THOMAS J. KAIRYS v. SOUTHERN PINES TRUCKING, INC.
Nos. 22-1783 & 22-2055
UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT
July 25, 2023
Before: HARDIMAN, PORTER, and FISHER, Circuit Judges.
PRECEDENTIAL
Argued on April 20, 2023
Audrey J. Copeland [Argued]
Marshall Dennehey Warner Coleman & Goggin
Teresa O. Sirianni Marshall Dennehey Warner Coleman & Goggin Union Trust Building, Suite 700 501 Grant Street Pittsburgh, PA 15219
Counsel for the Appellant
Christine T. Elzer [Argued] Tamra Van Hausen Elzer Law Firm, LLC 100 First Avenue, Suite 1010 Pittsburgh, PA 15222
Counsel for the Appellee
OPINION OF THE COURT
HARDIMAN, Circuit Judge.
Southern Pines Trucking, Inc. (Southern Pines or the Company) appeals the District Court‘s judgment for Thomas Kairys on his retaliation claim under the Employee Retirement Income Security Act (ERISA),
A
In March 2016, the owner and Chief Executive Officer of Southern Pines, Pat Gallagher, recruited Kairys to serve as Vice President of Sales to help the Company grow its cryogenic trucking services. Southern Pines had just two other employees when Kairys joined the Company: Bob Gallagher (Pat‘s brother and the Vice President of Operations) and a truck fleet manager. Soon after he started working for Southern Pines, Kairys was diagnosed with degenerative arthritis and required hip replacement surgery. Kairys notified his supervisor, Chad Vittone—the Chief Financial Officer of PGT Trucking, an affiliated business also owned by Pat Gallagher—that he would use a week of vacation time. Vittone said that was “no problem,” so Kairys had the surgery on November 30, 2017. Kairys missed seven days of work.
The Southern Pines employee health insurance plan with the University of Pittsburgh Medical Center (UPMC) covered Kairys‘s surgery. Because the Company was self-insured, it paid a portion of each claim made under the UPMC policy. Kairys‘s surgery caused the Company‘s health insurance costs to rise markedly. The claims invoice paid for the week of December 10–16, 2017, shortly after Kairys‘s hip replacement, totaled $23,277.07, with $13,394.94 billed to employee payroll code “SP01.” That invoice was the highest weekly amount in a six-month period by nearly $8,000. And the SP01 row was highlighted on every healthcare invoice that Southern Pines produced in discovery.
According to Kairys‘s trial testimony, after he returned to work in December 2017, Bob Gallagher told him to “lay
B
Kairys sued Southern Pines, alleging that his termination was discriminatory and retaliatory contrary to various state and federal statutes. His six claims included: discrimination and retaliation under the Americans with Disabilities Act (Count I); discrimination under the Age Discrimination in Employment Act (Count II); retaliation under ERISA (Count III); breach of contract (Count IV); violation of the Pennsylvania Wage Payment and Collection Law (WPCL) (Count V); and discrimination and retaliation under the Pennsylvania Human Relations Act (PHRA) (Count VI).
After discovery, the Company moved for summary judgment on all counts. Kairys cross-moved for partial summary judgment only as to his breach of contract and WPCL claims (Counts IV and V). The District Court denied the Company‘s motion and granted in part Kairys‘s cross-motion. It determined that a reasonable factfinder could conclude that
The case proceeded to trial, and the jury found for Southern Pines on Kairys‘s claims under the ADA, ADEA, and PHRA. The jury also returned an advisory verdict for the Company on the ERISA claim, finding that Kairys did not prove by a preponderance of the evidence that Southern Pines retaliated against him for exercising his right to ERISA-protected benefits or interfered with his right to future benefits. That verdict was only advisory because Kairys had no right to a jury trial on his ERISA claim for equitable relief. See Pane v. RCA Corp., 868 F.2d 631, 636 (3d Cir. 1989). Kairys prevailed on his WPCL claim and the jury awarded him $5,384.62 in separation pay, which included damages on Kairys‘s breach of contract claim.
