Havill v. Woodstock Soapstone Co., Inc.

Annotate this Case

Havill v. Woodstock Soapstone Co, Inc. (2003-032); 177 Vt. 297; 865 A.2d 335

2004 VT 73

[Filed 13-Aug-2004]

NOTICE: This opinion is subject to motions for reargument under
V.R.A.P. 40 as well as formal revision before publication in the Vermont
Reports. Readers are requested to notify the Reporter of Decisions,
Vermont Supreme Court, 109 State Street, Montpelier, Vermont 05609-0801 of
any errors in order that corrections may be made before this opinion goes
to press.

2004 VT 73

No. 2003-032

Lois Havill Supreme Court

On Appeal from
v. Windsor Superior Court

Woodstock Soapstone Company, Inc. November Term, 2003

Alan W. Cook, J.

Cathryn C. Nunlist of Stebbins Bradley Harvey & Miller, PA, Hanover, New
Hampshire, for Plaintiff-Appellee.

James M. Morrissey and Thomas Hayes of Eaton & Hayes, P.C., Woodstock, for
Defendant-Appellant.

PRESENT: Amestoy, C.J., Dooley, Johnson and Skoglund, JJ.,
and Allen, C.J. (Ret.), Specially Assigned

¶ 1. JOHNSON, J. Defendant Woodstock Soapstone Company appeals
the trial court's conclusions that plaintiff Lois Havill had an implied
employment contract with defendant and that defendant breached that
contract when it discharged plaintiff without adhering to the procedures
for just cause firings detailed in defendant's personnel policies.
Defendant also appeals various aspects of the trial court's damage award of
front and back pay as excessive or unwarranted. Plaintiff cross-appeals
the trial court's damage award because it makes no provision for bonuses
and wages plaintiff might have earned but for her improper discharge and
because plaintiff claims the court made other errors calculating her award.
We affirm the trial court's conclusions regarding the existence of the
implied contract and defendant's liability for violating that contract, but
remand for a recalculation of damages.

I. Contractual Liability

¶ 2. Defendant manufactures wood-burning and gas-burning stoves.
Plaintiff began working for defendant in 1982. She worked part-time at
first and then full-time, until she was terminated in April 1987 when the
company was experiencing financial difficulties. Plaintiff resumed
employment with defendant in 1990 working initially as an independent
contractor from her home and later that year as a part-time employee in
defendant's office. Defendant made plaintiff a full-time employee in
August 1994.

¶ 3. In 1994, defendant also issued and distributed personnel
policies, which were the functional equivalent of a personnel manual. The
policies detailed a process whereby an employee was entitled to two written
warnings in a twelve-month period prior to termination for "willful or
repeated violations, or exaggerated behavior not in the best interest of
the company or its employees." Most significantly, the policies
established a "just cause" requirement for the termination of defendant's
employees with problems such as unauthorized absences, violation of safety
procedures, theft, careless or faulty work, and incompatibility with other
employees. According to the policies, employees' "responsibilities will
often change, and responsibilities will often be broad and/or overlapping
with responsibilities of other employees."

¶ 4. The trial court found that when plaintiff resumed employment
with defendant in 1990 her duties included data entry, database
maintenance, and mailings to prospective customers. The trial court's
findings detail the expansion of plaintiff's responsibilities into the area
of customer service and sales, primarily on the telephone and occasionally
in the showroom. The trial court estimated, based on testimony of both
plaintiff and defendant, that sales and customer service activities were
twenty-five percent of plaintiff's work by 1997. Plaintiff received "very
positive" performance reviews in 1995 and 1996 as well as a $1000 bonus in
August 1997. The performance reviews in evidence indicated that plaintiff
was steadily improving at sales and customer service on the telephone,
though she remained reluctant to do this work. The reviews encouraged
plaintiff to take a more active role in this regard. Plaintiff also
testified that during the slow work seasons when she offered to go home
without pay, defendant's president required her to stay so she could work
the telephones, reasoning that if she even made one sale it would be worth
it to the company.

¶ 5. Meanwhile, defendant's business was declining seriously for
various market-related reasons. Many of defendant's competitors went out
of business. This led defendant's president, Tom Morrissey, to reorganize
the company by adding a line of gas burning stoves and outsourcing in-house
functions, including many of the letter shop and order fulfillment
functions that comprised much of plaintiff's workload. As part of this
reorganization, defendant hired Laura Scott to streamline the operation.
There is no dispute that this reorganization was warranted by outside
economic factors, that it actually occurred, and that it had a positive
effect on the business.

