November 9, 2020

California Supreme Court to rule soon on US Bank's petition for review (King v. U.S. Bank)

We reported in August about this decision in which the Court of Appeal partially reinstated a big punitive damages award against U.S. Bank.  As you may recall, the case involved a U.S. Bank supervisor who was accused of harassment by his subordinates. The company investigated and fired him.  He then sued the bank for wrongful termination and defamation and won a jury verdict for $24.3 million including $15.6 million in punitive damages.  The trial court reduced the amount to $2.7 million but the Court of Appeal bumped it back up to $8.5 million.

U.S. Bank has filed a petition for review with the California Supreme Court raising the following issues (these are quoted directly from the petition):

1. Whether evidence of errors of judgment by human resources (“HR”) employees who repeat allegedly false statements during an internal investigation of alleged workplace misconduct is sufficient to defeat the common-interest privilege and sustain a defamation claim. 
2. Whether an employer that terminates an employee for misconduct may be held liable for wrongful termination and breach of the covenant of good faith and fair dealing based on an inference that the employer rushed the termination so that the employee would not qualify for a bonus.
3. Whether evidence that an entry-level HR employee exercised discretion when investigating alleged workplace misconduct is sufficient to support a determination that she was a “managing agent” whose conduct can subject her employer to punitive damages.
4. Whether the decision below misapplied this Court’s decision—issued the day before—requiring courts to view the evidence supporting a finding of punitive liability through the lens of the clear-and-convincing-evidence standard.
5. Whether the Court of Appeal accorded legally insufficient deference to the trial court’s order granting a new trial or remittitur. 
6. Whether the $8,469,696 punitive award approved by the Court of Appeal—six times the maximum permissible punitive award for the more severe conduct and injuries in Roby v. McKesson Corp. (2009) 47 Cal.4th 686—is unconstitutionally excessive, given the punitive and deterrent effects of the $5,000,000 in non-economic damages and USBNA’s minimal to non-existent ill-gotten gain.

Horvitz & Levy filed a letter on behalf of the Association of Southern California Defense Counsel, asking the Supreme Court to grant the petition. The CELC and the US Chamber of Commerce also submitted letters (see here and here).

The Supreme Court's original deadline to rule on the petition was November 3, but the court issued an order extending its time until December 3.  Expect a ruling soon.