Most California employers (and their counsel) likely believe that an employee who obtained new employment in the same business at a higher salary with a promotion that required similar skills would have obtained employment “comparable or substantially similar” sufficient to cut off continuing damages in his wrongful termination lawsuit. Not so, according to a recent California opinion. On December 11, 2013, the Fourth District Court of Appeal issued Alfredo Villacorta v. Cemex Cement, Inc., Case No. E054329 (4th DCA December 11, 2013), holding that a longer commute can be sufficient to render a new job not “comparable or substantially similar” for purposes of mitigating lost wages in a wrongful discharge claim, even when the job meets the factors set forth above.
Plaintiff Villacorta worked as a maintenance planner at Cemex’s plant in Victorville, California, earning $65,699 per year. Cemex laid him off on February 22, 2008. Villacorta was off work for eight months. During that time he and his family moved to Corona to be closer to his wife’s job. On October 15, 2008, Villacorta began work with National Cement Company in Lebec as a maintenance supervisor with an annual salary of $69,300. Lebec was a two-three hour commute in each direction from Corona, so Villacorta rented a $450 per month apartment in Lancaster, about an hour commute each way from Lebec. Villacorta went home to Corona on the weekends.
Villacorta sued for wrongful termination alleging his discharge was due to his Filipino ethnicity, and he also sued for emotional distress. During closing argument, Villacorta’s attorney asserted that his client had suffered $44,000 in lost wages for the eight months he was unemployed.
The trial judge instructed the jury on mitigation, utilizing CACI 2407. CACI 2407 states that to reduce the employee’s damages because the employee found new employment the employer must show that the new job is “substantially similar” to his former job. Based on CACI 2407, the court instructed the jury to consider several factors in determining whether Villacorta’s new job at National Cement was “comparable or substantially similar,” including: (1) was the nature of his new job different than the old one; (2) was the position substantially inferior to his old job at Cemex; (3) were his salary, benefits and hours at the new job similar to his former job; (4) did his new job require similar skills; (5) were the responsibilities of his new job similar to his old position at Cemex; and (6) was his new job “in the same locality” as his old position.
The jury returned a verdict of $198,000 in lost wages, but zero on Villacorta’s emotional distress claim. The sum of $198,000 reflected three years’ lost wages from the date of his discharge to the date of the verdict.
Cemex moved for a JNOV, arguing that the lost wages award was not supported by substantial evidence. The trial court denied the motion.
The appellate court rejected Cemex’s appeal and affirmed the trial court. First, the court emphasized that Cemex’s appeal was based on insufficient evidence to support the jury verdict. The court then analyzed the affirmative defense of failure to mitigate by obtaining new employment, noting that the employer must show that the employment is “comparable, or substantially similar, to his old job If the new job is “different or inferior,” then the wages from the new job are not deducted from the employee’s damages.
The court then held that Villacorta’s longer commute and the effect on his family was “substantial evidence” that his new job was not comparable or substantially similar to his old position. Even though Villacorta’s new job was in the same business (cement), in a position with more responsibility (maintenance supervisor vs. maintenance planner), required similar skills, and earned a higher salary, the longer commute supported the jury’s lost wages award.
The lesson from this case for employers is that a change of “locality” can be sufficient basis to reject the employer’s claim that the employee’s new job cuts off his claim for lost wages.
If you have any questions, please contact Robert Bleicher at firstname.lastname@example.org or at (650) 342-9600.