Morris v. Clawson Tank Company

MORRIS v CLAWSON TANK COMPANY Docket No. 108659. Argued October 8, 1998 (Calendar No. 18). Decided December 28, 1998. Rehearing denied post, 1234. Matthew J. Morris lost an eye in an accident unrelated to his employment as a general laborer with the Clawson Tank Company. Although his physician certified that he was able to return to work a month later, Clawson Tank discharged him. Over the next three and a half years, Morris worked at various full- and part-time jobs. During that time, he also filed a grievance, and an arbitration panel ordered his reinstatement. When Clawson Tank refused to reinstate him, claiming no position was available, Morris brought an action in the Oakland Circuit Court, Denise Langford-Morris, J., seeking enforcement of the arbitration award and asserting a cause of action under the Handicappers’ Civil Rights Act, MCL 37.1101 et seq.-, MSA 3.550(101) et seq. He later moved to seek monetary relief only, and the court ruled that reinstatement would no longer be available and declared the ruling to be the law of the case. Clawson Tank subsequently purported to recall the plaintiff to work. Following a bench trial, the court awarded the plaintiff back and front pay. The Court of Appeals, Taylor, P.J., and Corrigan and D. A Johnston, JJ., affirmed the trial court’s finding of liability, but vacated its decision, and remanded for a substantial reduction of the back-pay award and elimination of the front-pay award. 221 Mich App 280 (1997) (Docket No. 183374). The plaintiff appeals. In an opinion by Justice Brickley, joined by Chief Justice Mallett, and Justices Cavanagh and Kelly, the Supreme Court held: The Court of Appeals utilized a legally erroneous standard in determining whether the plaintiff had properly mitigated damages. It also failed to properly observe the clearly erroneous standard in reviewing the factual findings of the trial court. When evaluated in light of the proper legal standards, the trial court’s findings were not clearly erroneous, mandating reversal of the judgment of the Court of Appeals. The circuit court did not specifically determine, however, whether the defendant met its burden of showing that the plaintiff unreasonably rejected its conditional offer of employment. Remand is required to determine whether the defendant met this burden and, therefore, whether an award of front pay is appropriate. 1. In the context of a breach of an employment contract, wrongful discharge, or discriminatory firing, mitigation of damages obligates the victim of the wrongdoing to make reasonable efforts to find employment after discharge. A back-pay award of a plaintiff who succeeds at trial is then reduced by the amount earned in mitigation. While a plaintiff may not purposefully remain unemployed or underemployed in order to maximize recoverable damages in the form of lost wages, it would be inappropriate to require him to make all efforts to eliminate the economic damages resulting from the wrongdoing. Rather, he is required only to make efforts to find employment that are reasonable under the circumstances. 2. The mitigation rule also obliges the plaintiff to accept, if offered, employment that is substantially similar to that from which the plaintiff was fired. If offered employment of a like nature is rejected, the plaintiff forfeits continuing back and front pay. The defendant bears the burden of proving that the plaintiff failed to make reasonable efforts to mitigate damages. 3. The Court of Appeals applied an erroneous rule of law in holding that the evidence showed that plaintiff’s own efforts to secure similar employment were not reasonable. It collapsed the two aspects of the doctrine of mitigation into one test: In order to mitigate damages, a plaintiff must make a reasonable, good-faith effort to secure “like employment,” defining like employment as work similar in type, hours, wages, tenure, and working conditions. There is no reason to require a plaintiff to search for like employment, as defined by the Court of Appeals, in an effort to mitigate damages. The sole interest of the defendant, the courts, and the public, in the type of employment sought by the plaintiff in mitigation is the interest those parties have in avoiding unnecessary economic loss. Thus, while a defendant may object to the reasonableness of the amount of compensation typical of the jobs sought in mitigation, work conditions and type of work are relevant only to the job seeker. There is no requirement that the plaintiff find employment with compensation equivalent to that of the job lost. The Court of Appeals standard is particularly inappropriate, given that the Handicapper’s Civil Rights Act, like the Civil Rights Act and title vii of the federal Civil Rights Act, is a remedial act, the primary goal of which is to end discrimination. The plaintiff was not required to find a job that was reasonably similar to the one that he held with the defendant; rather, the relevant question is whether the plaintiff made reasonable efforts to mitigate damages. The trial judge properly stated the allocation of the burden of proof, and found that the defendant failed to meet that burden. 