James T. Sinyard Monique T. Sinyard v. Commissioner of Internal Revenue

Opinion by Judge NOONAN; Dissent by Judge McKEOWN

James T. Sinyard and his wife Monique T. Sinyard (the Sinyards) appeal the judgment of the Tax Court determining a deficiency in their income tax for the taxable year 1992. At issue is the taxpayer’s liability for attorneys’ fees paid pursuant to court order approving the settlement of two class actions brought under the Age Discrimination in Employment Act (the ADEA), 29 U.S.C. § 621 et seq. Holding that such fees paid on the taxpayer’s behalf are income to the taxpayer, we affirm the judgment of the Tax Court.

FACTS

In the 1980’s James Sinyard was the division manager in Mobile, Alabama of IDS Financial Services, Inc. (IDS). In 1987, at the age of 49, he was allegedly forced to resign. In March 1989, Sinyard joined two class action suits against IDS alleging age discrimination and other torts. Sinyard entered into an agreement with class action counsel, Winthrop & Wein-stine, providing: “In the event of a recovery, Winthrop & Weinstine will be paid one third (jé) of the amount you obtain in the lawsuit, whether by settlement or jury award.”

In April 1990, the Equal Employment Opportunity Commission (the EEOC) intervened. In…

dissenting:

The majority concludes that a statutory attorney’s fee, awarded by the district court to the Sinyards’ attorney under the fee-shifting provision of the Age Discrimination in Employment Act (ADEA), 29 U.S.C. § 621 et seq., is taxable to the Sinyards as income. This unfortunate result appears to be at odds with the express statutory language, which provides that the attorney’s fee award is “in addition” to the plaintiffs recovery, and with the intent of the statute, which is to make the plaintiff whole. Because the majority’s conclusion fails to account for the effect of the ADEA’s fee-shifting provision, I respectfully dissent.

I. The Effect Of The ADEA

In my view, the issue is resolved by interpretation and application of the statute. The analysis starts and ends with the language of the ADEA. The ADEA incorporates the fee-shifting provision of the Fair Labor Standards Act, see 29 U.S.C. § 626 (b), which states that “[t]he court ... shall, in addition to any judgment awarded to the plaintiff or plaintiffs, allow a reasonable attorney’s fee to be paid by the defendant,” id. § 216(b).

In this case, as we previously determined, “the attorney’s fees paid in settlement…

268 F.3d 756 (9th Cir. 2001) JAMES T. SINYARD; MONIQUE T. SINYARD, PETITIONERS-APPELLANTS v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT-APPELLEE No. 99-71369 UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT Argued and Submitted March 16, 2001 Filed September 25, 2001 Thomas H. Boyd, Winthrop & Weinstine, P.A., St. Paul, Minnesota, for the petitioners. Paula M. Junghans, Richard Farber, and Kenneth W. Rosenberg, United States Department of Justice, Tax Division, Washington, D.C., for the respondent. Appeal from a Decision of the United States Tax Court Stephen J. Swift, Tax Court Judge, Presiding. Tax Ct. No. 11056-96 Before: Noonan, McKeown, and Wardlaw, Circuit Judges. Opinion by Judge Noonan; Dissent by Judge McKeown Noonan, Circuit Judge: 1 James T. Sinyard and his wife Monique T. Sinyard (the Sinyards) appeal the judgment of the Tax Court determining a deficiency in their income tax for the taxable year 1992. At issue is the taxpayer's liability for attorneys' fees paid pursuant to court order approving the settlement of two class actions brought under the Age Discrimination in Employment Act (the ADEA), 29 U.S.C. &#167 621 et seq. Holding that such fees paid on…