## Facts

- Thomas Dean Smith worked for World Insurance Company from 1950 and ultimately served as an assistant vice president.
- World reorganized management and placed a new vice president, Alan Jackson, over areas that included Smith’s responsibilities.
- Evidence supported that Jackson sought to reduce costs by pushing older, higher-paid employees into early retirement and directed that Smith be assigned “impossible tasks” to create grounds for termination.
- Smith was presented with a choice to take early retirement with benefits or continue working with the risk of termination without benefits.
- Smith elected early retirement at age 54 and signed documents describing his retirement as voluntary.
- World replaced Smith with a substantially younger employee.
- Smith sued under the Age Discrimination in Employment Act (ADEA), alleging age-based constructive discharge.
- A jury found for Smith and awarded back pay and liquidated damages; the district court also awarded front pay and denied World’s post-trial motions.

## Issues

1. Whether the evidence was sufficient for a reasonable jury to find Smith was constructively discharged because of age in violation of the ADEA.
2. Whether Smith’s execution of early-retirement documents stating his retirement was voluntary equitably estopped his ADEA constructive-discharge claim.
3. Whether an offer of reinstatement cut off back pay, and what standards govern tolling of back pay after such an offer.
4. Whether early-retirement benefits had to be offset against back pay to prevent double recovery.
5. Whether front pay was permissible after Smith rejected an offer of reinstatement, and what standards govern that determination.
6. Whether prejudgment interest was available in addition to ADEA liquidated damages, and how to avoid duplicative recovery.

## Decision

- The court affirmed the liability judgment, holding the evidence permitted a finding that World deliberately created intolerable conditions to force Smith’s retirement because of age.
- The court rejected equitable estoppel based on the “voluntary” retirement paperwork, treating the documents as potentially executed under coercive conditions rather than as a bar to statutory rights.
- The court affirmed in part and reversed in part on remedies, holding that the effect of an offer of reinstatement on back pay must be analyzed under the rule that an unconditional offer generally tolls back pay absent special circumstances.
- The court required reconsideration of offsets, instructing that certain early-retirement benefits may need to be deducted from back pay to avoid double recovery.
- The court affirmed in part and reversed in part the front-pay award, directing further proceedings on whether front pay remained appropriate given the reinstatement offer and the reasonableness of Smith’s rejection.
- The court affirmed in part and reversed in part regarding prejudgment interest, directing reconsideration consistent with the ADEA remedial scheme and the need to avoid duplicative compensation.
- The case was remanded for recalculation and further determinations consistent with these standards.

## Legal Principles

- Constructive discharge under the ADEA is shown when an employer deliberately makes working conditions so intolerable that a reasonable person would feel compelled to resign, and the discharge is tied to age-based animus.
- An employee’s signature on documents characterizing a coerced separation as “voluntary” does not, by itself, bar an ADEA claim when the jury could find the execution resulted from discriminatory pressure.
- An employer’s unconditional offer of reinstatement generally tolls further accrual of back pay unless special circumstances make rejection of the offer reasonable; courts must assess the offer’s unconditional nature and the reasonableness of refusal.
- Back pay should be calculated to make the employee whole without double recovery; payments attributable to the employment relationship and the separation may require offset, depending on their nature and purpose.
- Front pay is equitable relief used when reinstatement is not feasible; its availability is constrained when reinstatement is offered, and depends on whether rejection was reasonable and whether reinstatement would be workable.
- Prejudgment interest may be available on back pay in ADEA cases, but courts must structure awards to avoid duplicating compensation where liquidated damages are also awarded for willfulness.

## Conclusion

The court sustained the jury’s finding that World forced Smith into age-based early retirement amounting to constructive discharge, but it modified the remedial rulings, requiring a recalculation of back pay, offsets, front pay, and prejudgment interest using standards governing reinstatement offers and non-duplicative recovery.


Smith v. World Ins. Co., 38 F.3d 1456 (8th Cir. 1994)