4. The Court of Appeals holding, that after the plaintiff basically stopped looking for work his back-pay award should have been cut off, relies on a misapplication of the principles of the doctrine of mitigation. Determining the reasonableness of a job search is a fact-laden inquiry that relies upon determinations of credibility far more within the competence of the trial court than within the competence of an appellate court. The extent to which a plaintiff continues a job search after finding employment simply is one of many facts to be taken into consideration by the factfinder. A defendant must show that the plaintiff failed to make an honest, good-faith effort to secure employment; showing that more exhaustive efforts could have been made is not sufficient. In this case, the trial court’s finding, that the plaintiff made reasonable efforts to mitigate damages, was not clearly erroneous. 5. Where an employer makes an offer of reinstatement to a plaintiff, the court must first determine whether the reinstatement offer is conditional or unconditional. The second step is to assess whether a rejection is reasonable. The first step involves a question of law for the court, while the question of reasonableness is one of fact. The Court of Appeals statement of the law was error, because it implies that acceptance of offered reinstatement is in some way meaningfully different from acceptance of like employment from another employer. The defendant’s reinstatement offer was conditional in this case, but the Court of Appeals ignored the dispute between the parties over whether the job offer in fact was legitimate, or, rather, merely a trial tactic. Because the trial court did not document its findings regarding the reasonableness of the rejection, remand to the circuit court is required for a specific finding in that regard. 6. There was no clear error in the trial court’s factual findings. Justice Weaver, joined by Justice Boyle, concurring, stated that the doctrine of mitigation requires the victim of wrongdoing to make reasonable efforts to mitigate damages or forfeit the right to back pay. Further, and pursuant to the doctrine of mitigation, where the victim of wrongdoing refuses an offer of like employment, the right to continuing back pay and front pay also is forfeited. Because the trial court’s award of back pay after August 1990 was not clearly erroneous, it should be reinstated. The plaintiff’s receipt of disability from September 1989 through February 1990 does not preclude a concurrent award of back pay, although the trial court correctly reduced the back pay award by the amount of disability payments. Remand is necessary, however, to determine whether the plaintiffs rejection of the September and October 1992 job offers was reasonable. If the defendant demon-states that the plaintiff’s rejection was unreasonable, the plaintiff is entitled to neither back pay nor front pay after October 1992. It remains unclear whether the trial court correctly applied the doctrine of mitigation to the front pay award. The facts of the case may support a modified award of front pay after plaintiff accepted a substantially similar position in February 1993. While there is an obligation to mitigate future damages, the record does not adequately reflect whether the trial court properly considered the mitigation principles with respect to future damages. It remains to be determined what constitutes future damages. Thus, the case should be remanded not only to determine whether the plaintiff was reasonable in rejecting the defendant’s September and October job offers but also to reexamine the issue of front pay. Reversed and remanded. Justice Taylor took no part in the decision of this case. Otis M. Underwood, Jr., for the plaintiff-appellant. Karl Reibel for the defendant-appellee. Brickley, J. We are called upon to determine the scope of the plaintiffs duty to mitigate damages in the context of a discriminatory discharge suit under the Handicappers’ Civil Rights Act. MCL 37.1101 et seq.\ MSA 3.550(101) et seq. i The plaintiff was employed as a general laborer by the defendant, a manufacturer of underground storage and waste tanks. The plaintiff lost an eye on August 13, 1989, in an incident not related to his work at Clawson Tank. He reported back to Clawson Tank one month later with a note from his physician stating that he was able to return to work. At this point, however, he was discharged by the defendant. With the encouragement and assistance of the defendant, the plaintiff began receiving payments under disability insurance. He continued to receive disability payments for about five months following his discharge. The plaintiff began to search for other work almost immediately after he was fired. For six months in 