¶ 6. All parties agree that tension developed between plaintiff
and Scott soon after Scott's arrival. Plaintiff felt humiliated by the way
Scott dealt with her. Scott and Morrissey began to perceive that plaintiff
was resisting the reorganization. The conflict between Scott and plaintiff
manifested itself in instances of plaintiff's "rude" and "insubordinate"
conduct towards Scott. In response, Morrissey sent plaintiff a letter
dated September 30, 1997, in which he stated, "As a courtesy to you, and in
light of the length of time you have worked here, you are not being issued
a written warning now," although a newer employee would have received one.
The letter goes on to reprimand plaintiff for her unacceptable behavior
toward Scott the prior week, to indicate that she was being temporarily
relieved of her customer service duties, and criticized her for not
voluntarily participating in a team building lunch for all employees.

¶ 7. The letter was written forty-one days before plaintiff was
terminated. Nonetheless, Morrissey's letter states that "[t]o accommodate
any additional growth we need customer service people who are flexible,
professional and cooperative team players. I need to know if you will make
a commitment to accommodate our needs. This decision is really yours to
make." The letter also states that if plaintiff "cannot make this
commitment now, and regularly in the future, then we will do everything we
reasonably can to help [plaintiff] secure another job," but that Morrissey
"would like to have [plaintiff] continue to work here" because Morrissey
valued her hard work and dedication and considered her a friend.

¶ 8. On October 1, 1997, plaintiff entered into a written
agreement with Morrissey and Scott in which they all pledged to cooperate
as team members in the best interests of the company. Despite these
efforts, defendant terminated plaintiff on November 10, 1997. According to
plaintiff's testimony as recounted in the court's findings, when plaintiff
asked Morrissey the reason for her termination, he replied "I don't know
why. You just are." Plaintiff did not receive any written warnings prior
to termination. Subsequently, plaintiff obtained her personnel file, which
contained a memo dated November 10, 1997 indicating that her position had
been eliminated due to lack of work. The memo also indicated that
defendant would not object to plaintiff's application for unemployment
benefits and that the company would provide a written recommendation letter
for plaintiff.

¶ 9. Defendant did in fact provide a recommendation letter for
plaintiff authored by Morrissey. The trial court noted that the letter
speaks of plaintiff in "fairly glowing terms." The letter lauds plaintiff
as someone who would be a "big asset in a busy office which requires
organization, dedication and sound office skills." Two weeks after
providing plaintiff with the letter, defendant placed an ad in the Valley
News seeking an "office whiz" who would be "a well organized person with
fast and accurate typing and keyboard ability, basic computer literacy, and
sound office skills." The advertisement indicated that the position was
full-time with benefits, generous pay and incentives, and the company was
growing. The evidence shows that Heather Dahlin responded to this
advertisement and was hired. She worked for the company handling telephone
inquiries, taking and processing orders, bookkeeping, and other
miscellaneous tasks until she quit in November 1998.

¶ 10. By January 1998, defendant had hired three new customer
service representatives. The trial court found that the new employees
performed some of the functions that plaintiff had previously performed,
though they were expected to be more aggressive in turning routine
inquiries into sales. The new customer service representatives received
training and certification in defendant's products. Defendant did not
offer plaintiff the opportunity to undergo such training.

A. Defendant's Intent to Be Bound by Policies

¶ 11. Plaintiff's theory of liability is that defendant wrongfully
terminated her employment in violation of an implied contract. As we
stated in our earlier decision, the rule that employment contracts for
indefinite terms are "at will" is one of construction, not one of
substantive law. Havill v. Woodstock Soapstone, Co., 172 Vt. 625, 627, 783 A.2d 423, 427 (2001) (mem.). Thus, parties can modify the at will
relationship according to the usual rules of contract. Id. We previously
reversed and remanded the trial court's grant of summary judgment for
defendant in this case with instructions for the court to determine whether
defendant intended to be bound by the policies generally, and the just
cause and progressive discipline provisions specifically. Id. at 629, 783 A.2d at 480. The trial court correctly answered both of these questions in
the affirmative.

¶ 12. Though defendant's president Morrissey testified that he is
not and should not be bound by the terms of the personnel policies,
defendant concedes in its brief on appeal that it "has never claimed that
the just cause provision is not binding." This concession comports with
the trial court's finding that the language of the policies evinces
defendant's intention to be bound by the provisions therein. The trial
court reached this conclusion after observing that the policies were devoid
of any disclaimer to the contrary. See id. at 628, 783 A.2d at 428.
(employer must clearly state its intent not to be bound by its promulgated
policies in order to avoid creating contractual liability). Instead,
defendant's position on appeal is that the just cause provision in the
policies applies only to employee misconduct, and not layoffs due to
reorganization required by economic circumstances. This position appears
to be consistent with the language of the policies, as well as our case law
on implied employment contracts. See Taylor v. Nat'l Life Ins. Co., 161
Vt. 457, 467-68, 652 A.2d 466, 473 (1993) (employer may bind itself to
continue employment of an employee despite the fact that employer is not
making profit, but such promise must be clearly and specifically stated).

