Jackson County jury awards $2.1 million in age case

On March 17, 2010, a jury in Jack­son Coun­ty in West Vir­ginia award­ed Jerold John Rice Jr. rough­ly $2.1 mil­lion in an age dis­crim­i­na­tion case against The Burke-Par­sons-Bowl­by Cor­po­ra­tion, Stel­la-Jones US Hold­ings Cor­po­ra­tion, and Stel­la-Jones, Inc., tried in Judge Thomas C. Evans III’s court.

Mr. Rice was rep­re­sent­ed by Mark Atkin­son and Paul Framp­ton at Atkin­son & Polak, PLLC, and the defen­dants were rep­re­sent­ed by Roger Wolfe at Jack­son & Kel­ly PLLC in Charleston, and Kevin Hyde at Foley & Lard­ner, LLP in Jack­sonville, Flori­da.

Here is a quick run-down of what was award­ed in the case:

  • Back pay: $142,659 award­ed by jury.
  • Pre-judg­ment inter­est: $11,791.84 from date of ter­mi­na­tion through tri­al.
  • Front pay: $1,991,332.00 award­ed by jury (from rough­ly age 48 through retire­ment age at 67).
  • Emo­tion­al dis­tress: $0.
  • Puni­tive dam­ages: Jury did not answer ques­tion affir­ma­tive­ly which would have allowed award of puni­tive dam­ages.
  • Total judg­ment based on jury’s ver­dict: $2,145,782.84, plus post-judg­ment inter­est on that amount at 7% per annum.
  • Attor­neys’ fees: $117,235 award­ed by judge (based on $450 an hour for Mark Atkin­son and $300 per hour for Paul Framp­ton).
  • Lit­i­ga­tion expens­es: $20,324.16 award­ed by judge.
  • Total award: $2,283,342.00 (based on jury ver­dict, pre-judg­ment inter­est, attor­neys’ fees and expens­es) plus post-judg­ment inter­est at 7% per annum.

The Rice case illus­trates the risk employ­ers face when they ter­mi­nate an old­er, good, long-stand­ing employ­ee, and replace him or her with a much younger per­son with lit­tle or no expe­ri­ence for the employ­er.

What Hap­pened?

Mr. Rice at the time of his ter­mi­na­tion (in 2009) was age 47 and had worked for Burke-Par­sons-Bowl­by Cor­po­ra­tion for 24 years. When Mr. Rice was ter­mi­nat­ed he was the cor­po­rate con­troller.

In the year or so pre­ced­ing Mr. Rice’s ter­mi­na­tion, in 2008, Burke-Par­sons-Bowl­by Cor­po­ra­tion was acquired by Stel­la-Jones, Inc.  Then on Feb­ru­ary 16, 2009, the com­pa­ny hired Jere­my Stover, age 27–28, as the “assis­tant con­troller” under Mr. Rice. There was tes­ti­mo­ny that Mr. Rice was instruct­ed to teach Mr. Stover “every­thing you do”. There was also evi­dence that, between the time of the deci­sion to ter­mi­nate Mr. Rice and the actu­al ter­mi­na­tion, there was a sig­nif­i­cant com­pa­ny audit which required Mr. Rice’s exper­tise.

The kick­er for the defen­dants was that appar­ent­ly the com­pa­ny made the deci­sion to ter­mi­nate Mr. Rice’s employ­ment before hir­ing younger Mr. Stover. So the sequence of events, accord­ing to evi­dence pre­sent­ed by Mr. Rice,  was: pur­chase of the old com­pa­ny by Stel­la-Jones, deci­sion to ter­mi­nate 47-year-old Mr. Rice (with 24 years of expe­ri­ence), hir­ing of Mr. Stover at age 27 or 28 (with no expe­ri­ence with the com­pa­ny), get­ting Mr. Rice to train Mr. Stover, com­plet­ing the com­pa­ny audit with Mr. Rice’s help, then fir­ing 47-year-old Mr. Rice, and then get­ting 28 year old Mr. Stover to take over the bulk of Mr. Rice’s job.

Evi­dence of Dis­crim­i­na­tion: Con­flict­ing Expla­na­tions for the Ter­mi­na­tion

For prov­ing an age dis­crim­i­na­tion claim (or, for that mat­ter, any oth­er kind of dis­crim­i­na­tion claim), one of the stan­dard threads of evi­dence which sup­ports an infer­ence of dis­crim­i­na­tion is proof of con­flict­ing expla­na­tions by the employ­er for the rea­son for the employ­ment deci­sion.

