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• Job Termination for Older Workers: Avoiding the Train Wreck

• How to Hire Your Age Discrimination Lawyer

• Recovering Your Damages in Age Discrimination Cases

• How to Analyze Your Damages Under The Age Discrimination in Employment Act (ADEA)

• The Role of the Forensic Economist in an Age Discrimination Case

 
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How to Analyze Your Damages Under The Age Discrimination in Employment Act (ADEA)

The following is a synopsis of facts and quotes from Skalka v. Fernald Environmental Restoration Management Corp., 178 F.3d 414 (6th Cir. (Ohio) May 19, 1999). This case discusses, in detail, important issues arising in discrimination cases. This particular case was heard before the Court of Appeals for the Sixth Circuit, which is the appeals court that hears federal appeals from several states in the Southeastern United States.

This case was brought by four former employees who worked for FERMCO, a company engaged in the clean-up of uranium waste. FERMCO underwent a workforce reduction where employees were divided into peer groups, evaluated, and ranked. The employees at the bottom of certain lists were laid off. Skalka was one of four Remedial Support Operations employees (RSO’s). The other three RSO’s were all younger than Skalka, who was 54 at the time of his termination. Although Skalka received a nearly perfect score on his evaluation, he was terminated, and the other three were not. The reason FERMCO gave Skalka for his termination was that the particular department that he supported no longer needed an RSO, while the other departments each still needed one. Skalka argued that the person with the lowest rating should have been laid off and that he should have been moved to that person’s position. The Plaintiffs in this litigation were, like Skalka, veteran employees. They, however, were ranked at the bottom of their respective group, and were fired as a result.

FERMCO conducted a statistical study of the effects of the layoffs and concluded that there was a possible disparate impact on older workers. FERMCO, however, argued that the difference in the number of older and younger workers laid off was negligible. The Defendant based this conclusion on the assumption that all groups should be equally affected. In contrast, the Plaintiffs asserted that, because of their greater experience, they should have been disproportionately unaffected by the layoffs.

The federal district court jury found that FERMCO had willfully discriminated against Skalka and one of the other Plaintiffs and gave those two a doubled back pay award and a front pay award. The jury rejected the other two Plaintiffs’ claims. FERMCO appealed, claiming, among other things, that the damages had been calculated erroneously.

Below is the Court of Appeals for the Sixth Circuit’s discussion on the damages available to Skalka.

DAMAGES

The jury awarded Skalka $ 487,907 in back pay and $ 529,416 in front pay for his ADEA claim, as well as $ 225,000 for his contract claim. FERMCO has several complaints about these damages. As an initial matter, we reject its claim that the jury's decisions reflect "passion and prejudice." By FERMCO's own arguments the inflated damages awards are the result of errors rather than unprincipled anger at FERMCO.

In the absence of undue passion and prejudice on the part of the jury, we review for abuse of discretion the district court's refusal to grant a new trial based on excessive damages or a remittitur. See Roush v. KFC Nat’l Mngmnt. Co., 10 F. 3d 392, 397 (6th Cir. 1993), cert. denied, 513 U.S. 808 (1994). A verdict is not excessive unless it exceeds "'the maximum that a jury could reasonably find to be compensatory' for the plaintiff's loss." Id. (quoting In re Lewis, 845 F.2d 624, 635 (6th Cir. 1988)) Here, the district court refused to reduce the damages because the plaintiffs were able to offer a "tenable" explanation for the amounts. As FERMCO demonstrates in its brief, the jury clearly arrived at Skalka's back-pay figure by adding the stipulated amounts of salary and non-pension benefits to his projected pension without accounting for the amounts Skalka had received in early retirement benefits and in income from other employment. The plaintiffs' explanation for the damages incorporated the jury's clearest error, the failure to discount future pension benefits to present value. We therefore find it necessary to remand for the district court to calculate an appropriate remittitur and, if necessary, hold a retrial on the damages issue.

