In a recent wrongful termination case, the jury awarded a former employee three years of back pay even though he had obtained new employment soon after his termination. The appellate court upheld the award, finding that his back-pay claim didn't need to be reduced because the jury could reasonably conclude that the new employment was inferior to his former employment based on its location alone.
New employment eight months after layoff
Alfredo Villacorta worked as a maintenance planner for Cemex Cement, a large cement production company. He originally worked for the company in the Philippines and in 2003 transferred to its plant in Victorville, California. In 2008, Villacorta was laid off in connection with a reduction in force that affected hundreds of employees. At the time, he was earning an annual salary of $65,699.
After being laid off, Villacorta moved to Corona to be closer to his wife's work. After eight months off work, he obtained employment as a maintenance supervisor with National Cement in Lebec, which was a twoto three-hour commute from Corona. He ended up renting an apartment an hour from his new job, where he stayed during the workweek, and he visited his family on the weekends. Villacorta earned $69,300 per year with National.
Substantial award despite new employment
Villacorta sued Cemex for, among other claims, wrongful termination, contending that he was terminated for being Filipino. He sought damages for lost wages and garden-variety emotional distress.
The case went to trial, and during closing arguments, Villacorta's attorney asserted that Villacorta suffered $44,000 in lost wages for the eight months he was unemployed. The judge provided written instructions to the jury essentially stating that if they found that Villacorta was entitled to lost wages, the lost wages should be reduced by the amount he could have earned from employment comparable or substantially similar to his former job. After seeking clarification from the judge on those instructions, the jury returned with a verdict of $198,000 for past "lost salary" and awarded no other damages.
Cemex appeals damages award
After losing at trial, Cemex appealed, arguing that the jury erroneously awarded Villacorta the equivalent of three years of back pay, which wasn't supported by "substantial evidence." Generally, the standard on appeal is whether the verdict, when viewed in a light most favorable to the prevailing party, is supported by substantial evidence.
The appellate court's inquiry focused on whether Villacorta's wage claim should have been reduced by the amount of earnings he received from National. As the court discussed, for the employee's new earnings to be applied, the employer must show that the other employment was comparable or substantially similar to his former job, and the location of the new job is one factor to consider. The wage claim isn't reduced by earnings from an inferior job because doing so would punish an employee who, either because of an honest desire to work or a lack of financial resources, is willing to take whatever employment he can find.
The appellate court observed from the record that the National job was far from where Villacorta resided with his family and that as a result, he had to find a rental apartment near his job and could see his family only on the weekends. Based on those circumstances, the court found that the jury could reasonably conclude that the National job was inferior and therefore Villacorta's postemployment wages wouldn't be applied to reduce his economic losses.
Cemex also claimed that the $198,000 award was excessive based on Villacorta's own attorney arguing at trial for damages amounting to only eight months of lost wages. The appellate court responded that the attorney's argument wasn't evidence and thus wasn't relevant in determining whether the verdict was supported by substantial evidence. The appellate court upheld the jury's award. Villacorta v. Cemex Cement (California Court of Appeal, 4th Appellate District, 12/11/13).
Employer's obligation to prove mitigation
This decision clearly demonstrates that the employer has the obligation to prove mitigation of damages — in this case, that the former employee found comparable employment that offset his damages. To reduce the back- pay claim, the employer must prove either that the former employee obtained comparable employment or that he failed to engage in reasonable efforts to find such employment.
In this case, significantly, there is no record of what efforts, if any, Villacorta made to find a similar position near his residence. In employment litigation, the employer may meet its burden on mitigation of damages by proving, through the former employee's admissions and potentially the testimony of an expert with knowledge of the relevant job market, that the employee didn't apply for comparable available positions. It appears from this decision that both Cemex and Villacorta assumed that the jury would deem Villacorta's new job to be sufficiently similar to his former position to offset his back-pay claim.
The author can be reached at Epstein Becker & Green, P.C., in San Francisco, asommer@ebglaw.com.
California court upholds oversized jury award in wrongful termination case
