Nos. 11-1318 & 11-1320 ____________________________________________ IN THE UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT ____________________________________________ EILEEN M. HYLIND, Plaintiff-Appellant/Cross-Appellee, v. XEROX CORPORATION, Defendant-Appellee/Cross-Appellant. ____________________________________________ On Appeal From the United States District Court for the District of Maryland, Case No. 03-116-PJM ____________________________________________ BRIEF OF THE EQUAL EMPLOYMENT OPPORTUNITY COMMISSION AS AMICUS CURIAE IN SUPPORT OF APPELLANT/CROSS-APPELLEE AND PARTIAL REVERSAL ____________________________________________ P. DAVID LOPEZ EQUAL EMPLOYMENT General Counsel OPPORTUNITY COMMISSION Office of General Counsel LORRAINE C. DAVIS 131 M St. NE, 5th Fl. Acting Associate General Counsel Washington, D.C. 20507 (202) 663-4724 ANNE NOEL OCCHIALINO Annenoel.Occhialino@EEOC.gov Attorney TABLE OF CONTENTS TABLE OF AUTHORITIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ii STATEMENT OF INTEREST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 STATEMENT OF THE ISSUES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 STATEMENT OF THE CASE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 A. Nature of the Case and Course of Proceedings Below. . . . . . 3 B. Statement of Facts and District Court Opinion. . . . . . . . . 3 ARGUMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 I. The district court erred in its interpretation and application of the "collateral source rule," which turns on the nature of the benefits rather than their source. . . . . . . . . . . . . . . . . . . . . . . . . . . 16 II. The statute of limitations begins to run under Delaware State College v. Ricks only when an employee receives "final and unequivocal" notice of an adverse action. . . . . . . . . . . . . . . . . . . . . . . .27 CERTIFICATE OF COMPLIANCE CERTIFICATE OF SERVICE TABLE OF AUTHORITIES Cases Ablemarle Paper Co. v. Moody, 422 U.S. 405 (1975). . . . . . . . . . . . . . . 21 Allen v. Exxon Shipping Co., 639 F. Supp. 1545 (D.Me. 1986). . . . . . . . . 11,24 Cada v. Baxter Healthcare Corp., 920 F.2d 446 (7th Cir. 1991). . . . . . . . 28,31 Calef v. FedEx Ground Package Sys., 2007 WL 2570185 (N.D. W.Va. Aug. 31, 2007). . . . . . . . . . . . . . . 22 Clark v. Burlington N., Inc., 726 F.2d 448 (8th Cir. 1984). . . . . . . . . 17,22 Corti v. Storage Tech. Corp., 304 F.3d 336 (4th Cir. 2002). . . . . . . . . . . 28 Davis v. Odeco, Inc., 18 F.3d 1237 (5th Cir. 1994). . . . . . . . . . . . . . . 17 Delaware State Coll. v. Ricks, 449 U.S. 250 (1980). . . . . . . . . . . . passim English v. Whitfield, 858 F.2d 957 (4th Cir. 1988). . . . . . . . . . . . 28,30,31 EEOC v. O'Grady, 857 F.2d 383 (7th Cir. 1988). . . . . . . . . . . . . . . . . .24 Fariss v. Lynchburg Foundry, 769 F.2d 958 (4th Cir. 1985) . . . . . . . . . passim Giles v. Gen. Elec. Co., 245 F.3d 474 (5th Cir. 2001). . . . . . . . . . . . . .20 Gunnells v. Healthplan Servs., Inc., 348 F.3d 417 (4th Cir. 2003). . . . . . . .20 Miller v. AT&T Corp., 250 F.3d 820 (4th Cir. 2001). . . . . . . . . . . . . . . 21 NLRB v. Gullett Gin Co., 340 U.S. 361 (1951). . . . . . . . . . . . . . . . 16,18 Phillips v. Western Co. of N. Am., 953 F.2d 923 (5th Cir. 1992). . . . . . . . .16 Shannon v. Fireman's Fund Ins., 136 F. Supp.2d 225, 232 (S.D.N.Y. 2001). . . 16 Sloas v. CSX Transp., Inc., 616 F.3d 380 (4th Cir. 2010). . . . . . . . . passim TABLE OF AUTHORITIES (con't) Szedlock v. Tenet, 61 Fed. Appx. 88 (4th Cir. 2003) (unpublished). . . . . .passim United States v. Price, 288 F.2d 448 (4th Cir. 1961). . . . . . . . . 16,17,18,19 Weber v. Int'l Paper Co., 307 F. Supp. 2d 119 (D.Me. 2004). . . . . . . . . . . 23 Statutes 42 U.S.C. § 2000e et seq. . . . . . . . . . . . . . . . . . . . . . . . . . . 1 42 U.S.C. § 2000e-5(e)(1). . . . . . . . . . . . . . . . . . . . . . . . . . . 27 42 U.S.C. § 2000e-5(g). . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Rules Fed. R. App. P. 29. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 STATEMENT OF INTEREST Congress established the Equal Employment Opportunity Commission to administer, interpret, and enforce Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq. This appeal raises the question of whether the "collateral source rule" turns on the source or the nature of the payments and who bears the burden of proof. This appeal also raises an important issue concerning the application of Delaware State College v. Ricks, 449 U.S. 250 (1980), which held that a plaintiff's limitations period begins to run from when an employer notifies an employee of an adverse action, even if the action's effects are not felt until later. Because of the importance of these issues to the effective enforcement of Title VII, the Commission respectfully offers its views to the Court. See Fed. R. App. P. 29. STATEMENT OF THE ISSUES <1> 1. The "collateral source rule" holds that payments from a collateral source should be disregarded when assessing damages. Did the court err in holding that the rule's applicability depends upon the source of the payments, rather than their nature, and did the court err in implicitly holding that plaintiffs bear the burden of proof? 2. The Supreme Court held in Delaware State College. v. Ricks, 449 U.S. 250 (1980) that the statute of limitations begins to run when an employer makes a decision concerning an adverse employment action and notifies the employee, even if the decision's effects are felt later. Did the court correctly hold that the plaintiff's claim was timely because the jury reasonably could have found that the defendant gave the plaintiff definite notice of the decision only after the limitations period began? STATEMENT OF THE CASE A. Nature of the Case and Course of Proceedings Below In this long-running Title VII case, Plaintiff Eileen Hylind, a former sales representative, prevailed at trial on her claims that Xerox discriminated against her based on sex in 1995 when it assigned her to the Giant Food account and retaliated against her by assigning her a new sales territory. Hylind also alleged that the discrimination and retaliation caused debilitating migraines that rendered her unable to work; since 1995 she has received disability benefits pursuant to Xerox's disability plan. After trial, the court awarded Hylind back pay but offset her disability payments. R.378.