In Ford v. Trendwest, 103 Wn.App. 380, 12 P.3rd 613 (2000), a former employee of the Defendant sued alleging a breach of an Employee Assistance Agreement, under which the employer had promised to permit the employee to return to work at his former position upon his successful completion of a treatment program for alcohol abuse. The jury returned a verdict in favor of the employee, awarding economic damages in the amount of $235,000: $85,000 in "past economic damages" and $150,000 in "future economic damages." The Defendant appealed.
In relevant part, the Washington State Court of Appeals ruled that the jury was properly instructed that future lost wages was a proper component of damages in a breach of contract claim. Id. at 389-391. The Defendant petitioned this court for review. The limited issue addressed by the Defendant and The Washington Defense Trial Lawyers, amicus curiae, is whether so called "lost future earnings" are recoverable for breach of contract where the employee is an employee at-will.
The Washington Employment Lawyers Association (WELA), amicus curiae, argues that there exists sufficient evidence to support the jury award and that the decision of the Court of Appeals should be affirmed.
II. Statement of Facts.
Plaintiff, Bobby Ford, had worked for the Defendant for six years in the Upgrades Program, which was the most financially rewarding employment opportunity for Plaintiff. Id. at 383-384. Ford was terminated for reporting to work smelling of alcohol. In a letter dated May 8, 1997, the Defendant's Director of Staff Services offered to reinstate Ford "to a position equal to that which [he] held" if he successfully completed the Defendant's Employee Assistance Program (EAP). Id. The Plaintiff accepted the Defendant's offer, and his termination was changed to a leave of absence. Id . On May 12, 1997, a formal agreement was sent to the Plaintiff which provided that upon recommended treatment on an outpatient basis, . . ."the employee will be allowed to return to work." The agreement further provided that "the company agrees to hold the employee's job or position open during the EPA and return the employee to work upon the successful completion of the program." Id.
Ford successfully completed the EPA program with a recommendation for outpatient treatment. He was denied, however, the ability to return to his prior position, and instead was offered a less financially rewarding position. After Plaintiff rejected the position offered, he was terminated from employment.
No evidence is presented on the issue of mitigation of damages or whether reinstatement at the time of trial was feasible. In the Court of Appeals, these issues were not assigned as error, and were not raised in the Petition for Review or in the Defendant's Supplemental Brief.
III. Issues on Appeal
A. Is there a distinction between front pay and back pay?
B. Is front pay or back pay too speculative to award future damages?
C. Can back pay be a component of damages for a breach of contract where an employee is terminable at-will?
D. Can front pay be a component of damages for a breach of contract where an employee is terminable at-will?
IV. Summary of Argument
Back pay is the amount of money lost by an employee from the time of the wrongful act until the time of trial. Front pay is the amount of money lost by the employee from the date of trial until some indefinite time in the future to make an employee whole. After liability is determined, there exists a presumption in favor of back pay. An employee is ordinarily entitled to back pay unless the employer can prove that he or she failed to mitigate damages or would have been terminated from employment because of after acquired evidence. In this case, the Defendant does not argue either failure to mitigate damages or after acquired evidence.
Front pay is recoverable as an alternative to reinstatement. Whether reinstatement is a feasible remedy is a question for the court. If reinstatement is not a feasible remedy, the jury has discretion to award damages for front pay subject to the employee's obligation to mitigate damages. In this case, the Defendant does not argue that reinstatement was a feasible remedy at the time of trial.
The Defendant fails to distinguish between back pay and front pay, and erroneously characterizes all damages as "future lost wages." The Defendant further argues that the determination of all future lost wages is too speculative regardless of the evidence.
Neither back pay nor front pay is too speculative so as to deny relief even where an employee is an employee at-will. The at-will employment status is not a legal bar to damages where they can otherwise be established with reasonable certainty.
As recognized by the Defendant, front pay is not too speculative under the Washington Law Against Discrimination (WLAD), public policy tort, or for a breach of a promise of specific treatment in specific circumstances contained in employee handbooks. Yet virtually all Plaintiffs alleging any one of these claims are employees at-will. There is nothing about a fully integrated contract that distinguishes it from other claims and makes front pay too speculative as a remedy. The real question is not whether the Defendant could have terminated Plaintiff because he is an employee at-will, but whether it would have terminated his employment or whether the employee would have otherwise quit. This is a question for the jury.
