Feldman v. Phila. Housing Auth. al. , 43 F.3d 823 ( 1994 )

Opinions of the United
1994 Decisions States Court of Appeals
for the Third Circuit
12-22-1994
Feldman v. Phila. Housing Auth. al.
Precedential or Non-Precedential:
Docket 93-1977
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UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
_____________________
Docket Nos. 93-1977, 93-1978, 93-2115, 93-2129, 93-2139
_____________________
JAMES C. FELDMAN,
v.
THE PHILADELPHIA HOUSING AUTHORITY;
JONATHAN A. SAIDEL, individually and as
Chairman of the Board of Commissioners
of the Philadelphia Housing Authority;
JOHN PAONE, individually and as
Executive Director of the
Philadelphia Housing Authority;
PEGGY JONES; CLAYTON CARTER, JR.,;
NELLIE REYNOLDS; COURTNEY C. SMITH, JR.,
individually and as members of the
Board of the Philadelphia Housing Authority
Jonathan A. Saidel, in his
individual capacity,
Appellant in Nos. 93-1977
and 93-2129
John Paone,
Appellant in No. 93-2115
Philadelphia Housing Authority,
Jonathan A. Saidel and
John Paone, in their official
capacities,
Appellants in Nos. 93-
1978
and 93-2139
______________________
On Appeal From the United States District Court
For the Eastern District of Pennsylvania
(D.C. Civil No. 91-cv-05861)
_______________________
_______________________
Argued June 20, 1994
BEFORE: STAPLETON, GARTH, and PRATT, Circuit Judges*
(Opinion filed December 22, l994)
(Corrected as of December 30, 1994)
______________________
Alan Klein (Argued)
Barry H. Boise
Cohen, Shapiro, Polisher,
Sheikman & Cohen
PSFS Building - 22nd Floor
12 South 12th Street
Philadelphia, PA 19107
Attorneys for Appellant
Jonathan A. Saidel
Robert J. Sugarman (Argued)
Sugarman & Associates
Robert Morris Building, 7th Floor
100 N. 17th Street
Philadelphia, PA 19103
Attorney for Appellant
John Paone
Jerome J. Shestack (Argued)
Joseph C. Crawford
Jonathan D. Wetchler
Wolf, Block, Schorr &
Solis-Cohen
12th Floor Packard Building
15th and Chestnut Streets
Philadelphia, PA 19102
Attorney for Appellants
Philadelphia Housing Authority,
Jonathan Saidel, and John Paone
(the latter two in their
official capacities)
_______________________________________
* Honorable George C. Pratt, United States Circuit Judge for the
Second Circuit, sitting by designation.
Joseph F. Lawless, Jr. (Argued)
6 Harvey Lane
Newtown Square, PA 19073
Attorney for Appellee
____________________
OPINION OF THE COURT
____________________
PRATT, Circuit Judge:
INTRODUCTION
Plaintiff James C. Feldman claims the defendant
Philadelphia Housing Authority ("PHA"), through its agents,
defendants Jonathan A. Saidel and John Paone, violated the First
and Fourteenth Amendments of the Constitution of the United
States, as well as the State of Pennsylvania's "whistleblower"
statute, by firing him in retaliation for publishing reports that
exposed wrongdoing at PHA. After a jury trial the district court
entered judgment for plaintiff on all claims, awarding him
$616,696 in compensatory damages and a total of $20,000 in
punitive damages. Defendants appeal. We affirm.
FACTS AND BACKGROUND
Since the jury found for Feldman, we view the facts by
drawing from the evidence all reasonable inferences in his favor.
Defendant PHA, a public agency responsible for
providing housing for low-income citizens, is the largest housing
agency in Pennsylvania and fourth largest in the United States.
The agency is governed by a board of commissioners consisting of
five members, two each being appointed by the mayor and the city
controller, respectively, with the fifth member being selected by
the four appointees.
In January 1990 Saidel, exercising his authority as
Philadelphia's city controller, appointed himself to the board of
commissioners. Three months later, Paone was named as PHA's new
executive director, responsible for overseeing the day-to-day
activities of the agency. Paone and Saidel worked closely
together, routinely discussing the daily management and affairs
of PHA.
Feldman had been working at PHA since 1982. From May
1990 until his termination on May 3, 1991, Feldman acted as the
director of the agency's Internal Audit Department. In this
capacity, Feldman was responsible for investigating, identifying,
and exposing waste, inefficiency, fraud, and criminal activity
within PHA. In order to carry out this function, Feldman
regularly prepared detailed reports of his investigations. Under
the internal-audit charter, which specifies the responsibilities
of the Internal Audit Department, Feldman was required to present
his findings and observations to the executive director and the
board of commissioners, i.e. to Paone, as executive director; and
to Saidel, as chairman of the board of commissioners as well as
to the four other members of the board.
For most of Feldman's career at PHA, his work was
considered exemplary. His personnel file contained no reprimands
or comments concerning poor job performance. His last
performance evaluation, dated April 24, 1990, gave Feldman a
rating of "SUPERIOR". However, after Saidel became chairman of
the board and Paone became executive director, things changed.
In several of his reports on PHA's management and operations over
approximately the next twelve months, Feldman revealed numerous
improprieties in several key areas at the agency. As required by
the internal auditing charter, Feldman made his reports to Paone,
Saidel, and the rest of the board. Many of his reports
criticized the job PHA's management was doing. On several
occasions, Paone and Saidel reprimanded Feldman for preparing the
critical reports.
Paone was particularly displeased with Feldman after he
reported that management had promoted a PHA employee who was
under investigation for corruption. As a result of a tip, the
Internal Audit Department had conducted an investigation of PHA's
Central Maintenance Department. The investigation revealed that
the Central Maintenance Department, which was responsible for the
agency's fencing contracts, was involved in an illegal bid-
rigging scheme, and several PHA employees were linked to the
unlawful activity. Feldman periodically reported to Paone and
Saidel on the details of this investigation, including which PHA
employees were probably involved. Ultimately, Feldman reported
that one of the implicated employees had been promoted despite
being under the continuing investigation. Paone challenged
Feldman, saying, "I thought you were on our side". Paone then
instructed Feldman to remove from his report the reference to the
mid-investigation promotion. Feldman complied.
Later, after Feldman circulated a quarterly report to
the board that criticized certain other managerial decisions,
Paone and Saidel separately reprimanded Feldman and instructed
him that in the future he was to report his findings to Paone
only. Feldman refused to yield to this direction, because it was
contrary to the internal-audit charter, and he continued to
circulate his reports to the entire board.
The last matter that Feldman worked on that was to be
circulated to the board was a human-resources audit. The purpose
of the audit was to determine if PHA management was using its
employees in an efficient and economical manner. Feldman had
routinely advised the board and Paone of the progress of the
audit. The final audit report would have revealed favoritism and
other improprieties in personnel decisions made by Paone and
Saidel. In general, the audit was very critical of the manner in
which PHA was being run.
Around the same time, however, Paone and Saidel were
portraying their management of PHA to the public in a different
light. Saidel prepared a "Letter from the Chairman" that was
featured in PHA's 1991 annual report. The letter stated that
although the agency had previously been "financially
floundering", when he became chairman and Paone became executive
director, "[t]hings had to change fast -- and they did". He went
on to say that the board of commissioners "began to reorganize
PHA management and restore the Authority to a viable condition".
Moreover, in the "Letter from the Executive Director", also
featured in the annual report, Paone said that PHA's greatest
challenge was "to win the hearts, minds and respect of our
residents and to develop a team approach with them in resolving
other major issues". Had it been published, Feldman's human
resources audit report would have severely undercut the annual
report's glowing portrayal of management's success.
