Whistleblower Law: Are Non-Economic Damages Available?

Bailets v. Pa. Turnpike Commission, 126 MAP 2016 (direct appeal)

Issue

Whether non-economic damages are available under the Whistleblower Law, Act of December 12, 1986, P.L. 1559, 43 P.S. §§ 1421, et. seq.

Background

Ralph Bailets worked at the Pennsylvania Turnpike Commission from 1998 until he was laid off on November 20, 2008.  He held positions of responsibility involving financial reporting, and was responsible for a staff of programmers and business analysts. During his tenure he received good performance reviews.  He frequently complained about waste, improprieties, politically motivated personnel actions, and irregularities in procurement.  After he was laid off he filed suit under the Whistleblower Law against the Turnpike Commission in the Commonwealth Court’s original jurisdiction.  The Commonwealth Court initially dismissed his suit on summary judgment, and the Supreme Court reversed and remanded for trial. Bailets v. Pennsylvania Turnpike Commission, 123 A.3d 300 (Pa. 2015).  Judge Friedman conducted a bench trial and entered a verdict in favor of Mr. Bailets. She then awarded $3.2 million in damages, half of which was non-economic damages for harm to “his reputation, humiliation, and mental anguish.” As she summarized in her opinion denying post-trial motions:

A non jury trial was held from May 23, 2016, to May 26, 2016, before a single judge of the Commonwealth Court. On June 29, 2016, this court entered a verdict in favor of Bailets and against the Commission, concluding that  Bailets met his burden under the Whistleblower Law of proving that he made a good faith report of wrongdoing and waste to the Commission and that in retaliation the Commission terminated him. This court also determined that Bailets was entitled to an award of damages.By order filed on October 6, 2016, this court awarded Bailets $3.2 million in damages. By opinion filed on the same day, this court explained that Bailets was awarded $1.6 million in economic damages and an additional $1 6 million for non- economic actual damages, which included harm to his reputation, humiliation, and mental anguish.

Dec. 1, 2016 Slip Op. at 2.

The Turnpike Commission appealed as of right to the Supreme Court, challenging both liability and damages, with particular emphasis on the claim that the Whistleblower Law’s authorization of “actual damages” does not allow for non-economic damages.  After the briefs in the Supreme Court were filed, the Court issued an order granting oral argument on the non-economic damages issue but affirming the Commonwealth Court in all other respects:

AND NOW, this 23rd day of August, 2017, oral argument is GRANTED, LIMITED to the following issue raised in the appeal docketed at 126 MAP 2016, as phrased by appellant:

“Was the award of $1.6 million in ‘non-economic damages’ proper where the Whistleblower Law does not permit such damages and where the amount of non-economic damages awarded was arbitrary, excessive, and lacking in any rational basis in the record?”

The Commonwealth Court’s order is AFFIRMED in all other respects.

The appeal and ancillary petition at 23 MAP 2017 are DISMISSED as MOOT.

The Turnpike Commission’s arguments that non-economic damages are unavailable under the Whistleblower Law proceed as follows.  First, looking to other Pennsylvania statutes that authorize an award of damages, it argues that when the General Assembly intends to permit compensation of purely non-economic harms, it specifies that “actual damages” include damages for non-economic harms, and that it did not include such language in the Whistleblower Law. Second, it argues that non-economic damages are similar to punitive damages because they are intended to have a deterrent effect, and that, therefore, as a matter of policy, a court should not presume that the term “actual damages” authorizes noneconomic damages, especially against the Commonwealth, which enjoys sovereign immunity unless waived.  Third, it argues that two cases the Commonwealth Court relied on for support, Joseph v. Scranton Times, L.P., 129 A.3d 404 (Pa. 2015) and O’Rourke v. Commonwealth, 778 A.2d 1194 (Pa. 2001), are distinguishable.  Joseph is a defamation case that necessarily focuses on harm to reputation and resulting damages, and did not involve a statute authorizing damages, and O’Rourke is a Whistleblower case that merely made the general pronouncement that the law is “chiefly a remedial measure.” The Commission also argues that the award of $1.6 million is not supported by the evidence, and is arbitrary as its only basis is that it mirrors the $1.6 million in economic damages the court awarded.

Mr. Bailets, joined by amici Pennsylvania Association for Justice and AFSCME, responds as follows.  First, the concept of “actual damages” has been construed by Pennsylvania courts to include both economic and non-economic damages.  Second, O’Rourke stands for the proposition that whistleblowers need to be protected, as they are often in the best position to root out waste and wrongdoing, but typically feel compelled to remain silent. Third, the Commission’s sovereign immunity argument mischaracterizes both the Law and O’Rourke:

The PTC’s mischaracterization of the Law as a waiver of sovereign immunity requiring a narrow interpretation is contrary to the explicit pronouncement of this Court, which explained at length that the Whistleblower Law is “chiefly a remedial measure intended to ‘enhance openness in government and compel the government’s compliance with the law by protecting those who inform authorities of wrongdoing.’” Id. at 1202 (quoting Davis v. Ector County, 40 F.3d 777, 785 (5th Cir. 1994). And further, as this Court stated, “remedial statutes are to be liberally construed to effect their objects.” Id. at 1203 (citing 1 Pa. C.S. § 1928(c). “[A]bsent some assurance that the employee will be put in no worse a position for having exposed the wrongdoing, the Commonwealth largely foregoes the benefit of such ‘employee reporters.’” O’Rourke, 778 A.2d at 1202. Thus, anything short of full protection of whistleblowers would undermine the remedial purpose of the statute.

Br. at 40-41.

Fourth, other states have allowed non-economic damages under similar whistleblower statutes.

On the Commission’s claim that the $1.6 million award is unsupported, Mr. Bailets responds that the award is supported by the evidence of the hardship occasioned by his firing, that the court cannot substitute its judgment for that of the fact finder unless the award “shocks the conscience” and that the award does not.

For more information, contact Kevin McKeon or Dennis Whitaker.