A front pay award of 10 years in the amount of more than $135,000 for a Family Medical Leave Act violation was “unduly speculative,” the federal court of appeals in St. Louis has ruled, vacating the award. The Court found the district court abused its discretion in making the award because it was based on conjecture that the plaintiff-employee would remain in a job she never actually performed and because of the former employer’s business uncertainties after the employee’s termination. Dollar v. Smithway Motor Xpress Inc., No. 11-2093 (8th Cir. Mar. 27, 2013). The Eighth Circuit has jurisdiction over Arkansas, Iowa, Minnesota, Missouri, Nebraska, North Dakota, and South Dakota.

Background

Christine Dollar was a dispatcher for Smithway, a national over-the-road trucking carrier, for almost nine years when she quit in 1998. Dollar returned to Smithway seven years later, in May 2006. In December 2006, Dollar sought and received a transfer to the position of driver manager. While in the manager position, Dollar was absent from work periodically because of depression and medication she was taking. Recognizing attendance was of particular concern for the driver manager position, Smithway began looking for another position for Dollar. 

Dollar’s depression worsened and, slightly more than a year after she returned to Smithway, on June 11, 2007, she told her supervisor she would not be able to come to work. Initially, Dollar was placed off work until June 19. This was later moved to June 25.

On June 25, the company told Dollar she was expected to return on June 29 and her new position would be that of driver recruiter, which was comparable in pay and hours to the driver manager position. Dollar’s physician later gave her a medical excuse for a return date of July 9. Smithway told her the position of driver recruiter could not be held open for her and she would not be guaranteed a job if she did not return until July 9.

Dollar subsequently was placed on leave until July 30, 2007. Dollar mailed in the doctor’s excuse and on July 6 contacted Smithway to confirm receipt. Again, Dollar was told the recruiter position could not be held open for her. She responded by asking if she was fired and was told “yes.” At the time of her termination, Dollar had not been offered Family Medical Leave Act leave or any documentation regarding FMLA leave. Dollar never expressly requested FMLA leave. Subsequent to Dollar’s termination, Smithway underwent substantial changes in operations and corporate reorganizations.

On August 1, 2007, Dollar was provided a medical release to return to work.

Lawsuit

Two years after her termination, Dollar filed a lawsuit alleging FMLA interference and retaliation claims. The former employer did not raise failure to mitigate damages as an affirmative defense in the answer, nor in any other filings with the court.

Liability and Damages

After a bench trial, the district court rejected Dollar’s retaliation claim, but found that Smithway willfully interfered with Dollar’s FMLA rights.

Despite Smithway’s not providing any FMLA documentation to Dollar, the district court found the company’s attempts to accommodate Dollar (e.g., transferring her to the position of driver recruiter) were the very acts that made possible the recovery of back pay and liquidated damages. Dollar testified that at the time she was medically released, she was not able to perform the duties of a driver manager, but could perform that of a driver recruiter. The court ruled the employer had failed to reinstate her to an “equivalent position” at the end of her leave as required under the FMLA.

The court awarded Dollar back pay to the date of the judgment in the amount of $80,793 and statutory liquidated damages in the same amount. The court also awarded front pay for a period of 10 years in the amount of $134,526.

In determining front pay, the court noted that it was the plaintiff’s burden to prove her entitlement to front pay to a reasonable degree of certainty and the defendant’s burden to prove any failure to mitigate damages. The court, however, found Smithway had not pleaded the affirmative defense of failure to mitigate damages and therefore had waived the issue. The court found in the alternative that even if Smithway had not waived the affirmative defense, Dollar, in fact, acted reasonably in seeking replacement employment and did not fail to mitigate her damages.

The U.S. Court of Appeals for the Eighth Circuit affirmed the district court’s finding that Smithway waived its affirmative defense of failure to mitigate damages under Federal Rule of Civil Procedure 8(c)(1), which requires defendants to plead affirmative defenses and provides an exemplary list of defenses. Smithway not only failed to plead the affirmative defense, the Court said, but failed to identify the failure to mitigate damages as an issue for trial.

Addressing the front pay award, the Court reaffirmed that front pay is an equitable remedy that, to some extent, is always at least partially speculative since it rests upon predictions and assumptions about a plaintiff’s longevity, the likely duration of any future employment, the continued viability of the employer, ongoing efforts at mitigation, and countless other factors. More important, the decision to grant front pay, the Court instructed, requires consideration of all the circumstances of a case and an assessment of whether an award is appropriate.

In this case, the Eighth Circuit found unique circumstances that required the district court’s front pay award be vacated because it was “unduly speculative.” Significantly, the Court noted, Dollar was transferred to a job she had never performed and the company underwent substantial changes in operations and corporate reorganization that added greatly to the amount of uncertainty surrounding Dollar’s future prospects with Smithway. Accordingly, the Court vacated the front pay award.

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Dollar underscores the importance of raising a failure to mitigate damages defense in termination cases, since the defense applies to both back pay and front pay. Moreover, Dollar provides helpful guidance on challenging front pay awards where there has been a change in operations following the plaintiff’s termination and where there are other facts raising doubts about the plaintiff’s ability to maintain the former position during the front pay period.