1990, he held a temporary job at Cranbrook School, earning $6 an hour. In August of 1990, he began working for the Barkman Landscaping Company, earning $5 an hour and often working in excess of forty hours a week. This was a seasonal job, so the plaintiff was out of work in the winter, but was rehired by Barkman the next year and in 1992 as a supervisor earning $6 an hour. Between August 1991 and February 1993, the plaintiff made approximately fifty job inquiries to landscape companies, gas stations, and similar employers. During this period, the plaintiff held several short-term, odd jobs in addition to those already described. In February 1993, the plaintiff began working in a full-time, permanent position at Cranbrook School as a janitor earning $7.46 an hour, along with health care, pension, and other benefits. During the period following his discharge, the plaintiff was also pursuing legal remedies. The plaintiff filed a grievance, seeking reinstatement at Claw-son Tank, and, on January 20, 1990, an arbitration panel ordered that he be reinstated, as long as his rehiring would not displace employees of greater seniority. The defendant claimed that no such position was available, and refused to reinstate the plaintiff. The plaintiff then filed a lawsuit, seeking to enforce the arbitration award. On September 11, 1991, the trial court allowed the plaintiff to amend his complaint to assert a cause of action under the Handicappers’ Civil Rights Act. On August 17, 1992, the plaintiff stated at a motion hearing that, because of the increasing hostility of the litigation, and the lack of trust between the parties, he would only be seeking monetary relief, and no longer wanted reinstatement at Clawson Tank. Thus, the court ruled that reinstatement was no longer an available remedy, and on October 28, 1992, the circuit judge declared this ruling to be the law of the case. The plaintiff did not amend his complaint to correspond with this ruling. On September 18, 1992, and on October 23, 1992, the defendant mailed letters to the plaintiff, purportedly recalling him to work. The plaintiff did not respond to these letters, and the parties dispute whether the job offered actually existed and, if so, whether it was actually available to the plaintiff. A bench trial in the circuit court began in April 1994. The court heard testimony regarding the plaintiffs efforts to find work after his firing, both from the plaintiff and from the defendant’s experts. The court also heard testimony from both sides regarding the genuineness of the defendant’s September/October 1992 job offer to the plaintiff. The plaintiff’s expert presented evidence that the amount of back pay lost by the plaintiff was $46,729, and that the amount of front pay lost by the plaintiff was $76,516. In January 1995, the trial court ruled for the plaintiff, finding that he had fulfilled his duty to mitigate damages and awarded him $130,439. The Court of Appeals affirmed the trial court’s finding of liability, but vacated its decision, remanding the case for a substantial reduction of the plaintiff’s back-pay award, and elimination of his front-pay award. 221 Mich App 280; 561 NW2d 469 (1997). In reaching this conclusion, the Court of Appeals articulated a number of specific holdings. The panel held that the trial court’s award of back pay for the period between October 1989 and February 1990 was clearly erroneous because the plaintiff was receiving disability benefits; therefore, “plaintiff admitted that he was disabled” during this period. 221 Mich App 287. Because the plaintiff was still disabled, there could not yet have been an “act of discrimination” by the defendant justifying damages. Id. For the period between February 1990 and August 1990, the Court of Appeals held that the trial court’s award of back pay was not clearly erroneous, “because the trial court found credible plaintiff’s claim that he was also looking for comparable employment.” Id., p 288, citing MCR 2.613(C). The Court of Appeals further held that “the trial court should have cut off back pay in August 1990, when plaintiff took a seasonal job paying $5 an hour at a landscaping company and admittedly stopped seeking other employment.” Id., p 288 (emphasis in the original). The trial count’s award of front pay was, according to the Court of Appeals, clearly erroneous on two grounds. First, the defendant’s September/October 1992 offer of employment to the plaintiff was unreasonably refused by the plaintiff. Such a refusal forfeits the plaintiff’s right to front pay. Id., pp 290-291, citing Rasheed v Chrysler Corp, 445 Mich 109, 132; 517 NW2d 19 (1994). Second, “the trial court’s award of front pay for the period after February 1993, when plaintiff obtained like employment, was clearly erroneous because plaintiff incurred no damages after that time.” Id., p 291. Plaintiff sought leave to appeal to this Court, and we granted leave. 