Case Name: Wendi Ferguson SELLERS, Appellee, v. Norman Y. MINETA, Secretary of Transportation, Appellant
Court: United States Court of Appeals for the Eighth Circuit
Jurisdiction: United States
Decision Date: 2004-02-24
Citations: 358 F.3d 1058
Docket Number: No. 02-1425
Parties: Wendi Ferguson SELLERS, Appellee, v. Norman Y. MINETA, Secretary of Transportation, Appellant.
Judges: Before LOKEN, Chief Judge, HANSEN and BYE, Circuit Judges.
Reporter: Federal Reporter 3d Series
Volume: 358
Pages: 1058–1074

Head Matter:
Wendi Ferguson SELLERS, Appellee, v. Norman Y. MINETA, Secretary of Transportation, Appellant.
No. 02-1425.
United States Court of Appeals, Eighth Circuit.
Submitted: April 14, 2003.
Filed: Feb. 24, 2004.
See also 350 F.3d 706.
Charles W. Scarborough, argued, Washington, DC, for appellant.
Gregory A. Rich, argued, St. Louis, MO (Jerome J. Dobson, on the brief), for ap-pellee.
Before LOKEN, Chief Judge, HANSEN and BYE, Circuit Judges.

Opinion:
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 Ar Traffic Control Specialist at Lambert Mr-port 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 remitti-tur, 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 plaintiffs 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 defendanVprior 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 de fense 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. Nonvest 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 ease 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 plaintiffs 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.1995), the plaintiff was terminated from her position as an associate at a law firm for allegedly discriminatory reasons after she returned from maternity leave. After her termination, the firm provided her with an office and telephone to conduct a job search. During this time, the plaintiff copied her personnel file as well as the personnel files of twenty other associates. The defendant argued that even if the plaintiff could prove discrimination, her damages should be limited due to her misappropriation, copying, and retention of the defendant's documents. The district court rejected the argument. Like the Ryder court, it concluded that McKennon was "premised on the employee's misconduct occurring during her employment." Id. at 682-83. The Sigmon court then applied a bright-line rule, concluding that because the misconduct occurred outside the employment relationship, any complaint that the defendant may have had fell outside the McKen-non rule. See id. ("Because in this case, plaintiffs alleged misconduct occurred after her termination, McKennon does not govern.... In the instant situation, defendant and plaintiff were not in an employer-employee relationship át the time of the alleged incident. Therefore any complaint defendant has against plaintiff for her post-employment conduct falls outside of the McKennon rule.... ").
In Carr v. Woodbury County Juv. Det. Ctr., 905 F.Supp. 619 (N.D.Iowa 1995), the plaintiff was constructively discharged from her employment as a youth worker as a result of a racially and sexually hostile work environment. The plaintiff filed a motion in limine to exclude evidence of her post-employment marijuana use that the employer discovered during trial preparation. The defendant argued that Carr's post-termination marijuana use was probative of damages because (1) it showed that the County would have fired Carr because marijuana use violated County employment policies and (2) because it showed that Can- was unlikely to have remained at her position for any length of time as it was unlikely that a person with a marijuana habit could have maintained long term employment. The district court granted the motion, excluded the evidence, and declined to extend McKennon. Like the aforementioned cases, the Carr court reasoned that McKennon presupposes that the wrongdoing occurred during the existence of the employment relationship. See id. at 627-28. The court also reasoned that McKennon should not apply because the "marijuana use simply had nothing to do with and did not occur during her em ployment and caused her former employer absolutely no detriment." Id. at 628-29. Third, the district court reasoned that the County's employment policies could not "properly . be imposed upon a person after his or her employment has terminated" because "[i]t would be grossly inequitable to hold [a plaintiff] to all of the burdens of County policies at a time when she is not receiving any of the benefits of County employment." Id. at 629. Finally, the district court concluded that even if McKennon applied, the County had not established that the plaintiffs post-termination conduct was so severe that it would have terminated her for it. See id.-
The Tenth Circuit has also confronted this issue. In Medlock v. Ortho Biotech, Inc., 164 F.3d 545 (10th Cir.), cert. denied, 528 U.S. 813, 120 S.Ct. 48, 145 L.Ed.2d 42 (1999), Medlock was allegedly terminated in retaliation for his filing and pursuing a claim of race-based discrimination. At his unemployment benefits compensation hearing, Medlock verbally abused defendant's counsel. The defendant argued that the district court erred in refusing to instruct the jury that Medlock's post-termination conduct could serve to limit damages. The Tenth Circuit recognized that post-termination conduct could, in an appropriate case, limit a plaintiffs remedies. See id. at 555 (stating that it could "not foreclose the possibility that in appropriate circumstances the logic of McKennon may permit certain limitations on relief based on post-termination conduct"). But it concluded that Medlock was not such a case. See id. (stating that in "cases in which the alleged misconduct arises as a direct result of retaliatory termination, the necessary balancing of the equities hardly mandates a McKennon-type instruction on after-occurring evidence").
