneys ’
fees and costs, or “any other equitable relief as the court deems appropriate.”42 U.S.C. §
2000e5(g)(1). “Injunction” is defined as an order prohibiting the doing of certain acts. Injunction, BLACK’S
LAW DICTIONARY (10th ed.2014).
$150,000 in compensatory damages. 68 The district court did not find evidence
to support an award of punitive damages. 69 At an evidentiary hearing on
equitable remedies, the district court awarded Butcher $436,860.74 in front pay,
back pay, and lost benefits, and ordered an injunction against Consol Energy
prohibiting further violations of Title VII.70 In doing so, the court rejected
Consol’s contention that the pension benefits Butcher received after retiring
should be offset from the award.71
Consol Energy appealed to the U.S. Court of Appeals for the Fourth Ci
rcuit, filing three post-verdict motions, all three of which were denied in the
decision rendered June 12, 2017. 72 The first contended that judgment as a ma
tter of law was due because there was insufficient evidence of a conflict
ebtween Butcher’s religious belief and the requirement to use the hand scanner. 73
The court rejected this argument, citing to ample evidence that Butcher’s si
ncerely held beliefs were in conflict with the requirement that he participate in
the hand scanner program, and thus found that he necess itated reasonable
accommodation.74 Consol Energy also moved for a new trial, positing that the
68 Consol Energy,860 F.3d at140. The reasonable accommodation provisionis violatedwhenan
employee can prove that he possessed a sincerely held religious belief that stood in conflict with a job
requirement, the employee made a supervisor aware of such conflict, and was subsequently
disicplined for not performing the duty in conflict. Id.
69 Id. at 136.
70 Id. at 140. Back pay provides lost earnings from the time of discharge through the date of
settlement. Saulpaugh v. Monroe Cmty. Hosp ., 4 F.3d 134, 145 (2d Cir. 1993). Front pay exists to
compensate a victim of unlawful discrimination for her lost future earnings in the event that reinstatement
is unavailable. Duke v. Uniroyal, Inc., 928 F.2d 1413, 1423 (4th Cir. 1991). The courts consider a
number of factors in determining whether to award front pay over reinstatement, including the exis
tence of hostility between the former employer and victim, a lack of suitable available positions, and
the victim’s proximity to retirement age. Id.
71 Report or Affidavit of Dr. Sovan Tun, Ph.D., supra note 15, at 3 . Also disputed at the post -trial
remedial hearing was Butcher ’s mitigation of damages, with Consol Energy arguing that Butcher did
not undertake reasonable efforts to find another position within the coal industry because obtaining
such employment would cause his pension payments to cease. Plaintiff EEOC’s Post- Trial Brief
Regarding Back Pay and Front Pay Remedies at 18, Consol Energy, 860 F.3d 131 (No. 1:13- cv-00215),
2015 WL 782931. The Fourth Circuit rejected this argument, finding that Butcher was reasonably
diligent in accepting an alternative, lower-paying position after attending numerous job fairs in the
mining industry without success. Consol Energy, 860 F.3d at 148–49.
72 Consol Energy, 860 F.3d at 140–41. The motions filed by Consol were as follows: (1)
Judgment as a Matter of Law per Rule 50(b) of the Federal Rules of Civil Procedure, arguing that EEOC
failed to satisfy its burden to es tablish a prima facie ca se of a Title VII violation; (2)MotionforaNew
Trial per Rule 59 of the Federal Rules of Civil Procedure, contending that the jury verdict accepted by
the court was excessive; and (3) Motion to Amend per Rule 59 of the Federal Rules of Civil
Procedure, disputing the award of front and back pay. Id.
73 Id. at 131. Consol argued that Butcher took issue not with the particular hand scanner
implemented by the mine but rather with a technological trend towards the tracking of biometric data in
general. Id. at 132. As evidence for this proposition, Consol cites to Butcher ’s June 18 letter, in which
he wrote, “[e]ven though this hand scanner is not giving a number or a mark, it is a device leading up
to that time when it will come to fruition.” Id. at 132.
