Free Uncategorized - District Court of Arizona - Arizona

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Quarles & Brady Streich Lang LLP
Firm State Bar No. 00443100 Renaissance One Two North Central Avenue Phoenix, AZ 85004-2391
TELEPHONE 602.229.5200

Lonnie J. Williams, Jr. (#005966) ([email protected]) Dawn C. Valdivia (#020715) ([email protected]) Luis F. Ramirez (#022653) ([email protected]) Attorneys for Plaintiff Marcela Johnson IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA Marcela Johnson, Plaintiff, v. Charles Schwab Corporation, Defendant. Plaintiff Marcela Johnson ("Johnson") responds to Defendant Charles Schwab Corporations' ("Schwab") Motion for Summary Judgment Re: Damages. Summary Judgment is not appropriate in this case because the issue of whether Johnson mitigated her damages and the amount of back pay that should be awarded is a question of fact to be decided by a jury. Further, there are genuine issues of fact as to Johnson's pain and suffering damages. Finally, Johnson has presented evidence that Schwab intentionally terminated her in retaliation for reporting an incident of sexual harassment in violation of the Civil Rights Act of 1964, 42 U.S.C. § 2000e, et seq. ("Title VII"). Consequently, a jury may award punitive damages at its discretion.1 I. JOHNSON IS ENTITLED TO BACK PAY. Back pay is generally awarded "as a matter of course" and should only be denied for reasons that "would frustrate the central statutory purposes of eradicating
This Response incorporates by reference Plaintiff's Response to Defendant's Motion for Summary Judgment re: Liability.

NO. CV 04-0790 PHX-EHC PLAINTIFF'S RESPONSE TO DEFENDANT'S MOTION FOR PARTIAL SUMMARY JUDGMENT RE: DAMAGES

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discrimination and making persons whole for injuries suffered through past discrimination." Abermale Paper Co. v. Moody, 42 U.S. 405, 420 (1975); Brady v. Thurston Motor Lines, 753 F.2d 1269, 1273 (4th Cir. 1985). Schwab does not contest that the matter at hand lacks such compelling reasons for denying back pay. Instead,

Schwab's Motion for Summary Judgment argues that Johnson is not entitled to back pay because she allegedly failed to mitigate her damages. Schwab cannot preclude Johnson's claim for back pay via summary judgment. It is well settled that whether a plaintiff has mitigated her damages is a question of fact to be decided by the jury. See Haeuser v. Department of Law, 368 F.3d 1091, 1100 n.10 (9th Cir. 2004) (whether employee has acted reasonably regarding duty to mitigate is a question of fact); Passantino v. Johnson & Johnson Consumer Products, 212 F.3d 493, 511 (9th Cir. 2000) (the jury is entitled to award back pay based on evidence presented); Hawkins v. 1115 Legal Service Care, 161 F.3d 684, 695-696 (2nd Cir. 1998) (the question of whether an employee has made diligent efforts is one of fact for the jury); Hardy v. Saliva Diagnostic Systems, 52 F.Supp.2d 333, 338-339 (D.Conn. 1999) (whether a plaintiff has mitigated damages and the proper amount of damages is determined by the jury). In any event, Johnson has mitigated her damages. "A wrongfully discharged

employee is only required to make a reasonable effort to obtain interim employment, and is not held to the highest standard of diligence." Kawasaki Motors v. NLRB, 850 F.2d 524, 527 (9th Cir. 1988) (citing Iron Workers Local 118 v. NLRB, 804 F.2d 1100, 1102 (9th Cir. 1986)). Johnson's efforts to obtain employment far exceed this standard. She began looking for a job almost immediately after she was terminated from Schwab. CSOF ¶ 63. Johnson also contacted banks and brokerage firms for positions comparable to the one she lost at Schwab and applied for at least twelve positions in her former field of optometry. Id. Once she secured employment, Johnson attempted to improve her condition by

securing more advantageous positions. CSOF ¶ 65.

