Riethmiller v. Blue Cross and Blue Shield of Michigan

• Decision Date: 04 August 1986
• Docket Number: Docket No. 79939
• Citation: 390 N.W.2d 227,151 Mich.App. 188
• Parties: , 49 Fair Empl.Prac.Cas. (BNA) 1246 Robert F. RIETHMILLER, M.D., Plaintiff-Appellee, Cross-Appellant, v. BLUE CROSS AND BLUE SHIELD OF MICHIGAN, a Michigan non-profit corporation, Defendant-Appellant, Cross-Appellee.
• Court: Court of Appeal of Michigan — District of US

Page 227

390 N.W.2d 227

151 Mich.App. 188, 49 Fair Empl.Prac.Cas. (BNA) 1246

Robert F. RIETHMILLER, M.D., Plaintiff-Appellee, Cross-Appellant, v. BLUE CROSS AND BLUE SHIELD OF MICHIGAN, a Michigan non-profit corporation, Defendant-Appellant, Cross-Appellee.

Docket No. 79939.

Court of Appeals of Michigan.

Submitted Oct. 6, 1985.

Decided April 22, 1986.

Released for Publication Aug. 4, 1986.

Sommers, Schwartz, Silver & Schwartz, P.C. by Donald J. Gasiorek and Richard D. Toth, Southfield, for plaintiff-appellee, cross-appellant.

Kristine J. Galien, Detroit, for defendant-appellant, cross-appellee.

Before BRONSON, P.J., T.M. BURNS and SIMON, ^* JJ.

PER CURIAM.

Plaintiff, a doctor, filed suit against defendant, Blue Cross and Blue Shield of Michigan (BCBSM) alleging that defendant terminated his employment on the basis of his age in violation of the Elliott-Larsen Civil Rights Act, M.C.L. Sec. 37.2101 et seq.; M.S.A. Sec. 3.548(101) et seq., and that by terminating his employment defendant breached an employment contract which provided that plaintiff could only be terminated for cause. Following a bench trial in Wayne County Circuit Court, it was determined that plaintiff's termination resulted from unlawful age discrimination, but the trial court also concluded that plaintiff's termination did not result in a breach of an employment contract. Plaintiff received a judgment in the amount of $103,624, plus interest, taxable costs and attorney fees.

Defendant appeals as of right claiming that the trial court erred in finding that plaintiff was not required to mitigate his damages by accepting an independent contractor position which was offered to him prior to his termination. Plaintiff has also filed a cross-appeal raising several issues concerning damages and the amount of attorney fees awarded, and asserting that the lower court erred in not finding a breach of an employment contract.

At trial, plaintiff testified that in 1975 he decided to seek employment of a nonclinical nature. He desired a salaried position that would provide him with monetary security that would extend through retirement age and protect him in the event he became disabled. Plaintiff contacted an employment agency specializing in medical personnel, which advised him of a potential position with BCBSM.

After a personal interview and some negotiations, plaintiff eventually accepted an offer of employment with BCBSM as a permanent part-time medical consultant. Plaintiff was 58 years old at the time, and was given a starting salary of $16 an hour plus company provided benefits for approximately 20 hours of work per week. It was also specifically understood that after one year of service plaintiff could participate in the BCBSM pension program. Participation in the retirement program was extremely important to plaintiff.

In March, 1980, plaintiff received a memorandum indicating that it was BCBSM's intention to place part-time consultants on a contract method of remuneration sometime prior to 1981. This intention was finalized in a November 5, 1981, memorandum to plaintiff stating that BCBSM would be eliminating plaintiff's job. Plaintiff was offered a contract as an independent contractor. Acceptance of the contract would have left plaintiff performing essentially the same work he was performing as an employee. However, plaintiff's status as an independent contractor would have entitled him to no company sponsored benefits. Plaintiff's salary as an independent contractor would have increased to $32 per hour for approximately 16 hours of work per week.

Plaintiff made a counterproposal to the BCBSM offer asking them to insert language into his proposed contract as an independent contractor which would have reserved plaintiff's rights and benefits which he had as an employee. BCBSM refused plaintiff's proposal and ultimately terminated him from his employment. Prior to his termination, plaintiff was allegedly informed by a Dr. Shekerjian that BCBSM was looking for a "young Turk" to move in and work full-time instead of 60 to 65 year-old part-timers. Following his termination plaintiff filed the present action.

I

Defendant's sole claim on appeal is that the trial court erred by finding that plaintiff was not obligated to accept work as an independent contractor in order to mitigate his damages. According to defendant, plaintiff ignored his obligation to mitigate damages when he affirmatively rejected an offer of substantially equivalent employment with BCBSM as an independent contractor. As a result, defendant argues that plaintiff is precluded from recovering any award for back pay and lost fringe benefits for BCBSM's allegedly unlawful discrimination against him.