Washington law and the Restatement (Second) of Contracts recognizes that the concept of foreseeability at the time the contract is executed determines damages, and not the foreseeability at the time of the breach. Back pay is presumed. If it was foreseeable at the time of the contract to reinstate that Plaintiff would continue working for the Defendant past the date of trial, then front pay is recoverable. Other jurisdictions acknowledge the availability of front pay damages in a breach of contract cause of action.
The Defendant argues that the ruling of the Court of Appeals will eviscerate the employment at-will doctrine. This argument is specious. Employers remain free to terminate employees for any legal reason. It may not, however, violate a fully integrated contract with its employees with total impunity.
V. Argument of Counsel
A. There Exists a Presumption in Favor of Back Pay.
The Defendant characterizes back pay and front pay as future lost wages, see Def. Supp. Brief, page 2, n.1, and argues that both are too speculative to be determined because the Plaintiff is an employee at-will. This is error. Back pay is presumed and front pay is discretionary with the jury. Neither are too speculative to be determined as a matter of law simply because the employee is an employee at-will.
"Most jurisdictions that have ruled on the issue of damages recoverable for wrongful discharge of an at-will employee have taken the position that the employee is entitled to recover back pay, which represents the amount the employee would have earned from the time of discharge until he finds new employment or is reinstated." Hayes v. Trulock, 51 Wn.App. 795, 800, 755 P.2d 830 (1988). Back pay includes lost wages and lost fringe benefits including health benefits, vacation, sick leave, and pension benefits. (1) There is a presumption in favor of back pay awards. Albemarle Paper Co. v. Moody, 422 U.S. 405, 421, 95 S.Ct. 2362, 45 L.Ed.2d 280 (1975)("It follows that, given a finding of unlawful discrimination, backpay should be denied only for reasons which, if applied generally, would not frustrate the central statutory purposes of eradicating discrimination throughout the economy and making persons whole for injuries suffered through past discrimination"). See also Schlei& Grossman, Employment Discrimination Law , NBA 1983, 2nd Edition, Five Year Supplement, page 527 ("the circumstances (other than a failure of mitigation) justifying a denial of back pay once discriminatory action has been established are rare"); Thurman v. Yellow Freight Systems Inc., 90 F.3d 1160, 1168 (6th Cir. 1996)("As a general rule, when a court finds discrimination it must award backpay. 'The special factors which would constitute exceptional circumstances and prevent backpay awards are exceedingly rare'")(citing Rasimas v. Mich. Dept. of Mental Health, 714 F.2d 614, 626 (6th Cir. 1983), cert. denied, 466 U.S. 950 (1984)); Nichols v. Frank, 42 F.3d 503, 515 (9 th Cir. 1994)("Under Title VII, victims of sex discrimination--regardless of whether that discrimination results in a work-related "injury" or not--are entitled to a maximum of 100% of their back pay, as long as that sum does not lead to double recovery"); EEOC v. O & G Spring and Wire Forms Specialty Co., 38 F.3d 872, 880 (7th Cir. 1994) (Complete relief for a victim of discrimination generally will include an award of back pay; indeed, such an award is presumptively proper once a violation has been shown) cert. denied, 115 S. Ct. 1270 (1995); Davis v. Department of Labor and Industries, 94 Wn.2d 119, 615 P.2d 1279 (1980)("We agree with the Court of Appeals that after discrimination has been found, any doubts concerning backpay should be resolved against the employer"); Burnside v. Simpson Paper Co., 66 Wash.App. 510, 529, 832 P.2d 537 (1992)("Once discrimination has been found, any doubts concerning back pay are to be resolved against the employer").(2)
1. Back Pay Is Reduced If the Defendant Proves That the Plaintiff Failed to Mitigate Damages.
It is well settled that failure to mitigate damages is an affirmative defense. In Kloss v. Honeywell, Inc., 77 Wn.App. 294, 301, 890 P.2d 480 (1995)("[T]he burden of proving a failure to mitigate damages ... [is] on the defendant.... To satisfy its burden, the [employer] must show that there were suitable positions available and that the plaintiff failed to use reasonable care and diligence in seeking them"). See also Burnside v. Simpson Paper, 66 Wn.App. 510, 529-530 (1992) affirmed on other grounds 123 Wn.2d 93 (1994). Federal law is identical. (3) "The determinations of both proximate cause and mitigation are factual matters for the jury, operating to limit front and back pay awards in cases where there has been discrimination but no finding of constructive discharge." Martini v. Boeing Co., 137 Wn.2d 357, 368, 971 P.2d 45 (1999).(4) No evidence has been presented in this case on the issue of failure to mitigate damages.
