McNabola v. Chicago Transit Authority

• Citation: 10 F.3d 501
• Decision Date: 24 November 1993
• Docket Number: No. 92-1133,92-1133
• Parties: 63 Fair Empl.Prac.Cas. (BNA) 1064, 63 Empl. Prac. Dec. P 42,686, 27 Fed.R.Serv.3d 735 William McNABOLA, Plaintiff-Appellee, v. CHICAGO TRANSIT AUTHORITY, Defendant-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 501

10 F.3d 501

63 Fair Empl.Prac.Cas. (BNA) 1064,

63 Empl. Prac. Dec. P 42,686, 27 Fed.R.Serv.3d 735

William McNABOLA, Plaintiff-Appellee, v. CHICAGO TRANSIT AUTHORITY, Defendant-Appellant.

No. 92-1133.

United States Court of Appeals, Seventh Circuit.

Argued Nov. 2, 1992.

Decided Nov. 24, 1993.

Linda Friedman (argued), Richard C. Leng, Leng, Stowell, Friedman & Vernon, Nicholas J. Motherway, Mark E. McNabola, Motherway & Glenn, Chicago, IL, for plaintiff-appellee.

Mitchell Ware (argued), Dianne McCollough, Jones, Ware & Grenard, Chicago, IL, for defendant-appellant.

Before RIPPLE and ROVNER, Circuit Judges, and ENGEL, Senior Circuit Judge. ^*

ILANA DIAMOND ROVNER, Circuit Judge.

William McNabola maintains that the Chicago Transit Authority (the "CTA") discriminated against him on account of his race when it terminated his relationship with the CTA. The jury found that the CTA's Board of Directors had a custom or policy of terminating whites similarly situated to McNabola and that McNabola had been terminated pursuant to that custom or policy. The jury accordingly awarded back pay and future losses, and also compensated McNabola for emotional distress. The district court, after ordering a remittitur of the jury's damage verdict, awarded prejudgment interest, attorney's fees, and costs. The CTA appeals, and we affirm all but the award of prejudgment interest.

I. BACKGROUND

In April or May of 1983, the CTA hired McNabola, a white male, as an independent contractor on a per diem basis to perform in-house medical examinations of CTA employees seeking worker's compensation benefits. McNabola was a physician who specialized in "industrial medicine," and he had completed over 45,000 worker's compensation evaluations over the course of his career. John Demaret was the CTA's General Counsel when McNabola was hired. McNabola's relationship with the CTA was never formalized through a written contract, but he worked for the CTA a few hours on both Tuesdays and Thursdays at the rate of fifty dollars per hour until he was terminated in October 1986. ¹

The CTA created McNabola's position in an attempt to investigate what it perceived to be phony worker's compensation claims by CTA employees. Patients were sent to McNabola by the CTA's claims adjusters, and he then was responsible for evaluating the nature and extent of their injuries and for making a determination as to whether they were able to return to work. At the same time it hired McNabola, the CTA also hired three white investigators whose job it was to determine whether claimants were at home or working elsewhere. This "in-house" policing program was generally a success, as an internal CTA audit disclosed that claims had dropped from $10 million in 1981 to $4.9 million in 1984. The 1985 internal CTA audit stated: "The return to in-house control coupled with the even more important innovation of investigations and controlled medical examinations has resulted in a dramatic reduction of expenditures and pay outs reducing costs by several million dollars a year." (Pl.Ex. 4, at 2.) Indeed, McNabola sent approximately seventy percent of the claimants he examined back to work.

The CTA replaced McNabola in 1986 with Dr. David Reid, an African-American orthopedic surgeon who had conducted fewer than twenty "fitness-for-duty" evaluations prior to his work with the CTA. The CTA paid Reid $75.00 per hour, $25.00 more per hour than it had paid McNabola. ² After a time, the claims adjusters stopped sending suspicious claims to Reid for evaluation because Reid tended to go along with the recommendation of the employee's treating physician and generally did not send the employee back to work. Claims in the CTA's Worker's Compensation Department rose from $6 million in 1985 to $9 million in 1988.

