Gan v. Schrock

• Citation: 640 S.W.3d 451
• Decision Date: 25 January 2022
• Docket Number: WD 84241
• Parties: Xinsheng GAN, Appellant, v. Penny SCHROCK, Respondent.
• Court: Court of Appeal of Missouri (US)

640 S.W.3d 451

Xinsheng GAN, Appellant,

v.Penny SCHROCK, Respondent.

WD 84241

Missouri Court of Appeals, Western District.

OPINION FILED: January 25, 2022

George S. Smith, Columbia, MO, Attorney for Appellant.

Eric S. Schmitt, Attorney General, Jefferson City, MO, and Amanda R. Langenheim and D. Ryan Taylor, Assistant Attorneys General, Kansas City, MO, Attorneys for Respondent.

Before Division One: W. Douglas Thomson, Presiding Judge, and Alok Ahuja and Karen King Mitchell, Judges

Karen King Mitchell, Judge

Xinsheng Gan appeals from the circuit court's affirmation of an Administrative Hearing Commission (AHC) decision awarding some, but not all, of the monetary relief Gan requested following a hearing to determine the amount of back pay he was owed following reinstatement to his job with the State of Missouri after an improper dismissal. Gan raises four points on appeal. First, he argues that the AHC award was erroneous insofar as it failed to include (1) back pay for the entire six years between dismissal and reinstatement, (2) the difference between the cost paid by Gan for medical insurance and what he would have paid under the State's plan, (3) a loss of value for future social security benefits, and (4) the value of all of the annual leave that Gan would have acquired absent his dismissal. Second, Gan argues that the award improperly failed to include both pre- and post-judgment interest. Third, Gan argues that the award should have included additional compensation for the adverse tax consequences he would suffer from a large lump-sum payment. And, finally, Gan argues that he was improperly rehired, rather than reinstated, to his original position. Finding no error, we affirm.

Background

Gan worked as a Research Analyst III with the Missouri Department of Social Services, Division of Finance and Administrative Services, for six years until he was dismissed in February 2013. Schrock v. Gan , 494 S.W.3d 631, 633 (Mo. App. W.D. 2016) ( Gan I ). Gan, a merit system employee, appealed his dismissal to the AHC, and the AHC initially determined that Gan's dismissal was not for the good of the service and ordered that he be reinstated.¹

Id. The Department sought review in the circuit court, and the circuit court reversed the AHC's decision, finding that the AHC failed to use a proper analysis, and the court remanded the matter back to the AHC to reconsider under the proper analysis. Id. Gan appealed the circuit court's decision to this court, and we dismissed the appeal for lack of a final judgment and remanded the matter to the AHC for final determination. Id. at 637.

In March 2017, the AHC adopted its previous findings of fact, found additional facts, and concluded that Gan's dismissal was not for the good of the service and reinstated him to his position as Research Analyst III. Schrock v. Gan , 563 S.W.3d 127, 129 (Mo. App. W.D. 2018) ( Gan II ). The Department again sought review in the circuit court, and the circuit court again reversed the AHC's decision, finding that the AHC exceeded its authority and misapplied the law and that its determination was not supported by competent and substantial evidence upon the whole record. Id. Gan again appealed to this court, and we held that there was no error in the AHC's determination that the Department failed to show that Gan's dismissal was for the good of the service. Id. at 136-37. Therefore, we reversed the decision of the circuit court, affirmed the decision of the AHC reinstating Gan to his former position, and remanded the matter to the AHC for determination of attorney's fees and costs. Id. at 137.

On February 14, 2019, the AHC reopened the matter to determine Gan's date of reinstatement and the amount of back pay to which he was entitled. The AHC held a hearing on July 24, 2019, wherein it received documentary evidence and testimony from Penny Schrock, the former Appointing Authority for the Department; Dawn Plybon, the current Appointing Authority for the Department; James Brinkmann, a vocational rehabilitation specialist; and Gan. The parties agreed that Gan's dismissal date was February 1, 2013, and that he was reemployed as a Research Analyst III with the Department on January 14, 2019. They also agreed that the total wages Gan would have received for the nearly six years he was unemployed was $239,399.19. The Department argued, however, that Gan was not entitled to the full amount as a result of his failure to mitigate his damages by working during the period between dismissal and reemployment. Gan argued that he was entitled to not only the full amount of lost wages but also additional compensation for (1) the difference in medical insurance premiums paid and those he would have paid under the State's medical plan (MCHCP), (2) the loss in value of social security benefits, (3) the value of all lost annual leave, and (4) the value of his lost time in the Missouri State Employees Retirement System (MOSERS).

