The Supreme Court/The Supreme Court.iso/pc/ascii/1991/91_0042/91_0042.zd

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SUPREME COURT OF THE UNITED STATES
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No. 91-42
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UNITED STATES, PETITIONER v. THERESE A.
BURKE, CYNTHIA R. CENTER, and
LINDA G. GIBBS
on writ of certiorari to the united states court of
appeals for the sixth circuit
[May 26, 1992]

  Justice O'Connor, with whom Justice Thomas joins,
dissenting.
  The Court holds that respondents, unlike most plaintiffs
who secure compensation after suffering personal injury,
must pay tax on their recoveries for alleged discrimination
because suits under Title VII of the Civil Rights Act of
1964, 78 Stat. 253, as amended, 42 Stat. 2000e et seq., do
not involve -tort type rights.-  This is so, the Court says,
because -Congress declined to recompense Title VII plain-
tiffs for anything beyond the wages properly due them.-
Ante, at 12.  I cannot agree.  In my view, the remedies
available to Title VII plaintiffs do not fix the character of
the right they seek to enforce.  The purposes and operation
of Title VII are closely analogous to those of tort law, and
that similarity should determine excludability of recoveries
for personal injury under 26 U. S. C. 104(a)(2).
                      I
  Section 104(a)(2) allows taxpayers to exclude from gross
income -damages received . . . on account of personal
injuries or sickness.-  The Court properly defers to an
Internal Revenue Service (IRS) regulation that reasonably
interprets the words -damages received- to mean -an
amount received . . . through prosecution of a legal suit or
action based upon tort or tort type rights, or through a
settlement agreement entered into in lieu of such prosecu-
tion.-  26 CFR 1.104-1(c) (1991).  See ante, at 5; United
States v. Correll, 389 U. S. 299 (1967).  Therefore, respon-
dents may exclude from gross income any amount they
received as a result of asserting a -tort type- right to
recover for personal injury.
  The Court appears to accept that discrimination in the
workplace causes personal injury cognizable for purposes of
104(a)(2), see ante, at 9-10, and there can be little doubt
about this point.  See Goodman v. Lukens Steel Co., 482
U. S. 656, 661 (1987) (-[R]acial discrimination . . . is a
fundamental injury to the individual rights of a person-);
Price Waterhouse v. Hopkins, 490 U. S. 228, 265 (1989)
(O'Connor, J., concurring in judgment) (-[W]hatever the
final outcome of a decisional process, the inclusion of race
or sex as a consideration within it harms both society and
the individual-).  I disagree only with the Court's further
holding that respondents' action did not assert tort-like
rights because Congress limited the remedies available to
Title VII plaintiffs.  Focusing on remedies, it seems to me,
misapprehends the nature of the inquiry required by
104(a)(2) and the IRS regulation.  The question whether
Title VII suits are based on the same sort of rights as a tort
claim must be answered with reference to the nature of the
statute and the type of claim brought under it.
  Title VII makes employment discrimination actionable
without regard to contractual arrangements between
employer and employee.  Functionally, the law operates in
the traditional manner of torts: courts award compensation
for invasions of a right to be free from certain injury in the
workplace.  Like damages in tort suits, moreover, monetary
relief for violations of Title VII serves a public purpose
beyond offsetting specific losses.  -It is the reasonably
certain prospect of a backpay award that `provide[s] the
spur or catalyst which causes employers and unions to self-
examine and to self-evaluate their employment practices
and to endeavor to eliminate, so far as possible, the last
vestiges of [discrimination].'-  Albermarle Paper Co. v.
Moody, 422 U. S. 405, 417-418 (1975) (quoting United
States v. N. L. Industries, Inc., 479 F. 2d 354, 379 (CA8
1973)).
  Such a scheme fundamentally differs from contract
liability, which -is imposed by the law for the protection of
a single, limited interest, that of having the promises of
others performed.-  W. Prosser, Law of Torts 5 (4th ed.
