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Teutscher v. Woodson

United States Court of Appeals, Ninth Circuit

August 26, 2016

Scott Teutscher, an individual, Plaintiff-Appellee,
v.
William Nathaniel Woodson, III, Intervenor-Appellant. and Riverside Sheriffs' Association, Defendant-Appellee, and Riverside Sheriffs' Association Legal Defense Trust; Tanya Conrad, individually and as an Agent of the Riverside Sheriffs Association, Defendants, Scott Teutscher, an individual, Plaintiff-Appellee,
v.
Riverside Sheriffs' Association, Defendant-Appellant.

          Argued and Submitted January 5, 2016 Pasadena, California

         Appeal from the United States District Court for the Central District of California Robert H. Whaley, Senior District Judge, Presiding D.C. No. 5:06-cv-01208-RHW-OP

          Daniel P. Stevens (argued) and Heather K. McMillan, Stevens & McMillan, Tustin, California, for Plaintiff-Appellee.

          Jon R. Williams (argued), Williams Iagmin LLP, San Diego, California, for Defendant-Appellee.

          William N. Woodson, III (argued), Law Offices of Wm. N. Woodson, III APC, Fallbrook, California, pro se Intervenor-Appellant.

          Before: Milan D. Smith, Jr., Paul J. Watford, and Michelle T. Friedland, Circuit Judges.

         SUMMARY [*]

         Labor Law

         The panel reversed the district court's award of front pay and reinstatement as equitable remedies under the Employee Retirement Income Security Act for a retaliatory discharge after the plaintiff had already sought and been awarded by a jury front pay damages to compensate for the same harm.

         The plaintiff went to trial against his former employer on retaliatory discharge claims under both state law and ERISA. The jury awarded him lump-sum damages on his state law claims, and the district court then entered judgment on his ERISA claim. Even though the jury had been instructed to include front pay in its damages award, the district court granted the plaintiff additional equitable remedies consisting of reinstatement as well as front pay until reinstatement occurred.

         The panel held that the equitable front pay award conflicted with the jury's front pay award in violation of the Seventh Amendment right to a jury trial. In addition, although the reinstatement remedy did not necessarily conflict with the fact findings implicit in the jury's verdict, it nevertheless was improper because the plaintiff waived that relief when he elected to seek the duplicative front pay remedy from the jury.

         Judge M. Smith concurred in the judgment. However, he disagreed with the majority's Seventh Amendment analysis. Judge M. Smith would hold instead that the district court's equitable remedy was an abuse of discretion because the district court did not give reasons why additional equitable relief was appropriate after the jury had already compensated the plaintiff for the monetary harm he suffered.

          OPINION

          FRIEDLAND, Circuit Judge:

         This appeal requires us to examine the limits on a district court's authority to award front pay and reinstatement as equitable remedies for a retaliatory discharge after a plaintiff has already sought and been awarded by a jury front pay damages to compensate for the same harm. Plaintiff-Appellee Scott Teutscher went to trial against his former employer, Riverside Sheriffs' Association ("RSA"), on retaliatory discharge claims under both state law and the Employee Retirement Income Security Act, 29 U.S.C. §§ 1001-1461 ("ERISA"). A jury awarded him lump-sum damages on his state law claims, and the district court then entered judgment in his favor on his ERISA claim. Even though, at Teutscher's request, the jury had been instructed to include front pay in its damages award, the district court granted Teutscher additional equitable remedies consisting of reinstatement as well as front pay until reinstatement occurred. RSA appeals these equitable remedies, arguing that they conflict with the jury's front pay award in violation of the Seventh Amendment and improperly duplicate Teutscher's recovery from the jury.

         Given the way in which the jury was instructed and the evidence presented at trial, the jury's verdict encompassed an implicit factual determination as to the entire amount of front pay to which Teutscher was entitled on account of his retaliatory discharge. We hold that the district court's grant of an additional front pay remedy for the same harm disregarded that determination in violation of the Seventh Amendment right to a jury trial. In addition, although the reinstatement remedy does not necessarily conflict with factual findings implicit in the jury's verdict, we hold that it is nevertheless improper because Teutscher waived that relief when he elected to seek the duplicative front pay remedy from the jury. We accordingly reverse the district court's equitable awards.

         I.

         Defendant-Appellant RSA is an organization that represents law enforcement employees in Riverside County, California for collective bargaining purposes. RSA also administers the RSA Legal Defense Trust (the "Trust"), an ERISA-governed plan. The Trust provides legal defense services to RSA members in civil and criminal actions arising from incidents in the course of their employment. From 2002 until his termination in 2005, Plaintiff-Appellee Scott Teutscher worked on an at-will basis for RSA as the Trust's Legal Operations Manager. In that position, Teutscher was responsible for the Trust's day-to-day operations, including directing the work of staff members and investigating disciplinary violation claims against RSA members.

         During Teutscher's tenure as Legal Operations Manager, the Trust began covering legal expenses for Deputy Sheriff Duane Winchell's defense in criminal and civil proceedings unrelated to Winchell's employment. Teutscher eventually started expressing concerns that the Trust's coverage of Winchell's defense costs was unlawful because it was disallowed by the Trust's governing plan documents. Teutscher later met with an officer in the Riverside Sheriff's Department and accused RSA's president and its executive director of improper coverage approvals. Shortly after Teutscher revealed that he had contacted law enforcement about the coverage issues, RSA's executive director terminated Teutscher's employment.

