Employer Liability for Discriminatory Firing: $1

By Scott M. Wich Jun 1, 2016
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Litigation can strike fear into employers and cause great anxiety over liability exposure. However, employers are well-advised to remember that litigation is a two-way street which, for unprepared plaintiffs, can be a very unproductive journey. Illustrative of this point is a recent decision from the 8th U.S. Circuit Court of Appeals, where a discharged employee who proved he was a victim of unlawful discrimination nonetheless walked away with only one dollar in damages.

 Oscar Olivares worked as a shift supervisor for Brentwood Industries, a manufacturer of water filters for cooling towers, headquartered in Hope, Ark. A naturalized citizen of Mexican origin, Olivares had worked for Brentwood for over 10 years and received a number of promotions. According to the court’s decision, Olivares spoke to one of his supervisors in January 2013 about distributing permanent employment applications to temporary workers under his supervision. Olivares was purportedly told not to distribute any applications because the plant manager did not want to employ any more Mexican workers.

Several weeks later, Olivares was terminated. He was charged by Brentwood with failing to properly supervise two subordinates, who were allegedly found to have been working without adequate personal protective equipment. Olivares was unable to find work for approximately one year, after which he became a forklift operator at another local manufacturer.

A jury unanimously found that Olivares’ termination was the product of race discrimination. However, it awarded him only one dollar in damages. Olivares appealed, claiming error by the lower court on the failure to provide either reinstatement or back pay. The appeals court affirmed the decision of the lower court.

The appeals court began its discussion by noting that Olivares had failed to provide evidence of damages during the trial. Therefore, the jury had no basis to award him anything other than nominal damages. After the verdict, however, Olivares asked the lower court for equitable relief in the form or either reinstatement or front pay (pay going forward in lieu of reinstatement).

The lower court properly denied reinstatement, the appeals court found, because there were no comparable supervisory positions available at Brentwood. More significantly, the lower court appropriately found “serious trust issues” between Olivares and the management that could not be repaired. Because the jury never made any findings as to whether Olivares had violated safety rules or if Brentwood’s trust concerns were valid, the district court was free to conclude that reinstatement based on these issues was neither possible nor practical.

With regard to front pay, the appeals court found that Olivares’ testimony about his pay at his subsequent employer was insufficient to support such a claim for equitable relief. Lacking documentary evidence of post-verdict pay, the court concluded that an award would be too speculative.

In affirming the lower court’s decision, therefore, Olivares’ ultimate relief for his unlawful termination was one dollar, with no back pay, front pay or reinstatement.

Olivares v. Brentwood Industries, 8th Cir., No. 15-2674 (May 13, 2016).

Professional Pointer: Settlement is frequently, but not always, the wise option in managing litigation risk. Careful attention and analysis should be given as to the risks of continuing a particular lawsuit versus the cost of settlement. Keep in mind that routine settlement of claims can give rise to avoidable expenses and encourage other discharged employees to bring lawsuits with the expectation of a post-termination payout.

Scott M. Wich is an attorney with Clifton Budd & DeMaria LLP in New York City.

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