Opinion ID: 755554
Heading Depth: 2
Heading Rank: 2

Heading: The First Verdict

Text: 12 Kirsch commenced the present action in 1992, alleging principally that the events of May 1991, namely the reduction of his salary from $60,000 to $26,000 and the transfer of the Stern's account, amounted to a constructive termination of his employment; that he was discharged because of his age, in violation of the ADEA, 29 U.S.C. §§ 621 et seq., and state law; and that, in terminating him, Fleet Street had acted willfully. Kirsch sought, inter alia, backpay, doubled as provided by the ADEA for willful violations, see 29 U.S.C. §§ 626(b), 216, and an award of attorneys' fees. As eventually amended, the complaint also alleged that during the period 1984-1989, Fleet Street had improperly deprived Kirsch of commissions to which he was entitled, in violation of the New York Labor Law, see N.Y. Labor Law §§ 191, 198 (McKinney 1986) (the labor law claim). 13 After discovery, the case was tried to a jury, and Kirsch presented evidence as to the above events. At the close of Kirsch's case, defendants moved for judgment as a matter of law, arguing, to the extent pertinent to this appeal, that there was insufficient evidence to support findings of discrimination and constructive discharge. The court denied the motion. Before the case was submitted to the jury, defendants unsuccessfully renew[ed] their motion on the same grounds. (First Tr. 1130.) 14 In the meantime, defendants presented evidence to show that the changes in Kirsch's compensation had been motivated by legitimate financial concerns, and that Fleet Street had lowered the compensation of not just Kirsch but other salespersons as well. Manny Haber testified that the Stern's account was transferred to Kedrus in 1991 because Fleet Street sales to that retailer had been declining for two years and Kedrus had personal ties with buyers at Stern's and associated companies that could revitalize that business. Manny Haber also testified that there was no intent on his part or the company's to force Kirsch to leave Fleet Street. 15 In disputing Kirsch's state labor law claim, on which Kirsch could not prevail unless he was an employee of Fleet Street, rather than an independent contractor, see Part III.D. below, defendants presented evidence that during the period 1970-1989, Kirsch was not required to spend time in Fleet Street's offices, was free to set his own hours and take vacation at will, was allowed to sell merchandise on behalf of other companies, and was not reimbursed for his expenses. Defendants also presented evidence that during that period, Fleet Street did not withhold Social Security or income taxes for Kirsch and did not provide him with employee benefits such as health insurance, whereas after Kirsch's compensation was changed from commission to salary in 1990, Fleet Street did withhold such taxes and provide him with such benefits. Defendants also introduced a February 1990 job description, prepared at Kirsch's direction, which stated that Kirsch was independently employed. 16 In submitting Kirsch's ADEA claim to the jury, the district court instructed that 17 [i]f you ... are persuaded by a preponderance of the evidence that age was a motivating factor in the defendants' decision to reduce plaintiff's salary and take away plaintiff's largest account, then you must find for the plaintiff, unless the defendants persuade you by a preponderance of the evidence that the defendants would have made the same decision even if they had not taken the illegitimate factor of age into account. 18 (First Tr. 1206.) The court rejected defendants' contention that the evidence was insufficient to warrant such an instruction. As to Kirsch's labor law claim, the court instructed the jury that 19 Mr. Kirsch is entitled to recover on [ ]his claim only if he was an employee of Fleet Street prior to early 1990.... 20 An employee may generally be defined as a person who undertakes to perform services or to do work under the direction and control of another for compensation. An employer may generally be defined as one who hires another to do certain work and who has a right of control over the performance of the work to the extent of prescribing the manner in which it is to be executed. 21 An independent contractor may generally be defined as a person who undertakes to perform services for compensation not under the direction and control of the business for whom he is performing the services. 22 This determination as to whether Mr. Kirsch was an employee or an independent contractor when he was performing the salesperson function is to be made from the totality of the facts and circumstances of this case. 23 (First Tr. 1210-11.) 