The parties offer divergent views for McNabola's termination. McNabola contends that he was fired pursuant to the "reverse discrimination" policy of the CTA Board. Under McNabola's theory, his problems began when Joyce Hughes, an African-American female, was named the CTA's General Counsel in April 1984. McNabola posits that Hughes, with the acquiescence of the CTA Board, embarked on a policy of terminating white per diem professionals and replacing them with African-Americans. ³ McNabola pointed to evidence relating to treatment of the CTA's per diem attorneys to support his charge. The evidence revealed that the CTA maintained a list of attorneys who it hired on a case-by-case basis. Before Hughes' tenure with the CTA, six of the approximately sixty-one individual attorneys and five law firms on the list were African-American. Thus, approximately nine percent of the CTA's per diem attorneys were African-American, although African-Americans made up only three percent of the practicing attorneys in the greater Chicago area. After Hughes became General Counsel, however, over seventy percent of the per diem attorneys retained by the CTA Board were African-American.

The CTA Board had the final authority to hire and fire per diem attorneys. Hughes would recommend, either to the Board or to a Board Committee, attorneys for inclusion on the per diem list. She also would approve and pass on to the Board the names of those attorneys who had been recommended by others. It was the Board, and not Hughes, that made all final decisions concerning the retention or procurement of CTA independent contractors such as the per diem attorneys.

In addition to the per diem attorney statistics, there also was evidence that white employees were disgruntled with their treatment by CTA officials. John Hoellen, a member of the CTA's Board, testified that approximately forty-seven terminated employees had petitioned the Board to hold hearings on their dismissals during Hughes' tenure as General Counsel. He stated that the number of petitions represented a marked increase over prior years and that the petitioners were largely white employees who charged reverse discrimination. Hoellen "deplored" the situation because he believed that many of those dismissed were "very capable people."

The jury also heard extensive testimony about the fate of Lorene Murray, a white woman who had been the Director of General Law and the legal division's highest ranking woman in 1984 and 1985. Hughes placed Murray on probation, telling her that she was "not on [Hughes'] team" and that Hughes had not brought her in. Murray ultimately resigned in 1987 because she found the working conditions intolerable and because she believed that Hughes had initiated a campaign to drive her out on account of her race. When Hughes subsequently left the CTA, Murray returned to a position with the CTA's Legal Department.

The CTA, on the other hand, maintains that race played no role in McNabola's termination. Instead, it offers a litany of problems and concerns that ultimately prompted Hughes to terminate the relationship. For example, the CTA attributes the general success of the in-house control program to the fact that McNabola may have been overzealous. The patients examined by McNabola frequently complained about rough treatment; the CTA showed that it received approximately one such complaint per week. ⁴ Several of the complaints were from women who indicated that McNabola had examined or probed their chests when that was not the location of their injuries. Indeed, in response to complaints about painful examinations, the CTA in 1984 began to require that a third person observe all of McNabola's exams.

The CTA also focused on two letters from hospitals complaining that McNabola had made unauthorized examinations of CTA employees while they were patients at the hospitals. The Chief Executive Officers of both Palos Hospital and St. Bernard's Hospital wrote letters to the CTA's medical director in 1985 to complain about McNabola making unauthorized hospital visits. St. Bernard's CEO threatened to have McNabola arrested and promised to hold the CTA responsible for his conduct.

Finally, the CTA maintained that McNabola had utilized a CTA prescription pad for a private patient, thereby putting the weight of the CTA behind his statement on the pad. The note was directed to the Plaza Limousine Company and stated that one of McNabola's private patients was taking Hydrodiural but that he was capable of driving a limousine. ⁵

McNabola filed this action on August 8, 1988, alleging in count I of a two-count complaint that the CTA and three individuals, one being Joyce Hughes, had campaigned to drive out white upper-level management and other employees from the CTA and to replace them with African-Americans. McNabola alleged in count II that he had been discharged in violation of his first amendment free association rights because he had supported two white aldermen who were rivals of the late Mayor Harold Washington. The district court dismissed the individual defendants without prejudice but found that McNabola had stated a claim for race discrimination against the CTA under 42 U.S.C. Sec. 1983. The case proceeded to trial on February 19, 1991, and the jury returned its verdict on March 4, finding in response to special interrogatories that "the Chicago Transit Authority had a custom or policy of terminating white per diems " and that "there was a causal connection between a policy or custom of terminating white per diems and [McNabola's] termination." The jury awarded McNabola past lost wages of $286,084.90, future lost wages totaling $78,330.76, and compensation for mental distress in the amount of $15,000.00, resulting in a total of $379,415.66. On September 11, 1991, the district court ordered a remittitur of $112,658.85 to the past and future lost wage components of the jury's verdict, reducing McNabola's award to $265,756.81. ⁶ The district court subsequently awarded McNabola $20,438.55 in prejudgment interest, $185,653.00 in attorney's fees, and $13,630.79 in costs. The CTA appeals.

II. DISCUSSION

A. Policy Claim

The CTA first...