Tax Consequences Awarded for Emotional Distress Damages; Denial of Fee Multiplier for Risk Was Abuse of Discretion

Two employees obtained a $550,000 jury verdict for WLAD race/national origin discrimination claims. The trial court then awarded $168,000 for the increased tax liability resulting from the lump sum payment of lost wages. ?On appeal, Division I remanded for the trial court to award additional supplemental damages for the tax consequences of the emotional damages of $120,000 awarded to the plaintiffs.? ?Holding that ?an award [of emotional damages] is not a gain for the plaintiff; it substitutes for the sense of well-being that the plaintiff lost as a result of being discriminated against,? the court found no material distinction for tax purposes between emotional damages and lost wages, for which the Washington Supreme Court? ordered? tax? consequences? be? paid? in Blaney v. Internat?l Ass?n of Machinists and Aerospace? Workers, ?151 ?Wn.2d ?203 ?(2004). After ?deducting ?$50,000 ?in? attorney ?fees ?for work related to unsuccessful efforts during the litigation (e.g., cross summary judgment motion and request for injunctive relief), the trial court had awarded $297,532.77 in attorney fees. Reversing, the Court of Appeals noted: ?the trial court? improperly? focused? on? the? short? term failure of certain components of the litigation, when the focus should have been on the long term success of the litigation as a whole.? Similarly, the appeals court reversed the trial court=s denial of a request for a 2.0 multiplier for risk in the litigation on the ground that the risk was due to the plaintiffs? inability to articulate their own claims and the paucity of proof: ?The law against discrimination is not intended to protect only the articulate? and ?the ?paucity? of evidence known to the plaintiffs at the outset of the case is a common feature of disparate treatment ?litigation.????? Van ?Pham ?v. ?City ?of Seattle, No. 52356-2-I (Becker, Coleman, Appelwick; 12/20/04).