Ray v. Miller Meester Advertising, Inc., No. C3-02-1605.

• Decision Date: 29 July 2004
• Docket Number: No. C3-02-1605.
• Citation: 684 N.W.2d 404
• Parties: Patricia Ludowese RAY, Respondent, v. MILLER MEESTER ADVERTISING, INC., Appellant, Robert V. Miller, Defendant.
• Court: Minnesota Supreme Court

684 N.W.2d 404

Patricia Ludowese RAY, Respondent, v. MILLER MEESTER ADVERTISING, INC., Appellant, Robert V. Miller, Defendant.

No. C3-02-1605.

Supreme Court of Minnesota.

July 29, 2004.

Joseph W. Anthony, Mary L. Knoblauch, Mark D. Wisser, Minneapolis, for Appellant.

Susan M. Coler, Teresa K. Patton, Minneapolis, for Respondent.

Robert R. Reinhart, Erik T. Nelson, Minneapolis for amicus Minnesota Employment Law Council.

Leslie L. Lienemann, St. Paul, for amicus National Employment Lawyers Association.

Heard, considered, and decided by the court en banc.

OPINION

MEYER, Justice.

In this appeal, we are asked to decide whether front pay is subject to multiplication under Minn.Stat. § 363.071, subd. 2 (2002).¹

Appellant Miller Meester Advertising, Inc. (MMA), a Minnesota-based advertising agency, hired respondent Patricia Ludowese Ray in June of 1996 in the position of Vice President/Group Creative Director. At the time she was hired, Ray had 21 years of experience in the advertising industry. In June 1998, after two years of employment and without a negative performance evaluation, Ray was promoted to the position of Creative Director, the first woman to hold that position. Two months later, Ray was terminated by Robert V. Miller, MMA's owner. She was terminated without warning and with no prior criticism of her job performance. Ray then sued MMA and Miller for unlawful gender discrimination under the Minnesota Human Rights Act (MHRA), Minn.Stat. ch. 363 (2002), and Title VII of the federal Civil Rights Act, 42 U.S.C. § 2000e-5(g) (2004).

Ray's Title VII claim was tried to a jury and the MHRA claim was tried to the court. The presiding judge used the jury in an advisory capacity with regard to claims of discrimination under the MHRA. By special verdict, the jury found that Ray was terminated on the basis of her gender and awarded past wage loss in the amount of $73,866, past compensatory damages in the amount of $95,000, future compensatory damages in the amount of $42,250, and punitive damages in the amount of $500,000.

On June 7, 2001, the district court issued its findings of facts and conclusions of law with respect to the MHRA claims. The court concluded that MMA terminated Ray in violation of the MHRA. The court ordered a total of over $1 million in damages on both the Title VII and MHRA claims. The MHRA damage award included $123,004 for three years of front pay which, under Minn.Stat. § 363.071, subd. 2 (2002), the court doubled to $246,008.

MMA appealed, and among its claims of error it asserted that doubling the front pay award was not permitted under the MHRA.² The court of appeals reversed the entire Title VII award due to evidentiary errors. Ray v. Miller Meester Adver., Inc., 664 N.W.2d 355, 372 (Minn.App.2003). The court of appeals also reversed the district court's trebling of emotional distress damages under the MHRA. Ray, 664 N.W.2d at 370. The court of appeals found no other errors in the district court's evidentiary rulings or determination of liability and damages under the MHRA. Ray, 664 N.W.2d at 372. We granted MMA's petition for review on the issue of whether front pay is subject to multiplication under the MHRA.

We begin by briefly examining the nature of front pay. "In employment contracts, the general rule is that `[t]he measure of damages for breach of an employment contract is the compensation which an employee who has been wrongfully discharged would have received had the contract been carried out according to its terms.'" Feges v. Perkins Rests., Inc., 483 N.W.2d 701, 709 (Minn.1992) (quoting Zeller v. Prior Lake Pub. Sch., 259 Minn. 487, 493, 108 N.W.2d 602, 606 (1961)). However, a court may award future damages, or front pay, for lost compensation that occurs after the time of trial. Id. at 710. The potentially speculative nature of front pay awards is limited by the plaintiff's duty to mitigate damages, the evidence presented concerning the extent of the potential damages, and the principle that front pay awards are limited to the damages caused by the breach of contract. Id. Under the MHRA, when a court finds that an employer engaged in an unfair discriminatory practice, the court shall order the employer to pay "compensatory damages in an amount up to three times the actual damages sustained." Minn.Stat. § 363.071, subd. 2 (2000). The question in this case is whether front pay is a component of "actual damages" and, therefore, subject to multiplication under the MHRA. This is an issue of statutory construction that we review de novo. State v. Wukawitz, 662 N.W.2d 517, 525 (Minn.2003).