74 Id. at 142.
district court erred in rejecting the first verdict returned bythe jury. 75 The court
denied this motion as well, finding that the district court acted properly in cla
rifying the law and correcting juror confusion. 76 Finally, Consol Energy made a
motion to amend Butcher’s damages, arguing that it was entitled to an offset
against the award for the pension benefits received by Butcher after his retir
ement.77 The court also rejected this argument, holding that a pension is a
collateral source and therefore should not be included in the calculation of a front
or back pay award.78
B. Competing Jurisprudence in the Fourth Circuit
In Consol Energy, the Fourth Circuit employed a categorical approach in
order to clarify its own conflicting position on the offset of employer-funded
benefits from discrimination pay awards.79 In 1985, in Fariss v. Lynchburg
Foundry, the Fourth Circuit affirmed an offset of the lump sum pension
payment from the plaintiff’s damage award following an age discrimination
claim.80 In doing so, the courtexamined the totality of circumstances and
found the plaintiff enjo yed a significant financial gain as a resu lt of his unla
wful termination. 81 The court reasoned that because the plaintiff had opted for a
lump sum and forgone a survivorship option, he was only able to collect the
pension because of his discharge .82 Had he continued working until he passed
away, he would not have collected a pension at all. 83 Thus, the court held that
because the plaintiff was placed in an economically superior position by virtue
of collecting his pension earlier, it was necessary to deduct said lump sum in
an effort to avoid creating a windfall.84
This decision appeared at odds with the Fourth Circuit’s ruling in 2010 in
Sloas v. CSX Transportation, where the court held that an employer was not
entitled to an offset for the portion of the disab ility benefits the employer had
funded.85 In arriving at this conclusion, the court stated that fringe benefits are
always considered collateral except when the benefit is provided as com
pensation for the injury in question. 86 This means that a damages award may only be
reduced by the amount of payments made in an effort to relieve the employer
of liability; all other fringe benefits are deemed incidental and excluded from
The Fourth Circuit acknowledged the discrepancy betweeSnloas and
Fariss in Consol Energy, and resolved it in favor of the Sloas court’s
interpretation.88 In doing so, the court reiterated the distinction between payments made
directly to the employee by the employer and payments that are ordered and a
dministered by a third party.89 The court categorized the lump sum in Fariss as a
direct payment because it was issued by the employer to the employe9e0. In
terms of damages, this type of direct payment requires a corresponding reduction
in an award of front o r back pay. 91 In Consol, by contrast, the employer pension
contributions were sent to a third party fund managed and administered by
Butcher’s union. 92 The court stated that this separation between the time of co
ntribution and time of payment indicated that the pension was standard
component of Butcher’s compensation.93 As such, the court argued that providing an
85 See 616 F.3d at 389 (holding that the United States District Court for the District of West Virginia
did not err in refusing to offset disability payments from an injured railroad worker’s negligence award).
86 See id. at 390 (creating a binary test distinguishing between payments that the employer has
voluntarily taken to indemnify itself against possible liability, and all other benefits).
87 See id. (finding that all benefits arecollateral aside from those made toindemnifytheemployer
from tort liability).
88 See Consol Energy, 860 F.3d at 150 (acknowledging that, if read broadly, theholdings of Sloas
and Fariss are in conflict).
89 Id. at 149 ( observing that Consol Energy made contributions to a collective fund managed by
the United Mine Workers Association as per a requirement in its collective bargaining agreement).
90 Id. (placing an emphasis on the fact that in Fariss, the payment was made directly to the
employee from the employer without passing through a commingled fund).
