FILED
NOT FOR PUBLICATION JUL 24 2012
MOLLY C. DWYER, CLERK
UNITED STATES COURT OF APPEALS U .S. C O U R T OF APPE ALS
FOR THE NINTH CIRCUIT
DAREL HARDENBROOK, an individual No. 10-35967
Plaintiff - Appellee, D.C. No. 1:07-cv-00509-EJL-
CWD
and
ROBERT ORLOFF and PAUL GOOCH, MEMORANDUM *
individuals,
Plaintiffs,
v.
UNITED PARCEL SERVICE, INC.,
Delaware corporation doing business in
the State of Idaho,
Defendant - Appellant.
Appeal from the United States District Court
for the District of Idaho
Edward J. Lodge, District Judge, Presiding
Argued and Submitted May 7, 2012
Seattle, Washington
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
Before: GOULD, BYBEE, and BEA, Circuit Judges.
Darel Hardenbrook brought suit against UPS alleging claims for breach of
contract, breach of the implied covenant of good faith and fair dealing, and
wrongful termination in violation of public policy. Hardenbrook’s wrongful
termination claim proceeded to trial and the jury returned an award of $1,436,367
in front pay and $40,000 in back pay, for a total of $1,476,367. The district court
denied UPS’s motion for a new trial conditioned on Hardenbrook accepting a
remittitur in the amount of $713,169—or $673,169 in front pay and $40,000 in
back pay, which he did. We have jurisdiction under 28 U.S.C. § 1291, and we
affirm in part and reverse and remand in part.
UPS argues that the district court erred in offering Hardenbrook a remittitur
that includes twenty-seven years of front pay. The proper amount of a remittitur is
the maximum amount sustainable by the evidence. See D&S Redi-Mix v. Sierra
Redi-Mix & Contracting Co., 692 F.2d 1245, 1249 (9th Cir. 1982). “When
considering an award of damages for lost future benefits, the question is whether
the plaintiff has proven the damages relating to future losses with reasonable
certainty.” O’Dell v. Basabe, 810 P.2d 1082, 1098 (Idaho 1991). The factors to
consider include “‘the plaintiff’s salary history, scheduled or mandated pay raises,
and a finding based on the evidence in the record of the time which it will take the
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plaintiff to find comparable employment with a commensurate salary, at which
time the award of front pay should be discounted [sic].’” Hummer v. Evans, 923
P.2d 981, 985–86 (Idaho 1996) (quoting O’Dell, 810 P.2d at 1098, but misquoting
“discontinued” as “discounted”); see also Cassino v. Reichhold Chems., Inc., 817
F.2d 1338, 1347 (9th Cir. 1987) (explaining that front pay is intended to be
temporary in nature and “must be reduced by the amount [the] plaintiff could earn
using reasonable mitigation efforts”).
The district court rejected the jury’s initial award, finding that the
assumptions upon which it relied were “too speculative.” In determining the
proper amount of the remittitur, the district court considered Hardenbrook’s
expected years of employment at UPS, the comparability of Hardenbrook’s jobs
post-UPS, the valuation of UPS restricted stock units, and the defined benefit plans
offered by UPS and Hardenbrook’s subsequent employer. The district court relied
on the evidence in the record, and the findings of the jury, to determine that had
Hardenbrook not been fired from UPS, he likely would have remained with the
company through retirement. This finding is supported by the evidence.
Additionally, the district court did not err in including the discretionary
bonus provided by UPS in the front pay analysis. The evidence shows that
Hardenbrook received a bonus in his two last full years with UPS, there was no
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evidence presented that this bonus would cease to be paid in the future, and the
evidence shows that it was unlikely that any bonus would be paid to Hardenbrook
by his new employer.
The district court also did not err in rejecting UPS’s argument that
Hardenbrook’s current job is substantially equivalent to UPS, even with a lower
salary, because he is required to work significantly fewer hours. The district court
found that “the value of this difference was not quantified at trial” and thus “there
[wa]s no evidence upon which to value the difference.” The district court did not
abuse its discretion in rejecting the contention that Hardenbrook should have taken
a second job to fully mitigate his damages.
UPS next claims that the district court’s award double-counted back-pay
damages. Based on all the evidence, the district court concluded that “the proper
amount of a remittitur, or the maximum amount sustainable by the evidence, is
$673,169 in front pay damages and $40,000 in back pay.” The front pay figure
was based entirely on the calculations offered by Hardenbrook’s expert. Notably,
the expert’s calculations included $149,615 for “Value of Past Lost Wages and
Benefits,” i.e., back pay. Thus, this calculation includes both back pay and front
pay damages. Because the jury explicitly found, and the district court affirmed in
the remittitur, that the proper amount of back pay damages was $40,000, the
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inclusion of an additional $149,615 for back pay was without support in the record
and an abuse of discretion by the district court. We reverse the judgment. On
remand, Hardenbrook’s damages should be reduced by $149,615.
