Carl M. Hadra v. Herman Blum Consulting Engineers, a Texas Corporation

THOMAS A. CLARK, Circuit Judge,

dissenting:

Respectfully, I dissent. I disagree with the majority’s handling of two of the issues raised on appeal by Herman Blum Consulting Engineers. First, in my view the district court erred in granting Carl Hadra’s motion for a new trial. Second, even if the grant of a new trial was appropriate, the district court’s charge to the jury in the second trial on the issue of mitigation of damages was inadequate as a matter of law thereby substantially prejudicing Blum’s defense.

In granting Hadra’s motion for a new trial, the district court ruled that once the jury in the first trial found that Blum had breached his employment contract with Hadra, the jury could not, under the instructions it was given and the evidence adduced at trial, have determined that Hadra was not entitled to damages for lost salary. 1 In reviewing the district court’s ruling, I agree with the majority opinion that this court’s decision in Massey v. Gulf Oil Corporation, 508 F.2d 92 (5th Cir. 1975), should guide us:

Our review of an order granting a motion for new trial is somewhat broader than review of an order denying a motion for new trial.

We [have] noted that where the judge denies the motion and leaves undisturbed the jury’s determination, all factors press in the direction of leaving the trial judge’s ruling undisturbed. But where the judge has granted a new trial, the factors oppose each other. Deference to the trial judge is subjected to opposing tensions of deference to the jury as the body to whom fact finding is constitutionally allocated and deference to the decision which the jury has reached pursuant to that authority. Furthermore, where a new trial is granted on the ground that the verdict is against the weight of the evidence, we exercise closer scrutiny than where the ground is that some undesirable or pernicious influence has intruded into the trial, because to an extent the judge has substituted his judgment of the facts and credibility of witnesses for that of the jury. Thereby we protect the litigants’ right to jury trial.

Id., at 94-95 .

I part company with the majority, however, when it concludes that a new trial was required in this case because there was no evidence to support an inference by the jury in the first trial that Hadra could have mitigated his damages resulting from the *1248 breach of the employment contract. Upon review of the record, I am convinced that the jury in the first trial had ample evidence to support its verdict.

Blum terminated Hadra’s assignment in Teheran, Iran, on July 22,1975. Hadra was advised of his dismissal by a letter from the firm’s president, Herman Blum, which was hand delivered to Hadra by Blum’s marketing manager, Mr. Ken Wallace. The termination letter read as follows:

July 2, 1975

Mr. Carl Hadra

C/O Iran Electronics Industries Box 66/1500

Saltanatabad, Teheran, Iran Dear Carl:

A decision has been made by Herman Blum Consulting Engineers, Inc. to terminate your employment in Iran upon the delivery of this letter to you by Ken Wallace effective immediately. Simultaneously, we terminate reimbursment [sic] for any and all allowances and expenses. We request you hand over to Mr. Wallace all Herman Blum Consulting Engineers, Inc. credit cards.

We simultaneously offer you employment in our Dallas office in the position of Project Design Engineer under the direction of Mr. Fernando Meneses.

Should you accept this position and stay employed with us for 12 months after arrival in Dallas, we will then reimburse you for reasonable moving expenses.

Yours very truly,

HERMAN BLUM CONSULTING ENGINEERS, INC.

By: /S/_

Herman Blum, President

In evaluating Blum’s motion for a new trial, the key question is whether there was adequate evidence presented at the first trial to support the jury’s conclusion that Hadra could have mitigated all of his damages resulting from Blum’s breach of the employment contract. “Could have mitigated” required Hadra to make some effort to seek employment. As stated in the majority opinion, Hadra stipulated that he did not begin to look for new employment until his return to the United States in August, 1976. Hadra testified that he chose to remain overseas, jobless, until the summer of 1976 so that he could take advantage of federal income tax provisions which provide favorable tax treatment for American expatriates who live and work overseas for an extended period. Thus, Hadra apparently hoped to reduce his U.S. income taxes on the approximately $50,000 in total compensation which he had received from Blum Consulting Engineers prior to his discharge on July 22, 1975. Of course, while sojourning on Majorca, a Mediterranean resort island off the coast of Spain, Hadra also permitted his possible claim against Blum to accrue for lost compensation from July 22 until January 1, 1976. Although there was significant disagreement at trial over how much of the $130,000 annual total compensation package was actually Hadra’s salary, it is clear that while in Teheran his salary was significantly higher than it had been in this country apparently because of the extremely high cost of maintaining a satisfactory American lifestyle in Iran.

