Petition for Writ of Certiorari — Biggins v. Hazen Paper Co.
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‘ Supreme Court, U.S.
FILED
APR 30 1992
+DRRGE—OF-THE CLERK
91-1848>
No. 91-
In the |
Supreme Court of the United States
bad
OCTOBER TERM, 199]
WALTER F. BIGGINS,
CroOSS-PETITIONER,
v.
HAZEN PAPER COMPANY, ET AL.,
CrosS-RESPONDENTS.
CROSS PETITION FOR A WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
CROSS PETITION FOR A WRIT OF CERTIORARI
JOHN J. EGAN
Counsel of Record
MAURICE M. CAHILLANE, JR.
EDWARD J. MCDONOUGH, JR.
EGAN, FLANAGAN AND COHEN, P.C.
67 Market Street
P.O. Box 9035
Springfield, Massachusetts 01 102-9035
(413) 737-0260
Counsel for Cross-Petitioner
BATEMAN & SLADE, INC BOSTON. MASSACHUSETTS
i
QUESTION PRESENTED
Whether, in determining the amount of a reasonable attor-
neys’ fee under a federal fee shifting statute, a Court should
enhance the award to reflect the local market for such legal
services under which the plaintiff retained an attorney on a
contingent fee basis.
ill
PARTIES TO THE PROCEEDING BELOW
The parties to the proceedings below were the cross
petitioner/plaintiff Walter F. Biggins and the respondents to
the cross petition, the Hazen Paper Company (a privately held
Massachusetts Corporation), Thomas N. Hazen and Robert
Hazen.
Vv
TABLE OF CONTENTS
QUESTION PRESENTED ............
PARTIES TO THE PROCEEDING. .......
TABLE OF AUTHORITIES ...........
PTE as ee ek eee Se ees
STATUTORY PROVISIONS INVOLVED ... .
STATEMENT OF THE CASE ..........
A. The Underlying Case... .........
B. The Attorneys’ Fee Request ........
C. The District Court’s Award of Fees... . .
D. The Court of Appeals Decision. ..... .
REASONS FOR GRANTING THE WRIT
1. The Issue of Enhancement of Statutory Attorneys’
Fees, Is an Important Question Already Accepted
by the Court and This Case Presents an Appropri-
ate Compliment to the Case Already Before the
ee a eer a riers. ae
A. The Conflict Among the Circuit Courts
B. This Case Is Appropriate for Review
C. The Court Erred in Denying Enhancement .
(Aa, kk ek ws ee Oe eee
PE: - 5) oo es Pee ee ee
oo ww ws Ga CO WU
v1
TABLE OF AUTHORITIES
Alberti v. Klevenhagen, 896 F.2d 927 (Sth Cir. 1990) . 10
City of Burlington v. Dague, 935 F.2d 1343 (2d Cir.
1991), No. 91-810, cert. granted, (U.S. Jan. 27,
ONRE aoe ee ee ee ee eee 5,8,
10,14
Fadhl v. City and County of San Francisco, 859 F.2d
669 @@ Cir. 19GB) ow tt 10
King v. Palmer, 950 F.2d 771 (D.C. Cir. 1991) (now
before this Court on a Petition for Writ of Certiorari
Ped Dakar. 6 & & a ce Oe eee eee 10,12
Lattimore v. Oman Construction, 868 F.2d 437 (11th
i Fees ence oe es a eee 10
Pennsylvania v. Delaware Valley Citizens Council for
Clean Air, 483 U.S. 711 (1987) (Delaware Valley
|) Pe re 6,7,8,
10,11,13
Perotti v. Seiter, 935 F.2d 174 (6th Cir. 1991) . . 10
Rode v. Dellarciprete, 892 F.2d 1177 (3d Cir.
2) Me ee ee ee ee 10
Spell v. McDaniel, 824 F.2d 1380 (4th Cir. 1987) . 10
Student Public Interest Research Group v. AT & T Bell
Laboratories, 842 F.2d 1436 (3d 1988) .... 10
Venagas v. Mitchell, 495 U.S. 82 (1990)... .. 9,13
Statutes and Regulations:
ae US eo Se 6 ee ee eee 2
UB. See es ee eee 3,4
BUSS. Bee eee... = eee ee 5
BUSS. SEG « awe eee 2,3
on U2. § Ue oe ee eee 5
Vil
TABLE OF AUTHORITIES (cont.)
7 oie Sa | ee eee a ere pe ae 5
Massachusetts General Laws
i es Se a Nga ee oe a 5
supreme CO Re 1S os Cre ee ON l
No. 91-
In the
Supreme Court of the United States
OCTOBER TERM, 199]
WALTER F. BIGGINS,
Cross-PETITIONER,
V.
HAZEN PAPER COMPANY, ET AL.,
CroSS-RESPONDENTS.
CROSS PETITION FOR A WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
CROSS PETITION FOR A WRIT OF CERTIORARI
INTRODUCTION
Cross petitioner, Walter F. Biggins, respectfully prays that
a writ of certiorari issue to review the judgment and opinion
of the United States Court of Appeals for the First Circuit
entered in this case on January 8, 1992. This petition is sub-
mitted as a cross petition to the petition filed on April 3, 1992
by the Hazen Paper Company, Thomas N. Hazen and Robert
Hazen.
.
OPINIONS BELOW
The opinion of the Court of Appeals for the First Circuit is
reported at 953 F.2d 1405 (Ist Cir. 1992) and is reproduced
in the appendix at (A-1). The opinion of the district court of
Massachusetts (Freedman, C.J.) is unreported and is repro-
duced in the Appendix at (A-50).
The petitioner has also provided in the appendix, the Order
of the Court of Appeals dated March 19, 1992 providing an
award of fees for appellate work (A-89).
JURISDICTION
The judgment of the Court of Appeals for the First Circuit
was entered on January 8, 1992. Timely petitions for rehearing
were filed by both parties and were denied on January 29,
1992. On April 3, 1992 the Hazen Paper Company, Thomas
N. Hazen and Robert Hazen filed a petition for a Writ of
Certiorari in this Court which is now pending. Jurisdiction of
this Court is invoked under 28 U.S.C. § 1254. The Hazen
Petition was received by the respondent on April 3, 1992.
STATUTORY PROVISIONS INVOLVED
1) The Age Discrimination in Employment Act, 29 U.S.C.
§ 621, et seq., which provides in material part:
§ 626(b) Enforcement; prohibition of age dis-
crimination under fair labor standards; unpaid
minimum wages and unpaid overtime compensa-
tion; liquidated damages; judicial relief; concilia-
tion, conference, and persuasion
The provisions of this chapter shall be enforced
in accordance with the powers, remedies, and pro-
cedures provided in sections 211(b), 216 (except for
sores tineeseensteiaeee cn
3
subsection (a) thereof), and 217 of this title, and
subsection (c) of this section. Any act prohibited
under section 623 of this title shall be deemed to be
a prohibited act under section 215 of this title.
Amounts owing to a person as a result of a violation
of this chapter shall be deemed to be unpaid minimum
wages or unpaid overtime compensation for purposes
of section 216 and 217 of this title: provided, that
liquidated damages shall be payable only in cases
of willful violations of this chapter. In any action
brought to enforce this chapter the court shall have
jurisdiction to grant such legal or equitable relief a
may be appropriate to effectuate the purposes of this
chapter, including without limitation judgments
compelling employment, reinstatement or promo-
tion, or enforcing the liability for amounts deemed
to be unpaid minimum wages or unpaid overtime
compensation under this section. Before instituting
any action under this section, the Equal Employment
Opportunity Commission shall attempt to eliminate
the discriminatory practice or practices alleged, and
to effect voluntary compliance with the requirements
of this chapter through informal methods of concili-
ation, conference, and persuasion.
§ 216 Penalties; civil and criminal liability; in-
junction proceedings terminating right of action;
waiver of claims; actions by Secretary of Labor;
limitation of actions; savings provision
(b) Any employer who violated the provision of
section 206 or section 207 of this tile shall be liable
to the employee or employees affected in the amount
of their unpaid minimum wages, or their unpaid over-
time compensation, as the case may be, and in an
additional equal amount as liquidated damages. Any
4
employer who violates the provisions of section
215(a)(3) of this title shall be liable for such legal
or equitable relief as may be appropriate to effectuate
the purposes of section 215(a)(3} of this title, includ-
ing without limitation employment, reinstatement,
promotion, and the payment of wages lost and an
additional equal amount as liquidated damages. An
action to recover the liability prescribed in either of
the preceding sentences may be maintained against
any employer (including a public agency) in any
Federal or Sate court of competent jurisdiction by
any one or more employees for and in behalf of
himself or themselves and other employees similarly
situated. No employee shall be a party plaintiff to
any such action unless he gives his consent in writing
to become such a party and such consent is filed in
the court in which such action is brought. The court
in such action shall, in addition to any judgment
awarded to the plaintiff or plaintiffs, allow a reason-
able attorney's fee to be paid by the defendant, and
casts of the action. The right provided by this subsec-
tion to bring an action by or on behalf of any employ-
ee, and the right of any employee to become a party
plaintiff to any such action, shall terminate upon the
filing of a complaint by the Secretary of Labor in
an action under section 217 of this title in which (1)
restraint is sought of any further delay in the payment
of unpaid minimum wages, or the amount of unpaid
overtime compensation, as the case may be, owing
to such employee under section 206 or section 207
of this title by an employer liable therefor under the
provisions of this subsection or (2) legal or equitable
relief is sought as a result of alleged violations of
section 125(a)(3) of this title.
5
2) Employee Retirement Income Security Act, 29 U.S.C.
§$§ 1001 et seq., which provides in material part:
§ 1132(g) Attorney’s fees and costs; awards in
actions involving delinquent contributions
(1) In any action under this subchap*er (other than
an action described in paragraph (2)) by a participant,
beneficiary, or fiduciary, the court in its discretion
may allow a reasonable attorney’s fee and costs of
action to either party.
STATEMENT OF THE CASE
This cross petition presents a specific issue already before
this Court in the-case of City of Burlington v. Dague, 935
F.2d 1343 (2d Cir. 1991), No. 91-810, cert. granted, (U.S.
Jan. 27, 1992).
A. The Underlying Case
This case originated in the district court of Massachusetts
in an action filed by Walter F. Biggins (hereinafter Biggins)
against the Hazen Paper Company, Thomas N. Hazen and
Robert Hazen (collectively hereinafter Hazen). The case arose
out of the termination of Biggins’ employment in June of 1986
by Hazen, and presented claims for violations of the Age
Discrimination in Employment Act (ADEA) 29 U.S.C. § 621
et seq., Employee Retirement Income Security Act (ERISA)
29 U.S.C. § 1132, and state law claims for fraud, breach of
contract, conversion and violations of the Massachusetts Civil
Rights Act M.G.L. c. 12, § 111. After the jury returned verdicts
in favor of Biggins under the ADEA (awarding $560,775),
ERISA (awarding $100,000), breach of contract (awarding
$266,897), and fraud (awarding $315,000), the district court
6
awarded liquidated damages under the ADEA, since the jury
found the violation to be willful. The district court subsequently
granted defendants’ motion for judgment notwithstanding the
verdict on the issue of willfulness (A. 50-80). The Court of
Appeals for the First Circuit reversed this decision and
reinstated the jury verdict on willfulness, (the subject of the
original petition in this case), and reversed the award for breach
of contract and reduced the amount of damages awarded under
the ADEA (A. 1-49).
B. The Attorneys’ Fee Request
Biggins filed a motion for an award of attorneys’ fees with
the district court under the ADEA and ERISA. In the motion,
Biggins presented the court with a detailed description of the
number of hours devoted to the case by each attorney and the
work performed, as well as information on the attorney’s nor-
mal hourly rate (A. 83-84). From this information, the district
court calculated the “lodestar” in the amount of $175,564.75
(A-85). Biggins sought an enhancement of that award on
grounds that counsel had taken the case on a one-third contin-
gent fee basis, as was the practice in the relevant market.
Relying on Justice O’Connor’s opinion in Pennsylvania v.
Delaware Valley Citizens Council for Clean Air, 483 U.S.
711 (1987) (Delaware Valley II), Biggins sought to have the
award enhanced to one-third of the total judgment, excluding
fees, on grounds that this was the market for fees for cases of
this type in the Springfield, Massachusetts area (C.A. App.
110). Biggins presented affidavits from local counsel who had
experience in similar cases, establishing that a one-third con-
tingent fee arrangement was the standard way for plaintiff’s
attorneys to charge in civil rights and employment cases in
the local market (C.A. App. 147-153). Biggins filed an af-
fidavit describing his agreement to the one-third contingent
fee arrangement, stating that without such an arrangement he
7
could not have afforded to pursue the case, and that he had
previously been to four other law firms, which were either
unable or unwilling to take the case on a one-third contingent
basis (C.A. App. 155-156). Biggins also filed an affidavit
from Attorney John J. Egan who stated that Biggins had in-
formed him that Biggins could not pay for the case on an
hourly basis, that the case was therefore taken on a contingent
fee because, despite risk of non payment, there was a potential
for a premium in excess the normal hourly rate, and that
without the prospect of enhancement, he would be discouraged
from taking such cases (C.A. App. 112-118). This evidence
as to the market conditions for legal services in the relevant
area was not contested in any way.
C. The District Court’s Award of Fees
The district court granted an award of attorneys’ fees in the
amount of $175,564.75 which was its calculation of the lodes-
tar figure (A-85). The Court denied the request for enhance-
ment on grounds that the case was “not sufficiently rare or
exceptional to justify an enhancement of the lodestar.” (A-86).
Although the district court cited Justice O’Connor’s opinion
in Delaware Valley I/, it nonetheless made its ruling disregard-
ing that opinion’s dictate that such decisions “be based on the
difference in market treatment of contingent fee cases as a
class rather than on an assessment of the ‘riskiness’ of any
particular case.” Pennsylvania v. Delaware Valley Citizens
Council for Clean Air, 483 U.S. 711, 731 (1987).
The district court did not reject any of the evidence with
respect to contingent fees in the loca! market (A-86).
D. The Court of Appeals Decision
The First Circuit affirmed the denial of a fee enhancement,
but did so again with reference to the risks involved in this
particular case, stating that “the size of the judgment already
8
provides counsel with a premium” on the basis of its contingent
fee arrangement, and, therefore, fee enhancement was not
necessary (A-48). The First Circuit cited Justice White’s plur-
ality opinion in Delaware Valley II, without stating whether
it considered that opinion to presently be the law (A-46-47).
There was again no dispute as to the nature of the local
market for legal services of this type.
REASONS FOR GRANTING THE WRIT
This petition involves an important question of federal law
concerning which the Circuit Courts are split, and which is
essentially identical to the question presented in Dague v. City
of Burlington, 935 F.2d 1343 (2d Cir. 1991), No. 91-810,
cert. granted, (U.S. Jan. 27, 1992). To the extent this case
differs from Dague, it presents the significant supplemental
issue Of whether enhancement should be granted, where the
local market treats cases of this type on a one-third contingent
fee arrangement, and whether the failure to grant enhancement
in such circumstances impermissibly penalizes the plaintiff by
depleting his award and forcing him or her to bear a larger
portion of the cost of litigation than a prevailing plaintiff who,
because of market factors, is able to retain an attorney on an
hourly rate as opposed to a contingent fee. Put another way,
this case squarely presents the question of whether the Court
should adopt a rule whereby enhancement is determined strictly
on the basis of the local market treatment of the class of case,
since the market itself will provide the mechanism for attracting
competent counsel. The decision of the First Circuit was in
error because, contrary to this Court’s decision in Delaware
Valley II, it assessed the availability of fee enhancement on
the basis of the risks involved in the particular case itself (and
the size of the verdict), rather than treating these cases uniformly
i ieee ie
9
as a Class, based on local market conditions. The First Circuit
likewise erred in reviewing the issue only in hindsight, by
asserting that risk enhancement should be assessed after the
case is concluded, on the basis of the size of the verdict, rather
than on the risk involved for counsel prior to knowing the
outcome. The First Circuit decision is contrary to this Court’s
decision in Venegas v. Mitchell, 495 U.S. 82 (1990), since it
denied enhancement on the basis of the fee the successful
plaintiff will pay his lawyer, rather than on the basis of what
the losing defendant should pay. The Court should, therefore,
review this case on the basis of Delaware Valley II and any
decision reached in Dague v. City of Burlington and remand
the case to the lower court for reconsideration in light of those
decisions.
1. The Issue of Enhancement of Statutory Attorneys’ Fees,
Is an Important Question Already Accepted by the
Court and This Case Presents an Appropriate Compli-
ment to the Case Already Before the Court
That the issue involved in the present case is an important
question of federal law is clear from this Court’s grant of
certiorari in Dague v. City of Burlington, 935 F.2d 1343 (2d
Cir. 1991), No. 91-810, cert. granted (U.S. Jan. 27, 1992).
This case presents the same question as presented in Dague
on the basis of different local market conditions which reflect
an important variant of the type of possible fee arrangements
in Civil Rights and employment discrimination cases.
A. The Conflict Among the Circuit Courts
Since this Court’s ruling in Delaware Valley II, the Circuit
Courts have differed in their interpretation of that case. Here,
the First Circuit cited only Justice White’s plurality opinion
and essentially ignored the principles of enhancement agreed
to by a majority of the Justices in Delaware Valley II. The
First Circuit did not specify which of the Delaware Valley II
i
10
opinions it regarded as the governing law, but its citation to
Justice White’s opinion to support the denial of a fee enhance-
ment, indicates that it regards the plurality opinion as control-
ling. This puts the First Circuit at odds with every other Circuit
Court which has considered the matter since Delaware Valley
II. Five Circuit Courts (the 3d, 4th, 5th, 9th and 11th) have
held that Justice O’Connor’s opinion is the controlling law.
