United States Court of Appeals
For the First Circuit
No. 99-2113
RAFAEL RAMOS,
Plaintiff, Appellant,
v.
DAVIS & GECK, INC.,
Defendant, Appellee.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
[Hon. Héctor M. Laffitte, U.S. District Judge]
Before
Torruella, Chief Judge,
Stahl and Lipez, Circuit Judges.
David W. Román, with whom Herbert W. Brown III, José Luis
Ubarri, and Brown & Ubarri were on brief, for appellant.
Pedro J. Manzano-Yates, with whom Juan J. Casillas-Ayala and
Fiddler González & Rodríguez were on brief, for appellee.
August 23, 2000
1
2
LIPEZ, Circuit Judge. Rafael Ramos appeals from a
decision of the district court for the District of Puerto Rico
ordering that his award of damages against Davis & Geck, Inc.,
be subject to withholding for FICA and Puerto Rico income taxes
because part of the damages represented back pay. See Ramos v.
Davis & Geck, Inc., 64 F. Supp. 2d 6, 8 (D.P.R. 1999). Ramos
contends that the court erred in deciding what portion of the
damages found by the jury was back pay. We agree.
I.
The underlying facts of this case are recited in our
prior opinion, Ramos v. Davis & Geck, Inc., 167 F.3d 727 (1st
Cir. 1999), and we sketch here only the facts relevant to this
appeal. Ramos sued Davis & Geck, his former employer, alleging
that he had been discharged because of his age in violation of
the Age Discrimination in Employment Act (ADEA), 29 U.S.C. § 621
et seq., and Puerto Rico's Law 100, P.R. Laws Ann. tit 29, § 146
et seq. The case was tried to a jury in January 1997. The jury
found for Davis & Geck on the ADEA claim. On the Law 100 claim,
the verdict form asked the jury:
Do you find that the Defendant
constructively discharged the Plaintiff
Rafael Ramos without just cause because of
his age in violation of Law 100? . . .
If your answer is YES, state the
amount of damages in the space below, double
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that amount, and write the total amount of
damages.
The jury answered "YES" and found damages of $150,000, doubled
pursuant to Law 100 to $300,000. The verdict form did not
require the jury to specify what portion of the damages
represented back pay and what portion was compensation for
emotional distress.
Davis & Geck appealed and we affirmed. See 167 F.3d
at 735. After our decision, Davis & Geck refused to pay Ramos
the full amount of the judgment, contending that part of the
jury's damage award represented back pay, from which it was
required to withhold payments for Puerto Rico income taxes and
federal social security (FICA) taxes. Ramos brought the issue
before the district court, which agreed with Davis & Geck. The
court calculated Ramos's lost wages as $178,062.30 by
multiplying his monthly salary, $3,123.90, by the number of
months between his termination and the jury verdict, fifty-
seven. It then subtracted the $52,518.50 Ramos had received in
social security benefits during the fifty-seven months and
concluded that the net amount of the back pay award represented
$125,543.80 of the $150,000 in damages found by the jury.
Accordingly, the court ordered $8,788.07 withheld from the
damages for Puerto Rico income tax, see P.R. Laws Ann. tit. 13,
§ 8542(a) (mandating 7% withholding), and $9,604.10 withheld for
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FICA, see 26 U.S.C. § 3101(a), (b)(6) (mandating 7.65%
withholding).1 This appeal followed.
II.
In its opinion ordering the withholding, the district
court did not discuss its authority to determine the amount of
the back pay award. Instead, the court stated that because the
verdict form did not indicate what portion of the damages
represented back pay, "the Court must determine to what extent
the award is subject to withholding . . . ." 64 F. Supp. 2d at
7-8. The court concluded that withholding was necessary because
an award of back pay was "require[d]" by its jury instructions,
and it accepted Davis & Geck's calculation of the amount of back
pay as $125,543.80. Id. at 8.
We do not agree with the district court that its jury
instructions required an award of back pay by the jury. The
court told the jury that "[i]f you find for the plaintiff under
Law 100, you may award an amount of monetary damages that will
1
The court also ordered Puerto Rico income tax withheld from
the attorney's fees Ramos was awarded. Ramos complains about
this withholding in a footnote in his brief, but he did not
appeal from that aspect of the court's order and he admitted at
oral argument that the withholding from the damage award is the
sole issue in this appeal.
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reasonably compensate the plaintiff for his loss of salary and
for any moral or emotional anguish or distress suffered as a
result of the age discrimination." The court then explained to
the jury how to calculate a back pay award. At most, these
instructions demonstrate that the jury should have awarded back
pay. Likewise, the calculations accepted by the court show at
best that the jury should have found the amount of the back pay
to be $125,543.80. But we are aware of no law imposing tax
withholding on a plaintiff for a back pay award he should have
received. On the contrary, we think it self-evident that Ramos
is only subject to withholding for the back pay award he
actually did receive.