¶ 13. The progressive discipline and just cause policy applied to
such things as incompatibility with other employees, unauthorized absences,
and faulty work. It included a provision for two written warnings. When
defendant sent plaintiff a letter about her incompatibility with Scott, the
letter indicated that it was not to be considered a written warning, but
that if she had been a newer employee, a written warning would have been
issued. The discussion of a written warning is an unmistakable reference
to the progressive discipline procedure and the just cause provisions
contained in defendant's policies. This, coupled with defendant's
concession on appeal, is ample evidence to support the trial court's
conclusion that defendant specifically intended to be bound by the just
cause provisions and the progressive discipline procedures in the area of
incompatibility with co-workers and other employee misconduct.

B. Evidence of Pretext

¶ 14. After having determined that defendant and plaintiff did have
an implied contract that plaintiff's employment would not be terminated
without just cause and adherence to defendant's stated procedures, the
court explored defendant's claim that the company decided to outsource
plaintiff's functions and eliminate her job in response to economic
circumstances in the industry. As the trial court stated, "economic
circumstances requiring layoffs may constitute good cause for termination."
See Taylor, 161 Vt. at 466, 652 A.2d at 472. Nonetheless, "[a]n employer
cannot use the defense of economic necessity as a pretext for discharges
which would otherwise be subject to a just cause attack by the employee."
Havill, 172 Vt. at 628, 783 A.2d at 429 (internal citations omitted).
After reviewing all the evidence, the trial court rejected defendant's
claim as pretext. The findings and undisputed evidence in the record
reasonably support the trial court's conclusion on pretext. Accordingly,
the conclusion must be upheld. Schnabel v. Nordic Toyota, Inc., 168 Vt.
354, 357, 721 A.2d 114, 118 (1998) (trial court's conclusion will stand if
reasonably supported by findings).

¶ 15. The crux of the dispute between plaintiff and defendant was
whether plaintiff's position had been eliminated as part of the company's
reorganization. Plaintiff prevailed below by demonstrating that
significant portions of her job remained after the reorganization.
Furthermore, plaintiff successfully attacked defendant's credibility by
offering evidence that contradicts defendant's claim that her termination
was contemplated as part of a planned, orderly reorganization.

¶ 16. The trial court found against defendant on the job elimination
issue. Specifically, the court found that sales and customer service
comprised at least twenty-five percent of plaintiff's job responsibilities
by 1997 when she was terminated, and that the company did not eliminate the
customer service positions. This finding was firmly grounded in evidence
that, despite the reorganization, the company still handled roughly the
same volume of inbound telephone traffic and still employed in-house
customer service representatives to handle these calls. Morrissey
testified that, although plaintiff did perform customer sales and service,
the company expected customer service representatives hired after the
reorganization to be more proactive in making sales and more technically
proficient in addressing service issues. To this end, defendant provided
the new hires with extensive training and certification courses in
defendant's products. Defendant did not offer similar training
opportunities to plaintiff at any time during her employment - even as her
duties expanded from the manual tasks of the mail room to more technical
telephone customer service. The job may have changed in part, but it did
not go away and it did not change in a way that required qualifications
that were different from those plaintiff possessed. Plaintiff was not
given the chance to change with it despite the clause in defendant's
policies that states "responsibilities will often change, and
responsibilities will often be broad and/or overlapping with
responsibilities of other employees."

¶ 17. The court's findings further reveal that customer service and
sales was not the only part of the job that remained. The trial court
found, based on undisputed evidence, that after it terminated plaintiff,
most of the data-entry tasks and mail room duties that plaintiff had
previously performed were outsourced to individuals working from home.
While defendant may not have been obligated to offer this work to
plaintiff, the company's decision not to utilize plaintiff's services for a
job defendant agreed she was qualified to perform reasonably supports the
court's conclusion that plaintiff's termination had less to do with
reorganization and more to do with behavioral issues. This conclusion is
also supported by the fact that defendant had, at various times over the
course of plaintiff's long employment with the defendant, outsourced
contract work to her to perform from her home. See Havill, 172 Vt. at 629,
783 A.2d at 430.

