Frank Boehm v. American Broadcasting Company, Inc.
91 Daily Journal DAR 3540, 929 F.2d 482, 91 Cal. Daily Op. Serv. 2222 (1991)
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Rule of Law:
Under California law, an employer's liability for lost compensation damages to a wrongfully terminated employee is not cut off by the employee's rejection of a subsequent job offer from the employer unless the employer demonstrates that the offered position was comparable or substantially similar to the position from which the employee was discharged.
Facts:
- Frank Boehm worked for American Broadcast Companies (ABC) for fourteen years, serving as Vice President of ABC Radio in charge of Los Angeles regional sales.
- On November 16, 1982, ABC terminated Frank Boehm's employment.
- Following his termination, ABC offered Boehm a newly created position within the company.
- While the new position had the same base salary as Boehm's previous role, the total compensation (factoring in commissions) and the equivalence of responsibilities were disputed.
- In the new position, Boehm would have been required to report to the individual who had replaced him in his former Vice President role.
- Boehm did not accept ABC's offer, expressing his belief that the new position was 'phony' and had never existed before or since.
- In the fall of 1987, Boehm moved to Pebble Beach.
Procedural Posture:
- Frank Boehm instituted a contract and tort action for wrongful termination in California state court against ABC.
- The action was removed by ABC to the United States District Court for the Central District of California based on diversity jurisdiction.
- A jury in the district court returned a special verdict, finding in Boehm's favor on claims of breach of an implied employment contract, breach of the covenant of good faith and fair dealing, and negligent infliction of emotional distress.
- The jury awarded Boehm $1.34 million in lost compensation damages and $150,000 for negligent infliction of emotional distress, but found in favor of ABC on a claim of intentional infliction of emotional distress.
- ABC filed a Motion for Judgment Notwithstanding the Verdict (JNOV) or, alternatively, for a New Trial.
- The district court granted ABC's JNOV with respect to the emotional distress damages award, ruling that Newman v. Emerson Radio Corp. (which retroactively applied Foley v. Interactive Data Corp.) disallowed such tort damages in wrongful termination actions.
- The district court denied ABC's JNOV regarding the other claims and also denied ABC's alternative motion for a new trial.
- ABC (appellant) appealed the district court's judgment to the United States Court of Appeals for the Ninth Circuit, with Boehm as the appellee.
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Issue:
Does a wrongfully terminated employee's rejection of a new job offer from the former employer cut off the employer's liability for lost compensation damages, even if the employer fails to prove the new position was substantially equivalent to the employee's former job?
Opinions:
Majority - Farris, Circuit Judge
No, a wrongfully terminated employee's rejection of a new job offer from the former employer does not cut off the employer's liability for lost compensation damages if the employer fails to prove the new position was substantially equivalent to the employee's former job. The Ninth Circuit affirmed the district court's judgment, explaining that under California law, a wrongfully terminated employee has a duty to mitigate damages by seeking other employment, but this duty applies only if the alternative employment is "comparable, or substantially similar." The employer bears the burden of proving that such comparable employment was available. The court noted that the Ford Motor Co. v. EEOC framework, which requires an employer to establish that a plaintiff failed to accept an unconditional offer to a "substantially equivalent" job, aligns with California law. The jury in this case was properly instructed on mitigation, including the necessity for the employer to prove the offered job's substantial similarity. The jury implicitly found that ABC's newly created position was not sufficiently similar to Boehm's old job, a finding supported by substantial evidence in the record, including disputes over compensation, responsibilities, and the position's legitimacy. The court rejected ABC's claims that Boehm admitted the positions were equivalent or that the issue was improperly raised on appeal. Furthermore, the court upheld the jury's finding that Boehm did not voluntarily leave the job market by moving to Pebble Beach and that the six years of 'front pay' damages awarded were permissible under California contract-based wrongful termination actions, which allow such awards to extend to retirement.
Analysis:
This case reinforces a critical aspect of wrongful termination law in California, emphasizing that the burden of proving a failure to mitigate damages rests entirely with the employer. It clarifies that merely offering a new position post-termination is insufficient to limit damages; the employer must establish the "substantial equivalence" of the offered position to the former role, considering factors like compensation, responsibilities, and legitimacy. The decision provides essential guidance for jury instructions on mitigation, ensuring that the appropriate legal standard is applied. This ruling protects wrongfully terminated employees from being compelled to accept inferior re-employment offers from their former employers while upholding the general duty to mitigate damages by seeking genuinely comparable work.
