Opinion ID: 1385370
Heading Depth: 1
Heading Rank: 4

Heading: liability for back pay

Text: The College cross-appeals the district court's ruling that Piacitelli should receive back pay for the period from June 30, 1979, when the College ceased to pay him, through February 8, 1980, when he was properly terminated. For purposes of this cross-appeal, we must consider two questions settled. First, the nonrenewal of Piacitelli's contract on June 30, 1979, was procedurally defective because it was accomplished in violation of his contractual right to formal termination procedures. Second, the College had just cause to dismiss Piacitelli. [6] Consequently, the back pay issue may be framed as follows: Is a college employee who was dismissed with sufficient cause, but in violation of contractually guaranteed termination procedures, entitled as a matter of contract law to back pay for the period between the procedurally defective dismissal and the subsequent proper dismissal? [7] We hold in the affirmative, and affirm the district court on the cross-appeal. Numerous state and federal courts have considered the propriety of back pay awards after justified but procedurally deficient dismissals. But, unlike the instant case, the appellate opinions in the decided cases have not rested primarily on contract theory. In all but one of those cases, [8] the employees' claims have been founded upon 42 U.S.C. § 1983, which provides a federal damage remedy against one who, under color of state law, deprives the plaintiff of any rights, privileges, or immunities secured by the Constitution and laws... . The right claimed in those cases is the Fourteenth Amendment right not to be deprived of property without due process of law. The property at stake in each case is the plaintiff's contractual expectation of continued employment. In the § 1983 cases, the employment contract ordinarily appears only as a spoke in a larger constitutional and statutory wheel. Back pay has normally been denied in these constitutionally based § 1983 cases on the rationale that the wrong suffered by the employee was not the dismissal. (Good cause being present, the employee would have been dismissed even if the required procedures had been followed.) The wrong was the deprivation of due process. Consequently, the plaintiff is not allowed to recover back pay, which is the normal remedy to compensate an employee dismissed without cause, but can recover only those damages directly traceable to the employer's failure to observe due process, viz., nominal damages and, in most cases, provable damages for mental and emotional distress. Taliaferro v. Willett, 588 F.2d 428 (4th Cir.1978); Burt v. Abel, 585 F.2d 613 (4th Cir.1978); Hostrop v. Board of Junior College District No. 515, 523 F.2d 569 (7th Cir.1975), cert. denied 425 U.S. 963, 96 S.Ct. 1748, 48 L.Ed.2d 208 (1976); Parks v. Goff, 483 F. Supp. 502 (E.D.Ark. 1980); Ohland v. City of Montpelier, 467 F. Supp. 324 (D.Vt. 1979). The United States Supreme Court approved and applied this same measure of damages to the closely analogous case of the § 1983 damage claims of public school students suspended without the required due process procedures. Carey v. Piphus, 435 U.S. 247, 98 S.Ct. 1042, 55 L.Ed.2d 252 (1978). In doing so, the Court specifically rejected the reasoning of federal cases that had granted back pay to employees dismissed for cause but without due process. [9] Its opinion gave an extended explanation of the rationale of damages under § 1983. The Court characterized this statutory cause of action as a species of tort liability. Id. at 253, 98 S.Ct. at 1047, quoting Imbler v. Pachtman, 424 U.S. 409, 417, 96 S.Ct. 984, 47 L.Ed.2d 128 (1976). Since tort damages are designed to compensate the plaintiff for an injury caused by the defendant, the Court approved the principle that the basic purpose of a § 1983 damages award should be to compensate persons for injuries caused by the deprivation of constitutional rights... . Id. at 254, 98 S.Ct. at 1047. This principle excluded presumed damages or damages for injuries caused by justified suspensions. Plaintiffs were limited to damages proved to have been caused by the denial of procedural due process. [10] The § 1983 authorities are not persuasive on the measure of damages that should be applied to a claim like Piacitelli's, which is based solely on a breach of the employment contract. In the tort context, neither party has any underlying, continuing obligation to pay money to the other. Rather, the law seeks to compensate one party for an injury caused by a specific tortious act. The right to that compensation depends on a causal chain connecting defendant's wrongful act with plaintiff's injury. This approach dictates that an employee discharged with sufficient cause but in violation of his procedural due process rights is only entitled to the damages he can prove were caused by defendant's wrong. Since defendant's wrongful act was not the dismissal per se but the failure to observe due process, only damages flowing directly from the failure to observe the required procedures are recoverable. This outcome contrasts with the outcome produced by analyzing the same problem from the standpoint of breach of contract. By entering into an employment contract of the type before us, the parties assume continuing obligations to one another: the employee to render services, the employer to pay salary. Those obligations continue until they are extinguished. Here, the termination mechanism described in the Personnel Manual, which the district court found to govern the terms of the contract between the College and its employee, was the sole means by which the College could extinguish the contractual relationship. Until it at least substantially complied with those procedures, its contractual obligation continued in force and the clock continued to run on Piacitelli's right to receive his contract salary. [11] Piacitelli is therefore entitled to recover that accrued salary, and is not limited to reimbursement for an injury caused by a specific wrongful act. This result comports with what we deem to be sound policy for contractual employer-employee relations. It will encourage employers to comply promptly with their contractual termination procedures, and if they fail to do so will impose the monetary consequences on the party at fault. If the rule were otherwise, the employer could discharge an employee summarily and then omit or delay the contractual termination procedures with impunity so long as it was in possession of evidence which, when ultimately provided, would justify the discharge. In that circumstance, the employee, without notice of the reason for his dismissal and without any opportunity to refute the charges, would remain in an indefinite and painful state of limbo, uncertain about his ultimate right to reinstatement or back pay. If our rule works any hardship on employers, they can avoid it by prompt and substantial compliance with the procedures to which they have agreed. The proper measure of damages for an employee who has been dismissed without substantial compliance with agreed termination procedures is the promised salary for the appropriate period, less amounts actually earned by the employee during that period or amounts he reasonably could have earned in other available employment of a like nature. Pratt v. Board of Education, Utah, 564 P.2d 294, 298 (1977); Williston on Contracts, Vol. 11, §§ 1358-1360 (3d ed. 1968); Annot., Elements and Measure of Damages in Action by Schoolteacher for Wrongful Discharge, 22 A.L.R.3d 1047 (1968). [12] The employee is also entitled to interest at the statutory rate as specified in U.C.A., 1953, § 15-1-1. Papadopoulos v. Oregon State Board of Higher Education, 48 Or. App. 739, 617 P.2d 931 (1980). Mitigation of damages is an affirmative defense, and any amounts in mitigation must be established by the employer. Pratt v. Board of Education, supra . Where no salary agreement has been reached for the damage period, the rate of pay for the previous salary year should be used as the base salary amount. Brady v. Board of Trustees, 196 Neb. 226, 242 N.W.2d 616 (1976). In sum, we hold that, where the College breached its contract with this employee by originally discharging him without observing the formal termination procedures in the College Personnel Manual, (1) even though the College had good cause to dismiss the employee, it was under a contractual obligation to continue to pay his salary until he was properly dismissed; and (2) the College finally performed a proper dismissal by substantially complying with the procedures in its Personnel Manual and therefore is not obliged to reinstate the employee. The judgment is affirmed. No costs awarded. HALL, C.J., and STEWART and HOWE, JJ., concur. MAUGHAN, J., heard the arguments, but died before the opinion was filed.