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Schwab argues that Johnson should not be entitled to back pay because she voluntarily "quit" her jobs at Optical Holdings and Alex Optical. Motion for Summary Judgment Re: Damages at 3. However, Schwab's cited authority confirms that a

plaintiff's act of voluntarily leaving a job does not negatively affect her back pay if she was "motivated by unreasonable working conditions or an earnest search for better employment." Equal Employment Opportunity Commission v. Delight Wholesale Co., 973 F.2d 664, 670 (8th Cir. 1992); see also Hawkins, 161 F.3d at 696-697. Johnson left the jobs in question in order to transfer to more suitable positions with other employers. CSOF ¶ 65. She was well within her rights to pursue what she believed were better employment opportunities. Further, Schwab's contention Johnson is precluded from back pay because she was "fired for cause" from Eye Care Plus is completely unfounded. Back pay periods may be tolled if an employee is "justifiably" terminated from subsequent employment for "violating the stated rules of their [subsequent] employers." Thurston, 753 F.2d at 127879. Schwab offers no evidence that Johnson was terminated from Eye Care Plus for misconduct. In fact, Schwab's Statement of Facts specifically admits that Johnson "was fired as a result of a business decision." SOF ¶ 65 (emphasis added). In any event, it is

up to the jury to decide whether Johnson made diligent efforts to maintain her employment at Eye Care Plus. See Hawkins, 161 F.3d 695-696 (an employee's diligence is a matter if fact for the jury).2 Finally, Schwab mischaracterizes Johnson's claim for back pay as only including wages. Employees who are wrongfully discharged are entitled to recover damages

Schwab also claims that Johnson should be precluded from back pay because she applied with the Phoenix Police Department and was not granted a position. Schwab cites no authority supporting its inherently contradictory proposition that back pay is somehow tolled by a plaintiff's very attempt to mitigate her damages and obtain employment. On the other hand, the Ninth Circuit Court of Appeals has specifically found that "Success or failure in finding interim employment is not a measure of the employee's search; the law only requires a `good faith effort.'" Kawasaki, 850 F.2d at 527 (internal citations omitted). Moreover, Schwab misstates the facts in an effort to disparage Johnson and asserts that she was not granted a position because she "failed" a polygraph test. Johnson was unsuccessful in securing a job with the Police Department because she failed a portion of the written test. CSOF ¶ 74.

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measured by their entire loss of earnings, including the value of all fringe benefits. District of Columbia v. Greater Washington Bd. of Trade, 506 U.S. 125, 133 (1992); Local Joint Executive Bd. of Culinary/Bartender Trust Fund v. Las Vegas Sands, Inc., 244 F.3d 1152, 1158 (9th Cir. 2001) (citing Pettway v. American Cast Iron Pipe Co., 494 F.2d 211, 263 (5th Cir. 1974)). In addition to the wages she would have earned if she had not been terminated by Schwab, Johnson's back pay damages include: medical insurance benefits, credit earned for not selecting medical insurance, dental insurance, vision insurance, life insurance, disability insurance, and 401K benefits. SOF ¶ 134. To the extent that Schwab has evidence pertaining to Johnson's post-termination earnings, Schwab should present these earnings to the jury so that it may reduce Johnson's total back pay award accordingly. See 42 U.S.C. § 2000e-5(g); Passantino, 212 F.3d 510-511; Hard, 52 F.Supp. 2d at 338-339. Schwab's attempt to preclude Johnson's entire back pay damages via summary judgment is contrary to all established legal principles and should be denied. At most, Schwab has raised an issue of fact concerning the actual amount of back pay that the jury should award Johnson. II. JOHNSON IS ENTITLED TO DAMAGES FOR PAIN AND SUFFERING. Schwab does not dispute that Johnson can recover for emotional distress and physical ailments related to termination of her employment from Schwab. Rather,

Schwab mischaracterizes the nature of Johnson's claims in order to justify summary judgment. Schwab asserts that Johnson is not entitled to pain and suffering damages because she "was never stressed as a result of the alleged harassment." Motion for Summary Judgment Re: Damages at 5. However, Schwab is fully aware that the present case involves more than the harassment Johnson suffered while employed at Schwab. Schwab also retaliated against Johnson and wrongfully terminated her employment. Johnson has presented evidence that she has been suffering from headaches, stomach pains, lack of sleep, acne, and stress since Schwab terminated her employment.