The parties then briefed the ERISA claim to the District Court. Southern Pines asked the District Court to adopt the advisory verdict because Kairys failed to prove his case on that claim. The District Court disagreed. The Court observed that “the jury made no specific findings of fact,” and explained that it would independently consider the trial evidence to evaluate the ERISA claim. Kairys v. S. Pines Trucking, Inc., 595 F. Supp. 3d 376, 380 (W.D. Pa. 2022). The Court then found that Kairys had proved by a preponderance of the evidence that the Company retaliated against him for using ERISA-protected benefits and interfered with his right to future benefits. The Court awarded Kairys $67,500 in front pay and determined that he was entitled to reasonable attorneys’ fees and costs.
II
The District Court had subject matter jurisdiction under
III
We first consider the Company‘s argument that the District Court‘s ERISA judgment conflicted with the jury‘s factual findings on evidence common to all claims.
A
Kairys argues that Southern Pines forfeited this argument. We disagree. Kairys is correct that the Company never argued to the District Court that it was bound to accept
B
The District Court wrote that it was “not bound by the advisory verdict,” citing Hayes v. Community General Osteopathic Hospital for the proposition that “[a] trial court has full discretion to accept or reject the findings of an advisory jury.” Kairys, 595 F. Supp. 3d at 380 (quoting 940 F.2d 54, 57 (3d Cir. 1991)). But Hayes involved an advisory jury only, so we had no occasion to consider the relationship between binding and advisory jury verdicts issued in the same suit. 940 F.2d at 56. Here, AstenJohnson‘s more specific command applied—Kairys‘s suit involved both a binding jury verdict on legal claims and an advisory jury verdict on the equitable claim. So the District Court had to “accept[] the jury‘s findings on common facts” when deciding the equitable ERISA claim. AstenJohnson, 562 F.3d at 228. Otherwise, “the seventh amendment right to a jury trial would be significantly attenuated.” Roebuck v. Drexel Univ., 852 F.2d 715, 737 (3d Cir. 1988).
We therefore hold that, in a suit with equitable and legal claims and facts common to both, a district court must determine whether the jury verdict on the legal claims “necessarily implie[s]” the resolution of any common factual issues, even when the jury fails to make explicit findings of fact. Ag Servs. of Am., Inc. v. Nielsen, 231 F.3d 726, 731 (10th Cir. 2000). The court then “must follow the jury‘s implicit or explicit factual determinations in deciding the equitable claims.” Teutscher v. Woodson, 835 F.3d 936, 944 (9th Cir. 2016) (cleaned up). The converse is also true. “[A]ny findings not necessarily implied by, but nonetheless consistent with, the verdict” are for the court to decide. Covidien LP v. Esch, 993 F.3d 45, 56 (1st Cir. 2021); see also
C
Though the District Court should have analyzed in the first instance whether the jury‘s verdict on the ADA, ADEA, and PHRA claims necessarily implied the resolution of any factual issues common to the ERISA claim, we do so here. See TD Bank N.A. v. Hill, 928 F.3d 259, 276 n.9 (3d Cir. 2019) (“[W]e may affirm on any ground supported by the record.“).
Southern Pines argues that “[t]here is no set of facts where [the Company] could prevail on the disability and age discrimination claim, but not prevail on the ERISA claim.” Southern Pines Br. 41. We disagree. The ADA, ADEA, PHRA, and ERISA claims have distinct elements of proof. Each required the jury to find that a different protected characteristic or activity was a determinative factor in Kairys‘s termination. So a jury could possibly find that Kairys‘s use of his health benefits motivated the Company‘s decision, not his age, disability (arthritis), or request for time off work.
Consider first the ADA retaliation claim. Kairys had to prove a causal connection between his termination and his request for a reasonable accommodation (i.e., leave for hip surgery). By contrast, the ERISA retaliation claim required Kairys to prove “that there was a causal connection between his termination and his use of the employee benefit plan.” Dist. Ct. Dkt. 119, at 18. A jury could conclude that, although Kairys was not fired in retaliation for requesting time off, he was fired in retaliation for using his healthcare benefits.