¶ 18. Only two weeks after delivering plaintiff a letter of
recommendation that praised her for "organization" and "sound office
skills" such as data entry, database management, and work with customers in
person and over the phone, defendant advertised for an "office whiz" who
would be a "well organized person with fast and accurate typing and
keyboard ability, basic computer literacy, and sound office skills." The
court noted the striking similarities between plaintiff's qualifications as
described by defendant and the profile of the employees that defendant
almost immediately began seeking in the marketplace. In Mylan Labs. v.
Robertson, a gender discrimination case, we accepted the employer's claim,
as a nonpretext reason for denying the plaintiff a promotion, that a newly
created position required different skills from those possessed by the
plaintiff. 2004 VT 15, ¶¶ 31, 37, 848 A.2d 310. The plaintiff in
Mylan failed to produce evidence that she possessed the skills and could
meet the requirements of the job description promulgated by the employer.
Id. ¶ 37. Here, by contrast, the skills required to perform the tasks
that remained after the reorganization were indistinguishable from those
that Morrissey attributes to plaintiff in his letter of recommendation.
Moreover, this cannot fairly be characterized as a case about whether a
business is entitled to downsize for economic reasons; the trial court
found that defendant hired three new employees - including the "office
whiz" - by January 1998, approximately one month after plaintiff was
terminated.

¶ 19. The court's findings also include the following excerpt from a
letter that defendant sent to plaintiff just over one month before
defendant terminated her: "to accommodate any additional growth we need
customer service people who are flexible, professional and cooperative team
players. I need to know if you will make a commitment to accommodate our
needs. This decision is really yours to make. . . . I would like to have
you continue to work here." (emphasis added). Coming from Morrissey, one
of the primary architects of the reorganization, this letter is
inconsistent with the claim that defendant had planned to release plaintiff
all along because she lacked the skills required to fill the new positions.
It demonstrates that Morrissey viewed plaintiff as a customer service
representative and contemplated her continued employment with the company
as it adapted to meet the challenges presented by the marketplace. This
appearance of inconsistency is bolstered by the fact that the letter was
sent after Laura Scott, the employee overseeing the reorganization, had
been hired. In fact, plaintiff's "rude, insubordinate, and unacceptable
behavior toward Scott" was the impetus for the letter.

¶ 20. The foregoing analysis of the findings and other undisputed
evidence adequately supports the trial court's conclusion that defendant's
claim regarding the elimination of plaintiff's job was pretext. Although
the specific responsibilities may have changed somewhat, the core functions
were retained and were performed by employees who were all hired not long
after plaintiff was terminated.

¶ 21. At oral argument, defendant protested vigorously that the
court erred in concluding that defendant's claim that it eliminated
plaintiff's position was pretext because plaintiff did not make that
argument at trial or in its pleadings. While this is literally true in the
sense that plaintiff did not use the word pretext, the entire thrust of
plaintiff's argument was that her position was not eliminated in the
reorganization, and that defendant's proffered reason for terminating her
was false. Black's Law Dictionary defines pretext as "[a] false or weak
reason or motive advanced to hide the actual or strong reason or motive"
Black's Law Dictionary (7th ed. 1999). Pretext is, therefore, a
determination of credibility. Indicia of untruthfulness appear more
readily in person than they do in the cold appellate record; thus the
fact-finder's credibility determination is due great deference because it
is based on the trial court's observation of the witnesses as they
testified. The court made no error by fashioning its judgment in response
to the facts as they appeared at trial.

¶ 22. Defendant also finds fault in what it sees as the trial
court's failure to specify what defendant's proffered reason was masking.
To the contrary, the trial court's findings indicate that defendant
terminated plaintiff because of her incompatibility with Laura Scott, the
employee who was directing the reorganization. Findings 9-12 detail the
friction between plaintiff and Scott that culminated in plaintiff's
dismissal:

On October 1, 1997 Plaintiff, Mr. Morrissey and Laura Scott
entered into a written agreement regarding the conduct of their
relationship and how they would cooperate as team members in the
best interest of the company. Apparently these efforts did not
eliminate the conflict and on November 10, 1997 Plaintiff was
terminated.

Although the court could have been more explicit in drawing the link
between this finding and its conclusion on pretext, the finding reasonably
supports the conclusion as well as the court's ultimate disposition of the
liability issue.

¶ 23. Defendant bound itself to the terms of an implied employment
contract that entitled plaintiff to two written warnings before she would
be terminated for just cause. Defendant breached that contract when it
terminated her without warning, and thus is liable for damages.

II. Damages

¶ 24. After concluding that defendant was liable for damages in
contract, the trial court awarded plaintiff a total of $74,644 in principal
damages plus $15,040 in pre-judgment interest. Both parties have appealed
various aspects of the damages award. Before addressing those arguments,
we review the trial court's findings as they relate generally to the issue
of damages.

