Equal Employment Opportunity Commission v. RadioShack Corporation
Filing
94
ORDER granting in part and denying in part 89 EEOC's Motion for Equitable Relief. An evidentiary hearing shall be scheduled so as to resolve the remaining pertinent factual issues, by Judge Lewis T. Babcock on 12/6/2012. (eseam)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
LEWIS T. BABCOCK, JUDGE
Civil Case No. 10-cv-02365-LTB-BNB
EQUAL EMPLOYMENT OPPORTUNITY COMMISSION,
Plaintiff,
v.
RADIOSHACK CORPORATION,
Defendant.
______________________________________________________________________________
ORDER
______________________________________________________________________________
This matter is before me on Plaintiff Equal Employment Opportunity Commission’s
(“EEOC”) Motion for Equitable Relief [Doc #89]. Pursuant to the conference held on November 28,
2012, see Doc #93, I address only the questions of law raised in the motion. After considering the
parties’ arguments, for the reasons herein, I GRANT the motion in part and DENY it in part.
I. Background
EEOC brought two claims against Defendant RadioShack Corporation (“RadioShack”) under
the Age Discrimination in Employment Act (the “ADEA”), 29 U.S.C. § 621, et seq., on behalf of
David Nelson, a former RadioShack employee. The first was that RadioShack discriminated against
Nelson on the basis of his age in violation of § 623(a)(1) of the ADEA. The second was that it
retaliated against him in violation of § 623(d) by firing him for complaining of age discrimination.
The case was tried to a jury from September 10 through September 17, 2012. The jury found
as follows: RadioShack did not terminate Nelson because of his age. See Docket # 88 Attach. 1,
Redacted Verdict Form at 1. It did, however, retaliate against Nelson because he complained of age
discrimination and, in doing so, willfully violated the ADEA. Id. at 1-2. The jury thus rendered a
verdict against EEOC’s discrimination claim but in favor of its retaliation claim. Turning to
damages, at trial EEOC sought $561,622 in back pay for Nelson. The jury found that Nelson failed
to make reasonable efforts to mitigate his damages. Id. at 2. As a result, the jury reduced the amount
that it determined would compensate Nelson for his lost wages and benefits resulting from
RadioShack’s retaliation by the amount it calculated he would have made had he properly mitigated
his damages. Id. The jury awarded Nelson $187,706 for his lost wages and benefits, as well as a
“Lifetime RadioShack Discount Card” (the “Discount Card”). Id.
II. Discussion
EEOC now moves for equitable relief and liquidated damages per 29 U.S.C. §§ 626(b) and
216(b), respectively. EEOC requests five things: (1) liquidated damages; (2) the Discount Card; (3)
front pay; (4) a tax penalty offset; and (5) injunctive relief. I examine these seriatim.
A.
Liquidated Damages
EEOC firstly seeks liquidated damages equal to the amount of back pay the jury
awarded–$187,706.00. The ADEA incorporates § 216 of the Fair Labor Standards Act (“the
FLSA”). See 29 U.S.C. § 626(b); EEOC v. Prudential Fed. Sav. and Loan Ass’n., 763 F.2d 1166,
1171-72 (10th Cir. 1985). Section 216 of the FLSA provides that “[a]ny employer who violates the
provisions of [the Act] shall be liable to the employee . . . affected in the amount of [his] unpaid
minimum wages . . . as the case may be, and in an additional equal amount as liquidated damages.”
29 U.S.C. § 216(b) (emphasis added). Amounts owed to an employee for a willful violation of the
ADEA “shall be deemed to be unpaid minimum wages.” Id. at § 626(b). The Fifth Circuit has held
that once there is a finding of willfulness by the employer, as there was here, an award of liquidated
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damages is necessary. Tyler v. Union Oil Co., 304 F.3d 379, 389 (5th Cir. 2002). RadioShack does
not dispute that a liquidated damages award is appropriate, nor does it dispute the appropriateness
of the amount EEOC seeks. Accordingly, I grant this portion of the motion.
B.
