Opinion ID: 400928
Heading Depth: 1
Heading Rank: 2

Heading: i. magnin's cross-appeal

Text: A. ADEA Determining Factor Standard 4 The ADEA makes it unlawful for an employer to discharge any individual because of such individual's age. 29 U.S.C. § 623(a) (1976). In Kelly v. American Standard, Inc., 640 F.2d 974, 984-85 (9th Cir. 1981), this court set out the requirements for a proper jury instruction on age discrimination. We adopted the determining factor test established in Laugesen v. Anaconda, 510 F.2d 307, 317 (6th Cir. 1975), and restated as a but for test in Loeb v. Textron, 600 F.2d 1003, 1019 (1st Cir. 1979). We rejected the argument that plaintiff must prove age was the sole factor in his discharge, and upheld a jury instruction stating that plaintiff has the burden of proving that one of the reasons he was terminated was because of his age, and that he should prevail if this factor made a difference in determining whether the plaintiff was retained or discharged. 2 5 The essence of a proper jury instruction under Kelly is that it require the jury to focus on the marginal effect of the age factor. Age need not be the sole factor in a discharge or other discriminatory practice. Conversely, it is not enough that age discrimination be present or even that it figure in the decision to fire; age must make a difference between termination and retention of the employee in the sense that, but for the presence of age discrimination, the employee would not have been discharged. 6 Here the district judge instructed the jury that (a)ge must be a determining factor in an employer's personnel policies or practices before violation of the Act occurs. The district judge completely failed to give any guidance as to the meaning of determining factor in lawsuits under the ADEA, or to refer to the Laugesen and Loeb test we adopted in Kelly v. American Standard, Inc. This was error. The words determining factor are not self-explanatory. In general, fair application of the Act requires the trial judge to formulate precisely what employer conduct the ADEA redresses and what employer conduct it leaves undisturbed. Because the attribute with which the statute is concerned comes to each of us in time, it will inevitably be present in a multitude of employee discharges. It will be a factor in many and a determining factor in some. It is only this last group that can obtain relief under the ADEA, even though, in the broad sense, it aims to benefit the entire aged employment force. 7 However, a careful reading of the transcript and record convinces us that in this case the instruction does not require reversal. Giving it was harmless error. There is little or no indication in the proceedings that the outcome would have changed if the Kelly jury instruction had been given. This case was not decided by a hairsbreadth. There was ample evidence that consideration of age made a difference in the termination of Cancellier, Costello, and Ritter. Moreover, it was conceded at oral argument that the challenged instruction was fashioned by the judge from language submitted by I. Magnin. While we are extremely reluctant to affirm verdicts based on jury instructions different from those approved in Kelly or their equivalent, 3 we find that on the facts of this case refusing a new trial is consistent with substantial justice. Fed.R.Civ.P. 61; Ginsburg v. Ginsburg, 276 F.2d 94, 96 n.2 (9th Cir. 1960); 7 J. Moore & J. Lucas, Moore's Federal Practice P 61.11 & n.1a (2d ed. 1979). The instruction approved in Kelly adequately protects against mistaken inferences either that age must be the sole factor in the discharge, or that age may be less than a but for cause of the discharge. It is strongly preferred. Here, however, we find the error harmless. B. Use of General Verdict 8 I. Magnin contends that the district court committed reversible error by using simple general verdict forms without requiring special interrogatories or any breakdown of the verdict by source of damages. 4 Thus, I. Magnin contends, the possibility of punitive damages not recoverable under the ADEA in this lawsuit 5 or of duplicative damages in the pendent state claims requires a new trial. 9 Submission of special interrogatories is a matter committed to the discretion of the district judge. Fed.R.Civ.P. 49(b); Monsma v. Central Mutual Insurance Co., 392 F.2d 49 (9th Cir. 1968); 5A J. Moore & J. Lucas, Moore's Federal Practice P 49.04 & n.3 (2d ed. 1981). A jury generally is not required to itemize the components that enter into an award of damages. Neal v. Saga Shipping Co., 407 F.2d 481, 489 (5th Cir.), cert. denied, 395 U.S. 986, 89 S.Ct. 2143, 23 L.Ed.2d 775 (1969), cited in Frito-Lay, Inc. v. Local 137, International Brotherhood of Teamsters, 623 F.2d 1354, 1365 (9th Cir. 1980), cert. denied, 449 U.S. 1013, 101 S.Ct. 571, 66 L.Ed.2d 472 (1981), and cert. denied, 448 U.S. 1112, 101 S.Ct. 922, 66 L.Ed.2d 841 (1981) (district court sitting as trier of fact not required to itemize damage award). 10 When state claims for breach of the implied covenant of good faith and fair dealing are joined to claims of age discrimination under the ADEA, however, review of jury verdicts presents special difficulty to appellate courts. A general verdict may conceal punitive damages which may not be allowed under the ADEA. If the state claims are flawed, the entire verdict may have to be reversed. For these reasons, a separate verdict for each claim and a separate verdict on punitive damages is strongly preferred. 