¶ 25. Plaintiff worked for defendant for approximately ten years
over the period from 1982 to 1997. For some of that time she worked as
either an independent contractor or part-time employee, and for the final
three years she worked full-time. At the time of her termination, she
earned $10.75 per hour while working forty hours per week at defendant's
office. Plaintiff earned a total of $23,360, including an August bonus,
working for defendant in 1997. The trial court estimated that she would
have earned a total of $24,060, including an anticipated $700 December
bonus, had she finished out the year in defendant's employ. The week
before defendant terminated her, plaintiff told Morrissey that she was in
good health, enjoyed her work, and planned to work for the company another
ten years.

¶ 26. Plaintiff was able to find work at Morgan's Plumbing only
three days after her termination. She worked thirty hours per week for a
rate of $9.00 per hour. This work, which was always understood as
temporary, ended in June 2000. Plaintiff was fifty-eight years old when
defendant terminated her, and sixty-one when her employment ended at
Morgan's. At this point, she decided to become self-employed because she
was unable to find other work.

¶ 27. Plaintiff's self-employment consisted of performing typing for
two businesses. She began working in 1990 with OT, now called Therapeutic
Dimensions, and had continued to work for them while she worked for
defendant as a supplement to her income. It does not appear from the
record that she worked increased hours for Therapeutic after she became
fully self-employed. Her second client, Wilson Associates, now known as
Quest, hired her within days of her termination from Morgan's. Between
these two clients, she works, on average, forty hours per week without
benefits.

A. Damages Period

¶ 28. The trial court calculated plaintiff's damages for the period
beginning in calendar year 1998 (FN1), and ending in 2004 - a total period
of seven years. This includes five years of back pay, i.e., lost wages up
to the time of judgment, and two years of front pay - damages for lost
future wages accruing after the date of judgment. See Haynes v. Golub
Corp., 166 Vt. 228, 238, 692 A.2d 377,383 (1997) (defining front and back
pay). "When front pay is allowed, the damages must be limited to a
reasonable period of time, and the amount must not be speculative." Id.
(internal citation omitted).

¶ 29. Defendant first challenges the damages award because, in its
view, the damages period was twice as long as plaintiff's tenure as a
full-time employee, and thus is unreasonable. We have previously
recognized that the length of employment prior to termination is a factor
bearing on the determination that a front pay damage award is reasonable
and not too speculative. Trombley v. Southwestern Vt. Med. Ctr., 169 Vt.
386, 398, 738 A.2d 103, 112 (1999); Haynes, 166 Vt. at 238, 692 A.2d at
383. In the present case, we are satisfied that the overall relationship
between employer and employee was sufficiently long-term to support the
damages period. Defendant would have us focus narrowly on the
approximately three and one half years prior to plaintiff's termination,
the period for which plaintiff was a full-time employee. In its first
finding, however, the trial court detailed an employment relationship that
began almost fifteen years before the date of termination, and comprised a
total of ten and one half years of service by plaintiff to defendant as an
independent contractor, part-time employee and finally as a full-time
employee.

¶ 30. Defendant also argues that this award is excessive because the
period upon which it is based is unreasonable in light of its argument that
plaintiff's job was eliminated by January 1999 at the latest. This argument
is based largely on the same assertions and evidence defendant cited to
contest the trial court's conclusion on liability. We have already
affirmed the trial court's disposition and will not revisit the underlying
issues as they pertain to damages.

¶ 31. Nonetheless, we remand to the trial court to consider another
factor that could, in the trial court's discretion, support a damages award
- with special attention to front pay - that spans a shorter period than
that which it chose. Specifically, the trial court may assess whether
defendant's evidence in any other way supported its claim that plaintiff
would not have remained in defendant's employ until or beyond the normal
retirement age of sixty-five. See Barbour v. Merrill, 48 F.3d 1270, 1280
(D.C. Cir. 1995) (court may consider, among other discretionary factors,
defendant's evidence that indicates plaintiff would not have remained in
the job until retirement); see also Hybert v. Hearst Corp., 900 F.2d 1050,
1057 (7th Cir. 1990) (although there was sufficient evidence to support
conclusion of age-based discrimination, evidence regarding complaints about
employee performance and tension with management "should not be ignored in
making the front pay determination"). In the instant case, plaintiff has
prevailed by showing that she was discharged for some reason other than
economic circumstances, specifically, incompatibility with a supervisor.
See supra, at ¶ 22. Accordingly, the trial court should be allowed to
balance this evidence against plaintiff's statements of her subjective
intent to remain employed with defendant beyond her normal retirement age.