The Discount Card
EEOC next requests that I order RadioShack to provide Nelson with the Discount Card. It
argues that awarding the card is within my “equitable powers” and that I should do so because it
would “effectuate the purposes of the ADEA.” RadioShack opposes. I agree with RadioShack.
As an initial matter, I must determine whether the Discount Card is an equitable or legal
remedy. In Downie v. Independent Drivers Ass’n Pension Plan, 934 F.2d 1168 (10th Cir. 1991),
an employee filed suit seeking, among other relief, the restoration of certain retirement benefits and
service credits that he had earned during his employment and that were terminated. The Tenth
Circuit construed this relief as equitable. Id. at 1170-71; accord Callery v. U.S. Life Ins. Co. in City
of New York, 392 F.3d 401, 407 (10th Cir. 2004) (relief in Downie was “a clear equitable remedy”).
The Discount Card is akin to the relief the plaintiff sought in Downie in that it is a benefit
that only RadioShack employees can earn through long-term employment. The Discount Card is
also not money, “the classic form of legal relief.” See Gorman v. Carpenters’ & Millwrights’ Health
Benefit Trust Fund, 410 F.3d 1194, 1201 (10th Cir. 2004); see also J.R. Simplot v. Chevron Pipeline
Co., 563 F.3d 1102, 1115 (10th Cir. 2009) (“The general rule is that monetary relief is legal.”).
Plaintiff all but concedes that the card is an equitable remedy. See Pl.’s Mot. at 2. For these
reasons, I conclude that the Discount Card constitutes equitable relief. Consequently, the power to
award it lays with me, not the jury. See, e.g., Denison v. Swaco Geolograph Co., 941 F.2d 1416,
1425 (10th Cir. 1991) (“Both parties agree there is a split among the circuits on whether to
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characterize the calculation of front pay damages as a legal issue, for the jury, or an equitable issue,
for the court.”).
District courts have “considerable discretion” when deciding whether to award equitable
remedies. Boutwell v. Keating, 399 F.3d 1203, 1207 n.1 (10th Cir. 2005) (citing Stitching
Mayflower Recreational Fonds v. Newpark Res., Inc., 917 F.2d 1239, 1245 (10th Cir. 1990)). EEOC
argues that I should exercise this discretion to award the card because that would “effectuate the
purposes of the ADEA,” but it fails to say what those purposes are or to even cite them. EEOC
further argues that the card was meaningful to Nelson because of the discount and because it enabled
him to visit a RadioShack store and to demonstrate that he was a long-term employee of the
company. But EEOC again fails to proffer any legal authority for this argument, leaving its request
for the card devoid of legal support. Absent that and more developed arguments, I am not persuaded
that awarding the Discount Card is warranted. Accordingly, I deny this portion of the motion.
C.
Front Pay or Reinstatement
EEOC thirdly requests front pay or reinstatement and that front pay is more appropriate.
RadioShack disagrees with a front pay award. It contends that Nelson is precluded from receiving
front pay because the jury found that he failed to mitigate his damages. I conclude that reinstatement
is inappropriate and that Plaintiff is entitled to front pay.
Under the ADEA, a court can award reinstatement, or front pay in lieu of reinstatement, as
an equitable remedy. See Prudential, 763 F.2d at 1171-72 (citing Blim v. Western Elec. Co., 731
F.2d 1473, 1478-79 (10th Cir. 1984)). “[R]einstatement is the preferred remedy under the ADEA
and should be ordered whenever it is appropriate.” Id. at 1172. When it is not appropriate, “an
award of future damages in lieu of reinstatement furthers the remedial purposes of the ADEA by
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assuring that the aggrieved party is returned as nearly as possible to the economic situation he would
have enjoyed but for the defendant's illegal conduct.” Id. at 1173. Front pay is “money awarded
for lost compensation during the period between judgment and reinstatement or in lieu of
reinstatement.” Pollard v. E.I. du Pont de Nemours & Co., 532 U.S. 843, 846 (2001). It “[i]s
intended to compensate victims of discrimination for the continuing future effects of discrimination
until the victim can be made whole.” Pitre v. Western Elec. Co., Inc., 843 F.2d 1262, 1278 (10th
Cir. 1988).