The same day the human-resources report was to be
circulated to the board, Paone, after conferring with Saidel,
fired Feldman. He told Feldman that, effective immediately, his
services were no longer needed, because the agency had decided to
reorganize the Internal Audit Department. Feldman was then
promptly escorted out of his office by two police officers,
without being given an opportunity to retrieve his work or
publish the audit report.
Four months later, Feldman instituted this action in
district court against PHA, Paone, and Saidel, and against other
PHA board members who were dismissed from the action as
defendants at the completion of plaintiff's case-in-chief.
Feldman alleged that defendants had fired him for
"whistleblowing" in violation of the first and fourteenth
amendments, 42 U.S.C. § 1983, and 43 Pa. Cons. Stat. Ann. §
1423(a) and (b) (the Pennsylvania "Whistle-blower" Law).
The case was tried before the Honorable William H.
Yohn, Jr. and a jury, which returned a verdict in favor of
Feldman and against defendants PHA, Saidel, and Paone. The jury
awarded Feldman $616,696 in compensatory damages, of which
$500,000 was for front pay. It also awarded Feldman punitive
damages against Paone and Saidel in their individual capacities,
in the amount of $10,000 each. Defendants now appeal. We have
jurisdiction under 28 U.S.C. § 1291.
Defendant PHA raises three issues on appeal:
1) whether the district court erred in not granting judgment as a
matter of law dismissing the first amendment and "whistleblower"
claims; 2) whether the district court erred by allowing an award
of front pay instead of reinstating plaintiff at PHA; and
3) whether the jury's $500,000 award for front pay was excessive.
Both Paone and Saidel argue that the evidence was
insufficient to justify punitive damages. Saidel also challenges
the award of punitive damages against him, claiming a lack of
evidence to establish that he personally participated in
Feldman's firing.
We affirm.
DISCUSSION
Review of a denial of a directed verdict is plenary,
and we invoke the same standard that the district court applies.
Thus, viewing the evidence in the light most favorable to
Feldman, the nonmoving party, we determine whether there is
evidence reasonably tending to support his claim. See Bielevicz
v. Dubinon, 915 F.2d 845, 849 (3d Cir. 1990). While the role of
an appellate court, in a first amendment case, requires an
enhanced examination of the entire record, see Bose Corp. v.
Consumers Union of U.S., Inc., 466 U.S. 485, 499 (1984), "[a]
jury verdict will not be overturned unless the record is
critically deficient of that quantum of evidence from which a
jury could have rationally reached its verdict". Swineford v.
Snyder County, 15 F.3d 1258, 1265 (3d Cir. 1994).
A. First Amendment Claim
Feldman recovered, in part, on a theory that his firing
was in retaliation for his having engaged in speech protected
under the first amendment. Determining whether PHA's dismissal
of Feldman violated the first amendment requires a three-step
analysis. See Swineford, 15 F.3d at 1270; Czurlanis v. Albanese,
721 F.2d 98, 103 (3d Cir. 1983). Feldman was first required to
show that his speech constituted protected activity. See
Pickering v. Board of Educ., 391 U.S. 563, 568 (1968). If
protected, Feldman then had to establish that the speech was a
substantial or motivating factor for his discharge. See Mt.
Healthy City Sch. Dist. Bd. of Educ. v. Doyle, 429 U.S. 274, 287
(1977). If Feldman satisfied the first two steps, then
defendants could avoid liability by showing that they would have
fired Feldman anyway. Id.
1. Constitutionally Protected Activity
A state cannot lawfully discharge an employee for
reasons that infringe upon that employee's constitutionally
protected interest in freedom of speech. Rankin v. McPherson,
483 U.S. 378, 383 (1987). A public employee's freedom of speech,
however, does have its limits. The court must weigh the
employee's interest in free speech against the government's
interest in promoting efficiency among its employees. See
Versarge v. Township of Clinton New Jersey, 984 F.2d 1359, 1364
(3d Cir. 1993). As the Supreme Court explained in Pickering:
The problem in any case is to arrive at a
balance between the interests of the
[employee], as a citizen, in commenting upon
matters of public concern and the interest of
the State, as an employer, in promoting the
efficiency of the public services it performs
through its employees.
391 U.S. at 568. It is for the court, not the jury, to perform
the Pickering balancing test. See Czurlanis, 721 F.2d at 105
("As the Supreme Court made clear in Connick, it is the role of
the court in a case alleging retaliatory action which violates
the First Amendment to decide not only whether the speech at
issue related to a matter of public concern, but also to conduct
the necessary Pickering balancing.").
Thus, in order to determine whether Feldman's speech
was protected, we must first determine if the speech related to
matters of public concern, or constituted merely personal
grievances, see Connick v. Myers, 461 U.S. 138, 147 (1983);
Pickering, 391 U.S. at 568, and looking at the entire record, we
must consider the content, form, and context of the speech for
which Feldman contends he was fired. See Connick, 461 U.S. at
147-48.
An employee's speech addresses a matter of public
concern when it can "be fairly considered as relating to any
matter of political, social or other concerns of the community".
Id. at 146. Feldman's speech was not related in any way to
personal grievances; on the contrary, it clearly pertained to
matters of important public concern. The very purpose of his
auditing reports was to ferret out and highlight any
improprieties that he found at PHA. Disclosing corruption,
fraud, and illegality in a government agency is a matter of
significant public concern. See Swineford, 15 F.3d at 1274.
Next we must balance Feldman's interests in engaging in
the speech, together with the public's interest in listening,
against defendants' interest in promoting efficiency at PHA. Id.
The interests of Feldman, as well as the public, in exposing
governmental wrongdoing of the nature and magnitude that
Feldman's reports exposed, is very strong. We have recently
recognized:
Speech involving government impropriety
occupies the highest rung of First Amendment
protection. Moreover, the public's
substantial interest in unearthing
governmental improprieties requires courts to
foster legitimate whistleblowing.
Swineford, 15 F.3d at 1274.
Defendants, however, stress in opposition the
disruptive impact of Feldman's speech which, they argue, was
sufficient to deprive it of constitutional protection. This
argument is misplaced. We have previously explained:
The First Amendment balancing test [of
Pickering] can hardly be controlled by
finding that disruption did occur. An
employee who accurately exposes rampant
corruption in her office no doubt may disrupt
and demoralize much of the office. But it
would be absurd to hold that the First
Amendment generally authorizes corrupt
officials to punish subordinates who blow the
whistle simply because the speech somewhat
disrupted the office * * *. The point is
simply that the balancing test articulated in
Pickering is truly a balancing test, with
office disruption or breached confidences
being only weights on the scales.
Czurlanis, 721 F.2d at 107 (quoting Porter v. Califano, 592 F.2d
770, 773-74 (5th Cir. 1979)) (emphasis in original). Moreover,
revelations of misconduct at PHA by Feldman stand in a unique
position. Feldman was not the typical employee exposing fraud
within one's work environment; he was the head of a department
whose very job it was to uncover improprieties. Feldman's
conduct was not only permitted, but required by the Internal
Audit Department's charter, which provided:
It is the policy of the Philadelphia Housing
Authority (PHA) to determine the adequacy and
effectiveness of management policies,
controls and procedures with respect to all
activities within PHA, and to insure full
compliance with such policies, controls and
procedures.
In order to implement this objective, it is
the policy of PHA to provide and support an
Internal Audit Department to determine the
adequacy and effectiveness of management
policies, controls and procedures in
discharging management's responsibilities for
the control of assets and operations * * *.
(emphasis added).
