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Barring whistleblowers from recovering noneconomic damages against their former employers might be “distasteful,” but it is inherent in sovereign immunity, a lawyer representing the Pennsylvania Turnpike argued before the state Supreme Court on Wednesday.

Duane Morris attorney Robert Palumbos told the court that because whistleblower damages are recoverable only through a waiver of sovereign immunity, the scope of those damages must be narrowly construed. Palumbos said the Commonwealth Court's decision to award plaintiff Ralph Bailets more than $1.5 million in mental anguish and humiliation damages in connection with his whistleblower lawsuit far exceeded what is allowed under the law.

“This case shows the dangers of having waivers of governmental immunity extended as far as the Commonwealth Court found,” Palumbos said.

Bailets' case resulted in a $3.2 million verdict against the turnpike, with $1.6 million each in economic and noneconomic damages. But, along with the award came a pronouncement by Commonwealth Court Judge Rochelle Friedman that “actual damages” in whistleblower cases “must include compensation for the mental anguish, humiliation and reputation damage.”

Palumbos told the justices that the issue came down to statutory construction, and, given that the damages were derived from a waiver of sovereign immunity, a strict interpretation must apply.

“Any waiver of sovereign immunity must be unequivocal and specific,” he said, listing other statutes, like the state's Human Relations Act, which specifically state the types of damage that can be recovered. “All that language would be surplusage.”

Justice Max Baer, however, questioned whether the legislature's use of the broad term “actual damages” in the whistleblower law didn't indicate they wanted the damages to be applied broadly, given the law's purpose of fighting government waste and corruption.

“Here your client got caught with its pants down,” he said. “The legislature knew exactly what it was doing when it put actual damages in there uncapped because of the special circumstances.”

Palumbos said that might be a good policy concern, but the court should not reach that issue, given that the law should be viewed using the limited statutory construction interpretation required when viewing laws involving sovereign immunity.

Arguing for Bailets was Thomas Sprague of Sprague and Sprague, and he told the justices the Commonwealth Court's interpretation of the law was correct.

“This is a broad remedial statute requiring a liberal interpretation,” he said. “Why? Because it is to promote whistleblowers, and to promote the reporting of significant waste and wrongdoing.”

Sprague noted that the law does not only apply to government agencies, but it also applies to any entity that takes state money. So any normal limitations due to sovereign immunity waivers should not apply, he told the court.

“The standard rules of statutory construction apply,” Sprague said. “You look to the context in which the words were written. What was the mischief to be remedied, the object to be obtained?”

Getty Images/iStockphoto

Barring whistleblowers from recovering noneconomic damages against their former employers might be “distasteful,” but it is inherent in sovereign immunity, a lawyer representing the Pennsylvania Turnpike argued before the state Supreme Court on Wednesday.

Duane Morris attorney Robert Palumbos told the court that because whistleblower damages are recoverable only through a waiver of sovereign immunity, the scope of those damages must be narrowly construed. Palumbos said the Commonwealth Court's decision to award plaintiff Ralph Bailets more than $1.5 million in mental anguish and humiliation damages in connection with his whistleblower lawsuit far exceeded what is allowed under the law.

“This case shows the dangers of having waivers of governmental immunity extended as far as the Commonwealth Court found,” Palumbos said.

Bailets' case resulted in a $3.2 million verdict against the turnpike, with $1.6 million each in economic and noneconomic damages. But, along with the award came a pronouncement by Commonwealth Court Judge Rochelle Friedman that “actual damages” in whistleblower cases “must include compensation for the mental anguish, humiliation and reputation damage.”

Palumbos told the justices that the issue came down to statutory construction, and, given that the damages were derived from a waiver of sovereign immunity, a strict interpretation must apply.

“Any waiver of sovereign immunity must be unequivocal and specific,” he said, listing other statutes, like the state's Human Relations Act, which specifically state the types of damage that can be recovered. “All that language would be surplusage.”

Justice Max Baer, however, questioned whether the legislature's use of the broad term “actual damages” in the whistleblower law didn't indicate they wanted the damages to be applied broadly, given the law's purpose of fighting government waste and corruption.

“Here your client got caught with its pants down,” he said. “The legislature knew exactly what it was doing when it put actual damages in there uncapped because of the special circumstances.”

Palumbos said that might be a good policy concern, but the court should not reach that issue, given that the law should be viewed using the limited statutory construction interpretation required when viewing laws involving sovereign immunity.

Arguing for Bailets was Thomas Sprague of Sprague and Sprague, and he told the justices the Commonwealth Court's interpretation of the law was correct.

“This is a broad remedial statute requiring a liberal interpretation,” he said. “Why? Because it is to promote whistleblowers, and to promote the reporting of significant waste and wrongdoing.”

Sprague noted that the law does not only apply to government agencies, but it also applies to any entity that takes state money. So any normal limitations due to sovereign immunity waivers should not apply, he told the court.

“The standard rules of statutory construction apply,” Sprague said. “You look to the context in which the words were written. What was the mischief to be remedied, the object to be obtained?”