Sellers v. Mineta

Decision Date24 February 2004
Docket NumberNo. 02-1425.,02-1425.
Citation358 F.3d 1058
PartiesWendi Ferguson SELLERS, Appellee, v. Norman Y. MINETA, Secretary of Transportation, Appellant.
CourtU.S. Court of Appeals — Eighth Circuit

Charles W. Scarborough, argued, Washington, DC, for appellant.

Gregory A. Rich, argued, St. Louis, MO (Jerome J. Dobson, on the brief), for appellee.

Before LOKEN, Chief Judge, HANSEN and BYE, Circuit Judges.

HANSEN, Circuit Judge.

Wendi Sellers brought an action against the Secretary of Transportation pursuant to Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e, et seq. (2000), alleging that she was unlawfully discriminated against in her employment on account of her gender and in retaliation for filing a sexual harassment complaint. Pursuant to 28 U.S.C. § 636(c), with the parties' consent, the claims were tried before a magistrate judge and a jury. After the jury returned a verdict in favor of Sellers, she moved for equitable relief in the form of reinstatement or, in the alternative, front pay. The district court denied reinstatement but awarded Sellers front pay in the amount of $638,293.99. The government appeals the front pay award. For the reasons stated below, we vacate the award and remand to the district court.

I.

Sellers was employed by the Federal Aviation Administration (FAA) as an Air Traffic Control Specialist at Lambert Airport in St. Louis beginning in 1987. Sellers alleged that she was subjected to a hostile work environment beginning in 1996 and lasting through the time of her termination in 1997. The harassment began when John Joseph, who was also employed at Lambert, made unwanted sexual advances toward Sellers and, on one occasion, sexually assaulted Sellers at her home. Sellers complained of this conduct to her coworkers, supervisors, and union officials. Although Joseph's harassing conduct ceased after Sellers' complaints, the workplace atmosphere at Lambert deteriorated as Sellers was subjected to on-the-job harassment. Because of the deteriorating atmosphere, the FAA decided to terminate Sellers effective September 30, 1997.

From October 1997 through April 2000, Sellers worked at the Bank of America. The bank terminated Sellers on April 14, 2000, after she attempted to process an unauthorized loan application in the name of her spouse's former wife. When bank representatives questioned Sellers about the loan application, she admitted her wrongful conduct, explaining that she had completed the application to obtain her spouse's ex-wife's credit history.

Sellers' case was tried during March 2000, when she was still employed by the bank. The jury awarded Sellers $800,000 in noneconomic compensatory damages and $345,000 in backpay. On April 4, 2000, the district court entered judgment in accord with the jury's verdict and then granted the Secretary's motion for remittitur, reducing Sellers' noneconomic damages award to the statutory maximum of $300,000. See 42 U.S.C. § 1981a(b)(3)(D) (2000). The district court also granted Sellers' motion for prejudgment interest in the amount of $27,329.33. Sellers sought further equitable relief in the form of reinstatement or front pay. On April 25, 2000, the Secretary moved for a stay of the proceedings with respect to the requested equitable relief, noting that he had recently received information regarding Sellers' discharge from Bank of America that "if proved, would have a direct impact on the plaintiff's motion [for equitable relief], defendant's ability to even consider reinstatement... and ultimately, therefore on the issue of front pay." (Appellee's App. at 24-25.) On November 19, 2001, the court held a hearing on the reinstatement/front pay motion. The district court concluded that reinstatement was impractical because of the level of acrimony still present between Sellers and her coworkers, supervisors, and the FAA. In lieu of reinstatement, the district court awarded Sellers front pay. On appeal, the Secretary argues that the district court abused its discretion in awarding Sellers front pay because her post-termination conduct-that is, her termination from the Bank of America for processing a false loan application-made her unsuitable for reinstatement as an air traffic controller. The Secretary argues in the alternative that the front pay award was excessive under the circumstances.

II.

The primary issue presented is whether the post-termination misconduct of a discharged employee that would prevent reinstatement with the defendant/prior employer limits the equitable remedy of front pay. It is a question of first impression in this circuit.

