The Fourth Circuit upheld the jury’s and court’s determination on damages and attorney’s fees on a successful FMLA claim, but remanded since the district court failed to account for interest on part of the damages. The appellate opinion is written by Senior District Judge Cacheris, sitting by designation.
Some excerpts follow on (1) whether the employer is on notice of FMLA issues; (2) after-acquired evidence issue, which may have limited the jury’s verdict for the plaintiff; (3) denial of front pay award to plaintiff; (4) pre-judgment interest; (5) liquidated damages under FMLA; and (6) attorney’s fee award.
http://pacer.ca4.uscourts.gov/dailyopinions/opinion.pdf/071920.P.pdf
Dotson v. Pfizer, Inc., No. 07-1920 (4th Cir. Mar. 4, 2009)
Appeals from the United States District Court for the Eastern District of North Carolina, at Raleigh.
Argued: September 23, 2008
Decided: March 4, 2009
Before MOTZ and AGEE, Circuit Judges, and James C. CACHERIS, Senior United States District Judge for the Eastern District of Virginia, sitting by designation.
Affirmed in part, reversed in part, vacated in part, and remanded by published opinion. Senior Judge Cacheris wrote the opinion, in which Judge Motz and Judge Agee joined.
This case reaches the Court after a full trial on the merits in the Eastern District of North Carolina. James Dotson ("Dotson") brought suit against his employer, Pfizer, Inc. ("Pfizer"), for violations of the Family and Medical Leave Act of 1993, 29 U.S.C. § 2601, et seq. (the "FMLA"). The jury awarded Dotson $1,876.00 on his FMLA interference claim and $331,429.25 on his retaliation claim. The district court awarded Dotson $333,305.25 in statutory liquidated damages, $375,000.00 in attorneys’ fees, and $14,264.88 in costs. Each party appealed different rulings of the district court. Finding error with the district court’s decision to deny pre-judgment interest, we affirm in part, reverse in part, vacate in part, and remand.
Pfizer terminated Dotson shortly after he and his wife returned from Russia
with their newly-adopted child. Prior to his termination, Dotson had worked at Pfizer for approximately fifteen years. He began his career there in 1988 at an entry-level sales position. In 1991 he was promoted to District Manager; seven years later he became a Regional Manager responsible for more than 100 sales representatives. . . .
. . . A jury trial began in May 2006 and lasted eight days. The jury found that Pfizer interfered with Dotson’s rights to FMLA leave and that it discharged Dotson in retaliation for his exercise of those rights. It awarded him $1,876 on his claim of interference and $331,429.25 on his retaliation claim. Pfizer filed a Motion for Judgment as a Matter of Law ("JMOL") and an alternative Motion for a New Trial in June 2006. After the trial, Dotson filed a Proposed Findings of Fact and Conclusions of Law Regarding Front Pay and a Motion for Liquidated Damages, Attorneys’ Fees, and Costs. The Court denied Pfizer’s JMOL motion and awarded Dotson $375,000 in liquidated damages, as well as attorneys’ fees and costs. It denied Dotson’s motion for front pay and prejudgment interest. On appeal, Pfizer challenges the court’s denial of its JMOL motion, the award of liquidated damages, and the amount of attorneys’ fees awarded. Dotson appeals the court’s denial of pre-judgment interest and front pay, and contends that the award of attorneys’ fees was inadequate.
[Employer on notice of FMLA claims]
. . . Case law and federal regulations make it clear, however, that employees do not need to invoke the FMLA in order to benefit from its protections. The regulations do not require the employee to "expressly assert rights under the FMLA or even mention the FMLA"; instead, the employee "may only state that leave is needed for an expected birth or adoption, for example." 29 C.F.R. § 825.302(c). After the employee makes such a statement, the responsibility falls on the employer to inquire further about whether the employee is seeking FMLA leave. Id. "In providing notice, the employee need not use any magic words." Sarnowski, 510 F.3d at 402.
There is no question that Dotson gave Pfizert adequate notice of his need for leave during the adoption process. After he provided this information, the burden shifted to Pfizer to determine whether he was requesting FMLA leave. Pfizer has not shown that it made any inquiry into whether his adoption-related leave should have been classified as protected under the FMLA. Pfizer’s legal argument would allow it to use its own failure to determine whether leave should be designated as FMLA-protected to block liability for retaliation. We decline to allow an employer to take advantage of its own lapse in such a way. . . .
[After-Acquired Evidence issue]
An after-acquired evidence defense limits an employer’s liability when the employer discovers evidence of "wrongdoing . . . of such severity that the employee in fact would have been terminated on those grounds alone if the employer had known of it at the time of the discharge." McKennon v. Nashville Banner Publ’g Co., 513 U.S. 352, 362-63 (1995). In evaluating an after-acquired defense, a court "must look to the employer’s actual employment practices and not merely the standards articulated in its employment manuals." Sellers v. Mineta, 358 F.3d 1058, 1064 (8th Cir. 2004) (citing O’Day v. McDonnell Douglas Helicopter Co., 79 F.3d 756, 759 (9th Cir. 1996)).