In this case, the parties agree that reinstatement is inappropriate. See Pl.’s Mot. at 3-7; Def.’s
Resp. at 3 n.1. The question thus becomes whether front pay in lieu thereof should be awarded.
RadioShack answers in the negative. Citing a host of cases, it asserts that Nelson is precluded from
receiving front pay because the jury found that he failed to mitigate his damages. See Hughes v. Bd.
of Regents of the Univ. of Colo., 967 F.Supp. 431, 435 (D. Colo. 1996); Dilley v. SuperValue Inc.,
296 F.3d 958, 967-68 (10th Cir. 2002); McInerny v. United Air Lines, Inc., 463 Fed App’x 709, 725
(10th Cir. 2011); Leidel v. Ameripride Services, Inc., 276 F.Supp.2d 1138 (D. Kan. 2003);
Richardson v. Tricom Pictures & Productions, Inc., 334 F.Supp.2d 1303, 1318 (S.D. Fla. 2004).
I disagree with RadioShack. To begin, the cases that it cites do not lend it succor. The first
case, Hughes, 967 F.Supp. at 435, indeed asserts that “[t]he law requires [a] plaintiff to take
reasonable steps to mitigate h[is] damages before [he] may be eligible for front pay.” As the basis
for that assertion, Hughes cites only Spulak v. K Mart Corp., 894 F.2d 1150, 1158 (10th Cir. 1996).
See id. The problem, however, is that I do not read Spulak as standing for that proposition. In
Spulak, a former K Mart employee sued K Mart under the ADEA, alleging that he had been
constructively discharged from his job with K Mart as a result of illegal age discrimination. 894
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F.2d at 1152. The jury returned a verdict for the plaintiff and awarded him back pay and liquidated
damages. Id. The district court ruled post-trial that the plaintiff was entitled to front pay in lieu of
reinstatement. K Mart appealed. Id. On appeal, K Mart contended, inter alia, that the record did not
support the district court’s decision to award front pay in lieu of reinstatement and that the district
court erred in failing to adjust the damages to reflect the plaintiff’s alleged failure to mitigate. Id.
at 1157. The Tenth Circuit first held that there were no grounds for disturbing the district court’s
decision to award of front pay in lieu of reinstatement. Id. at 1158. It then held that the plaintiff
had presented sufficient evidence of mitigation to send the issue to the jury. Id. Importantly, Spulak
never stated that a plaintiff’s failure to mitigate his damages bars him from receiving front pay. See
id. Furthermore, its analysis suggests otherwise: the court in Spulak addressed the appropriateness
of the front pay award before addressing the mitigation issue, intimating that the former is not
dependant upon the latter as a matter of law. For these reasons I respectfully disagree with Hughes’s
interpretation of Spulak and, consequently, Hughes’s assertion regarding mitigation and front pay.
RadioShack also cannot rely on Dilley, supra, or McInerney, supra. While the court in Dilley
stated that “[m]itigation is relevant to determining a plaintiff’s entitlement to back pay, . . . and front
pay,” whether a plaintiff’s failure to mitigate precluded his recovery of front pay was not even an
issue on appeal. See 296 F.3d at 967 (internal citations omitted). Nor did the court in Dilley state
in dicta that, as a matter of law, the failure to mitigate precludes recovering front pay. See id. In
fact, the Tenth Circuit again suggested to the contrary by stating that “courts routinely find that a
plaintiff's failure to mitigate negates or reduces his claim for back pay or front pay, . . .” Id. at 968.
I interpret this to mean that, as a factual matter, Nelson’s failure to mitigate bears on the amount of
front pay to be awarded in that it may diminish or offset front pay. But that failure does not preclude
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him from being entitled to front pay as a matter of law. McInerney is similar. There, the Tenth
Circuit merely held that “the district court did not abuse its discretion in denying front pay because
McInerney’s attempt to calculate front pay at the hearing was inadequate.” McInerney, 463 Fed
App’x at 725. This is not tantamount to a conclusion that the failure to mitigate bars a recovery of
front pay as a matter of law.