Rode v. Dellarciprete, 892 F.2d 1177 (3d Cir. 1990); Student
Public Interest Research Group v. AT & T Bell Laboratories,
842 F.2d 1436 (3d Cir. 1988); Spell v. McDaniel, 824 F.2d
1380 (4th Cir. 1987); Alberti v. Klevenhagen, 896 F.2d 927
(Sth Cir. 1990); Fadhl v. City and County of San Francisco,
859 F.2d 649 (9th Cir. 1986); Lattimore v. Oman Construction,
868 F.2d 437 (11th Cir. 1989).
Three Circuit Courts have held that Delaware Valley II
provides no governing rule of law at all: the Second Circuit
granting an enhancement in Dague v. City of Burlington, 935
F.2d at 1360 (now before this Court), the District of Columbia
Circuit, sitting en banc, denying an enhancement in King v.
Palmer, 950 F.2d 771 (D.C. Cir. 1991) (now before this Court
on a Petition for a Writ of Certiorari, No. 91-1370), and the
Sixth Circuit in Perotti v. Seiter, 935 F.2d 174 (6th Cir. 1991).
This leaves the First Circuit as the lone Circuit Court following
Justice White’s plurality opinion.
B. This Case Is Appropriate For Review
Given that the issue of enhancement is presently before this
Court, this case presents an appropriate compliment to Dague.
The plaintiff in this action was able to obtain counsel in the
relevant legal market only on a one-third contingent basis, and
only after approaching five different law firms. This situation
reflected the requirements for a fee enhancement set forth in
Justice O’Connor’s opinion in Delaware Valley: there was
uncontradicted evidence that without enhancement of the fee,
1}
Biggins could not have secured counsel (and indeed was almost
unable to anyway), and uncontradicted evidence that the local
market compensated for the risk on a simple one-third contin-
gent fee basis.
The First Circuit refused to consider enhancement, appar-
ently on the ground that such an arrangement (at least where
a large verdict resulted) in itself provides counsel with the
necessary enhancement. Such an analysis ignores a significant
purpose of fee shifting statutes: to make the wrongdoer bear
the burden of the cost of litigation and not the plaintiff. Without
enhancement in such a circumstance, the plaintiff cannot be
made whole, but must himself bear a more significant portion
of the cost than does a plaintiff who has funds to retain counsel
on an hourly basis. While a large verdict may sometimes
provide the attorney with a degree of enhancement, it is the
plaintiff, not the defendant, who is forced to bear the burden
of the enhancement, a result which could hardly have been
intended by fee shifting statutes, and a result completely at
odds with equity.
This case therefore provides an alternative focus for the
Court to consider in determining the governing rules for fee
enhancements: namely whether the plaintiff or the defendant
should bear the burden of enhancement.
This case further presents the Court with the opportunity to
eliminate the lower courts’ confusion on this issue, by adopting
a simpler rule based solely on market factors and not on case
specific factors. The Court should adopt a rule whereby en-
hancement (or the required fee itself) is determined strictly on
the basis of how the local market compensates attorneys for
that type of case.
This approach eliminates the requirement put forth in Dela-
ware Valley II by Justice O’Connor that the plaintiff demon-
strate “substantial difficulty” in obtaining counsel without a
contingent fee enhancement, but retains the case neutral market
analysis test. Enhancement on the basis of market factors Satis-
fies the concerns raised by the “substantial difficulties” test
12
because the market, by definition, adjusts the fee arrangement
to compensate for the plaintiff’s difficulty in otherwise obtain-
ing counsel.
As it is, the “substantial difficulty” test is, for this reason,
almost impossible to apply, and is a major source of confusion
in the lower courts. As the Court of Appeals for the District
of Columbia stated in King v. Palmer:
To add to our quandary, even if we did have
evidence that several lawyers had declined Ms.
King’s case, we think it would be impossible to
separate out from their decision not to represent her
the strength or weakness of her claim as it appeared
to them at the time. After all, this is surely the
principal reason a lawyer will turn down a case under
a fee-shifting statute .. .
The more we struggle with this problem, the more
we are convinced that it is virtually impossible to
determine whether a given plaintiff would have had
“substantial difficulties” in obtaining counsel without
a contingency enhancement. The inquiry is quite
artificial, because, by definition, the plaintiff stands
before the court with counsel. And since counsel
could not possibly know whether a risk enhancement
was in the offing until a court decides the question
ten years later, our inquiry is circular.
King v. Palmer, 950 F.2d at 780. \
By adopting a pure market approach, this court can simplify
the rule and its application, while satisfying the concerns of
plaintiff's need to obtain counsel and to be made whole.
C. The Court Erred in Denying Enhancement
As noted above, the First Circuit denied enhancement of
the fee for the risk of contingent stating that the size of the ver-
13
dict itself provided counsel with a premium (A-8). This reason-
ing is clearly contrary to Justice O’Connor’s opinion in Dela-
ware Valley II, in that it necessarily looks to the risks of the
particular case itself and in fact does so only with the benefit
of hindsight, analyzing risk after the plaintiff has prevailed,
where obviously no risk any longer exists. This guarantees
that the worthiest of cases will never receive enhancement.
Such reasoning effectively denies all fee enhancement when-
ever one-third of the verdict exceeds the lodestar figure.
This rationale not only penalizes the plaintiff who is most
injured and has suffered the greatest damages, but likewise
frees the most egregious violators of the law from the additional
liability now reserved for those who create lesser harms. In
this case, the plaintiff had economic damages in excess of
$1,200,000 (A-52), and the defendants were found liable of
a willful violation of the ADEA (A-51). Yet, in the eyes of
the First Circuit, the size of the wrong becomes the reason to
deny enhancement.
While this result damages the plaintiff most of all, it also
ignores the fact that it is in those cases which involve the
largest damages that counsel is more likely to be required to
take the greatest risk of loss. In the present case, the lodestar
as determined by the district and Circuit Courts now exceeds
$240,000. It is perhaps an oversimplification, but, nonetheless,
usually the case, that the larger the stakes, the greater the risk
for counsel who accepts the case on a contingent basis.
The First Circuit further errs by basing its decision on the
nature of the contract between counsel and the plaintiff. In
Venagas v. Mitchell, 495 U.S. 82, 110 S.Ct. 1679 (1990),
this Court held:
§ 1988 controls what the losing defendant must pay,
not what the prevailing plaintiff must pay his lawyer.
What a plaintiff may be bound to pay and what an
attorney is free to collect under a fee agreement are
not necessarily measured by the “reasonable attor-
EE
I4
ney’s fee that a defendant must pay pursuant to a
Court Order.
Venagas, 110 S.Ct. at 1684. The Court of Appeals, contrary
to this principle, focuses only on what Biggins will pay his
attorney, and in an odd twist of fate, uses it against him.
Consideration of enhancement should instead be based on what
the defendant must pay.
The First Circuit’s opinion demonstrates that attempting to
address the “substantial difficulties” test leads a court inevitably
to analyze the risks of a particular case. See King v. Palmer,
950 F.2d at 780.
Adopting a pure market approach to determining the award
of attorney’s fees provides the enhancement necessary for
plaintiffs to obtain counsel, avoids analysis of the risks of a
particular case and makes the party responsible for the harm
bear the costs of the litigation.
CONCLUSION
For these reasons, a Writ of Certiorari should issue to review
the decision of the United States Court of Appeals for the First
Circuit and preserve the plaintiff’s rights while this Court con-
siders City of Burlington v. Dague, 935 F.2d 1343 (2d Cir.
1991), No. 91-810, cert. granted, (U.S. Jan. 27, 1992).
Respectfully submitted,
JOHN J. EGAN
Counsel of Record
MAURICE M. CAHILLANE, JR.
EDWARD J. MCDONOUGH, JR.
EGAN, FLANAGAN aAnbD COHEN, P.C.
67 Market Street
P.O. Box 9035
Springfield, Massachusetts 01 102-9035
(413) 737-0260
Counsel for Cross-Petitioner
A-1
United States Court of Appeals
For the First Circuit
No. 91-1591
WALTER F. BIGGINS,
PLAINTIFF, APPELLEE,
v.
THE HAZEN PAPER COMPANY, ET AL..,
DEFENDANTS, APPELLANTS.
No. 91-1614
WALTER F. BIGGINS,
PLAINTIFF, APPELLANT,
v.
THE HAZEN PAPER COMPANY, ET AL.,
DEFENDANTS, APPELLEES.
Before
Breyer, Chief Judge,
Bowness, Senior Circuit Judge,
TorRUELLA, SELYA and Cyr, Circuit Judges,
and Tauro,* District Judge.
*Of the District of Massachusetts, sitting by designation.
A-2
ORDER OF COURT
Entered: January 29, 1992 ,
The panel of judges that rendered the decision in these cases
having voted to deny the petitions for rehearing submitted by
defendants appellants/cross appellees and plaintiff ap-
pellee/cross appellant, and their suggestions for the holding of
a rehearing en banc having been carefully considered by the
judges of the court in regular active service and a majority of
said judges not having voted to order that these appeals be heard
or reheard by the court en banc,
It is ordered that both petitions for rehearing and both sug-
gestions for rehearing en banc be denied.
By the Court:
Clerk
[cc: Messrs. Harrington and Egan)
A-3
United States Court of Appeals
For the First Circuit
No. 91-1591
WALTER F. BIGGINS,
PLAINTIFF, APPELLEE,
v.
THE HAZEN PAPER COMPANY, ET AL.,
DEFENDANTS, APPELLANTS.
No. 91-1614
WALTER F. BIGGINS,
PLAINTIFF, APPELLANT,
vb.
THE HAZEN PAPER COMPANY, ET AL.,
DEFENDANTS, APPELLEES.
JUDGMENT
Entered: January 8, 1992
ee
A-4
These causes came on to be heard on appeal from the United
States District Court for the District of Massachusetts, and were
argued by counsel.
Upon consideration whereof, It is now here ordered, ad-
judged and decreed as follows: The judament of the district
court is affirmed in part and reversed in part and the cause is
remanded to the district court for further proceedings consis-
tent with the opinion issued this date.
No costs to either party.
By the Court:
Clerk
(cc: Messrs. Harrington and Egan]
A-5
United States Court of Appeals
For the First Circuit
No. 91-1591
WALTER F. BIGGINS
PLAINTIFF, APPELLEE,
v.
THE HAZEN PAPER COMPANY, ET AL..,
DEFENDANTS, APPELLANTS.
No. 91-1614
WALTER F. BIGGINS
PLAINTIFF, APPELLANT,
v.
THE HAZEN PAPER COMPANY, ET AL..,
DEFENDANTS, APPELLEES.
APPEALS FROM THE UNITED STATES DISTRICT COURT FOR THE
DISTRICT OF MASSACHUSETTS
(Hon. FRANK H. FreepMan, U.S. District Judge)
Before
TORRUELLA, Circuit Judge,
Bownss, Senior Circuit Judge,
and Tauro, * District Judge.
John M. Harrington, Jr. with whom Robert B. Gordon, Ropes &
Gray, Richard S. Hayes, Patrick W. McGinley, Raymond R. Randall
and Sullivan & Hayes were on brief for Hazen Paper Company, et al.
John J. Egan with whom Maurice M. Cahillane and Egan, Flana-
gan and Cohen, P.C. were on brief for Walter F. Biggins.
* Of the District of Massachusetts, sitting by designation.
A-6
January 8, 1992
Bowngs, Senior Circuit Judge. After his employment was
terminated at the Hazen Paper Company in June of 1986,
Walter F. Biggins sued the company and the two individuals
who owned and operated it, Robert Hazen and Thomas N.
Hazen. In the district court Biggins obtained an amended judg-
ment against the defendants in the amount of $1.78 million dol-
lars. Both the defendants and the plaintiff appeal this
judgment.
I. BACKGROUND
A. The Jury Verdict
The complaint alleged violations of the Age Discrimination
in Employment Act (ADEA), 29 U.S.C. §§ 621-634, and the
Employee Retirement Income Security Act (ERISA), 29 U.S.C.
§ 1140. Pendent state law claims were also brought under Mas-
sachusetts tort and contract law and the Massachusetts Civil
Rights Act (MCRA), Mass. Gen. L. ch. 12, §§ 11H and 111. The
case was jury tried.
The jury, in answer to special interrogatories, rendered the
following verdict on the federal claims. It found that defen-
dants violated the ADEA and awarded Biggins $560,775 in
damages. It also found that the ADEA violation was willful. On
Biggins’ ERISA claim, the jury found that defendants dis-
charged the plaintiff in order to prevent his pension benefits
from vesting. Biggins was awarded $100, 000 in damages on the
ERISA claim.
The jury found for the plaintiff on four Massachusetts law
claims. First, on the wrongful discharge claim, the jury found
that the defendants agreed to compensate Biggins by giving him
shares of company stock, and that the defendants wrongfully
discharged Biggins in order to deprive him of this promised
stock compensation. The jury awarded plaintiff one dollar in
compensatory damages on the wrongful discharge claim. The
jury also found that the defendants committed fraud by failing
to compensate Biggins with the stock he had been promised; it
A-7
awarded him $315,098 in damages for the fraud. The jury fur-
ther found that the plaintiff and the defendants had a contract
other than of at-will employment, and that the defendants
breached this employment contract when they discharged him.
Biggins was awarded $266,897 in compensatory damages on
this claim. Finally, the jury found that the defendants violated
the Massachusetts Civil Rights Act because they interfered with
Biggins’ exercise of his civil rights through the use of threats, in-
timidation or coercion. The jury awarded Biggins one dollar in
damages on this claim.
The jury was also asked to determine if Biggins was the inven-
tor, developer, and sole rightful owner of a paper coating for-
mula and method that was developed while he worked for the
defendants. The jury found that he was not.
B. District Court Rulings on Post-Trial Motions
After the verdict, both the defendants and the plaintiff filed
post-trial motions. Defendants filed a motion pursuant to Fed.
R. Civ. P. 50(b) for j.n.o.v. or, in the alternative, for a new
trial. Defendants also moved to amend or alter the judgment
pursuant to Fed. R. Civ. P. 59(e). Plaintiff moved for an award
of costs and attorney’s fees under federal and state law. Plaintiff
also requested that the district court enhance any award of at-
torney’s fees to an amount equal to one-third of the damages
awarded.
The court ordered j.n.o.v. on the jury’s finding that the
ADEA violation was willful. That finding, if sustained, would
have required an additional payment of liquidated damages
equal to the amount of damages awarded for the ADEA viola-
tion. The court also ordered j.n.o.v. on the finding of a violation
of the Massachusetts Civil Rights Act. In all other respects the
court denied the defendants’ motion for j.n.o.v. or a new trial.
The court also denied the defendants’ motion to alter or amend
the judgment.
On plaintiff's post-trial motions, the district court further
A-8
ruled that Biggins was entitled to prejudgment interest “on his
entire award because plaintiff is not entitled to liquidated
damages.” The court granted plaintiff's motion for attorney's
fees in the amount of $175,564.57 and for costs in the amount
of $9,760.07. It declined to enhance the award of attorney's
fees.
C. The Issues on Appeal
The defendants raise three issues on appeal: (1) whether the
district court erred in denying their motions for directed verdict
and j.n.o.v. on all the claims submitted to the jury; (2) whether
the district court erred in denying the defendants’ motion to
alter or amend the judgment because the damages awarded
were excessive, duplicative, and unsupported by the evidence
and because the award of prejudgment interest was erroneous
as a matter of law; and (3) whether the district court erred in
denying defendants’ motion for a new trial because the verdict
was against the clear weight of the evidence.
Biggins raises three issues on cross-appeal: (1) whether the
court erred in granting j.n.o.v. on the jury's finding that the
ADEA violation was willful; (2) whether the court erred in
granting j.n.o.v. on the Massachusetts Civil Rights Act claim:
and (3) whether the court erred by applying the wrong standard
in determining the amount of attorney’s fees and expenses to be
awarded plaintiff.
We apply the same standard of review to the district court's
grant or denial of motions for directed verdict and j.n.o.v. See
Veranda Beach Club Ltd. Partnership v. Western Sur. Co. , 936
F.2d 1364, 1383 (1st Cir. 1991). The standard is de novo review
“which means that we use the same stringent decisional stan-
dards that control the district court.” Hendricks ¢> Assocs., Inc.
v. Daewoo Corp., 923 F.2d 209, 214 (1st Cir. 1991). The stan-
dard has been elucidated as follows:
A-9
The district court may grant judgment notwithstanding
the verdict “only after a determination that the evidence
could lead a reasonable person to only one conclusion,”
. namely, that the moving party was entitled to
judgment{[.]...
The district court “may not consider the credibility of
witnesses, resolve conflicts in testimony, or evaluate the
weight of the evidence.” The trial court is “compelled,
therefore, even in a close case, to uphold the verdict” un-
less the facts and inferences, when viewed in the light most
favorable to the party for whom the jury held, point so
strongly and overwhelmingly in favor of the movant that
a reasonable jury could not have arrived at this con-
clusion.”
Id. at 214 (citations omitted). We review the evidence in our
discussion of the issues.
II. THE ADEA CLAIM
A. Sufficiency of the Evidence
McDonnell Douglas Corp. v. Green, 411 U.S. 792 (1973), is
the foundation case on the order and allocation of proof in an
employment discrimination case, where, as here, there is no
direct proof of discrimination. The plaintiff must first prove a
prima facie case. If this is done, the burden then shifts to the em-
ployer to articulate some nondiscriminatory reason for the em-
ployee’s termination. Id. at 802. If this is done, the plaintiff has
the opportunity to show that the reasons advanced were a
cover-up for a discriminatory employment decision. Jd. at 805.
See also Texas Dep’t of Community Affairs v. Burdine, 450 U.S.
248, 252-53 (1981); Furnco Constr. Corp. v. Waters, 438 U.S.
567, 575-76 (1978).
There is no doubt that plaintiff here made out a prima facie
case of age discrimination. He was within the protected age
OOOO aol
A-10
group. He was sixty-two years old at the time of his termination.
He was performing his work at a level that met his employer's
legitimate expectations. And he was replaced by someone youn-
ger than himself with roughly similar qualifications. See Mes-
nick v. General Elec. Co., ____ F.2d ___.,, No. 91-1451, slip.
op. at 9-10 (1st Cir. Dec.16, 1991); Medina-Munozv. R. J. Rey-
nolds Tobacco Co., 896 F.2d 5, 8-9 (1st Cir. 1990).