2. Back Pay Is Cut off If the Defendant Proves That it Would Have Terminated Plaintiff Based upon After Acquired Evidence.
After acquired evidence refers to evidence of employee wrong doing discovered after the employee was discharged and unrelated to the reason for discharge. In McKennon v. Nashville Banner Publishing Co., 513 U.S. 352, 115 S.Ct. 879, 130 L.Ed.2d 852 (1995), the Supreme Court held that if an employer discovers that the plaintiff committed an act of wrongdoing, and can further establish that the "wrongdoing was 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," Id. 115 S.Ct. at 886-87, the employer does not have to offer reinstatement or provide front pay. Under those circumstances, the employer only has to provide backpay "from the date of the unlawful discharge to the date the new information was discovered." Id. 115 S.Ct. at 886. McKennon places the burden of proof with respect to this issue on the employer, carefully articulating that the employer must establish not only that it could have fired an employee for the later-discovered misconduct, but that it would in fact have done so. Id. See also O'Day v. McDonnell Douglas Helicopter Co., 79 F.3d 756, 759 (9th Cir. 1996)("The inquiry focuses on the employer's actual employment practices, not just the standards established in its employee manuals, and reflects a recognition that employers often say they will discharge employees for certain misconduct while in practice they do not"). In this case, there is no allegation of after acquired evidence.
B. Front Pay Is an Alternative to Reinstatement, and Is Discretionary with The Jury.
"It is within the trial court's discretion to award damages for loss of future earnings, known as front pay, representing the difference between what the employee would have earned from his former employer and the amount, if any, he could expect to earn from his new employer." Goodman v. Boeing Co., 75 Wn.App. 60, 78, 877 P.2d 703 (1994) affirmed on other grounds 127 Wash.2d 401, 899 P.2d 1265 (1995) . "The purpose of front pay in a Title VII case is to put an injured party in the same position the party would have occupied in the absence of the discrimination, neither more nor less." Griffin v. Michigan Dept. of Corrections, 5 F.3d 186, 189 (6th Cir. 1993). "[C]ourts will presume for the purposes of awarding relief that an illegally discharged employee would have continued working for the employer until he or she reaches normal retirement age, unless the employer provides evidence to the contrary." Xieng v. Peoples Nat. Bank of Washington, 120 Wn.2d 512, 531, 844 P.2d 389 (1993).
"An award of front pay is made in lieu of reinstatement when the antagonism between employer and employee is so great that reinstatement is not appropriate." Fadhl v. City and County of San Francisco, 741 F.2d 1163, 1167 (9th Cir.1984). See also Roush v. KFC National Management Co. , 10 F.3d 392, 398 (6th Cir. 1993)(Although reinstatement is "the presumptively favored equitable remedy . . . [it] is not appropriate in every case, such as where the plaintiff has found other work, where reinstatement would require displacement of a non-culpable employee or where hostility would result")(citations omitted), cert. denied, 513 U.S. 808 (1994). In this case, there is no evidence addressing the feasibility of reinstatement.