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SSF ¶ 92. In fact, Johnson specifically informed Schwab at deposition that these health issues began to appear "the day [she] was fired" and are "completely" attributable to the stress caused by her termination. Id. Consequently, Johnson's physical and emotional damages predate this litigation and are recoverable. The authority cited by Schwab

regarding this issue only confirms Johnson's right to recover for these ailments. See Knussman v. State of Maryland, 272 F.3d 625, 642 (4th Cir. 2001) (recognizing that plaintiff was entitled to recover for emotional distress caused by discrimination and ordering new trial to determine amount); Clark v. United States, 660 F.Supp 1164, 1200 (W.D. Wash. 1987) (awarding damages for emotional distress attributable to defendant's conduct); Blakely v. Continental Airlines, Inc., 992 F.Supp 731, 740-741 (D. N.J. 1998) (awarding $250,000 for stress related to defendant's work misconduct). To the extent that Schwab disputes Johnson's damages because it believes that some of her injuries are not directly attributable to Schwab's violations, it should present evidence in this respect and permit the jury to determine what portion is attributable to her unlawful termination and what portion, if any, is attributable specifically to this litigation. III. JOHNSON IS ENTITLED TO RECOVER FOR LOST MEDICAL BENEFITS. Employees who are wrongfully discharged are allowed to recover damages measured by their entire loss of earnings, including the value of fringe benefits such as health insurance. District of Columbia v. Greater Washington Bd. of Trade, 506 U.S. 125, 133 (1992). Such recovery is for the loss of the health benefit itself, not any additional medical costs incurred by the plaintiff. See Munoz v. Oceanside Resorts, Inc., 223 F.3d 1340, 1348 (11th Cir. 2000) (upholding back pay award that included vacation time, employee meal discounts, and health insurance coverage); Kelly v. Matlack, Inc., 903 F.2d 978, 984-85 (3d Cir. 1990) (allowing for the recovery of medical benefits where employee handbook noted these among the "invisible paycheck" that the employee receives as a benefit of employment). Consequently, Johnson may recover, as part of her back pay

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award, the value of the health insurance denied to her by her termination from Schwab. Moreover, Schwab misrepresents Johnson's testimony and asserts that Johnson "testified" that she is "purposefully not searching for a job that provides medical coverage" until this lawsuit is over. Motion for Summary Judgment Re: Damages at 6. Johnson specifically testified that she has been unable to find a job that offers insurance because she is afraid that Schwab will subpoena that employer, as it has done throughout this litigation, and cause her further damage. SSF ¶ 91. Johnson also explained that the loss of her employment at Schwab and the accompanying loss of insurance benefits have been a significant detriment in her life. Id. Johnson lost her husband's insurance

coverage in September 2005, Schwab does not, and cannot, dispute that Johnson would have been entitled to health insurance benefits under Schwab's plan if she had not been terminated. As with all the other elements of back pay, the jury should be allowed to determine the full extent of the harm caused by Johnson's loss of medical insurance benefits. IV. THE JURY MAY AWARD JOHNSON PUNITVE DAMAGES. A. Schwab terminated Johnson for complaining about harassment.

Whether punitive damages are appropriate is a fact issue that is ultimately decided upon by a jury. Kolstad v. American Dental Association, 527 U.S. 526, 533 (1999); Passantino, 212 F.3d 493 at 515. Kolstad sets the standard for determining whether a jury may properly award punitive damages. Id. In that case, the Supreme Court rejected a previous interpretation of Title VII which required "egregious" conduct by an employer before punitive damages could be made available. Id. at 536. Instead, the Court declared that an employer is liable for punitive damages in any case where it "discriminate[s] in the face of a perceived risk that its actions will violate federal law." Id. at 537. The Court made clear that although egregious conduct could be evidence of an intent to break the law, such conduct was not required to establish punitive damages liability. Id. at 538. Egregious behavior provides only "one means" of satisfying a plaintiff's burden of proof

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for punitive damages. Id. In general, intentional discrimination is enough to establish punitive damages liability. Id.; Passantino, 212 F.3d at 515. Johnson has presented evidence that Schwab's conduct was both egregious and intentionally discriminatory. Prior to bringing to Schwab's attention the inappropriate behavior of Ed Steinert ("Steinert"), Johnson was regularly praised as a valued and capable employee. SSF ¶ 27. However, as soon as Johnson raised a concern regarding Steinert's harassment, Schwab embarked on a campaign to discredit her character and professional achievements. SSF ¶¶ 8-12, 93-98. Ultimately, Schwab terminated