<2> Xerox filed a motion for judgment as a matter of law arguing that the sex discrimination claim was untimely, but the court denied the motion. R.385,R.393. Both parties appealed. R.422,R.424. B. Statement of Facts and District Court Opinion Hylind began working for Xerox in 1980. R.21,p.1. She alleged that she was the victim of severe and egregious sexual harassment and discrimination during the 1980s that stretched into the 1990s, including being sexually assaulted by co-workers and raped and stalked by managers. R.21,pp.2-3. The events concerning the claims that eventually went to trial, however, began in about 1992 when Xerox decided to reassign Hylind's "Vitro/Tracor" account. R.243(6/13/07 Tr.77-78). Hylind informed the account's representative, Gary Pool, who then asked her out and sent her flowers. Id. at 80. When Hylind's supervisor, Jenny Bennett, learned this, she said "this changes everything" and "you'll never be taken off of this account as long as [Pool]'s interested in you." Id. at 81-82. Hylind protested, but Bennett said it would "be good for business." Id. at 83. When Hylind asked if Bennett expected Hylind to sleep with a customer, Bennett said "yes." Id. Bennett also said that if Hylind angered a customer by rejecting him, "we'll just take you off the account." R.244(6/14/07 Tr.6). Hylind protested "that's sexual harassment," but Bennett kept Hylind on the account. R.243(6/13/07 Tr.83-84). Hylind and Pool had a few dates, but Hylind soon ended their social relationship. Id. at 87. They continued their professional relationship. Id. at 88. That changed, however, in July 1994 when Hylind met with her new supervisor, Toby Tobin, to review her accounts. R.244(6/14/07 Tr.17). Hylind told Tobin she was "very excited" about being on the brink of the largest order of her career, as she expected a sizeable order from the Vitro/Tracor account in 1995. Id. at 25. Tobin said, "you're sleeping with that guy [Pool], right?" Id. Hylind said she was not and that she would be making the sale despite having rejected Pool. Id. Tobin then said he was going to have "a man-to-man meeting" with Pool. Id. Hylind objected, but Tobin met with Pool anyway. Id. at 26. Pool said Hylind was the "best rep" they had ever had but he was uncomfortable working with her. Id. at 27. Also in July 1994 a sales representative named Mike Vazzana left Xerox. R.385-5(6/15/07 Tr.143,151). Tobin temporarily assigned Vazzana's "AE26" territory to Hylind, who already had the "AE24" territory. Id. The AE26 territory included Giant Food ("Giant"). Id. at 143. Giant subsequently notified Xerox that it was going with a different vendor. R.385-4(6/14/07 Tr.49). Tobin asked Hylind to make a presentation to Giant to try and keep its business, which she did. Id. at 49-50. Meanwhile, Hylind continued to ask Tobin to keep her on the Vitro/Tracor account. On October 31, 1994, Hylind reminded him that he needed to "correct that problem with Gary Pool," as she knew that "reconfiguration" was taking place. R.385-4(6/14/07 Tr.51). The "reconfiguration process" was when Xerox managers reassessed their sales representatives' territories and made changes for the next calendar year; Tobin explained that "reconfiguration" mainly took place in the fourth quarter, usually ending around November, although "sometimes it carried over." R.385-5(6/15/07 Tr.125-26); see also R.245(6/20/07 Tr.133)(Ill's testimony that reconfiguration occurred in December). Tobin told Hylind that "he would think about" whether to keep her on the Vitro/Tracor account and that she "would know in January" his decision. R.385-4(6/14/07 Tr.51). Later that same afternoon, Tobin and Hylind met with Art Koch, the assistant secretary of Giant. R.385-4(6/14/07 Tr.51-52). They discussed who would be the Xerox sales representative for 1995. Id. at 52. Koch expressed his preference for working with women and stared inappropriately at Hylind's chest. Id. After the meeting, Tobin asked Koch about his hobby, which was taking nude photographs, and Koch ended up showing Tobin and Hylind "approximately 15 to 20" of his photographs, which were of "women's breasts." R.244(6/14/07 Tr.55- 56). When Hylind remarked that the photos were clearly not, as Koch had said, of models from art class, he replied, "I'll take anyone anytime." Id. at 58. Hylind, who felt "sick to her stomach," did not respond. Id. Koch also asked Hylind to join him at a gallery display of his photos, but Hylind declined. Id. at 59. Hylind and Tobin drove back to the office, and she pleaded with Tobin not to give her the Giant account. R.385-4(6/14/07 Tr.60). But Tobin was "giddy" over Koch's reaction to Hylind, saying "that customer really likes you" and "I'm giving you this account . . . for '95." Id. Tobin also said that Koch liked women, was like a "dirty old man," and had given a married female sales representative body oils. R.385-4(6/14/07 Tr.62). Tobin added that he "had to give [Koch] what he wants" and that the other two women on his team were unsuitable because Koch would not be attracted to one while the other was "too young and too nice." Id. Hylind begged Tobin not to "pimp [her] out" and said that giving her the account would constitute sexual harassment. Id. at 60,63. Tobin said, "you're like a scorpion with all your charges of sexual harassment" and that Xerox "doesn't need people like you around." Id. at 61. The next day he told her, "I can beat any charge of sexual harassment by just changing your territory number, by putting you in the territory that Giant was in and taking you out of the territory that Vitro was in, and you can't prove anything." R.244(6/14/07 Tr.66). On November 21, 1994, Tobin issued Hylind a memo stating "the purpose of this memo is to inform you . . . that you will cover the open assignment (AE26) through the rest of 1994." R.385-8(emphasis added). The memo listed the accounts within the AE26 territory, including Giant. The memo also stated that Tobin was giving Hylind "the budget" for these accounts for November and December, which had negative implications for Hylind's earnings. Toward the end of the two-page memo, Tobin cited "Customer Satisfaction" as a reason for the assignment, explaining that "these accounts will be yours on January 1st" and that he wanted the "continuity of one representative." Hylind complained to Tobin about being assigned the AE26 budget for November/December, and eventually Tobin reversed his decision. R.385-5(6/15/07 Tr.181). That was memorialized in a December 8, 1994 memo stating "the purpose of this memo is to finalize the open territory coverage for 1994" and "you have agreed to cover the open assignment (AE26) through December 31, 1994" but will not have the AE26 budget for November/December. Def's Tr.Ex.36(emphasis added). On