91 See Equal Emp’t Opportunity Comm’n v. O’Grady, 857 F.2d 383, 391 (7th Cir. 1988) (noting
that a payment direct from the employer is not collateral, and therefore should be offset against a
92 Consol Energy,860 F.3dat150. Factors that other circuits have looked toinorder todetermine
if a pension is a collateral source include the following: (1) the employee ’s contributions to the plan,
(2) the existence of a collective bargaining agreement providing the terms of the pension, (3) whether
the plan contemplates injuries sustained both at and outside of work, (4) the employee’s service
requirements in earning the pension, and (5) the presence of a se-toff provision in the event of a tort
action. See Hamlin v. Charter Twp. of Flint, 165 F.3d 426, 435 (6th Cir. 1999) (citing the same set of
factors for evaluating whether pension benefits were collateral); Phillips v. W. Co. of N. Am., 953
F.2d 923, 932 (5th Cir. 1992) (citing a list of five factors useful in determining if a payment is a fringe
93 Consol Energy, 860 F.3d at 149–50.
offset for the pension would allow Consol to unjustly reduce its liability9.4 In
other words, a reduction in the damages award for the pension payments would
allow Consol to escape a portion of financial responsibility for its unlawful
III. REDIRECTING THE FOURTH CIRCUIT
The Fourth Circuit Court of Appeals has been inconsistent in its treatment
of deductions for pension payments over time. 96 This Part examines the unr
esolved conflict in EEOC v. Consol Energy , and argues for an approach to ca
lculating damage awards that emphasizes the principles of equity.97
There are a number of general policy considerations underpinning the co
llateral source rule that have contributed to its widespread adoption. 98
Unfortunately, none of these rationales are cited by the U.S. Court of Appeals for the
Fourth Circuit in its confusing and perhaps even contradictory approach to the
offset of benefits funded in whole or in part by the employer9.9 Instead, the
Fourth Circuit relied on arbitrary distinctions to create a policy through which
two identically situated claimants may receive widely variant remedies, a r
esult that is antagonistic to both the remedy provision of Title VII and the
nature of equitable damages.100
It is first necessary to examine the competing stances inFariss v.
Lynchburg County and EEOC v. Consol Energy on the categorization of pensionben
efits.101 The holding in Fariss is clear: a fringe benefit triggeredbyanemployee’s
unlawful discharge may be reduced from an award of damages if it places the
employee in an economically superior position than had the discharge never
occurred.102 The court arrives at this conclusion not by labeling the pensionbenefit
interim earnings, but rather by referencing the principles of equity , conductinga
holistic examination of the damage award,and concluding that offsetting the
lump sum pension payment is necessary to avoid a windfall.103
In Consol Energy, the Fourth Circuit states that it need not address this
holding from Fariss because Consol is decided on a significantly different set of
facts; namely, that the pension payment inFariss came directly from the
employer whereas the pension payments in Consol were distributed by the
thirdparty union.104 This is an artificial distinction for the purposes of determining
whether the pension represents interim earnings or collateral payments1.05 In
both cases, the sole funder of the pension payments was the employer, and the
benefits arose out of a contractual employment agreement that made
contributions contingent upon the length of the plaintiffs’ service1.06 Furthermore, the
plaintiff in either instance received a clear monetary advantage from collecting
his pension at an earlier date.107 Thus, the pension benefits were from similar
sources, were similar in nature, and provided similar windfalls to the plaintiff,
creating clear tension that remained unresolved in Consol Energy.108 Despitethis
close resemblance of facts, Fariss resulted in an offset, and Consol did not.109
The Fourth Circuit’s adoption of this narrow, categorical approach to d
etermining damage questions undermines the statutory intent of Title VII’s re
medy provisions. 110 Title VII calls for equitable relief to be provided in the wake
of unlawful discrimination. 111 It is necessary to conduct a thorough analysis of
a situation’s particularities to ensure that the victim is returned to his or her
rightful position monetarily.112 Imposing a rule that automatically triggers or
blocks an offset on the basis of a technical distinction is adverse to the
