Commissioner of Internal Revenue v. Schleier

Summary

The Court, in an opinion by Justice Stevens joined by Chief Justice Rehnquist and Justices Kennedy, Ginsburg, and Breyer, held that neither the backpay nor the liquidated-damages portion of Schleier’s ADEA settlement was excludable from gross income under § 104(a)(2). Exclusion requires both an action based on tort or tort-type rights and damages received on account of personal injuries or sickness; the settlement satisfied neither requirement. Justice Scalia concurred in the judgment without a separate writing. Justice O’Connor dissented, joined by Justice Thomas throughout and Justice Souter in Part II. She argued that age discrimination causes personal injury, that the ADEA’s remedies distinguish it from the statute considered in Burke, and that the Court departed from longstanding administrative interpretations of the exclusion.