Community Hosp. v. Fail

• Decision Date: 30 November 1998
• Citation: 969 P.2d 667
• Docket Number: 97SC558
• Parties: 8 A.D. Cases 1652, 14 NDLR P 9, 98 CJ C.A.R. 5927 COMMUNITY HOSPITAL, Petitioner, v. Erika FAIL, Respondent.
• Court: Colorado Supreme Court

Page 667

969 P.2d 667

8 A.D. Cases 1652, 14 NDLR P 9, 98 CJ

C.A.R. 5927

COMMUNITY HOSPITAL, Petitioner, v.Erika FAIL, Respondent.

No. 97SC558.

Supreme Court of Colorado En Banc.

Nov. 30, 1998.

Elder & Phillips, P.C., Mark Luff, Keith Boughton, Grand Junction, for Petitioner.

Keith Killian & Associates, P.C., J. Keith Killian, James P. Guthro, Grand Junction, for Respondent.

Gale A. Norton, Attorney General, Martha Phillips Allbright, Chief Deputy Attorney General, Richard A. Westfall, Solicitor General, Garth C. Lucero, Deputy Attorney General, Timothy R. Arnold, Deputy Attorney General, Gregg E. Kay, First Assistant Attorney General, Beverly Fulton, Assistant Attorney General, Civil Litigation Section, Denver, for Amicus Curiae State of Colorado.

Hall & Evans, L.L.C., Alan Epstein, Thomas J. Lyons, Tracey P. Robinson, Denver, for Amici Curiae Colorado Defense Lawyers Association and Colorado Counties, Inc.

Barry D. Roseman, Thomas A. Feldman, Laurie Scott Paddock, Fox & Robertson PC, Amy F. Robertson, Denver, for Amicus CuriaePlaintiffEmployment Lawyers Association.

Chief Justice MULLARKEYdelivered the Opinion of the Court.

We granted certiorari in Fail v. Community Hospital, 946 P.2d 573(Colo.App.1997), to resolve several issues arising under the Americans with Disabilities Act of 1990,42 U.S.C. §§ 12101-12117(1994)(ADA).First, we must determine who bears the burden of persuasion in a discrimination case under the ADA when there is a factual dispute as to whether the employer offered to make a reasonable accommodation to an employee's disability.¹We hold that when a disabled employee has established a prima facie case under the ADA, the burden shifts to the employer to prove by a preponderance of the evidence that it either offered reasonable accommodation or that such accommodation was an undue hardship.

Second, we must decide whether the trial court erred in failing to instruct the jury on the definition of "qualified individual with a disability."We find that in the context of the instructions given in this case, the omission of this instruction did not constitute reversible error.

The third issue on review is whether reasonable accommodation under the ADA includes reassignment to a lower-paying position.We hold that an employer may satisfy the ADA by offering reassignment to a lower-paying position if the disabled employee is not qualified for the vacant positions at her current rate of pay, if she is qualified to perform the lower-paying position, and if the employer typically reduces the salary of non-disabled employees who transfer to such positions.

Finally, we must determine the appropriate burden of proof for punitive damages under 42 U.S.C. § 1981a(1994).Prior to the adoption of § 1981a, we held in Boulder Valley School District R-2 v. Price, 805 P.2d 1085(Colo.1991), that federal law did not provide a rule of decision regarding the burden of proof for punitive damages in a 42 U.S.C. § 1983 claim.We now hold based upon ourreview of federal law addressing the burden of proof for punitive damages in civil rights claims that Boulder Valley incorrectly found that federal law was inadequate.Therefore, we adopt the analysis of applicable federal decisions and hold that the proper standard for punitive damages under both §§ 1983and1981a is a preponderance of the evidence.Part III of Boulder Valley is overruled.

I.

On December 10, 1992, petitioner Community Hospital (Community) fired an employee, the respondentErika Fail, because a knee injury prevented her from performing the essential functions of her job as a rehabilitation aide.Fail, who had worked for nearly a decade in a variety of positions at the hospital, knew that she could no longer continue the heavy lifting required of a rehabilitation aide.Therefore, two days before Fail was fired, she interviewed with Janie Searcy, the Medical Records Department Supervisor, regarding an internal transfer to a vacant position as a medical records clerk.

Fail learned that, even though the medical records clerk position was assigned the same salary range as that of a rehabilitation aide, she would not be paid her then-current salary.Community assigns a salary range to each of its positions.It further subdivides each salary range into eleven steps so that an employee who works in a particular position can receive performance increases through the eleven steps of the salary range.As a rehabilitation aide, Fail earned $8.46 per hour and was classified at the ninth step.According to Community, at the time Fail was terminated, it had a policy that employees who transferred into a particular position could not be paid more than the sixth step of that position's salary range.