As director of the Internal Audit Department, Feldman
was responsible for uncovering and reporting any wrongdoing that
he discovered at PHA. If done correctly, Feldman's very job was
to be disruptive. His responsibility to investigate and ferret
out improprieties extended not only to Feldman's co-workers, but
also to Paone, the executive director, and yes, even Saidel, the
chairman of the board. The charter specifically provided that
the Internal Audit Department must "determine the adequacy and
effectiveness of management policies, controls and procedures in
discharging management's responsibilities for the control of
assets and operations". (emphasis added).
Exposing waste, fraud, and corruption within an agency
will likely cause disruption, particularly when done by a person
whose responsibility it is to unveil such conduct. This type of
disruption, however, cannot justify a retaliatory discharge.
At the time of his firing, Feldman was about to publish
an audit report that would have revealed wrongdoing on the part
of Paone and Saidel. Feldman, however, was fired the day the
report was to be published. The jury could have reasonably
concluded that this was no coincidence, especially in light of
the fact that after being fired, Feldman was escorted from his
office by two police officers, and prevented from either
circulating the report or even retrieving any of his work.
Very likely, publication of the report would have
caused some disruption at PHA, particularly between Feldman and
his superiors, Paone and Saidel. Defendants would have us
believe, however, that the disruption would have been great
enough to justify, under Pickering balancing, their firing of
Feldman. We disagree. Feldman did what the charter required him
to do; failure to do so would have been a breach of his
responsibilities. Moreover, the subject matter of his reports --
improprieties in governmental business -- occupies a high level
of public concern. Simply because his reports might cause
disruption in the eyes of Paone and Saidel, the very people he
was reporting on, could not be a sufficient justification for his
discharge. We conclude that Feldman's speech was
constitutionally protected.
2. Unconstitutional Discharge
Feldman contended that his discharge was caused by
defendants' retaliatory motives. The record is replete with
evidence from which the jury could properly conclude that
Feldman's firing was directly precipitated by his engaging in
protected speech. Initially, defendants told Feldman that the
reason he was being fired was that they were reorganizing the
audit department. This, the jury could have found, was a
pretext. Except for a few minor changes, the audit department
was substantially the same at the time of trial as it was when
Feldman was fired.
Defendants later abandoned their initial reason for the
firing, and launched an intense attack on Feldman's ability to
perform his job. They alleged, inter alia, that Feldman was
insubordinate, self-serving, and overall, an incompetent
employee. Their attack on Feldman's alleged incompetence as the
reason for his dismissal raised a jury issue. Incidentally, the
argument is substantially undercut by PHA's present contention
that Feldman should be reinstated at PHA instead of receiving
front pay. Because there is ample evidence to support the jury's
finding that Feldman was fired for engaging in protected
activity, we affirm the jury's determination that defendants
violated Feldman's constitutional rights.
Defendants also argue that the district court committed
reversible error by failing to conduct, on the record,
particularized fact-finding and balancing under Pickering. They
further contend that the district court inappropriately submitted
to the jury all of Feldman's statements and reports before first
determining for itself which, if any, were protected.
Defendants, however, have failed to preserve these issues for
appeal. They did not except to the court's jury instruction con-
cerning Pickering, nor did they take any pre-verdict exception to
the district court's failure to make specific factual findings on
the record.
Even if defendants had properly preserved the record,
we would still affirm. Although the district court did not
perform the Pickering balancing test in precisely the fashion
that some cases suggest is appropriate, it is apparent from the
district court's memorandum and order denying defendants' motion
for judgment notwithstanding the verdict, that it had considered
all of Feldman's speech to be constitutionally protected under
Pickering. Consequently, we see no prejudicial error in the
court's having first submitted the same issue to the jury, which
arrived at the same conclusion.
B. Front Pay Versus Reinstatement
PHA argues that the district court erred by permitting
an award of front pay instead of ordering Feldman reinstated at
PHA. The equitable remedy of reinstatement is available for
discharges that violate 42 U.S.C. § 1983, see Versarge, 984 F.2d
at 1368, and reinstatement is the preferred remedy to cover the
loss of future earnings. See Blum v. Witco Chem. Corp., 829
F.2d 367, 373-74 (3d Cir. 1987). However, reinstatement is not
the exclusive remedy, because it is not always feasible, such as
when there exists "irreparable animosity between the parties".
Id. at 374.; see also Versarge, 984 F.2d at 1368. When
reinstatement is not appropriate, front pay is the alternate
remedy. See Maxfield v. Sinclair International, 766 F.2d 788,
796 (3d Cir. 1985), cert. denied, 474 U.S. 1057 (1986). Guided
by the particular circumstances of a case, the district court has
broad discretion in determining whether reinstatement is
appropriate, and its determination is reviewed under an abuse-of-
discretion standard. See id.
Although Feldman initially requested reinstatement in
his complaint, he sought, prior to trial, to have reinstatement
excluded as a potential remedy. The district court deferred its
ruling until after both sides had presented their evidence to the
jury. Then, having heard all the evidence, the district court
held that reinstatement was not feasible, because "irreparable
distrust and animosity developed between Feldman and PHA as a
result of the events prior to his termination, the termination
itself, and the litigation that followed in its wake". The
district court also concluded that the "lawsuit irrevocably
impaired [Feldman's] ability to function as an auditor at PHA".
Consequently, the district court submitted to the jury the issue
of the amount of front pay that Feldman should be awarded.
PHA also argues that because Paone and Saidel are no
longer with PHA, the animosity is no longer present. Even on
this appeal, PHA has joined Paone and Saidel in their continuing,
albeit unsuccessful attack on Feldman's professional competence
and personal integrity. The record contains ample evidence of
the hostility that was caused by this litigation. The facts
surrounding Feldman's firing, together with defendants'
litigation strategy, are but two examples of the irreparable
animosity that resulted. We conclude that the district court did
not abuse its discretion in allowing front pay rather than
reinstatement.
During this litigation, PHA offered Feldman another
position at the agency. However, having determined that the
district court did not abuse its discretion in permitting the
alternate remedy of front pay, we need not address the effect of
Feldman's rejection of the offer.
Contrary to PHA's contention, neither Feldman nor the
court was bound by Feldman's alternative request for
reinstatement made in the wherefore clause of his complaint.
Relief is determined by the merits of the case, not by the
pleadings. Rule 54(c) of the Federal Rules of Civil Procedure
provides that "every final judgment shall grant the relief to
which the party in whose favor it is rendered is entitled, even
if the party has not demanded such relief in the party's
pleadings." Fed. R. Civ. P. 54(c).
In short, we see no reason at this late date to
overturn the district court's determination, fully supported by
the record when made, that front pay was appropriate relief in
the circumstances of this case.
C. Amount of Front Pay
PHA asserts that even if some front pay was
appropriate, the jury's award of $500,000 was excessive,
considering Feldman's age, experience, and future likelihood of
employment. While PHA's argument is cast in terms of
excessiveness, it, at times, seems to be faulting the district
court for failing to instruct the jury on mitigation of damages,
i.e., on what the jury should do if it believed Feldman would be
capable of securing other employment at some point prior to
retirement age. The district court did instruct the jury on this
point, however. Its charge was not materially different from
that requested by the defense and was not objected to by it. The
court's instruction was:
"Now, award of front pay or future
damages is used to make the plaintiff whole
for future expected losses. In calculating
such an award, you must consider the expected
future damages caused by defendants' wrongful
conduct from the date of judgment to the date
of retirement by the plaintiff, less any
wages and benefits he might receive during
that same period of time. In other words,
future damages in this case consists of what
Mr. Feldman would have earned in wages and
benefits working at PHA, less whatever he
earns from any other employment he undertakes
from the date judgment is entered to the date
of his expected retirement.