January 11, 1995, Hylind learned that Tobin had yanked her from the Vitro/Tracor account. R.385-4(6/21/07 Tr.74). Tobin did not tell her at that point, however, the extent of her 1995 territory assignment. Id. Rather that "unfolded all throughout January." Id. Hylind testified that "[o]n January 18th, I was given a list of accounts for the first time in 1995 and I discovered at that moment that I was losing six to eight accounts from my old territory and gaining some other accounts." R.395-3(6/21/07 Tr.40-41). She also testified that "there was some confusion about different accounts that may or may not be in my territory, but I was given a list. It was my first notification about the territory." Id. at 40; see also R.395-4(6/14/07 Tr.74)(testifying that she was not assigned to Giant before December 31, 1994). On January 25, 1995, Hylind learned more about which accounts she would keep and which were given away. R.395-4(6/21/07 Tr.74-75). Although the November 21, 1994 memo listed the Prudential account as part of the AE26 territory, it was not assigned to Hylind for 1995. R.385-4(6/21/07 Tr.76-77). Tobin initially reassigned the American College of Cardiology, which had been Hylind's account for twelve years, but then left it with Hylind. R.395-4(6/14/07 Tr.74-77). In April or May 1995, Hylind complained to District Manager Jenny Ill about her 1995 territory assignment. R.245(6/20/07 Tr.134). After reviewing Hylind's territory and speaking to Tobin, Ill refused to change it. Id. at 135. Ill and Hylind had a verbal confrontation that left Hylind physically incapacitated. Due to extreme stress, including debilitating migraines, Hylind went out on medical leave. Since then she has received disability payments pursuant to Xerox's disability plan. On October 27, 1995, Hylind filed a charge of discrimination with the Montgomery County Office of Human Rights (MCOHR). R.21,p.3. Xerox made several statements during MCOHR's investigation that were eventually read to the jury. They included Xerox's statement that "'[a]fter departing the [Giant] account [meeting with Koch], Mr. Tobin and Ms. Hylind discussed the possibility of adding Giant to her territory for 1995.'" R.395-2(6/14/07 Tr.181)(emphasis added). The jury also heard Xerox's statement that "[i]n January 1995, the open territory that [Hylind] had covered in 1994 was formally added to her territory . . . ." Id. Six years after Hylind filed her charge, MCOHR finally dismissed it. R.21,p.3. After the dismissal was upheld on appeal, the EEOC adopted the MCOHR's findings and dismissed Hylind's federal charge. Id. On January 14, 2003, Hylind filed a pro se complaint alleging hostile work environment, quid pro quo sexual harassment, retaliation, and sex discrimination. R.1. Hylind subsequently obtained counsel. In a September 30, 2003 opinion, the court dismissed Hylind's hostile work environment and quid pro quo claims on the grounds of untimeliness. R.21. But the court refused to dismiss Hylind's claims for discrimination and retaliation arising from her Giant assignment and her removal from the Vitro/Tracor account. Id. On July 7, 2005, the court granted Xerox's motion for summary judgment as to any failure-to-promote or failure-to- reinstate claims but otherwise denied it. R.130. In June 2007-twelve years after filing her charge and four years after filing her complaint-Hylind's case finally went to trial. Although Xerox conceded that Hylind's trial testimony created a "factual issue" as to when she learned of her 1995 territory assignment, including Giant, Xerox made a Rule 50(a) motion for judgment as a matter of law arguing that her claim was untimely. R.395-2(6/14/07 Tr.166-67); R385-3(6/14/07 Tr.216-21). The court denied Xerox's motion, and it denied Xerox's renewed motion for judgment as a matter of law. Id.; R.385- 3(6/20/07 Tr.182). The jury returned a verdict for Hylind "on her claim of sex discrimination on or after December 31, 1994, for being assigned to the Giant Found account" and in favor of Hylind on her "claim for retaliation on or after December 31, 1994, for being reassigned to a new territory." R.276. The jury awarded Hylind $1,000,000 in compensatory damages for the first claim, and $500,000 in compensatory damages for her second claim. Id. The jury found for Xerox on Hylind's claims relating to the Vitro/Tracor account. Id. At Hylind's request, her attorney withdrew and she proceeded pro se. R.280,R.291. On November 26, 2007, Hylind filed a motion for economic damages requesting back pay. R.298. Relying on the five-part test in Allen v. Exxon Shipping Co., 639 F. Supp. 1545, 1548 (D.Me. 1986) for ascertaining whether a payment is from "collateral source," Hylind argued that her disability benefits were from a collateral source and could not be offset from her back pay award. Id. Specifically, she argued that Xerox's disability plan was a fringe benefit of employment rather than a prophylactic measure against liability, which made it a collateral source. Id. at 29. Xerox responded that under Szedlock v. Tenet, 61 Fed. Appx. 88 (4th Cir. 2003) and Fariss v. Lynchburg Foundry, 769 F.2d 958 (4th Cir. 1985) the collateral source inquiry turns on whether the employer made the payments. R.304,pp.15-19. Citing Hylind's testimony that Xerox provided her $34,818 per year in disability benefits, Xerox asserted that it was "undisputed" that it was the source of the disability benefits, which therefore must be offset.<3> R.304,p.17. On August 18, 2008, the court held a hearing. Initially, Xerox agreed with the court that it had not paid the full annual disability but instead had paid a premium-of an unknown amount-to an insurance company. R.347(8/18/08 Tr.13).<4>Moments later, Xerox appeared to contradict itself by claiming that it paid the entire cost of the disability plan for all salaried employees. Id. at 16.