On December 20, 2019, the AHC issued its decision, granting Gan $92,631.52 in back pay without interest, representing lost wages for two years and five months, from February 1, 2013, through June 30, 2015 (the date by which the AHC determined Gan could have found reasonable employment but failed to continue seeking it); 710 hours of reinstated sick leave; reinstatement of annual leave up to 240 hours; and service credit with MOSERS backdated to February 1, 2013. The AHC denied Gan's request for reimbursed health insurance costs, lost value of social security benefits, and lost tax credit opportunities. Gan sought review in the circuit court. The circuit court affirmed the AHC's decision. Gan appeals.

Standard of Review

On an appeal from judicial review of an AHC decision, "we review the decision of the AHC [and] not the judgment of the trial court." Gan II , 563 S.W.3d at 130 (quoting Cash v. Mo. Dep't of Revenue , 461 S.W.3d 57, 60 (Mo. App. W.D. 2015) ). We will uphold the AHC's decision "unless it is not supported by competent and substantial evidence upon the whole record; it is arbitrary, capricious, or unreasonable; it is an abuse of discretion; or it is otherwise unauthorized by law or in violation of constitutional provisions." Id. (quoting Cash , 461 S.W.3d at 60 ).

"In determining whether a decision is supported by competent and substantial evidence, we review the record as a whole and determine whether the AHC's decision is against the overwhelming weight of the evidence." Id. (quoting Cash , 461 S.W.3d at 60 ). Because "the AHC is the sole judge of the credibility of witnesses and the weight and value to give to the evidence," we will "defer to its credibility findings." Id. (quoting Cash , 461 S.W.3d at 60 ). "We review the AHC's conclusions on the interpretation and application of the law, however, de novo. " Id. (quoting Cash , 461 S.W.3d at 60 ).

Analysis

Gan raises four points on appeal. In his first point, he argues that the AHC erred in failing to include in its back-pay award (1) nearly four more years’ worth of past wages; (2) the difference in cost of medical insurance premiums he paid; (3) the lost value of social security benefits; and (4) additional value for annual leave. In his second point, he argues that the AHC award should have included both pre- and post-judgment interest. In his third point, he argues that the award should have included compensation for the tax consequences Gan would suffer from a lump-sum payment. And, in his final point, Gan argues that the AHC erred in concluding that he was reinstated, rather than rehired, by the Department.

I. The AHC did not err in applying the rule of avoidable consequences to limit Gan's back-pay award.

In Point I, Gan argues that the AHC erred in its determination that he was not entitled to all the relief he requested in his back-pay award because the AHC's decision to apply the rule of avoidable consequences to limit his back-pay award was arbitrary and capricious.² We disagree.

Section 621.075.3³ provides that, following an order of reinstatement and the conclusion of any appeals resulting in affirmance of the order of reinstatement, "the [AHC] shall commence a separate action to determine the date of reinstatement and the amount of back pay owed to the employee." "Back pay is calculated based upon the difference between the value of the compensation the plaintiff would have been entitled to had he remained employed by the defendant and whatever wages he earned during the relevant period."⁴ Pitcher v. Centene Corp. , 602 S.W.3d 216, 225 n.2 (Mo. App. W.D. 2020) (quoting Clark v. Matthews Int'l Corp. , 639 F.3d 391, 396 (8th Cir. 2011) ).

Here, the AHC awarded Gan $92,631.52 in lost wages, 240 hours in annual leave, 710 hours in sick leave, and a reinstatement date of February 1, 2013, for purposes of calculating service credit with MOSERS. Gan first argues that he should have received the full $239,399.19, representing his lost pay for the entire six years he was separated from the Department. We disagree.

"An improperly dismissed public employee is entitled upon reinstatement to recover his lost back pay from the date of termination to the date of his reinstatement." Schulze v. Erickson , 17 S.W.3d 588, 591 (Mo. App. W.D. 2000) (quoting Gamble v. Hoffman , 695 S.W.2d 503, 509 (Mo. App. W.D. 1985) ). "However, under the rule of avoidable consequences, the amount of back pay must be offset by such sums the employee has earned or could have earned from other employment[.]" Id. (citing Wolf v. Mo. State Training Sch. for Boys , 517 S.W.2d 138, 144-45 (Mo. banc 1974) ). "Those offsets are to be determined by an administrative evidentiary hearing for that purpose in the event the employee is reinstated." Gamble , 695 S.W.2d at 509. "[T]he burden of proof on this issue [of offsets] rests with the [employer]." Shaughnessy v. Mark Twain State Bank , 715 S.W.2d 944, 954 (Mo. App. E.D. 1986).

At the hearing, Gan testified that he stopped seeking jobs after the June 4, 2014 AHC decision...