Pennsylvania Supreme Court Affirms $1.6M Award of Non-economic Damages in Whistleblower Retaliation Case
In a unanimous opinion in Bailets v. Pennsylvania Turnpike Commission, the Pennsylvania Supreme Court affirmed an award of $1.6 million in non-economic damages in a whistleblower retaliation case and held that the phrase “actual damages” in the Pennsylvania Whistleblower Law encompasses compensatory damages. The court also held that an award of $1.6 million in non-economic damages is not excessive and is appropriate compensation for the mental anguish, embarrassment, humiliation, and loss of reputation that results from being fired for exposing wrongdoing.
Bailets’ Whistleblower Retaliation Claim
Bailets worked at the Pennsylvania Turnpike Commission (PTC) for approximately ten years as Manager of Financial Systems and Reporting. When he discovered that a contractor named Ciber was afforded an improper advantage in the bidding process for a contract to implement a computerized financial system. He raised his concerns to management and his supervisor warned him “not to make any waves” or his job would be in jeopardy. Once the contract was awarded to Ciber, Bailets raised concerns about Ciber’s deficient performance, including testing failures and delays. The PTC then fired Bailets along with approximately twelve co-workers in what it claims was a layoff driven by budgetary constraints.
Bailets brought suit under the PA Whistleblower Law and prevailed at a non-jury trial, during which he offered expert testimony of an economist who testified that Bailets’ past and future lost earnings resulting from his termination amounted to a loss of approximately $1.6 million. At trial, Bailets testified about the emotional toll of being fired for whistleblowing, including humiliation, sleepless nights, and the embarrassment of using an unemployment card to purchase groceries. In addition, Bailets testified about the pain of not being able to provide for thirteen-year-old triplet daughters and having to explain to them that he lost his job.
In particular, Bailets recalled the times he broke down crying due to anxiety about securing comparable work and the guilt he felt about having subjected his family to economic hardship. Specifically, “he said that . . . maybe he should never have notified his employers of these things that were going wrong[,]” because if “he hadn’t done that, . . . he would still be there.”
Relying on the testimony of the economist, the trial court awarded Bailets $1.6 million in economic damages. And based on the testimony of Bailets and his wife, the judge found that the termination had a profound effect on Bailets and caused a major disruption to his life, and therefore he is entitled to an award of non-economic damages equal to that of his economic damages.
“Actual Damages” Encompasses Non-economic Damages
On appeal, the PTC asserted that the PA Whistleblower Law does not authorize non-economic damages and the amount awarded was arbitrary, excessive, and lacking any rational basis in the record. The PA Supreme Court held that the primary purpose of the PA Whistleblower Law
is “to protect whistleblowers who come forth with good faith reports of wrongdoing” and that the remedial nature of the law compels a broad construction of the phrase “actual damages.” In addition, the court found that non-economic losses are actual losses and a critical aspect of make-whole relief:
Given the overriding purpose of the Law and our determination a whistleblower must be put in no worse a position for having reported the wrongdoing, we cannot view the phrase “actual damages” as excluding damages for such items of loss as humiliation, embarrassment and mental anguish because if no recovery for such items of loss are available, a whistleblower cannot be made whole.
$1.6M in Emotional Distress Damages is Appropriate Make Whole Relief
The court also rejected PTC’s assertion that the award of $1.6 million in non-economic damages was excessive and unsupported by the evidence, and PTC’s argument that Bailets’ emotional distress is “typical of anyone’s experience while between jobs.” The court pointed out that Bailets became unemployed as a result of PTC’s intentional retaliation against him for exposing wrongdoing, which caused him to “ruminate endlessly, wondering whether he had done the right thing given his resulting dire financial predicament and its impact on his family.” That type of emotional distress is not commonplace among persons suffering unemployment. The court then deferred to the trial court’s determination of non-economic damages and did not find any abuse of discretion to warrant setting aside the trial court’s refusal of a remittitur.
Implications for Whistleblowers
Bailets is a well-reasoned opinion recognizing that non-economic damages are a necessary component of the “make whole relief” that whistleblower retaliation laws authorize. Failing to compensate a whistleblower for humiliation, embarrassment and mental anguish prevents the whistleblower from being placed in the position he would be in absent the retaliation. In addition, the opinion signals that garden variety emotional distress damages unsupported by medical evidence or expert testimony can be substantial in whistleblower retaliation cases.