Corporate Counsel Daily, $2.5M age discrimination award against AutoNation upheld, (Oct 23, 2024)

By George Basharis, J.D.

A former Porsche dealership employee won a major victory as a judge confirmed an arbitration ruling, rejecting AutoNation's attempts to vacate or modify the award.

A federal court in in Washington upheld a $2.5 million arbitration award in an age discrimination case against AutoNation Inc., rejecting the company’s attempts to overturn or modify the decision. The court found that AutoNation failed to demonstrate any valid grounds for vacating or modifying the award under federal arbitration law. The ruling not only confirms the original award but also grants additional attorney fees and interest to the former employee (Lee v. AutoNation Inc., No. C23-348RSL (W.D. Wash. Oct. 21, 2024)).

The case stems from the November 2021 termination of a 62-year-old employee who had worked at Porsche Bellevue, owned by AutoNation, for more than 30 years. The employee filed claims under both the Washington Law Against Discrimination (WLAD) and the ADEA. Following a four-day arbitration hearing, the arbitrator found that age was a substantial factor in the employee’s termination and awarded approximately $2.5 million in damages, including lost earnings, emotional damages, and attorney fees.

The total award of $2,493,912.96 included several components: $1.125 million in lost earnings, $21,077 in lost benefits, $500,000 in emotional damages, $135,737 for adverse tax consequences, nearly $69,000 in pre-judgment interest, and $642,573.96 in attorney fees. The award also included provisions for post-judgment interest until the judgment is paid in full.

AutoNation’s challenge to the award. AutoNation challenged the arbitration award on multiple grounds. The company argued that the arbitrator exceeded her powers, engaged in misconduct, and made calculation errors. A key point of contention was the arbitrator's decision to award back pay even after the employee was terminated from a subsequent position at Jaguar Land Rover Bellevue.

The court systematically rejected each of AutoNation’s arguments. Regarding the back pay issue, the court found that the arbitrator properly applied relevant case law and determined that the employee's termination from his subsequent job did not constitute a failure to mitigate damages, as there was no evidence of willful loss of earnings or lack of good faith effort.

The court noted that while there were “some things that obviously led to” the employee’s termination from his subsequent position at Jaguar Land Rover Bellevue, the arbitrator reasonably concluded that these issues did not demonstrate intentional misconduct or gross wrongdoing that would justify cutting off back pay. The court emphasized that an arbitrator’s decision cannot be overturned merely because a party disagrees with how evidence was interpreted or the law was applied.

Misconduct allegations. AutoNation’s claims of arbitrator misconduct centered on allegations that the arbitrator cherry-picked testimony and improperly considered certain evidence. The court found these arguments unpersuasive, noting that the arbitrator had thoroughly considered the context and nuances of the testimony in question.

AutoNation objected to how the arbitrator quoted testimony from a Jaguar Land Rover manager who said the employee did a “good job,” arguing this ignored the full context of the statement. However, the court found that the arbitrator had actually acknowledged both positive and negative aspects of the employee's subsequent employment, including noting that the position “was ultimately not a good fit” and that there were “three events” leading to the termination. The court emphasized that such disagreements over how evidence was interpreted do not rise to the level of misconduct required to vacate an arbitration award under federal law.

Fee award dispute. The court also rejected AutoNation's attempts to modify the attorney fee award. While AutoNation complained about various billing practices and costs, the court found that the company failed to demonstrate any actual miscalculation or proper grounds for modification under federal arbitration law.

The court appeared particularly frustrated with AutoNation’s approach, noting that the company merely rehashed complaints about billing practices that had already been presented to and addressed by the arbitrator in earlier proceedings. The court also dismissed AutoNation’s argument that fee awards are routinely vacated, pointing out that none of the four cases cited by the company were relevant to the current situation, as they involved fundamentally different circumstances such as fees not being submitted to arbitrators or violations of state law.

Additional awards and interest. The court’s decision went beyond simply confirming the arbitration award. It granted the former employee's request for additional attorney fees incurred in defending the arbitration award, as well as both pre-judgment and post-judgment interest. The employee was given 14 days to submit a supplemental fee petition for the additional costs incurred since the arbitration award.

The court’s decision emphasized the extremely limited grounds for vacating or modifying arbitration awards under the Federal Arbitration Act. It noted that merely disagreeing with an arbitrator's interpretation of evidence or application of law is insufficient for overturning an award.

The case is No. C23-348RSL.

Judge: Lasnik, R.

Attorneys: Katherine C. Chamberlain (MacDonald Hoague & Bayless) for Eric Lee. Catharine M. Morisset (Fisher & Phillips) for AutoNation Inc.

Companies: AutoNation, Inc.

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