Pa. High Court Greenlights Noneconomic Damages for Whistleblower Cases
Whistleblowers fired for reporting government waste can recover for noneconomic damages, the Pennsylvania Supreme Court ruled on Tuesday, in a decision that could open the door to suits that previously were not viable.
March 27, 2018 at 06:08 PM
4 minute read
Whistleblowers fired for reporting government waste can recover for noneconomic damages, the Pennsylvania Supreme Court ruled on Tuesday, in a decision that some attorneys have said could open the door to suits that previously were not viable.
The state high court unanimously decided that the Pennsylvania General Assembly intended to include noneconomic damages for injuries such as humiliation and mental anguish in the phrase “actual damages,” which is what whistleblowers are entitled to recover under the state Whistleblower Law.
The case arose from claims brought by Ralph Bailets, a former financial reporting manager with the Pennsylvania Turnpike Commission, who will now be able to keep the $1.6 million in nonecomonic damages a Commonwealth Court judge awarded him in 2016.
The central issue in the dispute was whether the Whistleblower Law effectively limited the scope of available damages by creating a waiver for sovereign immunity, or if that was overcome by the fact that the statute is a “remedial law” aimed at encouraging employees to report government waste.
Justice Kevin Dougherty, who wrote the court's 20-page opinion, said the two aren't mutually exclusive. “Although we recognize the law's design perhaps entails overlapping purposes of waiving sovereign immunity on the one hand, and of compelling compliance by protecting those who expose wrongdoing on the other, we cannot accept [the Turnpike Commission's] conclusion the sovereign immunity waiver aspects of the law override its remedial protective aspects,” Dougherty wrote.
“Instead, we view the immunity waiver aspect of the law as supportive of its primary purpose—to protect whistleblowers who come forth with good faith reports of wrongdoing,” the judge added. Dougherty further said the key language in the dispute came from Supreme Court case law holding that whistleblowers should be put “in no worse a position for having exposed the wrongdoing.”
“Any construction which limits the phrase 'actual damages' to economic losses leaves whistleblowers uncompensated for any non-economic harms they must suffer as a result of their decision to expose the wrongdoing of the employers, harms which lie completely outside such items as loss of pay and benefits,” Dougherty said.
Thomas Sprague of Sprague & Sprague, who argued to the justices on behalf of Bailets, said the “unanimous decision sends a powerful message in support of whistleblowers.”
“Public employees who are unlawfully terminated for blowing the whistle on significant waste or wrongdoing are able to recover the full measure of their damages as a result of having been fired for having blown the whistle,” he said.
Duane Morris attorney Robert Palumbos, who argued for the Turnpike Commission, did not return a call seeking comment Tuesday afternoon.
According to court records, Bailets worked for the turnpike from 1998 until 2008, when he was fired. His duties included reviewing requests for proposals, and, court papers said, he complained on several occasions about a continually under-performing outside consulting firm that had multiple contracts with the commission. In 2015, the commission sued the company for more than $45 million.
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.”
Less than two months later, the case was cited as the basis for another large award in the high-profile whistleblower lawsuit that Mike McQueary, a star witness for the prosecution of convicted child molester Jerry Sandusky, brought against Penn State. The judge handling that case, Judge Thomas Gavin, noted that the state legislature did not define the term “actual damages,” but said Friedman's reasoning was persuasive before he awarded McQueary $1 million in noneconomic damages.
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