Finally, UPS contends that the district court failed to discount the restricted
stock to present value. Hardenbrook’s expert testified as to how he arrived at a net
discount rate of zero. UPS’s expert strongly objected to this analysis as
“completely wrong” and “mak[ing] absolutely no sense.” Although, the district
court was “concerned” about the zero percent discount rate because it “seems to
ignore the time value of money” and is not supported by “basic economic
principles,” the court accepted that rate because UPS’s expert failed to provide any
evidentiary basis for the discount rate it suggested. Because the district court’s
conclusion appears to place the burden of proving the correct discount rate on the
defendant, we reverse and remand to the district court, on an open record, for
reconsideration in light of Watkins Co. v. Storms, 272 P.3d 503, 511 (Idaho 2012)
(holding that plaintiff has the burden to prove present value of damages, including
the proper discount rate).
The case is remanded to the district court for further proceedings in
accordance with this holding.
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AFFIRMED in part; REVERSED and REMANDED in part. Each party to
bear its own costs.
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FILED
Hardenbrook v. United Parcel, 10-35967 JUL 24 2012
MOLLY C. DWYER, CLERK
BEA, J., concurring in part and dissenting in part. U .S. C O U R T OF APPE ALS
I concur in most of the panel’s determinations in the accompanying
memorandum disposition. However, I do not think it was an abuse of discretion
for the district court to ratify the jury’s use of the plaintiff’s proposed zero percent
“discount rate” for future stock-based awards. Thus, I would affirm that
determination rather than remand for reconsideration.
I agree with the panel and the district court that the zero percent discount
rate proffered by the plaintiff’s expert is puzzling because it “seems to ignore the
time value of money.” But when Hardenbrook’s expert offered this testimony,
UPS did not object nor move to strike the evidence as irrelevant because it was
absurd. Instead, UPS put on the stand an opposing expert who disagreed with the
zero percent rate and offered an alternative rate of 10.5%. The problem with
UPS’s alternative, though, was that, according to the district court, there was “no
testimony or evidence as to the basis for the ‘UPS discount rate’ figure.”
Thus the jury was offered two choices. Hardenbrook’s zero percent rate
seems implausible but was at least supported by some evidence, however
unconvincing that evidence seems to all judges to have now considered the matter.
By contrast, UPS’s 10.5% rate was supported by “no testimony or evidence.” The
jury chose zero percent. Keeping in mind that “a jury’s award of damages is
entitled to great deference, and should be upheld unless it is clearly not supported
by the evidence or only based on speculation or guesswork,” In re First Alliance
Mortgage Co., 471 F.3d 977, 1001 (9th Cir. 2006), I do not see grounds to disturb
the jury’s award.
The panel remands for reconsideration in light of the intervening Idaho case
of Watkins Co. v. Storms, 272 P.3d 503 (Idaho 2012). That case held that a
plaintiff has the burden to prove present value of damages, including the proper
discount rate. I agree that the burden is on the plaintiff under Idaho law. But that
is not a new principle of law such as is required on a motion for reconsideration,
and in fact the plaintiff has carried that burden here.
In Watkins, which dealt with what damages could be recovered from a
lessor’s breach of a lease, the plaintiff had “presented evidence that nearly
$1,750,000 would be due in rent through the end of the term of the lease.” 272
P.3d at 510. The state trial court had found the lease’s provisions for acceleration
of rent so disproportionate to actual damages as to be unconscionable.
The Idaho Supreme Court did not grapple with whether the district court had
been correct in its “unconscionability” analysis in denying plaintiff an award for
future rent lost. Rather, the Idaho Supreme Court affirmed denial of damages on a
totally different ground: “We find that this analysis [i.e., unconscionability vel non]
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was unnecessary as [the plaintiff] failed to produce evidence of the present value of
its loss in unpaid rent; without such, there could be no foundation upon which the
court could base an award of damages.” Id. The Idaho Supreme Court did not
state what kind of evidence is necessary for a plaintiff to carry his burden to prove
the future discount rate. Rather, the Idaho Supreme Court’s decision to affirm the
district court’s denial of future damages was based on the fact that there was “no
evidence in the record . . . regarding the present value amount of the unpaid rent.”
Id. (emphasis added).
Here, by contrast, Hardenbrook presented some evidence in support of his
claim to a zero percent discount rate. The plaintiff’s expert testified as to how
UPS’s stock compensation program operates and then testified to the excellent
performance of UPS’s stock in the year before the trial. The stock had increased
18% in one year, and the expert estimated that the stock would continue to perform
well in the near and medium term. While it may seem implausible that
Hardenbrook would continue to be granted stock at the rate used by the expert, and
that UPS stock would deliver to Hardenbrook and other stockholders such a high
rate of return for the entire period at issue—27 years—that was still some evidence
of Hardenbrook’s future damages.
The jury accepted this rate, perhaps because zero percent was the better of
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the two imperfect alternatives proffered by the parties. Yet that is the nature of
litigation in our adversary system: sometimes, a party wins because its weak
evidence is stronger than the other party’s even weaker evidence. Because the jury
verdict shows that Hardenbrook carried his burden to prove damages, I would
affirm the award of damages using his discount rate rather than remanding for
reconsideration.
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