         Teutscher filed the instant lawsuit alleging that RSA terminated him in retaliation for reporting his suspicions that the Trust's coverage of Winchell was illegal. In the operative complaint, Teutscher asserted claims against RSA under federal and California law arising out of his termination, including retaliatory discharge in violation of section 510 of ERISA, 29 U.S.C. § 1140; wrongful discharge in violation of public policy under California common law; and retaliatory discharge in violation of California Labor Code §§ 98.6 and 1102.5. After this court partially reversed an earlier grant of summary judgment in favor of RSA, the case proceeded to a jury trial on the three state law claims pursuant to Teutscher's timely jury demand, and to a simultaneous bench trial on his ERISA claim.

         During trial, Teutscher presented evidence that RSA's executives threatened to terminate him if he "didn't keep [his] mouth shut" about the Winchell coverage issues. He argued to the jury that the executives acted on that threat by firing him after he reported to outside authorities his suspicions that the coverage was illegal. RSA in turn presented evidence that Teutscher had made repeated mistakes in his job, which had led the Trust's Board to assign RSA's executive director to supervise Teutscher's work. RSA also introduced evidence that Teutscher had been investigated and disciplined for failing to follow Trust policy in responding to an officer-involved shooting incident, and that he was placed on administrative leave shortly before his termination for, among other things, angrily throwing a work file. Teutscher argued that these performance-related grievances were merely pretext for retaliation, and that they were belied by his consistently satisfactory job performance ratings and by a raise he received shortly before his termination.

         Teutscher also put on testimony about wages he had lost since his termination and wages he would have earned for the remainder of his anticipated working life at RSA. Teutscher testified that, at the time of his termination, he had been earning an $86, 000 annual salary plus annual bonuses and the value of a company car. During closing arguments, his counsel placed the total value of compensation at $98, 236 per year. Teutscher, who was 55 years old at the time of trial, testified that had he not been wrongfully terminated, he would have continued working at RSA until his Social Security "would kick in, probably 65, 67." Teutscher testified that he was instead forced to look elsewhere for work. After about six months, he found his first replacement job working at an auto business, earning roughly $8, 000 per year in 2006 and 2007. In 2008, Teutscher began working at the San Bernardino County Sheriff's Department for an annual salary of roughly $42, 000, which had increased to $52, 000 by 2012.

         The district court adopted Teutscher's proposed jury instruction on damages, and, without objection, instructed the jury on how to calculate Teutscher's damages should it find that he was wrongfully discharged. This instruction provided:

         If you decide that Plaintiff has proved that Defendant wrongfully terminated him, then you must decide the amount of damages that Plaintiff has proven he is entitled to recover, if any. To make that decision, you must:

1. Decide the amount that Plaintiff would have earned up to today, including any benefits and pay increases; and
2. Add the present cash value of any future wages and benefits that he would have earned for the length of time the employment with Defendant was reasonably certain to continue; and
3. Add damages for pain, suffering and emotional distress if you find that Defendant's conduct was a substantial factor in causing that harm.

         In determining the period that Plaintiff's employment was reasonably certain to have continued, you should consider such things as:

(a) Plaintiff's age, work performance, and intent regarding continuing employment with Defendant;
(b)Defendant's prospects for continuing the operations involving Plaintiff; and
(c) Any other factor that bears on how long Plaintiff would have continued to work.

         The court also instructed the jury that "Plaintiff has a duty to use reasonable efforts to mitigate damages" and that the burden was on RSA to show that Teutscher had failed to do so.

         Following deliberations, the jury returned a verdict in favor of Teutscher on his state law claims for wrongful and retaliatory discharge. Using a general verdict form to which neither party had objected, the jury awarded Teutscher lump- sum damages of $457, 250 and separately awarded punitive damages of $357, 500.

         Based on the evidence presented at trial, the district court adjudicated Teutscher's ERISA claim, holding RSA liable for retaliating against Teutscher in violation of section 510. The district court then heard argument on an appropriate ERISA remedy. Teutscher asked that his ERISA remedy include back pay and reinstatement. RSA objected that back pay was unavailable under ERISA as a form of compensatory relief. RSA also objected that reinstatement would conflict with the jury's award of lost future earnings and would constitute impermissible double recovery because Teutscher was already made whole by the remedy he elected to pursue from the jury. RSA further contended that reinstatement was impossible because of continuing acrimony between the parties.

         The court issued a ruling denying back pay but ordering RSA to reinstate Teutscher and to provide him interim front pay at the rate of $98, 235 per year until such reinstatement occurred. RSA filed objections to the court's ruling, protesting that it would be impossible to reinstate Teutscher because his position had by then been eliminated, and again arguing that the equitable front pay and reinstatement awards duplicated the relief Teutscher had obtained from the jury and that Teutscher waived his right to those equitable awards when he elected a make-whole remedy on his legal claims. The district court nevertheless entered judgment in accordance with its earlier ruling. RSA timely appealed the district court's remedy on the ERISA claim, arguing that it violated both the Seventh Amendment and the prohibition on double recovery.

         II.

         We review for abuse of discretion the district court's award of equitable relief, including its grant of reinstatement and front pay. See Gotthardt v. Nat'l R.R. Passenger Corp., 191 F.3d 1148, 1156 (9th Cir. 1999). Under this framework, we must determine whether the district court based its ruling on an erroneous view of the law, United States v. Hinkson, 585 F.3d 1247, 1261-62 (9th Cir. 2009) (en banc), or on a factual finding that was "illogical, implausible, or without support in inferences that may be drawn from the record, " id. at 1262-63. See United States v. McConney, 728 F.2d 1195, ...


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