457 Mich 853 (1998). We now reverse the Court of Appeals decision as set forth below. n Mitigation of damages is a legal doctrine that seeks to minimize the economic harm arising from wrongdoing. “Where one person has committed a tort, breach of contract, or other legal wrong against another, it is incumbent upon the latter to use such means as are reasonable under the circumstances to avoid or minimize the damages. The person wronged cannot recover for any item of damage which could thus have been avoided.” [Shiffer v Gibraltar School Dist Bd of Ed, 393 Mich 190, 197; 224 NW2d 255 (1974) (quoting McCormick, Damages, § 33, p 127).] In the context of a breach of an employment contract, wrongful discharge, or discriminatory firing, mitigation of damages obligates the victim of the wrongdoing to make reasonable efforts to find employment after discharge. Id. The plaintiffs back-pay award, if he succeeds at trial, is then reduced by the amount that he earned in mitigation. See EEOC v Harper Grace Hospitals, 689 F Supp 708, 716 (ED Mich, 1988). Such a plaintiff may not purposefully remain unemployed or underemployed in order to maximize recoverable damages in the form of lost wages. It must be remembered, however, that the plaintiff here was wrongfully discriminated against when he was fired by the defendant. 221 Mich App 284-286. It would be inappropriate to require him to make all efforts to eliminate the economic damages resulting from the wrongdoing. Rather, he is only required to make efforts that are reasonable under the circumstances to find employment. Rasheed, supra, p 124. A plaintiff who does not make such efforts loses the right to claim full back pay as damages. Id. This Court has noted that “a claimant required to make reasonable efforts to mitigate damages is not held to the highest standards of diligence. . . . ‘[T]he claimant’s burden is not onerous, and does not require him to be successful in mitigation.’ ” Rasheed, supra, p 123, quoting Rasimas v Dep’t of Mental Health, 714 F2d 614, 624 (CA 6, 1983), cert den 466 US 950 (1984). The mitigation rule also obliges the plaintiff to accept, if offered, employment that is substantially similar to that from which the plaintiff was fired. See Ford Motor Co v EEOC, 458 US 219, 231-232; 102 S Ct 3057; 73 L Ed 2d 721 (1982). This aspect of the mitigation rule balances the interest of the plaintiff in not being forced to accept an unacceptable job in order to maintain his right to back pay, against the interests of the defendant and the public in avoiding unnecessary economic loss. As the United States Supreme Court has explained, the mitigation requirement cannot be construed to force a plaintiff to accept employment that he or she finds demeaning, particularly inconvenient, or otherwise unacceptable. [T]he unemployed or underemployed claimant need not go into another line of work, accept a demotion, or take a demeaning position, [but] he forfeits his right to backpay if he refuses a job substantially equivalent to the one he was denied. [Ford Motor Co, supra, pp 231-232.] Thus, in order to mitigate damages, the plaintiff must make efforts that are reasonable under the circumstances to minimize the economic harm caused by the wrongdoer; and, if offered employment of a “like nature,” the plaintiff forfeits further back-pay awards by turning it down. Significantly, “the question whether an employee was reasonable in not seeking or accepting particular employment is one to be decided by the trier of fact.” Rasheed, supra, p 124, citing Riethmiller v Blue Cross & Blue Shield of Michigan, 151 Mich App 188, 194-195; 390 NW2d 227 (1986). The defendant bears the burden of proving that the plaintiff failed to make reasonable efforts to mitigate damages. Rasheed, supra, p 124. If the plaintiff was offered “like employment” and turned it down, the burden of proving this is likewise on the defendant. Id. In light of these principles, we now examine the holdings of the Court of Appeals. A As is made evident from this discussion of the doctrine of mitigation of damages, the Court of Appeals applied an erroneous rule of law in holding that “the evidence showed that plaintiff’s own efforts to secure similar employment were not reasonable.” 221 Mich App 287. The Court of Appeals erred in collapsing the two aspects of the doctrine of mitigation into one test: “In order to mitigate damages, a plaintiff must make a reasonable, good-faith effort to secure ‘like’ employment.” Id. The Court of Appeals defined “like employment” as “work that is similar in type, hours, wages, tenure, and working conditions.” Id. We find no reason to require a plaintiff to search for “like employment,” as defined by the Court of Appeals, in an effort to mitigate damages. The sole interest of the defendant, the courts, and the public, in the type of employment sought by the plaintiff in mitigation is the interest those parties have in avoiding unnecessary economic loss. See Shiffer, supra, p 197, “The principle of mitigation is a thread permeating the entire jurisprudenc