- 6 - The critical question is "in lieu of what was the settlement amount paid?" Bagley v. Commissioner, 105 T.C. 396, 406 (1995). Determination of the nature of the claim is a factual inquiry. Robinson v. Commissioner, supra at 127. The amounts petitioner received under the settlement agreement were intended to settle petitioner's claim under Title VII. Although the settlement agreement does not contain a specific statement to that effect, the surrounding circumstances establish that Title VII is the underlying claim. Petitioner was a member of a class action suit asserting a claim of discrimination under Title VII. The District Court ruled that State Farm was liable under Title VII to all members of the class who had been discriminated against and ordered individual hearings. State Farm and the plaintiffs to the class action suit agreed on a procedure and a formula to ascertain the amount owed, if any, to each individual claimant. Petitioner's damages under the consent decree were ascertained, and petitioner was paid an amount equal to 78 percent of her full claim under the consent decree, plus a bonus amount. Thus, the consent decree implemented the District Court's ruling that State Farm was liable under Title VII, and the settlement agreement represented a compromise and settlement of petitioner's rights under the consent decree. As a result, we conclude that petitioner's settlement proceeds were intended to settle her Title VII claimPage: Previous 1 2 3 4 5 6 7 8 Next
Last modified: May 25, 2011