Thursday, July 30, 2020
Plaintiff’s Win Bobs From $24.3 Million to $5.4 Million—Now $17 Million
Court of Appeal Says Punitive Damages May Not, Under the Facts, Exceed Compensatory Damages; Award Is Against U.S. Bank
By a MetNews Staff Writer
The Third District Court of Appeal has held that a jury went overboard in awarding $24.3 million to a man fired as an executive of U.S. Bank after a faulty probe failed to uncover the falsity of accusations against him, but said the judge unreasonably slashed the award to $5.4 million where the sole flaw in the verdict was that a $15.6 million punitive-damage award was disproportionate to actual damages.
In an opinion by Justice Ronald Robie, filed Tuesday, the appeals court proceeded to order entry of a new judgment in favor of plaintiff/appellant Timothy King in the amount of $17,179,392.
Robie, in reaching that figure, agreed with Sacramento Superior Court Judge Christopher E. Krueger that punitive damages, under the facts of the case, may not exceed the award of compensatory damages. But, he declared, Krueger erred in determining that the jury’s $6 million award for defamation was barred—and thus worth “$0”—because the harm to King under that cause of action did not go beyond what was incurred by him in connection with his cause of action for wrongful termination.
For that harm, jurors had set damages at $2,489,696.
Krueger set the award at $5,429,392 after King agreed to accept a remittitur as an alternative to a new trial being ordered. The sum was basically what the jury awarded for wrongful termination plus a like amount in punitive damages, with some adjustments.
The $17,179,392 judgment ordered by the Third District was comprised of the jury’s $2,489,696 award for wrongful termination, plus the restored jury award of $6 million—amounting to $8,489,696 in compensatory damages—increased by punitive damages in a like amount, totaling $16,979,392, beefed up by $200,000 based on a jury award for a past economic damage (an unpaid bonus).
That $200,000 award was tacked on because it did not give rise to punitive damages.
The outcome would have remained as it was had U.S. Bank not appealed. Robie explained in a footnote:
“Ordinarily, when a plaintiff consents to a remittitur, he or she waives the right to an appeal on any inseverable issue. However, if the defendant appeals, the plaintiff may cross-appeal because the defendant’s appeal deprives the plaintiff of the benefits of consenting to the remittitur….That is what occurred here.”
King’s victory in gaining a boost in the judgment—though not a reinstatement of the full jury award—came in response to his cross-appeal. With respect to the bank’s appeal, Robie wrote:
“We find no merit in U.S. Bank’s challenge to the jury’s verdicts in favor of King.”
An investigation into allegations against King by his immediate subordinates was conducted by Maureen McGovern, a human resources “generalist” for the bank. She made a report reciting various assertions, among which were that King advised employees to falsify expenses and boasted that he would collect pay for unused vacation time at the end of the year and had, in actuality, used the vacation time.
McGovern had not confronted King with any of the accusations before turning in her report. She made no effort to determine whether anyone making charges had a motive to lie, even though she knew that accounts by one person making complaint, which included gender bias and harassment, were contradicted by others
Robie said “there was substantial evidence McGovern republished the defamatory statements with malice, supporting the defamation verdict.”
The jurist explained:
“The evidence before the jury supported a finding of actual malice based on McGovern’s failure to investigate and her reliance on sources known to be unreliable or biased against King.”
He noted that the existence of actual malice destroys the privilege an employer would otherwise enjoy under Civil Code §47 in republishing defamatory statements about an employee.
Of the $6 million awarded by a jury for defamation, $1 million for harm to King’s business standing, $4 million for harm to his reputation, and $1 million for shame, mortification, or hurt feelings. As to the first two components, Robie said, Kruger erred in finding that the damages duplicated those awarded for wrongful termination, and as to the third component, he said the trial judge failed to set forth reasons, invalidating his disallowance of the award.
The $1 award for damage to King’s profession and occupation, Robie observed, was not duplicative because there was evidence that the full past and future monetary loss was about $5 million.
The damage to reputation, he pointed out, could not be covered by wrongful termination damages because some of the defamation occurred after King was fired.
Addressing the punitive damages, Robie said:
“[W]e conclude U.S. Bank acted wrongfully—warranting civil penalties—but that its conduct nevertheless was at the low end of the range of wrongdoing that can support an award of punitive damages under California law.”
Applying the California Supreme Court’s 2009 holding in Roby v. McKesson Corp., he declared that, in light of the a relatively low reprehensibility and a substantial award of noneconomic damages, “a one-to-one ratio between compensatory and punitive damages is the constitutional limit under the facts of this case.”
U.S. Bank argued that no punitive damages are allowable because McGovern is not a high level employee whose utterances may be attributed to the employer. Robie responded:
“U.S. Bank’s attempt to classify McGovern as ‘an entry-level employee’ does not negate the discretion delegated to her.”
The case is King v. U.S. Bank National, 2020 S.O.S. 3775.
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