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Long-time employee’s $1.27M damage award for pretextual firing upheld

By Lorene D. Park, J.D.

Evidence supported a Massachusetts’ jury’s conclusion that an employer violated New York City law by firing an employee, who had been primarily teleworking for years, on the pretext that he moved to Massachusetts without approval.

Affirming a $1,275,000 judgment for an employee who received excellent reviews for 27 years before he was fired, allegedly on the pretext that he moved to the Boston area without permission and then refused to work in the New York office, the First Circuit rejected the employer’s argument that punitive damages were not available. The New York City Human Rights Law (NYCHRL) allows for punitives and the lower court did not err in allowing the employee to pursue his age discrimination claim (first pled under Massachusetts law) under the NYCHRL without repleading. The appeals court also rejected the employer’s challenges to jury instructions on causation and punitive damages, and concluded that the verdict was not against the weight of the evidence at trial (Rinsky v. Cushman & Wakefield, Inc., March 8, 2019, Katzmann, R.).

27 years of excellent reviews. The employee, a senior systems analyst in a software company’s New York City office, worked remotely a few days a week from his New Jersey home. He also occasionally worked remotely while visiting his daughter in Boston. Throughout his 27-year tenure, he received performance reviews of “exceeds expectations” and “excellent.”

Move to Massachusetts. In December 2014, the employee bought a home in Massachusetts, where he planned to retire in a few years to be near his daughter. He put his New Jersey home up for sale in March 2015. That same month, he learned his boss was transferring to Miami and he asked if he could transfer to the Boston office. He claimed that the boss eventually approved but said he needed to check with a higher-level manager. A few days later, his boss said the other manager had “no problem” with the transfer and they would find him a cubicle in Boston.

The employer disputes this timeline, with the employee’s boss testifying that he first heard of the relocation on April 30, and he told the employee that transfers take months to process. In May, the managers started exchanging emails about the “situation” the employee put them in with his “home purchase in Boston.” On May 27, they emailed a senior managing director the six steps to replace the employee. Later that week, the employee began working remotely in Massachusetts.

Termination. Over the next few weeks, managers discussed the need to replace the employee. On June 15 the senior director emailed that they needed to proceed “as quickly as possible,” that the employee’s job was in New York City, and it was “unacceptable” that he left without notifying his manager. On June 22, the managers asked the employee to start reporting to New York City five days a week, beginning the next day, or alternatively to resign. He protested and sent emails to senior management explaining he thought his transfer to Boston was approved. He opted to not resign, and he was fired on July 10, at the age of 63. He was replaced with a 48-year-old. Meanwhile, a younger employee was allowed to transfer from New York to Florida.

NYSHRL or NYCHRL? Citing the Massachusetts’ choice-of-law approach, the employer argued New York law should apply because it “has the most significant relationship” to the case. It also argued that the New York counterpart to the Massachusetts discrimination statute under which the employee sued (Mass. Gen. Laws ch. 151B) was the New York State Human Rights Law (NYSHRL), which does not provide for punitive damages or attorneys’ fees. The employee argued that the NYCHRL was most analogous and, like the Massachusetts law, it provides for uncapped compensatory damages, including punitive damages and attorneys’ fees for age and disability discrimination. The lower court found the NYCHRL most analogous.

Verdict and appeal. The jury found for the employee on his discrimination claim, and awarded him $425,000 in compensatory and $850,000 in punitive damages ($1,275,000 total). Appealing, the employer argued that the NYCHRL was inapplicable, that the court incorrectly instructed the jury, and that there was insufficient evidence to support the verdict.

NYCHRL applicable. Affirming, the First Circuit rejected the employer’s argument that the employee waived the NYCHRL claim by failing to plead a city-based cause of action. For one thing, the employer failed to preserve this argument for appeal because it merely objected to the lower court’s decision to apply the city-based law and did not explain or support the objection. The argument also failed on the merits because the purpose of pleadings is to afford fair notice of the claims and the employer here had fair notice of the issues presented. The employee was not required to newly plead an NYCHRL claim. The appeals court also pointed to Rule 81(c)(2), which states that “[a]fter removal, repleading is unnecessary unless the court orders it.”

Impact of discrimination in NYC. The employer also argued that the NYCHRL did not apply because the employee lived and worked in Massachusetts when fired, so the impact of his firing was felt outside New York City and was not within the reach of the statute. Disagreeing, the court explained that a NYCHRL claim may be brought if the impact of a discriminatory decision is felt within New York City, which extends to those who work in the city.

Here, the employee worked in the employer’s New York City office for 27 years. He worked remotely from Massachusetts when terminated, but a “plausible reading of the verdict and the evidence is that [the employer] allowed [him] to believe that he would be able to transfer to Massachusetts, but never officially authorized or intended to authorize the transfer, thus creating a pretext to fire him after he moved.” Thus, he was “continuously employed in New York City” though he worked remotely from Massachusetts in the days preceding his termination.

Jury instructions on causation. The employer also argued that the lower court committed reversible error in jury instructions on causation because it did not instruct the jury on the substantive differences between the NYCHRL and NYSHRL. Specifically, the NYSHRL requires showing that age was the “but for” cause of an adverse action but the NYCHRL uses the “substantial” or “motivating factor” standard. Rejecting the employer’s position, the appeals court reiterated that the NYCHRL applies here and the language of the jury instruction included the essence of that causation standard.

Punitives didn’t require clear and convincing proof. Also unpersuasive was the employer’s argument that the lower court erred in instructing the jury on punitive damages because it didn’t state that the employee was required to prove punitives by “clear and convincing evidence.”

The appeals court noted that the correct burden of proof is a matter of debate among New York’s courts and the state’s highest court has not yet addressed the split. Making an “informed prophesy,” the court here concluded that, if asked, the state high court would not require clear and convincing proof for punitive damages under the NYCHRL. In support, the court noted that the state high court has determined that the standard for punitives under the NYCHRL should be less demanding than Title VII’s standard.

Verdict not against the weight of evidence. The appeals court also concluded that the employer failed to show either that there was no legally sufficient basis for the verdict or that the lower court abused its discretion in denying the post-trial motion for judgment as a matter of law or alternatively for a new trial. Though the employer claimed the employee was fired because he moved to Boston without its approval and then refused to return to New York City when asked, the employee presented circumstantial evidence calling into question this proffered explanation.

Specifically, the employee had received excellent reviews for decades, there was evidence that managers started formulating a plan to replace him before his move to Boston, suggesting they waited until after he moved to use that as a pretense to fire him and the stated reason for firing him was false. Whether analyzed under a mixed motive theory or under the McDonnell Douglas framework, the denial of the employer’s post-trial motions was affirmed.