If PHA proves that Mr. Feldman
unjustifiably failed or fails to take a new
job of like kind, status and pay which is
available to him or he fails to make
reasonable efforts to find a new job, you
must also subtract any amount he could have
earned in that new job after today."
Based on these instructions, the jury awarded to
Feldman front pay of $500,000. The jury's verdict may not be
disturbed unless the record is critically devoid of the minimal
amount of evidence upon which the jury could have reached its
verdict. See Swineford, 15 F.3d at 1265; Dutton v. Wolpoff and
Abramson, 5 F.3d 649, 653 (3rd Cir. 1993). On this record, we
think that the evidence supports the jury award.
Feldman's actuarial-economic expert testified exten-
sively on plaintiff's lost future income, making several
sophisticated calculations that produced various figures,
depending upon which criteria he applied. The $500,000 award,
however, was over $30,000 less than the lowest figure calculated
by Feldman's expert. Defendants called no expert of their own,
and they offered no evidence to controvert the testimony of
Feldman's expert.
The jury's award, therefore, was sufficiently supported
by the evidence, and we do not think that $500,000 is so
excessive as to shock the conscience of this court. See Savarese
v. Agriss, 883 F.2d 1194, 1205 (3d Cir. 1989).
D. Punitive Damages
The jury awarded punitive damages against Paone and
Saidel, in their individual capacities, in the amount of $10,000
each. Both of them contend that their conduct here does not sink
to the level that would permit punitive damages. In addition,
Saidel argues that he should not have been found liable for
punitive damages because he did not have sufficient involvement
with Feldman's firing. We disagree with both contentions.
Punitive damages are authorized on Feldman's federal
and state law claims.
In a § 1983 action:
[A] jury may be permitted to assess punitive
damages * * * when the defendant's conduct is
shown to be motivated by evil motive or
intent, or when it involves reckless or
callous indifference to the federally
protected rights of others.
Smith v Wade, 461 U.S. 30, 56 (1983). Similarly, the
Pennsylvania Supreme Court has stated that "punitive damages may
be awarded for conduct that is outrageous, because of the
defendant's evil motive or his reckless indifference to the
rights of others." Feld v. Merriam, 506 Pa. 383, 485 A.2d 742,
747 (Pa. 1984) (internal quotations omitted).
It is true that Paone's conduct was more culpable than
Saidel's. The record contains evidence, however, from which the
jury could reasonably have concluded that Saidel not only knew
about and acquiesced in, but also directed Paone's firing of
Feldman for engaging in his constitutionally protected speech.
Saidel and Paone worked closely together on PHA matters, and
Feldman's reports implicated both Saidel and Paone in the
mismanagement of PHA. Paone testified that before firing
Feldman, he spoke with Saidel about the matter and that Saidel
"concurred" with the decision to terminate Feldman. Paone
further testified that he and Saidel discussed the reorganization
of the Internal Audit Department, one of the pretextual reasons
initially offered for their discharge of Feldman. However, the
Internal Audit Department, with only a few minor changes,
remained the same. In response to written interrogatories,
defendants admitted that the only step taken to reorganize the
department was that the director of the Internal Audit Department
"no longer reports to the Board of Commissioners but reports to
the Executive Director".
The jury could reasonably have inferred that Paone
would not have engaged in the unlawful firing of Feldman without
first consulting with and obtaining Saidel's approval, that
Saidel thus participated in the retaliatory firing of Feldman;
that they fired him in order to conceal their own mismanagement
at PHA; and that this conduct sank to the levels of conduct that
justify imposition of punitive damages under both federal and
Pennsylvania law. We conclude that both Paone and Saidel must
pay the modest punitive damages the jury assessed against them.
We have considered defendants' remaining arguments and
find them to be similarly without merit.
CONCLUSION
The judgment of the district court is affirmed.
_______________________________________
Feldman v. Philadelphia Housing Auth.
Nos. 93-1977, 93-1978, 93-2115, 93-2129, 93-2139
GARTH, Circuit Judge, concurring in part and dissenting in part:
While I agree with the majority's conclusion that
Feldman's actions as Director of Internal Audit at the
Philadelphia Housing Authority were entitled to First Amendment
protection under Pickering, I find that the majority's failure to
identify any evidence supporting (1) the failure to reinstate
Feldman, (2) the excessive front pay award of $500,000, and (3)
the punitive damage award imposed upon Saidel requires reversal.
Thus, I would reverse and remand to the district court
with instructions that it order reinstatement of Feldman, that it
vacate the front pay award of $500,000 and that it vacate the
punitive damage award against Saidel.
I
So that my disagreement with the majority may be
clearly understood, I fault the majority's opinion because it
does not point to any evidence in the record nor does it discuss
the relevant case law, which can support an affirmance of the
three issues I have identified. In my view, it is not sufficient
to state in a conclusory manner that there is "ample evidence" to
support the court's finding (Maj. Op, p. 17) without calling
attention to at least some evidence. Nor is it sufficient to
decide complex issues such as front pay or restitution with
little reference to the criteria established in case law and
without relating the facts of record to those criteria. Indeed,
one can search long and hard in the record for the evidence which
"fully support[s]" the district court's determination that front
pay to retirement was appropriate relief in this case. (Maj. Op.
p. 18.) But that search reveals nothing. One can look even
harder to find evidence that would support a $500,000 front pay
award to retirement for a 38-year-old professional auditor who
rejected an annual salary of $66,616 in favor of working for
$12,500 annually and who has an opportunity to reestablish
himself in the job market long prior to his retirement.
Finally, there is just no evidence to be found in the
record of outrageous, wanton or reckless conduct on the part of
Saidel. This is the standard by which punitive damages are
measured. While there is evidence in the record that supports
compensatory damages -- specifically Saidel's concurrence in the
decision to discharge Feldman, this meager fact alone does not
warrant a punitive damage award against Saidel. The majority's
decision suggests that a supervisor's concurrence in any unlawful
discharge must result in both compensatory and punitive damages,
a doctrine which Pennsylvania has yet to adopt.
In short, my quarrel with the majority is that it has
taken unwarranted liberties with the record and has glossed over
the lack of evidence in reaching its conclusions. Having set
forth the predicate for this separate opinion, I now recite in
some detail the reasons why I disagree so strongly with the
majority on the three issues I have identified: reinstatement,
excessive front pay and punitive damages.
II
In his original complaint, and in his amended
complaint, Feldman asked to be reinstated to his former position
at the housing authority. A few months before trial, PHA offered
to reinstate Feldman to a different position, but at the same
salary.
Thereafter, Feldman filed a motion asking the district
court to rule that PHA had failed to offer him a "substantially
equivalent" position and that reinstatement was not a viable
remedy as a result of continuing animosity between him and PHA.
Immediately before closing arguments, the district
court granted Feldman's motion. Ultimately, the jury awarded
Feldman $500,000 in front pay in lieu of reinstatement. In a
post-trial motion, PHA, in addition to arguing that the front pay
award was improper and excessive, also argued that the district
court had erred in ruling that reinstatement was inappropriate.
The district court rejected PHA's arguments.
In particular, the district court reiterated its view
that reinstatement was not a feasible remedy because
"[i]rreparable distrust and animosity [had] developed between
Feldman and PHA as a result of the events prior to his
termination, the termination itself, and the litigation that
followed in its wake." Dist. Ct. Order of 9/16/93 at 3. The
district court noted that: (1) Feldman had been fired for
insubordination; (2) Feldman's ability to function as an auditor
at PHA had been irrevocably impaired by his lawsuit; and (3)
although Paone and Saidel no longer worked at PHA, "many of the
people, with whom or for whom Feldman would work if he were to
return, worked at PHA prior to his termination." Dist. Ct. Order
of 9/16/93 at 5.