We are of the view that the aforementioned district court cases gave too crabbed a reading to McKennon. The McKennon Court used sweeping language, instructing lower courts to treat each case on a case by case basis considering all the "factual permutations and the equitable considerations they raise." McKennon, 513 U.S. at 361, 115 S.Ct. 879; see also Mardell v. Harleysville Life Ins. Co., 65 F.3d 1072, 1074 n. 4 (3d Cir.1995) (stating that the "Supreme Court did not limit the general principles articulated in McKen-non to cases involving on-the-job misconduct, instead using the broader term 'wrongdoing' "). Thus, like the Tenth Circuit, we cannot establish a bright-line rule and foreclose the possibility that a Title VII plaintiffs post-termination conduct may, under certain circumstances, limit the remedial relief available to the plaintiff. A simple illustration will demonstrate why and how post-termination conduct may be relevant, in some circumstances, in limiting relief. Let us suppose that after the FAA had terminated her, and before the district court granted her equitable relief, Sellers had been convicted of some crime wholly unrelated to her former position with the FAA and was incarcerated such that reinstatement was now an impossibility. Simple common sense tells us that it would be inequitable to award her front pay in lieu of reinstatement where she had rendered herself actually unable to be reinstated.
The nature of the front pay remedy itself is what makes the answer to the above illustration so intuitive. Front pay is a disfavored remedy that may be awarded in lieu of reinstatement, but not in addition to it, where the circumstances make reinstatement impractical. See Salitros v. Chrysler Corp., 306 F.3d 562, 572 (8th Cir.2002) (stating that front pay is a disfavored remedy); Kucia v. S.E. Ark. Cmty. Action Corp., 284 F.3d 944, 949 (8th Cir.2002) (stating that reinstatement should be the norm and that front pay is an exceptional remedy); Smith v. World Ins. Co., 38 F.3d 1456, 1466 (8th Cir.1994) ("Front pay is an equitable remedy, which . may be awarded in lieu of, but not in addition! ] to reinstatement.")- The availability of front pay as a remedy thus presupposes that reinstatement is impractical or impossible due to circumstances not attributable to the plaintiff. It would be inequitable for a plaintiff to avail herself of the disfavored and exceptional remedy of front pay where her own misconduct precludes her from availing herself of the favored and more traditional remedy of reinstatement. As such, we hold that a plaintiffs post-termination conduct is relevant in determining whether a front pay award is available, and if so, in determining the extent of the award.
