A wrongful termination lawsuit was filed by Larry W. Barnes against The Goodyear Tire and Rubber Company under the Tennessee Handicap Act, following a jury trial that found Goodyear had wrongly terminated Barnes due to his perceived handicap. The jury awarded Barnes $150,000 in back pay and $150,000 for humiliation and embarrassment. The trial court later suggested a remittitur, reducing the back pay to $100,000 and the humiliation award to $75,000, and ordered Goodyear to pay approximately $30,000 in attorney's fees and costs. Barnes accepted the remittitur under protest, leading both parties to appeal. The Court of Appeals initially reversed the jury's finding, citing insufficient evidence that Goodyear regarded Barnes as having a substantial impairment. However, the Tennessee Supreme Court reinstated the jury’s verdict, finding sufficient material evidence to support it, and remanded the case for the resolution of the pretermitted issues. On remand, the Court affirmed the trial court's remittitur regarding humiliation and embarrassment, upheld the award of attorney’s fees and costs, but reversed the remittitur of the back pay award. The case is centered around Barnes, who, after being diagnosed with Bell’s Palsy, was laid off during a workforce reduction at Goodyear based on performance appraisals, where he received one of the lowest evaluations. He was offered a temporary position at a significantly reduced salary, which he declined.
Barnes, a laid-off employee from Goodyear, was entitled to 'subfund pay,' a program that provided 80% of his prior salary, considering other income sources like unemployment compensation. He received a total of $22,722 in subfund pay, supplemented by $160 weekly in unemployment for 41 weeks, and received subfund payments of $541 weekly for 42 weeks. While his acceptance of a new job at Hamilton-Ryker was not a condition for receiving subfund pay, it would have extended his eligibility. In addition to subfund pay, he received one year of medical benefits. After his layoff in 1990, he unsuccessfully sought work at various retailers before enrolling in barber school, graduating, and beginning work as a barber in October 1992. In July 1993, he was recalled to Goodyear at an hourly rate, which later increased, but this recall resulted in a loss of seniority rights.
In 1991, Barnes filed a lawsuit against Goodyear, claiming his layoff violated the Tennessee Handicap Act (THA), asserting he was terminated due to a perceived handicap. The jury trial in May 1996 concluded with the jury finding Goodyear liable, awarding Barnes $150,000 in back pay and $150,000 for humiliation. The trial court upheld the liability but suggested reducing the back pay to $100,000 and the humiliation award to $75,000, which Barnes accepted under protest. The court also awarded him attorney’s fees of $28,690 and $1,073.37 in costs. Both parties appealed; Barnes contested the reduction of damages and attorney's fees, while Goodyear challenged the denial of its directed verdict motion regarding the perception of handicap. Ultimately, the appellate court reversed the trial court's liability finding, stating there was insufficient evidence to support that Goodyear regarded Barnes as having a substantial impairment affecting a major life activity.
The trial court's finding of liability was reversed, leading to the dismissal of other issues on appeal. The Tennessee Supreme Court reviewed the case to establish the appropriate framework for handicap discrimination claims under the THA, ultimately finding substantial evidence supporting the jury's verdict for handicap discrimination. The court reinstated the verdict and remanded the case for further consideration of issues previously set aside. On remand, the focus is on whether the trial court erred in suggesting a remittitur of the jury's damage award and in its calculation of attorney’s fees. A remittitur is considered appropriate only when the court disagrees with the verdict amount without undermining the jury's decision. The appellate court must evaluate the justification for any adjustment, respecting the jury's credibility assessments and the trial court's role as the thirteenth juror.
The trial court had suggested reducing the jury's back pay award from $150,000 to $100,000, which Barnes argues lacked a valid basis and effectively undermined the jury's verdict. Barnes claims the evidence overwhelmingly supported the jury's damage calculation, while Goodyear contends the remittitur was justified and should have been greater due to Barnes's alleged failure to mitigate damages and the necessity to account for unemployment compensation he received. Back pay serves as an equitable remedy in employment discrimination cases, aiming to fully compensate the plaintiff for losses incurred due to discrimination, which includes base salary and benefits. However, speculative benefits related to performance-based increases or inconsistent bonus patterns should not be included in back pay awards.
In Bonura v. Chase Manhattan Bank, N.A., the court examined Goodyear's merit raise system, which categorized employees into five performance groups, with raises typically ranging from 3% to 7%, contingent on available funds. High performers in Groups 1 and 2 received larger and more frequent raises compared to those in Groups 4 and 5. The Manager of Human Resources testified that inflation had reduced the funds for merit increases, affecting the reliability of raises. Barnes, who had received two raises prior to his layoff—4% in 1989 and 3.49% thereafter—projected a 5% annual salary increase, which the jury included in its back pay award.
The trial court, acting as a thirteenth juror, suggested a remittitur to remove the projected raises, which raised a legal question regarding their inclusion. Factors considered included Barnes' previous raises, his placement in Group 3, and the impact of economic conditions on future salary increases. The court deemed Barnes' claim of a guaranteed 5% increase speculative, affirming the trial court's remittitur.
Additionally, back pay awards must account for any interim earnings or potential earnings from comparable employment, requiring employees to mitigate damages through reasonable job-seeking efforts without needing to accept any job offer. An employee forfeits back pay rights if they refuse a substantially equivalent job. Goodyear argued that Barnes' rejection of an offer from Hamilton-Ryker justified eliminating the back pay award, contingent upon proving that the position was substantially equivalent in various aspects such as compensation and working conditions.
