March 30, 2009

Rich v. Koi Restaurant: Plaintiff Not Entitled to Retrial on Punitive Damages When Jury Ignores Defendant's Admission

Last Friday, the California Court of Appeal (Second District, Division Four) issued this unpublished opinion affirming the trial court's denial of the plaintiff's motion for new trial after a jury declined to award punitive damages.

In this sexual harassment case, the corporate defendant admitted before trial (in response to a request for admissions) that the alleged harasser was a managing agent of the corporation within the meaning of Civil Code section 3294. The jury was informed of this admission and told to accept it. Defense counsel also conceded the point in closing argument.

When the case was submitted to the jury, the jury found in favor of the plaintiff and awarded compensatory and punitive damages against the alleged harasser. But when the jury was asked to decide whether the alleged harasser was a managing agent, the jury answered "no," and therefore awarded no punitive damages against the corporation.

The plaintiff moved for a new trial, arguing that the jury's answer to the managing agent question was improper. The trial court denied the motion, finding that the jury's answer was “a technical error at most,” and that the denial of punitive damages against the corporation represented “a measured and calculating or calculated decision to punish the truly culpable and to treat the less culpable with a lighter touch.”

The Court of Appeal affirmed, finding that the trial court did not abuse its discretion in denying the new trial motion. The Court of Appeal cited the California Supreme Court's decision in Brewer v. Second Baptist Church (1948) 32 Cal.2d 791 and Sumpter v. Matteson (2008) 158 Cal.App.4th 928 (which we blogged about here in one of our earliest posts), both of which held that a plaintiff has no right to punitive damages even when the statutory prerequisites for awarding punitive damages are established.

For what it's worth, I think the Court of Appeal correctly deferred to the trial court's discretion, but I'm not sure I would have decided this issue the same way the trial court did. It seems possible that the jury's response on the verdict form was just a mistake, and not a measured or calculated decision. At the same time, I have to wonder why plaintiffs' counsel did not object to the inclusion of the managing agent question on the verdict form, given that the defense had already conceded the issue.