The Ninth Circuit Court of Appeals interpreting Washington law has recognized that front pay is recoverable when the reinstatement is not feasible, and that juries have substantial autonomy to determine the amount of front pay. Under Washington law the jury has substantial autonomy when awarding front pay. See Lords v. Northern Automotive Corp., 75 Wash.App. 589, 881 P.2d 256, 266 (Wash.Ct.App.1994) (striking down trial court decision limiting front pay to five years after termination). Front pay may be awarded whenever the antagonism between the plaintiff and her employer is such that it would be inappropriate to expect her to return to work. See Pannell v. Food Services of America, 61 Wash.App. 418, 810 P.2d 952, 966 (Wash.Ct.App.1991) (holding that front pay issue is not too speculative to go to jury, and endorsing it as substitute for reinstatement, citing Ninth Circuit's decision in Cassino); Hayes v. Trulock, 51 Wash.App. 795, 755 P.2d 830, 834 (Wash.Ct.App.1988) (describing front pay as substitute for reinstatement); Cassino v. Reichhold Chemicals, Inc., 817 F.2d 1338, 1347 (9th Cir.1987) (upholding front pay award based on "some hostility" in spite of testimony that plaintiff and defendant were still friends); Thorne v. City of El Segundo, 802 F.2d 1131, 1137 (9th Cir.1986). Front pay may also be awarded when the antagonism precludes the plaintiff from remaining at work following the trial, even if she has not yet quit at the time it is being conducted.
Passantino v. Johnson & Johnson Consumer Products, Inc., 212 F.3d 493, 512 (9th Cir. 2000).
Plaintiffs seeking front pay have an obligation to mitigate damages by seeking alternative employment with reasonable diligence. Goodman, supra at 79 ( "However, front pay awards, like back pay awards, must be reduced by the amount a plaintiff could earn using reasonable mitigation efforts to seek alternative employment. (Citation omitted). The burden of proving lack of diligence in mitigating damages is on the defendant"). See also Caudle v. Bristow Optical Co., Inc., 224 F.3d 1014, 1020 (9 th Cir. 2000); Cassino v. Reichhold Chemicals, Inc. , 817 F.2d 1338, 1347 (9th Cir.1987)("[F]ront pay awards ... must be reduced by the amount plaintiff could earn using reasonable mitigation efforts...."); Suggs v. Servicemaster Education Food Management, 72 F.3d 1228, 234 (6th Cir. 1996)("Title VII claimants have a duty to mitigate an award of front pay").(5)
C. Damages for Front Pay Are Recoverable in Breach of Contract Cases Where The Employee Is at-Will and There Is Evidence to Support an Inference That The Employee Would Have Continued Working Past the Date of Trial.
When determining the availability of front pay damages, the real question is not whether the employer could have terminated the employee but whether it would have terminated the employee. All parties concede that the employee at-will doctrine allows the employer to terminate an employee for any legal reason. This doctrine overshadows many claims including, WLAD, public policy torts and the breach of a promise made pursuant to an employee handbook. Yet all parties acknowledge that both back pay and front pay are recoverable pursuant to these claims even though the employee is at-will.
There is nothing in the nature of breach of contract which makes the determination of either back pay or front pay any more or less speculative than for any other claim. In every case, the recovery of front pay turns on whether the employee would have continued working for the employee after the date of trial. The mere fact that the employer could have terminated the employee for any legal reason after the date of trial is irrelevant for all other claims. There is nothing about the nature of a breach of contract that creates an exception.
In this case, the Plaintiff was employed with the Defendant for six years before taking an approved leave of absence and then terminated from employment. He apparently had been satisfactorily performing the duties of his job. These facts are sufficient to support the jury's determination that he would have continued working for the Defendant past the date of trial. The Defendant does not argue to the contrary. Rather, it argues a jury can never conclude that the employee would have continued working for the employer past the date of discharge regardless of how strong the evidence to the contrary. This argument makes no sense. The at-will status is just one fact in the employment relationship, it is not a legal bar to damages where they can otherwise be established with reasonable certainty.