<5> Hylind argued that Xerox had failed to prove that it self-funded the plan, as MetLife, Travelers, and other insurance companies had been involved in dispensing benefits. Id. at 22. After the hearing, Xerox submitted a supplemental letter brief with a copy of the 1995 "Disability Benefits" Policy. R.344 & Ex. A. It states that employees are covered "from the first day of employment" for disability "caused by injury or illness, occupational or non-occupational" and that a Claims Administrator administers the program. R.344,Ex.A,pp.1-2. Hylind responded that offset was an affirmative defense that Xerox waived by failing to raise it until two years after discovery closed. R.348. She also submitted letters from various insurance companies about her benefits, Travelers' Insurance "disability income benefits" statements listing her benefits and deduction for taxes, a Travelers' Insurance W-2 form listing it as "agent for Xerox," and her testimony that deductions were taken from her disability payments for her long-term disability (i.e., she paid a premium). R.348-25. Hylind also submitted "Enrollment Worksheets" from 2001 through 2004. R.348-24. These appear to show that as of 2001 Xerox provided employees a "benefits allowance" to use towards the benefits of their choosing, although employees had to pay the cost for benefits exceeding the allowance. In 2001, Xerox provided an individualized "benefits allowance" for five standard benefits, including long-term disability (60% of base pay) and extended long-term disability (40% of base pay). See R.348-24,p.3;R.351. Xerox's "allowance" of $15.22 per pay period for long-term disability appears to have covered in full the employee's cost (other "allowances" did not, and employees evidently paid those difference out-of-pocket). Although extended long-term disability was a standard benefit with an allowance of $13.22, Hylind had "no coverage" and evidently received the $13.22 in cash back to spend on other benefits. R.348-24,p.3;R.351 ("Hylind had the option to elect a 40% base pay replacement or no coverage, in which case she would have received cash back to spend on other benefits");R.352. In 2002, Xerox provided an undifferentiated total benefits allowance of $247.20 per pay period. R.348-24,p.4. Because the premium for medical benefits alone was $277.50-which exceeded the total "benefits allowance" by over thirty dollars-Hylind had to pay out-of-pocket for any additional benefits she selected; this evidently would have included the $17.60 employee cost for long-term disability. Id. Xerox replied that the worksheets establish that it paid the full cost of Hylind's long-term disability benefits in 2001 because the $15.22 "allowance" covered the cost. R.351,p2. Xerox also asserted that the benefits allowance it provided after 2001 "continued to include the full cost of Xerox's long-term disability benefit," R.351,p.2, although it did not explain the $17.60 "price per pay period" Hylind paid as of 2002. Xerox offered to provide an affidavit attesting to these facts, but it apparently never did. Id. Nearly four years after Hylind filed her motion for economic damages, the court finally ruled on it. R.378. The court noted that the parties agreed that Xerox's unlawful conduct had contributed to Hylind's disabling migraines, entitling Hylind to back pay. Id. at 3. The court concluded that Hylind was entitled to only eight years of back pay, however, because by 2002 her migraines should have returned "to her pre-1995 baseline level of work capability." Id. at 5- 6. The court also concluded that Hylind's disability payments should be offset because they were not from a collateral source. The court applied what it viewed as the rule from Szedlock v. Tenet, 61 Fed. Appx. 88 (4th Cir. 2003) (unpublished)-that "[c]ollateral funds are 'those received from a source distinct from the employer.'" R.378,p.8 (quoting Szedlock, 61 Fed. Appx. at 93). Faulting Hylind for failing to produce evidence that the disability payments were not from Xerox, or "any evidence" about the plan's purpose, the court concluded that "the disability plan was a benefit" from Xerox and therefore was not from a collateral source. Id. at 9, & n.8. Accordingly, the court said, the payments had to be offset. To do otherwise, the court reasoned, would give Hylind "an unfair windfall" and would inflict "an unfair penalty" on Xerox. Id. at 10. The court therefore offset Hylind's annual disability payments of $34,819/year, resulting in a total back pay award of $896,509. Id. at 13. Having already reduced the damages award to the $300,000 cap, the court ordered that Xerox pay $1,196,509 in damages. Id. at 20. On October 14, 2010 Xerox filed a motion for judgment as a matter of law arguing that Hylind's sex discrimination claim was untimely because Hylind learned of her 1995 assignment to the Giant account more than 300 days before she filed her charge. R.385-1,pp.3-7 (relying on Delaware State Coll. v. Ricks, 449 U.S. 250 (1980)). The court denied Xerox's motion in an October 25, 2010 paperless order. R.393. Hylind nevertheless filed a response. R.395. On February 28, 2011, the court issued an order disposing of all remaining motions and entered final judgment. R.418,419. Hylind and Xerox appealed. R.422,424. ARGUMENT I. The district court erred in its interpretation and application of the "collateral source rule," which turns on the nature of the benefits rather than their source. The "collateral source rule" provides that "'compensation from a collateral source should be disregarded in assessing . . . damages.'"<6> Sloas v. CSX Transp., Inc., 616 F.3d 380, 389 (4th Cir. 2010) (quoting United States v. Price, 288 F.2d 448, 449-50 (4th Cir. 1961)). The rule has several justifications, including that "no consideration need be given to collateral benefits which employees may have received" because "no consideration [is] given or should be given to collateral losses in framing an order to reimburse employees for their lost earnings." NLRB v. Gullett Gin Co., 340 U.S. 361, 364 (1951) (unemployment compensation is a collateral source that cannot be offset from an NLRA award). The collateral source rule also serves the purpose of deterrence, as defendants must pay for their misconduct even if a plaintiff has obtained funds from a collateral source. Phillips v. Western Co. of N. Am., 953 F.2d 923, 930 (5th Cir. 1992). Finally, while the rule may effectively provide a "windfall" to plaintiffs, "fairness dictates that [any] 'windfall' be awarded to the victim of discrimination rather than the perpetrator." Shannon v. Fireman's Fund Ins., 136 F. Supp.2d 225, 232 (S.D.N.Y. 2001). While the contours of the collateral source rule and its rationales are clear, it is less clear how to determine whether a particular payment came from a collateral source. Relying primarily on this Court's unpublished, per curiam opinion in Szedlock v. Tenet, 61 Fed. Appx. 88 (4th Cir. 2003), the district court held that only those sources "'distinct from the employer'" qualify as collateral sources. R.378, pp.8,9-10(emphasis added). This is an incorrect statement of the law. To be sure, this Court has recognized that "when compensation comes from someone other than the defendant" it is typically from a collateral source. Price, 288 F.2d 