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McDowell v. Avtex Fibers Inc.

July 12, 1984

MCDOWELL, ROBERT, APPELLANT IN NO. 83-1455
v.
AVTEX FIBERS, INC., APPELLANT IN NO. 83-1434



APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA

Author: Higginbotham

Before: ALDISERT, HIGGINBOTHAM and PECK,*fn* Circuit Judges.

Opinion OF THE COURT

HIGGINBOTHAM, A. LEON, JR., Circuit Judge.

This case arises from a claim of age discrimination under the Age Discrimination in Employment Act ("ADEA"), 29 U.S.C. ยง 626(b)(1976 & Supp. IV 1980). Plaintiff/appellee Robert L. McDowell ("McDowell") initiated the underlying action against Avtex Fibers, Inc. ("Avtex"), alleging that his discharge violated the ADEA. A jury found in favor of McDowell on the issue of liability, but the issue of damages was submitted to Magistrate Hall*fn1 by stipulation of the parties. Magistrate Hall awarded McDowell lost earnings minus mitigation as compensatory damages and an equal amount in liquidated damages on the ground that Avtex's violation was willful.

Avtex appeals from that portion of the order awarding liquidated damages arguing that the trial court applied an incorrect legal standard in finding Avtex's violation to have been willful and that, in any event, the evidence was insufficient to support a finding of willfulness. McDowell in his cross-appeal challenges the trial court's deduction of unemployment compensation benefits and pension plan benefits from his back pay award.*fn2

We believe that the trial court applied a proper legal standard in finding a willful violation of the ADEA and that the evidence was sufficient to support a finding of willfulness. We thus affirm the district court's order on this issue. With regard to the trial court's deduction of pension plan and unemployment compensation benefits from McDowell's back pay award, we find it improper; accordingly, we will reverse that portion of the order of the trial court and will remand this case for reconsideration of the damages question in a manner consistent with this opinion.*fn3

I.

The principal issue before this court concerns the total amount of damages for which Avtex is liable. In presenting the issue of damages to the trial court, McDowell asked that he be awarded lost earnings or "back pay" measured generally as the amount which he would have earned had he not been unlawfully discharged. Seeking to mitigate damages for which it would have been liable, Avtex argued that, in addition to certain agreed upon reductions, the back pay award should be further reduced by the amounts received by McDowell as unemployment compensation benefits and pension plan benefits after his discharge by Avtex. The parties stipulated that the pension payments were derived from a pension plan to which Avtex had made payments without contributions from McDowell. Moreover, the parties stipulated that Avtex would pay into this pension plan so as to return McDowell's pension benefits to the level they would have reached but for the interruption of his employment due to his unlawful discharge. McDowell has been reinstated with his entitlement under the pension plan fully restored.

In addition to back pay, McDowell was awarded by the trial court an equal amount in the form of "liquidated damages." Such damages are proper if Avtex willfully violated the ADEA. Avtex argued, however, that the trial court erred in finding willfulness and that the evidence was insufficient to support a finding of willfulness.

II.

Mitigation of Damages

A. Unemployment Compensation Benefits

We will address first McDowell's challenge to the trial court's deduction of unemployment compensation benefits from his back pay award. Without benefit of this court's decision in Craig v. Y & Y Snacks, Inc., ("Craig") 721 F.2d 77 (3d Cir. 1983), the trial court reasoned that the propriety of deducting unemployment compensation benefits from McDowell's back pay award under ADEA is entrusted to the discretion of the trial judge. ...


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