Employment Law Daily Given employee’s unrebutted testimony, error to shift burden to prove mitigation of damages
Friday, January 26, 2018

Given employee’s unrebutted testimony, error to shift burden to prove mitigation of damages

By Lorene D. Park, J.D.

Noting that “a jury award of back pay ought to stand unless ‘the evidence indicates that the jury awarded damages in an amount substantially less than unquestionably proved by the plaintiff’s uncontradicted and undisputed evidence,” and noting that an employee who won on his retaliation claim nevertheless received significantly less than the backpay award he sought, even though his testimony on his earnings was undisputed, the Sixth Circuit found that a lower court erred in denying the employee’s motion for a new trial on damages because the court improperly shifted the burden of proof on mitigation of damages. The employer has the burden of proving that the employee failed to mitigate his damages by not seeking a new job, but the employer in this case presented no evidence on that issue. Judge Sutton dissented (Pittington v. Great Smoky Mountain Lumberjack Feud, LLC, January 24, 2018, Moore, K.).

The employee worked for Great Smoky Mountain Lumberjack Feud, a theater company in Tennessee, for five months before he was fired in retaliation for supporting his wife (also a Lumberjack employee) in her sexual harassment complaint against the employer. Before being fired, the employee allegedly suffered a number of additional hardships: he was demoted and his duties were diminished; his hours were reduced; he was segregated from his coworkers and made to work in an unheated, outdoor shack; and while in the shack, he was denied access to a padded chair he was previously provided because of a pre-existing medical condition that caused his leg to swell, his back to knot, and his mobility to be impaired if he stood for long periods of time. (Further details are in the district court’s opinion denying summary judgment.).

Evidence of earnings. During the trial on his discrimination and retaliation claims, the employee presented evidence of his earnings. He testified that his starting salary was $8 and he received one raise from $8 to $10.50. He also testified that he usually worked 40 hours a week and the employer admitted his time cards for his entire employment into evidence. According to the employee after he was fired on October 8, 2012, he did not get another job until April 2013 though he looked for work. He then testified to each of his subsequent employments, two ending when he was laid off due to a reorganization or because the company went out of business.

The court informed the jury that the parties stipulated that he fully mitigated his damages as of October 12, 2015, when he got a job at a hotel. Thus, “any damages awarded in the form of back pay should not go beyond October 12, 2015,” when he got a “new job of like kind, status, and pay.” The employee’s attorney urged the jury to award $40,632 in back pay, which assumed the employee would have received $10.50 per hour at 40 hours per week had he remained with Lumberjack. Opposing counsel urged the jury to find that the employee had failed to mitigate his damages adequately and was not entitled to the full amount of back pay that he requested.

Verdict, post-trial motions. The jury returned a verdict for the employee on his Title VII and THRA retaliation claims. Though the jury declined to award compensatory or punitive damages, it awarded $10,000 in back pay. Believing his uncontroverted testimony established he was owed over $40,000 in back pay, the employee filed a motion to increase the award or for a new trial on damages. He also sought front pay and interest at 10%, which is the maximum rate allowed for violations of the THRA. The district court largely denied his motion, only granting interest on back pay at the lower interest rate called for under 28 U.S.C. § 1961(a), which governs post-judgment interest in federal cases. The employee appealed as to back pay and the interest rate.

Entitlement to back pay. Reversing, the Sixth Circuit noted that “successful Title VII plaintiffs are presumptively entitled to back pay, and they ought to receive enough back pay to make them whole.” Also, “a jury award of back pay ought to stand unless ‘the evidence indicates that the jury awarded damages in an amount substantially less than unquestionably proved by the plaintiff’s uncontradicted and undisputed evidence.”

Here, the district court abused its discretion by denying a new trial on damages. It interpreted the jury’s award of $10,000 as approximating the compensation the employee “would have earned from the time he was terminated in October 2012, until he obtained employment in April 2013.” Thus, the district court necessarily understood the jury to have credited the employee’s testimony regarding his compensation—namely, that he earned between $8 and $10.50 per hour during his time at Lumberjack and worked an average of 40 hours of week, so would have earned between $8,000 and $10,500 in the 25 weeks between October 8, 2012 and April 1, 2013.

