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Media Alerts - Teutscher v. Riverside Sheriff's Association
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October 31, 2016
  Teutscher v. Riverside Sheriff's Association
Headline: The Ninth Circuit holds the district court erred in awarding ERISA front pay and reinstatement after the jury already had awarded front pay for state employment law violations.

Areas of Law: Seventh Amendment, ERISA, Remedies

Issues Presented: (1) Whether an award of the equitable remedies of front pay and reinstatement pursuant to ERISA violates the Seventh Amendment after the jury already awarded front pay as damages for state employment law violations; and (2) whether an employee who elected the remedy of front pay would have an unlawful double recovery if also awarded the equitable remedy of reinstatement pursuant to ERISA.

Brief Summary: Plaintiff-Appellee Scott Teutscher ("Teutscher") sued his former employer, Riverside Sheriffs' Association ("RSA") for retaliatory discharge, alleging violations of California law and the Employee Retirement Income Security Act, 29 U.S.C. §§ 1001-1461 ("ERISA"). The jury, using a general verdict form to which neither party objected, awarded Teutscher compensatory damages and punitive damages. Implicit in the jury's award, were amounts for back pay, front pay, and pain, suffering, and emotional distress. Thereafter, the district court ordered Teutscher's reinstatement plus $98,235 per year until reinstatement as ERISA equitable remedies. On appeal, the Ninth Circuit panel reversed the district court's equitable award of front pay on the ERISA claim as violating the Seventh Amendment and the court's reinstatement order because it was duplicative of the front pay remedy.

Significance: When a discharged employee alleges violations of state employment law and ERISA, and the jury's verdict on the state claims includes front pay, it is a violation of the Seventh Amendment for a district court to award additional front pay pursuant to ERISA. Additionally, if the employee elects the remedy of front pay, he may not receive the remedy of reinstatement to cover the same period of time as this would be an unlawful double recovery.

Extended Summary: Riverside Sheriffs' Association ("RSA") is an organization representing law enforcement employees in various collective bargaining agreements. It also administers a Legal Defense Trust ("Trust") governed by ERISA. Teutscher, at-will employee, was the Trust's Legal Operations Manager. He became suspicious that RSA was providing legal services for a criminal defense that was not permitted under the plan. When he informed RSA that he had expressed his concerns to local law enforcement, he was terminated. Teutscher then filed a lawsuit alleging wrongful termination. His complaint included claims for violations of Section 510 of ERISA, 29 U.S.C. § 1140, California Labor Code §§ 98.6 and 1102.5, and California common law.

At trial, a jury decided the state claims. The district court instructed the jury to calculate any damages based on what Teutscher would have earned up to the trial, the value of any future wages and benefits he would have accrued for as long as the jury found he would have been employed by RSA, and punitive damages if they found RSA's conduct was a substantial factor in causing his harm. Using a general verdict form to which neither party objected, the jury awarded Teutscher $457,250 in compensatory damages and $357,500 in punitive damages. Subsequently, the district court held a bench trial on the ERISA claim. The court awarded the equitable remedies of reinstatement and front pay of $98,235 per year until Teutscher was reinstated. RSA appealed on the grounds that the district court violated the Seventh Amendment by awarding additional front pay and the prohibition against double recovery by awarding front pay and reinstatement to cover the same period of time.

On appeal, the Ninth Circuit panel reversed the district court's equitable awards of front pay and reinstatement. As to the first issue, the court recognized that Seventh Amendment provides the right to trial by jury is to be preserved in suits at common law and that "no fact tried by a jury, shall be otherwise reexamined in any Court of the United States, than according to the rules of the common law." In this case, the state law claims and the remedy of damages were legal remedies, while the relevant ERISA remedies were exclusively equitable. Thus, Teutscher had a right to a jury trial on the state claims, but not for the ERISA remedies. The court also cited Dairy Queen, Inc. v. Wood, 369 U.S. 469, 479 (1962). In Dairy Queen the United States Supreme Court held that where legal and equitable claims turn on common issues of fact, any legal issues must be determined by the jury, and the jury's determination of the issues must occur prior to any final court determination of the equitable claims.

The Ninth Circuit found that the district court contravened these constitutional restraints. Although the district court's ERISA remedies shared common questions of fact with the jury's damages calculation, the court's findings conflicted with the jury's on front pay. Teutscher's California damages claims included front pay for salary and benefits he would have earned from employment after the trial. Thus, a legal front pay award under the state's law turned on the same issues of facts as an equitable front pay award under ERISA. The jury decided the front pay issue, and the Seventh Amendment does not permit the jury's findings to be cast aside in this matter. For this reason, the district judge erred in awarding additional front pay.

The court rejected Teutscher's argument that the jury did not actually award him front pay. First, the Ninth Circuit found that the lump-sum format of the jury verdict form prevented it from ascertaining the relative amounts of back pay and front pay that the jury awarded. Teutscher asked the jury to award him front pay and did not object to the lump-sum verdict form, thereby waiving any argument that the jury's verdict should or could be parsed between its compensatory components. It is possible the damages award included front pay. Moreover, even if the court could parse the jury award and find the jury awarded zero front pay, this would be a jury finding of fact. For these reasons, the district court had no authority to disregard the jury's findings and award additional front pay.

Next, the Ninth Circuit considered whether the district court erred in ordering Teutscher's reinstatement because of the potential overlap with his damages award and because Teutscher waived reinstatement when he elected to seek front pay from the jury. The court discussed how the doctrine of double recovery dictates that a plaintiff can recover no more than the loss actually suffered. A plaintiff is unjustly enriched when he receives damages in excess of his injuries. The ERISA equitable remedies of reinstatement and front pay are alternative remedies which cannot be awarded to cover the same period of time.

In this case, Teutscher waived his right to reinstatement when he affirmatively elected to seek front pay from the jury. Under the election of remedies doctrine, a party is bound by his election of remedies if three conditions are met: "(1) two or more remedies ... existed at the time of the election, (2) these remedies [are] repugnant and inconsistent with each other, and (3) the party to be bound ... affirmatively chose[], or elected, between the available remedies." Because all of these conditions are met in the instant case, Teutscher was foreclosed from seeking the reinstatement remedy.

For these reasons, the Ninth Circuit reversed the district court's equitable awards of front pay and reinstatement.

To read the full opinion, please visit:

https://cdn.ca9.uscourts.gov/datastore/opinions/2016/08/26/13-56411.pdf

Panel: Milan D. Smith, Jr., Paul J. Watford, and Michelle T. Friedland, Circuit Judges

Argument Date: January 5, 2016

Date of Issued Opinion: August 26, 2016

Docket Number: 13-56411

Decided: Reversed the district court's ERISA equitable awards of reinstatement and front pay

Case Alert Author: Amanda Cline

Counsel: Daniel P. Stevens (argued) and Heather K. McMillian, Stevens & McMillian, Tustin, California, for Plaintiff-Appellee

Jon R. Williams (argued), Williams Iagmin LLP, San Diego, California, for Defendant-Appelle.
William N. Woodson, III (argued), Law Offices of Wm. N. Woodson, III APC, Fallbrook, California, pro se Intervenor-Appellant

Author of Opinion: Judge Friedland

Concurrence: Judge Smith

Circuit: Ninth Circuit

Case Alert Supervisor: Philip L. Merkel

    Posted By: Glenn Koppel @ 10/31/2016 12:41 PM     9th Circuit  

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