Dotson argues that the district court should have rejected Pfizer’s after-acquired evidence defense because the evidence "acquired" was in Pfizer’s possession before his termination and, in any event, Dotson’s alleged conduct would not normally have warranted discharge. He emphasizes a note from Kennedy to McElerney pointing out a discrepancy in the timing of Dotson’s starter authorizations. Dotson contends that this note shows that Pfizer was aware of the starter problem, allegedly uncovered during the discovery process, before it fired Dotson.
What was discovered during Dotson’s deposition, however, was that he had misled Batura, the starter compliance official, by telling him that Dr. Foster had signed a starter form prior to Dotson’s trip to Russia. This conversation, Pfizer claims, led it to refrain from contacting the FDA to report a problem with its handling of starters. Dotson’s argument that the evidence is not truly "after-acquired" is specious. His supervisors, who may have known that something was amiss with Dotson’s starter forms, directed him to call Pfizer’s compliance department. Pfizer put on evidence showing that Dotson misled a compliance official and that the extent of the purported deception did not become clear until after litigation began and Pfizer obtained a new explanation from Dotson, which it later discovered was also questionable. The evidence was "after-acquired": Dotson’s misleading of Batura was revealed only after Dotson filed suit.
The second question, which we decide using the same standard as the trial judge, is whether a reasonable jury could have found for Pfizer on its claim that it would have terminated Dotson for his allegedly misleading conversation with Batura. Pfizer argues that it would have terminated an employee for misrepresenting material facts to a company official investigating starter misuse. At trial, Pfizer introduced the testimony of Dawn Rogers, the Human Resources Vice President for Pfizer, who stated that Dotson would have been terminated based on what Pfizer discovered after the commencement of litigation. We conclude that this testimony would allow a reasonable jury to agree with Pfizer on this element of its after-acquired evidence defense, and so the district court correctly denied Dotson’s motion for judgment as a matter of law.
Because we reject Dotson’s assertion that the district court should have granted his motion for judgment as a matter of law on Pfizer’s after-acquired evidence defense, it is clear that the court did not abuse its discretion in allowing Pfizer to amend its Answer or in denying Dotson’s motion in limine to exclude the evidence from trial. . . .
[Front Pay]
Dotson appeals the district court’s denial of his request for front pay. He asked for approximately $8 million in front pay, including lost future earnings and benefits stretching fifteen years into the future — until, as Dotson explained, a planned early retirement at age 58.
Under the FMLA, a wronged employee is entitled to "such equitable relief as may be appropriate, including employment, reinstatement, and promotion," along with damages. 29 U.S.C. § 2617(a)(1)(B). The statute does not identify front pay as an equitable remedy, but we have recognized it as a proper form of relief that is "an alternative and complement to reinstatement." Cline v. Wal-Mart Stores, Inc., 144 F.3d 294, 307 (4th Cir. 1998). Determinations of front pay are made by the trial court sitting in equity. Id.at 307 (citing Duke v. Uniroyal, 928 F.2d 1413, 1424 (4th Cir. 1991)). A trial court must "temper" the use of front pay by recognizing "the potential for windfall" to the plaintiff. Duke, 928 F.2d at 1424. We review the denial of an award of front pay for abuse of discretion. See Nichols v. Ashland Hosp. Corp., 251 F.3d 496, 504 (4th Cir. 2001).
The district court believed that front pay from the date of termination until Dotson’s planned retirement was simply too speculative to award. The court cited Peyton v. Dimario, a Title VII case which held that front pay for 26 years was unduly speculative; the Peyton Court also noted that the balance of authority suggested that courts disfavored lifetime front pay awards for plaintiffs in their forties. Peyton v. Dimario, 287 F.3d 1121, 1129-30 (D.C. Cir. 2002). The district court stated that it would have been inclined to award front pay for a more limited duration — such as the approximately three years between Dotson’s termination and the point at which he secured a similar though lesser-paying job at GlaxoSmithKline — had the jury’s award plus liquidated damages not made Dotson whole by covering his projected losses over those three years.
Dotson objects to the district court’s characterization of what he claimed would be uninterrupted future employment with Pfizer as speculative. He also disputes its determination that liquidated damages made him whole for his future losses. Dotson suggests that, since he has not found a position as remunerative as the one he held with Pfizer, he will not be "made whole" unless he receives compensation to make up the difference, starting at the date of his termination and looking more than a decade into the future.