448; see also Davis v. Odeco, Inc., 18 F.3d 1237, 1244 (5th Cir. 1994) ("Sources of compensation that have no connection to the tortfeasor are inevitably collateral."). But this Court long ago rejected the converse principle-which the district court mistakenly embraced-that only sources distinct from the defendant constitute collateral sources. In United States v. Price this Court held that the fact that compensation "comes from the defendant tortfeasor does not itself preclude the possibility that it is from a collateral source." Price, 288 F.2d at 450 (emphasis added); see also Clark v. Burlington N., Inc., 726 F.2d 448, 450 (8th Cir. 1984) ("A benefit may be exempt from setoff . . . even though the employer is the sole source of the fund."). This Court explained that a "plaintiff may receive benefits from the defendant himself which, because of their nature, are not considered double compensation for the same injury." Price, 288 F.2d at 450 (refusing to offset plaintiff's retirement benefits, although the government was the defendant and contributed to the retirement fund, because the fund's purpose was to provide retirement benefits, not to compensate employees for injury). Although Price clearly held that benefits from an employer may be a "collateral source," two of this Court's subsequent decisions-Szedlock and the case upon which it relied, Fariss v. Lynchburg Foundry, 769 F.2d 958 (4th Cir. 1985)-admittedly could be read as suggesting that collateral sources are only those distinct from an employer. Significantly, neither case cites Price. In Fariss, this Court held that a lump sum pension benefit paid directly by the employer to the plaintiff upon his termination should be offset from the plaintiff's back pay award because the plaintiff would not have received the payment had he continued working. 796 F.2d at 966. In a footnote, this Court said that "[a] payment made entirely by the employer directly to the employee is not a 'collateral benefit'" under Gullett Gin and that "collateral benefits are those received from a source distinct from the employer . . . ." Id. at n.10. Nearly twenty years later, this Court issued its unpublished, per curiam decision in Szedlock, which was an employment discrimination case against the government in which the district court had offset from the plaintiff's back pay award 94% of her retirement benefits (representing the government's contribution to the fund). Relying on Fariss, this Court held that the plaintiff's benefits from the Federal Employees' Retirement System were "not 'received from a source distinct from the employer'" and therefore were not from a collateral source, even though the plaintiff contributed 6% to the fund. Szedlock, 61 Fed. Appx. at 94 (quoting Fariss, 769 F.2d at 966 n.10). Thus, Fariss and Szedlock seem to suggest that only those sources distinct from an employer are "collateral," although neither decision cited, much less distinguished, Price. Any tension between Price and Fariss and Szedlock, however, was resolved last year by this Court's published opinion in Sloas, which was issued before the district court ruled in this case. In Sloas, this Court considered whether the plaintiff's Federal Employers Liability Act award should have been offset by the portion of the plaintiff's "Tier II" disability benefits under the Railroad Retirement Act that were attributable to the defendant's contribution to the fund. Quoting Price, this Court said "that a benefit 'comes from the defendant tortfeasor does not itself preclude the possibility that it is from a collateral source.'" Sloas, 616 F.3d at 389 (quoting Price, 288 F.2d at 450) (emphasis added). Rather, this Court said, "[w]e . . . consider a benefit to be from a collateral source unless it results from payments made by the employer in order to indemnify itself against liability." Sloas, 616 F.3d at 390 (internal quotation marks and citation omitted). This Court explicitly rejected the defendant's argument that Szedlock stands "for the proposition that a benefit must be 'received from a source distinct from the employer' in order to be deemed 'collateral.'" Id. at n.10 (quoting Szedlock, 61 Fed. Appx. at 94). Calling the defendant's "reliance on mere labels" "mistaken," this Court said that Fariss, on which Szedlock relied, "dealt with a 'payment made entirely by the employer directly to the employee,' whereas the plaintiff's Tier II disability benefits were funded by employer and payroll taxes, much like Social Security benefits. Id. (quoting Fariss, 769 F.2d at 966 n.10). Thus, to the extent that Fariss and Szedlock raised any question about whether the collateral source rule turns strictly on the source of the funds, Sloas put that issue to rest; the nature of the benefit, not its source, determines the applicability of the rule. Employers also bear the burden of showing that an award should be offset by payments from a collateral source, as the general rule is that offset is an affirmative defense.<7> See, e.g., Gunnells v. Healthplan Servs., Inc., 348 F.3d 417, 438 (4th Cir. 2003) (recognizing in unfair trade practices case that offset is an affirmative defense); see also Sloas, 616 F.3d at 386 (quoting the district court's opinion stating that the defendant bore the burden of showing offset). Placing the burden on defendants makes pragmatic sense, as employers are typically in a better position than employees to produce evidence about the nature of employee benefits, and it also makes good policy sense. As the Supreme Court has stated, one of Title VII's purposes "is to make persons whole for injuries suffered on account of unlawful employment discrimination." Ablemarle Paper Co. v. Moody, 422 U.S. 405, 418 (1975). Back pay is essential to achieving "make whole" relief and is therefore presumptively available to victims of intentional discrimination. See id. at 418-21. The only offests from a back pay award contemplated by Title VII are for "interim earnings or amounts earnable with reasonable diligence." 