Employment Practices Decisions Archive: 1937 - 1995, EMPLOYMENT-PRACTICES 57 EPD ¶41,090, Nancy O’Mara Ezold, Plaintiff v. Wolf, Block, Schorr, and Solis-Cohen, Defendants., (July 23, 1991), (Jul. 23, 1991)

Nancy O’Mara Ezold, Plaintiff v. Wolf, Block, Schorr, and Solis-Cohen, Defendants.

United States District Court, Eastern District of Pennsylvania, No. 90-0002, July 23, 1991

Title VII--Civil Rights Act of 1964

Back Pay--Mitigation of Damages--Rejection of Partnership.

--A law firm associate, denied a promotion to partner because of gender, did not necessarily violate her duty to mitigate damages when she rejected a subsequent partnership offer that would not have been effective for a year. The firm’s partnership offer was conditioned upon remaining an associate for one year and forfeiting a semiannual raise and was not guaranteed.

Back reference.--¶2605.49 .

Back Pay--Mitigation of Damages--Reasonable Diligence.

--An associate with a law firm, denied a promotion because of gender, acted with reasonable diligence in mitigating her damages when she accepted a position for more money with a different company. Even though the new position as president and chief counsel of a company was guaranteed for only one year, it was not unreasonable to anticipate future earnings at or above that level.

Back reference.--¶2605.25 .

Order following (DC Pa 1991) 56 EPD ¶40,718 ; which ordered back pay following (DC Pa 1991) 55 EPD ¶40,497 .

Daniel M. Jaffe, Philadelphia, Pennsylvania, Judith P. Vladeck, Debra L. Raskin, Michael B. Ranis (Vladeck, Waldman, Elias $amp; Engelhard), New York, New York, for Plaintiff.

Mark S. Dichter, Ian A.L. Strogatz, M. Norman Goldberger (Wolf, Block, Schorr $amp; Solis-Cohen), Philadelphia, Pennsylvania, for Defendants.

Kelly, D.J.: On November 29, 1990, this court found that the defendant law firm had considered the Plaintiff’s gender in its decision not to promote her to partnership, in violation of Title VII of the Civil Rights Act of 1964, 42 U.S.c. §2000e et seq. (“Title VII”). Plaintiff’s claim of constructive discharge under Title VII was denied. On March 15, 1991, this court determined that Plaintiff’s failure to prove constructive discharge would not restrict Plaintiff’s remedies for the gender discrimination beyond the date of her resignation from the defendant firm.

Presently before the court are the parties’ memoranda of law addressing the issue of whether Plaintiff properly mitigated her damages. For the reasons stated more fully below, this court finds that Plaintiff properly complied with her statutory duty to mitigate damages imposed by section 706(g) of Title VII.

[Background Facts]

The facts of this case which are relevant to the present issue are as follows. In the October of 1988, the defendant firm informed Plaintiff, then in her sixth year as an associate in the firm’s litigation department, that she would not be promoted to partner, which partnership would have been effective February 1, 1989. At trial, Plaintiff proved that her gender played a part in the defendant firm’s decision not to promote her to partner. In November, 1988, the chairman of the firm’s executive committee, Mr. Charles Kopp, offered Plaintiff partnership in the firm’s domestic relations department if she would remain as an associate for another year. Plaintiff was also informed that she would not receive the semi-annual raise customarily accorded to associates at that time, however she would receive a raise in July, 1989. Plaintiff then decided not accept the offer represented by Mr. Kopp.

Plaintiff remained at the firm until June 7, 1989, upon which date she resigned her association with the defendant. At the time of her resignation, Plaintiff was earning an annual salary of $73,000. Prior to resigning, Plaintiff had secured a one-year contract of employment as president and chief counsel of BES Environmental Specialists (“BES”), an environmental consulting company. Plaintiff’s total compensation under her one-year contract with BES was $93,000, including a $20,000 bonus. Upon the expiration of Plaintiff’s one-year contract with BES, Plaintiff secured employment with the law firm of Rosenthal and Ganister, where she currently earns an annual salary of $60,000.

[Mitigation Arguments]

Plaintiff now asserts that the above facts establish that she acted reasonably to mitigate her damages by rejecting the offer of a domestic relations partnership in one year represented to her by the chairman of the firm’s executive committee, and leaving her employment as an associate at the defendant firm. Plaintiff argues that this court’s March 15, 1991 determination that her Title VII relief would not be restricted past the date of her resignation even though no constructive discharge occurred effectively resolves the mitigation issue because it was determined that Plaintiff acted reasonably in resigning her employment at the defendant firm. Plaintiff further argues that she had no duty to accept the offer of a domestic relations partnership in one year as that position was not equivalent to the litigation partnership that she was discriminatorily denied.

In response, the defendant submits that Plaintiff’s statutory duty to mitigate, and relevant caselaw interpreting that duty, require that she should have remained in her employment at the defendant firm, and accepted the offer of a domestic relations partnership at the firm in one year’s time. Defendant argues that Plaintiff’s acceptance of the one-year contract with BES was a temporary position which only allowed her to earn more than she would have at the defendant firm for the 71/2 months between mid-June, 1989, and February 1, 1990, when her domestic relations partnership would have been effective. In support of that position, the defendant notes that since her contract with BES expired, Plaintiff has been earning less than she had been when she left the defendant firm, and less than half of what she would have received had she accepted the domestic relations partnership offer.