essential goal of equity in Title VII discrimination cases .113
Advocates of the bright line rule from the Fourth Circuit would likely
counter that allowing the deduction of pension and other fringe benefits from
award of front and back pay undermines Title VII’s statutory objective of
deterring discrimination in the workplace.114 Rendering a plaintiff more than
whole, however, achieves a punitive effect on the tortfeasor, which is
inconsistent with Title VII’s objectives. 115 Punitive remedies are provided for in the
statute and acknowledged by the Fourth Circuit to be available only in limited
circumstances.116 It thus exceeds the scope of the e quitable remedy provision
to force the employer to pay twice for the same injury.117
The U.S. Court of Appeals for the Second Circuit has adopted anp-a
proach for handling collateral source determination that better aligns with the
nature of equitable awards. 118 Following the court's earlier decisions disfavo
ring the bright line approach to the deductibility of fringe benefits, the Second
Circuit acknowledged the compelling reasons why a district court might
decline to offset benefits partially funded by the employer in Dailey v. Societe
Generale in 1997. 119 Specifically, the court noted the distasteful possibility of
conferring a windfall to the wrongdoer.120 Despite this, the court retained its
position that, as the forum with the soundest understanding of the i
diosyncrasies of the situation, the question of offset should remain firmly within the di
scretion of the di strict court.121 This approach ensures that victims of unlawful
employment discrimination are made whole without overstepping the bound
aries clearly laid out by the statutory text of Title VII. 122
When considering how to best correct the injustice of unlawful
employment discrimination, district courtsshould be provided the opportunity to
weigh every fact and circumstance of each individual plaintiff. The ability to
examine facts and determine damages on a case-by- case basis is hampered by
the adoption of a bright line rule classifying certain fringe benefits as collateral
sources rather than interim earnings. By labeling a fringe benefit a collateral
source, the damage award is not reduced by amounts already paid by the e
mployer to the employee. The U.S. Court of Appeals for the Fourth Circuit erred
in adopting such a categorical approach, and in doing so, came in direct
conflict with its previous decisions which emphasized the need to evaluate the
award in terms of equity rather than rigid rules. Moving forward, the holding
in EEOC v. Consol Energy may result in awards that exceed the scope of the
enforcement provision of Title VII and lead to widely variant damage awards
for similarly situated victims of employment discrimination.
Preferred cite: Virginia Calistro, Comment, Title VII and the CollateralSourceRule:Evaluatingthe
Not-So Equitable Remedy in EEOC v. Consol Energy, 59 B.C. L. REV. E. SUPP. 263 (2018), http://
note 100, at 346 (explaining the primary purpose of any equitable remedy as placing the employee in
the position he would have enjoyed but for the unlawful discrimination suffered).
119 Dailey, 108 F.3d at 461 ( observing that a wrongfully dischargedemployeelikelysuffersmany
non-compensable and incidental losses, and therefore the additional burden should rest withtheparty
more capable of paying).
120 See id. (noting that declining to reduce a back pay award by the amount of a fringe benefit
may result in a windfall for the discriminatory employer).
122 42 U.S.C. § 2000e-5(g)(1); see Moody,422 U.S. at417 –18 (identifying the twin aims of Title
VII to be ending unlawful discrimination in the workforce and making whole victims who have
endured unlawful discrimination); Dailey, 108 F.3d at 461.
13 42 U.S.C. § 2000e ( 2012 ) ; see Albemarle Paper Co . v. Moody , 422 U.S. 405 , 417 ( 1975 ) (d eriving the statutory aims of Title VII from the 1972 Conference Committee Report, where Congress voted against limiting the enforcement provisions of the Act) .
14 See 42 U.S.C. § 2000e-5(g)(1) (providing for injunctive relief, including reinstatement, back pay, front pay, compensatory damages, attorneys ' fees and costs, or “any other equitable relief as the court deems appropriate”) ; see , e.g., Consol Energy , 860 F. 3d at 140 (stating that an evidentiaryhearing followed the jury verdict to determine an equitable remedy) . In some circuits, quantification of a front pay award is a matter for the jury . See Fite v. First Tenn. Prod. Credit Ass'n, 861 F.2d 884 , 893 ( 6th Cir . 1988 ); Maxfield v . Sinclair Int'l, 766 F.2d 788 , 796 ( 3d Cir . 1985 ).