In Connell v. Bank of Boston, 924 F.2d 1169 (1st Cir.) cert.
denied, 111 S. Ct. 2828 (1991), we held that
[i]f a prima facie case is made, the burden shifts to the em-
ployer to articulate some legitimate nondiscriminatory
reason for plaintiff's discharge. The articulation of such a
reason nullifies the inference raised by the prima facie
case. Plaintiff must then clear the second hurdle by show-
ing that the employer's articulated reasons were only a
pretext for age discrimination. The plaintiff is required to
“do more than simply refute or cast doubt,” on the employ-
er's rationale. He must “also show a discriminatory animus
based on age.” The key question becomes whether the em-
ployer fired plaintiff because of his age. We do not second-
guess the business decisions of an employer.
Connell, 924 F. 2d at 1172 (citations and footnotes omitted).
The defendants in this case articulated legitimate non-
discriminatory reasons for Biggins’ discharge. The question is
whether there was sufficient evidence for the jury to find that
defendants fired plaintiff because of his age. We find that there
was.
In order to understand the ADEA evidence we must first out-
line the evidentiary contours of the case. Hazen Paper Compa-
ny is a small and successful business located in Holyoke, Mas-
sachusetts. It is privately owned and operated by two cousins,
Robert Hazen and Thomas N. Hazen. Robert Hazen is the com-
pany’s president and Thomas Hazen is its treasurer. The com-
pany is engaged in the manufacture of coated, foil laminated,
A-11
and printed paper and paperboard for use in such products as
cosmetic wrap, lottery tickets, and pressure sensitive items. It
is known as a paper converter.
Biggins was hired by Hazen Paper in 1977 as its first technical
director. There was no written employment contract. Biggins
was fifty-two years old when he was hired. He held a Bachelor’s
degree and a Master’s degree in chemistry and had spent his pri-
or work life as a technician-chemist in the paper industry.
Biggins worked for Hazen Paper for over nine and one-half
years. One of the problems that Hazen Paper and the paper con-
verter industry faced at the time Biggins started hisemployment
was the elimination of hazardous emissions from the nitrocellu-
lose and vinyl coatings then in general use. The elimination of
such emissions was mandated by the Clean Air Act. Biggins de-
veloped a water-based paper coating that both exceeded the re-
quirements of applicable environmental laws and resulted in a
superior product in terms of gloss and durability.
By the mid-1980s that coating, referred to at trial as “Biggins
Acrylic,” was widely used by Hazen Paper. The company’s sales
increased substantially as a result of the use of the coating deve-
loped by Biggins. In 1983 Biggins became aware of this increase
in sales and of the fact that the commissions of one of its sales
representatives, Robert Hutchinson, had increased dramatical-
ly (to over $200,000). Because he felt that these sales commis-
sion were being made on “something that I had developed,”
Biggins sought an increase in pay from the company. After a
meeting in 1983 with Thomas and Robert Hazen, Biggins’ sa-
lary was increased by ten percent.
Biggins, however, remained dissatisfied with his compensa-
tion. In 1984, Biggins again sought an increase in his salary,
which by this time was $44,000. Biggins testified that in July of
1984 he approached Thomas Hazen to tell Hazen that he want-
ed a raise and that he thought he was worth $100,000 to the
company. According to Biggins, Hazen told him that “nobody
in the company” was being paid that amount and that Hazen
could not give him a salary increase to $100,000. Biggins testi-
A-12
fied that Hazen nonetheless indicated that “he would be willing
to give me a piece of the company in stock, and that . . . my for-
tune could increase as the fortunes of the company did.” Biggins
also stated that Hazen said that he was prepared to “mak[e] up
the difference between my salary and $100,000 in stock.” Tho-
mas Hazen denied emphatically that he promised to give Big-
gins any stock.
While Biggins was working for Hazen Paper, he also was in-
volved in two private business ventures with his son. One had
to do with cleaning up hazardous wastes and recovering dirty
solvents produced by automobile repair shops and paper com-
panies. The other venture was a consulting business in the en-
vironmental/ regulatory compliance area, which involved ex-
plaining to small businesses what was required under applica-
ble regulations. When Thomas Hazen learned of the clean-up
business, he concluded that Biggins had taken personal advan-
tage of his employment at the company and that there was a
great risk of Biggins disclosing company secrets to its competi-
tors. Thomas Hazen and his cousin, Robert, told Biggins that
this activity was “outrageous.” Thomas Hazen had a confiden-
tiality agreement drawn up which restricted Biggins’ outside
activities during his employment and for a limited time after his
employment ceased. Biggins indicated he would sign the agree-
ment if he was given a raise, but Thomas Hazen would not agree
to this. He told Biggins that unless he signed the agreement as
it stood, his employment would be terminated. Biggins refused
to do so and his employment with Hazen Paper ceased on June
13, 1986. At the time Biggins was terminated, his pension
rights, which were worth about $93,000, had not vested. They
would, however, have vested a few weeks later if Biggins had
not been fired.
We now turn to the evidence bearing directly on the ADEA
claim. Biggins testified that both Robert and Thomas Hazen
made critical comments about his age. On one occasion, Robert
Hazen took out a membership for company employees in a
handball court in Holyoke. At that time he told Biggins and
A-13
another employee, who was a year older than Biggins, that it
would not do them much good because they were “so old.” On
another occasion, Thomas Hazen reminded Biggins that it was
costing the company a lot more for his life insurance policy be-
cause he was “so old.”
The most significant evidence on the ADEA claim comes
from the facts and circumstances surrounding the termination
of Biggins’ employment. Biggins was asked by Thomas Hazen
to sign a confidentiality agreement in the spring of 1986 be-
cause, according to Hazen, he felt that Biggins’ outside business
venture was improper and a threat to the company. Negotia-
tions relative to Biggins signing the confidentiality agreement
continued for weeks, during which time Biggins stated repeat-
edly that he would not sign the agreement unless his remunera-
tion was increased. Thomas Hazen brought matters to a head
by telling Biggins on June 13, 1986, that there would be no pay
increase, and unless he signed the agreement he would be fired.
Biggins refused to do so and his employment was terminated on
that date.
Defendants hired a younger man to replace plaintiff, one
Timothy McDonald. A confidentiality agreement was given to
McDonald. It provided for 100 days separation pay. By con-
trast, the confidentiality agreement offered Biggins had no such
provision for severance pay. McDonald’s agreement also con-
tained a six-month non-competition clause. In the agreement
tendered the plaintiff, the non-competition clause was for two
years.
As of June 13, 1986, Biggins had worked for the defendants
for more than nine and one-half years. He was sixty-two years
old. It is uncontradicted that had Biggins worked for the com-
pany a few more weeks, his right to a pension would have vest-
ed. There was uncontradicted evidence that at the time of Big-
gins’ termination no one else in the company was subject to a
confidentiality agreement.
There was additional testimony that when Thomas Hazen
was told by Biggins that he would not sign the confidentiality
A-14
agreement unless it was accompanied by an increase in
remuneration, Hazen suggested Biggins become a consultant to
the company. Biggins would then no longer have been an em-
ployee of the company and would have lost his rights to all em-
ployee benefits. Finally, Thomas Hazen testified that he was
“absolutely” aware that age discrimination was illegal.
Based on the foregoing evidence, the jury could reasonably
have found that Thomas Hazen decided to fire Biggins before
his pension rights vested and used the confidentiality agreement
as a means to that end. The jury could also have reasonably
found that age was inextricably intertwined with the decision
to fire Biggins. If it were not for Biggins’ age, sixty-two, his pen-
sion rights would not have been within a hairbreadth of vesting.
Biggins was fifty-two years old when he was hired; his pension
rights vested in ten years.
Based on our review of the evidence, we find that it was wi-
thin the province of the jury to decide whether age was a deter-
mining factor in the defendants’ decision to terminate Biggins’
employment.
B. Was There a Willful Violation of the ADEA?
The enforcement section of the ADEA contains the following
provision: “Provided, That liquidated damages shall be paya-
ble only in cases of willful violations of this chapter.” 29 U.S.C.
§626(b). The ADEA, in § 626(b), adopts the definition of liqui-
dated damages established in the Fair Labor Standards Act, 29
U.S.C. § 216(b). Liquidated damages are defined as an amount
equal to the pecuniary losses suffered by the discharged em-
ployee by way of lost wages, salary increases and other benefits.
See Air Line Pilots Ass’n., Int'l v. Trans World Airlines, Inc.,
713 F. 2d 940, 956 (2d Cir. 1983), aff'd in part and rev'd in part
sub nom. Trans World Airlines, Inc. v. Thurston, 469 U.S. 111
(1985).
A-15
In reviewing the Trans World Airlines case, which focused on
the application of a company-wide plan or policy, the Supreme
Court held that an acceptable definition of “willful violation”
was the one used by the Second Circuit: “( A] violation is ‘willful’
if ‘the employer either knew or showed reckless disregard for the
matter of whether its conduct was prohibited by the ADEA.’”
Thurston, 469 U.S. at 128 (citation omitted). The Court held
that “Congress intended for liquidated damages to be punitive
in nature.” Id. at 125. The Court noted:
Courts below have held that an employer's action may
be “willful,” within the meaning of § 16(a) of the FLSA,
even though he did not have an evil motive or bad purpose.
We do not agree with TWA’s argument that unless it in-
tended to violate the Act, double damages are inappropri-
ate under §7(b) of the ADEA. Only one Court of Appeals
has expressed approval of this position. See Loeb v. Tex-
tron, Inc., 600 F.2d 1003, 1020, n. 27 (CAl 1979).
Id. at 126 n.19 (citation omitted). This means, as we under-
stand it, that evil purpose or bad motive are not necessary com-
ponents of a willful violation.
In a subsequent Fair Labor Standards Act case the Court
reaffirmed the definition of a willful violation enunciated in
Thurston. “The standard of willfulness that was adopted in
Thurston — that the employer either knew or showed reckless
disregard for the matter of whether its conduct was prohibited
by the statute — is surely a fair reading of the plain language
of the Act.” McLaughlin v. Richland Shoe Co., 486 U.S. 128,
133 (1988).
As already noted, Thurston involved the application of a
company policy to a group of employees. The courts of appeals
have had some trouble fitting the Thurston standard of willful-
ness to disparate treatment cases. Asa result the circuits have ar-
rived at differing interpretations and modifications of Thur-
ston. We, therefore, turn to a review of the relevant cases before
Hittin
as |
A-16
attempting to formulate our own definition of willfulness in a
disparate treatment case.
The Second Circuit has taken a “continuum” approach.
In light of Thurston, we think that “willfulness.’ is most
easily understood when the term is analyzed along a con-
tinuum. Using that concept, at one extreme there is no lia-
bility for liquidated damages when a plaintiff proves only
that the employer acted negligently, inadvertently, inno-
cently, or even, if the employer was aware of the applica-
bility of the ADEA, and acted reasonably and in good
faith. See McLaughlin, 1085S. Ct. at 1681-82. The opposite
point of the spectrum is revealed when a plaintiff estab-
lishes that the employer had an evil motive: such showing
is sufficient for double damages, but is not necessary for an
award of liquidated damages. See Thurston, 469 U.S. at
126 n. 17, 105 S. Ct. at 624 n. 17. Thus, in the middle of
the spectrum, double damages may properly be awarded
when the proof shows that an employer was indifferent to
the requirements of the governing statute and acted in a
purposeful, deliberate, or calculated fashion.
Benjamin v. United Merchants and Mfrs, Inc. , 873 F.2d 41, 44
(2d Cir. 1989).
The Third Circuit has added a requirement of “outrageous
conduct” to the Thurston factors:
Where an employer makes a decision such as termina-
tion of an employee because of age, the employer will or
should have known that the conduct violated the Act.
Nonetheless, in order that the liquidated damages be based
on evidence that does not merely duplicate that needed for
the compensatory damages, there must be some additional
evidence of outrageous conduct.
Dreyer v. Arco Chemical Co., Div. of Atlantic Richfield Co..,
801 F.2d 651, 658 (3d Cir. 1986). The Third Circuit felt that
a
‘nea
A-17
under Thurston it “must interpret the liquidated damages pro-
visions in a way that would not permit ‘an award of double
damages in almost every case’... . ” Id. at 657 (citation omit-
ted). It found its basis for adding this requirement of outrageous
conduct in the Restatement (Second) of Torts §908(2). Id. The
Court also held: “If an employer can show good faith and
reasonable grounds for believing it was not in violation of the
Act, a willfulness finding would be inappropriate.” Id. at 658
(citations omitted). See also Turner v. Schering-Plough Corp.,
901 F.2d 335, 346 (3d Cir. 1990).
In Taylor v. Home Insurance Company, 777 F.2d 849, 859
(4th Cir. 1985), cert. denied, 476 U.S. 1142 (1986), the Fourth
Circuit adopted the Thurston definition of willfulness without
discussion.
The Fifth Circuit has interpreted Thurston to mean that
“good faith” is no longer a valid defense to a willfulness claim:
Under the Thurston rule, however, “good faith” can no
longer coexist with “willfulness.” The result is that only
“knowing” or “reckless” violations of the ADEA are sub-
ject to liquidated damages. Thus, a further examination of
good faith becomes irrelevant because it has already been
factored into the Thurston “willfulness” definition.
Powell v. Rockwell Int'l Corp., 788 F.2d 279, 287 (5th Cir.
1986). In Hansard v. Pepsi-Cola Metropolitan Bottling Co.,
865 F.2d 1461 (5th Cir.), cert. denied, 493 U.S. 842 (1989), the
court appears to have added an egregious violation requirement
to the Thurston standard of “knowing or reckless disregard”:
The Supreme Court has held that liquidated damages
are a punitive sanction and chould be reserved for the most
egregious violations of the ADEA. Liquidated damages
should not be awarded unless the defendant acted know-
ingly or recklessly.
The evidence is this case was weak. There is simply no
_—————Qq~r—aa.0rES-t_,., "1
A-18
evidence that Pepsi’s actions were so egregious as to justify
finding a willful violation. Pepsi was entitled to judgment
on this issue.
Id. at 1470 (citations omitted).
In Schrand v. Federal Pacific Electric Co. , 851 F.2d 152 (6th
Cir. 1988), the Sixth Circuit followed the Tenth Circuit and
heid that a defendant’s conduct could be willful “only if age was
the predominant factor in the decision to terminate the plain-
tiff.” Id. at 158. See also Wheeler v. McKinley Enter. , 937 F.2d
1158, 1164 (6th Cir. 1991).
The Seventh Circuit follows Thurston’s knowing or reckless
disregard definition. Brown v. M & M/Mars, 883 F.2d 505, 512
(7th Cir. 1989). It squarely rejected the Third Circuit's addition
of outrageous conduct to the Thurston formula. Id. at 513.
The Eighth Circuit applies the Thurston standard as follows:
We think Thurston means at least this: if the people mak-
ing the employment decision know that age discrimination
is unlawful, and if there is direct evidence -- more than just
an inference from, say, an arguably pretextual justifica-
tion — of age-based animus, the trier of fact may properly
find willfulness.
Neufeld v. Searle Lab. , 884 F.2d 335, 340 (8th Cir. 1989). See
also Beshears v. Asbill, 930 F.2d 1348, 1356 (8th Cir. 1991).
The Ninth Circuit follows the Thurston standard unadorned
and has applied it retroactively. Gilchrist v. Jim Slemons Im-
ports, Inc., 803 F.2d 1488, 1494-95 (9th Cir. 1986).
The Tenth Circuit, after a careful analysis of Thurston and
a survey of the standards adopted in other circuits, held:
Under the standard we adopt today, a basic finding of lia-
bility under the Act requires that age be at least one of pos-
sibly several “determinative factors” in the employer's
conduct; for a willful violation to exist in a disparate treat-
A-19
ment claim, a factfinder must find that age was the
predominant factor in the employer's decision.
Cooper v. Asplundh Tree Expert Co., 836 F.2d 1544, 1551
(10th Cir. 1988).
The Eleventh Circuit follows Thurston without qualifica-
tion. Formby v. Farmers & Merchants Bank, 904 F.2d 627, 632
(11th Cir. 1990). See also Lindsey v. American Cast Iron Pipe
Co., 810 F.2d 1094, 1099-1101 (11th Cir. 1987).
Finally, we turn to our own circuit. Loeb v. Textron Inc. , 600
F.2d 1003 (Ist Cir. 1979), which was decided before Thurston,
is the seminal case.' Our definition of willfulness as requiring
bad purpose has been rejected by Thurston. See Thurston, 469
U.S. at 126 n.19. Specific intent to violate the ADEA is, there-
fore, not required to establish a willful violation.
In Loeb, after discussing the jury instructions on application
of the McDonnell Douglas formula to an ADEA violation
claim, we adopted the following standard governing proof of an
ADEA violation:
We do not quarrel with the court’s statement that age
did not have to be the sole factor motivating defendants to
act; we do think, however, that the court should have in-
structed the jury that for plaintiff to prevail he had to
prove by a preponderance of the evidence that his age was
the “determining factor” in his discharge in the sense that,
“but for” his employer’s motive to discriminate against
him because of age, he would not have been discharged.
1 Loeb held, inter alia, that in this circuit good faith could not be used as
a defense in an ADEA case. Id. at 1020. We agree with the Fifth Circuit's deci-
sion in Powell v. Rockwell Int 1. Corp. , 788 F.2d 279, 287 (5th Cir. 1986), that
Thurston has rendered the issue of good faith irrelevant.
hci
A-20
Loeb, 600 F.2d at 1019. The “determining factor” or “but for”
test has been consistently followed by usin ADEA cases in which
the McDonnell Douglas formula applies. See e. g., Mesnick v.
General Electric Co., No. 91-1451, slip. op. at 11-13; Connell,
924 F.2d at 1172; Medina-Munoz, 896 F.2d at 9: Hebert v. Mo-
hawk Rubber Co., 872 F.2d 1104, 1110-11 (ist Cir. 1989);
Menard v. First Sec. Serv. Corp., 848 F.2d 281, 285 & 287 (Ist
Cir. 1988).