Under these circumstances, we do not believe the district court abused its discretion in denying Dotson front pay. At the time the court ruled on Dotson’s request for front pay, Dotson had secured full-time employment in the pharmaceutical services industry, making approximately $65,000 less than the approximately $232,000 in salary and benefits he made prior to his termination. Thus, he had secured comparable, if not precisely equivalent, work at another major drug company. . . .
[Pre-judgment Interest]
We reverse the district court’s decision because prejudgment interest on FMLA damages is mandatory rather than discretionary. Pre-judgment interest also does not constitute the kind of "additional" relief that requires briefing — unlike other FMLA remedies like front pay and liquidated damages, which the district court has the discretion to reduce or deny outright. Pre-judgment interest automatically becomes part of the damages award under the plain terms of the statute. 29 U.S.C. § 2617(a)(1)(A)(i)-(ii). Given the statutory command to include pre-judgment interest as part of FMLA damages, the district court should have awarded pre-judgment interest regardless of whether Dotson reiterated his pre-trial requests for it in the post-trial motion. In this case — where prejudgment interest was requested in several documents filed before trial — Dotson was entitled to the interest, which should have been awarded at the time the district court awarded him liquidated damages and other costs and fees.
[Liquidated Damages]
The FMLA entitles a wronged employee to an additional award of liquidated damages equal to the sum of the amount awarded for damages and the interest on that amount. 29 U.S.C. § 2617(a)(1)(A)(iii). Normally, liquidated damages are awarded automatically under the statute. If, however, the employer "proves to the satisfaction of the court" that the violation of § 2615 "was in good faith and that the employer had reasonable grounds for believing that the act or omission was not a violation," the court, in its discretion, may choose not to award liquidated damages. Id.
The employer has a "plain and substantial burden" to persuade the court that its failure was in good faith and that it would be unfair to impose liquidated damages.
Mayhew v. Wells, 125 F.3d 216, 220 (4th Cir. 1997) (quotation omitted) (interpreting liquidated damages provision of the Fair Labor Standards Act). The employer must show objective good faith.
See id. (citing
Clifton D. Mayhew, Inc. v. Wirtz, 413 F.2d 658, 661-62 (4th Cir. 1969)). Pfizer’s decision-makers, the company contends, did not know that Dotson had inquired about FMLA leave, and so the district court punished Pfizer for not knowing the statutory implications of Dotson’s adoption-related leave. This argument ignores Pfizer’s statutory burden of seeking out further information and complying with the FMLA when an employee indicates that he or she is seeking leave for a protected reason.
See 29 C.F.R. § 825.303(b). Pfizer had affirmative obligations it did not meet. The district court was well within its discretion to find that Pfizer did not make a showing of good faith.
Our decision that Dotson is entitled to pre-judgment interest, however, requires that we vacate the award of liquidated damages and return it to the district court for recalculation after the addition of pre-judgment interest. See supra at subsection III.B; 29 U.S.C. § 2617(a)(1)(A)(ii)-(iii) (prescribing liquidated damages equal to the sum of damages and prejudgment interest).
[Attorney’s Fees]
Both parties contest the attorneys’ fees awarded to Dotson’s counsel. Pfizer claims that the amount of attorneys’ fees awarded — $375,000 — was excessive considering that Dotson recovered $666,610.50 on his claims.
. . . Pfizer claims that, because it prevailed on its after-acquired evidence defense, Dotson won only a limited victory. Thus, the Court should reduce the attorneys’ fees awarded, because "the most critical factor is the degree of success obtained." Hensley v. Eckerhart, 461 U.S. 424, 436 (1983). "Even when an award of attorneys’ fees is mandatory, the district court may decrease the amount of fees that might otherwise be awarded in order to account for the plaintiff’s limited success." McDonnell, 134 F.3d at 641. Here, the district court reduced the amount claimed by Dotson’s attorneys from $550,000 to $375,000. Even if Pfizer prevailed, or partially prevailed, on the after-acquired evidence defense it raised, we do not find the district court’s attorneys’ fee award "clearly wrong." Martin, 48 F.3d at 1359. The court properly took into account Dotson’s limited recovery and reduced the fee award accordingly.
The district court limited Dotson’s attorneys’ fees because he did not obtain all the relief requested in his complaint. Dotson claims he is entitled to higher attorneys’ fees, since the district court wrongfully denied Dotson the full relief he requested. Because we hold that the district court did not abuse its discretion in denying front pay, it is clear that the court also did not err by limiting Dotson’s fees based on his failure to recover front pay.
. . . To recapitulate, we hold that Dotson is entitled to prejudgment interest under 29 U.S.C. § 2617(a)(1)(A)(i)-(ii). For that reason, the attorneys’ fees and liquidated damages must be recalculated after pre-judgment interest is added to Dotson’s award. We affirm the district court’s judgment in all other respects.
Comments