Eileen is terminated after 10 years' service. Her employment contract included a clause that requires the employer to provide Eileen with three months' notice or pay in lieu of notice in the event she is terminated without cause. Her pay is $3,000 per month, plus $200 per month contributed to a pension plan by the employer, plus a $2,000 bonus paid out to every employee who has been employed for a least one year and who is employed on December 31. Eileen is terminated on November 1. The employer falsely alleged cause and told Eileen's co-workers that Eileen had been fired for stealing money, when in fact there was no evidence of this. The employer maintained its position that Eileen had stolen money right up to the beginning of the trial, at which point it dropped that position and admitted that there was no cause. Assume that the court rules there was no cause for termination and the employer fabricated the false allegation about theft. The employer's false allegations of dishonesty caused Eileen to suffer severe depression that required her to take medication.

a.Discuss what damages you believe a court would order in these circumstances. If you believe a court might order aggravated or punitive damages, explain the tests courts apply when considering those damages. (You are not expected to know the precise amount a court would order in aggravated or punitive damages, as these are decided on a case-by-case basis.)

b.Assume now that the employer argues that Eileen failed to mitigate her losses because she did not actively look for work during the period of notice. What argument(s) would you make on Eileen's behalf in response to that argument?