On December 11, 2013, the California Court of Appeal for the Fourth District, in Villacorta v. Cemex Cement, Inc., Case No. E054329, affirmed the trial court’s denial of an employer’s motion for Judgment Notwithstanding the Verdict (JNOV), which had been filed in response to a jury award in favor of the employee in the amount of $198,000 for lost wages. The employer contended that the trial court erred because the award for lost wages was not supported by substantial evidence and did not account for mitigated damages. The Court disagreed, concluding that the employee’s replacement job qualified as inferior employment, and therefore could not be used to mitigate the employee’s damages.
Plaintiff Villacorta was laid off from Cemex Cement, Inc. (“Cemex”), located in Victorville, California, on February 22, 2008, at which time he was earning an annual salary of $65,699. Villacorta remained unemployed for approximately eight (8) months. On October 15, 2008, Villacorta began working for National Cement (“National”). National was located in Lebec, California, which was approximately two to three hours from his home. Rather than commute, Villacorta rented a room in Lancaster, California. As a result, Villacorta was away from his family Monday through Friday.
Villacorta sued Cemex for (1) wrongful termination in violation of public policy, (2) intentional infliction of emotional distress, and (3) national origin discrimination. At the time of trial, a jury instruction was provided to the jury regarding mitigation of damages wherein the jury was instructed to determine whether the employer had demonstrated that (a) employment comparable or substantially similar to the employee’s former job was available; (b) the employee failed to make reasonable efforts to seek this employment; and (c) the amount the employee could have earned from this employment. The jury was also instructed to consider whether the employee’s new position was substantially inferior to the employee’s former position. The jury awarded Villacorta $198,000 in past economic loss, but did not award any damages for two of the three claims. Accordingly, Cemex filed a JNOV motion, asserting that the evidence reflected Villacorta was only entitled to eight months of lost wages – from the time he lost his job until the time he began work for National. The trial court denied the JNOV Motion. Cemex appealed.
The Court of Appeal held in favor of the employee. The Court’s decision hinged on the application of the general rule that if the new job at issue is different or inferior to the former job, then the wages from the new job may not be used to mitigate damages. (Parker v. Twentieth Century-Fox Film Corp. (1970) 3 Cal.3d 176.) The Court found that wages earned from an inferior job cannot be used to mitigate damages because it “would result ‘in senselessly penalizing an employee, who either because of an honest desire to work or a lack of financial resources, is willing take whatever employment he can find.'” The Court found that since the employee had to pay for two residences, the location of the new job was inferior for purely economic reasons.
This case cautions employers that a change of “locality” for an employee’s replacement job may be a sufficient basis to defeat an employer’s claim that the employee’s new job should cut off the employee’s lost wages.
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