A. Waiver of After-Acquired Evidence Theory

Initially, we reject Sellers' argument that the Secretary waived this issue by failing to raise it before the district court. Even if the after-acquired evidence theory advanced by the Secretary is an affirmative defense that must be pleaded, as claimed by Sellers, clearly the Secretary cannot be expected to raise the defense in an answer filed over two years prior to the events giving rise to the defense. Further, the Secretary filed a Motion For a Stay of Proceedings within days of learning of the events, alerting the court that it was investigating alleged wrongdoing as the basis for Sellers' termination from Bank of America and noting that the events would have a direct impact on the issues of reinstatement and front pay. A significant portion of the November 1991 hearing was devoted to testimony about the events surrounding Sellers' termination from the bank and how those events affected the FAA's consideration of reinstating Sellers. (See Appellant's App. at 46-47, 189-93, 211-14, 225-26.) The district court specifically found that Sellers was terminated from the bank for the misconduct. That misconduct formed the basis for the FAA's decision not to offer reinstatement to Sellers in April 2001. (D. Ct. Order at 6.) In these circumstances, although the Secretary did not cite the specific legal theory to the district court, we conclude that he sufficiently raised the issue before the district court to allow us to consider it on appeal. See Sexton v. Martin, 210 F.3d 905, 914 n. 8 (8th Cir.2000) (reaching issue where facts were alleged in district court brief though controlling authority was not); Stockmen's Livestock Market, Inc. v. Norwest Bank of Sioux City, N.A., 135 F.3d 1236, 1243 n. 4 (8th Cir.1998) (reaching issue encompassed in general argument made before district court where party advancing argument did not present new evidence on appeal and both parties briefed the issue on appeal).

B. Merits of After-Acquired Evidence Theory

The most relevant Supreme Court case is McKennon v. Nashville Banner Publ'g Co., 513 U.S. 352, 115 S.Ct. 879, 130 L.Ed.2d 852 (1995). There, the plaintiff alleged that her employer terminated her in violation of the Age Discrimination in Employment Act (ADEA). The employer learned during the plaintiff's deposition that while the plaintiff was still employed with the firm, she had copied and taken home certain confidential documents in violation of her job responsibilities. See id. at 355, 115 S.Ct. 879. The McKennon Court held that after-acquired evidence of employee on-the-job misconduct, which would have resulted in that employee's discharge had the employer known of it, did not preclude recovery under the ADEA. See id. at 356, 115 S.Ct. 879. The Court rejected the proposition, however, that "the employee's own misconduct is irrelevant to all the remedies otherwise available under the statute." Id. at 360-61, 115 S.Ct. 879. The Court explained that "the employee's wrongdoing becomes relevant ... to take due account of the lawful prerogatives of the employer in the usual course of its business and the corresponding equities that it has arising from the employee's wrongdoing." Id. at 361, 115 S.Ct. 879. Most relevant to our discussion, the Court concluded that:

The proper boundaries of remedial relief in the general class of cases where, after termination, it is discovered that the employee has engaged in wrongdoing must be addressed by the judicial system in the ordinary course of further decisions, for the factual permutations and the equitable considerations they raise will vary from case to case. We do conclude that here, and as a general rule in cases of this type, neither reinstatement nor front pay is an appropriate remedy. It would be both inequitable and pointless to order the reinstatement of someone the employer would have terminated, and will terminate, in any event and upon lawful grounds.

Id. at 361-62, 115 S.Ct. 879.

Although McKennon involved the ADEA, its reasoning also applies in the Title VII context. See id. at 357, 115 S.Ct. 879 ("The substantive, antidiscrimination provisions of the ADEA are modeled upon the prohibitions of Title VII."); Trans World Airlines, Inc. v. Thurston, 469 U.S. 111, 121, 105 S.Ct. 613, 83 L.Ed.2d 523 (1985) (recognizing the similarity between Title VII and the ADEA because "the substantive provisions of the ADEA were derived in haec verba from Title VII" (internal marks omitted)). Only a few courts have addressed the question of whether the McKennon rationale should be extended to answer the question of whether evidence of misconduct that occurred after the employee has been terminated, but before the front pay decision is made, is relevant in fashioning equitable relief.

In Ryder v. Westinghouse Elec. Corp., 879 F.Supp. 534 (W.D.Pa.1995), the district court answered this question in the negative. It reasoned that the after-acquired evidence doctrine "presupposes that there was an employer-employee relationship at the time the misconduct occurred" and that "there cannot be misconduct that the employer did not know about prior to making its adverse decision if the misconduct did not even occur until after the adverse decision was made." Id. at 537. In Sigmon v. Parker Chapin Flattau & Klimpl, 901 F.Supp. 667 (S.D.N.Y.199...

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