During Fail's interview with Searcy, Fail was told that a medical records clerk started at step one or $6.25 per hour.At that wage, it would have taken Fail 9 1/2 years to regain her then-current pay of $8.46 per hour.Because she thought this wage was too low, Fail discontinued the interview.Community claims that the next day, Searcy saw Fail in the hallway and informally offered her the medical records clerk position starting at $7.66 per hour, the sixth step on the pay scale.Fail denies that this conversation occurred.Evidence presented to the jury shows that Community took steps to terminate Fail before this alleged offer was made.

In addition to the vacant medical records clerk position, two other positions were open at the time of Fail's firing.Community admitted that Fail was qualified for the vacant medical records clerk position but denied that Fail was qualified for the other two positions because at $8.46 per hour, her salary was higher than the sixth step, violating Community's transfer policy.Community did not contend that Fail was unable to perform the duties of those other jobs.Ten days after her termination, Fail unsuccessfully requested reinstatement.

Subsequently, Fail filed a complaint in Mesa County District Court alleging that Community's failure to reassign her to a vacant position was a refusal to make a reasonable accommodation of her disability in violation of the ADA.At trial, Community tendered proposed jury instruction K defining "qualified individual with a disability."In addition, Community offered proposed jury instruction C stating that the burden of proof for punitive damages is beyond a reasonable doubt.The trial court rejected both of these instructions in favor of jury instruction 13 stating that Community was required to prove by a preponderance of the evidence that it reasonably accommodated Fail's disability "in regard to reassignment to vacant positions for which she was qualified" and jury instruction 22 stating that the burden of proof on punitive damages is a preponderance of the evidence.

In response to a special interrogatory, the jury found that Community violated the ADA because it "failed to reasonably accommodate Fail in regard to her reassignment to any one of the [three] positions that were vacant."The jury awarded Fail $17,390 in back pay, $99,794 in front pay, and $100,000 in punitive damages.The court entered judgment on the jury verdict and awarded $4,041.64 in prejudgment interest, $50,803.30 in attorney fees, and $10,546.79 in costs.The judgment totaled $282,575.73.²Both parties appealed; however, only Community's issues are before this court.

Community argued to the court of appeals that jury instruction 13 improperly shifted to Community the burden of proof on the issue of reasonable accommodation.SeeFail, 946 P.2d at 576.The court of appeals applied the burden-shifting mechanism of McDonnell Douglas Corp. v. Green, 411 U.S. 792, 93 S.Ct. 1817, 36 L.Ed.2d 668(1973).SeeFail, 946 P.2d at 577.Under McDonnell Douglas, if Fail established a prima facie case of disability discrimination under the ADA, the burden would shift to Community to rebut that evidence.Community could have satisfied this burden by producing evidence that it provided a reasonable accommodation, including reassignment.Since the jury instruction stated that the jury could find for Community if it found that Community had reasonably accommodated Fail, the court of appeals held that the jury was properly instructed on the burden of proof.SeeFail, 946 P.2d at 577.

In addition, Community claimed that the trial court erroneously rejected its proposed jury instruction K defining "qualified individual with a disability."SeeFail, 946 P.2d at 579-80.Community's proposed instruction stated that a person who meets the definition of a qualified individual with a disability would subsequently lose that status if the disabled employee did not accept reasonable accommodation.Rejecting this argument, the court of appeals held that the trial court instructed the jury on the functional equivalent of instruction K.Seeid. at 580.

Community also asserted below that the ADA does not require an employer to reassign an employee contrary to the employer's non-discriminatory policies.Therefore, Community claimed it was not required to offer reassignment because the compensation allowed under its transfer policy precluded reassignment of Fail at her then-current rate of pay.SeeFail, 946 P.2d at 579.Since the ADA's interpretive guidelines permit, under certain circumstances, transfers with reduced pay, the court of appeals rejected Community's argument as contrary to the purposes and language of the ADA.Seeid.

Finally, Community argued that jury instruction 22 erroneously stated that the burden of proof on punitive damages under 42 U.S.C. § 1981a(1994) is a preponderance of the evidence.SeeFail, 946 P.2d at 580.Upholding the trial court, the court of appeals held that the correct standard is a preponderance of the evidence.Seeid. at 581.

After briefly reviewing the ADA, we will address each issue.

II.

The Americans with Disabilities Act of 1990,42 U.S.C. §§ 12101-12117(1994), provides that "no...