November 28, 2012

Trial court properly dismissed punitive damages claim because plaintiff introduced no evidence of corporate ratification (Betson v. Rite Aid)

This unpublished opinion (Betson v. Rite Aid) allows a plaintiff to proceed with her claims for disability discrimination and retaliation, but prohibits her from seeking punitive damages.  Although she accused her manager of numerous malicious acts, she presented no evidence that the manager's misconduct was authorized or ratified by the defendant's upper management. 

The plaintiff worked as a shift supervisor at a Rite Aid drug store in Beverly Hills.  She sued Rite Aid for various theories of discrimination, retaliation and harassment.  She claimed that the store manager routinely mocked her because she had a limp, refused to accommodate her disability, and fired her based on false accusations of stealing money from a cash register.  The trial court granted summary adjudication on many of plaintiff's claims, including her claim for punitive damages.  The case went to trial on the remaining claims and the jury awarded the plaintiff $500,000.  The trial court, however, granted Rite Aid's motion for judgment notwithstanding the verdict and entered judgment for Rite Aid.

Plaintiff appealed and the California Court of Appeal (Second Appellate District, Division Four), held that the trial court erred in granting JNOV and erred in granting summary adjudication on plaintiff's claims for disability discrimination and retaliation.  Nevertheless, the court affirmed the trial court's decision to toss out the plaintiff's claim for punitive damages, because plaintiff presented no evidence that the store manager's misconduct was ratified by any officer, director, or managing agent of Rite Aid.  The plaintiff argued that Rite Aid's continued employment of the store manager was sufficient evidence of ratification, but the Court of Appeal rejected that contention as a matter of law.

This case is a reminder that a corporate employee with the title of "manager" may not qualify as a "managing agent" within the meaning of Civil Code section 3294. As the California Supreme Court has explained, managing agents include only those corporate employees who have sufficient authority in the corporation such that their decisions ultimately determine corporate policy.  (See White v. Ultramar.)