ANALYSIS OF JANUARY 29, 2008 CAV OPINIONS

[Posted January 29, 2008] The Court of Appeals issues published opinions in two cases today. I almost started by saying “two published opinions,” but in reality it’s three. The explanation for that is very interesting; read on.

Workers’ Compensation

We get two . . . ummm . . . principal opinions in Dowden v. Hercules, Inc., decided by the full court on en banc review. I have to call them something, and with the court split evenly between two different approaches to the same case, you can’t call either of them a majority or a plurality or a dissent.

In my experience, when the court splits 5-5 in an appeal, the underlying decision is “affirmed by an equally divided court.” The rub in this case is that all ten judges want to reverse the decision of the full commission – and reversed it most certainly is – but for two very different reasons. As neither side could persuade anyone from the opposing camp to desert and form a true majority, we are left with a decisional anomaly: A sort-of unanimous judgment that probably cannot be cited as authority for either rationale.

The one thing we do know, is that the employer loses. Dowden worked for Hercules for 30 years. (Somehow, despite the fact that we have two full recitations of the facts, no one mentions exactly what his job title was, so I can’t tell you exactly what he did.) For whatever reason, the company wanted to reduce the average age of its work force. As you probably know, it can’t achieve that by the simplest method – laying off all the old people – without attracting some unwanted attention from certain federal functionaries.

The solution was easy – offer the gray-haired contingent incentives to retire early. (Hey, the EEOC doesn’t get involved when someone voluntarily retires.) Dowden qualified for the offer, and he accepted. But before he got to his last day at the office, he got hurt on the job. His doctor eventually returned him to light duty work, but by that point, Dowden shrugged, he was “retired.” That didn’t stop him from seeking Comp benefits for his residual disability.

At this point, you need to know something about a few Code provisions. (I’m going to simplify this to the extent possible, in an effort to keep the prose sparkling.) One statute requires an injured employee, as a condition of receiving benefits, to market his residual employment capacity. If he refuses, say, the employer’s offer of limited duty, his benefits can be cut off. Another says that if his benefits are cut off by refusal to get replacement work, he can cure that by accepting less-paying employment that’s still suitable to his capacity. Remember that last clause; it’s vital to today’s ruling.

The company cut off Dowden’s Comp benefits, claiming that they were willing to retain him (at a lower rate of pay, about $1K a week) for light duty work. He stubbornly resisted for a short while, but then got a job “as a sales associate with a friend’s seafood company . . . earning $200 a week.” This was a shrewd move; he took a lower-paying job, and preserved a claim for comp benefits. For the mathematically minded, the benefits would be calculated at 2/3 of the difference between his previous income and the amount the company would pay him for light duty. The resulting figure was about $160 per week, which is all the money this case is about.

The commission sided with the employer in the inevitable dispute over whether taking comparatively menial work, for menial pay, is enough to preserve the employee’s right to claim the differential benefits. The Court of Appeals disagrees, sort of unanimously.

Judge Clements writes the first opinion, which holds that the acceptance of the seafood job was enough to preserve Dowden’s right to the benefits. Judge Kelsey writes the second, which remands the case to the commission for further proceedings to decide whether taking the menial job was “suitable to [Dowden’s] capacity” for work, using several factors in the analysis. (Judge Kelsey’s opinion rejects both of the extreme positions offered by the parties. The employer had argued that the new job had to be roughly equivalent in pay to the rejected job; the employee had contended that even a dollar-a-week job would suffice.)

So what happens now? We have all ten judges voting to reverse, so clearly the employee wins, right? Well, yes. But half the judges think he gets his $160 a week, while the other half say he might, or he might not. Half of the judges think there ought to be more fact-finding by the commission; the other half seem satisfied with the record as it is. Both opinions conclude with a directive for further proceedings, but frankly, if I were on the commission, I’d feel less than comfortable reopening the record for more evidence; Judge Clements’s opinion seems to direct an award, and that’s it.

The truth is, I really don’t know what the commission is supposed to do. It is, of course, possible that the employer could appeal and have this unfortunate impasse resolved by the Supreme Court. But even assuming that that body would take the case, would the employer spend the money to appeal it, when it’s clearly going down in flames in a case that won’t cost it a ton of money anyway? Perhaps not; and I don’t think the employee can appeal, either, since he won and is not aggrieved by the court’s decision today.

Domestic relations

By comparison, the other case decided today is more sedate, but we still get an important refinement on a vital issue. The issue is imputation of income to an underemployed spouse in the calculation of child support; the case is Broadhead v. Broadhead.

I have long mused that one of the best gifts I can give my daughter is to love her mother; broken homes are no joy for any child. But not every marriage will work out; indeed, to quote the pop culture statistics (without any confidence in their accuracy), half of them don’t. After fifteen or so years of marriage, the Broadheads decided to call it off. There remained the issue of who would get their two kids, and who would pay support. The husband, who had a fairly cushy job (well, the work may have been hard, but the pay was cushy) as corporate counsel with Capital One in Richmond, earned a quarter million dollars in the year of the divorce, so he was elected to pay the support, in the amount of roughly $1,800 a month.

Two years later, the parties agreed to cut the support in half, to $890 a month. They didn’t get that change embalmed into a court order, but to her great credit, the wife never attempted to take advantage of this (as many another divorcee has done) by asking for an award of back support; she honorably insisted to the court later that she was not entitled to the extra $910 a month. There are, evidently, still people of principle in the world of litigation.

Now comes the monkey wrench: Capital One decided that it wanted its upper level honchos to have greater breadth of experience. It accordingly transferred a number of them, including husband, to other sectors of the company. Husband fought this, saying he wasn’t qualified for the new (and very different) position, but the company wouldn’t relent, so he had to transfer.

Guess what? Husband was right; he really wasn’t suited for the new assignment after all. Capital One agreed to replace him with a more experienced person, but by this point, his original job wasn’t available. Instead of another transfer, Capital One gave him a golden parachute, in the form of a year’s pay, tuition assistance toward a Master’s Degree, and a letter explaining that his leaving the company wasn’t his fault.

I’m going to fast-forward a bit here – husband got a job in Baltimore, but that started to cramp his style when it came to being part-time custodian of his two kids. His new employer, CitiFinancial, refused his request to partially telecommute (two days a week). Fearing that staying in Baltimore would cost him his kids, he left CitiFinancial and went to work for less money at a venture capital firm that he had founded with the proceeds of that golden parachute.

The trial court excused this last move as not being voluntary underemployment (and this ruling was not challenged on appeal – the court hints that the issue might have received considerable attention if it had been so challenged), but it finds that the original departure, from Capital One, was voluntary, so it imputes income to him from that job, in fixing a new child support figure of $800 a month.

The Court of Appeals reverses this ruling, and remands for recalculation of the support figure. It holds as a matter of law that the departure for Capital One was quite involuntary, especially since husband had to be crowbarred out of his original position. Accordingly, it was error to use that job as the basis for imputed income.

Today’s opinion is an enormously valuable tool for domestic relations practitioners, as it contains a meticulous description of the issues surrounding imputation. Perhaps the most important of these is the burden of proof. Ordinarily, you might think that the burden is on the party who wants to impute income to his or her spouse. You’d be wrong, at least in this context; if a husband takes a lesser-paying job, he has the burden of showing why his previous income should not be imputed to him. This is particularly true where a spouse leaves a comfortable, stable, salaried position to take a riskier job (say, on commission) that might engender better pay in the long run, but that also entails a risk of a bad year or two. Your kids don’t have to bear that risk, the court notes.