In this circuit, the “determining factor” ingredient added by
the Sixth and Tenth Circuits to the Thurston standard for proof
of a “willful” violation of ADEA in disparate treatment cases is
already a basic requirement for proof of the underlying ADEA
violation itself.
With due respect, we cannot accept the Third Circuit's out-
rageous conduct requirement. This seems to us to fly in the face
of Thurston, and we find the term “outrageous” simply too
amorphous to be of assistance in determining what constitutes
a willful violation.
We, therefore, adopt, without modification or qualification,
the Thurston test for willfulness: “a violation is ‘willful’ if ‘the
employer either knew or showed reckless disregard for the mat-
ter of whether its conduct was prohibited by the ADEA.’”
Thurston, 469 U.S. at 128 (citation omitted). We realize that in
many cases this will result in a willful violation following hard
on the heels of an ADEA violation, but that is the nature of the
beast in a disparate treatment case, at least until either the Con-
gress or the Supreme Court changes the definition of willful-
ness. See Burlew v. Eaton Corp. , 869 F.2d 1063, 1067 (7th Cir.
1989).
We now apply the standard to this case. The principal owner
of the company, Thomas Hazen, testified that he was “abso-
lutely” aware that age discrimination was illegal. This is as
strong evidence of a knowing violation of ADEA as a plaintiff
could wish. In his charge to the jury, the district judge instruct-
ed that “age must have been the determining factor” in plain-
tiff's discharge for the defendant's to be found liable. This was
A-21
in accord with the rule of this circuit. The court’s instruction on
willfulness was as follows:
I will now instruct you on the meaning of willfulness.
Under Federal law, an act is done willfully if done
voluntarily and intentionally, and with a specific intent to
do something the law forbids.
You may find that Defendants willfully violated the age
discrimination law if you find that one, that Defendants
knew of or showed reckless disregard for, the law prohibit-
ing age discrimination.
And two, that Defendants, with bad purpose, inten-
tionally disobeyed or ignored the law.
In sum, if you find in Plaintiff's favor on the age dis-
crimination claim, you must also decide whether the
Plaintiff proved by a preponderance of the evidence that
the violation was willful. You should not award any
damages for the willfulness of the violation itself. You need
only decide whether the violation of the age discrimina-
tion law is willful.
This instruction went further then necessary because the
“bad purpose” requirement established by this circuit in Loeb
was eliminated by Thurston. 469 U.S. at 126 n.19. The instruc-
tion misstated the applicable law, and thereby prejudiced the
plaintiff because it held him to a higher standard of proof than
is required by Thurston and this circuit.
Because the jury nonetheless found in plaintiff's favor,
however, the error was harmless. The jury’s finding of a willful
violation of the ADEA had a solid evidentiary foundation and
was in accord with jury instructions that correctly stated the ap-
plicable law except as to the requirement of “bad purpose.” It
was error for the district court to grant defendants’ motion for
j.n.o.v. on this count. The finding by the jury that there was a
willful violation is reinstated.
A-22
C. Damages Under the ADEA
We next address the defendants’ claim that the ADEA
damages award was excessive, duplicative, and contrary to the
evidence. Plaintiff suggests that defendants are foreclosed from
raising this issue now because it was not raised below. Our
review of the record discloses that, although it was not raised as
explicitly below as it is here, it was argued sufficiently in defen-
dants’ post-trial motions so that the court was aware of its con-
tours and implications. See Memorandum and order, Biggins v.
Hazen Paper Company, No. 88-00225-F, slip. op. at 35-36 (D.
Mass. filed April 5, 1991).
Ruling on the defendants’ motion for a new trial, the district
court stated:
It is uncontested that plaintiff alleged total damages in
the amount of $1,375,614.12. Plaintiff offered the tes-
timony of Dr. Moore and Mr. Moriarty in support of that
allegation, and their testimony was unrefuted. It is also
true that the jury awarded a total of $1,242,772.00 in
damages on all seven counts, some $132,842 less than the
damages claimed by plaintiff. Because the jury did not
select for total damages a figure higher than that alleged
by plaintiff and evidenced in the record, the Court will not
set aside any portion of the verdict on this basis.
Id. at 36 (citations omitted). We think the ruling contained in
the last sentence of this order was error. Damages should not
have been treated on an across-the-board basis. The jury was in-
structed on damages count by count and returned an award on
each count separately. The damages awarded on each count
should have been examined separately, not as alump sum. This
is particularly so in an ADEA award because liquidated
damages always loom over the award.
Defendants argue that the evidence established that plain-
tiff's pretrial losses for the ADEA violation totalled $419,454.38
r —
A-23
and that the award of $560,775.00 was excessive by the amount
of $141,320.62. Plaintiff counters that there was evidence from
which the jury could have awarded damages in excess of
$650,000.
Plaintiff put in evidence, as exhibit 21, a document entitled
“Summary of Loss.” It was in effect a summary and condensa-
tion of the testimony of the two expert witnesses on damages
who testified on behalf of plaintiff. The damages to which
plaintiff was entitled for the ADEA violation were as follows:
cash loss - $234,841.55; bonus loss - $131,275.88; lost benefits
- $53,336.95. These sums totalled $419,454.38. This was all for
which there was evidentiary support.”
The jury award of $560,775 is reduced to $419,454.38. Be-
cause we have found that there was a willful violation of the
ADEA, plaintiff is entitled to liquidated damages equivalent to
the amount. Damages on the ADEA count, therefore, amount
to $838,908.76.
Ill. THE ERISA CLAIM
Defendants argue that the jury verdict finding liability under
ERISA was erroneous as a matter of law because there was no
evidence to support a reasonable finding that plaintiff was dis-
charged with the specific intent of interfering with his pension
vesting. We need not linger long on this issue. Plaintiff was dis-
charged within weeks before the vesting of his pension.
Although plaintiff was fired ostensibly because he refused to
sign the confidentiality agreement, the jury could have found
that the real reason was to deprive him of his pension benefits.
2 In this exhibit, the plaintiffs also alleged an additional “stock loss” of
$342,498. On appeal, plaintiffs do not argue that the jury’s award of damages
in excess of $419,454.38 could have been derived from this figure. We also note
that, as discussed in Part V, infra, we consider the stock loss for which Biggins
recovered on the common law fraud claim separate and distinct from the
$419,454.38 in back pay recovered under the ADEA claim.
A-24
The jury was entitled to draw reasonable inferences from the
proximity of the date of firing and the date of vesting of plain-
tiffs pension.
We agree with the defendants that there should be a remit-
titur on the jury award of $100,000, but not of $30,000. View-
ing the evidence in the light most favorable to the plaintiff, the
jury could have found that he was deprived of pension funds
worth $93,000. There is no basis in the record for an amount
greater than that. There must, therefore, be a remittitur on this
count of $7,000.
IV. MASSACHUSETTS LAW CLAIMS
The defendants also challenge the district court’s denial of
their motions for directed verdict and j.n.o.v. on three of the
Massachusetts law claims, contending that the evidence could
not reasonably have permitted the jury to find in favor of Big-
gins. Specifically, the appellants challenge the sufficiency of the
evidence to sustain findings of liability against them under Mas-
sachusetts law for (1) wrongful discharge; (2) common law
fraud; and (3) breach of a contract embodied in the Hazen
Paper Company’s 1980 Employee Handbook. On cross-appeal,
Biggins contests the district court’s grant of j.n.o.v. reversing
the jury’s finding of liability against the defendants under the
Massachusetts Civil Rights Act. We apply the same de novo
standard of review on the state law claims as we did on the fed-
eral claims.
A. Wrongful Discharge
Count IV of the complaint charged the defendants with
“wrongful discharge” of Biggins in violation of Massachusetts
law governing the termination of at-will employment. In For-
tune v. National Cash Register Co., 373 Mass. 96, 364 N.E.2d
1251 (1977), the Massachusetts Supreme Judicial Court recog-
nized that “an employer may not in every instance terminate
A-25
without liability an employment contract terminable at will.”
Cort v. Bristol-Myers Co. , 385 Mass. 300, 431 N.E.2d 908, 910
(1982). Fortune and subsequent decisions establish that an en-
forceable claim for breach of a contractual condition of good
faith will lie when the termination of an at-will employee is con-
trary to public policy. Cort, 431 N.E.2d at 910. See also Gram
v. Liberty Mut. Ins. Co., 384 Mass. 659, 429 N.E.2d 21, 27-29
(1981) ; Tenedios v. Wm. Filene’s Sons Co., 20 Mass. App. Ct.
952, 479 N.E. 2d 723, 726 (1985); Siles v. Travenol Laborato-
ries, Inc., 13 Mass. App. Ct. 354, 433 N.E.2d 103, 106, app. de-
nied, 386 Mass. 1103, 440 N.E.2d 1176 (1982).
In Cort and Gram, the Massachusetts Supreme Judicial
Court found that an “employer’s predatory motivation . . . can
be classified as a reason contrary to public policy.” Cort, 43}
N.E.2d at 910; Gram, 429 N.E.2d at 29. InGram, the Supreme
Judicial Court held that
the obligation of good faith and fair dealing imposed on an
employer requires that the employer be liable for the loss
of compensation that is so clearly related to an employee's
past service, when the employee is discharged without
good cause.
Gram, 429 N.E.2d at 29. In establishing these principles
governing the liability of an employer for an employee's dis-
charge in the absence of good cause, the Gram court was careful
to distinguish between recovery based on the employee’s loss of
future wages for past services, and any claim for recovery based
on loss of future income for future services. Id. The Mas-
sachusetts Supreme Judicial Court explicitly limited this theory
of “wrongful discharge” to situations in which the employee’s
discharge without good cause deprives the employee of com-
pensation for services previously earned or past services. Cort,
431 N.E.2d at 908. In order to establish a claim of wrongful ter-
mination, the discharge must be
A-26
contrived to despoil an employee of earned commission or
similar compensation due for past services. . . . That the
plaintiff was fired arbitrarily and was injured in her expec-
tations of future wages or other future emoluments does
not, without more, encompass the Fortune-type of lia-
bility, however meretricious we may consider the dismis-
sal to have been.
Tenedios, 479 N.E.2d at 726 (citations omitted).
In the instant case, the jury found that the defendants had
agreed in 1984 to compensate Biggins with shares of Hazen
Paper Company Stock. It also found that the defendants wrong-
fully discharged Biggins in 1986 in order to deprive him of the
promised stock compensation. The jury awarded one dollar in
compensatory damages. In motions for directed verdict and
j.n.o.v., the defendants attacked the legal sufficiency of the evi-
dence to support a finding of wrongful discharge. In both mo-
tions, they insisted that the promise of stock to Biggins was not
an enforceable contract. They argued that a contract could not
have been formed because Biggins did not own the formula for
the acrylic process which he allegedly used as the bargaining
chip for the stock. Lack of ownership of the rights to that formu-
la meant that Biggins could not have given any consideration in
return for the promise of stock. Consequently, the defendants
claimed that because there was no consideration for the alleged
stock agreement, there was no enforceable contract for the pay-
ment of stock, and therefore no deprivation of past “compensa-
tion” already earned within the meaning of Fortune and its
progeny.
The district court rejected these arguments, holding that Big-
gins provided “ample consideration” for the alleged stock
agreement — namely, “the present and continued satisfactory
performance of services for Hazen Paper Company.” The court
noted that the jury’s rejection of Biggins’ claim of ownership of
the acrylic formula precluded argument by Biggins that his
ownership of the formula constituted valid consideration for
A-27
the stock promise. Nonetheless, the court concluded that Big-
gins’ continued service as an employee of the company subse-
quent to the alleged stock promise would in and of itself consti-
tute adequate consideration for any stock agreement.
On appeal, the defendants renew the argument that the evi-
dence was legally insufficient to establish that Thomas Hazen’s
promise of stock to Biggins in 1984 was earned, contractually-
established “compensation.” They insist that there can be no
Fortune-based claim because Biggins failed to establish any
contractual expectancy that was in fact defeated by reason of
his discharge from employment.
Viewing the evidence in the light most favorable to the non-
moving party, we find that the district court correctly conclud-
ed that there was adequate evidence to support the jury’s find-
ing that consideration sufficient to support an agreement for
“compensation” inhered in Biggins’ continued performance of
services for the Hazen Paper Company. Biggins testified that
when he requested a raise in his annual compensation in 1984,
Thomas Hazen promised to give him stock worth the difference
between his preexisting $44,000 annual compensation and a
$100,000 annual compensation level. The jury could have
found that Biggins’ decision to continue as an employee with
Hazen Paper was consideration for an agreement to increase his
annual compensation. See Jackson v. Action for Boston Com-
munity Dev., Inc., 403 Mass. 8, 525 N.E.2d 411, 415 (1988)
(citing Simons v. American Dry Ginger Ale Co. , 335 Mass. 521,
526, 140 N.E.2d 649 (1957)) (for an employee to remain with
employer can, in appropriate circumstances, supply adequate
consideration for employment contract). We, therefore, hold
that there was adequate evidence to support the jury’s finding
that Biggins’ discharge in 1986 deprived him of “compensation”
for past services within the meaning of Massachusetts wrongful
discharge doctrine.
We find unavailing appellants’ continued insistence that any
promise of stock by Thomas Hazen to Biggins could never have
A-28
constituted an enforceable contract.’ The appellants renew the
argument made below that any offer of stock by Thomas Hazen
which did not specify the quantity or class of stock promised, or
the time of its delivery to Biggins, would lack the requisite
definiteness to be enforced as a contract. We think that the issue
of whether Thomas Hazen’s alleged offer of stock was suffi-
ciently definite was a question of fact, which the jury could
properly resolve in favor of Biggins. See, e.g., Rizzo v. Cun-
ningham, 303 Mass. 16, 20 N.E.2d 471, 474 (1939) (“where a
contract is oral, the question of what the contract is must, if con-
troverted, be tried by a jury as a question of fact... .”).* There
was evidence for the jury to find that Hazen’s promise of an
amount of stock necessary to raise Biggins’ annual compensa-
tion to the amount of $100,000 was sufficiently definite to cre-
ate an enforceable contract.*®
> Appellants claim that “plaintiff at no time suggested in any of his plead-
ings below that he was entitled to Hazen Paper stock as a matter of contract
law.” We note that ¥ 11 of Biggins’ Amended Complaint alleges that in
response to Thomas Hazen’s promise that he would provide Biggins with stock
“sufficient to raise his salary . . . [to] $100,000{,] [t]he plaintiff agreed to this
offer and in reliance on the defendant's promise continued to allow the defen-
dant company to make use of his formula and process . . . and continued his
employment with the defendant corporation.” (Emphasis added). While Big-
gins did not allege any independent claim of breach of contract based on
failure to deliver the allegedly promised stock, it is clear that in his wrongful
discharge claim Biggins alleged the contractual elements necessary to support
a claim of deprivation of previously earned “compensation.”
* In Rizzo, the Massachusetts Supreme Judicial Court reinstated a jury ver-
dict in favor of a plaintiff seeking to recover on an oral contract for personal
services. The Court concluded that “the conversation upon which the jury was
permitted to find an agreement . . . was not too vague and indefinite to form
the basis for a contract.” 20 N.E.2d at 475.
5 The appellants also argue that any contract based on an agreement to give
Biggins stock in the Hazen Company would not be enforceable because it was
an oral promise unsupported by a writing that would fail under the Mas-
sachusetts statute of frauds. In the district court below, however, appellants
never raised this argument, preferring instead to rely on assertions that there
could have been no consideration for any contract based on Biggins’ ownership
of the formula for the acrylic. Because the defendants did not raise these objec-
tions in the district court, we decline to address them on appeal. See, e.g.,
Boston Celtics Ltd. Partnership v. Shaw, 908 F.2d 1041, F045 (1st Cir. 1990).
A-29
Because the jury could have determined that Hazen’s promise
of stock was an enforceable oral contract properly supported by
consideration, we see little merit in the appellants’ other argu-
ments challenging the adequacy of proof of various elements
necessary for Biggins to make out his wrongful discharge claim.
The defendants insist that the promise of stock was ambiguous
as to the time of its delivery and that any “compensation” due
Biggins was “future” rather than “past” earnings -- and there-
fore not properly recoverable under the Fortune doctrine. This
argument is without merit. If Biggins was promised stock in
1984 sufficient to raise his overall annual compensation to
$100,000, the jury had ample evidence to determine that his dis-
charge from Hazen Paper Company in 1986, without delivery
of the promised stock, was a deprivation of “past” earnings.
Equally lacking in merit is appellants’ argument that Biggins’
discharge in 1986 did not directly cause him to forfeit the
promised stock. We can see no distinction between the situation
of an employee whose discharge is intended by his employer to
deprive him of previously earned wages or sales commissions,
and that of an employee discharged by his employer in order to
deprive him of stock promised as supplemental annual compen-
sation. A jury could in both instances find that this discharge
was “contrived to despoil an employee of earned commission or
similar compensation due for past services .. . . Tenedios, 479
N.E.2d at 726 (citations omitted).”
B. Common Law Fraud
Defendants next attack the sufficiency of the evidence sup-
porting the jury’s verdict awarding $315,098 in damages on
Biggins’ claim of common law fraud. The defendants contend
that the district court improperly denied its motions for directed
verdict and j.n.o.v. because the evidence did not sufficiently es-
tablish certain of the elements necessary to sustain a fraud claim
under Massachusetts law. As we observed in one such case un-
der Massachusetts common law,
——————————————————— eee
A-30
the standard for setting aside a jury verdict is a rigorous
one. . . . [W]e must find that no jury could reasonably find
that all five elements of common law fraud were met with
respect to the alleged misrepresentation and omissions.
These elements are: (1) that the statement was knowingly
false; (2) that [the defendant] made the false statement
with intent to deceive; (3) that the statement was material
to the plaintiffs’ decision to [enter] the contract; (4) that
the plaintiffs reasonably relied on the statement; and (5)
that the plaintiffs were injured as a result of their reliance.