On this record, there is no way to determine what the
jury did. It might have awarded what it should have, but it
might also have awarded $150,000 for emotional distress and
nothing for back pay, or nothing for emotional distress and
$150,000 for back pay, or something in between. Although in
many contexts we presume that a jury follows its instructions,
see, e.g., United States v. Gonzalez-Vazquez, No. 98-2108, 2000
WL 967224, at *9 (1st Cir. July 18, 2000) (jury presumed to
follow instruction to disregard stricken evidence), that
presumption cannot extend so far that a jury is deemed to have
made a complex damage calculation in exactly the amount the
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district court believes its instructions required. The problem
with the court's back pay determination, then, "is that the jury
may or may not have reached the same conclusions as the court on
the proper damage elements." Payton v. Abbott Labs, 780 F.2d
147, 151-52 (1st Cir. 1985) (quoting Durant v. Surety Homes
Corp., 582 F.2d 1081, 1085-86 (7th Cir. 1978)). To the extent
that the court made a factual finding that the jury awarded
$125,543.80 in back pay, that finding was based on pure
speculation and was clearly erroneous. See id. at 154 (finding
clear error in district court's attempt to allocate among
multiple claims damages found by jury in lump sum).
Alternatively, the district court might have concluded
that, in the absence of a finding by the jury, it could
determine the amount of back pay itself. Davis & Geck argues
that the court was authorized to do so by Rule 49(a) of the
Federal Rules of Civil Procedure, although the court's opinion
makes no mention of that rule. Rule 49(a) allows the court to
require the jury to return a special verdict. See generally
Anderson v. Cryovac, Inc., 862 F.2d 910 (1st Cir. 1988). It
provides that if in instructing the jury on the special verdict:
the court omits any issue of fact raised by
the pleadings or by the evidence, each party
waives the right to a trial by jury of the
issue so omitted unless before the jury
retires the party demands its submission to
the jury. As to an issue omitted without
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such a demand the court may make a finding;
or, if it fails to do so, it shall be deemed
to have made a finding in accord with the
judgment on the special verdict.
Fed. R. Civ. P. 49(a). Davis & Geck says that because the issue
of the amount of back pay was omitted from the verdict form in
this case, Rule 49(a) authorizes the court to make a finding on
the issue.
We conclude, however, that Rule 49(a) is inapplicable
to this case. To begin with, the jury's verdict on Ramos's Law
100 claim was not a special verdict. On liability, the form
asked the jury only one question--"Do you find that the
Defendant constructively discharged the Plaintiff Rafael Ramos
without just cause because of his age in violation of Law 100?"-
-rather than the "special written finding[s] on each issue of
fact" authorized by Rule 49(a). That one question, although
phrased as a question of fact, was in substance identical to
asking the jury, "On Plaintiff's Law 100 claim, do you find for
Plaintiff or Defendant?" Then the jury was asked to find one
amount for damages (and then double it pursuant to Law 100),
without breaking it down into back pay and emotional distress.
This was a general verdict, fully adequate to support the
judgment entered for Ramos on the Law 100 claim, and not a
special verdict which lacked a finding on an essential issue,
was inadequate standing alone to support an entry of judgment,
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and required either a new trial or a finding by the court
pursuant to Rule 49(a). See Anderson, 862 F.2d at 915-16
(explaining that Rule 49(a) provision allowing finding by the
court was adopted to replace the common-law rule that omission
of essential issue from special verdict required a new trial);
see also 9A Wright & Miller, Federal Practice & Procedure § 2507
(1995).
Also, the amount of back pay awarded to Ramos is not
the type of issue on which Rule 49(a) contemplates a judicial
finding. As a distinct issue, it was not "raised by the
pleadings or by the evidence," as the rule requires, but was
raised after judgment in a collateral proceeding. Likewise, it
was not essential to the judgment. Davis & Geck does not
dispute that a valid judgment on the Law 100 count was entered
in Ramos's favor by the district court and affirmed by this
court. At the time the judgment was entered, there was no
reason to believe that the amount of back pay was an "issue[]
which should have been--but [was] not--covered by the
interrogatories." Anderson, 862 F.2d at 916.
Moreover, it is not clear that the back pay issue was
"omitted" in the sense used by the rule. The issue was indeed
omitted from the verdict form, but it was not omitted from the
jury instructions and there is no reason to believe it was not
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considered by the jury. See Gaia Techs. Inc. v. Recycled Prods.
Corp., 175 F.3d 365, 370 (5th Cir. 1999) ("Rule 49(a) allows the
district court to make its own findings only as to issues not
submitted to the jury."). The jury presumably decided an amount
of back pay, somewhere between zero and $150,000, but it was not
asked to record that amount as a discrete figure. For the
district court to decide the back pay issue, then, required it
to make a factual finding that was potentially inconsistent with
the jury's finding on the same issue. Rule 49(a) does not
authorize that sort of inconsistency. "The rule gives the
district court the authority to make a finding on the omitted
issue of fact; it does not give it the right to substitute its
judgment for that of the jury on the question of damages."
Payton, 780 F.2d at 154; see also Gaia Techs., 175 F.3d at 371
("Rule 49(a) does not permit a district court to make findings
contrary to the jury verdict.").
In sum, as a factual finding, the district court's
determination that the jury awarded Ramos $125,543.80 in back
pay has no support in the record and is thus clearly erroneous.
Alternatively, if the court concluded that it could determine
the amount of back pay in the absence of or without regard to
the jury's determination, the court's determination of that
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amount was unauthorized by Rule 49(a) or otherwise2 and was thus
an error of law.
Judgment ordering PRIRC and FICA withholding from the
plaintiff's damages award is vacated. Remanded for further
proceedings consistent with this opinion.
2Neither Davis & Geck nor the district court cited, and we
are not aware of, any provision of federal or Puerto Rico law
that requires a trial judge to determine the amount of a back
pay award for tax purposes regardless of the fact that the jury
was not asked to specify an amount for back pay. There would
obviously be a different outcome if there were such a provision.
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