Under Federal Common Law, Punitive Damage Award Under Surface Transportation Assistance Act Abates with the Death of the Claimant, Holds Sixth Circuit

In Weatherford U.S., L.P. v. United States Department of Labor, No. 21-3017 (6th Cir. May 24, 2023), the Sixth Circuit holds that – following federal common law – a punitive damage award entered by an administrative law judge Surface Transportation Assistance Act does not survive the death of the claimant.

“Daniel Ayres brought an administrative action complaining that his former employer, Weatherford U.S., L.P., had retaliated against him for engaging in protected behavior under the Surface Transportation Assistance Act (STAA). An administrative law judge (ALJ) in the Department of Labor found for Ayres and awarded him backpay, compensatory and punitive damages, and attorneys’ fees. Ayres passed away in the middle of the ALJ proceedings. The Administrative Review Board (Board) affirmed the ALJ’s awards, except for punitive damages. The Board concluded that the punitive damages claim had abated upon Ayres’s death.”

The case arose from an incident that occurred over a decade ago, when Ayres complained to this employer’s Human Resources department about violations of Department of Transportation (DOT) regulations at his workplace, such as “being asked to drive loads in violation of DOT regulations, violation of rules related to driving hazardous materials, Weatherford employees drinking and driving company vehicles, and [his bosses]’s comments about firing anyone who complained to HR.” In retaliation for reporting the violations, Ayers was taken off the work rotation and effectively placed on paid leave. Within two months, Ayres was fired.

In 2012, Ayres filed an STAA complaint with the U.S. Secretary of Labor. Ayres died in 2016. Thereafter, the ALJ “concluded that Weatherford violated the STAA when it dismissed Ayres. The ALJ awarded Ayres $82,119 in back pay, $10,000 for emotional harm, and $25,000 in punitive damages; the ALJ later awarded Ayres’s estate $36,219.01 in attorneys’ fees and costs.” On appeal to the Administrative Board, while affirming the ALJ’s decision, it struck the punitive damage award on the ground that the claim of punitives did not survive the death of the claimant.

The Sixth Circuit affirms. “When Congress has not spoken to the question, ‘the survival of a federal cause of action is a question of federal common law’ . . . .  We have understood the federal common law to say that ‘remedial’ claims— i.e., claims to compensate the plaintiff—survive a party’s death, whereas ‘punitive’ claims— i.e., claims to punish the defendant—do not.”

“A claim for punitive damages is inherently penal in nature. The very point of such an award is to ‘punish the defendant and deter future wrongdoing.’” Cooper Indus., Inc. v. Leatherman Tool Grp., Inc., 532 U.S. 424, 432 (2001). It is little surprise then that courts construing federal statutes routinely hold that claims for punitive damages are ‘penal’ and do not survive a party’s death . . . . Ayres offers no reason to believe that, in the STAA context, the damages Congress labeled as ‘punitive’ serve some other function.”

“Congress chose in the STAA to make ‘punitive’ damages available. We take Congress at its word . . . . [It] supplied us with the answer when they labeled the damages as punitive and failed to expressly provide for survival.” Thus, “[w]e agree with the Board that Ayres’s claims for punitive damages abated upon his death.” (The panel also rejects the employer’s argument for res judicata based on a prior state-court action.)