¶ 32. Plaintiff has also challenged the period over which damages
were awarded as too short in light of the evidence. The trial court found
that plaintiff intends to work until age seventy, and that she told
Morrissey that she had planned to work for defendant until she was
sixty-eight. After noting these findings, the trial court stated that "in
her post-trial memorandum, plaintiff suggests an award 'based on the normal
retirement age of sixty-five.' " (Citation omitted). The trial court
analyzed defendant's argument and then concluded that "plaintiff is
reasonable in requesting compensation until she reached the age of 65."

¶ 33. Plaintiff contends that the trial court misunderstood her
request. Our review of the post-trial memorandum supports plaintiff's
position. The section heading of the memo to which the court alludes in
its order expressly states that the "damages awarded by the court are
insufficient to properly compensate the plaintiff." The memo cites, by
number, the court's finding that plaintiff intended to work for the company
for another ten years. The memo then states that "since the evidence
clearly demonstrated that 'plaintiff planned to work after age sixty-five,'
damages should have been awarded through 2009." (Emphasis added; internal
citation omitted). This language is not susceptible to the trial court's
reading of it.

¶ 34. Notwithstanding the trial court's misapprehension of
plaintiff's request, plaintiff is not automatically entitled to the
additional damages she requests. In Haynes, we implied, in dicta, that a
front pay award extending beyond the normal retirement age might be
reasonable in that case if it was supported by evidence that plaintiff
planned to work beyond the retirement age. 166 Vt. at 238, 692 A.2d at
383. While such evidence is cited in the court's findings here, our law
does not compel the trial court to award damages that are co-extensive with
the period that a plaintiff intends to work. The trial court's only
responsibility is to make an award that is limited to a reasonable time and
that is not too speculative when viewing all the evidence in the light most
favorable to the plaintiff. Id.

¶ 35. Trial courts should be given considerable discretion in
calculating awards for lost future income, because such awards are "
'inherently speculative and are intrinsically insusceptible of being
calculated with mathematical certainty." Williams v. Rubicon, Inc., 808 So. 2d 852, 862 (La. Ct. App. 2002)(internal citation omitted). This
deference, however, is limited by the principle that the trial court's
findings must sufficiently demonstrate how it exercised its discretion in
light of the evidence. The findings here indicate that plaintiff planned
to work for defendant beyond the age at which the trial court capped her
damages, but also that plaintiff had performance-related issues that may
have eventually led to her discharge at some earlier point. Accordingly,
the issue of how many years worth of damages plaintiff should be awarded is
remanded to the trial court.

B. Mitigation

¶ 36. Defendant next contends that the court erred in holding that
plaintiff had fully mitigated her damages. An employee claiming wrongful
discharge has a general duty to mitigate damages. In re Lilly, 173 Vt.
591, 593, 795 A.2d 1163, 1168 (2002) (mem.). Mitigation, in the context of
an employment dispute, requires that the employee make a "good faith effort
to find suitable alternative employment." Schnabel, 168 Vt. at 361, 721 A.2d at 119. When an employer is claiming that the employee did not
properly attempt to mitigate damages, the burden of proof is on the
employer to show such failure. Lilly, 173 Vt. at 593, 795 A.2d at 1168.
This requires that the employer show both that suitable work existed and
that the employee did not make reasonable efforts to obtain it. Id.
Suitable employment is that which is "substantially equivalent to the
position lost and suitable to a person's background and experience." Id.,
795 A.2d at 1169.

¶ 37. In the trial court's view, plaintiff had sufficiently
mitigated her damages through her work first with Morgan's Plumbing, and
later by getting typing work from Quest. The trial court concluded that
plaintiff was "very conscientious about mitigating her damages by obtaining
other work in a timely manner" even though she no longer worked full time
for any one employer after defendant terminated her. The trial court's
conclusion is supported by its finding that plaintiff immediately entered
the job market and found comparable, albeit lower paying, work three days
after defendant terminated her. Moreover, as the trial court found,
plaintiff was nearly sixty-one years old when her Morgan's job ended.
Being so close to retirement, it is highly unlikely that another employer
would have taken a chance on hiring and training her for work comparable to
what she was doing for defendant. In this light, her decision to become
self-employed was reasonable. Again, plaintiff was able to secure a client
for her home typing business within a matter of days after her employment
at Morgan's ended. It appears that plaintiff acted with the utmost good
faith in trying to keep herself employed after defendant terminated her,
and that was all that was required of her. See id. at 594, 795 A.2d at
1169.