The legislature did not provide a definition of actual damages in the MHRA. However, we have already construed the meaning of this phrase in Phelps v. Commonwealth Land Title Ins. Co., 537 N.W.2d 271, 275 (Minn.1995). In Phelps we cited with approval the definition of actual damages found in Black's Law Dictionary. Phelps, 537 N.W.2d at 275

. Black's Law Dictionary defines actual damages as "[a]n amount awarded to a complainant to compensate for a proven injury or loss; damages that repay actual losses. — Also termed compensatory damages." Black's Law Dictionary 394 (7th ed.1999). We concluded in Phelps that "[i]n general, compensatory damages `consist of both general and special damages. General damages are the natural, necessary and usual result of the wrongful act or occurrence in question. Special damages are those which are the natural but not the necessary and inevitable result of the wrongful act.'"³

Phelps, 537 N.W.2d at 275 n. 2 (quoting Black's Law Dictionary 390 (6th ed.1990)). We further construed the term "actual damages" as having the meaning ascribed by common law.⁴

See id. at 275.

The common law principle that actual or compensatory damages may include future losses is well established in Minnesota. See, e.g., Pietrzak v. Eggen, 295 N.W.2d 504, 507-08 (Minn.1980)

(holding that the jury should have been instructed on future medical expenses as a component of special damages); Hake v. Soo Line Ry. Co., 258 N.W.2d 576, 582 (Minn.1977) (providing that the jury could consider a special damage award that consisted of future medical expenses and future lost wages). Additionally, a tort victim may recover future damages caused by the tortfeasor even though it may be difficult to determine the exact amount of those damages. See Pietrzak, 295 N.W.2d at 507.

We conclude that a front pay award is a form of actual damages because it is an award that is the "natural, necessary and usual result" of an employer's discriminatory behavior. As we have clearly stated, front pay awards are limited to the damages caused by the employer's breach. Feges, 483 N.W.2d at 710. Therefore, front pay awards are subject to multiplication under Minn.Stat. § 363.071, subd. 2, and the district court did not err when it doubled the award.⁵

MMA argues that front pay cannot be a component of "actual damages" because the MHRA provides at Minn.Stat. § 363.071, subd. 2:

In addition to the aforesaid remedies, in a case involving discrimination in

(a) employment, the [court] may order the hiring, reinstatement or upgrading of an aggrieved party, who has suffered discrimination, with or without back pay, * * * or any other relief the [court] deems just and equitable.

MMA reasons that the provision of reinstatement as a remedy for employment discrimination in addition to actual damages necessarily means that front pay cannot be awarded as a part of actual damages. We rejected an almost identical argument pertaining to back pay in Phelps. In Phelps, the employer argued that back pay was not an element of actual damages subject to multiplication under Minn.Stat. § 363.071, subd. 2, because back pay could be awarded attendant to an upgrade in hiring or reinstatement of the party who suffered discrimination. 537 N.W.2d at 277-78. We stated that "[w]e do not believe the statute precludes the inclusion of back pay as an element of damages that is subject to multiplication" because Minn.Stat. § 363.071, subd. 2, gives a court the discretion to award back pay either as actual damages or as damages "attendant to the hiring, reinstatement or upgrading of an aggrieved party." Id. at 278. Similarly, the statute permits a court to award front pay as a component of actual damages and, additionally, gives the court the authority to order reinstatement of the aggrieved party. Front pay is not a substitute for the remedy of reinstatement as MMA contends; instead, it is a distinct measure of damages that may be awarded in combination with reinstatement.

MMA also urges this court to adopt the approach federal courts have taken in interpreting front pay awards under Title VII and hold that front pay is a substitute for the equitable remedy of reinstatement and, therefore, does not constitute actual damages subject to multiplication under the MHRA. In construing the MHRA, we have at times "relied on principles developed under Title VII" but we are not bound by interpretations of Title VII. Turner v. IDS Fin. Servs. Inc., 471 N.W.2d 105, 107 (Minn.1991); see also Carlson v. Indep. Sch. Dist. No. 623, 392 N.W.2d 216, 220 (Minn.1986)

.

There are significant differences between the MHRA and Title VII. Carlson, 392 N.W.2d at 221. Portions of the MHRA, including the sex discrimination prohibition, appear to be patterned after the Uniform Law Commissioners' Model Anti-Discrimination Act, not Title VII. Carlson, 392 N.W.2d at 220; see also Minn. Mining & Mfg. Co. v. State, 289 N.W.2d 396, 399 (Minn.1979)

. Because "[t]he scope of discrimination liability, and its consequences, is more onerous under our state laws than under Title VII," we are not bound to follow seemingly analogous federal court decisions. Carlson, 392 N.W.2d at 221. For example, we rejected the federal standard for proof in a same-sex harassment claim because "the MHRA is not similar to Title VII in its treatment of sexual harassment." Cummings v. Koehnen, ...