In my opinion, the district court abused its discretion
when it refused to reinstate Feldman.
III
In employment discrimination suits, there are two
alternative remedies available to compensate a claimant for
future lost earnings: reinstatement or front pay. The
determination of which remedy is appropriate is left to the
discretion of the district court judge. Blum v. Witco Chem.
Corp., 829 F.2d 367, 374 n.4 (3d Cir. 1987); Maxfield v. Sinclair
Int'l, 766 F.2d 788, 796 (3d Cir. 1985), cert. denied, 474 U.S.
1057 (1986). Only after the judge determines that reinstatement
is not feasible, and that front pay is appropriate, does the jury
calculate a front pay award. Accordingly, when we review a
district court's order to reinstate, or to deny reinstatement, we
are not reviewing a jury determination. Rather, we are reviewing
a judge's ruling. In reviewing the district court's exercise of
discretion, we consider not only the reasons proffered by the
district court for its determination, but also whether those
reasons find support in the record.
It is well settled that reinstatement is the preferred
remedy to avoid future lost earnings. Maxfield, 766 F.2d at 796;
see also James v. Sears, Roebuck & Co., 21 F.3d 989, 997 (10th
Cir. 1994); Rodgers v. Western-Southern Life Ins. Co., 12 F.3d
668, 678 (7th Cir. 1993); Roush v. KFC Nat'l Management Co., 10
F.3d 392, 398 (6th Cir. 1993), cert. denied, 115 S. Ct. 56
(1994); Brunnemann v. Terra Int'l, Inc., 975 F.2d 175, 180 (5th
Cir. 1992); Wilson v. S & L Acquisition Co., L.P., 940 F.2d 1429,
1438 (11th Cir. 1991); Duke v. Uniroyal, Inc., 928 F.2d 1413,
1424 (4th Cir. 1991), cert. denied, 112 S. Ct. 429 (1991);
Cassino v. Reichhold Chems., Inc., 817 F.2d 1338, 1346 (9th Cir.
1987), cert. denied, 484 U.S. 1047 (1988). Only when the
evidence supports a judge's decision that reinstatement is not
feasible, may he award front pay in lieu of reinstatement.
Reinstatement may not be deemed feasible (1) where the
relationship between the parties has been so damaged by animosity
as to make reinstatement impracticable, Robinson v. Southeast Pa.
Transp. Auth., 982 F.2d 892, 899 (3d Cir. 1993); Witco Chem.
Corp., 829 F.2d at 373-74; Maxfield, 766 F.2d at 796; or (2)
where no comparable position is available to which the claimant
can be reinstated. Witco Chem. Corp., 829 F.2d at 374;
Whittlesey v. Union Carbide Corp., 742 F.2d 724, 728 (2d Cir.
1984).
A.
I believe that the record simply does not support the
district court's finding that substantial animosity had developed
between Feldman and PHA -- as opposed to the animosity that had
evolved between Feldman, on the one hand, and Paone and Saidel on
the other. Nor has the majority identified any such evidence.
Speculation that Saidel might, in the future, be re-elected to
the position of city comptroller and, in that capacity, be
permitted to appoint persons to the Board of Commissioners, which
in turn governs PHA, simply is too remote to support an award of
front pay in lieu of reinstatement and is no substitute for
evidence. Accordingly, in my opinion, the district court's
finding of fact that Feldman could not enjoy a productive working
relationship with PHA were he to be reinstated, is clearly
erroneous.
Unlike almost all cases in which reinstatement is
denied, here there is no record evidence of lingering hostility
between Feldman and any individual still working at PHA.1 While
1 See, e.g., Robinson, 982 F.2d at 899 (3d Cir. 1993)
(affirming district court's denial of reinstatement where
evidence supported finding of lingering hostilities between
plaintiff and his supervisors); Versarge v. Township of Clinton,
984 F.2d 1359 (3d Cir. 1993) (holding reinstatement inappropriate
"because of the great animosity between plaintiff and other
volunteer firefighters"); Standley v. Chilhowee R-IV Sch. Dist.,
5 F.3d 319, 322 (8th Cir. 1993) (upholding district court's
denial of plaintiffs' request for reinstatement to former
teaching positions on grounds that (1) school district and school
building were very small; (2) record was filled with testimony
regarding tense and hostile atmosphere at school between
plaintiffs, individual defendants, and other teachers; and (3)
some PHA employees testified at trial, their testimony did not
reveal any animus towards Feldman. See Bingman v. Natkins & Co.,
937 F.2d 553, 558 (10th Cir. 1991) (affirming district court's
finding that work place would not be unduly hostile where "all
persons involved in plaintiff's termination testified, and none
showed animosity toward him because of [his] lawsuit").
Most importantly, Paone and Saidel no longer work for
the Philadelphia Housing Authority. See, e.g., Rodgers, 12 F.3d
at 678 (affirming district court's award of reinstatement where
supervisor, whose racial comments had been the impetus for
Rodgers' Title VII action, no longer worked for Western-
Southern); Marshall v. TRW, Inc., 900 F.2d 1517, 1523 (10th Cir.
1990) (reversing award of front pay where two employees who made
the decision to discharge Marshall were no longer employed by
TRW); Morgan v. The Arkansas Gazetteer, 897 F.2d 945, 953 (8th
Cir. 1990) (affirming reinstatement order where any animosity was
eradicated inasmuch as employees responsible for the
friction that precipitated lawsuit would dog the school districts
if plaintiffs were returned to their positions); Tennes v.
Commonwealth of Mass. Dep't of Revenue, 944 F.2d 372, 381 (7th
Cir. 1991) (affirming denial of reinstatement where there was no
reason to believe that parties would enjoy a productive and
amicable working relationship); Spulak v. K Mart Corp., 894 F.2d
1150, 1157 (10th Cir.) (affirming award of front pay in lieu of
reinstatement where record supported Spulak's assertion that K
Mart's investigation of Spulak's alleged illegal activities "left
his employees with the impression that he was guilty of
wrongdoing, rendering him unable to function amicably and
productively in his former supervisory capacity," and where the
level of animosity between Spulak and K Mart only increased as a
result of the litigation).
discrimination no longer worked for the Arkansas Gazetteer);
Jackson v. City of Albuquerque, 890 F.2d 225, 232 (10th Cir.
1989) (reversing district court's denial of reinstatement where
"most of those making complaints against [Jackson] are no longer
employed" by the City's park department).
Although this might be a very different case were Paone
and Saidel still employed by PHA, quite clearly, they are not.
See, e.g., Grantham v. Trickey, 21 F.3d 289, 296 (8th Cir. 1994)
(concluding that unacceptable level of hostility existed and,
thus, reinstatement not feasible, inasmuch as claimant would have
to report to supervisor with whom he had "the most bitter
conflict"); Prive v. Marshall, Erdman & Assocs., Inc., 966 F.2d
320, 325 (7th Cir. 1992) (disapproving "reinstatement of a high-
level employee performing discretionary functions into the
division from which he was fired and which remains under the
management of the person who fired him"). That distinction
dictates a vastly different result from that reached by the
district court and now affirmed by the majority of this court.