11 Nevertheless, failure to submit special interrogatories was not an abuse of discretion. See supra p. 1317. The amounts awarded here are consistent with a reasonable award on the ADEA and pendent state claims. We find no reversible error. I. Magnin's claim that it is impossible to tell which plaintiffs prevailed on which of their claims is unpersuasive. The court submitted general verdict forms in favor of the defendant on each claim. The jury returned general verdict forms in favor of I. Magnin on Costello's fraud claim and Costello's negligent misrepresentation claim; clearly, all other claims were resolved in favor of the plaintiffs. The verdict is clear as to which plaintiffs prevailed on which claims. 12 C. Tort Damages for Breach of the Implied Covenant Breach of the implied covenant 13 I. Magnin contends that a claim for breach of the implied covenant under the circumstances here is contrary to California law. The contention is without merit. 14 California law recognizes an implied covenant of good faith and fair dealing in certain contracts that neither party will do anything to deprive the other of the benefit of the contract. See, e.g., Gruenberg v. Aetna Insurance Co., 9 Cal.3d 566, 578, 108 Cal.Rptr. 480, 510 P.2d 1032 (1973) (en banc); Comunale v. Traders & General Insurance Co., 50 Cal.2d 654, 658, 328 P.2d 198 (1958). California courts have recently applied the duty created by the implied covenant to the situation where the employee alleges no more than long service and the existence of personnel policies or oral representations showing an implied promise by the employer not to act arbitrarily in dealing with its employees. Such claims sound in both contract and tort and may give rise to emotional distress damages and punitive damages. Pugh v. See's Candies, Inc., 116 Cal.App.3d 311, 171 Cal.Rptr. 917 (1981); Cleary v. American Air Lines, 111 Cal.App.3d 443, 168 Cal.Rptr. 722 (1980) (alternative holding). See Tameny v. Atlantic Richfield Co., 27 Cal.3d 167, 179 n.12, 164 Cal.Rptr. 839, 610 P.2d 1330 (1980) (dicta). Cf. Note, Defining Public Policy Torts in At-Will Dismissals, 34 Stan.L.Rev. 153 (1981) (arguing against application of implied covenant to employment context). Preemption 15 The ADEA does not preempt the award of tort damages on pendent state claims. Kelly v. American Standard, Inc., 640 F.2d 974, 983 (9th Cir. 1981) (upholding emotional distress damages under state age discrimination statute). The award of tort damages on state claims here did not duplicate ADEA relief. Plaintiffs' ADEA claims were based on age discrimination in firing. Plaintiffs' contract and covenant claims were based on I. Magnin's obligation not to deal arbitrarily or unfairly in terminating plaintiffs' employment, an obligation created by I. Magnin's personnel policies and the fact of long service by the employee. 6 Punitive and emotional distress damages for this violation, unavailable under the ADEA, 7 do not duplicate the ADEA award for back pay, lost benefits, and liquidated damages. While the wisdom of allowing open-ended state claims for breach of the implied covenant to coexist with ADEA claims whose financial redress Congress has carefully limited to specific damage elements, see 29 U.S.C. § 626(b) (1976); Kelly v. American Standard, Inc., 640 F.2d at 983 n.14, is arguable, it is for Congress, not us, to decide whether state common law remedies trench too closely on the federal scheme. Pendent jurisdiction, of course, is a doctrine of discretion. We recognize that in appropriate circumstances dismissal of the state claims without prejudice is proper. United Mineworkers v. Gibbs, 383 U.S. 715, 726-27, 86 S.Ct. 1130, 1139, 16 L.Ed.2d 218 (1966). Such circumstances may exist, for example, where the trial judge finds that the state issues predominate in terms of the comprehensiveness of the remedy sought, or that there is a sufficient likelihood of jury confusion in treating divergent legal theories of relief to justify separating state and federal claims. Id. Notice 16 I. Magnin contends that it did not have notice of plaintiffs' claims for tort (as opposed to contract ) damages flowing from a breach of the implied covenant. Although the general verdict prevents us from determining with certainty the amount of punitive damages, they necessarily make up a significant portion of the award. 8 But the complaint alleging breach of the covenant implied in each plaintiff's employment contract was sufficient notice of plaintiffs' claim. No specific prayer for emotional distress or punitive damages is needed. A final judgment must grant the relief to which the prevailing party is entitled, even if such party has not demanded such relief in his pleadings. Fed.R.Civ.P. 54(c). Moreover, plaintiffs' pretrial statement itemized the emotional distress and punitive damages sought. On these facts, I. Magnin's claim of inadequate notice is without merit. Punitive damages 17 A jury may award punitive damages if it finds by a preponderance of the evidence that defendant was guilty of malice, oppression, or fraud. Cal.Civ.Code § 3294 (West 1981); Egan v. Mutual of Omaha Insurance Co., 24 Cal.3d 809, 819, 169 Cal.Rptr. 691, 620 P.2d 141 (1979). It is a question for the jury whether defendant's conduct was fraudulent, malicious, or oppressive. Id. at 821, 169 Cal.Rptr. 691, 620 P.2d 141. The evidence before the jury adequately supported a finding against I. Magnin on the issue of punitive damages. D. Other Alleged Errors 18 I. Magnin's additional claims of error are without merit. 9 A thorough review of the record below establishes that the trial was fairly and properly conducted.