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Ray v. Miller Meester Advertising

July 29, 2004

PATRICIA LUDOWESE RAY, RESPONDENT,
v.
MILLER MEESTER ADVERTISING, INC., APPELLANT, ROBERT V. MILLER, DEFENDANT.



SYLLABUS BY THE COURT

Front pay is a component of actual damages subject to multiplication under Minn. Stat. § 363.071, subd. 2 (2002).

Affirmed.

The opinion of the court was delivered by: Meyer, Justice.

Dissenting, Gilbert, J.

Heard, considered, and decided by the court en banc.

OPINION

In this appeal, we are asked to decide whether front pay is subject to multiplication under Minn. Stat. § 363.071, subd. 2 (2002).*fn1

Appellant Miller Meester Advertising, Inc. (MMA), a Minnesota-based advertising agency, hired respondent Patricia Ludowese Ray in June of 1996 in the position of Vice President/Group Creative Director. At the time she was hired, Ray had 21 years of experience in the advertising industry. In June 1998, after two years of employment and without a negative performance evaluation, Ray was promoted to the position of Creative Director, the first woman to hold that position. Two months later, Ray was terminated by Robert V. Miller, MMA's owner. She was terminated without warning and with no prior criticism of her job performance. Ray then sued MMA and Miller for unlawful gender discrimination under the Minnesota Human Rights Act (MHRA), Minn. Stat. ch. 363 (2002), and Title VII of the federal Civil Rights Act, 42 U.S.C. § 2000e-5(g) (2004).

Ray's Title VII claim was tried to a jury and the MHRA claim was tried to the court. The presiding judge used the jury in an advisory capacity with regard to claims of discrimination under the MHRA. By special verdict, the jury found that Ray was terminated on the basis of her gender and awarded past wage loss in the amount of $73,866, past compensatory damages in the amount of $95,000, future compensatory damages in the amount of $42,250, and punitive damages in the amount of $500,000.

On June 7, 2001, the district court issued its findings of facts and conclusions of law with respect to the MHRA claims. The court concluded that MMA terminated Ray in violation of the MHRA. The court ordered a total of over $1 million in damages on both the Title VII and MHRA claims. The MHRA damage award included $123,004 for three years of front pay which, under Minn. Stat. § 363.071, subd. 2 (2002), the court doubled to $246,008.

MMA appealed, and among its claims of error it asserted that doubling the front pay award was not permitted under the MHRA.*fn2 The court of appeals reversed the entire Title VII award due to evidentiary errors. Ray v. Miller Meester Adver., Inc., 664 N.W.2d 355, 372 (Minn. App. 2003). The court of appeals also reversed the district court's trebling of emotional distress damages under the MHRA. Ray, 664 N.W.2d at 370. The court of appeals found no other errors in the district court's evidentiary rulings or determination of liability and damages under the MHRA. Ray, 664 N.W.2d at 372. We granted MMA's petition for review on the issue of whether front pay is subject to multiplication under the MHRA.

We begin by briefly examining the nature of front pay. "In employment contracts, the general rule is that '[t]he measure of damages for breach of an employment contract is the compensation which an employee who has been wrongfully discharged would have received had the contract been carried out according to its terms.'" Feges v. Perkins Rests., Inc., 483 N.W.2d 701, 709 (Minn. 1992) (quoting Zeller v. Prior Lake Pub. Sch., 259 Minn. 487, 493, 108 N.W.2d 602, 606 (1961)). However, a court may award future damages, or front pay, for lost compensation that occurs after the time of trial. Id. at 710. The potentially speculative nature of front pay awards is limited by the plaintiff's duty to mitigate damages, the evidence presented concerning the extent of the potential damages, and the principle that front pay awards are limited to the damages caused by the breach of contract. Id.

Under the MHRA, when a court finds that an employer engaged in an unfair discriminatory practice, the court shall order the employer to pay "compensatory damages in an amount up to three times the actual damages sustained." Minn. Stat. § 363.071, subd. 2 (2000). The question in this case is whether front pay is a component of "actual damages" and, therefore, subject to multiplication under the MHRA. This is an issue of statutory construction that we review de novo. State v. Wukawitz, 662 N.W.2d 517, 525 (Minn. 2003).

The legislature did not provide a definition of actual damages in the MHRA. However, we have already construed the meaning of this phrase in Phelps v. Commonwealth Land Title Ins. Co., 537 N.W.2d 271, 275 (Minn. 1995). In Phelps we cited with approval the definition of actual damages found in Black's Law Dictionary. Phelps, 537 N.W.2d at 275. Black's Law Dictionary defines actual damages as "[a]n amount awarded to a complainant to compensate for a proven injury or loss; damages that repay actual losses. - Also termed compensatory damages." Black's Law Dictionary 394 (7th ed. 1999). We concluded in Phelps that "[i]n general, compensatory damages 'consist of both general and special damages. General damages are the natural, necessary and usual result of the wrongful act or occurrence in question. Special damages are those which are the natural but not the necessary and inevitable ...


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