Opinion
No. C8-95-2664.
Filed September 10, 1996.
Appeal from the Department of Human Rights, File No. 69-1700-8691-2.
Sonja Dunnwald Peterson, (for Respondent Catherine Durand-Graves).
Thomas M. Sipkins, Patricia O. Kiscoan, (for Relator).
Hubert H. Humphrey III, Attorney General, Erica K. Jacobson, Assistant Attorney General, (for Respondent Commissioner of Human Rights).
Considered and decided by Norton, Presiding Judge, Schumacher, Judge, and Harten, Judge.
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (1994).
UNPUBLISHED OPINION
Relator Unisys Corporation appeals the administrative law judge's decision in favor of respondent Catherine Durand-Graves, arguing that (1) the evidence does not support a finding of discrimination, (2) the ALJ erred by concluding that Durand-Graves was constructively discharged, (3) the award of back-pay damages is erroneous, (4) the ALJ erred by doubling the back-pay award, and (5) the ALJ erred by enhancing the attorney fee award. We affirm in part and reverse in part.
FACTS
Durand-Graves worked for Unisys or Burroughs Corporation (a predecessor of Unisys) since 1978. She served as account representative, branch manager, regional manager for major accounts, branch manager for manufacturing, and branch manager for major accounts. In May 1989, Durand-Graves accepted a job as an account executive with Unisys's airlines division. The division's accounts were staffed by teams of sales representatives. The position of account executive is a level below that of major account manager. A major account manager is responsible for leading his or her sales team and building relationships with customers.
Durand-Graves was teamed with another account executive, a male named Sadick Ozoglu, to work on the Northwest Airlines account. Their primary focus was to sell a 2200 computer system to Northwest, which would generate seven to eight million dollars in revenue. Northwest purchased a 2200/600 system in 1990. Northwest was unhappy with its purchase, however, because shortly after the sale, Unisys introduced an improved version called the 2200/900. As a result of the tension with Northwest, Ozoglu was removed from the account in August 1990. For the next five months, Durand-Graves managed the Northwest account. When she learned that Unisys was going to transform Ozoglu's former position from account executive to major account manager, she expressed interest in the job. Unisys instead hired Nick Debronsky, who was an attractive candidate because he had been successful in selling large computer systems to major accounts, he had a high degree of technical skill, and he had never worked on the Northwest account or any of Northwest's competitors' accounts.
Debronsky testified that although he had some responsibilities that Durand-Graves did not have, their duties were "very similar" and they "shared the responsibility of the account basically." He testified that he believed that Durand-Graves should also have been a major account manager for the Northwest account, and he suggested to Del Bloss, president of the airlines division, on more than one occasion that Durand-Graves be promoted.
During her first two years with the airline division, Durand-Graves met with many mid-level Northwest executives, including Tom Bozlinski. When Bozlinski was promoted to Northwest's director of operations, Durand-Graves was excluded from meetings with Bozlinski, as well as other high-level meetings. She was told that there were too many Unisys representatives at the meetings. Unisys claimed she was excluded because she was an account executive, although Ozoglu regularly met with high-level executives when he was an account executive. Durand-Graves's exclusion resulted in all-male contingents from Unisys at these meetings. Durand-Graves testified that being excluded from the meetings affected her ability to do her job and achieve her quotas.
During a meeting at a golf course in the spring of 1992, Bloss told Debronsky that Durand-Graves was too often "sloppily dressed." Debronsky disagreed. During a meeting on a boat in Chicago in the summer of 1992, Debronsky told Bloss that there was insufficient business at Northwest to support two sales executives. Debronsky suggested that he be allowed to go somewhere else in Unisys and that Durand-Graves could manage the account. Bloss responded that Durand-Graves would "never" be a major account manager. Bloss also said that he did not like the way she dressed. Adele Barbato, a Unisys human resources executive, also indicated to Debronsky that Durand-Graves would never be a major account manager.
In September 1992, a customer account review was held. About 20 people attended, including Durand-Graves, Bloss, Barbato, Debronsky, and Bozlinski. During a break in the meeting, Debronsky again suggested that Bloss take him off of the account and make Durand-Graves the major account manager. Bloss said there was "no way in hell" Durand-Graves would manage the Northwest account. Bloss said that during the meeting Durand-Graves had inappropriately touched Bozlinski on the knee. He also reiterated that he did not like the way she dressed and that she "look[ed] like a slob."
Debronsky told Durand-Graves about Bloss's and Barbato's comments. Durand-Graves sought a voluntary layoff severance package. She was given a document to sign before she would be eligible for any severance package. She refused to sign it because she was concerned about its legal effect. Durand-Graves resigned from Unisys in late February 1993 and began working for Stratus Corporation as an account executive on March 1.
After Durand-Graves left Unisys, the airlines division hired David Johnson as a major account manager. The Northwest account then had two major account managers. The airlines division also had two major account managers on its United Airlines account.