The concept of make whole relief is embodied in Washington contract law, and supports the recovery of back pay and front pay. The contractual principal of "make whole" relief is to place the plaintiff, as nearly as possible, in the position he or she would be in had the contract been performed. Mason v. Mortgage Am., Inc., 114 Wash.2d 842, 849, 792 P.2d 142 (1990)("Contract damages are ordinarily based on the injured party's expectation interest and are intended to give that party the benefit of the bargain by awarding him or her a sum of money that will, to the extent possible, put the injured party in as good a position as that party would have been in had the contract been performed"); Lincor v. Hyskell, 39 Wash.App. 317, 320, 692 P.2d 903 (1984) ("The purpose of awarding damages for breach of contract is . . . to place the plaintiff, as nearly as possible, in the position he would be in had the contract been performed"). "Employment contracts are governed by the same rules as other contracts." Kloss v. Honeywell , 77 Wash.App. 294, 298, 890 P.2d 480 (1995). (6)
Washington courts have recognized the availability of prospective damages in non-employment contract cases where they can be proven with reasonable certainty. See, e.g. Tiegs v. Watts, 135 Wash. 2d 1, 954 P.2d 877 (1998). In Tiegs, the Washington State Supreme Court upheld a jury award of prospective lost profits. It held that all lost profits are recoverable as damages when: (1) they are within contemplation of the parties at time contract was entered; (2) they are proximate result of defendant's breach; and (3) they are proven with reasonable certainty. Id. at 885. They are not recoverable only where they are speculative, uncertain, or conjectural. Id. at 886.(7)
The Restatement (Second) of Contract §351 likewise acknowledges damages are recoverable based upon the foreseeability of damages at the time the contract was made:
(1) Damages are not recoverable for loss that the party in breach did not have reason to foresee as a probable result of the breach when the contract was made.
(2) Loss may be foreseeable as a probable result of a breach because it follows from the breach (a) in the ordinary course of events, or (b) as a result of special circumstances, beyond the ordinary course of events, that the party in breach had reason to know.
(3) A court may limit damages for foreseeable loss by excluding recovery for loss of profits, by allowing recovery only for loss incurred in reliance, or otherwise if it concludes that in the circumstances justice so requires in order to avoid disproportionate compensation.
The Restatement (Second) of Contracts §351 further provides:
A contracting party is generally expected to take account of those risks that are foreseeable at the time he makes the contract. He is not, however, liable in the event of breach for loss that he did not at the time of contacting have reason to foresee as a probable result of such a breach. The mere circumstance that some loss was foreseeable, or even that some loss of the same general kind was foreseeable, will not suffice if the loss that actually occurred was not foreseeable. It is enough, however, that the loss was foreseeable as a probable, as distinguished from a necessary, result of the his breach. . . . Nor must he have had the loss in mind when making the contract, for the test is an objective one based on what he had reason to foresee.
Id. at comment a. (8)
The Defendant cites several out-of-jurisdiction decisions, which Plaintiff has adequately distinguished. A number of other jurisdictions address this issue by implication and at least one jurisdiction addresses it directly. In O'Dell v. Basabe, 119 Idaho 796, 810 P.2d 1082, 1096 (1991), the Court considered a breach of contract for failing to reinstate plaintiff as promised.(9)
The trial court ruled that the recovery of future lost wages was too speculative as an element of contract damages. The Supreme Court reversed:
Thus, we hold that the district court erred in its determination that a breach of an employment contract for an indefinite term precludes the recovery of future lost wages as a matter of law. We reverse the district court's determination that future lost wages are too speculative as a matter of law to be permitted as an element of contract damages.
Id. at 1099. On the issue of whether the damages were too speculative, the Court reasoned as follows:
The fact that contract damages are not capable of exact proof does not preclude their availability as a matter of law. The rule is that the measure of damages is such as will compensate for the loss suffered as the result of a breach of contract. Beal v. Mars Larsen Ranch Corp., 99 Idaho 662, 586 P.2d 1378 (1978); Nelson v. Hazel, 91 Idaho 850, 433 P.2d 120 (1967). When considering an award of damages for lost future benefits, the question is whether the plaintiff has proven the damages relating to future losses with reasonable certainty. Clark v. International Harvester Co., 99 Idaho 326, 581 P.2d 784 (1978).
Id. at 1098. "In the context of an employment contract for an indefinite term, a plaintiff might resort to evidence such as employment history to show likelihood of future employment. . . . 'The most elementary conceptions of Justice and public policy require that the wrongdoer shall bear the risk of the uncertainty which his own wrong has created.'" Id. at 1098-1099.
In Kempfer v. Automated Finishing Inc., 211 Wis. 2d 100, 107-08, 564 N.W.2d 692 (1997), the Court ruled, inter alia , that it was proper to allow the jury to consider awarding damages for future wages lost in the context of a public policy tort. Id. at 701. In a concurring opinion, Chief Justice Shirley Abrahamson persuasively and exclusively addressed the availability of front pay to give "practical guidance concerning remedies generally." Id. at 702. In her analysis, she borrowed extensively from contract law.