Turner v. Johnson & Johnson, 809 F.2d 90, 95 (ist Cir. 1986).
The defendants’ principal contention on appeal is that the
evidence was not sufficient to establish that Biggins relied on the
stock promise to his detriment and thereby suffered damages as
a result of his remaining as an employee at Hazen Paper.* The
defendants insist that Biggins offered no evidence to show that
he gave up other employment opportunities as a result of the
promise of the stock, or that he remained Hazen Paper after
1984 because of the promise. The defendants also challenge the
district court’s denial of j.n.o.v. on their argument that the
detrimental reliance element was lacking. They argue that the
district court misconstrued Massachusetts law when it held that
Biggins had satisfied the detrimental reliance element by the
simple fact of his remaining as an employee of the company sub-
sequent to the stock promise.
Proof of detrimental reliance is a necessary element of a fraud
claim under Massachusetts law. See McEvoy Travel Bureau,
Inc. v. Norton Co. , 408 Mass. 704, 563 N.E.2d 188, 192 (1990)
(citing Barrett Assocs. , Inc. v. Aronson, 346 Mass. 150, 152, 190
N.E.2d 867 (1963)); Robertson v. Gaston Snow Ely Bartlett,
*The defendants also challenge the adequacy of the fraud
claim with an argument not raised in either of their motions for directed ver-
dict and j.n.o.v. in the district court. They now claim that Thomas Hazen did
not make a false promise of stock to Biggins with the present intention not to
fulfill that promise. Appellants waived this argument through their failure to
present it to the district court. See Boston Celtics Ltd. Partnership, 908 F.2d
at 1045.
‘aii a
A-31
404 Mass. 515, 536 N.E.2d 344, 349, cert. denied, 493 U.S. 894
(1989); Snyder v. Sperry & Hutchinson Co., 368 Mass. 433, 333
N.E.2d 4211 428 (1975); Schinkel v. Maxi-Holding, Inc., 30
Mass. App. Ct. 41, 565 N.E.2d 1219, 1224, review denied, 409
Mass. 1104, 569 N.E.2d 832 (1991). At the outset, we note that
we agree with the district court's conclusion that Biggins could
not have suffered “detriment” as a result of a loss of rights to the
formula under the terms of a stock agreement with the defen-
dants. Because the jury found that Biggins never in fact owned
the formula, he cannot assert that he relied on Thomas Hazen’s
stock promise to his detriment when he gave up various offers
to sell the rights to that formula abroad.’ Thus, in order for the
jury to have properly reached its finding of fraud by the defen-
dants, it must be shown there was other evidence legally suffi-
cient to establish Biggins’ detrimental reliance.
The district court’s denial of j.n.o.v. rested on the finding
that Biggins’ “rendition of present and continuing services at
Hazen Paper Company provide({d] the legal detriment for the
fraud claim.” That conclusion, in turn, relied on the assump-
tion that under Massachusetts law, Biggins’ continued services
“in exchange for the stock promise [was] sufficient to provide
‘detrimental reliance.’” After review of the applicable case
law, we hold that the district court correctly interpreted Mas-
sachusetts law when it concluded that under the circumstances
Biggins’ continued employment was a legally sufficient form of
detrimental reliance that could have supported the jury’s
verdict.
Massachusetts law recognizes that an affirmative act by the
victim of fraudulent conduct is not required to establish the ele-
ment of detrimental reliance:
7 In any case, the record does not support Biggins’ repeated insistence that
the jury was presented with evidence showing that he gave up a specific oppor-
tunity to sell the rights to the formula after the alleged stock-for-rights agree-
ment with Hazen in 1984.
oe eo;
A-32
It is the settled law of this Commonwealth in actions for
deceit . . . that the representations need not be the sole or
predominating motive that induced the victim to part
with his money or property, but that it is enough if they
alone or with other causes materially influenced him to
take the particular action that the wrongdoer intended he
should take as a result of such representations and that
otherwise he would not have taken such action.
National Shawmut Bank v. Johnson, 317 Mass. 485, 58 N.E.2d
849, 852 (1945) (citations omitted and emphasis added). See
also 14A D. Simpson & H. Alperin, Massachusetts Practice:
Summary of Basic Law § 1795 (1974) (reliance can be shown
where the victim of fraud “does not do what he had intended
and started to do and would have done save for the fraud prac-
ticed upon him”); Restatement (Second) of Torts § 531 (1977)
(“[O]ne who makes a fraudulent misrepresentation is subject to
liability to the person[] . . . whom he intends or has reason to
expect to act or refrain from action in reliance upon the mis-
representation....””). Ina situation in which the object of an em-
ployer’s fraud is to prevent an employee from leaving his job,
we do not think that an employee’s fraud claim fails as a matter
of law because the employee does not offer evidence of specific
instances in which alternative offers of employment were re-
jected on the strength of the employer's fraudulent promises.°
® We think that Davis v. Sweetheart Plastics, Inc., 635 F. Supp. 849 (D.
Mass. 1986), does not properly characterize the principle of detrimental reli-
ance. Appellants urge that we apply the Davis court's reasoning that
detrimental reliance cannot be established where the defendant fails to ad-
duce evidence that “concrete job offers were made or interviews held.” Id. at
850. The appellants read this case as holding that a plaintiff who remains in
his job on account of his employer's false promise of future benefits, without
taking any steps to secure alternative employment, is thereby barred from as-
serting detrimental reliance. This cannot be correct. When an employer wish-
es to secure an employee's continued service through false promises oi benefits,
it is his precise intention to deter the employee from seeking alternative em-
ployment. To apply the Davis court's rationale would be to accept the perverse
proposition that only those employees who see through their employers’
fraudulent promises of benefits — and therefore take steps to find alternative
employment — can ever show detrimental reliance.
—————— ti‘ ‘sé
A-33
Here, as discussed supra, the jury could properly have found
that Biggins and the defendants entered into an enforceable
agreement for the payment of stock compensation. Both em-
ployer and employee were therefore subject to a requirement
that “parties to contracts, whether experienced in business or
not, should deal with each other honestly, and . . . should not
be permitted to engage in fraud to induce the contract.”
McEvoy Travel Bureau, 563 N.E.2d at 194 (citations omitted).
We think that it would defeat this principle to require as a mat-
ter of law that an employee offer proof of missed employment
opportunities in a fraud claim against an employer whose very
purpose was to secure the employee's forbearance from seeking
alternative employment. We thus reject the appellants’ conten-
tion that Biggins’ proof of the element of detrimental reliance
fails as a matter of law.
The jury heard evidence that Biggins approached Thomas
Hazen in 1984 with a demand for additional compensation that
would raise his salary to an annual rate of $100,000. The jury
could have inferred that this demand was an implicit threat by
Biggins that he would not otherwise continue in his job. There
was further evidence to support the conclusion that as a result
of a promise of stock, Biggins remained at the company and
referred to his son certain business opportunities that became
available to him. A jury could have determined that Biggins,
who was fifty-nine years old at the time of the stock agreement,
decided as a result of the promise of stock to forego any attempt
to seek alternative (or independent) employment during the re-
mainder of his career. The jury could have found damages for
this forbearance based on the difference between Biggins’ salary
and the promised stock compensation that would have raised
his annual salary to $100,000.
Based on this evidence and our reading of Massachusetts law,
we conclude that the district court correctly denied the defen-
dants’ directed verdict and j.n.o.v. motions.
A-34
C. Breach of Contract
Defendants’ next attack on the jury’s verdict focusses on the
sufficiency of the evidence to sustain Biggins’ claim that the
defendants breached a contract embodied in the Hazen Paper
Company’s 1980 Employee Handbook. The jury found that
either an express or implied employment contract existed
between Biggins and the Hazen Paper Company. It also found
that the Employee Handbook constituted a part of this contract
and that this contract was breached at the time of Biggins’
termination. The jury awarded compensatory damages of
$266,897. The district court subsequently denied directed ver-
dict and j.n.o.v. motions that challenged both the sufficiency of
the evidence establishing the existence of a contract other than
at-will employment and the sufficiency of proof of damages
flowing from the breach of that contract.
The parties agree that the controlling authority under Mas-
sachusetts law is Jackson v. Action for Boston Community De-
velopment, Inc., 403 Mass. 8, 525 N.E.2d 411 (1988). In Jack-
son, the Massachusetts Supreme Judicial Court established that
the existence of an express or implied employment contract was
a factual issue to be determined under the circumstances of the
case, 525 N.E.2d at 413-14, and that, “on proper proof, a per-
sonnel manual can be shown to form the basis of [such] an ex-
press or implied contract.” Id. at 414. In Jackson, however, the
Supreme Judicial Court found summary judgment appropriate
against the plaintiff alleging breach of a contract embodied in
an employment manual:
In this case. . . . the most that can be said in his behalf is
that he received the manual at some unknown time and
continued to work for the defendant thereafter... .
[O]}n review of all the circumstances here, . . . the conclu-
sion is inexorable that no implied contract based on the
personnel manual’s terms existed. It is undisputed that the
A-35
defendant retained the right to modify unilaterally the
personnel manual’s terms. This tends to show that any
“offer” made by the defendant in distributing the manual
was illusory. The personnel manual’s language that it is
provided for “guidance” as to the defendant's “policies” is
of the same import. It is also significant that nothing in the
| circumstances here reveals any negotiation over the terms
of the personnel manual. Furthermore, consistent with
employment at will, no term of employment was stated in
the personnel manual. The plaintiff does not argue that
any special attention was called to the manual by the
defendant; there is no indication that the plaintiff signed
the manual, or in any way manifested his assent to it or ac-
knowledged that he understood its terms.
Id. at 415-16 (citations omitted). This means, as we understand
it, that an employer does not automatically enter into a contract
other than at-will employment with its employees by merely
distributing a personne! manual to them. Instead, Jackson re-
quires that a plaintiff establish all of the elements ordinarily
necessary for the formation of a contract in order to prove that
a personnel manual forms the basis of an express or implied em-
ployment contract.
The evidence showed that Biggins was hired by Hazen Paper
in 1977. Biggins testified that at some point thereafter he ac-
quired a copy of the company’s 1980 Employee Handbook. Big-
gins stated that he tried to take a vacation in May of 1986, a
month prior to his discharge from the company, but was refused
permission by Thomas Hazen. He testified that after his termi-
nation the company refused to pay him for other accrued vaca-
tion time. Biggins said that he understood that the company had
a policy of not paying employees for vacation time off, and that
he learned of this policy from the 1980 Employee Handbook.
He also declared that he had learned about this policy from a
letter sent him after his termination by Hazen Paper’s attorney,
in which Biggins thought the attorney had quoted “verbatim”
Tiiliicacenneenienieamaiadiiaeameenmeaeeaillll
A-36
those portions of the Employee Handbook that described Hazen
Paper’s vacation policy.
The 1980 Employee Handbook established other personnel
policies apart from the vacation policy. As part of a section enti-
tled “The Policies You Enjoy as an Employee of Hazen Paper
Company,” the Handbook specified that employees would
have to pass through a ninety day “get-acquainted period” in
order to become “regular” employees. In a subsection titled
“Job Security,” the Handbook provided that
When employees do not fulfill the Company’s standards,
they are counselled and told how to be an acceptable em-
ployee. Only those who jeopardize customer relations
through outlandish gross violations of standards or failure
to respond to repeated counselling are separated.
On the topic of discipline of employees, the Handbook had a
section entitled “What is expected of you as an employee of
Hazen Paper Company,” which provided that
when discipline becomes necessary because of a violation
of Hazen Paper Company’s rules, we have the responsibili-
ty to ensure that such discipline is fair and consistent. To
provide for this treatment, the following factors will be
considered:
1) The seriousness of the offense;
2) The circumstances surrounding the incident;
3) Our past record;
4) The Company’s past practice.
Generally, any discipline will start with a verbal warning,
then a more serious penalty of suspension or discharge if
the conduct does not change. For very serious matters, em-
ployees may be discharged without warning.
a
A-37
These policies, and the surrounding circumstances of Biggins’
termination, formed the basis of the jury’s finding that (1) the
1980 Employee Handbook established a contract between
Hazen Paper and Biggins of other than at-will employment,
and (2) that Biggins’ termination in 1986 breached the contract
embodied in the Handbook because the company failed to fol-
low the procedures specified in the Handbook governing em-
ployee counselling and “discipline.”
Viewing the evidence in the light most favorable to Biggins,
we are nonetheless compelled to hold that the district court
erred in denying the defendants’ motion for j.n.o.v. After
reviewing the various principles of contract formation specifi-
cally enumerated by the Jackson cc rt as being necessary to es-
tablish the existence of a contract other than at-will employ-
ment, we find the evidence lacking in two important respects.
First, in affirming a grant of summary judgment against an
employee, Jackson held that it was “significant that nothing in
the circumstances here reveal(ed) any negotiation over the
terms of the personnel manual.” Jackson, 525 N.E.2d at 415. In
this case, there was no evidence to support a finding that there
was “negotiation” between Biggins and Hazen Paper which in
any way implied that the 1980 Employee Handbook ever
formed a part of Biggins’ conditions of employment between
1977 and his termination in June of 1986. Indeed, the evidence
showed that the only time the terms of the 1980 Employee
Handbook were discussed with Biggins was after his discharge
from the company. Biggins argues that such “negotiations” took
place in the context of the 1984 promise of stock compensation,
but offered no evidence at trial that the Employee Handbook
was mentioned by him or Thomas Hazen during that meeting.
Second, there was no showing that prior to Biggins’ termina-
tion that “special attention was called to the manual by the
defendant . . . [and] no indication that the plaintiff signed the
manual, or in any way manifested his assent to it or ac-
knowledged that he understood its terms.” Jackson, 525 N.E.2d
at 416. In this respect, the fact that the Employee Handbook
A-38
relied upon by Biggins was issued by his employer three years
after he joined Hazen Paper in 1977 helps explain why Biggins
was unable to offer evidence showing that he was called upon
to sign the Handbook or otherwise manifest assent to its terms.
There was simply no evidence upon which the jury could have
made the determination that prior to Biggins’ discharge “spe-
cial attention was called” to him by Hazen Paper about the 1980
Employee Handbook.
The most that can be said here is that after Biggins’ termina-
tion, Hazen Paper refused to pay him for ‘sis accrued vacation
time on the basis of language in the Employee Handbook. Big-
gins, in turn, attempted to hold the defendants to the standards
of behavior provided in other portions of that manual. We do
not think that under Massachusetts law a jury would be permit-
ted to find that the 1980 Employee Handbook established an
implied or express contract of other than at-will employment
with Biggins. Consequently, since such an employment con-
tract did not exist at the time of Biggins termination, there could
have been no breach.
Even if we concede that Biggins satisfied some of the elements
of contract formation required by Jackson,® we think that his
® The evidence is inconclusive, at best, to establish some of the other ele-
ments required by the Jackson court. For example, in rejecting the plaintiff's
claim of an implied contract, the Supreme Judicial Court placed particular
reliance on the fact that the defendant expressly retained the right to modify
unilaterally the personnel manual's terms. Jackson, 525 N.E.2d at 415. In the
instant case, there was no comparable reservation of rights. Biggins concludes
that the absence of a reservation of rights of modification is proof in its favor
of an implied contract. The defendants naturally take the opposite view that
there “was no evidence that Hazen Paper ever gave up the right to modify its
own personnel policies.”
The Jackson court offered no bright-line standards as to how “clear an indi-
cation an employer must give in connection with distributing an employee
manual before it may be found that the employer entered into a contact on
other than a strictly at-will basis.” Id. Jackson nonetheless places the burden
on the employee to prove the existence of the formation of a contract. In this
case, there was no express reservation of a right of modification by Hazen
Paper. We think that Massachusetts courts would probably not consider the
mere fact of the absence of such a reservation adequate evidence to support
A-39
failure to adduce evidence to support at least two of the prin-
cipal elements of that inquiry was fatal to his claim. Under these
circumstances, the district court was required to grant j.n.0.v.
Where there was no employment contract other than at-will es-
tablished or implied under the 1980 personnel manual, the ju-
ry’s award of damages must be vacated.
D. Massachusetts Civil Rights Act
On cross-appeal, Biggins challenges the district court’s grant
of j.n.o.v. reversing the jury’s award of one dollar in compensa-
tory damages for violation of the Massachusetts Civil Rights
Act. Mass. Gen. L. ch. 12, § 11H & 111.’° To recover under
these provisions, a plaintiff must prove that
(1) his exercise or enjoyment of rights secured by the Con-
stitution or laws of either the United States or of the Com-
monwealth (2) has been interfered with, or attempted to
be interfered with, and (3) that the interference or at-
tempted interference was by “threats, intimidation or
coercion.”
Bally v. Northeastern Univ., 403 Mass. 713, 532 N.E.2d 49,
51-52 (1989) (quoting Mass. Gen. L. ch. 12, § 11H). Applying
an employee's claim of the formation of a contract other than at-will employ-
ment. We also note that we have previously resolved in favor of the employer
ambiguities created by the silence of an employment manual on the issue of
whether that manual constitutes part of an employment contract. See
Menard, 848 F.2d at 289-90 (pre-Jackson decision under Massachusetts law
affirming summary judgment against employee on implied contract claim
where there was no evidence showing that personnel manual applied to that
employee).
10 Mass. Gen. L. ch. 12, § 11H provides in pertinent part that .
Whenever any person or persons, whether or not acting under color of
law, interfere by threats, intimidation or coercion, or atternpt to inter-
fere by threats, intimidation or coercion, with the exercise or enjoyment
by any other person or persons of rights secured by the constitution or
laws of the United States, or . . . commonwealth, the attorney general
may bring a civil action... .
Mass. Gen. L. ch. 12, § 111 creates a private right of action for persons whose
rights have been “interfered with” in the manner proscribed by section 11H.