[Section 706(g)]

Section 706(g) of Title VII establishes that backpay awarded to a victim of unlawful discriminatory employment practices is to be reduced as follows:

. . . Interim earnings or amounts earnable with reasonable diligence by the person or persons discriminated against shall operate to reduce the backpay otherwise allowable.

Under Section 706(g) then, the amount of backpay a discriminatory employer is required to pay a victorious Title VII plaintiff is to be offset and reduced by whatever the plaintiff earned in the interim period between the discriminatory action and judgment. If it is determined that the plaintiff did not exercise reasonable diligence in securing interim employment, a determination of what amounts were earnable with reasonable diligence is to be made, and the backpay award is to be reduced by that amount.

In Ford Motor Co. v. E.E.O.C., [29 EPD ¶32,852 ] 458 U.S. 219 (1982), the Supreme Court examined the Title VII mitigation duty in the context of an employer’s discriminatory refusal to hire and subsequent offer of the job previously denied, which offer did not provide seniority retroactive to the date of the discriminatory refusal. The Court held that “absent special circumstances, the rejection of an employer’s unconditional job offer ends the accrual of potential backpay liability.” Id. at 241. In so holding, the Court stated the following in reference to the duty of all Title VII claimants to mitigate damages:

This duty, rooted in an ancient principle of law, requires the claimant to use reasonable diligence in finding other suitable employment. Although the unemployed or underemployed claimant need not go into another line of work, accept a demotion, or take a demeaning position, he forfeits his right to backpay if he refuses a job substantially equivalent to the one he was denied. Consequently, an employer charged with unlawful discrimination often can toll the accrual of backpay liability by unconditionally offering the claimant the job he sought, and thereby providing him with an opportunity to minimize damages.

Ford Motor Co., supra, 458 U.S. at 231-32 (emphasis added).

[Refusal Not Per Se Violation]

Plaintiff’s refusal of the domestic relations partnership offer was not per se violative of her statutory duty to mitigate because the offer was conditioned upon her remaining as an associate for an additional year, and required her to forfeit one of the two semi-annual raises customarily accorded to associates by the defendant firm. In addition, although the delayed partnership offer had been extended by the firm’s executive committee chairman, Plaintiff had no guarantee that in one year’s time she would definitely receive the necessary approving vote from the firm’s full voting partnership, which vote is required to make partner. [1]

All of the circumstances surrounding the offer must be considered in determining whether Plaintiff’s rejection of it was unreasonable. [2] In light of the above facts, Plaintiff acted with reasonable diligence in obtaining alternative employment, albeit guaranteed only for one year, at an annual rate of compensation $20,000 greater than the associate’s salary she commanded at the time she left the defendant firm. In Huegel, supra, n. 1, the Postal Service denied the plaintiff employment and thereafter offered the plaintiff the “next available position.” Huegel, 683 F.Supp. at 124-26. The court noted that the “next available position might not have been available for a year,” Id. at 127 (emphasis added) as a basis for refusing to restrict backpay after the date of the plaintiff’s refusal of the offer.

[Constructive Discharge Finding]

Defendant argues further that this court’s trial finding of no constructive discharge is rendered legally meaningless by the conclusion that Plaintiff’s resignation neither bars post-resignation relief, nor violates the statutory duty of mitigation. Defendant’s argument overlooks at least two relevant aspects of the constructive discharge ruling however.

First, the litigation of constructive discharge claims in Title VII cases is not merely for the purpose of determining applicable limits on relief, but for determining actual liability. A Title VII plaintiff who is denied a promotion, as was Plaintiff here, can seek Title VII relief on alternative grounds, i.e. that either the employer unlawfully discriminated in the refusal to promote, or that the employer unlawfully discriminated against the plaintiff such that he or she was forced to quit the job in which he or she remained. In cases where there is no denial of promotion issue, the plaintiff claiming to have merely been discriminatorily forced out of his or her job, constructive discharge is the sole means of determining liability. Here a denial of promotion was at issue, hence Plaintiff sought relief on alternative grounds.

A second aspect of the constructive discharge finding’s relevance to the present issue involves the determination of the scope of “reasonable diligence”. This court’s March 15, 1991 holding that Plaintiff’s Title VII relief would not be cut off at the date of her resignation merely effected this court’s determination that the application of a general rule eliminating Title VII relief after the date of resignation from a lesser job when a superior position has been discriminatorily denied would not be consistent with the equitable purposes of Title VII in view of the facts of this case. That Plaintiff’s relief would not be restricted to the period prior to her resignation does not absolve Plaintiff of her duty to mitigate damages however.