Debronsky testified that when Johnson joined the Northwest account, he was allowed "[f]rom the beginning" to attend the kind of high-level meetings from which Durand-Graves had been excluded. He was also immediately given an enclosed office. (Durand-Graves had worked out of a cubicle.)
When Durand-Graves joined the airlines division, her base salary was higher than Unisys guidelines for account executives. Although Durand-Graves and Debronsky had similar targeted earnings, in 1991 Durand-Graves earned $59,576 while Debronsky received $97,584. In 1992, actual earnings were $52,147.43 for Durand-Graves and $98,708.63 for Debronsky. In 1993, Unisys reduced Durand-Graves's base salary by $6,000 to bring it in line with other account executives, while increasing Debronsky's base salary by $9,000. Johnson earned $90,318 in 1993, his first year on the Northwest account.
Durand-Graves filed a sex discrimination claim with the Minnesota Department of Human Rights. Following a seven-day hearing, an ALJ determined that Unisys discriminated against Durand-Graves. The ALJ awarded her $60,000 as double compensatory damages for wage loss, with interest. She also was awarded $40,000 in damages for mental anguish and suffering, and $8,500 in punitive damages. The ALJ further awarded costs and attorney fees, which it enhanced, and assessed a civil penalty of $5,000.
DECISION
This court may reverse or modify administrative agency decisions when the administrative findings are unsupported by substantial evidence, arbitrary or capricious, or in error as a matter of law. Minn. Stat. §(1994). Agency decisions are presumed to be correct and the party appealing the decision of an administrative agency has the burden of proving that the agency violated one or more of the provisions of Minn. Stat. § See Crookston Cattle Co. v. Minnesota Dep't of Natural Resources , 300 N.W.2d 769, 777 (Minn. 1980). The findings must be viewed in the light most favorable to the decision and cannot be disturbed where the evidence reasonably supports them. Booher v. Transport Clearings , 260 N.W.2d 181, 183 (Minn. 1977). A reviewing court must not substitute its view of the evidence for that of the ALJ if the record supports the ALJ's decision. Dakota County Abstract Co. v. Richardson , 312 Minn. 353, 356, 252 N.W.2d 124, 126-27 (1977).
1. Unisys contends that the evidence does not support the ALJ's finding of discrimination. Minn. Stat. § subd. 1(2)(c) (1994) prohibits discrimination on the basis of gender with respect to the terms, compensation, upgrading, conditions, facilities, or privileges of employment. In evaluating such claims, we use the analysis adopted in McDonnell Douglas Corp. v. Green , 411 U.S. 792, 93 S.Ct. 1817 (1973). See Sigurdson v. Isanti County , 386 N.W.2d 715, 721 (Minn. 1986) (requiring trial courts to apply McDonnell Douglas analysis in employment discrimination cases). This three-step analysis requires (1) the employee to establish a prima facie case of discrimination; (2) the employer to articulate a legitimate nondiscriminatory reason for the employee's treatment; and (3) a rebuttal of the employer's reasons showing them to be mere pretext for illegal discrimination. McDonnell Douglas , 411 U.S. at 802-04, 93 S.Ct. at 1824-25.
The ALJ determined that Durand-Graves established a prima facie case of discrimination. The ALJ found that Unisys's explanation of its treatment of her (that Durand-Graves was treated appropriately as an account executive, and others were more qualified than she) was pretextual. We conclude that substantial evidence, viewed in a light most favorable to the decision, supports these findings. Indirect evidence of Unisys's pretext includes Debronsky's testimony that he and Durand-Graves shared responsibility for the Northwest account, she was qualified to be a major account manager, and he proposed on more than one occasion that Durand-Graves be promoted to major account manager. Although Barbato testified that in her experience an account did not have more than one major account manager, another major account, United Airlines, had two male major account managers. Moreover, after Durand-Graves left, the Northwest account had two male major account managers.
Durand-Graves handled the Northwest account for five months before Debronsky joined the account. There is no indication that Johnson, Durand-Graves's replacement, was more qualified than Durand-Graves, but he joined the Northwest account as a major account manager rather than an account executive. Despite Debronsky's testimony that he and Durand-Graves "shared the responsibility of the account basically," W-2 forms indicate that in 1992, Durand-Graves earned $52,147.43 while Debronsky earned $98,708.63. Johnson's earnings in 1993, his first year on the Northwest account, were $90,318. Johnson was also allowed to attend high-level meetings from which Durand-Graves had been excluded, and he had been given an enclosed office.
There is also direct evidence of discrimination. Bloss repeatedly criticized Durand-Graves's appearance and said she would "never" be a major account manager. As the ALJ noted, criticisms about Durand-Graves's appearance "demonstrate the relationship of her gender to the attitudes held by higher management at Unisys."
