Certified Midwest, Inc. v. Local Union No. 738, 86 C 6061.

• Decision Date: 17 March 1988
• Docket Number: No. 86 C 6061.,86 C 6061.
• Citation: 686 F. Supp. 189
• Court: U.S. District Court — Northern District of Illinois
• Parties: CERTIFIED MIDWEST, INC., Plaintiff, v. LOCAL UNION NO. 738, INTERNATIONAL BROTHERHOOD of TEAMSTERS, Defendant.

686 F. Supp. 189

CERTIFIED MIDWEST, INC., Plaintiff, v. LOCAL UNION NO. 738, INTERNATIONAL BROTHERHOOD of TEAMSTERS, Defendant.

No. 86 C 6061.

United States District Court, N.D. Illinois, E.D.

March 17, 1988.

S. Richard Pincus, Fox & Grove, Chicago, Ill., for plaintiff.

Marvin Gittler and Barry M. Bennett, Asher, Pavalon, Gittler & Greenfield, Ltd., Chicago, Ill., for defendant.

MEMORANDUM OPINION

GRADY, Chief Judge.

Defendant Local Union No. 738, International Brotherhood of Teamsters ("Union") has submitted a proposed judgment order, and plaintiff Certified Midwest, Inc. ("Certified") objects to that order. The Union is directed to submit a second proposed judgment order consistent with this opinion.

FACTS AND PROCEDURAL HISTORY

The issue now before the court is the amount of back pay due to enforce an arbitral award. In our two previous opinions we ruled that an arbitrator's decision that plaintiff Certified had improperly discharged its employee Stan Price ("Price") had not been procured by Price's fraudulent testimony and that the award reinstating Price without back pay should be enforced. Certified Midwest, Inc. v. Local Union No. 738, No. 86 C 6061, Memorandum Op. (N.D.Ill. May 4, 1987) available on WESTLAW, 1987 WL 4941. We also ruled

that Price is entitled to back pay from the date he should have been reinstated (April 12, 1986) to the date of his reinstatement (June 7, 1987). Amounts received by Price, if any, from other employment during that period are to be subtracted from the back pay amount. Price is also entitled to the legal rate of interest on the back pay amount.

Certified Midwest, Inc. v. Local Union No. 738, No. 86 C 6061, Memorandum Op. at 8-9 (N.D.Ill. Sept. 17, 1987) ("Sept.Op.") available on WESTLAW, 1987 WL 17470.

Price's Earnings History

The parties agree that had Price been employed by Certified for ordinary forty-hour weeks during the entire back pay period, he would have received a gross pay of $31,306.00. Memorandum on Behalf of Local Union No. 738 In Support of Proposed Judgment Order at 2 ("Union Support Mem."); Plaintiff's Memorandum in Opposition to Defendant's Proposed Judgment Order at 9 ("Pl.Opp."). His average wage, therefore, would have been about $13.00 an hour. The union states, and Certified has not disputed, that Certified would have contributed $1,200.00 to Price's pension fund, and $2,232.34 to his health and welfare fund during that period. See id.

According to the Union, Price's earnings during the back pay period totaled $6,736.95.¹ Id.

Certified states, and the Union has not disputed, that Price drew $9,234.00 in unemployment compensation during the back pay period. The parties' dispute centers on the extent to which Price made proper efforts to mitigate his damages. The issue concerns the period during which Price was employed at Normaxcorp, doing business as BJ's Wholesale Club ("BJ's"). According to Price's deposition, in February 1986 he began working for BJ's as a full-time employee and received $5.00 per hour.² 1986 Price Deposition at 5. On March 11, 1986, Price began full-time employment with Sovereign Oil Co. Some time between March 11 and March 17, Price voluntarily reduced his hours at BJ's to part-time. He continued to hold one full-time and one part-time job until he was laid off by Sovereign Oil Co. on April 9 due to lack of work. Exhibit G to Union Support Mem. (letter of Sovereign Oil Co. Bookkeeper Yvonne Jasinski).

Price held only a part-time job with BJ's between April 9 and December 9. He testified that he did not seek a return to full-time status at BJ's because full-time employment would have interfered with his attempts to find a new job that would pay higher wages. Indeed, Price represents that he diligently sought higher-paying work:

Throughout the time I was unemployed, I did everything possible to obtain employment and earn a living. In addition to myself, I had to help support my wife and two children.... Except for the cold storage job which I felt unable to perform, I only quit jobs because I believed that I had other jobs which would pay me more money. I looked for work at all times that I was not employed, and I continued looking for better jobs even when I was working. While not all of my job changes worked out as I hoped when I made them, my desire at all times was to get work which would pay the highest amount so that I could support myself and my family.

Price Affidavit at ¶ 15.

Certified argues that Price's deposition testimony is more consistent with another story:

For almost eight months Price voluntarily worked part-time at BJ's, when he could have worked full-time.