42 U.S.C. § 2000e-5(g). Thus, the statute itself does not even contemplate offset for payments from collateral sources (just earnings). Accordingly, the burden should at least be on employers to show that an employee's back pay-which is presumptively available to victims of intentional discrimination-should be offset by payments from collateral sources, just as the burden is on defendants to show a plaintiff's failure to mitigate damages. See Miller v. AT&T Corp., 250 F.3d 820, 838 (4th Cir. 2001). Here, Xerox failed to meet its burden of showing that the disability payments were not from a collateral source. Because the district court applied the wrong test, it focused myopically on whether Xerox self-funded the plan. But even assuming, arguendo, that Xerox self-funded the plan and therefore paid Hylind's benefits, the disability payments should not have been offset because Xerox failed to show that they were "made by [it] in order to indemnify itself against liability." Sloas, 616 F.3d at 389. To the contrary, record evidence shows that the plan was a fringe benefit of employment, as even the district court seemed to have recognized. See R.378,p.9(calling the disability plan "a benefit" Hylind received as an employee). The name of the 1995 "Disability Benefits" policy suggests this, and, as discussed below, the express terms of the policy establish it. Significantly, nothing in the policy itself states that its purpose was to indemnify Xerox against liability for employment discrimination awards. Compare Calef v. FedEx Ground Package Sys., Inc., 2007 WL 2570185, at *4-5 (N.D. W.Va. Aug. 31, 2007) (disability plan was a fringe benefit where it did not provide for indemnification against employment discrimination awards), with Clark, 726 F.2d at 451 (payments from employer's disability plans must be offset from plaintiff's FELA award because the plans "explicitly provide that money paid or payable under the FELA decreases the benefits allowable"). To the contrary, the plan at issue here expressly provides disability benefits for illness as well as off-the-job injuries. Since Xerox would not ordinarily be liable for employee illnesses or off-the-job injuries, the policy's terms suggest that Xerox offered disability benefits as a fringe benefit of employment rather than as a prophylactic measure against liability for employment discrimination. See Sloas, 616 F.3d at 391 (relying on fact that employees "need not be injured on the job" in order to receive disability benefits under the Railroad Retirement Act in finding that employer's contributions were not made to indemnify itself against liability). Accordingly, even if Xerox self-funded its disability plan, as it claims, the plan was a fringe benefit of employment, making offset inappropriate. See Weber v. Int'l Paper Co., 307 F. Supp. 2d 119, 125 (D.Me. 2004) (where employer self- funded mandatory disability plan providing 60% of salary and employees could pay extra premium for 70% salary replacement, holding that 60% plan was a fringe benefit because it covered work and non-work injuries and did not contain specific language contemplating offset against discrimination judgments), aff'd on other grounds, 417 F.3d 229 (2d Cir. 2005). Indeed, it is almost inconceivable that Xerox offered its disability plan as a prophylactic measure against Title VII employment discrimination awards. That is because employment discrimination does not typically cause physical injury. Only in an exceptional case, such as this one, does an employer's unlawful conduct cause physical injury that renders an employee unable to work and therefore eligible for disability payments. Most victims of employment discrimination under Title VII who are fired or denied promotion (and therefore comprise the subset of plaintiffs who are typically awarded back pay), do not go out on disability leave as a result of the discrimination. Accordingly, only in the rarest of occasions would a Title VII plaintiff's claim for back pay coincide with the receipt of disability benefits. Given this, it is highly improbable that Xerox intended its disability plan to indemnify itself against liability for Title VII discrimination awards. Xerox's "Enrollment Worksheets" provide additional evidence that Xerox offered its disability plan as a fringe benefit.<8> R.348-24. The 2001 worksheet shows that although extended long-term disability was a standard benefit for which employees received a "benefit allowance," Hylind declined (or was not offered) it; according to Xerox, this meant she "received cash back to spend on other benefits." R.351. Thus, while it may have been that prior to 2001 all employees were covered by Xerox's disability plan, it appears that in 2001 employees had the "option"-as Xerox stated, R.351-to sign up for extended long-term disability or, presumably, long-term disability. The 2002 worksheet also suggests that employees had the option of paying $17.60/pay period for long-term disability benefits. The record therefore suggests that, at least as of 2001, Xerox's disability plan functioned like an optional insurance plan that was part and parcel of an employee's compensation package and therefore constituted a collateral source. See EEOC v. O'Grady, 857 F.2d 383, 391 (7th Cir. 1988) (refusing to offset pension payments because "like an insurance policy provided by an employer, the pension benefits here were part of the claimants' compensation") (emphasis added); Allen, 639 F. Supp. at 1548 (that employee contributes to funding of disability payments favors finding that payments were fringe benefit). Moreover, given the voluntary nature of the plan, at least as of 2001, it is difficult to fathom how Xerox could have intended the plan to provide protection against the possibility of employment discrimination awards. Accordingly, on this record, Xerox has failed to show that it intended its disability plan to indemnify itself against liability for Title VII discrimination awards. The record in this case also raises questions as to whether Xerox truly self- funded the disability plan, as it repeatedly argued below, and/or whether Hylind contributed a portion of her salary towards a premium for the benefits. Because Xerox bears the burden on this issue, the court erred in offsetting Hylind's disability benefits, even under its view of the collateral source rule as applying only to sources distinct from an employer. While Xerox's counsel repeatedly asserted below that the disability insurance plan was "fully self-insured and self- funded by Xerox and all payments made to Ms. Hylind . . . were paid in full by Xerox, not by any insurer," R.344, Xerox apparently never offered actual evidence clearly establishing this (such as an affidavit from its HR manager or the claims administrator). And Hylind provided some evidence suggesting that insurance companies paid her benefits. See R.348-25(5/08 disability income benefits statement from The Travelers Insurance, 1995 W-2 issued by The Travelers to Hylind, and correspondence from The Travelers, Hartford, and Prudential insurance companies to Hylind about her benefits). Xerox's own expert