Appeal from a decision of the United States District Court for the Northern District of New York (Hurd, J.) holding that Defendant-Appellant improperly made income tax, Federal Insurance Contributions Act (FICA) tax and other deductions from a Title VII judgment for back and front pay in favor of Plaintiff-Appellee. We hold that such Title VII awards constitute "wages" under the Internal Revenue Code and, as such, are subject to statutory withholding.
The opinion of the court was delivered by: Barrington D. Parker, Circuit Judge:
Noel v. New York State Office of Mental Health
Before: KATZMANN, B.D. PARKER & WESLEY, Circuit Judges.
AFFIRMED in part and REVERSED and REMANDED in part.
Gilbert S. Rothenberg, Acting Deputy Assistant
8 In 2008 a jury determined that the State Office of Mental Health Central New York 9 Psychiatric Center had terminated Ian Noel in violation of Title VII of the Civil Rights Act of 10 1964 and awarded him back and front pay. The United States District Court for the Northern 11 District of New York (Hurd, J.) entered a money judgment, and the State forwarded the judgment 12 to the New York State Office of the Comptroller ("OSC") for payment. Considering the payment 13 as one for "wages," the OSC made various deductions - mainly for state and federal taxes - and 14 forwarded a check for the balance directly to Noel, ostensibly in full satisfaction of the judgment. 15 Noel objected to the deductions and moved to require the State to pay him the full dollar 16 amount of the judgment. The court granted the motion. It held that the State lacked the authority 17 to make the deductions without prior court approval and ordered the State to re-pay directly to 18 Noel the full amount of the deductions. Although it was clear that Noel would be able to claim 19 credits against his income tax liability for the taxes withheld and paid on his behalf by the OSC, 20 the court nonetheless required, in effect, double payment to Noel. This appeal followed. We 21 conclude that he was not entitled to this windfall.
Attorney General (Steven Parks & Marion E.M. Erickson, Attorneys, Tax Division, Appellate Section, Department of Justice, on the brief), Washington, DC, for the United States of America as amicus curiae in support of Defendant-Appellant.
23 In 2005 Noel was terminated from his job at the Central New York Psychiatric Center.
24 Prior to his termination, he had cooperated in a formal investigation of race discrimination by his 25 supervisors, and he brought a retaliation claim arising from this episode. Noel prevailed at trial, 1 and a jury awarded him $210,000 in back pay, $70,00 in front pay, and $120,000 for emotional 2 distress. The State appealed. We reversed the $120,000 emotional distress award for lack of 3 evidence but otherwise affirmed the judgment. See Noel v. N.Y. State Office of Mental Health 4 Cent. N.Y. Psychiatric Ctr., 361 F. App'x 196 (2d Cir. 2010). Thereafter Noel sought, and 5 obtained, an amended judgment in the amount of $318,217.48, including $280,000 for back and 6 front pay.
7 The State forwarded the judgment to the OSC for payment. Without seeking to amend or 8 resettle the judgment - and without notice to counsel or to the district court - the OSC made 9 various deductions and mailed a check for $139,582.52 directly to Noel.*fn1 Noel objected to the 10 deductions and moved under Rule 70(a) for full satisfaction of the judgment and for sanctions.
11 See Fed. R. Civ. P. 70(a), (e). In response, the State took the position that, because the judgment 12 was for back and front pay, which it understood to be "wages," the OSC was obligated by the 13 Internal Revenue Code and state law to make the deductions and forward them to the relevant 14 taxing authorities. The State pointed out that, when Noel filed his state and federal returns, he 15 would be entitled to claim dollar for dollar credits against his income tax liability based on the 16 taxes withheld and remitted on his behalf. Def. Aff. in Opp'n to Noel's Order to Show Cause at 17 2, March 31, 2011, ECF No. 134. To avoid ...