The reason for this is obvious. Once Price was laid-off from Sovereign Oil on April 9, 1986, he was then eligible, based upon his employment at Sovereign, to receive unemployment compensation even though he was employed part-time at BJ's. Aware that he could receive unemployment compensation in amounts up to $200.00 per week, Price saw no reason to either resume full-time work at BJ's or to find other full-time work.

Pl.Opp. at 6.

Price resigned from BJ's on December 9, 1986 in order to work full-time for R. Gargol Roofing ("Gargol").³ He left this job on February 4, 1987, to work for Roger's Tank Wash at $6.00 per hour. Price stated in his affidavit that he believed he earned at most $750.00 while at Gargol. Price Affidavit at ¶ 12. Certified argues that this figure should be $960.00, because Price testified he worked forty hours per week for four weeks (February 5 to March 5). 1987 Price Deposition at 17-19. Price lost his job at Roger's Tank Wash when he failed a company physical.

Price's next employment began on April 10, 1987, at K & K, Inc. Price testified that he left K & K, Inc. after hearing of this court's order of May 4, 1987 that he be reinstated by Certified. 1987 Price Deposition at 22-23. Certified did not reinstate him, however, until June 7, 1987.

Certified's Opposition

Defendant Union has submitted a proposed judgment order requiring Certified to pay Price $26,960.93 as of November 1, 1987, and simple interest at 9% per year from that date until payment is actually made.

Certified contests this proposed order on four grounds. First, it argues that Price failed to mitigate his damages.⁴ Certified therefore discounts the amount owed Price, excluding interest, to $19,933.00. Second, Certified argues that Price's net back pay should be reduced by a further $9,234.00, reflecting unemployment compensation which Price received between April 12, 1986 and June 7, 1987 ("the back pay period"). Third, Certified argues that Price's back pay award should not include those payments Certified would have made on Price's behalf to a pension and a health and welfare trust fund ("the trust funds") if he had been employed by it during the back pay period. Fourth, Certified argues that no interest is due and owing. (Alternatively, Certified argues that if the court awards interest, it should be calculated according to 28 U.S.C. § 1961(a), which would set the rate at 6.35 percent for 1986, and 6.69 percent for 1987.) Certified's bottom line figure, excluding all interest, is $10,099.00.

DISCUSSION

We address each of these four arguments in turn.

Mitigation of Damages

Price had a duty to make reasonable attempts to mitigate his damages. "The principle of mitigation of damages ... requires that a person to whom a wrong has been done take reasonable steps to minimize the harm, on pain of having his award of damages cut down if he does not. The test in employment discrimination cases as in other cases is reasonable diligence." Hunter v. Allis-Chalmers Corp., Engine Div., 797 F.2d 1417, 1427 (7th Cir.1986) (§ 1981 action) (emphasis added) (citation omitted). The dispute between the parties concerns what job-seeking effort constitutes reasonable diligence, and what Price actually did to seek other work.

The defendant in this case (representing the worker receiving the back pay award) has the original burden of ascertaining and showing a gross back pay amount owing to the unfairly discharged employee. NLRB v. United Contractors, Inc., 713 F.2d 1322, 1330 (7th Cir.1983). The burden then shifts to the company to establish facts which mitigate its liability. Id.; NLRB v. NHE/Freeway, Inc., 545 F.2d 592, 593 (7th Cir.1976). The company has an affirmative obligation to show that:

(1) the plaintiff failed to exercise reasonable diligence to mitigate his damages, and

(2) there was a reasonable likelihood that the plaintiff might have found comparable work by exercising reasonable diligence.

Hanna v. American Motors Corp., 724 F.2d 1300, 1307 (7th Cir.) (emphasis in original), cert. denied, sub nom. American Motors Corp. v. Hanna, 467 U.S. 1241, 104 S.Ct. 3512, 82 L.Ed.2d 821 (1984); Syvock v. Milwaukee Boiler Mfg. Co., 665 F.2d 149, 153 (7th Cir.1981).

In Hanna, the Seventh Circuit addressed the duty to mitigate back pay damages under the Vietnam Era Veterans' Readjustment Assistance Act, 38 U.S.C. § 2022. Presumably, the duty to mitigate is the same whatever the source of the obligation creating a back pay award. However, in a later case, Hunter v. Allis-Chalmers Corp., Engine Div., the Seventh Circuit cited Hanna, see 797 F.2d at 1427, but found that an employer had carried its burden simply by showing a failure to make a reasonable effort to seek other work, without mentioning the second element in Hanna, that the company show that comparable work was available. The Seventh Circuit appeared to believe that the worker's conduct in Allis-Chalmers was egregious, as he had essentially failed to find a job for five years. The court ruled that this could only be due to a failure to search diligently. The plaintiff testified that he could only remember having applied to sixteen employers, id. at 1428, other than the four for whom he worked for short periods of time, id. at 1427. Based on those facts, the Seventh Circuit stated, "giving every...