even testified that he believed that insurance companies, not Xerox, paid the disability benefits. R.348-21. Accordingly, unlike other cases in which this Court has declined to apply the collateral source rule, record evidence suggests that the payments in this case were not made directly by Xerox to Hylind. Cf. Fariss, 769 F.2d at 966 (lump-sum pension payment made directly by employer to plaintiff was not a collateral source). Hylind also offered evidence that she essentially paid a premium for long- term disability benefits as of 2001, again undercutting Xerox's assertions that its plan was entirely self-funded. Although in 2001 Xerox's "benefits allowance" covered the $15.22 cost of the premium, this money was really Hylind's in the sense that the allowance was a fringe benefit of employment; Hylind evidently could have declined the coverage and used the $15.22 allowance for a different benefit, as she apparently did vis-à-vis the $13.32 allowance for the extended long- term disability plan she did not sign up for. In 2002, it seems most accurate to say that Hylind, not Xerox, paid the $17.60 cost for long-term disability because Xerox's undifferentiated lump sum "benefits allowance" of $247.20/pay period failed to cover even the premium for medical insurance. Thus, even under the district court's erroneous interpretation of the collateral source rule, it erred in offsetting the disability benefits because Xerox failed to show that it, rather than insurance companies, paid out the benefits, and because it also failed to show that it paid the premiums. Cf. Szedlock, 61 Fed. Appx. at 6 (retirement fund was collateral source where employer's contributions represented 94% of plaintiff's benefits). II. The statute of limitations begins to run under Delaware State College v. Ricks only when an employee receives "final and unequivocal" notice of an adverse action. Title VII requires that charges of discrimination be filed within 300 days of an unlawful employment practice. 42 U.S.C. § 2000e-5(e)(1). Hylind filed her charge on October 27, 1995, making December 31, 1994 the relevant cut-off date. Xerox argued that it was entitled to judgment as a matter of law on Hylind's sex discrimination claim because it was undisputed that Xerox told Hylind before December 31, 1994 about her 1995 Giant assignment, rendering the claim untimely under Delaware State College v. Ricks, 449 U.S. 250 (1980). R.385-1,pp.3-7. The district court properly rejected Xerox's argument, which is premised on an incorrect interpretation of Ricks and a selective presentation of the trial record. In Ricks the Supreme Court held that the plaintiff's limitations period began to run when "the tenure decision was made and communicated" to him, "even though one of the effects of the denial of tenure-the eventual loss of a teaching position-did not occur until later." Ricks, 449 U.S. at 258. Accordingly, events that are "a delayed, but inevitable, consequence" of a decision do not restart the limitations period. Id. at 257-58. But, as Judge Posner has explained, "Ricks does not hold that the statute of limitation begins to run as soon as the handwriting is on the wall." Cada v. Baxter Healthcare Corp., 920 F.2d 446, 449 (7th Cir. 1991) (emphasis added). Rather, as this Court has recognized, Ricks holds merely that the statute of limitations begins to run "on the date that the employee is given definite notice of the challenged employment decision." English v. Whitfield, 858 F.2d 957, 961 (4th Cir. 1988). As this Court has explained, Ricks is premised on an employee's receipt of "final and unequivocal notice of an employment decision" because "[u]ntil that time, there is the possibility that the discriminatory decision itself will be revoked, and the contemplated action not taken." Id. Here, the court properly rejected Xerox's motion for judgment as a matter of law under Ricks. The evidence was more than sufficient to support the jury's reasonable finding that Hylind did not receive "definite" or "final and unequivocal notice" of her 1995 assignment to Giant before December 31, 1994.<9> See Corti v. Storage Tech. Corp., 304 F.3d 336, 341 (4th Cir. 2002) ("Judgment as a matter of law is only appropriate if, viewing the evidence in the light most favorable to the non-moving party, the court concludes that a reasonable trier of fact could draw only one conclusion from the evidence.") (internal quotation marks and citation omitted). Specifically, Hylind denied that she was assigned to Giant before December 31, 1994. R.385-4(6/14/07 Tr.74)(adding that she did not get paid for the Giant account in November/December 1994). Rather, she testified, it was not until January 18, 1995, that she "was given a list of accounts for the first time"; she repeated that this was her "first notification about the [1995] territory." R.395- 3(6/21/07 Tr.40-41) (emphasis added). Hylind's testimony is fully consistent with statements Xerox made during the administrative investigation-which were read to the jury-that "'in January 1995, the open territory that she had covered in 1994 was formally added to her territory.'" R.395-2(6/14/07 Tr.181)(emphasis added). Her testimony was also consistent with undisputed evidence showing that she did not have the AE26 budget for Giant in November/December 1994 and was not getting paid for it. Despite this evidence, Xerox argued that Hylind's testimony that Tobin told her on October 31, 1994 that "I'm giving you this [Giant] account for '95" compels the conclusion that Hylind's claim was untimely under Ricks. R.385,p.6. It does not. The jury also heard Hylind testify that during this conversation she pled with Tobin not to give her the Giant account and argued that doing so would constitute sexual harassment. Thus, unlike in Ricks, where the plaintiff received final notice of an adverse action and then sought to overturn that decision,<10> the jury reasonably could have found that Tobin's statement was an off-the-cuff remark and that there was "the possibility that the discriminatory decision" might "be revoked, and the contemplated action not taken." English, 858 F.2d at 961. The jury's finding would have also been supported by Tobin's testimony that the "reconfiguration process" took place throughout the fall and but sometimes "carries over," suggesting that territory assignments were not final until January, and by Hylind's testimony that Tobin told her she would not know until January whether she would keep the Vitro/Tracor account. R.385-5(6/15/07 Tr.125-26);R.385-4(6/14/07 Tr.51). Similarly, the jury was not