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Francisco v. Susano

United States Court of Appeals, Tenth Circuit

May 28, 2013

ALEJO SUSANO, individually and in his official capacity; WILEY INNOVATIONS CONSTRUCTION CORP., a Nebraska corporation, Defendants-Appellees.

D.C. No. 1:10-CV-00332-CMA-MEH (D. Colo.)

Before McKAY, BALDOCK, and O'BRIEN, Circuit Judges.


Terrence L. O'Brien Circuit Judge

Plaintiffs appeal from the denial of compensatory and punitive damages on their claims under the Trafficking Victims Protection Act (TVPA), as amended by the Trafficking Victims Protection Reauthorization Act (TVPRA). See 18 U.S.C. § 1595. After entering a default judgment against the absent defendants, the district judge decided the general statutory allowance of "damages, " see id. § 1595(a), did not include punitive damages. She also decided compensatory damages, beyond those already awarded plaintiffs under the Fair Labor Standards Act (FLSA), 29 U.S.C. §§ 206, 216, were unavailable on the TVPA claims for lack of evidence and an associated metric to guide their calculation. As a result of these rulings, only nominal damages of one dollar were awarded on plaintiffs' TVPA claims.

The rulings on punitive and compensatory damages are both legal determinations. See Ditullio v. Boehm, 662 F.3d 1091, 1096 (9th Cir. 2011) (availability of punitive damages under TVPA reviewed de novo); Gaffney v. Riverboat Servs. of Ind., Inc., 451 F.3d 424, 458 (7th Cir. 2006) (availability of compensatory and punitive damages under federal statute reviewed de novo). As such, they are subject to de novo review whether the matter under consideration is the initial default judgment or the denial of plaintiffs' ensuing motion to alter or amend that judgment, see Devon Energy Prod. Co., L.P. v. Mosaic Potash Carlsbad, Inc., 693 F.3d 1195, 1201-02 (10th Cir. 2012). For reasons detailed below we reverse and remand for further proceedings.[1]


When plaintiffs moved for default judgment, they requested compensatory and punitive TVPA damages in addition to the unpaid wages and attendant liquidated damages (doubling the unpaid wages) sought under the FLSA. The judge set a hearing for plaintiffs to show why the requested TVPA damages were justified by defendants' alleged conduct and the applicable law. At the hearing she emphasized the narrowed focus of the relevant inquiry: the "whole purpose of th[e] hearing was to tell [the court] what is the authority" for awarding the requested TVPA damages.[2]App. 73. She repeatedly indicated additional evidence of damages—in particular, proffered testimony from plaintiff Gonzalez—was unnecessary, because the question was one of legal authority. See App. at 71-72; 79-80. At the close of the hearing, she reserved ruling on TVPA damages and allowed plaintiffs "to submit further briefing to substantiate any claims for damages in excess of the actual damages and the liquidated damages [under the FLSA] that you have outlined already." Id. at 79.

Plaintiffs submitted a supplemental memorandum of law, citing lower court TVPA cases approving compensatory damages over and above promised wages, as well as punitive damages. See App. at 64 (citing, in particular, Pena Canal v. de la Rosa Dann, No. 09-03366 CW, 2010 WL 3491136 (N.D. Cal. Sept. 2, 2010), which awarded default judgment for compensatory damages "consisting of . . . a fair hourly wage for [plaintiff's] work" and a recovery "for the emotional distress and other tort damages caused by [defendant], " as well as punitive damages, id. at *4). In support of their request for wage-related damages greater than those available under the FLSA, plaintiffs attached a government document specifying prevailing wage rates in the area for the kind of work they had performed. See App. at 68. The $18.50 hourly rate they sought on this basis substantially exceeded the promised wage rates ($10 or $11 per hour) they were ultimately awarded under the FLSA.[3]

In its ensuing default judgment, the district court refused to award plaintiffs any compensatory or punitive damages for the TVPA claims. The court's analysis, particularly on the question of punitive damages, was not fully articulated. The court noted it was not persuaded by the fairly scant case law cited by plaintiffs supporting punitive damages, but offered no authority or rationale for its contrary conclusion that the general statutory allowance of "damages" excludes punitive damages. The court merely stated that "[t]he statute offers no guidance regarding the appropriate damage award, and the precedent on this point is limited." Francisco v. Susano, No. 10-cv-00332-CMA-MEH, 2011 WL 5593165, at *3 (D. Colo. Nov. 16, 2011). The court also decided any claim for damages beyond the promised wages awarded under the FLSA failed for lack of evidence and a corresponding metric for the calculation of actual damages. Id.

Plaintiffs filed a motion to alter or amend the judgment. They claimed error in holding punitive damages unavailable under the TVPA, and suggested either an amount doubling the promised wages awarded under the FLSA or an amount accounting for the higher prevailing wage rate (again supported by the government documentation). As for compensatory damages, they argued they should not have penalized for not putting on evidence at the hearing when the court itself had forestalled the introduction of testimony from a proffered witness because the only issues of concern were legal. They also attached extensive affidavits detailing the inhumane treatment set out in the complaint and the resulting harm they endured.

The judge denied the motion in pertinent part, though she retreated from her earlier reliance on evidentiary insufficiency as a complemental rationale for denying TVPA damages. While faulting plaintiffs for not providing evidence establishing such damages with their initial motion for default judgment, she did not hold this omission sufficient to dispose of the matter.[4] Rather, she explained, the evidentiary record (including the newly submitted affidavits) was "immaterial, " because "Plaintiffs failed to persuade the Court that it had authority to award the damages requested." Francisco v. Susano, No. 10-cv-00332-CMA-MEH, 2012 WL 3638774, at *3 (D. Colo. Aug. 23, 2012). No further rationale was given to bolster the summary holding that the court lacked the necessary legal authority to award the requested compensatory and punitive damages.


A. Analytical Framework

Two Supreme Court decisions guide any inquiry into the availability of damages for a federal statutory cause of action. In Franklin v. Gwinnett County Public Schools, 503 U.S. 60 (1992), the Court reaffirmed a basic principle: "absent clear direction to the contrary by Congress, the federal courts have the power to award any appropriate relief in a cognizable cause of action brought pursuant to a federal statute."[5]Id. at 70-71; see also Bell v. Hood, 327 U.S. 678, 684 (1946) ("[W]here legal rights have been invaded, and a federal statute provides for a general right to sue for such invasion, federal courts may use any available remedy to make good the wrong done."). Applying that principle, Franklin reversed the lower courts for limiting remedies available for sexual harassment in violation of Title IX of the Education Amendments of 1972 to back pay and prospective relief. It considered Congress's remedial intent in the context of the common-law understanding that "the denial of a remedy [i]s the exception rather than the rule, " which prevailed both before and after a right of action was implied under Title IX. Franklin, 503 U.S. at 71 (internal quotation marks omitted). Since Congress had "made no effort . . . to alter the traditional presumption in favor of any appropriate relief for ...

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