Our conclusion that an employee's post-termination conduct can, in some circumstances, limit an employee's remedies for a wrongful discharge is not a new one. For example, we have previously concluded that a terminated employee could forfeit the remedy of reinstatement under the National Labor Relations Act where he threatened his supervisors post-discharge. See Precision Window Mfg., Inc. v. N.L.R.B., 963 F.2d 1105, 1108 (8th Cir.1992) (stating that "a fired employee 'does not have an unlimited right to engage in misconduct without losing his remedial rights' " (quoting Precision Window Mfg., Inc., 303 N.L.R.B. No. 141 (Raudabaugh, dissenting))). We have also concluded that front pay would be unavailable where the plaintiffs own post-termination conduct prevented reinstatement. See Smith, 38 F.3d at 1466 (stating that an unreasonably rejected offer of reinstatement will bar entitlement to front pay). It requires no leap in logic to conclude that if an unreasonable rejection of an offer of reinstatement precludes a front pay award, then post-termination misconduct of a type that renders an employee actually unable to be reinstated or ineligible for reinstatement should also be one of the "factual permutations" which is relevant in determining whether a front pay award is appropriate. See Christine Neylon O'Brien, The Law of After Acquired Evidence in Employment Discrimination Cases: Clarification of the Employer's Burden, Remedial Guidance, and the Enigma of Post-Termination Misconduct, 65 U.M.K.C. L.Rev. 159, 174 (1996) (concluding that where post-termination misconduct is egregious, such conduct should bar reinstatement).
McKennon makes clear that the burden of establishing these facts rests on the employer. See McKennon, 513 U.S. at 362-63, 115 S.Ct. 879 (stating that employer must establish that "the wrongdoing was of such severity that the employee in fact would have been terminated on those grounds alone"). The court must look to the employer's actual employment practices and not merely the standards articulated in its employment manuals, for things are often observed in the breach but not in the keeping. See O'Day v. McDonnell Douglas Helicopter Co., 79 F.3d 756, 759 (9th Cir.1996) (stating that inquiry must focus on actual employment practices). The government argues that it has established the relevant facts showing that Sellers is no longer eligible for reinstatement because FAA hiring practices provide that a person who has been terminated from, or forced to resign, a position is unsuitable for employment as an Air Traffic Control Specialist. The district court concluded that the FAA's assertion that Sellers was unsuitable for reinstatement because of her post-termination conduct was evidence of the acrimonious relationship between them, but there is no specific finding by the court that FAA employment regulations and policies as applied to Mrs. Sellers do in fact bar her reinstatement or employment as an Air Traffic Control Specialist. There is no finding that the FAA regularly adheres to this alleged policy or that the FAA has made an official determination that Sellers is, in fact, unsuitable for reinstatement solely because of her post-termination conduct. That the FAA chose not to offer Sellers reinstatement does not equate with finding that Sellers' conduct alone made her ineligible for reinstatement.
Accordingly, we vacate the district court's award of front pay and remand for further findings of fact and conclusions of law to be made on the existing record. No reopening of the evidentiary record shall occur, but the court may, of course, in its discretion call for additional briefing and argument. On remand, in order to establish that Sellers' front pay remedy should be limited by her post-termination conduct, the defendant must convince the court by a preponderance of the evidence that Sellers' post-termination conduct renders her ineligible for reinstatement under the FAA's employment regulations, policies, and actual employment practices.
III.
A. Length of Front Pay Period
The Secretary also argues that even if Sellers was entitled to a front pay award, the award as made was excessive because Sellers failed to mitigate her damages by seeking a comparable job following her termination. If the district court determines on remand that Sellers' conduct did in fact render her ineligible for reinstatement, this issue need not be addressed. Front pay is an alternative remedy to reinstatement and should be unavailable where the plaintiffs own conduct prevented reinstatement. See Smith, 38 F.3d at 1466; see also McKennon, 513 U.S. at 361-62, 115 S.Ct. 879 ("[A]s a general rule in cases of this type, neither reinstatement nor front pay is an appropriate remedy."). We address this issue, however, in the event that the district court determines on remand that Sellers' post-termination' conduct did not in itself bar her reinstatement.
Sellers asked for front pay in an amount sufficient to compensate her for the difference between her then-current salary of $24,889 and her FAA salary of $106,285 at least until her mandatory retirement age of 56, a period of 19 years. The district court awarded Sellers front pay for the 20-month period between the time of the verdict and the time of the ruling on the front pay motion based on the difference between what she actually earned and what she would have earned had she remained employed by the FAA. It found Sellers' request for front pay until retirement "too uncertain" and awarded her an additional seven years of front pay based on the difference between her current salary as an office manager and the FAA salary "to afford [Sellers] the opportunity to obtain employment with comparable compensation and responsibilities." (D. Ct. Order at 14.)