 

(1) Pension Benefits as Part of Back Pay

Over half of Skalka's "back-pay" award was compensation for pension benefits he eventually would have received if he had stayed at FERMCO until retirement. FERMCO argues that, by definition, payments expected in the future cannot be part of back pay. N3. The plaintiffs do not attempt to defend the inclusion of future payments in the back pay award, arguing only that FERMCO failed to object to jury instructions that defined back pay as including "pension benefits which a plaintiff would have received had the discrimination not occurred." FERMCO responds that the parties intended this to refer only to 401(k) payments that would have been made during the time before the trial.

The conversation at the charge conference clearly treated 401(k) payments as "part of the pension benefits," but it is not clear whether the parties were treating the future payments as back pay. The plaintiffs' closing argument discussed back pay, front pay, pension benefits, and 401(k) payments, in that order. The verdict form, however, had space only for back pay and front pay, leaving the jury to classify pension and 401(k) benefits as it saw fit. Although plaintiffs' counsel at one point referred to the claimed future pension benefits as "lost wages," this apparent slip of the tongue did not suffice to put FERMCO on notice that all pension benefits would be considered back pay. We conclude that FERMCO did not forfeit this issue and that only the portion of the damages that truly represents "back pay" should be doubled. Because $ 269,353 of the jury's "back-pay" award was compensation for Skalka's expected pension, that amount should be treated as front pay rather than back pay.

 

(2) Speculative Nature of Pension Benefits

FERMCO also argues that there was insufficient evidence to support the award of any pension benefits because those benefits were too speculative. FERMCO's argument on this point focuses on Conover, who in light of our holdings above is not entitled to any damages. FERMCO points out that the project was expected to last only ten to fifteen years and therefore would have ended before Conover turned 65. It claims that after the project is completed "'all personnel will move on to other employment or retirement.'" However, the document it cites for this proposition is rather vague. ("Whether such employees [will] have a continued presence at the [site] will depend upon the availability of other work for which they are qualified.").

Skalka was several years older than Conover and would have retired within the projected lifetime of the project. FERMCO's arguments that the pension component of the damages was speculative do not apply to him, and the jury was within its rights to award him damages for his lost pension. Thus, except as discussed in the next section, this portion of the award may stand as a component of front pay.

 

(3) Failure to Discount the Pension to Present Value

Perhaps because it erroneously treated the pension benefits as back pay, the jury failed to discount them to present value. The plaintiffs' justification of the damages to the district court made the same error, and they do not attempt to defend the error on appeal.

We have in the past been vigilant in correcting juries' failures to discount damages to present value. See e.g, Rodgers v. Fisher Body Div., Gen. Motors Corp., 739 F.2d 1102,1105-06 (6th Cir. 1984) (raising this issue sua sponte), cert. denied, 470 U.S. 1054, (1985). We therefore instruct the district court to apply an appropriate discount rate to the pension benefits in calculating the remittitur and carefully to instruct the jury on this issue if there is a re-trial.

 

(4) Failure to Reduce Back Pay to Account for Other Income

FERMCO claims that the jury unreasonably failed to subtract Skalka's early retirement benefits and money he earned through other employment from his back-pay award.

Skalka's back-pay award -- $ 218,554 once the future pension benefits are re-classified as front pay -- compensated him for his lost salary and benefits up until the time of the verdict. n4 FERMCO argues that this award should be reduced because, several months after his termination, Skalka secured a higher-paying position with another company. Skalka had a duty to mitigate his damages by seeking new employment, but the burden of proving reductions in Skalka's damages is on FERMCO. See Jackson v. City of Cookeville, 31 F.3d 1354, 1359 (6th Cir. 1994). Therefore, the remittitur calculated on remand should reflect Skalka's new employment to the extent that any rational jury would have found this income to be proven. We note that Skalka is not entitled to back pay for any period in which he earned an equal or higher salary than he would have earned at FERMCO, see, EEOC v. New York Times Board. Serv., Inc., 542 F.2d 356, 359 (6th Cir. 1976), but that his "excess" earnings are not to be subtracted from the back-pay award for the period of unemployment. See Matthews v. A-1, Inc., 748 F.2d 975, 978-79 (5th Cir. 1984); see also Darnell v. City of Jasper, 730 F.2d 653, 656-57 (11th Cir. 1984); Leftwich v. Harris-Stowe State College, 702 F.2d 686, 693-94 (8th Cir. 1983).