Barnes held a salaried position with benefits at Goodyear, while the Hamilton-Ryker position was a temporary hourly job, offering half his previous salary and no benefits. Even with additional pay, the Hamilton-Ryker position would only provide 80% of his prior earnings. An employee is not obligated to mitigate damages by accepting a position considered a demotion. Therefore, by rejecting the Hamilton-Ryker offer, Barnes retained his right to back pay.
Goodyear contends that back pay should not include the period after Barnes began barber school, arguing he did not make reasonable efforts to find comparable employment. Barnes’ job search during the three years post-layoff was limited to applications at a supermarket, Wal-Mart, K-Mart, and an unemployment agency. He argues Goodyear failed to demonstrate that comparable jobs were available to him. For an employer to reduce back pay, they must show that suitable employment was available and that the employee did not act diligently in seeking it.
Goodyear's evidence regarding suitable employment was confined to the Hamilton-Ryker position, deemed not substantially equivalent to Barnes' former job. Barnes’ minimal efforts to find work were overshadowed by his decision to train as a barber, which does not inherently violate his duty to mitigate damages, particularly if prior job searches were unsuccessful. However, if an employee opts to attend school without first attempting to find comparable work, they may fail to mitigate damages.
Tennessee courts recognize a limited exception regarding an employee's obligation to seek other employment, illustrated in Frye v. Memphis State University, where the court found no fault in a professor's inaction due to unique circumstances. However, this exception does not apply to Barnes since he did not demonstrate that his situation was comparable to Frye's, as he lacked the highly protected status and unique professional circumstances of a tenured professor.
No evidence supports the assertion that it would have been exceedingly difficult for the Plaintiff to find a job suitable for his qualifications. Courts have established an exception to the requirement for employers to demonstrate the availability of equivalent employment if the employee has not made reasonable efforts to seek such work. This exception is based on the premise that employers should not bear the burden of proving job availability when employees fail to pursue employment opportunities. Although this exception has not been recognized in Tennessee, it was considered in this case due to the minimal efforts made by Barnes in seeking comparable employment.
However, since Barnes did make some efforts, albeit limited, the court maintained that the burden remains on the employer to prove the employee's lack of reasonable mitigation efforts. The employer's burden consists of proving not only the availability of suitable employment but also the employee's failure to diligently seek it. Goodyear, the employer, only demonstrated the availability of one job that was not comparable to Barnes' previous position, thus failing to meet its burden. Consequently, Barnes' period in barber school should be included in his back pay award.
Goodyear further contended that Barnes' back pay should be reduced by the amount of unemployment benefits he received. However, referencing the Supreme Court's ruling in NLRB v. Gullett Gin, the court determined that unemployment compensation should not be deducted from back pay awards, as it aligns with the remedial purposes of the National Labor Relations Act and does not equate to double recovery for the employee. Thus, no adjustments should be made for collateral benefits received when calculating back pay for lost earnings.
Unemployment compensation serves social policy objectives rather than fulfilling employer liabilities, thus it is classified as a collateral benefit and should not influence back pay awards. Courts are divided on whether such benefits should be deducted from back pay; the majority view holds that they should not, while a minority allows discretion to trial courts in making this determination. The rationale for non-deduction is to ensure that employers who discriminate do not benefit from reduced liability by offsetting state-provided unemployment benefits, which would undermine the deterrent effect of back pay. In this case, the court decides that unemployment compensation received by Barnes will not be deducted from his back pay award, as there are no justifications for such a deduction. Conversely, the subfund pay Barnes received from Goodyear is deemed a direct benefit from the employer and therefore not subject to the collateral source rule.
Subfund pay was intended to provide Barnes with income during his layoff, replacing the salary he would have earned had he not been discharged. Allowing Barnes to receive both subfund pay and back pay would result in double recovery, making the plaintiff more than whole. Consequently, the back pay awarded to Barnes should be reduced by the amount of subfund pay received. The trial court initially reduced the jury’s back pay award from $150,000 to $100,000, deeming it excessive, but did not specify the basis for this reduction. The cause was remanded for recalculation, ensuring that the period after 1991, when Barnes attended barber school, is included while excluding subfund pay and projected raises. The back pay should not be reduced by unemployment compensation received.
Additionally, the trial court suggested a remittitur for the jury’s award for humiliation and embarrassment, reducing it from $150,000 to $75,000 due to excessive assessment. Under Tennessee law, damages for humiliation and embarrassment in discrimination cases rely on the jury's perception and must adhere to reasonableness standards. Barnes expressed significant emotional distress from his layoff, yet the trial court found the original award excessive without aggravating factors. The reduction to $75,000 was deemed reasonable and affirmed.
Barnes also challenged the trial court's method for calculating attorney’s fees, arguing for the 'lodestar' approach used in federal courts. However, the Tennessee Supreme Court has rejected this method, favoring a consideration of various factors under state rules. The trial court's approach aligns with established state precedent.
Determining reasonable attorney’s fees is a discretionary process without a fixed formula, meaning the trial court's fee award should be upheld on appeal unless there is an abuse of discretion. The appellate review found no error in the trial court's award of attorney’s fees, leading to an affirmation of this aspect of the decision. Additionally, the trial court’s suggested reduction of the jury's award for humiliation and embarrassment to $75,000 was deemed appropriate. The case is remanded for recalculation of back pay owed to Barnes in accordance with the ruling. The appellate court's decision partially affirms and partially reverses the trial court's decision and orders costs to be shared equally between the appellant, Larry W. Barnes, and the appellee, The Goodyear Tire and Rubber Company.