24 The jury returned its verdict on a special form that posed various questions as to, inter alia, defendants' treatment of and animus toward Kirsch, Kirsch's damages, and his efforts to mitigate damages. As to liability on the ADEA claim, the jury found that age was a motivating factor in defendants' decision to reduce Kirsch's compensation and reassign the Stern's account; that although defendants offered a non-age-based reason for the reductions and reassignment, that reason was a pretext for age discrimination; and that the changes in Kirsch's compensation and customer base were so intolerable that a reasonable person in Kirsch's shoes would have felt compelled to resign. The jury also found that defendants' discriminatory conduct was willful. 25 The jury found that Kirsch had suffered actual damages in the amount of $265,000. It found that he had made a diligent search for other work after leaving Fleet Street in May 1991, but not after he retired to Florida in June 1994 (see Verdict Form Question 7 (Did plaintiff make a diligent search for other work in the period after he retired to Florida in June 1994?)). Although asked to make a finding as to the amount Kirsch would have earned if he had made a diligent search for work after June 1994, the jury did not respond. And though instructed that it could award Kirsch damages for future lost wages, sometimes called front pay (First Tr. 1207) if it found that such damages were caused by the constructive discharge, the jury found that he had suffered no future damages. 26 As to the New York Labor Law claim, the court had rejected Kirsch's request that the jury be given a number of discrete factual questions and that court itself later determine, based on the jury's answers, whether Kirsch was an employee within the meaning of that statute. Instead, the jury was asked whether Kirsch was an employee or an independent contractor under the New York Labor Law when making sales in 1970-1989. (Verdict Form Question 11.) The jury found that he was an independent contractor. 27 Before discharging the jury, the court asked the parties whether, in light of the verdict, either side wished to submit further questions; both sides declined. 28 The district court entered judgment awarding Kirsch, inter alia, backpay damages of $530,000, doubling the actual damages found by the jury, in light of the jury's finding that defendants' ADEA violation was willful. Kirsch moved for additional relief in the form of reinstatement to his position at Fleet Street, at the level of compensation Fleet Street had paid Kedrus, and moved for attorneys' fees. The court denied reinstatement, see Part III.C.2. below, and reserved decision as to attorneys' fees. 29 Defendants moved under Fed.R.Civ.P. 50 and 59 for judgment as a matter of law, challenging the sufficiency of the evidence supporting the jury's findings of discrimination, constructive discharge, and willfulness; they moved in the alternative for a new trial or a remittitur, contending that the verdict was not supported by the evidence. In an Opinion and Order dated July 15, 1996 (July 1996 Posttrial Order), the district court denied the motion for judgment as a matter of law, and denied the motion for a new trial on the liability issues, but granted so much of the motion as sought a remittitur or a new trial on damages. The court found the jury's award of $265,000 unsupportable in light of (a) the evidence that Kirsch's annual compensation at the time of his constructive discharge was $60,000, plus no more than $5,000 in fringe benefits, and (b) the fact that Kirsch had retired in June 1994. The court rejected Kirsch's contention that the jury had permissibly calculated his damages on the basis of the salary and fringe benefits paid to Kedrus ($80,000 plus $15,000), because the court reasoned that Kedrus's position was not sufficiently similar to that of Kirsch to serve as a valid basis for calculating his damages. The court concluded that given the evidence of Kirsch's $60,000 salary plus no more than $5,000 in benefits, his total Fleet Street compensation from May 1991 to June 1994 (three years and one month) would have totaled $200,417; from this, the court subtracted (a) the $20,769 in severance payments Kirsch received from Fleet Street, and (b) $63,274 as his post-termination earnings from Tomen, leaving a total of $116,374 as a justifiable backpay calculation. Doubling that amount for the willfulness of the violation, the court concluded that Kirsch was entitled to a backpay award of no more than $232,748. The court offered Kirsch the choice between a remittitur to that amount and a new trial on the issue of damages.