In addition, between the time Feldman filed his first
complaint and the time he filed his amended complaint, HUD took
over PHA and appointed a special master to assume control of the
housing authority's daily operations. PHA, under new management,
has given every indication that it would like to see Feldman
return. Although the litigation of Feldman's claim may have
generated animosity, that animosity, as I have pointed out, was
generated by or against Paone and Saidel, and not by or against
PHA. Moreover, despite the majority's reliance upon this factor,
the existence of litigation-based hostility, without more,
generally is not sufficient to defeat reinstatement.2 (Maj. Op.
p. 17). Whether or not it might be uncomfortable for Feldman to
return to work at PHA, our jurisprudence implicitly tolerates
such discomfort as an unavoidable concomitant of our well-
established preference for reinstatement over front pay.
Concededly, the general rule is that a district court
may exercise its discretion to award front pay in lieu of
reinstatement. Its determination, however, must be well reasoned
and supported by record evidence. Here, there is not even a
2
See Grantham, 21 F.3d at 296 (holding hostility necessary to
support award of front pay "must go beyond the normal hostility
between parties to litigation"); United States E.E.O.C. v.
Century Broadcasting Corp., 957 F.2d 1446, 1462 (7th Cir. 1992)
(rejecting claim of hostility where only hostility present was
that "hostility common to litigation"); Walther v. Lone Star Gas
Co., 952 F.2d 119, 127 (5th Cir. 1992) (vacating award of front
pay where district court stated only that the litigation was
"protracted and necessarily vexing" and did not support its
finding with specific instances of discord); Goldstein v.
Manhattan Indus., Inc., 758 F.2d 1435, 1448 (11th Cir. 1985)
(affirming reinstatement of plaintiff who had argued that
litigation caused ill feelings between himself and persons who
would be his immediate superiors, but where supervisor testified
that he would be happy to have plaintiff back under same terms as
when he left); Dickerson v. Deluxe Check Printers, Inc., 703 F.2d
276, 281 (8th Cir. 1983) (holding "friction arising from the
litigation process itself is not alone sufficient to deny
employment"). Cf. Berndt v. Kaiser Alum. & Chem. Sales, Inc.,
789 F.2d 253, 261 (3d Cir. 1986) (upholding district court's
award of front pay in lieu of reinstatement where "relationship
between plaintiff and Kaiser has been so damaged by the
litigation that a continued working relationship for the four
months remaining until plaintiff will retire is not feasible").
scintilla of evidence that Feldman's working relationship with
PHA, as distinguished from his relationship with the now absent
Paone and Saidel, would be tainted by any animosity.
Unfortunately, the majority, as I have earlier indicated, has not
called our attention to any evidence supporting the district
court or its conclusion. This is not surprising as there is no
such evidence disclosed in the record.
Thus, inasmuch as the district court's determination
that reinstatement was not feasible was grounded on its
unsupported and, therefore, erroneous finding that there was
unabated hostility between Feldman and PHA, the district court's
determination was an abuse of discretion.
B.
It should not be overlooked, as I have emphasized, that
the question of whether reinstatement, in fact, is viable, is a
question for the judge and not the jury. Thus, it is the judge
who must determine whether the claimant's former position still
exists or whether it has been eliminated, whether a comparable
position is available, whether reinstatement should proceed, and
how. In the present case, not only did PHA make an offer of
reinstatement, but it conceded that, regardless of PHA's offer,
had the district court ordered reinstatement, PHA would have been
obligated to reestablish Feldman's position, and reinstate him to
it.
Although the district court found that the position
offered by PHA to Feldman before trial was not substantially
equivalent to the one Feldman held before he was fired, the
district court did not make any explicit findings as to whether
some other substantially equivalent position existed at PHA to
which Feldman could be reinstated.3 See, e.g., Anderson v.
Phillips Petroleum Co., 861 F.2d 631, 638 (10th Cir. 1988)
(reversing award of front pay and ordering reinstatement where
company could have reinstated Anderson to a comparable position);
cf. Nelson v. Boatmen's Bancshares, Inc., 26 F.3d 796 (8th Cir.
1994) (upholding district court front pay award where district
court found that Nelson's position no longer existed and that
there was no comparable position to which he could be
reinstated). Nor did the district court make a determination
with respect to whether a position could have been created to
which Feldman could be reinstated.
PHA asserted at oral argument that Feldman could have
been reinstated to the exact same position he held before he was
fired. I grant that this somewhat belated assertion must be
accepted with a measure of skepticism inasmuch as it differs from
the position advanced by PHA before the district court. There
PHA argued that IAD had been completely reorganized and that its
3
Front pay also may be awarded in lieu of reinstatement where
no comparable position is available to which the claimant can be
reinstated. Witco Chem. Corp., 829 F.2d at 374; Whittlesey, 742
F.2d at 728 (2d Cir. 1984).
pre-trial offer to Feldman of "Chief, Procurement Audit Unit" was
the best it could do. In this connection, Feldman had claimed
before the district court that his former position, "Director of
Internal Audit," had been renamed "Manager of Internal Audit" and
that, at the time of trial, the position was filled by a former
subordinate, Edward Merenda.
I am satisfied that reinstatement still would be
feasible, and an available remedy, even though a third person
might now occupy Feldman's former position. For example, in
Reeves v. Claiborne County Bd. of Ed., 828 F.2d 1096, 1101-1102
(5th Cir. 1987), the district court refused to reinstate Reeves
to her former position because a replacement had been hired
during the course of the litigation. The Fifth Circuit reversed:
If the existence of a replacement constituted
a complete defense against reinstatement,
then reinstatement could be effectively
blocked in every case merely by hiring an
innocent third party after the retaliatory
purpose was achieved. . . . While
reinstatement may displace an innocent
employee, the "[e]nforcement of
constitutional rights [may have] disturbing
consequences. Relief is not restricted to
that which would be pleasing and free of
irritation."
Id. at 1102 (citations omitted); see also Brunnemann, 975 F.2d at
180 (affirming reinstatement order even though Brunnemann's
former position already was held by another employee where there
was no evidence of animosity or hostility between the parties).
Contra United States E.E.O.C. v. Century Broadcasting Corp., 957
F.2d 1446, 1463 (7th Cir. 1992) (holding reinstatement not
feasible where claimant's position had been filled by third
party).
I see no reason why reinstatement here could not be
ordered as it is with respect to workers who are discharged as
the result of, or who go out on strike to protest, an employer's
unfair labor practice. "Under those circumstances, the striking
employees do not lose their status [as employees] and are
entitled to reinstatement with back pay, even if replacements for
them have been made." Mastro Plastics Corp. v. NLRB, 350 U.S.
270, 278 (1956). That is, "an employer must dismiss replacement
workers if necessary to make room for the returning unfair labor
practice strikers." NLRB v. International Van Lines, 409 U.S.
48, 50-51 (1972); see, e.g., Aguayo for NLRB v. Tomco Carburetor
Co., 853 F.2d 744, 750 (9th Cir. 1988) (rejecting Tomco's
argument that reinstatement would be inappropriate because eleven
innocent workers would have to be discharged and holding that
"the rights of the employees who were discriminatorily discharged
are superior to the rights of those whom the employer hired to
take their places"). Inasmuch as Feldman was fired, essentially,
as the result of an unfair labor practice, I see no reason why
his right to reinstatement -- the relief he requested originally
and our preferred remedy -- should be subordinated to the rights
of whichever employee was hired to replace him.
In light of the unequivocal representation made by PHA
to us that, if reinstated, Feldman would have his former position
reactivated, I would remand to the district court to accept PHA's
offer and to order that Feldman be reinstated as Director of
Internal Audit or its equivalent with appropriate back pay.
IV
Even if front pay were appropriate in the present case,
the $500,000 actually awarded to Feldman by the jury was clearly
excessive. See Williams v. Martin Marietta Alumina, Inc., 817
F.2d 1030, 1038 (3d Cir. 1987).