In declining to award Sellers front pay until she reached retirement age, the district court considered a number of factors, including her relatively young age (37), her education and extensive experience in the aeronautical field, her minimal efforts at mitigation, and the status of the aeronautical industry. Because we believe that eight years and eight months is the outside limit of an appropriate front pay award given Sellers' age, education, and extensive experience (without considering any minimal mitigation attempts), we cannot say that the length of the district court's ultimate award was an abuse of discretion, especially when it considered the relevant factors. See Salitros, 306 F.3d at 570 (affirming seven-year front pay award until plaintiffs normal retirement age); United Paperworkers Int'l Union, AFL-CIO, Local 274 v. Champion Int'l Corp., 81 F.3d 798, 805 (8th Cir.1996) (expressing "grave doubt" that a 24-year front pay award could be upheld and stating that "[i]nstead of warranting a lifetime of front pay, Fiedler's relatively young age should improve his future opportunities to mitigate through other employment"); Hukkanen v. Int'l Union of Operating Eng'rs, Hoisting & Portable Local No. 101, 3 F.3d 281, 286 (8th Cir.1993) (affirming front pay award of ten years).
B. Dollar Amount of Front Pay Award
We believe, however, that the district court did abuse its discretion by not reducing the annual amount it used to calculate Sellers' award to reflect Sellers' failure to mitigate. Following Sellers' termination, she worked as a loan officer and an office manager, both of which paid an annual salary of approximately $25,000. The district court specifically found:
Although [Sellers'] air traffic experience would qualify her for employment with private aviation contractors, including jobs such as airline and/or law enforcement dispatcher, consultant, or with private air traffic control towers, [Sellers] sought no such employment. Instead, [Sellers] sought relatively low paying jobs, and the nature of the great majority of jobs for which [Sellers] applied was in no way related to the field of aviation.
(D. Ct. Order at 5.) To avoid a reduction in her front pay award, Sellers had a duty to mitigate her damages by seeking comparable employment. See Denesha v. Farmers Ins. Exch., 161 F.3d 491, 502 (8th Cir.1998). While the district court found that she did not adequately attempt to mitigate her damages, it failed to sufficiently reflect her failure in its award. See id. (affirming reduction in front pay award where plaintiff failed to "make some sustained minimal attempt to obtain comparable employment"). The district court's award at a differential between the actual and FAA salaries does not adequately account for her failure to mitigate. As relevant on remand, the district court should determine an amount that Sellers could have earned if she had attempted to find comparable work, and reduce any award accordingly. See id. ("[A]n amount equal to what Denesha would have earned if he had made reasonable mitigation efforts was properly subtracted from his award.").
IV.
The district court's award of front pay is vacated, and the case is remanded to the district court for further proceedings not inconsistent with this opinion.
. The proper query is whether the FAA would have reinstated Sellers, not whether it would have terminated her. Although McKennon required the employer to prove that "the wrongdoing was of such severity that the employee in fact would have been terminated on those grounds alone if the employer had known of it at the time of the discharge," 513 U.S. at 362-63, 115 S.Ct 879, that case involved pre-termination on-the-job misconduct that the employer advanced as a legitimate justification for termination. The FAA does not rely on Sellers' post-termination conduct as justification for her termination, nor could it as the conduct occurred two years after the termination. Rather, the FAA relies on it solely to avoid the equitable remedies of reinstatement or front pay, thereby shifting the inquiry to whether Sellers would have been reinstated.
. The Secretary refers to tire front pay award as a seven-year award. Sellers actually received an eight-year and eight-month front pay award: the 20-month period between verdict and judgment, and the additional seven years beyond the judgment. The factors used by the district court in fashioning the seven-year award apply equally to both periods, and our references to the front pay award refer to both periods.