¶ 38. Assuming, arguendo, that we agreed with defendant's contention
that plaintiff could have been more diligent in finding work, defendant has
failed to carry its burden of demonstrating that plaintiff's diligence
would have been rewarded with a substantially equivalent position available
to a person of plaintiff's age and with her experience. Defendant has not
called our attention to, nor does the record reflect, any evidence that
defendant introduced at trial regarding the job market in plaintiff's area
at the time she allegedly failed to mitigate. See id. at 593-94, 795 A.2d 1168-69. Accordingly, the trial court's conclusion on mitigation must be
affirmed.

¶ 39. Defendant further contends that the trial court erred by not
deducting money that plaintiff earned working at home for OT/Therapeutic
Dimensions from her final damage award. " 'The measure of damages for
wrongful termination of an employment contract is the amount that the
plaintiff would have earned absent the breach, less what [plaintiff]
actually earned or could have earned by the exercise of reasonable
diligence during the contract period after [plaintiff's] termination.' "
Benoir v. Ethan Allen, Inc., 147 Vt. 268, 272, 514 A.2d 716, 719 (1986)
(citation omitted). As noted, plaintiff had been working for Therapeutic
since 1990 and continued to do so up until the time of trial. Her income
from Therapeutic did not rise dramatically after her termination. When
plaintiff worked for both defendant and Therapeutic, she worked between
fifty-five and sixty hours per week with only forty hours of that work
attributable to defendant. The trial court found that after she became
self-employed she worked only forty hours a week - the same amount she
worked for defendant. She testified that, at this point, she has all the
work she can handle. Thus, when plaintiff worked for defendant, and then
for Morgan's, the income from Therapeutic was mainly supplemental income.
After leaving Morgan's, Therapeutic became one of two primary sources of
income. This change in character must be reflected in the calculation of
damages. From defendant's perspective, defendant should not be
responsible for compensating plaintiff for what appears to be a voluntary
choice to work less total hours now than she did when she worked for
defendant. Although the amount of income from Therapeutic did not change,
its role in plaintiff's overall income picture did. By excluding the
Therapeutic income from the damages picture, the trial court unfairly
placed the burden on defendant to make up for the shortfall in plaintiff's
income that resulted more from her voluntary choice to work fewer hours
than defendant's decision to fire plaintiff. Accordingly, the trial court
shall treat income from Therapeutic in the same manner it treats income
from Quest for the period after her termination from Morgan's.

C. Vacation Time

¶ 40. Defendant also challenges the trial court's decision to
augment plaintiff's base pay damages by including additional funds to
compensate plaintiff for paid vacation time. Plaintiff would have been
contractually entitled to two weeks of paid vacation for the years 1998
through 2000, and to three weeks of paid vacation time for the years 2001
through 2004. Thus in calculating the net damages for those years, the
trial court multiplied the number of vacation hours plaintiff could have
taken by her hourly wage and added that number to each year's total
damages. This resulted in her damages being increased by $860 for each of
the first three damage years and $1,290 for each of the last four damage
years. As the trial court noted, plaintiff did not receive the benefit of
paid vacation time in her current employment.

¶ 41. Defendant argues that plaintiff is essentially receiving a
double-benefit for this vacation because the trial court's base pay
calculation compensates plaintiff for fifty-two weeks worth of salary. In
defendant's view, those fifty-two weeks already incorporate paid vacation,
six paid holidays and five paid sick days. Accordingly, plaintiff is made
whole by the fact that if she had worked for defendant she would have been
paid for fifty-two weeks even though she would not have been required to
work those fifty-two weeks.

¶ 42. We cannot say that the trial court erred in giving plaintiff
some additional monetary benefit for vacation time that her subsequent
jobs did not afford her. Nonetheless, the trial court's decision to
provide plaintiff full credit for all the vacation she would have been
entitled to without any findings on plaintiff's past behavior as it relates
to vacation time was error. The conclusion on this issue is not reasonably
supported by the findings and thus, this portion of the damages award is
remanded for further findings and such recalculation of damages that may be
warranted by the findings.