The remaining cases RadioShack cites do not compel me to agree with it either. For one,
neither Leidel, 276 F.Supp.2d 1138, nor Richardson, 334 F.Supp.2d 1303, is controlling. Moreover,
Leidel is consistent with Spulak, supra, and Dilley, supra, in that it did not state that the failure to
mitigate precludes a front pay award as a matter of law. Rather, whether to award front pay when
the plaintiff there failed to reasonably mitigate front pay damages by quitting two comparable jobs
was within the court’s discretion. See Leidel, 276 F.Supp.2d at 1147.
My review of these cases leaves RadioShack’s contention that a failure to mitigate precludes
recovering front pay unsupported. To the contrary, I glean from them that in the Tenth Circuit, the
question of whether to award front pay (and in what amount) when a plaintiff fails to mitigate
damages is a factual matter. RadioShack also fails to persuade me that on the basis of logic or
equity that Nelson’s failure to mitigate should have the asserted preclusive effect. See Def.’s Resp.
3-6. Nelson’s failure to mitigate reduced his back pay recovery, but it did not bar his recovery
altogether as a matter of law. Moreover, his failure was not so great as to completely negate his back
pay award as a factual matter. Given the obvious symmetries between back pay and front pay, I am
unconvinced that his failure to mitigate nevertheless has the qualitatively different, more onerous
consequence of precluding any recovery of front pay as a matter of law.
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Accordingly, I conclude that reinstatement is not appropriate and that, as a matter of law,
Plaintiff’s failure to mitigate does not preclude him from receiving front pay in lieu of reinstatement.
I therefore grant EEOC’s motion insofar as it seeks front pay in lieu of reinstatement. See Pl.’s Mot.
at 3-7. The amount of front pay, however, is a question of fact which remains.
D.
Tax Penalty Offset
EEOC penultimately requests a tax penalty offset. It argues that if front pay is awarded,
Nelson will be paid the entire award at once, in a lump sum, subjecting him to a higher tax rate and,
thus, a higher tax penalty. In order to make Nelson whole, EEOC argues that Nelson is entitled to
receive an additional amount to offset the increased tax penalty. Defendants argue that an offset is
inappropriate because it would give Nelson an improper windfall. I agree with EEOC.
District courts “ha[ve] wide discretion in fashioning remedies to make victims of
discrimination whole.” Sears v. Atchison, Topeka & Santa Fe Ry., Co., 749 F.2d 1451, 1456 (10th
Cir. 1984). The Tenth Circuit has countenanced a district court exercising that discretion to award
a tax penalty offset. In Sears, the district court included a tax component in its back pay award to
compensate plaintiff class members for their additional tax liability as a result of receiving over 17
years of back pay in one lump sum. See id. at 1456. On appeal, the Tenth Circuit stated that
although “[a] tax component may not be appropriate in a typical Title VII case,” Sears presented
special circumstances. Id. These special circumstances included the litigation’s protracted nature
as well as the tax regulations at the time. The court-ordered back pay awards would likely place the
living members of the plaintiff-class in the highest income tax bracket on much of the back pay they
would receive. Id. And even if the class members averaged their income, which the tax code
allowed at that time, they could only use a three-year average. Id. Moreover, many of the class
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members had died and were thus ineligible for income averaging. For these reasons that Tenth
Circuit held that a district court did not abuse its discretion when it included the tax component. See
id.
In rendering this decision, the Tenth Circuit distinguished Sears from Blim, supra. See
Sears, 749 F.2d at 1456. Blim was an age discrimination case in which it the Tenth Circuit held,
inter alia, that awarding a tax component was inappropriate because it determined that the plaintiffs
would suffer no significant tax penalty. 731 F.2d at 1480. This was because, at that time, the “tax
laws contain[ed] five-year averaging provisions that [would] eliminate nearly all of any penalty that
would otherwise result from receipt of a lump sum payment.” Id. This five-year averaging
provision would also apply to liquidated damages, should they have been taxable. Id.