In Mr. Rice’s case, there were alle­ga­tions that the com­pa­ny had con­flict­ing ver­sions of why it ter­mi­nat­ed Mr. Rice. The com­pa­ny orig­i­nal­ly claimed that part of the rea­son for ter­mi­nat­ing Mr. Rice was his inad­e­quate per­for­mance qual­i­ty. Then lat­er, the com­pa­ny appar­ent­ly shift­ed to the expla­na­tion that it sim­ply elim­i­nat­ed Mr. Rice’s posi­tion.

Evi­dence of Dis­crim­i­na­tion: Replac­ing an Old­er Work­er with a Sub­stan­tial­ly Younger One

Anoth­er type of evi­dence which is con­sid­ered to be sup­port­ive of a find­ing of dis­crim­i­na­tion is the replace­ment of the plain­tiff-employ­ee in the “pro­tect­ed class” with an employ­ee out­side the pro­tect­ed class.

For his age dis­crim­i­na­tion claim, Mr. Rice was age 47, which meant that he sat­is­fied the statu­to­ry require­ment for being pro­tect­ed on the basis of age — he was 40 years or old­er. Mr. Rice was replaced by an employ­ee sub­stan­tial­ly younger than him, Mr. Stover at age 27 or 28.

The courts have con­clud­ed that, for age dis­crim­i­na­tion, the infer­ence of dis­crim­i­na­tion aris­es if the replace­ment employ­ee is “sub­stan­tial­ly younger” than the plain­tiff, even if the replace­ment employ­ee is over 40 years of age. In Mr. Rice’s case there were no com­pli­ca­tions on that issue — Mr. Stover was both under age 40 and sub­stan­tial­ly younger than Mr. Rice (about 20 years younger).

There was a dis­pute over whether Mr. Stover in fact “replaced” Mr. Rice, but the fol­low­ing facts were in the record which could have sup­port­ed the con­clu­sion that the younger Mr. Stover replaced the old­er Mr. Rice: Mr. Rice was the cor­po­rate con­troller, a deci­sion was made to ter­mi­nate Mr. Rice, Mr. Stover was hired as “assis­tant con­troller”, man­age­ment instruct­ed Mr. Rice to teach Mr. Stover “every­thing you do”, the com­pa­ny then con­duct­ed a sig­nif­i­cant audit (with Mr. Rice’s assis­tance) to a suc­cess­ful con­clu­sion, the com­pa­ny then ter­mi­nat­ed Mr. Rice, and Mr. Stover took over most of Mr. Rice’s job respon­si­bil­i­ties.

Evi­dence of Dis­crim­i­na­tion: Con­tra­dict­ing the Employer’s Expla­na­tion

There is a third type of evi­dence which sup­ports a find­ing of dis­crim­i­na­tion: the con­tra­dict­ing of the company’s stat­ed legit­i­mate, non-dis­crim­i­na­to­ry rea­son for ter­mi­nat­ing the plain­tiff.

The defen­dants’ ini­tial descrip­tion of the rea­son for ter­mi­na­tion was inad­e­quate job per­for­mance. Mr. Rice pre­sent­ed evi­dence that he had an excel­lent work his­to­ry with the com­pa­ny that was free of any dis­ci­pli­nary action.

Dam­ages

The award­ed dam­ages in this case are inter­est­ing. First, the jury award­ed $142,659 in “back pay”, which is essen­tial­ly lost income and lost ben­e­fits from the point of ter­mi­na­tion through the date of tri­al.

The jury also award­ed $1,991,332 for “front pay”, which is future (from date of tri­al) lost income through some point in the future. An expert wit­ness for Mr. Rice cal­cu­lat­ed future lost income through a pro­ject­ed retire­ment age of 67. The expert’s cal­cu­la­tion of front pay was as I under­stand it, near­ly exact­ly what the jury award­ed: $1,991,332.

So the jury award­ed Mr. Rice front pay from his age at tri­al, which appears to me to have been age 48 or 49, through retire­ment at age 67 — a total of about 19 years.

An impor­tant facet of the jury’s deci­sion on front pay is that it did not reduce its award of front pay by the amount of any income Mr. Rice would be receiv­ing in the future from employ­ment after ter­mi­na­tion by the defen­dants. West Vir­ginia has a some­what unusu­al char­ac­ter­is­tic on awards of lost income, both past and future. Ordi­nar­i­ly, and this is also true in West Vir­ginia, the jury would be instruct­ed to take its pre­dic­tion of lost income in the future (which is cal­cu­lat­ed by pro­ject­ing the annu­al salary and ben­e­fits for the plaintiff’s last posi­tion with the defen­dant), and then sub­tract what the jury believes will be income to be earned by the plain­tiff dur­ing that same time future time peri­od.