A.
PHA argues that Feldman should not have been granted
front pay until the age of retirement but, rather, until a point
in time at which he "would be expected to regain a position at
the level of the one he lost when his employment was terminated."
Appellant's Br. at 43.
The time period over which the jury calculated its
front pay award goes to the heart of the question of whether that
award was excessive. We have held that "[i]n selecting a cut-off
date for an equitable front pay remedy the [district] court
exercises discretion." Goss v. Exxon Office Sys. Co., 747 F.2d
885, 890 (3d Cir. 1984). Accordingly, in determining whether the
front pay amount awarded by the jury was excessive, it is proper
for us to consider whether the district court's front pay
instruction to the jury caused the jury to return with a front
pay award that was excessive.4 That instruction required that
4
PHA's requested jury instruction, which was not granted by
the district court, did not limit the end date to "retirement."
Rather, it would have instructed the jury, among other things,
that "[i]f you decide to award [front pay], front pay begins
today. It ends when James Feldman would have stopped working for
the jury calculate its front pay award "from the date of judgment
to the date of retirement by the plaintiff."
I conclude that the district court abused its
discretion in selecting a cut-off date ("retirement") which was
unreasonable in the context of this case. As a result, the jury
granted to Feldman an excessive front pay award.
B.
The purpose of front pay is to make an injured employee
whole by compensating him for future lost earnings resulting from
his wrongful termination. The future, of course, is unknown, and
we have been reluctant to award front pay where such an award
would be overly speculative. Goss, 747 F.2d at 889. Common
sense dictates that the farther into the future a front pay award
reaches, the more speculative it becomes. Consequently, "[a]
claimant's work and life expectancy are pertinent factors in
PHA (because of retirement or termination or otherwise) in the
absence of dismissal."
Despite the majority's contention to the contrary (Maj. Op.
p. 18-19), the district court did not leave it to the jury to
determine the termination date for front pay. Rather, the
district court instructed the jury to award front pay from the
date of judgment to the date of retirement. See id. at 19.
Thus, the instruction given by the district court to the jury was
fundamentally different from the instruction requested by PHA.
The PHA instruction, as noted in text, left to the jury the
appropriate cutoff date for front pay.
calculating front pay." Anastasio v. Schering Corp., 838 F.2d
701, 709 (3d Cir. 1988).
When a plaintiff's work expectancy is relatively short,
it is not overly speculative and, therefore, appropriate to award
front pay "to retirement." Duke v. Uniroyal, Inc., 928 F.2d
1413, 1424 (4th Cir. 1991) ("If a plaintiff is close to
retirement, front pay may be the only practical approach.").
Thus, in ADEA cases, front pay often is awarded from the date of
discharge to the date of retirement based on the assumption that,
in many instances, ADEA claimants will not work long enough to
reestablish themselves in the marketplace. See, e.g., Witco
Chem. Corp., 829 F.2d at 374-76 (awarding "front pay-to-
retirement" where plaintiffs were all within eight years of
normal retirement age when terminated and, therefore, it was not
overly speculative to assume that the plaintiffs would have
finished their working careers working for Witco).
This is not to say, however, that all front pay awards
should be calculated to the plaintiff's date of retirement. In
fact, not even all ADEA claimant's are entitled to "front pay-to-
retirement." See Anastasio, 838 F.2d at 709 ("The purpose of
front pay under the ADEA is to ensure that a person who has been
discriminated against on the basis of age is made whole, not to
guarantee every claimant who cannot mitigate damages by finding
comparable work an annuity to age 70."); Davis v. Combustion
Eng'g, Inc., 742 F.2d 916, 923 (6th Cir. 1984) (noting that an
award of front pay to 41-year old until normal retirement age
might be unwarranted while failure to make such an award to 63-
year old might be an abuse of discretion).5
In those cases in which the plaintiff is not close to
retirement age, the expectation that he will continue working
tempers the need for "front pay-to-retirement," the award of
which might constitute a "windfall" for the plaintiff. Standley
v. Chilhowee R-IV School District, 5 F.3d 319, 322 (8th Cir.
1993). In such cases, one can only speculate "how long the
plaintiff actually would have remained working at the job,
whether the plaintiff soon would have left for a different,
perhaps better-paying, job, or whether the plaintiff soon would
have been dismissed for legitimate reasons." Id. Consequently,
the general rule in such cases is that front pay may only be
awarded "for a reasonable future period required for the victim
to reestablish her rightful place in the job market." Goss, 747
F.2d at 889; see also Cassino v. Reichhold Chems., Inc., 817 F.2d
5
It is not surprising that relevant caselaw reveals that
"front pay-to-retirement" only has been awarded where the
plaintiff is close to retirement age. See, e.g., Boehm v.
American Broadcasting Co., Inc., 929 F.2d 482, 488 (9th Cir.
1991) (awarding six years "front pay-to-retirement" where
district court found that Boehm would not be able to obtain a
position equivalent to his former job); Witco Chem. Corp., 829
F.2d at 373-74 (awarding "front pay-to-retirement" where
plaintiffs were within eight years of retirement); Davis, 742
F.2d at 923 (approving jury's $88,000 front pay award, based on
district court's finding that Davis was 59 years old and facing
mandatory retirement in six years).
at 1347 (9th Cir. 1987) (stating that front pay is intended to be
temporary in nature).
Just as it is a plaintiff's duty to mitigate his
damages prior to trial, see Ford Motor Co. v. EEOC, 458 U.S. 219,
232 (1981), cert. denied, 454 U.S. 1030 (1981), it is expected
that he will continue to mitigate his damages into the future.
Maxfield, 766 F.2d at 796 (recognizing that plaintiff's duty to
mitigate serves as a control on front pay damage awards);
Whittlesey, 742 F.2d at 728 (noting that award of front pay "does
not contemplate that a plaintiff will sit idly by and be
compensated for doing nothing").
The Second Circuit explained this concept of "future
mitigation" in Dominic v. Consolidated Edison Co., 822 F.2d 1249
(2d Cir. 1987), a case in which the Court of Appeals upheld a
district court's decision to reduce an ADEA claimant's front pay
award:
Had Con Edison proved that Dominic failed to
mitigate damages -- for example, by refusing
a substantially equivalent job -- Dominic's
back-pay award would have been cut off or
reduced at the time of his failure to
mitigate and any front-pay award would have
been foreclosed. See Ford Motor Co. v. EEOC,
458 U.S. 219, 233-34 (1982). However, Con
Edison's failure to show that Dominic had not
mitigated damages does not entitle him to a
lifetime front-pay award. In calculating the
size of a front-pay award the court must
estimate the plaintiff's ability to mitigate
damages in the future.
Id. at 1258 (affirming district court's award of two years front
pay) (emphasis added). It follows that a plaintiff may only
receive front pay for that period of time reasonably necessary
for him to mitigate his losses. See Cassino, 817 F.2d at 1347
(reversing front pay award where jury, "without instruction on
mitigation, found that Cassino was entitled to front pay from the
time of trial until the time he would have retired"); Fitzgerald
v. Sirloin Stockade, Inc., 624 F.2d 945, 956 (10th Cir. 1980)
(awarding front pay for five years to reflect amount of time
necessary for plaintiff to reach the current salary of the
position from which he was fired).
Simply stated, the longer a plaintiff is expected to
work, the more likely it becomes that he will have sufficient
opportunity to mitigate his damages. Given this likelihood of
mitigation, the longer the period upon which a front pay award is
based, the more likely that the award will be overly speculative.
C.