Hadra obtains here that which we all dream about-enjoying our cake and it being there after the feast. As the result of the new trial on damages only, Hadra spent a year relaxing on Majorca, received the $97,205.10 in salary and expenses for the remainder of the unexpired employment contract and avoided federal income taxes. The Texas jurors hearing this evidence had ample evidentiary basis for the zero verdict, believing as I do that Hadra should have accepted the job offer from Blum, returned to Dallas and paid his income taxes. If Hadra had not wanted to work for Blum, he could have returned and obtained a comparable position at a city of his choice, as he did in Los Angeles after returning in 1976. In my view the jury took a common sense view of what was fair between the parties and the district court erred in ruling that there was no basis for the zero verdict.

At the first trial the jury was given special interrogatories to answer. Question number two asked: “Do you find from a *1249 preponderance of the evidence that in July 1975, Blum Engineering reassigned Hadra to Dallas, Texas?” The jury answered that Blum “did not reassign” Hadra to Dallas. However, while Hadra may not have been “reassigned” to Dallas, the letter reproduced above clearly indicates that Blum Engineering did offer Hadra a new position back at the firm’s headquarters in Dallas. It was perfectly reasonable for the jury to find, as it apparently did, that although Blum did not reassign Hadra to Dallas, it did make Hadra a good faith offer of new employment at the Dallas office. This conclusion is perfectly reasonable when one considers the nature of the employment relationship between Hadra and Blum. Hadra was working for Blum in Teheran under the terms of an employment contract. The terms of that contract stated that Hadra was to represent Blum Engineering in its efforts to expand its business with the Iranian government. Hadra was hired under the contract to work only in Iran. Unlike the typical employer-employee relationship in which an employer may reassign his employee to a new work location, the contract in dispute here would not permit Blum to reassign Hadra to its Dallas office. Thus, although the jury found that Hadra was not reassigned to Dallas, it is quite clear from the record that Blum had offered Hadra a comparable job back in this country.

The majority concludes that the jury could not have considered the Dallas job offer as evidence relating to Hadra’s duty to mitigate because Blum did not present this “theory” to the jury. I can see no reason why the jury could not or should not have considered the evidence relating to the Dallas job offer in determining whether Hadra had fulfilled his duty to mitigate. In my view, the “theory” was presented to the jury in the first trial. Just as the majority acknowledges in its statement of facts, it is abundantly clear that Hadra was offered a new job with the firm back in Dallas.

In addition to the offer included in the termination letter set forth above, the jury also heard testimony concerning the job offer. Herman Blum testified that his firm offered Hadra a Dallas job because the firm “had a heavy workload in Dallas and needed his engineering expertise.” 2 Furthermore, Blum explained that he had conditioned the reimbursement of Hadra’s reasonable moving expenses from Teheran to Dallas on Hadra’s remaining with Blum Consulting Engineers because Blum had accidentally heard that Hadra was trying to negotiate an employment contract with another firm and Blum did not want to pay Hadra’s moving expenses back to Dallas and then have Hadra resign shortly thereafter.

I submit that the jury in the first trial had sufficient evidence before it to support its finding that Blum Consulting Engineers had met its burden on the mitigation of damages issue and that Hadra had failed completely to mitigate his damages resulting from his wrongful discharge.

At the second trial, the trial judge gave the following charge to the jury on the issue of mitigation of damages:

After an employment contract has been breached, the employee has a duty to mitigate damages. That means that the employee must exercise reasonable diligence in seeking employment of the same or similar quality as the wrongfully terminated employment for a reasonable time. The employee may exercise reasonable diligence by seeking employment which pays a comparable salary and which consists of a position of similar prestige as the wrongfully terminated employment. ■

However, after a reasonable time, the employee must seek and accept any employment for which he is qualified. In the exercise of reasonable diligence, an employee must consider all opportunities for the kind of employment which he has a duty to seek, whomever the employer, provided the place of employment is not a geographical area unreasonably distant *1250 from his usual place of employment. (Emphasis added.)