A-40
this test to Biggins’ claim, the district court conceded that there
might have been an interference with “rights” within the mean-
ing of the Civil Rights Act as a result of the failure of Hazen
Paper to deliver the promised stock compensation. The court
nonetheless concluded that Biggins had failed to offer adequate
evidence to support a claim under the Civil Rights Act because
he had not demonstrated that the defendants used physical
“threats, intimidation or coercion” to accomplish this depri-
vation.
On appeal, Biggins insists that the district court too narrowly
construed the meaning of “threats, intimidation or coercion”
when it found Biggins’ case distinguishable from “most [Civil
Rights Act] cases recognized by the Supreme Judicial Court
[ which] involve the threat of physical contact.” Biggins argues
that the district court erred because it required proof of a threat
of physical harm.
In Bally, the Massachusetts Supreme Judicial Court noted
that almost all of the cases in which it had granted relief under
the Civil Rights Act involved “a physical confrontation accom-
panied by a threat of harm.” Id. at 52. The Bally court ac-
knowledged that it thought the sole exception to this require-
ment of physical confrontation as an element of a Civil Rights
Act claim was Redgrave v. Boston Symphony Orchestra, Inc.,
399 Mass. 93, 502 N.E.2d 1375 (1987). There, according to the
Bally court, in a case involving the deprivation of the plaintiff's
contract rights, the Supreme Judicial Court found “that the
Boston Symphony orchestra violated (the Civil Rights Act) be-
cause its cancellation of its contract with Redgrave had the ef-
fect, intended or otherwise, desired or not, of coercing Red-
grave not to exercise her First Amendment rights.” Id. at 52.
Biggins asserts that his case is analogous to Redgrave, insofar as
he too suffered a deprivation of his contractual rights to his stock
compensation as a result of the non-physical form of “intimida-
tion” to which he was subjected at the time of his termination
from Hazen Paper.
We agree with the district court that j.n.o.v. was appropri-
A-4l
ate. In the Redgrave decision, the Supreme Judicial Court
found that a deprivation of Redgrave’s contract rights could
have been caused by “threats, intimidation and coercion” —
specifically, threats to the safety of the audience and members
of the Boston Symphony Orchestra made by community mem-
bers and subscribers after the announcement of Redgrave’s
planned performance. See Redgrave, 502 N.E.2d at 1376-79.
The Redgrave court found that physical threats by these third
parties could have caused the BSO to cancel Redgrave’s perfor-
mance contract, depriving her of both her contract and First
Amendment rights. Id. The Redgrave court thereby inferred
the existence of physical “threats, intimidation, or coercion”
sufficient to state a claim under the Civil Rights Act.
Biggins did not offer evidence that showed that, as in Redg-
rave, the deprivation of his contract or constitutional rights was
caused by indirect physical “threats, intimidation or coercion.”
We therefore see little reason to deviate from the Supreme Judi-
cial Court's repeated pronouncement that a defendant can be
held liable under the Civil Rights Act only in situations that “in-
volve[] an actual or potential physical confrontation accompa-
nied by a threat of harm.” Layne v. Superintendent, Mas-
sachusetts Correctional Inst., 406 Mass. 156, 546 N.E.2d 166,
168 (1989) (citing Bally). See also Willitts v. Roman Catholic
Archbishop, 411 Mass. 202, 1991 Mass. LEXIS 533, *15-16
(Nov. 18, 1991) (“relief under the Act may be granted where the
‘threat, intimidation or coercion’ involves. . . a physical con-
frontation accompanied by a threat of harm. . . . ”) (citations
omitted); Longval v. Commissioner of Correction, 404 Mass.
325, 535 N.E.2d 588, 593 (1989) (same principle) . If Redgrave
states an exception to this principle, that exception is not ap-
plicable under the facts of this case. Wetherefore affirm the dis-
trict court’s grant of j.n.o.v.; the jury’s one dollar damages
award is annulled.
A-42
V. PREJUDGMENT INTEREST
The district court awarded prejudgment interest “on the en-
tire award.” In Powers v. Grinnell Corp. , 915 F.2d 34 (1st Cir.
1990), the role of prejudgment interest was fully explored
where liquidated damages had been awarded on an ADEA
claim and there had been recovery on state law claims parallel-
ing the ADEA claim." We focused on whether the ruling in
Thurston that liquidated damages under ADEA was punitive,
469 U.S. at 125, should change our circuit rule “that an award
of liquidated damages bars prejudgment interest in ADEA
cases.” Kolb v. Goldring, Inc., 694 F.2d 869, 875 (lst Cir.
1982). After a detailed examination and analysis of Thurston
and cases in other circuits, we concluded “that Thurston does
not ordain abandonment of the majority rule that an award of
liquidated damages under the ADEA precludes a recovery of
prejudgment interest on the back pay award.” Powers, 915
F.2d at 41 (citations omitted). We also held, following Kolb and
Linn v. Andover Newton Theological School, Inc. , 874 F.2d 1,
8 (Ist Cir. 1989), that a plaintiff cannot recover both prejudg-
ment interest on a back pay award under a state law claim and
liquidated damages on an ADEA claim. Powers, 915 F.2d at 42.
We are, of course, bound by the Powers holding. Therefore
there can be no prejudgment interest on the ADEA damages
award.
Although Powers would also preclude prejudgment interest
on the state law claim of breach of the employment contract,
our reversal of the district court’s ruling on that claim and an-
nulment of the damages renders this issue moot.
The state law claim based on fraud, however, stands on a
different footing. This was not a claim for the back pay and
lost employment benefits encompassed within the ADEA
count. The fraud count in the complaint was premised on a
promise by the defendants that “they would pay him [plaintiff]
in addition to his regular salary corporate stock of a value which
would increase his annual compensation to $100,000.” The
' The state law claims were brought under the Rhode Island Fair
Employment Practices Act.
A-43
jury was instructed properly on each count of the complaint.
The only instruction that referred directly to the stock promise
was on the fraud count: “The next count is fraud or deceit.
Plaintiff also alleges that Defendants committed fraud or deceit
by promising to give Plaintiff stock but never delivering the
stock.” The court then went on to instruct the jury carefully and
properly on the proof necessary for a finding of fraud under
Massachusetts common law. The jury was further instructed
not to award duplicative damages: “In awarding damages, you
should be careful not to award duplicative damages; that is,
Plaintiff is entitled to collect full compensation for his injuries,
but he must not collect more than once for the same wrong.”
An analysis of the jury’s awards on the fraud and ADEA
counts shows that its award for fraud was not duplicative of its
award on the ADEA count. The jury awarded plaintiff
$315,000 on the fraud claim. The plaintiffs damages evidence
on this count was that the stock loss amounted to $342,498. The
jury award of $315,000 was a rough approximation of the plain-
tiff's evidence. On the ADEA count, the jury awarded plaintiff
$560,775. As already pointed out, this was $141,320.62 more
than the plaintiff's losses in salary, employment benefits and bo-
nus. It is, however, a far cry from the stock loss of $342,000.
We see no reason why prejudgment interest should not be al-
lowed on a state law claim that is, as here, separate and distinct
from the ADEA claim. This was well within the district court’s
discretion. See Freeman v. Package Machinery Co., 865 F.2d
1331, 1343 (1st Cir. 1988). This result also comports with our
decision in Freeman in other respects. There, we observed that
“a plaintiff is entitled to only one full recovery, no matter how
many legal grounds may support the verdict,” id. at 1345, and
that the “plaintiff, although entitled to the same damages under
both federal and state statutes, could collect them but once.”
Id. at 1344, n.7. See also Linn, 874 F.2d at 8. Here, the plaintiff
has recovered the value of the stock promised him under his
common law fraud claim, and not under his ADEA claim.
There is, therefore, no duplication of damages.
A-44
We now turn to the ERISA damages award. We have been
unable to find any cases discussing whether or how an award of
liquidated damages under an ADEA claim affects the addition
of prejudgment interest to ERISA damages. We do know,
however, that “[a]s a matter of federal law, prejudgment in-
terest is a discretionary item of compensation.” Conway v.
Electro Switch Corp., 825 F.2d 593, 602 (1st Cir. 1987). See
also Kolb, 694 F.2d at 875.
In West Virginia v. United States, 479 U.S. 305 (1987), the
question was whether West Virginia was liable for prejudg-
ment interest on a debt owed the United States Army C: rps of
Engineers. Jd. at 306. A unanimous court found that it was. In
the course of its opinion, the Court stated: “Prejudgment in-
terest is an element of complete compensation . . . .” Id. at 310
(citing General Motors Corp. v. Devex Corp., 461 U.S. 648,
655-656, & n.10 (1983)). The Seventh Circuit has taken the po-
sition that prejudgment interest should be presumptively avail-
able to victims of federal law violations and that this presun:p-
tion is specifically applicable to ERISA cases. See Rivera v.
Benefit Trust Life Ins. Co., 921 F.2d 692, 696 (7th Cir. 1991).
We need not go that far at this time. The question is whether
the prejudgment interest award was within the discretion of the
district court. We find that it was.
As with the state law fraud claim, the ERISA award did not
duplicate the ADEA award. It was not based on loss of back pay
and other employment benefits due and owing at the time
plaintiff was discharged. In awarding damages on the ERISA
count, the jury found that “defendants fired plaintiff for the
purpose of preventing plaintiff from attaining vestment of pen-
sion benefits, in violation of ERISA.” We have already found
that the jury verdict on this count had a solid evidentiary foun-
dation. Defendants argue that because the pension rights would
not be payable until 1994, prejudgment interest cannot be
awarded. This overlooks the obvious fact that the plaintiff has
been damaged now because defendants took away pension
A-45
benefits by firing him before his rights to the pension could vest.
We affirm the award of prejudgment interest on the ERISA
damages.
VI. ATTORNEY’S FEES
After trial, Biggins moved that he be awarded attorney's fees
under the ADEA count, the ERISA count, and the Mas-
sachusetts Civil Rights Act count in the amount of $666,729.12. _
This amount represented one-third of the total jury verdict of
$2,000,187.35. In its memorandum opinion and order on the
post-trial motion, the district court reduced the ADEA award
by one-half and found, as a matter of law, that plaintiff was not
entitled to liquidated damages. It seems apparent that, regard-
less of the numbers, plaintiff sought an enhancement of attor-
ney’s fees equal to one-third of the final judgment on damages.
This is borne out by an affidavit of plaintiff's counsel submitted
in support of its motion for attorney’s fees.
This affidavit stated, inter alia, that the case was handled on
a one-third contingent fee basis with the plaintiff responsible
for the expenses incurred; and that in the legal market for the
geographic area in which plaintiffs counsel practices —
Springfield, Massachusetts — a one-third contingent fee agree-
ment is the typical method of compensation for attorneys
representing plaintiffs on employment-related litigation.'* The
chief counsel for the plaintiff stated:
I agreed to accept this case on a contingent fee basis, even
with the knowledge that this would be a long and compli-
cated case, because I knew this was the only way to provide
access to the Courts for Mr. Biggins, and because our risk
taking had the potential for reward if successful with a
premium in excess of our normal hourly rates. If the
\2 There were affidavits by two other attorneys from the same legal market
area to the same effect.
A-46
Court’s award of attorneys’ fees is limited to payment for
hours expended multiplied by our normal hourly rates,
then I would be discouraged from taking these types of
cases in the future when I could be spending my time on
cases where I would be paid without risk of non-payment
according to my normal hourly rate.
Plaintiff's counsel also submitted detailed records of the time
spent by the attorneys and paralegals on the case and a fee com-
putation based on this and the hourly rates charged by the
different attorneys who worked on the case. The total legal fees,
as determined by the time expended multiplied by hourly rates,
came to $182,058.25. The district court adjusted this fee slightly
to reduce the hourly payment rates on work performed by ex-
perienced attorneys on “non-core” matters. The court arrived
at a lodestar fee in the amount of $175,564.57. Biggins does not
appeal the court’s determination of the lodestar fee award.
The district court refused, however, to enhance the lodestar
fee award to an amount equivalent to one-third of the total
damages awarded. Plaintiff appeals the refusal of his request
for enhancement of the fee award.
The issue of enhancement of legal fees to reflect the contin-
gency of services -- the risk involved of not getting paid -- was
the focus of the Supreme Court’s decision in Pennsylvania v.
Delaware Valley Citizens’ Council for Clean Air, 483 U.S. 711
(1987). In a comment that is pertinent to the case before us,
Justice White, writing for a plurality, observed that fee en-
hancement is not necessary “where any plaintiff, impecunious
or otherwise, has a damages case that competent lawyers would
take in the absence of fee-shifting statutes.” Id. at 726. Justice
White then stated:
The issue thus involves damages cases that lawyers
would not take, not because they are too risky (the fee-
shifting statutes should not encourage such suits to be
brought), but because the damages likely to be recovered
A-47
are not sufficient to provide adequate compensation to
counsel, as well as those frequent cases in which the goal
is to secure injunctive relief to the exclusion of any claim
for damages. In both situations, the fee-shifting statutes
guarantee reasonable payment for the time and effort ex-
pended if the case is won.
Id.
It appears to us that in this case fee enhancement is not war-
ranted. Although the fee contract between plaintiff and his at-
torneys is not part of the record, it can be fairly inferred from
counsel’s affidavit that Biggins and his attorneys entered into a
fee agreement whereby Biggins agreed to pay his attorneys one-
third of the amount of damages awarded and be responsible for
expenses. In his affidavit, chief counsel for Biggins stated that
“our risk taking had the potential for reward if successful with
a premium in excess of cur normal hourly rates.” On the basis
of the adjustment in damages made in this opinion, and without
adding prejudgment interest, plaintiff's attorneys are entitled
to fees under their contingent fee arrangement of more than
twice the amount of the lodestar fee award. Plaintiff's counsel,
as he anticipated, will in fact be rewarded with a premium in
excess of his normal hourly rates.
The substantial recovery of damages in this case stands in
contrast to the situation in a majority of civil rights cases in
which the damages are so low that fees based on a contingent
fee agreement are less than the lodestar recoverable as attor-
ney’s fees. In Blanchard v. Bergeron, 489 U.S. 87 (1989), the
damages award on a § 1983 claim totalled $10,000. The attor-
neys had a forty percent contingency fee agreement with the
plaintiff. The lodestar figure, as determined by the district
court, was $7,500. The court of appeals set the fee award aside
on the ground that the contingent fee agreement was a cap on
the fees to be awarded. Justice White, writing for the Court,
reversed this ruling, holding that “[t]he attorney's fee provided
for in a contingent-fee agreement is not a ceiling upon the fees
A-48
recoverable under section 1988.” Id. at 96. Blanchard, which
is typical of the fee cases coming before the courts, is the reverse
- of the case before us. Under the circumstances of this case, fee
enhancement is not necessary because the contingency arrange-
ment more than adequately compensates Biggins’ attorneys for
the risk undertaken in accepting this case.
This does not mean that a lodestar fee should not be deter-
mined. The lodestar fee, which is paid by the defendant, acts
as a deterrent to future violations of the ADEA. As the Blan-
chard Court pointed out, “[t]he defendant is not, however, re-
quired to pay the amount called for in a contingent fee contract
if it is more than a reasonable fee calculated in the usual way.”
Id. at 944. We would expect, of course, that the lodestar fee as
determined by the district court will be an offset against the fee
to be paid by the plaintiff under the one-third contingent fee
agreement.
CONCLUSION
1. We uphold the finding of liability on the ADEA count. We
find, as a matter of law, that the violation was willful. The
damages are reduced from $560,775 to $419,454.38. Be-
cause this was a willful violation that amount is doubled to
$838,908.76.
2. We uphold the finding of liability on the ERISA count. We
order a remittitur of $7,000 on the damages award of
$100,000.
3. Weuphold the finding of liability on the wrongful discharge
count. We leave undisturbed the award of one Gomer in
damages.
4. Weuphold the finding of liability on the fraud count and af-
firm the damages award of $315,098.
5. We reverse the finding of liability on the breach of employ-
ment contract count. The damages award on that count of
$266,897 is annulled.
ileal
A-49
6. We affirm the district court’s grant of j.n.o.v. on the
Massachusetts Civil Rights Act count. This means the jury
award of one dollar in damages is annulled.
7. No prejudgment interest can be awarded on the ADEA
count. We uphold the awards of prejudgment interest on the
ERISA count and the wrongful discharge and fraud counts.
8. We affirm the district court’s refusal to enhance plaintiff's
attorney’s fees.
Affirmed in part, reversed in part. Remanded for further
proceedings consistent herewith.
No costs to either party.
A-50
UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
Civil Action No. 88-0025-F
WALTER F. BIGGINS,
PLAINTIFF,
v.
THE HAZEN PAPER COMPANY,
ROBERT HAZEN anp
THOMAS HAZEN,
DEFENDANTS.
MEMORANDUM AND ORDER
April 5, 1991
FREEDMAN, C.].
I. INTRODUCTION
On February 16, 1986, plaintiff Walter P. Biggins com-
menced this action against defendants Hazen Paper Company,
Robert Hazen and Thomas Hazen (“defendants” or “the
Hazens’”), alleging violations of the Age Discrimination in Em-
ployment Act, 29 U.S.C. §§ 621 et seq. (“ADEA”), the Em-
ployee Retirement Income Security Act, 29 U.S.C. §§ 1001 et
seq. (“ERISA”), Massachusetts tort and contract law, and the
Massachusetts Civil Rights Act, Mass. Gen. Laws ch. 12, §§
11H, 111 (“MCRA”). A jury found in favor of plaintiff on six of
the eight counts in his complaint, and awarded plaintiff sub-
stantial damages. After the verdict, both parties submitted
post-trial motions.
Four motions, two by plaintiff and two by defendants,
are now before the Court. First, defendants have filed a
Se
A-51
motion, pursuant to Fed. R. Civ. P. 50(b), for judgment not-
withstanding the verdict or, in the alternative, for a new trial.
Second, defendants have filed a motion to amend or alter the
judgment pursuant to Fed. R. Civ. P. 59(e). Plaintiff opposes
these motions.
Third, plaintiff has moved for an award of costs and attor-
ney’s fees under provisions of federal and state law. Fourth,
plaintiff has filed a motion to compel defendants to increase the
amount of the bond that secures plaintiff's judgment during the
pendency of the post-trial motions. Defendants oppose plain-
tiffs motions.
