Ballard v. El Dorado Tire Co.

Brief Fact Summary. An employee was effectively terminated from their position at a company.  The company argued that the lower court should have mitigated the employee's damages.

Synopsis of Rule of Law. In the realm of mitigation of damages, the burden of demonstrating the existence of similar employment is upon the employer.

Facts. The Plaintiff, Bill L. Ballard (the "Plaintiff"), entered into an employment contract with the Defendant, El Dorado Tire Co. (the "Defendant"), on May 31, 1969.  The Defendant owned a substantial interest in a Florida subsidiary.  The Plaintiff was entitled to $18,000 per year in salary, a commission of 1% on his gross sales, and "a credit towards the purchase of stock in the Florida Subsidiary company."  Up to 20% of the stock.  The Defendant sold all 31,000 shares of the stock in the Florida Subsidiary that it owned to a man name Dodenhoff.  Subsequent to the sale, on October 19, 1971, the Plaintiff filed suit to establish his rights under the contract.  Dodenhoff considered the Plaintiff's filing of suit a "breach of their contract" and a "voluntary resignation." The District Court refused to mitigate the Plaintiff's damages by what he could have earned if employed by another company.

Issue. Should the District Court have mitigated the Plaintiff's damages?

Held. No.  The burden of demonstrating the existence of similar employment is upon the employer.  According to Dobbs, "[t]he recovery is based on contract price, not on the contract price/market value differential so commonly used in sales cases. The employee need only prove the breach and the contract price when he is wrongfully discharged and this will warrant a judgment in his favor for all future installments due him, reduced to present value. If the employee has obtained a substitute job, or could obtain one by reasonable effort, he is chargeable with the income he obtains or could reasonably obtain in this fashion, but only if the employer sustains the burden of proving these facts."  Here, the Defendant failed to prove similar employment for the Plaintiff was available.  The only way the Defendant could meet its burden is "by showing the availability of a managerial type position in the tire industry."  The court says the Defendant could have met their burden by introducing into evidence help-wanted ads from local newspapers.

Discussion. This case illustrates an interesting point.  Although an employee has the duty to mitigate damages, the employer has a duty to prove that the damages could be mitigated.