1971).  Title VII liability also is distinguishable from quasi-
contractual liability, which -is created for the prevention of
unjust enrichment of one man at the expense of another,
and the restitution of benefits which in good conscience
belong to the plaintiff.-  Ibid.  It is irrelevant for purposes
of Title VII that an employer profits from discriminatory
practices; the purpose of liability is not to reassign economic
benefits to their rightful owner, but to compensate employ-
ees for injury they suffer and to -eradicat[e] discrimination
throughout the economy.-  Albermarle Paper, supra, at 421.
  This Court has found statutory causes of action for
discrimination analogous to tort suits on prior occasions,
but has not suggested that this comparison turns on the
specific monetary relief available.  In Wilson v. Garcia, 471
U. S. 261 (1985), we considered which state statute of
limitations is most appropriately applied to a claim brought
under 42 U. S. C. 1983.  The Court answered this question
by looking not to the remedies afforded a 1983 plaintiff,
but to -the essence of the claim- and -the elements of the
cause of action.-  Id., at 268.  Of greatest significance was
the fact that Congress designed the Civil Rights Act of 1871
to provide a civil remedy for violations of constitutional
rights in the post-war South.  Because Congress was
concerned with harms that -plainly sounded in tort,- it only
remained for the Court to select the best comparison from
among -a broad range of potential tort analogies, from
injuries to property to infringements of individual liberty.-
Id., at 277.  In concluding that the closest state-law
equivalent to a 1983 suit is a tort claim for personal
injury, the Court once more emphasized the rights made
enforceable under federal law:
-The unifying theme of the Civil Rights Act of 1871 is
reflected in the language of the Fourteenth Amendment
that unequivocally recognizes the equal status of every
`person' subject to the jurisdiction of any of the several
States.  The Constitution's command is that all `per-
sons' shall be accorded the full privileges of citizenship
. . . .  A violation of that command is an injury to the
individual rights of the person.-  Ibid. (footnote
omitted.
  When asked in Goodman v. Lukens Steel Co., supra, to
determine the appropriate state analogue to a suit under 42
U. S. C. 1981, the Court again considered the rights
protected by federal law rather than the recovery that could
be had by a plaintiff.  As in Wilson, the tort-like nature of
a 1981 claim was clear.  See 482 U. S., at 661.  According-
ly, the Court quickly turned to rejecting the view that
1981 suits are more similar to tort actions for interference
with contractual rights than to claims based on personal
injury.  The Court noted that while 1981 deals partially
with contracts, it is -part of a federal law barring racial
discrimination, which . . . is a fundamental injury to the
individual rights of a person.-  Ibid.  Moreover, the econom-
ic consequences of 1981 -flo[w] from guaranteeing the
personal right to engage in economically significant activity
free from racially discriminatory interference.-  Id., at
661-662.  The most analogous state statute of limitations
in a 1981 action is, therefore, the one governing personal
injury suits.  Id., at 662.
  Wilson and Goodman held federal civil rights suits
analogous to personal injury tort actions not at all because
of the damages available to civil rights plaintiffs, but
because federal law protected individuals against tort-like
personal injuries.  Discrimination in the workplace being no
less injurious than discrimination elsewhere, the rights
asserted by persons who sue under Title VII are just as
tort-like as the rights asserted by plaintiffs in actions
brought under 1981 and 1983.
                     II
  The Court offers three additional reasons why
respondents' recoveries should be taxed.  First, it notes that
amounts awarded under Title VII would have been received
as taxable wages if there had been no discrimination,
leaving the impression that failing to tax these recoveries
would give victims of employment discrimination a windfall.
See ante, at 12 and n. 13.  Affording victims of employment
discrimination this benefit, however, simply puts them on
an equal footing with others who suffer personal injury.