For the reasons stated below, the Court orders judgment not-
withstanding the verdict with regard to liquidated damages
and the MCRA claim. The Court denies defendants’ motion for
judgment notwithstanding the verdict or new trial in all other
respects. The Court also denies defendants’ motion to alter or
amend the judgment. The Court grants plaintiff's motion for
attorneys’ fees in the amount of $175,564.75, and for costs in the
amount of $9,760.07. Finally, the Court denies plaintiff's mo-
tion to increase the amount of the bond.
II. PRIOR PROCEEDINGS
On July 20, 1990, after one week of trial, a jury of six returned
a verdict in favor of plaintiff on six of the eight counts at issue.’
On Count I, the jury awarded plaintiff $560,775.00 in actual
damages under the ADEA, and also found that defendants had
wilfully violated the ADEA. On Count II, the jury found that
defendants’ conduct constituted a violation of ERISA, and
awarded $100,000.00 in damages. The jury also awarded plain-
tiff $1.00 in damages on Count IV for wrongful discharge,
$315,098.00 on Count V for fraud, $1.00 on Count VII for a
| The jury found in favor of defendants on Counts III (declaratory judg-
ment) and VI (conversion). Because none of the parties have objected to these
parts of the verdict, Counts III and VI are not at issue, and the Court will not
discuss them.
|
A-52
violation of MCRA, and $266,897.00 on Count VIII for breach
of contract. Thus, the jury awarded plaintiff a total of
$1,242,772.00.
Subsequent to the verdict, plaintiff filed a motion for an
award of liquidated damages. On August 24, 1990, the Court
granted plaintiff's motion, based solely on the jury’s finding of
willfulness and the text of the ADEA. 29 U.S.C. § 626(b); Big-
gins v. Hazen Paper Co., et al, Civ. Action No. 88-0025-F,
Memorandum and Order (August 24, 1990). Thus, the Court
awarded to plaintiff, in addition to the damages awarded by
the jury, liquidated damages in an amount equal to the actual |
damages awarded by the jury on the ADEA claim, that is,
$560,775.00. The Court deliberately offered no opinion as to
the weight or sufficiency of the evidence with regard to any of
the jury’s findings. “[T]he Court will withhold its decision as to
sufficiency of the evidence, on the question of willfulness as well
as on other portions of the verdict, until after judgment is en-
tered.” Id. at 3-4.
The Court ordered the clerk to enter judgment consistent
with the jury verdict and the Court’s decision on the liquidated
damages question. Id. at 4. On August 27, 1990, the clerk en-
tered judgment in the amount of $1,803,547.00, with interest
on the ERISA and state law claims in the sum of $196,641.35.
Defendants’ total liability as of the date of judgment, therefore,
was $2,000,188.35.
The Court ordered the clerk to issue an execution on Novem-
ber 7, 1990. Upon issuance of the execution, defendants filed a
bond in the amount of $2, 100,000.00 to stay execution of judg-
ment pending the Court’s disposition of post-trial motions.
Defendants having provided security, plaintiff has refrained
from execution pending the Court’s determination of the pend-
ing motions.
ci
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III. DISCUSSION
A. Defendants’ Motion for Judgment Notwithstanding the
Verdict or, in the Alternative, for New Trial
Defendants seek judgment notwithstanding the verdict, or in
the alternative, a new trial on each count on which plaintiff
prevailed. Fed. R. Civ. P. 50(b). The Court will first address
defendants’ arguments for judgment notwithstanding the ver-
dict, and then proceed to the new trial arguments.
1. Judgment Notwithstanding the Verdict
“When the evidence is such that without weighing the credi-
bility of the witnesses there can be but one reasonable conclu-
sion as to the verdict, the court should determine the proceeding
by non-suit, directed verdict . . . or by judgment notwithstand-
ing the verdict.” Brady v. Southern Railway Co. , 320 U.S. 476,
479-80 (1943). The Court will grant a party’s motion for judg-
ment notwithstanding the verdict only if, viewing evidence and
reasonable inferences in a light most favorable to the non-
moving party, reasonable people would nonetheless find in the
movant’s favor. Jordan v. United States Lines, Inc., 738 F.2d
48; 49 (Ist Cir. 1984)(citations omitted); accord deMars v.
Equitable Life Assurance Society, 610 F.2d 55, 57 (1st Cir.
1979). “This Court will not grant a judgment notwithstanding
the verdict unless the jury’s verdict is untenable under any
reasonable assessment of the evidence adduced at trial.” Refuse
dx Environmental Systems, Inc. v. Industrial Services of
America, 732 F. Supp. 1209, 1222 (D. Mass. 1990)(Freedman,
C.J.).
a. Count I: Age Discrimination in Employment
In order to prevail under the ADEA, a plaintiff must prove
that his employer fired him because of his age, that is, that
plaintiff's age was “the determinative factor in his discharge.”
Freeman v. Package Machinery Co., 865 F.2d 1331; 1335 (1st
Cir. 1988); Loeb v. Textron, Inc. , 600 F.2d 1003; 1019 {1st Cir.
'
A-54
1979). To properly state a claim under the ADEA, a plaintiff
must first establish a prima facie case of age discrimination. A
plaintiff must show that he was within the protected age group;
that he was fired; that he was qualified for the position and per-
formed his job adequately; and that he was replaced by a person
with qualifications similar to his own, thus evidencing the em-
ployer’s continued need for the same skills. Hebert v. Mohawk
Rubber Co. , 872 P.2d 1104, 1110 (1st Cir. 1989); Freeman, 865
F.2d at 1335.
Proof of plaintiff's prima facie case creates an inference of age
discrimination, and places on the employer a burden of articu-
lation or production. While the burden of proof remains at all
times with the plaintiff, the employer, having been presented
with an inference of discrimination, bears the burden of ar-
ticulating a valid, non-discriminatory reason for the firing.
Freeman, 848 F.2d at 1335.
If the employer produces a legitimate reason for the firing,
“the initial presumption of age discrimination is dissolved and
plaintiff must respond by showing that the reasons presented by
the defendant are merely pretextural.” Hebert, 872 F.2d at
1111; Freeman, 865 F.2d at 1336. Plaintiff must “prove by a
preponderance of the evidence that the defendant’s true motive
was age discrimination.” Menard v. First Security Services
Corp., 848 F.2d 281, 285 (ist Cir. 1988). Thus, in the end, a
plaintiff must prove that the employer’s alleged reasons for dis-
charging plaintiff were fictitious and designed merely to mask
age discrimination. Freeman, 865 F.2d at 1336.
The record plainly indicates that plaintiff established a pri-
ma facie case, and defendants do not appear to dispute this.
Rather, the Hazens contend that they fired plaintiff because of
plaintiff's disloyalty and his refusal to sign a legitimate con-
fidentiality agreement. Defendants point to plaintiff's involve-
ment with other businesses competing in the paper industry as
evidence of plaintiff's disloyalty. In short, defendants argue
that they had a valid, non-discriminatory reason for discharg-
ing plaintiff, that the record contains overwhelming evidence
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in their favor, and that the jury verdict to the contrary lacks
evidentiary support. The Court disagrees, and now holds that
plaintiff offered evidence sufficient to sustain his burden of
proof under the ADEA. Thus, the jury verdict as to age dis-
crimination must stand.
Plaintiff offered the following as evidence of age discrimina-
tion. Plaintiff testified that defendants presented him with a
confidentiality agreement, and that plaintiff would have had to
sign the agreement in order to keep his job. Trial Transcript,
Volume I at 114.? Plaintiff alleged that other, younger Hazen
Paper employees did not have to sign such an agreement. Plain-
tiff further testified that the agreement did not provide for
severance pay for plaintiff. However, when defendants hired a
younger employee, one McDonald, to replace plaintiff, Mr.
McDonald was offered a confidentiality agreement that provid-
ed for 100 days of separation pay. Further, Mr.McDonald’s
confidentiality agreement included a six-month noncompeti-
tion clause, whereas plaintiff's agreement contained a two-year
non-competition clause. 4 Tr. 92 (testimony of Tl:omas Hazen).
Plaintiff also offered evidence that defendants fired plaintiff
in order to prevent plaintiff from acquiring ar.y pension entitle-
ments. While the discharge of an employee in order to eliminate
the employee’s pension rights cannot, by itself, establish age dis-
crimination, courts have held that such conduct provides some
proof of an ADEA violation. Visser v. Packer Engineering As-
sociates, Inc., 924 F.2d 655, 658 (7th Cir. 1990); Benjamin v.
United Merchants and Manufacturers, Inc. , 873 F.2d 41, 43 (2d
Cir. 1989). It is undisputed that a Hazen Paper employee ac-
quires vested rights to pension benefits after having worked for
Hazen for ten years. Plaintiff testified that at the time of his dis-
charge, he “was just a few hours away from being fully vested”
in the pension plans offered by Hazen Paper Company. | Tr.
128. Thomas Hazen was in charge of pension account matters
* The trail transciipt comes in six volumes. The Court will cite the trial tran-
script by volume number and page. For example, the Court would cite to page
25 of volume 2 as follows: 2 Tr. 25.
A-56
at Hazen Paper Company, and regularly received pension ac-
count documents regarding individual employee pension sta-
tus. 4 Tr. 94-95. Thomas Hazen testified that at the time of
plaintiff's termination, plaintiff had nine years and several
months of service at Hazen Paper Company. 4 Tr. 97-98. While
Thomas Hazen denied discharging plaintiff to prevent his pen-
sion rights from vesting, the jury could reasonably have found
that defendants knew of plaintiff's status as to the pension fund,
and chose to discharge him with the intent to interfere with his
pension rights.
Plaintiff testified that the Hazens also made comments with
regard to plaintiff's age. On the first day of trial, plaintiff testi-
fied that Thomas Hazen had stated that “it was costing him a
lot more for my [insurance] policy because I was so old.”
1Tr.151. According to plaintiff, Robert Hazen had also men-
tioned that the Hazen’s handball court membership would not
be useful for plaintiff because of plaintiff's age. 1 Tr. 151.
The jury also heard evidence regarding defendants’ offer of
a consulting arrangement to plaintiff. Thomas Hazea testified
that in May of 1986, before plaintiff was fired, he offered plain-
tiff a consulting contract. Thomas Hazen testified that persons
employed by Hazen Paper as consultants did not accrue em-
ployee benefits: no vacation benefits, pension rights, or health
or disability insurance. 4 Tr. 106-107. From this testimony, the
jury could reasonably have concluded that defendants sought to
receive plaintiff's services, but did not wish to extend to plaintiff
certain benefits that were offered to younger employees.
While the Court finds this evidence of age discrimination a
bit thin, the evidence is sufficient to support the jury’s verdict.
A judge may not grant judgment notwithstanding the verdict
simply because he would have reached a different conclusion
had he been the trier of fact. Borras v. Sea-Land Service, Inc.,
586 F.2d 881, 887 (1st Cir. 1978). Rather, judgment notwith-
standing the verdict is appropriate only where the evidence can
reasonably lead to only one conclusion. Because the Court finds
that the jury could have reasonably found age discrimination,
A-57
based on the evidence adduced at trial and reasonable infer-
ences drawn therefrom, the verdict as to age discrimination will
stand.
b. Liquidated Damages: The Question of Willfulness
On the issue of willfulness, however, the Court finds the evi-
dence deficient. In Trans World Airlines, Inc. v. Thurston, 469
U.S. 111 (1985), the Supreme Court, adopting a Second Circuit
definition, held that a violation of ADEA is willful if the em-
ployer “knew or showed reckless disregard for the matter of
whether its conduct was prohibited by the ADEA.” Jd. at 126,
citing Air Line Pilots Ass’n, International v. Trans World
Airlines, Inc., 713 F.2d 940, 956 (2d Cir. 1983), aff'd in part
and rev'd in part, Trans World Airlines, Inc. v. Thurston, 469
U.S. 111 (1985).* In adopting the “knew or showed reckless dis-
regard” standard, the Supreme Court explicitly rejected the no-
tion that a willful violation exists where “the employer simply
knew of the potential applicability of the ADEA,” Thurston,
469 U.S. at 127, or where the employer merely knew that the
ADEA was “in the picture.” Id., citing Coleman v. Jiffy June
Farms, Inc., 458 F.2d 1139, 1142 (5th Cir. 1971), cert.
3 Prior to Thurston, the First Circuit in Loeb held that a violation of the
ADEA is willful if “done voluntarily and intentionally, and with the specific
intent to do something the law forbids; that is to say, with bad purpose either
to disobey or to disregard the law.” 600 F.2d at 1020, n. 27, quoting E.Devitt
& C. Blackmar, Federal Jury Practice and Instructions § 14.06, at 384 (3d ed.
1977). In Thurston, however, the Supreme Court adopted the “knew or
showed reckless disregard” standard for willfulness in ADEA cases. The
Supreme Court further stated that “[w]Je do not agree with TWA’s argument
that unless it intended to violate the Act, double damages are inappropriate
under § 7(b) of the ADEA. Only one Court of Appeals has expressed approval
of this position. See Loeb v. Textron, Inc. , 600 F.2d 1003, 1020, n. 27 (1st Cir.
1979).” Thurston, 469 U.S. at 126 n. 19.
While the First Circuit has not expressly overturned Loeb with respect to
the standard for determining willfulness, , the First Circuit has applied Thur-
ston, without reference to Loeb, when deciding the question of willfulness un-
der the ADEA. Aledo-Garcia v. Puerto Rico National Guard Fund, Inc. , 887
F.2d 354, 357 (Ist Cir. 1989). Thus, the Court finds that the language of Thur-
ston operates to overrule Loeb with respect to the standard of willfulness that
applies in ADEA cases.
A-58
denied, 409 U.S. 948 (1972). The Supreme Court rejected these
proposed standards because they “would result in an award of
double damages in almost every case.” Thurston, 469 U.S. at
128. “Both the legislative history and the structure of the statute
show that Congress intended a two-tiered liability scheme. We
decline to interpret the liquidated damages provision of ADEA
§ 7(b) [29 U.S.C. § 626(b)] in a manner that frustrates this in-
tent.” Id.
It is with some difficulty that the Court applies the “knew or
showed reckless disregard” standard to the facts of the instant
case. In Thurston, Trans World Airlines (“TWA”) adopted a
policy which allowed airplane captains who were disqualified
from serving as captains for reasons not related to age (e.g.,
medical incapacity) to transfer to positions as flight engineers.
However, those captains over the age of sixty could not auto-
matically transfer. Any captain aged sixty years or more could
transfer to flight engineer stat»'s only if he successfully bid for
flight engineer status pursuant to a collective bargaining agree-
ment. The Supreme Court held that the policy discriminated
against protected pilots in violation of the ADEA. However, the
Court held that the violation was not willful because TWA
made good faith efforts to fashion a policy in compliance with
the ADEA.
In cases like Thurston, which involve employment policies or
employment plans, the “knew or showed reckless disregard”
standard functions adequately because it penalizes employers
who institute discriminatory policies that they know violate
that ADEA, or that indicate the employer's reckless disregard
for the provisions of the ADEA. Indeed, the “knew or showed
reckless disregard standard” guarantees that liquidated
damages serve their proper punitive function, different from
the pure compensatory role of actual damages. Thurston, 469
U.S. at 125.
Unlike Thurston, the case at hand involves a claim of discrete
employment discrimination. Plaintiff alleged discriminatory
treatment against hirn as an individual based on his age,
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without reference to any employment policy. To prevail on his
ADEA claim, plaintiff had to prove, and did prove, that “ “but-
for’ defendants’ motive to discriminate against him because of
age, he would not have been discharged.” Loeb, 600 F.2d at
1019. Having so proven, a wooden application of the “knew or
showed reckless disregard” standard would not properly distin-
guish between simple and willful ADEA violations, because
plaintiff, in establishing the actual ADEA violation, already
had to prove that age discrimination motivated the employer to
fire plaintiff. Menard, 848 F.2d at 285. The “knew or showed
reckless disregard” standard, applied without reference to the
two-tiered liability scheme, would therefore result in liquidat-
ed damages in practically every case of discrete employment
discrimination, despite the Supreme Court's rejection of such a
result.
Courts from other circuits have found it necessary to distin-
guish between simple and willful age discrimination, in an ef-
fort to insure that liquidated damages awards do not become
automatic. Turner v. Schering-Ploug Corp. , 901 F.2d 335, 346
(3rd Cir. 1990); Neufeld v. Searle Laboratories, 884 F.2d 335,
340-41 (8th Cir. 1989); Hansard v. Pepsi-Cola Metropolitan
Bottling Co. , 865 F.2d 1461, 1470 (5th Cir. 1989); Anderson v.
Phillips Petroleum Co. , 861 F.2d 631, 635-36 (10th Cir. 1988).
In Neufeld, supra, for example, the court decided that there
must be “direct evidence — more than just an inference from,
say, an arguably pretextual justification—of age-based ani-
mus” to warrant an award of liquidated damages. Neufeld, 884
F.2d at 340.
To date, the First Circuit has offered no guidance on this
point. Thus, while the Court will apply the “knew or showed
reckless disregard” standard in accordance with controlling
precedent, it will not apply that standard in a manner that
would frustrate congressional intent or Supreme Court in-
terpretations. Upon consideration of Neufeld and similar
authorities, the Court now holds that plaintiff, in order to
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recover liquidated damages, must prove that the employer en-
gaged in specific age-based conduct that rises above an ordinary
ADEA violation. Inferential evidence of discrimination is not
enough to establish willfulness. Mere proof of an ADEA viola-
tion, without more, does not adequately distinguish between
ordinary and willful violations of the ADEA. There must be
proof sufficient to push the level of conduct to a higher plateau.
Having so stated the law, the Court now decides that the jury’s
finding of willfulness must be set aside for the following reasons.