In the present case, Feldman was fired from an auditing
position at which he was earning $66,616 per year. Prior to
trial, HUD, which had taken over PHA, offered to reinstate
Feldman to an auditing position, at his old salary. Feldman
refused the offer. Six months after his discharge, Feldman had
accepted a non-salaried "sales-like" position with the Individual
Financial Services Division of the CIGNA Corporation -- a
position unrelated to auditing -- which paid Feldman $12,500 a
year.
I agree that PHA's actions caused Feldman significant
harm. Feldman testified that his firing had an emotional effect
on his family life. The jury awarded him $50,000 to compensate
him for his mental and emotional distress.
Front pay, however, is not intended as damages for
mental distress. Rather, front pay is designed to reimburse a
claimant for his future lost earnings. I do not believe that,
under the circumstances, it was reasonable for Feldman to refuse
a job similar (though not identical) to the one from which he was
fired -- a job that would have paid him $66,616 a year -- when he
was earning only $12,500 in a field unrelated to the one for
which he was trained. Rather, I am convinced that, had Feldman
acted reasonably, he would not have suffered a future loss of the
magnitude that is reflected in the jury's outrageous $500,000
front pay award.
Furthermore, I would conclude that the $500,000 front
pay award was excessive, even if I were persuaded that Feldman,
in fact, was justified in turning down HUD's reinstatement offer.
At the time of trial, Feldman was thirty-eight years old. By all
accounts, he is a highly trained professional. He has been in
the work force for fewer than twenty years. He will be part of
the work force, one can expect, for, at least, another twenty-
seven years. In light of these uncontroverted facts, there can
be no justification for, just as there is no legitimate evidence
supporting, the $500,000 front pay award, calculated to Feldman's
retirement age of 65.
Under these circumstances, to have permitted the jury
to consider a front pay award to retirement was an abuse of
discretion on the part of the district court. While we have
never said so explicitly, I believe that it was the district
court's responsibility to determine, and then to instruct the
jury as to, a finite period over which the jury should have
calculated its front pay award. At worst, the district court
should have instructed the jury to award front pay "for a
reasonable future period required for [Feldman] to reestablish
[his] rightful place in the job market." Goss, 747 F.2d at 889.
Whichever is the correct approach, clearly the district court
abused its discretion when it directed the jury to calculate
Feldman's front pay award to retirement.
I conclude that the jury's highly speculative front pay
award -- $500,000 -- given the circumstances, was so "grossly
excessive as to shock the judicial conscience." Williams, 817
F.2d at 1038. I would direct that the front pay award be
vacated.
VI
Saidel argues that the jury's verdict against him on
both his compensatory and punitive liability must be reversed for
lack of sufficient evidence. While I agree with the majority
that the record could be read to support the jury's finding with
respect to Saidel's compensatory liability, I do not believe that
there was sufficient evidence to satisfy the stricter standard
which must be met in order for a jury to award punitive damages.
Punitive damages may be awarded in § 1983 actions "for
conduct that is outrageous, because of the defendant's evil
motive or his reckless indifference to the rights of others."
Smith v. Wade, 461 U.S. 30, 46-47 (1983), quoting Restatement
(Second) of Torts § 908(2). See also Savarese v. Agriss, 883
F.2d 1194, 1204 (3d Cir. 1989). Pennsylvania has adopted the
same standard for awarding punitive damages. See Chuy v.
Philadelphia Eagles Football Club, 595 F.2d 1265, 1277 (3d Cir.
1979) (in banc); Rizzo v. Haines, 555 A.2d 58, 69 (Pa. 1989).
I find nothing in the record which suggests that
Saidel's single action of "concurring" in Paone's decision to
terminate Feldman's employment was so "outrageous" as to merit
the imposition of punitive liability. Nor has the majority
directed our attention to any such evidence of that nature.
There is just no evidence in the record that Saidel's action
exhibited a reckless or callous disregard of, or indifference to,
Feldman's rights. Nor is there any evidence that Saidel's
conduct was outrageous. See Tunis Brothers Co. v. Ford Motor
Co., 952 F.2d 715, 739-40 (3d Cir. 1991).
Concededly, the record suggests that Saidel was made
aware of Feldman's IAD reports. There also is record evidence
that Paone conferred with Saidel before firing Feldman, just as
there is record evidence that Saidel concurred in Paone's
decision to fire Feldman.6
6
Saidel testified at his deposition as follows:
Q: When you had the conversation with Mr.
Paone regarding Mr. Feldman's firing did Mr.
Paone ever say to you that he wanted Feldman
fired for giving information to the HUD
inspector general?
A: If I'm not mistaken he mentioned to me
that one of the things he felt was a problem
was that . . . Mr. Feldman did not follow the
chain of command.
App. VI at 1306. At trial, Saidel testified as follows:
Q: Do you recall discussing Mr. Feldman's
firing with Mr. Paone before he was fired?
A: I didn't discuss it with Mr. Paone. Mr.
Paone told me that he was contemplating
dismissing Mr. Feldman.
App. VIII at 2238. Paone testified as follows:
A: . . . I discussed the situation with Mr.
Saidel based on the meeting that I had with
Mr. Feldman and I told Mr. Saidel that I
wanted to terminate Mr. Feldman, asked his
concurrence, he concurred.
Q: Did you actually terminate him that week?
A: No. I terminated him two weeks later, May
3d.
Q: And what was the reason for the delay?
Discharging an employee, however, can be a neutral,
non-discriminatory action. Here, there is no direct evidence
that Saidel had knowledge of Paone's discriminatory motive in
firing Feldman. Nor is there any direct evidence that Saidel
concurred in Paone's decision because of his own personal
discriminatory motive.
In Keenan v. City of Philadelphia, 983 F.2d 459 (3d
Cir. 1992), we vacated the punitive damages awarded against
Philadelphia's Police Commissioner even though we upheld the
compensatory damages imposed against him. We held that even
though Police Commissioner Tucker "had been fully aware of the
actions of his subordinate command personnel in this particular
case," this fact alone could not justify the imposition of
punitive damages against him. Id. at 471.
This case is much the same as Keenan and highlights the
rule that "despite its utility as a deterrent, the punitive
damage remedy must be reserved . . . for cases in which the
defendant's conduct amounts to something more than a bare
A: Well there's a number of reasons. We
spent a day in Richmond, when I came back I
talked to both Rich Brown who is the Director
of Human Resources and Mr. Saidel again. Mr.
Saidel had a concern that [objection omitted]
. . . Mr. Saidel's concern was that there
would be a perception because of Mr.
Feldman's position in terminating an Internal
Auditor that we should touch base with
relevant Federal officials first.
App. VII at 1625-27.
violation justifying compensatory damages or injunctive relief."
Cochetto v. Desmond, 572 F.2d 102, 106 (3d Cir. 1978). See also
Savarese, 883 F.2d at 1205 (3d Cir. 1989) (noting that "punitive
damages in general represent a limited remedy, to be reserved for
special circumstances").
Here, where there is only minimal evidence supporting
Saidel's liability for compensatory damages, and no evidence
which would tend to show that Saidel's actions were in any way
"outrageous," I believe that the imposition of punitive damages
against Saidel was inappropriate and should be vacated.
VI
In sum, I would reverse and remand to the district
court with instructions that it order the reinstatement of
Feldman at the same salary to the same position or an equivalent
position to the one he previously held at PHA. I would vacate
the front pay award of $500,000 as inappropriate upon Feldman's
reinstatement and alternatively as excessive under the
circumstances of this case. Finally, I would vacate the $10,000
award of punitive damages against Saidel.
I respectfully dissent from so much of the majority's
opinion as holds otherwise.
f