This jury charge was not given at the first trial. The majority upholds the jury charge on the basis that the limitations on the duty to mitigate, including the geographical limitation, “are derived from long-standing Texas law and are not error.” The majority cites as authority Kramer v. Wolf Cigar Stores Co., 99 Tex. 597 , 91 S.W. 775 (1906), and San Antonio & A. P. Ry. Co. v. Collins, 61 S.W.2d 84 (Tex. Comm.App.1933). My view is that under the circumstances of this case Texas law would not narrow Hadra’s duty to search for new employment to an area not “unreasonably distant from his usual place of employment,” i.e., Teheran.

The district court’s charge had the effect of limiting Hadra’s efforts to secure new employment to only Teheran or somewhere else in Iran. Therefore, under the charge as given the jury would not have been allowed to consider Hadra’s job opportunities back in the United States in evaluating whether he had satisfied his duty to mitigate.

The cases relied upon by the majority are an insufficient basis on which to support the geographical limitation on the duty to mitigate. Kramer was an action brought by a wrongfully discharged employee who had served as a cigar store manager in the Dallas area beginning in 1902. There the evidence indicated that, once discharged, the ex — cigar store manager had

made no effort to secure any other employment after his discharge and before he went into business for himself, for the reason, as he states, that he knew that the attempt to secure employment of the same character as that which he had of defendant would be useless as there were none such open in Dallas.

91 S.W. at 777 . However, although the Texas court did hold that a discharged employee must secure “by reasonable diligence ... another position of substantially the same character and grade as that which he had held,” the court made no specific mention that the former cigar store manager could restrict his job seeking efforts to the Dallas area only.

In San Antonio & A. P. Ry. Co. v. Collins, supra, the employee was discharged in 1921 from his position as a switchman for the railroad company at its yards in Houston. Although the company offered the worker a job at either the San Antonio or Kennedy railroad yards, Collins refused and eventually filed suit. Acknowledging a wrongfully discharged employee’s general duty to mitigate as stated in Kramer , the court in San Antonio & A. P. Ry. Co. held that Collins satisfied his general duty to mitigate by “making a reasonable effort to secure other employment at Houston; and his refusal to accept employment at distant places, involving change of residence and loss of position and security in the Houston yards, was within his rights under the contract.” 61 S.W.2d at 89 .

However long-standing the Texas law as stated by Kramer and San Antonio & A. P. Ry. Co. may be, neither case addresses the geographical limitation on the duty to mitigate in the context of modern, sophisticated employment relationships between large firms engaged in multinational operations and their thousands of American expatriate employees who serve their companies abroad. In this age when American businesses are actively engaged in overseas business ventures such as oil exploration, mining, and construction projects of all kinds in all parts of the world, it is unrealistic to conclude from the authority relied on by the majority that Texas law would require a wrongfully discharged expatriate employee to search for new employment only in the vicinity of their former foreign assignment.

But that is just what happened in this case. The trial court effectively forced the jury in the second trial to ignore job opportunities that Hadra had in the United States in its consideration of his duty to mitigate. In my opinion, Texas law would require that an expatriate employee who loses his overseas job and is unable to secure comparable employment in the general vicinity of that overseas assignment should *1251 return to his home in this country within a reasonable period of time and undertake serious efforts to secure employment here. Application of the geographical limitation to the duty to mitigate under the circumstances of this ease necessitates an illogical, unnecessary result.

I would hold that the district court erred in granting the appellee’s motion for a new trial. I would vacate the verdict of the jury in the second trial and reinstate the jury’s verdict from the first trial. Failing that, I submit that the trial judge’s charge to the jury in the second trial on the issue of mitigation unfairly prejudiced the appellant, necessitating a new trial on the issue of damages.

. In its order granting a partial new trial, the district court stated in pertinent part:

The court has concluded that the jury could not, under the instructions it was given, have properly reached the conclusion that an award of $0 was appropriate, based upon the evidence adduced at trial. Without analyzing the evidence in detail, it was defendant’s burden, after a showing of contractual breach by defendant, to establish the possibility of mitigation and the amount by which mitigation was possible. The court feels that the jury based upon the evidence before them could have inferred that plaintiff might have mitigated within some time after he was terminated, but could not have inferred that the amount by which he could mitigated [sic] would have equalled or exceeded the lower limit of his contractual damages.

. Tr.Vol. Ill, at 147.