For a remedy to be available in a contract action the fact of loss must be foreseeable. Restatement (Second) of Contracts Section(s) 351 (1981). It is enough that the loss was foreseeable as a probable, as distinguished from a necessary, result of the breach. Id. at cmt. a.
An employer might argue that because an at-will employee has no expectation of future employment with this employer for a definite term, the loss of future wages is unforeseeable and front pay is inappropriate. This argument confuses the foreseeability of the harm, lost future wages, with the foreseeability of the amount of the loss. Only the former need be foreseeable; the latter need only be reasonably calculable. Restatement (Second) of Contracts Section(s) 352 (1981).
Id. at 704. "Indeed the black letter rule in contract actions involving employment seems to be that recovery of damages includes front pay." Id. at 705 (citations omitted). In making a determination of whether to award front pay and how much to award where reinstatement is not feasible, Chief Justice Abrahamson suggests the following factors:
(1) the employee's seniority at the time of the wrongful discharge; (2) the likelihood that the employment would have continued, and for how long, but for the wrongful discharge; (3) the employee's work and life expectancy; (4) the employee's efforts at mitigating his or her damages, including the nature of new employment, if any; (5) the availability of comparable employment opportunities; and (6) the length of time required to find another job.
Id. at 706. See also Worrell v. Multipress Inc. , 45 Ohio St.3d 241, 543 N.E.2d 1277, 1283 (1989)("We hold that, as a result of breach of an employment contract where an employee has been wrongfully discharged, front pay, or lost future wages, may be awarded as compensation between the date of discharge and reemployment in a position of equal or similar status").
D. Bakotich V. Swanson Should Not Create a Per Se Rule Excluding Damages Where There Exists Evidence to Support Them.
The ruling in Bakotich v. Swanson, 91 Wn.App. 311, 957 P.2d 275 (1998), appears to be limited to prospective employment. Id. at 315. The Court then apparently rules that no economic damages are recoverable under a breach of contract theory because the Plaintiff bargained for an employment at-will position and the employer could have terminated employment at any time. Id. at 316. This per se rule of excluding evidence of economic damages, even in a prospective employment setting, should be rejected. The length of future employment may be difficult to prove in such cases. But where there exists evidence to support the length of an employee's future employment, the mere fact of the employee at-will status should not preclude economic damages. As stated above, the real question is not whether the employer could have terminated the employee at any time, but whether it would have done so. This ordinarily is a question for the jury.
Respectfully Submitted this 20th day of August, 2001.
Washington Employment Lawyers Association
By Jeffrey Needle, WSBA 6346
Maria Fox, WSBA 27476
1. See Suggs v. Servicemaster Education Food Management, 72 F.3d 1228, 1233 (6th Cir.1996) ("The back pay award should completely redress the economic injury the plaintiff has suffered as a result of discrimination. It should include the salary, including any raises, which plaintiff would have received but for the discrimination, as well as sick leave, vacation pay, pension benefits and other fringe benefits she would have received but for discrimination"); Rasimas v. Michigan Department of Mental Health, 714 F.2d 614, ___ (6th Cir.1983)("Sick leave, vacation pay, pension benefits and other fringe benefits the claimant would have received but for discrimination should also be awarded").
2. Although these cases were decided under Title VII of the Civil Rights Act of 1964, 42 U.S.C. §2000(e), or the WLAD, contract law also embraces the principle of making the wronged party as whole as possible. See infra , Section C.
3. See Sias v. City Demonstration Agency, 588 F.2d 692, 696 (9th Cir. 1978)("The burden of proving a failure to mitigate damages in an employment discrimination suit is on the defendant. To satisfy this burden, defendant must establish (1) that the damage suffered by plaintiff could have been avoided, i.e. that there were suitable positions available which plaintiff could have discovered and for which he was qualified; and (2) that plaintiff failed to use reasonable care and diligence in seeking such a position"); See also Cassino v. Reichhold Chemical, 817 F.2d 1338, (9th Cir. 1987). Jackson v. Shell Oil Co., 702 F.2d 197, 201-202 (9th Cir. 1983) (ADEA, citing Sias v. City Demonstration Agency); EEOC v. Pacific Press Pub. Assoc., 482 F.Supp. 1291, 1317 (Cal. 1979); Kaplan v.. Intern. Alliance of Theatrical, 525 F.2d 1354, 1363 (9th Cir. 1975).
