Supreme Court Docket Report, October Term, 2003 - Number 10

On March 29, 2004 and March 22, 2004, Supreme Court granted certiorari in several cases of interest to the business community. The briefing schedule in Cherokee Nation v. Thompson has not yet been determined. In the other cases discussed below, amicus briefs in favor of petitioners will be due on Thursday, May 13, 2004, and amicus briefs in favor of respondents will be due on Thursday, June 17, 2004.

1. Age Discrimination in Employment Act - Disparate Impact Claims. The Age Discrimination in Employment Act ("ADEA") essentially prohibits employers from considering the age of an employee or potential employee who is forty or older when making employment-related decisions. The Supreme Court granted certiorari in Smith v. City of Jackson, Mississippi, No. 03-1160, to determine whether "disparate impact" claims are cognizable under the ADEA.

In contrast to "disparate treatment" claims, which require plaintiffs to prove that their age played an actual role in an adverse employment decision, disparate impact claims may be proven by evidence that an employer's policies or practices adversely affected persons who are forty or older as compared with persons under forty. The plaintiffs in Smith - a group of municipal police and public safety officers ó seek to prove that the City of Jackson's pay-scale discriminates on the basis of age by showing through statistical analysis that employees over forty years of age receive proportionally smaller wage increases than do persons under forty. A divided panel of the Fifth Circuit joined the First, Seventh, Tenth, and Eleventh Circuits in holding that disparate impact claims may not be brought under the ADEA. By contrast, the Second, Eighth, and Ninth Circuits have all held that disparate impact claims are legally cognizable under the Act. The Court's decision will be important to all private employers with more than 20 employees as well as to all state and municipal governments.

2. Federal Income Tax - Damage Awards - Contingent Fee Agreements. As a general rule, taxpayers cannot avoid paying federal income taxes by assigning to another person income not yet received. See Helvering v. Horst, 311 U.S. 112 (1940); Lucas v. Earl, 281 U.S. 111 (1930). There is a conflict among the circuits regarding whether fees paid to an attorney under a contingent fee arrangement violate this "anticipatory assignment" prohibition, and thus are taxable as income of a plaintiff who has obtained a damages judgment or settlement.

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