For exam­ple, let’s assume that the jury knows that the plain­tiff was mak­ing $100,000 a year in the last posi­tion for the defen­dant-employ­er that ter­mi­nat­ed the plain­tiff. In award­ing front pay, the jury would first project out that $100,000 each of the next 10 years. Let’s also assume that at time of tri­al the plain­tiff is mak­ing $50,000 year at a new job (after his ter­mi­na­tion), and that job is like­ly to con­tin­ue into the future. (For these cal­cu­la­tions, I am ignor­ing the prospects of pay rais­es, I am ignor­ing ben­e­fits, and I am ignor­ing any effort to apply a “dis­count rate” to the future income amounts.) Under this sce­nario, the jury would sub­tract the $50,000 of annu­al wage from the $100,000 fig­ure, for a year­ly front pay dam­age amount of $50,000, and a total front pay award of $500,000 (10 years at $50,000 per year).

Under West Vir­ginia law, how­ev­er, the jury is instruct­ed that if it con­cludes ter­mi­na­tion of the plain­tiff was “mali­cious”, then the jury should not sub­tract the sub­se­quent replace­ment  income (in my exam­ple, $50,000 a year), and should instead award  a “flat” amount for front pay con­sist­ing sole­ly of the cal­cu­la­tion of the annu­al wage from the employee’s income with the defen­dant (in my exam­ple, $100,000 per year). That would mean an award of $100,000 per year, and a total award of $1,000,000 (10 years times $100,000).

Obvi­ous­ly, the “mal­ice” rule makes a big dif­fer­ence. In the exam­ple I pro­vid­ed above, with 10 years of future lost income, wages of $100,000 per year at the defen­dant, and wages of $50,000 per year in a sub­se­quent job:  the plain­tiff would receive $500,000 in front pay dam­ages if the ter­mi­na­tion was not mali­cious. How­ev­er, the plain­tiff would receive $1,000,000 in front pay if the jury con­cludes that the ter­mi­na­tion was mali­cious and does not sub­tract any of the replace­ment (post-defen­dant) job income.

In Mr. Rice’s case, my under­stand­ing is the jury award­ed the $1,991,332 in front pay based on a con­clu­sion of mal­ice, so the jury did not sub­tract any income Mr. Rice might receive in the future from any sub­se­quent employ­ment.

The West Vir­ginia Supreme Court most recent­ly reit­er­at­ed this “mali­cious ter­mi­na­tion rule” for back and front pay awards in Peters v. Rivers Edge Min­ing, Inc., 224 W. Va. 160, 680 S.E.2d 791, 814–815 (2009).

Inter­est­ing­ly, the jury did not award any com­pen­sa­tion for emo­tion­al dis­tress.

The jury also did not award any puni­tive dam­ages.

Thus, when you add pre­judg­ment inter­est to the award of back pay (and the pre­judg­ment inter­est was $11,791.84), the total amount of dam­ages that the judge award­ed based on the jury’s ver­dict was $2,145,782.84

Attorney’s Fees and Expens­es

Because Mr. Rice was the pre­vail­ing par­ty in an age dis­crim­i­na­tion claim under the West Vir­ginia Human Rights Act, he also received from the tri­al judge after the jury’s ver­dict an award of rea­son­able attorney’s  fees and expens­es. The lead lawyer for Mr. Rice was Mark Atkin­son, who has been prac­tic­ing about 27 years. Mr. Atkin­son has tried sev­er­al employ­ment dis­crim­i­na­tion and oth­er wrong­ful dis­charge cas­es in West Vir­ginia to jury ver­dicts of rough­ly $1-$3 mil­lion each. The tri­al court approved an hourly rate for Mr. Atkin­son of $450. Paul Framp­ton also tried the case with Mr. Atkin­son, has been prac­tic­ing law for about 7 years, and the tri­al judge approved an hourly rate for Mr. Framp­ton of $300. The tri­al court also approved an hourly rate of $125 for para­le­gal time.

The tri­al court then mul­ti­plied those hourly rates by the num­ber of hours expend­ed by the lawyers and their legal assis­tants, and award­ed attor­neys’ fees of $117,235. The tri­al court also award­ed expens­es incurred by coun­sel for Mr. Rice in the amount of $20,324.16.

Post-Judg­ment Inter­est

Under West Vir­ginia law “post-judg­ment inter­est” would then be applied to all of those award­ed amounts at the rate of 7% per year.

Appeal?

The defen­dants have filed a motion for new tri­al, and I don’t have sig­nif­i­cant infor­ma­tion on that motion (it has not been ruled upon as of this date). Giv­en the size of the ver­dict, it seems like­ly that an appeal will fol­low, assum­ing the tri­al court does not grant the motion for new tri­al.

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Drew M. Capuder

Publisher of Drew Capuder's Employment Law Blog. Lawyer with more than 29 years experience, focusing on employment law, commercial litigation, and mediation. Extensive trial and appellate experience in state and federal courts. Call Drew at 304-333-5261
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