15 See, e.g., Report or Affidavit of Dr. Homayoun Hajiran , MBA , Ph.D. at 5 , Consol Energy , 860 F.3d 131 (No. 113CV00215 ), 2014 WL 878251 at *1734 , 1739 (countering the report of Dr. Sovan Tun with reconstructed calculations of Butcher's economic damages) ; Report or Affidavit of Dr. S ovan Tun , Ph.D. at 3 , Consol Energy , 860 F.3d 131 (No. 113CV00215 ) , 2014 WL 8728251 (providing a calculation of gross pay lost after termination).
16 See, e.g., Report or Affidavit of Dr. Homayoun Hajiran, supra note 15 , at 5 (offsettingtheback pay award to Butcher by the pension distributions he received following termination, indicating cat egorization of such payments as interim earnings).
17 DAN B. DOBBS , LAW OF REMEDIES § 3 . 8 ( 1 ) 266 - 69 (2d ed. 1993 ). For example, if a plaintiff receives payments from an insurer for medical expenses, this does not reduce the amount he is ableto receive from the tortfeasor . Id. at 267.
18 See id . at 267 . (exploring as rationale for the rule the suggestion that the wrongdoer would be permitted a windfall if allowed credit for an unconnected benefit thatreduces theplaintiff 's damages) .
19 See, e.g., England v . Reinauer Transp. Cos. , 194 F.3d 265 , 273 - 74 ( 1st Cir . 1999 ) (stating that a recovery need not be offset by any amount of benefits received from a source that is not the tortfeasor). For example, payments received from a health insurer for medical expenses are categorized as collateral . See, e.g., Samsel v . Allstate Ins. Co., 59 P.3d 281 , 290 (Ariz. 2002 ) ( “Recoveryof expenses
51 See id . (finding that the damage award would be different ifthepension planwereadministered by the employer rather than a third- party) . Many companies that can afford to do so will contract out the administration of pension plans to a financial institution or brokerage firm . See Holland & Hart LLP , Wake-Up Call for Administrators of Pension Plan,s 1 IDAHO EMP'T L. LETTER , June, 1996 (recommending that companies utilize third-party administrators to decrease their risks of litigation over pension disputes).
52 See U.S. Equal Emp't Opportunity Comm'n v . Consol Energy , Inc., 860 F.3d 131 ( 4th Cir . 2017 ) (holding that a pension is a collateral source and therefore should not be deducted from a pay award). The Fourth Circuit had previously discussed deducting retirement benefits inSloas v . CSX Transportation.616 F.3d 380 , 389 ( 4th Cir . 2010 ).
53 See infra notes 55-78 and accompanying text.
54 See infra notes 79-95 and accompanying text.
55 Complaint and Jury Trial Demand, supra note 4 , at 3.
57 Id. at 4.
58 Memorandum in Support of EEOC's Motion for Partial Summary JudgmentRegarding Liabi lity at 2 , Consol Energy , 860 F.3d 131 (No. 1: 13CV00215) , 2014 WL 7715194 (noting that Butcher testified to subscribing to a biblical interpretation in which followers of the antichrist are designated with a mark on the forehead or hand, acceptance of which renders them to an eternity of suffering).
59 Id. at 7.
94 See id . at 149 (highlighting the fact that Butcher would have been entitled to the pension regardless of the Title VII violation, unlike a payment made individually to Butcher to compensate him for injuries suffered ).
95 See id . (reasoning that allowing an offset for the pension payments would allow Consol to avoid its contractual obligation to provide retirement benefits to Butcher).
96 Compare U.S. Equal Emp't Opportunity Comm'n v . Consol Energy , Inc., 860 F.3d 131 , 150 ( 4th Cir . 2017 ) (refusing an offset for pension payments received following constructive discharge), with Fariss v . Lynchburg Foundry , 769 F.2d 958 , 966 ( 4th Cir . 1985 ) (deductingthe entiretyof a lump sum pension payment from a damages award) . See also Sloas v . CSX Transp., 616 F.3d 380 , 389 ( 4th Cir . 2010 ) (creating a rule that fringe benefits are always collateral andthereforenot deductiblefroma damages award).