Johnson's employment by using against her the very fact that she complained about Steinert's inappropriate behavior. Schwab specifically admits basing its decision to terminate Johnson on the results of its HR investigation. However, Schwab's investigation was prejudiced from the onset. The harasser, Steinert, was promised by Joel Price ("Price") and Cherri Melle ("Melle"), the very managers assisting in the investigation, that they would "work to preserve [his] intent and represent [his] integrity." SSF ¶ 17. Steinert was also reassured that these managers were "doing [their] best to correctly handle this." Such guarantee was made to Steinert before the investigation had even begun, the day before the managers were to meet with Johnson to purportedly listen to her concerns. Id. When they finally met with Johnson, Schwab's managers displayed an utter lack of sympathy and an unwillingness to evaluate her concerns fairly. Tammy Kornegay-

Hodges ("Hodges"), the Human Resources Manager in charge of the investigation, admitted that Johnson was already on her "radar" prior to commencing the investigation. SSF ¶ 11. Hodges and the other managers treated Johnson in a manner consistent with such ill will. The day after comforting the harasser and easing his anxiety concerning the investigation, Melle found out that Johnson was ill, had thrown-up, and had experienced a family tragedy. SSF ¶¶ 19, 23-25. Melle showed no concern for Johnson's condition. In an e-mail to Hodges addressing their plans for the upcoming HR meeting with Johnson,

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Melle simply stated "I just wanted you to know what the situation will be like. FYI, she just found out that one of her aunts has cancer and may not have long to live. That is another reason she isn't `up to going through with this'" Id. Indifferent to Johnson's apprehension regarding the investigation and her emotional and physical inability to effectively participate in the meeting, Hodges replied "I walked over to [ Johnson's] desk a few minutes ago, she is clear that we are going to meet." Id. After compelling Johnson to attend the meeting and elaborate on her concerns about Steinert's inappropriate behavior, Schwab immediately began a deliberate campaign to discredit these concerns. Schwab ignored key corroborating statements form other employees such as Teresa McClung ("McClung"). During her investigative

interview with Hodges, McClung said that she wished that Steinhart could keep things on a professional level and that in October 2003 she had requested to move away from his desk. SSF ¶ 72. McClung also stated that Steinert had made "unwelcome comments." SSF ¶ 73. Similarly, Steinert's manager Jeff Bosio ("Bosio") told Hodges that he had witnessed Steinert massaging another female employee and that he had been present for most of the massages. SSF ¶ 75. Bosio told Hodges that other employees had also witnessed the massages. SSF ¶ 76. Similarly, John Creelman admitted that he had witnessed Steinert massaging another female employee's shoulders and that he said that it was "disgusting." SSF ¶ 69. Instead of following-through and further investigating these facts, the managers conducting the investigation ignored them. Indeed, these managers also disregarded their own conclusions regarding the harasser's conduct. On October 30, 2003, after meeting with Johnson and Hodges, Melle sent an email to Director Lisa Gee ("Gee") that said: he rubbed her neck, etc. while talking to her. He has done this to other women on his own team. Not good...." (Emphasis added.) SSF ¶ 45. Under Schwab's twisted concept of a harassment investigation, the harasser, Steinert, was treated as the victim and all efforts were made to reassure him and preserve

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his "integrity."

On November 10, 2006, Steinert was again reassured by Price, "I

understand that last week was an amazing experience. Just wanted to touch base with you and see if you are ok." SSF ¶ 94. Meanwhile, Johnson was at all times treated like she had done something wrong by raising her concerns. Rather than investigating

Steinert's inappropriate behavior towards Johnson and other female employees, Schwab deliberately focused its efforts on Johnson and attempted to gather as much negative information about her as it could. On November 6, 2003, Melle sent an email to herself describing a meeting that purportedly happened on April 23, 2003 addressing Johnson's behavior with the team. SSF ¶ 93. Melle later forwarded the email to Hodges. Id. On November 11, 2003, Price sent an email to Melle disparaging Johnson's relationships with other employees. SSF ¶ 95. This communication was likewise forwarded to Hodges. Id. On December 16, 2003, Price sent an email to Melle with the subject line "HR." SSF ¶ 96. The email contained an attachment providing descriptions of past issues regarding Johnson. Id. On

December 18, 2003, Melle forwarded this email to Gee with the message "stuff on Marcela from Joel." Id. None of these emails or conversations was previously documented in Johnson's file. They were manufactured as part of Schwab's deliberate effort to disparage Indeed, all the communications

Johnson's character and justify its retaliatory acts.