2. Unisys argues that the ALJ erred in concluding that Durand-Graves was constructively discharged. "A constructive discharge occurs when an employee resigns in order to escape intolerable working conditions caused by illegal discrimination." Continental Can Co. v. State , 297 N.W.2d 241, 251 (Minn. 1980). If the employee cannot prove her employer consciously intended to force her to quit, she must instead prove that the employer intended the reasonably foreseeable consequences of its actions. Hukkanen v. International Union of Operating Eng'rs , 3 F.3d 281, 284 (8th Cir. 1993). A reasonable person standard is used to judge whether working conditions are intolerable. West v. Marion Merrell Dow, Inc. , 54 F.3d 493, 497 (8th Cir. 1995). The employee has the burden of proving constructive discharge. Jurgens v. Equal Employment Opportunity Comm'n , 903 F.2d 386, 390 (5th Cir. 1990).
Unisys points out that unequal pay or a denial of promotion, taken alone, generally do not result in constructive discharge. See, e.g., Bourque v. Powell Elec. Mfg. , 617 F.2d 61, 65 (5th Cir. 1980) ("discrimination manifesting itself in the form of unequal pay cannot, alone, be sufficient to support a finding of constructive discharge"); Muller v. United States Steel Corp. , 509 F.2d 923, 929 (10th Cir.), cert. denied , 425 U.S. 825 (1975) (discriminatory failure to promote does not constitute constructive discharge). This case is different, however, from those in which unequal pay or a denial of promotion is the only inequity faced by an employee. Durand-Graves did not merely learn that her base salary was being lowered or that she failed to receive a one-time promotion. Instead, Unisys executives said that she would never advance to major account manager. See Jurgens , 903 F.2d at 393 (suggesting that dimmed future job prospects due to "repeated discriminatory impediment to any advance ," may support finding of constructive discharge (emphasis added)). Moreover, Durand-Graves was also told that the airline division's president repeatedly criticized her not on the basis of her work, but rather about her physical appearance. Additionally, Durand-Graves testified that being excluded from meetings affected her ability to do her job. When she complained, Unisys failed to address her concerns. Viewing all this evidence as a whole, we cannot say the ALJ erred by finding that Durand-Graves was constructively discharged.
3. Unisys contends that the ALJ erred in awarding $30,000 in back pay for the years 1993, 1994, and 1995 because the $10,000-per-year award is speculative. Employees are entitled to back-pay awards if they were constructively discharged from employment. Maney v. Brinkley Mun. Waterworks Sewer Dep't , 802 F.2d 1073, 1075 (8th Cir. 1986). The ALJ's award was based on the fact that Durand-Graves's " earning ability was severely damaged by the discrimination she suffered." (Emphasis added.) It would be impossible for the ALJ to arrive at an exact dollar amount regarding Durand-Graves's earning ability. See Wilson v. Sorge , 256 Minn. 125, 132, 97 N.W.2d 477, 483 (1959) (impairment of earning capacity is item of general damages that does not require specific proof of actual earnings or income either before or after injury). Moreover, when Durand-Graves's earnings are compared to those of Johnson, the $30,000 award for back pay is reasonable. See Kolstad v. Fairway Foods, Inc., 457 N.W.2d 728, 734 (Minn.App. 1990) (affirming ALJ's damage award based on difference in plaintiff's wages and those of her male replacement).
4. Unisys contends that the ALJ erred by doubling the back-pay award to $60,000. Under Minnesota law:
In all cases where the administrative law judge finds that the respondent has engaged in an unfair discriminatory practice, the administrative law judge shall order the respondent to pay an aggrieved party, who has suffered discrimination, compensatory damages in an amount up to three times the actual damages sustained .
Minn. Stat. § subd. 2 (1994) (emphasis added). This subdivision "vests trial courts with the discretion to multiply damages." Phelps v. Commonwealth Land Title Ins. Co. , 537 N.W.2d 271, 274 (Minn. 1995). We find no abuse of discretion here.
5. In determining attorney fees, the ALJ calculated a lodestar figure of $78,952.57, and then "enhanced" the fees by 33% "due to the contingent fee nature of the case." Unisys argues that the ALJ erred by enhancing the lodestar figure. We agree.
In City of Burlington v. Dague , ___ U.S. ___, 112 S.Ct. 2638 (1992), the Supreme Court prohibited the use of contingency fee enhancements in federal fee-shifting statutes. Id. at ___, 112 S.Ct. at 2643; see also Kientzy v. McDonnell Douglas Corp. , 990 F.2d 1051, 1062-63 (8th Cir. 1993) (concluding that district court improperly enhanced lodestar amount to account for risk of loss assumed in taking contingent fee case). Even if such enhancements were allowed under Minnesota law, the enhancement here is erroneous because Durand-Graves did not provide any evidence that but for the possibility of a fee enhancement, she would not have been able to secure legal representation. See Hendrickson v. Branstad , 934 F.2d 158, 163 (8th Cir. 1991) (reversing contingency enhancement because there was no "specific evidence in the record to establish that the unavailability of a risk enhancement would have caused [plaintiff] substantial difficulty in locating competent counsel").
We affirm all but the calculation of attorney fees, which we reverse in part, thereby disallowing the enhancement of the lodestar figure.