U.S. Virgin Islands Supreme Court Affirms Compensatory Damages Award to Former Employee Claiming Age Discrimination

On December 5, 2022, the Supreme Court of the Virgin Islands upheld a 2019 jury verdict, which found that Caribbean airline LIAT (1974), Ltd., had discharged its former area manager, William Cherubin, because of his age in violation of the Virgin Islands Civil Rights Act (VICRA). In doing so, the court addressed the standards for establishing liability under the VICRA and rejected several challenges advanced by LIAT concerning the sufficiency of the evidence supporting the jury’s award of damages.

Background

On June 4, 2015, LIAT terminated the employment of Cherubin, a seventy-one-year-old area manager who had worked for LIAT for forty-seven years, based upon a determination that he had engaged in “gross misconduct” due to his involvement in incidents that prompted the issuance of two written warning letters three months earlier. Approximately one month before it involuntarily separated Cherubin, LIAT had launched a voluntary separation program and an early retirement program for employees under age sixty-five in furtherance of an effort to reduce operating costs.

Cherubin filed suit against LIAT on February 27, 2017, alleging that LIAT had unlawfully terminated his employment because of his age, and the case proceeded to trial approximately two years later, in February 2019. In finding LIAT liable for age discrimination in violation of the VICRA, the jury awarded Cherubin compensatory damages in the amount of $1,633,320, consisting of $82,000 in lost wages and $1,551,320 for mental anguish.

The Virgin Islands Supreme Court’s Decision

LIAT appealed the judgment, arguing that the trial court erred when it denied LIAT’s renewed motion for judgment as a matter of law because Cherubin had failed to introduce sufficient evidence to establish that LIAT had discharged him due to his age and not because of misconduct or other permissible reasons. In its discussion rejecting LIAT’s challenge to the finding of liability, the court instructed that the McDonnell Douglas burden-shifting framework applicable to claims under the federal Age Discrimination in Employment Act (ADEA) did not apply to claims arising under the VICRA because the McDonnell Douglas framework was inconsistent with Virgin Islands law regarding the burden of proof in civil cases. Nonetheless, the court concluded that Cherubin had provided the jury with “sufficient affirmative circumstantial evidence” to “reasonably infer that LIAT systematically discriminated against its employees based on age, and that age discrimination therefore was a motivating factor in its decision to terminate Cherubin.” Specifically, the court highlighted the following evidence:

• LIAT discharged Cherubin based upon incidents that had occurred three months earlier, had only resulted in a warning, and had not been repeated.
• LIAT’s employee manual stated that the age of sixty-five constituted the company’s “normal retirement age.”
• “LIAT established an ER [early retirement] program one month before it terminated [Cherubin], which was limited only to employees under the age of 65 and provided workers with progressively diminished benefits based solely on age.”
• Although Cherubin remained eligible to apply for a voluntary separation program, employees under the age of sixty-five were not required to elect between the two programs offered by LIAT between May 5, 2015, and June 19, 2015.

The court also rejected LIAT’s challenge to the damages awarded for mental anguish, which LIAT asserted were unauthorized by law and excessive. In affirming the portion of the judgment based upon the jury’s award of noneconomic damages, the court rejected LIAT’s suggestion that “Cherubin should have been required to provide proof of psychological counseling, a physical injury, or other compelling extrinsic evidence” of mental anguish, concluding that “the record [was] replete with testimony from both Cherubin himself and other witnesses that, if credited by the jury, support[ed] a finding that he experienced mental anguish.” Of note, the court declined to find that the jury could not have credited the witnesses merely because they consisted of Cherubin and his family members and friends.

Addressing LIAT’s assertion that the award of noneconomic damages was excessive because it was nineteen times larger than the amount awarded for lost wages, the court declined to adopt a proportionality standard akin to that applicable to an award of punitive damages. Instead, the court explained that although Cherubin’s lost wages were cut off due to LIAT’s cessation of its operations in the Virgin Islands less than two years after discharging Cherubin, “the jury heard evidence that Cherubin continued to suffer mental anguish well after LIAT ceased operations” and that he would likely continue to do so for the foreseeable future. The court therefore reasoned, “[W]hile the jury calculated Cherubin’s lost wages from June 2015 to March 2017, it likely predicated the award of mental anguish damages based on a period running from June 2015 to a much later date, resulting in a longer time period over which the harm he suffered, and the resulting damages he incurred from it, accrued.”

Key Takeaways

The court’s decision highlights the importance of understanding the differences between federal law and Virgin Islands antidiscrimination law and taking into account the applicability of both sets of laws when operating a business in the Virgin Islands. In addition, the decision provides yet another example of the deference afforded by the court to jury determinations of noneconomic damages in employment cases and other civil actions.

The St. Thomas office of Ogletree Deakins will continue to monitor developments regarding laws that have an impact on the workplace and will post updates on the firm’s U.S. Virgin Islands blog as additional information becomes available. Important information for employers is also available via the firm’s webinar and podcast programs.