4. Assuming, for the sake of argument, that an employer could succeed in convincing a jury that plaintiff failed to exercise reasonable diligence, and further assuming that an employer could succeed in convincing the jury that suitable alternatives existed, the amount which the employee could have earned is reduced from the back pay award. Nichols v. Frank, 42 F.3d 503, n. 9 (9th Cir. 1994)(" Interim earnings or amounts earnable with reasonable diligence by the person or persons discriminated against shall operate to reduce the back pay otherwise allowable"). "The burden is on the defendant... to show interim earnings or amounts earnable with reasonable diligence". Inda v. United Air Lines, 405 F.Supp. 426,434 (Cal 1975) affd. 565 F.2d 554 (9th Cir. 1977). See also Rasimas v. Michigan Dept. of Health, supra, 714 F.2d 614, 623 (6th Cir. 1983)("Once a claimant establishes a prima facie case and presents evidence on the issue of damages, the burden of producing sufficient evidence to establish the amount of interim earnings or lack of diligence shifts to the defendant.")(cited in Burnside ); Schlei& Grossman, Employment Discrimination Law, NBA 1983, 2nd Edition, page 1447 (Thus, at common law...and under the ADEA the burden is on the defendant to establish what plaintiff could have earned").
5. A general reduction in force is not a defense to a claim for front pay. "Because this argument represents another attempt by the Bank to reduce its damages, it is analogous to a mitigation of damages issue, and we agree with the federal courts that the employer should bear the burden to demonstrate that the plaintiff would not have been shifted to another position after the elimination of the position for which the plaintiff applied." Xieng. Supra at 532.
6. In Albemarle Paper Co. v. Moody, supra, at 422 U.S. 418-19 (citing Wicker v. Hoppock, 6 Wall. 94, 99 (1867), the Court applied general legal principles and concluded: "[t]he general rule is that, when a wrong has been done and the law gives a remedy, the compensation shall be equal to the injury. The latter is the standard by which the former is to be measured. The injured party is to be placed, as near as may be, in the situation he would have occupied if the wrong had not been committed."
7. 7 Hadley v. Baxendale, 156 Eng.Rep. 145 (1854), first established the rule that contract damages are determined by foreseeability at the time the contract was made. Hadley v. Baxendale "has won universal acceptance in the common law world and remains the leading case in the field." Calamari on Contracts, 3rd Ed. §14-20.
8. 8 Restatement (Second) of Contracts §352 is also instructive. It provides: "Damages are not recoverable for loss beyond an amount that the evidence permits to be established with reasonable certainty." In relevant part, comment a to §352 provides: "Doubts are generally resolved against the party in breach. A party who has, by his breach forced the injured party to seek compensation in damages should not be allowed to profit from his breach where it is established that a significant loss has occurred. A court may take into account all the circumstances of the breach, including willfulness, in deciding whether to require a lesser degree of certainty, giving greater discretion to the trier of the facts. Damages need not be calculable with mathematical accuracy and are often at best approximate. . . .Furthermore, increasing receptiveness on the part of courts to proof by sophisticated economic and financial data and by expert opinion has made it easier to meet the requirement of certainty." `
9. 9 The issue of lost wages was considered by the jury in the context of three theories: breach of the employment contract, breach of the contract to reinstate O'Dell to his former position, and retaliatory discharge under the Idaho Human Rights Act, I.C. 67-5901-67-5912. The jury found liability on all three theories, and awarded O'Dell lost wages as damages, including $375,000 to compensate for future lost wages, otherwise known as "front pay," and $35,000 to compensate for past lost wages. Id. at 1096. While much of the court's quoted analysis pertained directly to the breach of contract claim, the court adopted the same reasoning with reference to the claim for breach of contract for failing to reinstate. "The district court granted Simplot a new trial on the issue of future lost wages as damages on the claim for breach of contract to reinstate. The trial court reasoned that future damages were too speculative to be predicted with any certainty and also that O'Dell caused the breach of the contract by rejecting the alternate position at the Food Division. As we have stated earlier, future lost wages as damages are not too speculative so as to deny recovery." Id . at 1099 (emphasis added).