97 See infra notes 98-122 and accompanying text.
98 See DOBBS , supra note 17, at 267- 69 (including the following as rationales for the rule: (1) in the case of benefits that come as gifts, the defendant should not be able to take credit for the gratuity of others, (2) preserving the subrogation rights of insurers, (3) in the case of insurance payments, ensuring that the plaintiff is able to receive the full benefits for which he paid through premiums, and (4) avoiding a windfall to the tortfeasor) .
99 See Consol Energy , 860 F.3d at 149 - 50 (noting that the court is silent as to thepolicyconside rations generally associated with the collateral sourcerule) ; seealso infra notes 82-88 andaccompanying text .
100 See e.g., Consol Energy , 860 F. 3d at 150 (implying that the damage award for Butcher would have been reduced had his pension payments been managed by Consol rather than a third- party); see also Thomas W . Lee, Deducting Unemployment CompensationandEndingEmploymentDiscrimination: Continuing Conflict, 43 EMORY L.J. 325 , 336 - 37 ( 1994 ) (identifying a lack of uniformity in damage awards within lower courts that rely on this definitional distinction) . Equitable remedies are characterized by their necessary rejection of bright -line rules . See Lussier v. Runyon , 50 F.3d 1103 , 1110 ( 1st Cir . 1995 ) (engaging in a prolonged discussion of the nature of equity and emphasizing its
110 See 42 U.S.C. § 2000e-5(g)(1) (providing that courts should provide for equitable relief .) Compare Albemarle Paper Co. v. Moody, 422 U.S. 405 , 417 - 18 ( 1975 ) (stating that all Title VII remedies should be examined in light of the goals of ending unlawful discrimination in theworkforce, and making whole victims who have endured unlawful discrimination) , with ConsolEnergy,860 F.3d at 149 (adopting a binary test that considers solely the source of the benefit in rendering a collateral source designation).
111 42 U .S.C. § 2000e-5(g)(1).
112 See Lussier , 50 F. 3d at 1112 (encouraging courts to view pay awards in discrimination cases as part of a larger remedial endeavor, not a singular solution).
113 See Moody, 422 U.S. at 417 -18 (describing the statutory goals of Title VII); Lussier, 50 F.3d at 1110 (describing the nature of equity as necessarily rejecting rigid tests in favor of discretion).
114 See Craig v. Y & Y Snacks, Inc ., 721 F.2d 77 , 85 ( 3d Cir . 1983 ) (arguing that the preventative goal of Title VII is more effectively served by adopting firm standards against the offset of fringe benefits from back pay awards).
115 See Equal Emp't Opportunity Comm'n v . O'Grady, 857 F.2d 383 , 391 ( 7th Cir . 1988 ) (describing compensation that renders a plaintiff more than whole as a “discrimination bonus”).
116 42 U .S.C. § 2000e-5(g)(1); ConsolEnergy, 860 F.3d at 150- 51 (stating that punitivedamages are available only in egregious instances of discrimination in whichthe employer can be shown to have acted maliciously); see also Mark C. Weber , Accidentally on Purpose, Intent in Disability Di scrimination Law ,56 B.C.L. REV . 1417 , 1439 ( 2015 ) (noting that when Title VII was originallyenacted, it permitted only equitable relief; punitive remedies were not added to the statute until its expa nsion in 1991 ).
117 42 U .S.C. § 2000e-5(g)(1); see Graefenhain v . Pabst Brewing Co. , 870 F.2d 1198 , 1210 ( 7th Cir . 1989 ) (holding that an employer is entitled to offset damages that exceed the amount the plaintiff would have received had he not been wrongfully terminated).
118 See Dailey v. Societe Generale , 108 F.3d 451 , 461 ( 2d Cir . 1997 ); Lussier, 50 F. 3d at 1110 (describing the central characteristic of equitable awards to be flexibility and discretion); Lee, supra