For example, -[i]f a taxpayer receives a damage award for
a physical injury, which almost by definition is personal,
the entire award is excluded from income even if all or a
part of the recovery is determined with reference to the
income lost because of the injury.-  Threlkeld v. Commis-
sioner, 87 T. C. 1294, 1300 (1986), aff'd, 848 F. 2d 81 (CA6
1988).  I see no inequity in treating Title VII litigants like
other plaintiffs who suffer personal injury.
  Second, the Court intimates that the unavailability of
jury trials to Title VII plaintiffs bears on determining the
nature of the claim they bring.  See ante, at 11, 12, n. 12.
Here, the Court apparently assumes the answer to a
question we have expressly declined to address on recent
occasions.  See Lytle v. Household Mfg., Inc., 494 U. S. 545,
549, n. 1 (1990) (-This Court has not ruled on the question
whether a plaintiff seeking relief under Title VII has a right
to a jury trial. . . .  [W]e express no opinion on that issue
here-); Teamsters v. Terry, 494 U. S. 558, 572 (1990).  More
importantly, the Court does not explain what relevance the
availability of jury trials holds for the question of
excludability under 104(a)(2).  The suggestion is that Title
VII recoveries are not excludable under this section because
employment discrimination suits are equitable rather than
legal in nature.  Cf. Sparrow v. Commissioner, ___ U. S.
App. D.C. ___, 949 F. 2d 434 (1991).  That argument,
however, ignores the very IRS regulation the Court pur-
ports to apply.  Instead of construing the statutory term
-damages- as a reference to the remedy traditionally
available in actions at law, the IRS defines -damages- to
mean -an amount- recovered through prosecution or
settlement of a -legal suit or action based upon tort or tort
type rights.-  26 CFR 1.104-1(c) (1991) (emphasis added).
This inclusive definition renders the historical incidents of
-actions at law- and -suits in equity- irrelevant to the
proper interpretation of 104(a)(2).
  Finally, the Court asserts that Congress fundamentally
changed the nature of a Title VII suit when it enacted the
Civil Rights Act of 1991, Pub. L. 102-166, 105 Stat. 1071.
By authorizing compensatory and punitive damages in
addition to backpay and injunctive relief, the Court sug-
gests, Congress extended the statute's scope beyond purely
economic losses to personal injury.  See ante, at 12, n. 12.
This theory is odd on its face, for even before the 1991
amendments Title VII reached much more than discrimina-
tion in the economic aspects of employment.  The protection
afforded under Title VII has always been expansive,
extending not just to economic inequality, but also to
-`working environments so heavily polluted with discrimi-
nation as to destroy completely the emotional and psycho-
logical stability of minority group workers'- and -`demean-
ing and disconcerting'- conditions of employment.  Meritor
Savings Bank v. Vinson, 477 U. S. 57, 66, 67 (1986)
(quoting Rogers v. EEOC, 454 F. 2d 234, 238 (CA5 1971),
cert. denied, 406 U. S. 957 (1972); Henson v. Dundee, 682
F. 2d 897, 902 (CA11 1982)).
    Given the historic reach of Title VII, Congress' decision
to authorize comparably broad remedies most naturally
suggests that legislators thought existing penalties insuffi-
cient to effectuate the law's settled purposes.  There is no
need to guess whether Congress had a new conception of
injury in mind, however.  The legislature set out the reason
for new remedies in the statute itself, explaining that
-additional remedies under Federal law are needed to deter
unlawful harassment and intentional discrimination in the
workplace.-  Pub. L. 102-166, 2, 105 Stat. 1071.  This
authoritative evidence that Congress added new penalties
principally to effectuate an established goal of Title VII, not
contrary speculation, should guide our decision.
  By resting on the remedies available under Title VII and
distinguishing the recently amended version of that law,
the Court does make today's decision a narrow one.
Nevertheless, I remain of the view that Title VII offers a
tort-like cause of action to those who suffer the injury of
employment discrimination.  See Price Waterhouse v.
Hopkins, 490 U. S., at 264-265 (O'Connor, J., concurring
in judgment).  For this reason, I respectfully dissent.