compelled to find that Tobin's November 21, 1994 memo gave Hylind "final and unequivocal" notice of her 1995 Giant assignment. The memo's opening line states that its purpose was to inform Hylind she would be covering the AE26 territory, including Giant, "through the rest of 1994." The memo notes only in passing at the end that Tobin made the assignment because "these accounts will be yours on January 1st." The jury was not compelled to find that this statement-tacked on to the end of a memo whose stated purpose was to communicate about assignments for the rest of 1994- constituted "definite" or "final and unequivocal" notice of Hylind's 1995 Giant assignment. To the contrary, at least one of the accounts listed on the memo- Prudential-did not end up being assigned to Hylind for 1995. R.395-4(6/14/07 Tr.76-77). Additionally, the jury heard evidence suggesting that as late as January 1995, Tobin made changes to Hylind's territory assignment, as he revoked his initial decision to reassign the American College of Cardiology to another sales representative. R.395-4(6/14/07 Tr.75-77). Finally, the jury heard undisputed evidence that Hylind successfully objected to the memo's assignment of the AE26 budget to her for November/December, again demonstrating that nothing in the memo was set in stone. Rather, at most, the memo provided tentative notice of Tobin's thoughts about the scope of Hylind's 1995 territory assignment. Because Ricks does not hold that the statute of limitations begins when "the handwriting is on the wall," Cada, 920 F.2d at 449, but when an employee receives "final and unequivocal notice of an employment decision," English, 858 F.2d at 961, the evidence does not compel a finding that Hylind received "final and unequivocal" notice of her territory assignment prior to January 1995. Therefore, the court properly denied Xerox's motion for judgment as a matter of law. Respectfully submitted, P. DAVID LOPEZ General Counsel LORRAINE C. DAVIS Acting Associate General Counsel ________________________ /s/ ANNE NOEL OCCHIALINO Attorney EQUAL EMPLOYMENT OPPORTUNITY COMMISSION Office of General Counsel 131 M St. NE, 5th Fl. Washington, D.C. 20507 (202) 663-4724 Annenoel.Occhialino@EEOC.gov CERTIFICATE OF COMPLIANCE I hereby certify that this brief complies with the type-volume requirements set forth in Fed. R. App. P. 32(a)(7)(B) and Fed. R. App. P. 29(d). This brief contains 6,959 words, from the Statement of Interest through the end of the brief, as determined by the Microsoft Word 2003 word processing program, with 14-point proportionally spaced type for text and 14-point proportionally spaced type for footnotes. ________________________ s/ ANNE NOEL OCCHIALINO Attorney EQUAL EMPLOYMENT OPPORTUNITY COMMISSION Office of General Counsel 131 M St. NE, 5th Fl. Washington, D.C. 20507 (202) 663-4724 Annenoel.Occhialino@EEOC.gov CERTIFICATE OF SERVICE I hereby certify that on June 8, 2011, I electronically filed the foregoing with the Clerk of Court using CM/ECF, which will provide notice to counsel and parties listed below, and that on this same date I sent eight identical copies of this brief by overnight mail to the United States Court of Appeals for the Fourth Circuit. Plaintiff-Appellant Eileen Hylind 14300 Platinum Dr. Gaithersburg, MD 20878 (301) 294-3484 ehylind@stanfordalumni.org Counsel for Xerox Elena. D. Marcuss McGuire Woods, LLP 7 St. Paul St. Baltimore, MD 21202-1626 emarcuss@maguirewoods.com Intervenor-Appellee Laurence Samuel Kaye 5801 Nicholson Lane, Rockville, MD lkaye@thekayelawfirm.com _________________________ s/ANNE NOEL OCCHIALINO Attorney EQUAL EMPLOYMENT OPPORTUNITY COMMISSION Office of General Counsel 131 M St. NE, 5th Fl. Washington, D.C. 20507 (202) 663-4724 Annenoel.Occhialino@EEOC.gov ********************************************************************************** <> <1> The Commission expresses no opinion on other issues presented in this appeal. <2> For the court's convenience, all record cites are to where the documents can be found on PACER. <3> Hylind actually testified, however, that whether Xerox provided the benefits was "a question that still hasn't been decided," as she "paid for benefits out of the disability pay" and other companies had been "involved in insurance and monitoring [her] care . . ." R.304-3(Tr.135). <4> Xerox's expert also testified that he believed that insurance companies, not Xerox, paid Hylind's disability benefits. R.348-21(Tr.67). <5> To support this assertion, Xerox pointed to Defendant's Exhibit 103, which includes a collection of Hylind's earning reports listing the $34,818/year that Hylind received in long-term disability payments, and the 1990 You and Xerox Benefits for Salaried Employees, which states that Xerox provided disability to all employees. R.347,Tr.16;Ex.103,p.54. Hylind, however, denied that the 1990 policy was in effect in 1995, R.347,p.19, and Xerox later submitted a copy of the 1995 plan. <6> Hylind argued below that Xerox waived its opportunity to assert a collateral source defense. The Commission takes no position on this issue, which the court did not address. <7> Xerox argued below that offset is not an affirmative defense in employment discrimination cases, but the law is to the contrary. See Giles v. Gen. Elec. Co., 245 F.3d 474, 494 & n.36 (5th Cir. 2001) (in ADA action, recognizing that offset of plaintiff's long-term disability and pension benefits was an affirmative defense). <8> Although the parties seem to agree that the 1995 policy governs Hylind's receipt of disability benefits, it also appears undisputed that deductions were made from Hylind's benefits at least as of 2001 to cover her long-term disability premiums. Therefore, how Xerox's disability plan worked as of 2001 seems relevant to an inquiry into whether the plan was a fringe benefit of employment. <9> Although the court invited Xerox to submit a special interrogatory on the statute of limitations defense, Xerox evidently never did. See R.395-2(6/14/07 Tr.179). The jury was therefore never asked explicitly whether Xerox gave "final and unequivocal" notice to Hylind of her 1995 Giant assignment before December 31, 1994, which is the key question under Ricks. Hylind argued below that Xerox's failure to request a special interrogatory on this issue waives it. R.395,p.2. The Commission takes no position on this issue, which the court did not address. <10> This case would be like Ricks only if Hylind were claiming that the limitations period began to run in May 1995 when Jenny Ill denied Hylind's appeal of her 1995 territory assignment.