In Brewster v. Martin Marietta Aluminum Sales, Inc, 145 Mich.App. 641, 663, 378 N.W.2d 558 (1985), this Court stated:

" 'It is well established that a plaintiff must make every reasonable effort to mitigate damages. * * * Such a defense, however, is an affirmative one, and proof of plaintiff's failure to mitigate rests upon the defendant. * * * A wrongfully discharged employee is obligated to mitigate damages by accepting employment of a "like nature." * * * The criteria for determining "like nature" include the type of work, the hours of labor, the wages, tenure, working conditions, etc. Whether or not an employee is reasonable in not seeking or accepting particular employment is a question for the trier of fact.' " Quoting Higgins v. Kenneth R. Lawrence, DPM, PC, 107 Mich.App. 178, 181, 309 N.W.2d 194 (1981) (citations omitted).

See also, Ford Motor Co. v. EEOC, 458 U.S. 219, 231-232; 102 S.Ct. 3057, 3065-66, 73 L.Ed.2d 721 (1982), where the Court stated that a claimant forfeits his right to back pay if he refuses a job "substantially equivalent" to the one he was denied.

Thus, once a plaintiff establishes a prima facie case of an illegal discharge and presents evidence on the issue of damages, the burden of producing sufficient evidence to establish lack of diligence to mitigate damages shifts to the defendant. The defendant may satisfy this burden only if it establishes that substantially equivalent positions were available and that the plaintiff failed to use reasonable care and diligence in seeking such positions. As previously indicated, that determination is a question of fact. Rasimas v. Michigan Dep't of Mental Health, 714 F.2d 614, 624 (CA 6, 1983), cert. den., 466 U.S. 960, 104 S.Ct. 2151; 80 L.Ed.2d 537 (1984). Brewster, supra.

In the present case, the trial court found "that plaintiff made every effort to mitigate his damages". The trial court's findings of fact on this issue are supported by the record and not clearly erroneous. BCBSM simply did not establish that a substantially equivalent position was available and that plaintiff failed to use reasonable care or diligence in refusing such a position. Although plaintiff's job responsibilities and work site would have remained the same as an independent contractor, plaintiff's compensation, benefits and status would have been drastically changed.

As an employee, plaintiff had been entitled to various company-provided benefits, including the right to participate in BCBSM's pension plan. As an independent contractor, plaintiff was entitled to no benefits. Further, with respect to the independent contractor position, BCBSM was only required to provide plaintiff with 16 hours of work a week for 49 weeks at $32 per hour. Plaintiff had been working at least 20 hours a week as an employee at an hourly rate at the time of his termination of $20.79. The value of plaintiff's benefit package amounted to between 41.3 percent and 52 percent of plaintiff's salary.

BCBSM's contention that plaintiff's compensation was substantially unchanged is unpersuasive. BCBSM maintains that the proposed raise from $20.79 to $32 per hour more than adequately compensated plaintiff for any loss of benefits. Defendant ignores the fact that it was only required to supply plaintiff with 16 hours of work under the proposed contract. Further, BCBSM ignores the fact that the character of the compensation provided was substantially different. For the most part, company-provided fringe benefits are not included as income for tax purposes. As an independent contractor all of plaintiff's compensation would have been taxable as income. Finally, it was unclear whether BCBSM would provide any liability insurance to protect plaintiff in the event of a lawsuit arising out of decisions made by plaintiff with respect to his work as an independent contractor for BCBSM.

Therefore, we hold that the trial court did not err in finding as a matter of fact that plaintiff was not obligated to mitigate his damages by accepting work as an independent contractor for BCBSM.

II

Plaintiff's first issue on cross-appeal is that the trial court erred in not finding that BCBSM had breached a contract of employment by discharging plaintiff without good cause. Plaintiff raises this issue on appeal because it relates to the trial court's award of damages. According to plaintiff, if the trial court had found in his favor on the breach of contract claim, future damages would have been awardable pursuant to basic common-law breach of contract principles.

Plaintiff's breach of employment contract claim was based on Toussaint v. Blue Cross & Blue Shield, 408 Mich. 579, 292 N.W.2d 880 (1980), reh. den. 409 Mich. 1101 (1980). In that case, our Supreme Court stated that when an employer makes statements in employee policy manuals or otherwise which tend to create legitimate expectations in the employees' minds that they will be discharged only for just cause, the employer may be found, under a theory of implied contract, to fulfill those legitimate expectations by discharging only for just cause. 408 Mich. 598-599. The Court further stated that:

"While an employer need not establish personnel policies or practices, where an employer chooses to establish such...