Southern Pines contends that the jury instructions on the ADA claim tell a different story. Those jury instructions directed: “If you believe [the Company‘s] stated reason(s) and if you find that the termination would have occurred regardless of his disability and/or the cost of the medical expenses associated with his disability, then you must find for [the Company] on Mr. Kairys‘s ADA claim.” App. 634 (emphasis added). The Company suggests that this instruction renders the District Court‘s ERISA decision inconsistent with the jury‘s ADA verdict.1
Though we think it a close question, the jury instructions’ use of “or” convinces us that the jury‘s ADA verdict does not necessarily imply that Southern Pines did not
For these reasons, the District Court‘s judgment and findings for Kairys on the ERISA claim were not inconsistent with the jury‘s verdict on the ADA, ADEA, and PHRA claims.
IV
We turn next to the Company‘s argument that the evidence was insufficient to support the District Court‘s verdict for Kairys on his ERISA claim. Kairys again says that
Kairys‘s ERISA claim arose under Section 510, which states:
It shall be unlawful for any person to discharge . . . a participant or beneficiary for exercising any right to which he is entitled under the provisions of an employee benefit plan . . . or for the purpose of interfering with the attainment of any right to which such participant may become entitled under the plan . . . .
Kairys had to prove that Southern Pines intended to violate Section 510. DiFederico v. Rolm Co., 201 F.3d 200, 204–05 (3d Cir. 2000). Because he offered no direct evidence of discriminatory intent, the McDonnell Douglas burden-shifting framework applied. Id. The Company‘s appeal focuses on the third step of that framework, where Kairys had to show that the Company‘s proffered legitimate, nondiscriminatory reason for his termination was pretextual by persuading the Court either “that the discriminatory reason more likely motivated the employer or . . . that the employer‘s proffered explanation is unworthy of credence.” Jakimas v. Hoffmann-La Roche, Inc., 485 F.3d 770, 785–86 (3d Cir. 2007), as amended (May 31, 2007) (cleaned up).
A
Southern Pines first attacks the District Court‘s credibility determinations. The Company argues that the District Court should not have credited Kairys‘s testimony that Bob Gallagher told him to “lay low” following his surgery, because Bob and Pat testified to the contrary. This argument is a nonstarter because such credibility determinations are for the trier of fact, not the appellate court. We give “great[ ] deference” to the District Court‘s factual findings that rest on credibility because that Court is in a “superior[ ] . . . position to make” such determinations. Anderson, 470 U.S. at 574–75;
B
Southern Pines also challenges the Court‘s factual findings supporting pretext. The Company insists there is “no evidence that the elimination of Kairys‘s position and his termination was anything other than a legitimate, nondiscriminatory business decision.” Southern Pines Br. 17. The record does not support that broad statement. The District Court identified several “weaknesses, implausibilities, inconsistencies, incoherencies, or contradictions” in the Company‘s proffered legitimate reason. Kowalski, 82 F.3d at 1289 (citation omitted).
The District Court found implausible the Company‘s explanation for terminating Kairys: that his position was unnecessary once the Southern Pines cryogenic truck fleet reached full utilization. The Court explained that the Company‘s bonus plan showed that utilization of trucking leases varied, so “it [was] not plausible that reaching full utilization any given month would lead Pat Gallagher to
The Court also determined that the circumstances surrounding Pat Gallagher‘s termination of Kairys were unusual. Pat considered no documents and consulted no one before firing Kairys, though he had unilaterally terminated employees only when the employee performed poorly or misbehaved. And Pat acknowledged that Kairys was a high-performing employee who earned an $11,458 bonus less than a week before he was fired.
Finally, the Court found that the Company‘s decision to borrow Kunkle from a sister company after firing Kairys undermined its claim that Kairys was no longer needed. Some of Kunkle‘s duties overlapped with Kairys‘s; though Kairys focused on sales and Kunkle focused on operations, the Court credited Kairys‘s testimony that his role involved both operations and sales work.