FERMCO also argues that Skalka's back-pay award should be reduced because he received early retirement benefits during the time between his termination and the trial. Such benefits, however, may constitute payments from a collateral source that are not properly subtracted from the damages awarded to a discrimination plaintiff. See Hamlin v. Charter Township of Flint, 165 F.3d 426, 432-36 (6th Cir. 1999). In Hamlin, we set out a test for determining whether pension benefits are collateral. See id. at 435. On remand, the district court should apply Hamlin to determine whether Skalka's retirement benefits received up until the time of trial should be subtracted from his back-pay award.

 

(5) Front Pay

FERMCO asserts in its brief that Skalka's front-pay award should be vacated:

Under the ADEA, "a substantial liquidated damage award may indicate that an additional award of front pay is inappropriate or excessive." Weaver v. Amoco Prod. Co., 66 F.3d 85,89 (5th Cir. 1995). But at the same time that the jury was giving Skalka and Conover inflated liquidated damage awards, it was also giving them huge front-pay awards. These front-pay awards should be vacated.

This argument is no longer applicable because our decision classifying Skalka's pension as front pay will have the effect of substantially reducing the "liquidated damages" (i.e., the doubled back pay to which Skalka is entitled because the jury found that FERMCO discriminated willfully). The remainder of this section of FERMCO's brief is devoted to Conover's claim, and the arguments are not applicable to Skalka. As FERMCO acknowledges, this circuit has held that the amount of front pay is for the jury to decide, see Roush, 10 F.3d at 398, and FERMCO has not pointed to any identifiable flaw in the jury's determination. Thus, when the district court determines the remittitur, it should allow the front-pay award to stand as determined by the jury, adjusted consistent with this opinion.

 

(6) Overlap Between ADEA and Contract Damages

FERMCO claims that it made no sense for the jury to award contract damages, since Skalka was fully compensated for his lost pay (past and future) through his ADEA damages. Although we have held that Skalka's contract claim fails as a matter of law, the plaintiffs' calculation of the damages makes the not unreasonable assumption that the jury simply chose to "allocate" some of the total damages to the contract claim. Therefore, in determining the remittitur, the district court should start with the total amount awarded, rather than just throwing out the contract damages. For example, under both claims the plaintiffs asked the jury to award damages for lost 401(k) payments. The damages figures for the ADEA claims suggest that the jury did not include 401(k) damages in its back-pay calculations, but it may have taken the 401(k) payments into account in the damages it allocated to the contract claim. The court's duty in calculating a remittitur is to determine the maximum amount the jury could reasonably have awarded. See Katch v. Speidel, Div. of Textron, Inc., 746 F.2d 1136, 1144 (6th Cir. 1984). Therefore, the remittitur should assume that the jury awarded damages for 401(k) payments at the rate requested by Skalka and that Skalka is entitled to 401(k) damages whether or not the jury lumped them into its contract claim award.

 

(7) Summary of Damages Issues

In summary, the district court's determination of the remittitur should take into account the following. Skalka's back-pay award properly includes the stipulated value of Skalka's salary and benefits less severance pay ($ 218,554), reduced to the extent required by his other employment and early retirement benefits. The front pay award may stand as determined by the jury, increased by an amount to compensate for Skalka's lost pension ($ 269,353 in future payments, which should be reduced to present value). In addition, the damages allocated by the jury to Skalka's contract claim may be re-allocated if appropriate to either back pay or front pay, to the extent that a reasonable jury could have awarded more on the ADEA claim. Finally, the back-pay award is doubled due to the finding of willfulness.

 

D. POST-JUDGMENT INTEREST

The parties dispute whether post-judgment interest on the jury's awards accrued from the date on which the district court entered an initial judgment memorializing the verdicts or from the later date on which the court entered a final, appealable judgment disposing of all claims. This question of statutory interpretation is one of first impression in this court and, so far as we are aware, in any federal court. We hold that interest runs from the date of the initial judgment.

 

Footnotes

N3 This issue is important to FERMCO because the back-pay award but not the front-pay award is doubled when the jury finds that the defendant's violation of the ADEA was willful.

N4 This figure reflects the stipulated value of Skalka's salary and benefits from the time of his termination until the time of the verdict, minus the amount he received as severance pay.

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