The evidence in this case, if examined in relation to ADEA
cases considered by courts of appeals in other circuits, is simply
not adequate to warrant a finding of willfulness. In Reynolds
v. CLP Corporation, 812 F.2d 671 (llth Cir. 1987), the plaintiff
was demoted and then fired from her position as store manager
after fifteen years of service. The plaintiff alleged “that CLP en-
gaged in a systematic campaign of harassment and humiliation
in an effort to force [plaintiff] to resign.” Id. at 673. The evi-
dence showed that the employer expressly sought “new” and
“young Miss America type” employees. Id. The case also includ-
ed evidence that less than six months before her discharge, the
employer demoted plaintiff, cut her pay by $10,000.00, placed
her under the supervision of a store manager who “had ways of
getting rid of CLP’s unwanted employees,” id., fired her, and
replaced her with a woman in her twenties. The court of ap-
peais upheld the jury’s award of liquidated damages.
In Neufeld, supra, the employer fired plaintiff, age 52, after
seventeen years of service in the Kansas City sales district. The
employer replaced plaintiff with a twenty-seven year old sales
agent. Neufeld, 884 F.2d at 337. Testimony of a non-party em-
ployee indicated that plaintiff's supervisor from Kansas City,
Ed Kill, tried to emulate other sales districts. “Kill said that the
Indianapolis district manager had ‘gotten rid of the older pec-
ple. . . [and] had hired younger people,’ and that ‘this is what
[Kill] was trying to do with [the Kansas City] district.’” Id. at
338, citing district court transcript at 336. The testimony
showed that Mr. Kill found Mr. Neufeld to be the appropriate
A-61
“sacrificial lamb.” Id. at 338. Mr. Neufeld was the oldest sales
agent in the district, and the evidence clearly supported the
jury’s finding that Mr. Kill fired Mr. Neufeld because of his age.
According to one witness, “Kill commented that ‘one way of
looking at it, you get rid of the old guys, put in the new people,
the figures change.’” Id. at 338, citing district court transcript
at 764. Again, the court of appeals upheld a jury’s finding of
willfulness.
The Reynolds and Neufeld cases contain strong evidence of
age-based discrimination by the employer. In these cases, the
employer demoted the older employee, or cut the employee's
pay, or made disparaging statements directed at the employee's
age, or otherwise by conduct or statements established a plain
nexus between the discharge and the employee’s age. In com-
parison, the instant case, while containing the few strands of
age-based evidence summarized above, lacks powerful evi-
dence of age-based animus.
The instant case closely resembles cases such as Smith v. Con-
solidated Mutual Water Co., 787 F.2d 1441 (10th Cir. 1986),
where the Tenth Circuit Court of Appeals found no willful
ADEA violation. In Smith, the plaintiff's supervisor often
referred to plaintiff as “an old goat,” criticized him for being
slow, commented that he had been “knocked around a bit over
the years,” and fired him in favor of a younger worker. Smith,
787 F.2d at 1442. The Court held that “[a]lthough the evidence
is thin and circumstantial, we conclude that, taken as a whole,
it is enough to permit a reasonable juror to infer that age was
a determinative factor in Consolidated’s decision.” Id. While
the court of appeals found that plaintiff had adequately proven
an ADEA violation, the court held that “[t]he thin nature of the
evidence presented by Mr. Smith at trial compels us to agree
with the trial court that Consolidated’s conduct was not ‘will-
ful’ under the standard announced by the Supreme Court in
Trans World Airlines, Inc. v. Thurston, supra.” Id. at 1443.
The Court has also considered Morgan v. Arkansas Gazette,
897 F.2d 945 (8th Cir. 1990). In Morgan, numerous Gazette
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employees testified regarding the age-based employment deci-
sions allegedly made by a particular Gazette manager, one
Tinker. The record indicated “a pattern of employees over the
age of forty leaving the circulation department and being
replaced by younger employees. . . .” Morgan, 897 F.2d at 950.
Testimony demonstrated age-based hiring, payment and firing
practices by Mr. Tinker. The record contained evidence that
Mr. Tinker referred to an older employee as an “old fuddy-
duddy,” and that “no matter what he did, [Morgan] would be
fired because Tinker was out to get all the older, experienced
employees.” Id. As in Smith, the court of appeals found the evi-
dence sufficient to support a finding of liability, but inadequate
under Thurston to trigger liquidated damages. See also Krause
v. Dresser Industries, Inc. , 910 F.2d 674 (10th Cir. 1990)(even
though jury finds that employer discharged plaintiff in viola-
tion of ERISA, court of appeals finds evidence insufficient to
support a finding of willfulness); Gillian v. Armtex, Inc. , 820
F.2d 1387 (4th Cir. 1987)(in affirming judgment notwithstand-
ing the verdict on the question of liquidated damages, the court
of appeals finds the evidence “too thin” to support of [sic] find-
ing of willfulness).
In the instant case, as in Smith and Morgan, the evidence was
largely circumstantial. Indeed, Mr. Biggins’ testimony supplied
almost all of the evidence of age discrimination offered in the
case. While “[a] claim of discrimination need not be proven
solely through direct evidence,” Conway v. Electro Switch
Corp., 825 F.2d 593, 597 (1st Cir. 1987), the Court will not al-
low liquidated damages if based.on sparse or circumstantial evi-
dence, or on self-serving testimony. Having considered the evi-
dence as a whole and as summarized above, the Court finds the
evidence incapable of supporting a finding of willfulness.
c. Count II: ERISA
InCount II of the complaint, plaintiff alleges that defendants
fired him in order to prevent his attainment of pension rights,
in violation of section 510 of ERISA, 29 U.S.C. §1140. The jury
A-63
found in plaintiff's favor on Count II, and awarded plaintiff
$100,000.00 in damages.
Section 510 provides that “[i]t shall be unlawful for any per-
son to discharge . . . a participant or beneficiary . . . for the pur-
pose of interfering with the attainment of any right to which
such participant may become entitled under [an employee pen-
sion plan) . . . .” Congress designed section 510 to prevent “un-
scrupulous employers from discharging or harassing their em-
ployees in order to keep them from obtaining vested pension
rights.” West v. Butler, 621 F.2d 240, 245 (6th Cir. 1980). To
recover under section 510, a plaintiff must prove that “an em-
ployer was at least in part motivated by the specific intent to en-
gage in activity prohibited by § 510.” Dister v. Continental
Group, Inc. , 859 F.2d 1108, 1111 (2d Cir. 1988)(citations omit-
ted). However, proof that an employee lost pension benefits as
a mere consequence of discharge will not create a cause of ac-
tion under ERISA. Gavalik v. Continental Can Co., 812 F.2d
834, 851 (3rd Cir.), cert. denied, 484 U.S. 979 (1987); Titsch v.
Reliance Group, Inc. , 548 F. Supp. 983, 985 (S.D.N.Y. 1982),
affd mem., 742 F.2d 1441 (2d Cir. 1983). Plaintiff must
demonstrate that the employer fired him with the “unlawful
purpose” to prevent plaintiff from attaining pension rights. Dis-
ter, 859 F.2d at 1111 (collecting cases).
Plaintiff offered ample evidence of an ERISA violation, and
the jury verdict on Count II must therefore stand. Plaintiff testi-
fied that at the time of his discharge, he had almost ten years of
service at Hazen Paper Company. | Tr. 128.‘ Thomas Hazen
offered similar testimony. 4 Tr. 97-98. Thomas Hazen also testi-
fied that he was in charge of pension account matters at Hazen
* After the conclusion of discovery, plaintiff's counsel found that plaintiff
may in fact have attained the right to collect pension benefits before defen-
dants fired him. Plaintiff offered into evidence, as exhibit 26, the summary
plan description of defendants’ pension plan. 4 Tr. 97. The summary plan
description provides that “if the aggregate of years and months of service ex-
ceeds five, then an additional year will be added in determining your vested
percentage.” 4 Tr. 97 (testimony of Thomas Hazen). If this provision applied
to plaintiff, then plaintiff would have had more than ten years of service for
pension purposes.
A-64
Paper Company, and regularly received pension account state-
ments regarding individual employee pension status. 4
Tr.94-95. This evidence, in combination with evidence of the
proffered consulting position, supports the inference that
defendants fired plaintiff with the intent to deprive him of
earned pension benefits. Because the jury could reasonably
have drawn such an inference from the evidence, the Court will
not set aside the verdict with regard to the ERISA claim.
d. Count IV: Wrongful Discharge
On Count IV, the jury returned a verdict in plaintiff's favor,
and awarded one dollar in damages.
The general rule in Massachusetts is that an at-will employee-
like plaintiff may be terminated with or without cause. Glaz v.
Ralston Purina Co., 24 Mass. App. Ct. 386, 389, 509 N.E.2d
297, 299, rev. denied, 400 Mass. 1106, 513 N.E.2d 1289 (1987).
Exceptions to the general rule exist, however. For example, an
employee has a cause of action for wrongful discharge if the dis-
charge is in bad faith or contrary to public policy. DeRose v.
Putnam Management Co., Inc., 398 Mass. 205, 210, 496
N.E.2d 428, 431 (1986); Siles v. Travenol Laboratories, Inc. , 13
Mass. App. Ct. 354, 433 N.E.2d 103, rev. denied, 386 Mass.
1103, 440 N.E.2d 1176 (1982).
Defendants argue that “[p]laintiff's: recovery for wrongful
discharge . . . depends upon the enforceability of the stock
promise and whether plaintiff ever was lawful owner of the
water based acrylic formula.” Defendants’ Brief in Reply to
Plaintiff's Opposition to Defendants’ Motion for Judgment Not-
withstanding the Verdict at 12 (October 23, 1990) (“Defen-
dants’ JNOV Reply”). Defendants contend that “[p]laintiff's
claim has always been that selling the rights to ‘his process or
formula’ was consideration for Hazen stock.” Defendants’ Brief
in Support of Motion for Judgment Notwithstanding the Ver-
dict at 11 (September 11, 1990)(“Defendants’ Brief for JNOV”).
Because the jury found that plaintiff never owned the paper
treatment formula in question, defendants argue, any alleged
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stock-for-formula agreement lacks consideration, and is unen-
forceable. Thus, defendants contend that they cannot be liable
for wrongful discharge, because the firing of plaintiff did not
prevent plaintiff from receiving a benefit to which he was en-
titled.
The Court finds defendants’ argument unpersuasive because
it does not properly characterize plaintiff's wrongful discharge
claim. It is true that the jury found that plaintiff had no owner-
ship rights to the formula. See Special Verdict at 3 (July 20,
1990). However, while plaintiff does claim that defendants
agreed to compensate him with stock in return for use of the for-
mula, plaintiff also contends that defendants promised the
stock as compensation for services rendered. No party disputes
that plaintiff repeatedly sought greater compensation for his
work at Hazen Paper Company; the disagreement centers
around what defendants did to accommodate plaintiff's
demand.
Plaintiff's version is that defendants agreed that plaintiff
deserved a $100,000.00 salary for the work he performed for
defendants, 1 Tr. 97, and that defendants agreed to pay plain-
tiff “the difference between my salary and $100,000.00 in
stock.” 1 Tr. 98. Plaintiff testified that when reminded by
plaintiff of the stock promises, Thomas Hazen never denied that
he promised plaintiff stock compensation, 1 Tr. 105, 125, but
that defendants nevertheless failed to tender the stock as
promised. Id. Plaintiff further testified that he agreed to sign
over to defendants any rights he had to the paper treatment for-
mula in return for fulfillment of the stock promises. 1 Tr. 98-99.
Finally, after plaintiff refused to sign the confidentiality agree-
ment, defendants fired plaintiff in order to avoid honoring their
stock promise. 1 Tr. 126-27.
Given this evidence, the Court finds ample consideration for
the stock promise alleged by plaintiff. The agreement called for
increased compensation for plaintiff, in the form of salary or its
equivalent. The consideration for the stock promise was the
present and continued satisfactory performance of services for
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Hazen Paper Company. Thus, while the jury’s verdict with
regard to the ownership of the formula does reject the notion
that plaintiff had any ownership right to the formula, it does
not entirely destroy consideration for the stock promise.
The evidence also suffices to support the verdict for wrongful
discharge. As noted above, plaintiff in this case testified — and
the jury found — that defendants promised plaintiff stock, as
a substitute for salary, equal in value to the difference between
plaintiff's salary and $100,000.00. Plaintiff also testified that
while the Hazens never denied promising the stock, they never
delivered on the promise, and fired plaintiff in order to avoid
rendering the promised compensation. Therefore the Court
will not disturb the jury’s verdict on Count IV.
e. Count V: Fraud
In Count V, plaintiff alleged that defendants fraudulently
failed to honor their promise to compensate plaintiff with stock.
The jury found in plaintiff's favor, and awarded plaintiff
$315,098.00 in damages for fraud.
“[A] fraud may be defined to be any artifice whereby he
who practices it gains, or attempts to gain, some undue ad-
vantage to himself, or to work some wrong or do some inju-
ry to another, by means of a representation which he
knows to be false, or of an act which he knows to be against
right or in violation of some positive duty.”
Commonwealth v. O’Brien, 305 Mass. 393, 397-398, 26 N.E.2d
235, 238 (1940), quoting Commonwealth v. Tuckerman, 76
Mass. (10 Gray) 173, 203 (1857). An action in fraud requires
plaintiff to prove “that the defendant made a false representa-
tion of a material fact with knowledge of its falsity for the pur-
pose of inducing the plaintiff to act thereon, and that the plain-
tiff relied upon the representation as true and acted upon it to
his damage.” Barrett Associates, Inc. v. Aronson, 346 Mass.
150, 152, 190 N.E.2d 867, 868 (1963), quoting Kilroy v. Bar-
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ron, 326 Mass. 464, 465, 95 N.E.2d 190, 191 (1950). Because the
evidence adduced at trial amply satisfies these elements, the
jury verdict for fraud will stand.
In essence, defendants’ attack on the jury’s fraud verdict
comes in two parts. First, defendants argue that plaintiff failed
to prove detrimental reliance on defendants’ misrepresenta-
tion. Second, defendants assert that plaintiff never established
damages directly resulting from defendants’ misrepresentation.
The Court will discuss each contention in turn.
A plaintiff must prove more than mere deception to establish
a cause of action for fraud. Massachusetts case law requires that
a plaintiff show detrimental reliance in order to collect for
fraud. Nei v. Burley, 388 Mass. 307, 311, 446 N.E.2d 674, 677
(1983); Kilroy, 326 Mass. at.465, 95 N.E.2d at 191. Courts will
find detrimental reliance where the misrepresentation “materi-
ally influenced” the plaintiff, in whole or in part, to take action
or refrain from acting. National Shawmut Bank v. Johnson, 317
Mass. 485, 490, 58 N.E.2d 849, 852; Schinkel v. Maxi-Holding,
Inc., 30:Mass App. Ct. 41, 48, 565 N.E.2d 1219, 1224
(1991)(plaintiff adequately states a claim for fraud where,
although plaintiff rendered managerial services and partial
payments in reliance on defendants’ promise to tender company
stock, defendants refused to deliver stock as promised).
Massachusetts law further provides that in a fraud action, the
misrepresentation need not be the sole or predominating motive
that induced the victim to engage in particular conduct. Na-
tional Shawmut Bank, 317 Mass. at 490, 58 N.E.2d at 852.
There may be one or many motivating reasons for a person’s act
or omission; but if a person acts or refrains from acting, in com-
plete or partial reliance on a false representation, the element
of detrimental reliance is satisfied. See National Car Rental Sys-
tem, Inc. v. Mills Transfer Company, 7 Mass. App. Ct. 850,
852, 384 N.E.2d 1263, 1264 (1979).
Defendants argue that because the jury found that plaintiff
never owned the formula, plaintiff cannot assert that his “detri-
ment” was loss of rights to the formula. Defendants’ Brief for
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JNOV at 12-13. While the Court agrees with defendants that
plaintiff cannot claim as his legal detriment the loss of rights to
the formula, plaintiff adequately proved other legal detriment
sufficient to support a finding of fraud. As with the wrongful
discharge count, see supra at 19-22, plaintiff's rendition of
present and continuing service at Hazen Paper Company pro-
vides the legal detriment for the fraud claim. All parties agree
that plaintiff sought a $100,000.00 salary in exchange for his
continuing employment. Plaintiff testified, and the jury appar-
ently believed, that defendants agreed to pay plaintiff approxi-
mately $44,000.00 in salary, and the balance of plaintiff's com-
pensation in stock. 1Tr.98. Thus, the jury could have found that
plaintiff continued to work for Hazen Paper Company, after
defendants initially promised to give plaintiff stock, in reliance
on the stock promise. This provision of continued services in ex-
change for the stock promise is sufficient to provide “detrimen-
tal reliance.”
Defendants further argue that plaintiff did not rely to his
detriment on defendants’ misrepresentation because “plaintiff
failed to introduce any evidence indicating that Plaintiff was
deprived of alternative employment opportunities by remain-
ing a Hazen employee during the period that the alleged
promise was made.” Defendants’ Brief for JNOV at 13. This ar-
gument confuses the element of reliance with the element of
damages. Although proof of lost wages or income might help
bolster a claim for fraud, plaintiff need not show that his reli-
ance caused him to forego earning opportunities of which he
might otherwise have availed himself. Rather, plaintiff need
only show that he acted or refrained from acting, at least in part
because he relied on the misrepresentation. As discussed supra,
plaintiff satisfied the reliance element by showing that he con-
tinued to work at Hazen Paper Company, after the mis-
representation, in part because the Hazens promised to com-
pensate him with shares of Hazen Paper Company stock in ad-
dition to his salary.
With respect to damages, however, a plaintiff who alleges
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may recover according to the “benefit of the bargain” rule.
Productora e Importadora de Papel, S.A. de C.V. v. Fleming,
376 Mass. 826, 838, 383 N.E.2d 1129, 1136-37 (1978); Rice v.
Price, 340 Mass: 502, 507-511, 164 N.E.2d 8911 894-97 (1960).
This means that plaintiff may recover as damages the value of
the benefit that he would have received had the misrepresenta-
tions been true. Under the benefit of the bargain rule, “damages
would be measured by the difference in value between the per-
forma
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