We discern no clear error in these findings. Taken together, the Court‘s “interpretation of the facts” to find pretext “has support in inferences that may be drawn from the facts in the record.” Anderson, 470 U.S. at 577.
Last, Southern Pines argues that the District Court clearly erred by finding that Kairys‘s past and anticipated future use of his ERISA benefits motivated the Company‘s termination decision. We disagree because the record shows the District Court thoroughly considered the evidence and drew reasonable inferences to conclude that Southern Pines terminated Kairys because of the cost of his past and anticipated future hip replacement surgeries.
The District Court reasonably inferred that the Company knew about the cost of Kairys‘s surgery. It first determined that the many highlights on the Company‘s healthcare invoices corresponded to Kairys‘s hip replacement surgery costs based on these facts: (1) employees on the invoices were listed using codes beginning with “P,” “S,” and “SP“; (2) Pat Gallagher had three companies starting with those letters: PGT, Sudbury Express, and Southern Pines; (3) only 20 employees from those three companies used the same UPMC plan as Kairys; (4) Southern Pines had only three employees; and (5) December 10–16, 2017, shortly after Kairys‘s surgery, showed a spike in expenses because of a claim paid for “SP01.” From these facts, the Court concluded: “it would not have been difficult [for someone at the Company] to identify ‘SP01’ as Mr. Kairys and parse his expenses.” Kairys, 595 F. Supp. 3d at 387. And the Company offered no contrary explanation for why SP01 was the only employee code highlighted on the invoices.
The Court also found that the proximity between the end of the healthcare benefits year and Kairys‘s termination was probative of the Company‘s discriminatory intent. Though Pat Gallagher testified he had never seen the invoices on which
Finally, the Court credited Kairys‘s testimony that he told Pat Gallagher he would need a second hip replacement, and it found that Pat was “evasive” when asked whether he knew that Kairys would need more surgery. Id.
For the reasons stated, none of the Court‘s factual findings supporting its holding that Kairys‘s past and anticipated future use of ERISA benefits was a determinative factor in the Company‘s termination decision leaves us “with the definite and firm conviction that a mistake has been committed.” Anderson, 470 U.S. at 573 (citation omitted).
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In sum, the District Court‘s factual findings and credibility determinations were not clearly erroneous. And its
V
We turn finally to the Company‘s challenge to the District Court‘s award of reasonable attorneys’ fees and costs. Southern Pines does not claim that Kairys is entitled to no fees. Instead, it contends the District Court did not sufficiently reduce fees to account for Kairys‘s losses before the jury on his age and disability claims.
ERISA provides that “the court in its discretion may allow a reasonable attorney‘s fee and costs of action to either party.”
Kairys proposed a 10 percent reduction in fees to account for his losses at trial; Southern Pines asked for at least 40 percent. The District Court acknowledged that “a substantial portion of the case” related to claims on which
The Company‘s specific challenges to Kairys‘s counsel‘s time entries fare no better. The time entries were sufficiently detailed. See Rode, 892 F.2d at 1190 (stating that a fee petition must be “specific enough to allow the district court to determine if the hours claimed [were] unreasonable for the work performed“) (cleaned up). And the entries were not so duplicative to warrant a reduction. See id. at 1187 (“A reduction for duplication is warranted only if the attorneys are unreasonably doing the same work.“) (cleaned up). Fees were appropriately awarded for work related to Kunkle‘s testimony because that testimony influenced the ERISA claim. And Kairys properly excluded work related to the WPCL claim in
For these reasons, we will affirm the District Court‘s award of attorneys’ fees and costs.
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The District Court‘s judgment for Kairys on the ERISA claim was neither inconsistent with the jury‘s verdict on his other claims, nor unsupported by the trial evidence. And the Court did not abuse its discretion in calculating reasonable attorneys’ fees and costs. We will affirm.