purported to describe issues that occurred prior to Johnson's complaint yet these alleged issues were not raised until after she made her complaint. SSF ¶¶ 97, 98. Ultimately, Schwab terminated Johnson for complaining about Steinert's conduct. In doing so, Schwab consciously disregarded its express policy against retaliation and its guidelines for conducting investigations. See Porter v. California Department of

Corrections, 383 F.3d 1018 (9th Cir. 2004), superseded by 419 F.3d 885 (9th Cir. 2005) (employer's deviation from policies is evidence of pretext). The policy specifically

provides: "When an employee brings alleged harassment or discrimination to a manager's

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attention, the manager will: obtain whatever the employee is willing to share at that time or offer to put the employee in immediate touch with Human Resources ... not retaliate against the employee for raising the complaint." SSF ¶ 101. Similarly, the investigation guidelines prescribe: "If the results of the investigation are inconclusive, or the complaint is deemed unfounded, explain the reasons why and reinforce the policy against discrimination/harassment and retaliation ... Remind the complainant that his or her complaint was taken seriously and that you appreciate that she came forward." SSF ¶¶ 121, 123. Despite finding that Johnson's claims were "partially true" and disciplining the harasser, Schwab nevertheless terminated Johnson for raising the complaint. Schwab has made a mockery of Title VII's anti-retaliation provisions. It

compelled Johnson to give additional information about Steinert's inappropriate behavior despite her reluctance to get anyone in trouble and her weakened physical and emotional state at the time of the investigation. After receiving this information, Schwab did

everything possible to discredit Johnson while reassuring the harasser that it would work to preserve his intent and represent his integrity. Schwab then subjectively decided to ignore corroborating testimony and resolve all doubts against Johnson. Finally, Schwab terminated Johnson's employment despite admitting that her allegations were not baseless and disciplining the harasser. Such conduct is exactly the type of employer action which "chills" employee complaints and merits the imposition of punitive damages. B. Schwab's managers retaliated on behalf of Schwab.

Schwab's claim that punitive damages are precluded because Steinert and Hodges were not managers once again misrepresents Johnson's claim and the facts of this case. As an initial matter, Johnson seeks punitive damages for the intentional actions of Price, Melle, Gee and Hodges. These individuals are all managers that represented Schwab and acted as Schwab's proxy in the investigation of Johnson's claim and her subsequent termination. Indeed, Hodges was designated as the Company's 30(b)(6) representative for this lawsuit. CSF ¶ 30. Consequently, Price, Melle, Gee, and Hodges were all acting

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in a managerial capacity for purposes of punitive damages liability. See Kolstad, 527 U.S. 526. In any event, Schwab misstates the Kolstad decision and the role of managers in punitive damages claims. Manager conduct is an issue raised by employers when

claiming an affirmative defense based on lack of vicarious liability and the existence of an employment policy. See Kolstad, 527 U.S. 532-38. However, an employer can escape punitive damages using this defense "only if it has undertaken sufficient good faith efforts at Title VII compliance." Id. (emphasis added). Kolstad explains that, although the

purpose of Title VII is served by rewarding employers who adopt anti-discrimination policies, the Statute would be undermined if those policies were not implemented and were allowed instead to serve only as a device to allow employers to escape punitive damages. Id. Thus, an employer must show that it has implemented its policy in good faith in order to claim an affirmative defense. There is no evidence that Schwab

implemented its policy in good faith. On the contrary, the record specifically reflects that Schwab expressly disregarded its own policies when it terminated Johnson. Consequently, the jury in this case may properly award Johnson punitive damages if it sees fit to do so. IV. CONCLUSION. For the foregoing reasons, Defendant's Motion for Partial Summary Judgment Re: Damages should be denied. RESPECTFULLY SUBMITTED this 12th day of May, 2006. QUARLES & BRADY STREICH LANG LLP By s/Dawn C. Valdivia Lonnie J. Williams, Jr. Dawn C. Valdivia Luis F. Ramirez Attorneys for Plaintiff Marcela Johnson

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I hereby certify that on May 12, 2006, I electronically transmitted the attached document to the Clerk's office using the CM/ECF System for filing and transmittal of Notice of Electronic Filing to the following CM/ECF registrants: Joseph T. Clees Karen Gillen Ogletree, Deakins, Nash, Smoak & Stewart, P.C. 2415 E. Camelback Road Suite 800 Phoenix, AZ 85016 A copy of this document was provided to The Honorable Earl H. Carroll s/Dawn C. Valdivia

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