In the context of the mitigation issue the trial finding of no constructive discharge is thus relevant in determining whether Plaintiff acted with reasonable diligence in giving up her associate position and accepting the one-year contract as president and general counsel for BES. Here, the “reasonable diligence” of Plaintiff’s actions is not to be considered in light of any equitable duty to battle the discrimination from within, etc., as was relevant to the analysis underlying this court’s March 15, 1991 holding, but instead simply in terms of whether the dollar amounts earnable are such that she should have continued in that position. The relevance of the constructive discharge finding is thus made apparent: As Plaintiff was not constructively discharged from her associate position, the $73,000 salary she was earning in it is not eliminated from the scope of possible mitigative efforts, and this court must consider whether proper mitigation of the damages suffered as a result of being denied partnership encompassed remaining in the associate position.

[Conclusion]

Considering all of the facts and circumstances surrounding the original denial of partnership, the subsequent offer of a domestic relations partnership in one year, and Plaintiff’s decision to leave the defendant firm for alternative employment, Plaintiff acted with reasonable diligence in accepting the one-year contract with BES, satisfying her statutory duty to mitigate damages under Title VII. At the time of her decision to accept BES’s offer, Plaintiff was assured of earning $20,000 more with BES during that year than she would have as an associate with the defendant. Plaintiff reasonably could have anticipated that as president and general counsel for BES, there was a significant possibility of future earnings at or above that level. Thus Plaintiff was not required to accept the domestic relations partnership offer and/or remain in her position as an associate at the defendant firm in order to satisfactorily mitigate her damages.

As Plaintiff and Defendant have each submitted an alternative proposed order detailing in specific dollar amounts the backpay award appropriate to a determination that Plaintiff either did or did not properly mitigate her damages, respectively, I will adopt Plaintiff’s version in light of my conclusions today. That appropriate order follows.

Order

Kelly, D.J.: And Now, this 23rd day of July, 1991, for the reasons set forth in the foregoing Memorandum, it is Ordered that:

A. An Amended Memorandum having been rendered by the Court on November 29, 1990 in favor of Plaintiff on her claim of sex discrimination in promotion to partnership in violation of Title VII of the Civil Rights Act of 1964, 42 U.S.C. §2000e et seq. (Title VII) and against Plaintiff on her claim of construction discharge in violation of Title VII;

B. A Memorandum and Order having been rendered by the Court on March 15, 1991 that trial should proceed with respect to the issues of back pay, instatement or, in the alternative, front pay, and mitigation of damages by Plaintiff;

C. The Court having been advised that Plaintiff seeks the remedy of instatement as a partner with defendants and that defendant does not oppose the remedy of instatement should the Court’s November 29, 1990 and March 15, 1991 Orders be affirmed on appeal;

D. The Court having been advised that the parties have agreed to the amount of back pay; and

E. The Court having been advised that the parties’ agreements set forth in paragraphs (D) and (E) above are subject to the rights of the parties to appellate review of the Court’s prior Orders and this Judgment;

Pursuant to the Court’s prior Orders and the agreements of the parties set forth above, it is Further Ordered and Adjudged that:

I. Instatement

A. In the event the Court’s November 29, 1990 and march 15, 1991 Orders and this Judgment of instatement are affirmed in relevant part, Plaintiff shall be instated as a partner at defendant in its Litigation Department with the full rights and duties of all such individuals admitted to partnership by defendant effective February 1, 1989, such instatement to occur within 30 days of such affirmance and the exhaustion of all appeals or the expiration of all time periods for seeking appellant review.

B. Neither party waives its rights to seek modification by this Court, including its rights to seek any otherwise permissible discovery in connection with any such requested modification, of this Judgment ordering instatement. Such a request for modification may be based only upon subsequent events occurring during the period following entry of this Judgment and ending upon the later of the exhaustion of all appeals or the expiration of all time periods for seeking appellate review. If the Court determines that modification of this Judgment of instatement is appropriate, the Court shall conduct such additional proceedings as may be necessary to determine the appropriate relief to which Plaintiff may be entitled.

II. Back Pay

A. Plaintiff shall be awarded back pay in the amount of $131,784 for the period from the date of her resignation through January 31, 1991. Of this sum, $90,516 is to be paid to Plaintiff, with full pre-judgment interest to be calculated on a monthly, cash-flow basis. If and when Plaintiff is instated as a partner, the remaining sum of $41,268 shall be deemed to have been contributed by Plaintiff to Defendant’s capital and shall be maintained by Defendant with respect to Plaintiff in the same manner and under the same rules as are applicable to the capital contributions of those individuals admitted to partnership in February, 1989.

B. If this Court’s prior Orders and this Judgment are affirmed in relevant part, this Court shall thereafter determine back pay for the period from February 1, 1991 to the date of Plaintiff’s instatement as a partner, with full pre-judgment interest to be calculated on a monthly, cash-flow basis for the period prior to the entry of this Judgment and post-judgment interest thereafter.

III. Attorneys’ Fees and Costs

The Court finds further that Plaintiff is a prevailing party within the meaning of Title VII and therefore is entitled to attorneys’ fees and costs. The Court will determine the amount of Plaintiff’s attorneys’ fees and costs if and when a judgment in Plaintiff’s favor is affirmed and after the exhaustion of all appeals or the expiration of all time periods for seeking appellate review.