Washington Supreme Court Refuses to Award Federal Income Tax Offsets for Noneconomic Damages – Gives Guidance on Attorneys’ Fees Awards Under the Washington Law Against Discrimination
In Pham v. City of Seattle, two employees sued the City of Seattle for employment discrimination on the basis of race and national origin under the Washington Law Against Discrimination (“WLAD”), Chapter 49.60 RCW. The jury awarded the plaintiffs front pay, back pay and noneconomic damages. Following the jury verdict, the trial court awarded the plaintiffs additional money to offset the adverse federal income tax consequences they would suffer from receiving a “lump sum” front and back pay award, but declined to award an offset for the tax consequences attributable to their noneconomic (emotional distress) damages award. The trial court also reduced the plaintiffs’ requested attorneys’ fees by $50,000 and declined to enhance the reduced fees by a “multiplier” to compensate plaintiffs’ attorneys for the risks they took, given the contingent nature of success. View full article (PDF).