D. Bonuses and Raises

¶ 43. In calculating base pay damages, the trial court included
$700 to account for one anticipated bonus, but did not include any amount
for anticipated raises. Defendant contends that the court erred by
including the anticipated bonus because defendant was not contractually
bound to pay plaintiff bonuses. Plaintiff also claims error in the trial
court's failure to account for anticipated future raises. The trial
court's findings show that plaintiff received a raise of $.25 per hour in
1995 and another raise of $.50 per hour in 1996. The findings also
indicate that plaintiff received bi-annual bonuses since becoming a
full-time employee in 1994. The only exception being that she did not
receive her December bonus of $700 in 1997 because she was terminated in
November. The trial court also found that "[d]efendant has apparently
continued its practice of awarding pay raises and bonuses since Plaintiff
was terminated." These findings are supported by Morrissey's own
testimony. With regard to bonuses, Morrissey testified that defendant
"like[s] to give away money, and we do it if we can, and yes, we have
succeeded almost every August and December." On the topic of annual
raises, Morrissey testified that some employees got annual raises and some
people did not. He testified that both bonuses and raises were "heavily
merit related," although he did concede that during the five year period
from plaintiff's termination in 1997 to the trial in 2002, customer service
representatives did receive annual pay raises. By Morrissey's own
testimony, the business has doubled in size since 1997.

¶ 44. Based on those findings, we cannot conclude that the trial
court's decision to include a reasonably anticipated bonus was too
speculative. The decision was based on undisputed evidence about
plaintiff's prior employment history and the company practices and finances
in the period after termination. See Benoir, 147 Vt. at 273, 514 A.2d at
719 ("[e]vidence of plaintiff's past employment history, coupled with proof
of the company's operating history during the post discharge period"
provides fact-finder with a conservative estimate of employee's damages).
Though plaintiff was not contractually entitled to bonuses it appears
certain that she would have continued to receive bonuses as she had
regularly in the past, and thus the trial court was within its discretion
to provide plaintiff the bonuses.

¶ 45. The issue of annual raises presents a more difficult
question. Unlike bonuses, which plaintiff received every year since
becoming a full time employee, plaintiff did not receive raises every year.
Specifically, plaintiff did not receive a raise in either her first, or her
last year of full-time employment with defendant. We can see why the trial
court felt that automatically granting plaintiff an annual raise was more
speculative than granting annual bonuses. The issue of timing is especially
difficult. The evidence shows that bonuses were granted every August and
December. By contrast, plaintiff has not called our attention to any
evidence that would assist the trial court in determining at what point in
the year raises should be granted. This information is key because, unlike
bonuses that can be expressed in consistent lump sums, raises affect the
rate of pay that is in turn multiplied by the number of hours worked.
Thus, a raise granted in January is far more valuable than a raise granted
in November because it applies to a greater number of hours worked. Timing
is not the only problem. While Morrissey's testimony does indicate that
both bonuses and raises were "heavily merit based," the evidence shows that
plaintiff did receive bonuses in 1994 and 1997, but did not receive raises
in those years. Thus, the evidence suggests that the employer's standard
for granting bonuses was more liberal than its standard for granting
raises. Plaintiff's track record indicates that while she always met the
standard for bonuses, for whatever reason, she did not always receive a
raise. The trial court's conclusion that granting plaintiff annual raises
would have been too speculative is reasonably supported by the findings and
the evidence.

E. Other Claims

¶ 46. Plaintiff appeals the trial court's use of anticipated gross
income figures to calculate her income from Quest for the purposes of
deducting this amount from her base damages as mitigation. She claims this
was error because, according to expert testimony offered at trial, the
correct way to calculate a self-employed worker's earnings is to deduct
expenses from gross wages. As plaintiff's counsel concedes, the trial
court's damage calculations with respect to her income from this source was
based on plaintiff's own exhibit. Plaintiff cannot blame the court for an
error that is of her own creation, especially when defendant relied on
plaintiff's calculation at trial. As defendant points out, defendant did
not cross-examine plaintiff on the issue of her expenses related to
self-employment. If the court were to recalculate plaintiff's income by
the formula she suggests, it would be on the basis of unimpeached testimony
regarding her expenses. The trial court did not abuse its discretion by
relying on plaintiff's own calculation.

¶ 47. Defendant claims error in the trial court's decision not to
include income plaintiff receives as compensation for working for her
husband's business approximately five hours per week at a rate of $10.00
per hour. Plaintiff testified that this amounted to a gross income of
about $2,600 per year since 2001. Plaintiff testified that she reports
this income on her taxes. Despite this testimony, the trial court failed
to discuss this amount in its opinion. Therefore, on remand, the trial
court shall consider the appropriate treatment of this income, and if
necessary, adjust the damage award in light of its eventual conclusion with
respect to this income .

The trial court's judgment with respect to defendant's liability is
affirmed. The trial court's damages award is affirmed in part and reversed
in part, and the matter is remanded for further findings and a
reconsideration and recalculation of damages consistent with the views
expressed herein.

FOR THE COURT:

_______________________________________
Associate Justice

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Footnotes

FN1. The trial court's decision not to calculate damages from the date of
termination was made in light of the generous severance package that
defendant granted plaintiff. Neither party challenges this aspect of the
award.

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