Under Sears and Blim, I conclude that Nelson may receive a tax penalty offset award. Those
cases put great emphasis on the plaintiff-recipient’s ability or inability to reduce the tax penalty
through income-averaging provisions. Significantly, income averaging was eliminated from the tax
code as of the Tax Reform Act of 1986, 26 U.S.C. § 1305 (repealed 1986). Nelson will therefore be
unable to spread his lump sum award over a multi-year period and, consequently, will likely be
forced into a higher–and perhaps the highest–income tax bracket. In this way he is similarly situated
to those deceased class members in Sears. Unlike the plaintiffs in Blim, then, Plaintiff would indeed
suffer a significant tax penalty, leaving him with less than he would have had but for his termination.
As stated, I am to exercise my equitable powers to make Nelson whole. See Sears, 749 F.2d at 1456.
I conclude that to do so, Nelson may need to receive a tax penalty offset award. This would not be
a windfall, as RadioShack asserts, but would simply place Nelson in the financial situation he would
have been in had he not been fired.
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Accordingly, I grant the motion insofar as it seeks a tax penalty offset as a matter of law.
Whether such an offset is verily needed to leave Nelson whole as a result of a tax penalty and, if it
is, what amount, are questions of fact that remain.
E.
Injunctive Relief
EEOC lastly seeks certain injunctive relief. It requests an order permanently enjoining
RadioShack from retaliating and requiring RadioShack to implement remedial measures such as
annual training on retaliation; to post notices advising employees of their ADEA rights; to monitor
complaints of discrimination and retaliation; and to provide quarterly reports to EEOC summarizing
any complaints and investigations for a period of two years. RadioShack contends that this relief
is inappropriate. I agree with RadioShack.
“[T]he purpose of injunctive relief is to prevent future violations.” E.E.O.C. v. General
Lines, Inc., 865 F.2d 1555, 1565 (10th Cir. 1989) (citing United States v. W.T. Grant Co., 345 U.S.
629 (1953)). “The likelihood of future violations is inferred from the totality of the circumstances,
including the commission of past illegal conduct.” Id. To obtain such relief, “the moving party must
demonstrate that there exists some cognizable danger of recurrent violations, something more than
a mere possibility, which serves to keep the case alive.” Id. (citing W.T. Grant Co., 345 U.S. 629).
EEOC fails to make such a showing. Nothing from trial or the instant motion indicates
“some cognizable danger” that RadioShack will retaliate against an employee in violation of the
ADEA in the future. This case was about a single act of discrimination and retaliation against one
employee by a lone RadioShack supervisor. The jury determined only that the lone RadioShack
supervisor–John Wissinger–had retaliated against Nelson but that Nelson was not discriminated
against on the basis of his age. EEOC’s argument here relies solely on the single occurrence of
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retaliation. There is no evidence that RadioShack has any unlawful employment “practice” or
“policy” that it followed, nor is there evidence establishing a pattern of retaliation. There is thus no
reason to believe that the single unlawful act “will likely occur again.” See id.; see also Drez v. E.R.
Squibb & Sons, Inc., 674 F.Supp. 1432 (D. Kan. 1987) (“The court can summarily dismiss plaintiff's
requested injunctive relief. When there is no proof of a pattern or practice of discrimination, an
injunction barring an employer from continuing alleged discriminatory practices is not
appropriate.”); Layman v. Gutierrez, 2007 WL 4061971, *4 (D. Colo. Nov. 15, 2007) (unpublished)
(“Put simply, a finding that Defendant discriminated against one individual on the basis of disability
is not, standing alone, sufficient to warrant mandating the entire Department of Commerce post an
anti-discrimination notice.”).
I therefore conclude that the requested injunctive relief is
unwarranted. See General Lines, 865 F.2d at 1565. Accordingly, I deny this portion of EEOC’s
motion.
IV. Conclusion
For the foregoing reasons, IT IS ORDERED that EEOC’s Motion for Equitable Relief [Doc
#89] is GRANTED in part and DENIED in part as set forth above. IT IS FURTHERED ORDERED
that an evidentiary hearing be scheduled so as to resolve the remaining pertinent factual issues.
Date: December
6 , 2012 in Denver, Colorado.
BY THE COURT:
s/Lewis T. Babcock
LEWIS T. BABCOCK, JUDGE
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