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There is a saying in golf that you drive for show and putt for dough. In employment litigation, a similar dynamic is at work: Liability gets the headlines, but damages pays the bills (rhyming is hardly my strong suit). After all, a finding of liability can be worth little if the employees have not attempted to mitigate their damages or there is after-acquired evidence that limits any monetary awards. Law on mitigation of damages is limited in the 3rd U.S. Circuit Court of Appeals. As such, a recent 1st Circuit decision, when read in conjunction with 3rd Circuit law, provides guidance as to a plaintiff’s obligation to mitigate his or her damages and an employer’s defenses where mitigation is at issue. In Johnson v. Spencer Press of Maine Inc., handed down in April, the 1st Circuit discussed the religious discrimination claim of Albert Johnson. While not the focal point of the case, the facts are another in a series of what-were-they-thinking? scenarios and are relevant to give some context to the damages issue. RELIGIOUS DISCRIMINATION Johnson was hired as a custodian at Spencer Press, a printing company, in November 1991. Johnson was not your run-of-the-mill custodian, as he had a bachelor of science degree in Bible studies and had served as a pastor at a church prior to working at Spencer. Stephen Halasz became Johnson’s supervisor in May 1992. Halasz was aware of Johnson’s background and the fact that Johnson did not like to work on Sundays because he wanted to go to church. Halasz’s response to this was to inundate Johnson with a series of sexually explicit and demeaning comments (virtually none of which could be reprinted here), along the consistent theme that Johnson was “too chaste and sober for Halasz’s taste and that this was because of Johnson’s religious beliefs.” The court found that “Halasz repeatedly and continuously insulted Johnson and mocked his religious convictions. The harassment occurred throughout Johnson’s workday, including when he was attempting to perform his custodial duties. On multiple occasions, Halasz threatened Johnson with violence and once he actually placed the point of a knife under Johnson’s chin.” The harassment ultimately led Johnson to resign on April 30, 2000, after he experienced a panic attack and severe depression, to the point of requiring hospitalization. Apparently not content to have made Johnson’s life miserable at work, Halasz visited Johnson at home and threatened to “beat him up” upon learning of Johnson’s complaint with the U.S. Equal Employment Opportunity Commission. LOST WAGES LIMITED It should be noted that Spencer Press did not benefit from strong human resources work. Johnson complained to the HR department six times about Halasz and was told each time that there was nothing that could be done and “if he did not like the treatment he was receiving, he could leave the company.” With these facts, it is not surprising that the jury returned a verdict against Spencer Press, awarding $400,000 in compensatory damages and $750,000 in punitive damages, which were reduced to $300,000 under the statutory cap. Johnson’s back pay, however, was limited to about $1,228, and his claim for front pay was denied on the basis of his failure to mitigate his damages as a matter of law. As noted, Johnson resigned from Spencer Press on April 30, 2000. He began working at a local supermarket just a few days later. He was fired from that job in November 2000, however, after eating food for which he had not paid. The district court held that Johnson was not entitled to any back pay or front pay beyond the date of his termination from his post-discharge employment. Johnson appealed. The court began its discussion with a review of the law of damages, finding that “awards of back pay are offset by any wages that could have been earned with reasonable diligence after the illegal discharge, regardless of whether they were actually earned.” This is the principle requiring that an employee mitigate his or her damages after termination. The Johnson court found that Johnson stopped mitigating his damages when he was fired from his supermarket job, thus eliminating the availability of either back pay or front pay for any period of time after Dec. 8, 2000. Johnson did work after his termination, claiming that his mistreatment at Spencer Press was causally responsible for his being fired from the supermarket. LOST-WAGES RATIONALE The appellate court disagreed that the termination of Johnson rendered him ineligible for any future damages. Instead, the 1st Circuit joined a number of other circuits in finding that “back pay is not permanently terminated when an employee is fired for misconduct or voluntarily quits interim employment.” This is based on the rationale that “had there been no discrimination at Employer A, the employee would never have come to work (or have been fired) from Employer B.” While there was no blanket exclusion from lost wages on the basis of having been terminated from post-discharge employment, Johnson received no additional damages on the basis of his claim that he sought no further work “because he was unable to work as he suffered from a total psychological disability.” The court cited the 3rd Circuit’s decision in 1995 in Starceski v. Westinghouse Electric Corp. for the rule that “an employer who has discriminated need not reimburse the plaintiffs for salary loss attributable to the plaintiffs and unrelated to the employment discrimination.” In this case, Johnson’s claim for damages was denied as he had not sufficiently established the connection between Spencer Press’ behavior and his psychological condition. As such, he was not able to take advantage of the court’s finding that “an employee who cannot mitigate damages because of the unlawful actions of the employer can still receive back pay.” Again, the Johnson court looked to 3rd Circuit law for support of this proposition. In Durham Life Insurance Co. v. Evans, the 3rd Circuit in 1999 held that “because Durham’s conduct impaired Evans’ ability to mitigate her damages, it would be inequitable to reduce her back pay award in this case.” In finding that the causal connection was not established, the court in Johnson specifically referred to Johnson’s psychological expert, who testified to a host of psychological stressors but “did not make a determination as to what event or events, if any, caused his depression and panic and anxiety disorders.” The case emphasizes the importance of evidence in establishing, or disproving, a claim for damages. This goes beyond simply having an economist calculate the amount of future lost pay but focuses on the plaintiff’s post-employment work history. Sid Steinberg is a partner in Post & Schell’s (www.postschell.com) business law and litigation department. He concentrates his national litigation and consulting practice in the field of employment and employee relations law. Steinberg has lectured extensively on all aspects of employment law, including Title VII, the FMLA and the ADA. If you are interested in submitting an article to law.com, please click here for our submission guidelines.

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