Nevertheless, the district court found the jury justified in declining to award damages for his remaining periods of unemployment or underemployment between August/September 2013 and October 2015, faulting the employee for failing (1) to “provide specific testimony regarding the periods of time he was unemployed or his efforts to find employment during those periods other than to state that he ‘looked for work’”; (2) to submit “documentation to substantiate his testimony as to his employment or the amounts he earned while employed”; and (3) “to provide any documentation to support the calculation of his claim for back pay.”

Employer has burden of proving failure to mitigate. In the Sixth Circuit’s view, these critiques were unfounded because the employee did not bear the burden of producing evidence as to his efforts at mitigation. While Title VII plaintiffs have a duty to mitigate damages, the employer has the burden of producing evidence establishing the amount of interim earnings or lack of diligence in mitigation. In cases like this one, where the employer offered no evidence indicating substantially similar positions were available or that the employee failed to diligently seeks such positions, the court erred in holding that it was up to the jury to decide whether the employee mitigated his damages. This essentially shifted the burden of proof to the employee.

Though Lumberjack argued that the jury could have reached its decision based on purported “common knowledge of the job market,” the appeals court was not swayed, because this said nothing about the ability to retain a job or that there were jobs comparable to the employee’s position. A jury verdict based on speculation is impermissible, noted the appeals court. Thus, to the extent the district court upheld the verdict on the ground that Lumberjack proved a failure to mitigate, that was clear error and abuse of discretion.

Lumberjack’s remaining arguments, which improperly shifted the burden of proof, were also rejected. Lumberjack insisted that even if the employee satisfied his burden of production as to damages, he failed to meet his burden of persuasion, regardless of whether his testimony “stands unrebutted.” This, said the appeals court, “inverts the proper burden of proof. The jury could not simply disbelieve [the employee’s] testimony as to his earnings between April 2013 and October 2015 and, on that basis, decide that [the employee] was not entitled to any back pay for those thirty months, particularly since the jury apparently found that [he] had established with ‘reasonable certainty’ the amount he would have earned during that time.” To hold otherwise would allow a jury not only to disbelieve testimony, but to treat “unbelieved testimony [as]… sufficient grounds for drawing the opposite conclusion,” and that is disfavored. Based on the foregoing, the lower court erred in refusing to order a new trial on damages.

Prejudgment interest. The Sixth Circuit also found that the district court abused its discretion in applying a prejudgment interest rate of 0.66% because it failed to consider adequately case-specific factors before applying the federal statutory rate in Section 1961. Under Sixth Circuit precedent, district courts must consider a series of factors before applying the statutory rate, including “the remedial goal to place the plaintiff in the position that he or she would have occupied prior to the wrongdoing; the prevention of unjust enrichment on behalf of the wrongdoer; the lost interest value of money wrongly withheld; and the rate of inflation.” While the appeals court pointed out that not all factors will weigh evenly in all cases, it concluded that the district court’s analysis in this case was “too terse to satisfy even a narrow reading” of the Sixth Circuit’s requirements.

Dissent. Judge Sutton found it “tempting to join the court’s decision” but could not rebuke the district court for taking the case as it came. The financial stakes were not high and, in Judge Sutton’s opinion, the employee’s attorney “introduced some evidence of damages and neglected many other sources of evidence, making it exceedingly nebulous for anyone—jury, district court judge, appellate judges—to be sure about what he fairly deserved. And perhaps because of those modest stakes, his counsel made only one argument about prejudgment interest—that he was entitled to a 10% per year interest award on the judgment, a princely rate of return if you could get it during the time at hand. Under these circumstances, the district court judge did not exceed her considerable discretion in rejecting [the employee’s] request for a new trial on damages and in rejecting his request for a 10% prejudgment interest award on the judgment.”

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