Thaddeus C. Pulla v. Amoco Oil Co. ( 1995 )


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  •                          UNITED STATES COURT OF APPEALS
    FOR THE EIGHTH CIRCUIT
    ____________________
    Nos. 94-4001 and 95-1047
    ____________________
    Thaddeus C. Pulla,                        *
    *
    Appellant/Cross-Appellee,        *
    *
    v.                                   *   Appeal from the United States
    *   District Court for the Southern
    Amoco Oil Company,                        *   District of Iowa.
    *
    Appellee/Cross-Appellant.        *
    ____________________
    Submitted: October 18, 1995
    Filed: December 19, 1995
    ____________________
    Before McMILLIAN, Circuit Judge, WHITE,* Associate Justice (Ret.), and LOKEN,
    Circuit Judge.
    ____________________
    WHITE, Associate Justice (Ret.).
    I.       INTRODUCTION
    The Amoco Oil Company ("Amoco") appeals from a jury verdict that it
    invaded the privacy of Thaddeus C. Pulla ("Pulla"), one of its employees, by
    searching his credit card records to determine if he had abused his sick leave.
    Amoco filed a series of post-trial motions challenging both the verdict and the
    jury's award of $500,000 in
    *
    The Honorable Byron R. White, Associate Justice of the
    United States Supreme Court, (Ret.), sitting by
    designation, pursuant to 28 U.S.C. § 294(a).
    punitive damages on a variety of grounds, but the district court rejected
    Amoco's motions for judgment as a matter of law, a new trial and a remittitur.
    Pulla v. Amoco, 
    882 F. Supp. 836
    (S.D. Iowa 1994). On appeal, Amoco renews four
    of its claims of error, including its argument that the punitive damages award
    in this case violates due process.        In his cross appeal, Pulla raises two
    claims of error.   We exercise jurisdiction over these appeals pursuant to 28
    U.S.C. § 1291, and we now AFFIRM in part, REVERSE in part, and REMAND this case
    for further proceedings.
    II.     BACKGROUND
    Pulla has worked continuously for Amoco since April 14, 1974.     By 1989,
    when he was 48 years old, Pulla had worked his way up to a class 8 supervisor
    of   new accounts in Amoco's credit card department.         At that time, his
    supervisor, Robert Langois ("Langois"), judged his work to be satisfactory and
    noted that he was "promotable with future development."      However, on May 22,
    1989, Langois told Pulla that his performance was unsatisfactory and that he
    might be transferred to another department.      Ten days later, Pulla was asked
    to consider remaining in his position until age 50 at which time he could
    consider early retirement.   On July 28, 1989, Langois demoted Pulla to a class
    7 sales authorization representative.    While this transfer and demotion did not
    reduce his pay, it did reduce his possibilities for future pay increases.
    Isabella Hurless, a 45 year-old, replaced Pulla as the supervisor of new
    accounts.
    -2-
    After filing an administrative complaint with the Equal Opportunity
    Employment Commission on March 13, 1990, Pulla filed this action on February
    20, 1991.    He alleged that Amoco demoted and transferred him because of his age
    and in violation of the Age Discrimination in Employment Act ("ADEA"), 29
    U.S.C. § 621 et seq., and his employment contract.           To support his ADEA claim,
    Pulla reported that Langois made several ageist comments, including such
    statements as Pulla was "too old for the job," "had been with the company too
    long," and "should consider early retirement."
    Based on incidents that occurred after he filed his complaint, Pulla
    amended his complaint on September 9, 1992.          This amendment alleged that Amoco
    had retaliated against him in violation of the ADEA and his employment contract
    and had violated state tort law by invading his privacy.                 The basis of the
    invasion of privacy claim (and the most significant alleged retaliatory action)
    was Amoco's inspection of his credit card records.             This alleged invasion of
    privacy     stemmed    from   the   action   of    Pulla's   coworker,    Tammy   Leckband
    ("Leckband").         Pulla and Leckband worked together at Amoco's Credit Card
    Service Center in Des Moines, Iowa, where they handled authorizations for
    customer purchases and investigations of related problems.           Pulla often called
    in sick, and over the course of 1991, he missed two months of work.               Leckband
    was one of the employees who covered his shift when he was absent.            Because she
    was "mad" at Pulla for what she viewed as an abuse of his sick leave, which
    burdened her, Leckband checked Pulla's personal credit card records against
    -3-
    the days that he called in sick.       In so doing, she found that Pulla had used
    his credit card at various restaurants and bars on days when he had called in
    sick.       On November 8, 1991, she reported these observations to Anthony
    Wieczorek ("Wieczorek"), the individual who supervised her and Pulla.
    Wieczorek admonished Leckband for reviewing Pulla's credit card records,
    and instructed her never to repeat such behavior.          She was not otherwise
    disciplined.     After finishing this conversation with Leckband, Wieczorek asked
    another employee to print out this same material and gave it to Bruce Williams,
    an Amoco Human Resources representative, who placed this information in Pulla's
    personnel file with red marks on the days in which Pulla had called in sick.
    Pulla soon learned that Amoco had retrieved this information, began to suffer
    feelings about being watched, and felt that this investigation put him in a bad
    light.      Finally, Wieczorek referred to Pulla's absence problem in a subsequent
    evaluation, and singled Pulla out for the unique requirement that he obtain a
    doctor's note before submitting any claims for sick leave.
    Amoco moved for summary judgment on the age discrimination claims, state
    law contract claims as well as the invasion of privacy claim.      On January 11,
    1994, the district court1 granted summary judgment to Amoco on the state law
    contract claims, but ruled that a genuine
    1
    Harold D. Vietor, District Court Judge for the Southern
    District of Iowa.
    -4-
    dispute of material fact existed as to the ADEA and the invasion of privacy
    claims.     Thus, Pulla's ADEA and invasion of privacy claims were tried to a
    jury.
    After Pulla presented his evidence of age discrimination and invasion of
    privacy to the jury, Amoco requested that the district court2 dismiss his claims
    as a matter of law under Fed. R. Civ. P. 50(a).    Amoco argued that Pulla had
    (1) only offered some stray comments referring to his age on his ADEA claim;
    (2) failed to present any evidence of retaliation based on his filing of this
    action; and (3) failed to establish that the search of his credit card records
    was "highly offensive" and "objectionable" so as to constitute an invasion of
    privacy.
    The district court explained that it would take Amoco's Rule 50(a) motion
    under advisement.    However, it also noted that the invasion of privacy claim
    was "clearly submissible," and that he would also allow Pulla's ADEA claims to
    go to the jury although the evidence on these claims was thin.      After Pulla
    attempted to introduce more evidence in support of his privacy claim, and Amoco
    presented four
    2
    The parties consented to a trial before a United States
    Magistrate Judge pursuant to 28 U.S.C. § 636(c), and the case was
    referred to the Hon. Mark W. Bennett, who at that time was serving as
    a magistrate judge for the Southern District of Iowa. As Judge
    Bennett was appointed to the United States District Court for the
    Northern District of Iowa on August 30, 1994, we will refer to him
    and the proceedings before him as the district court. The fact that
    he was appointed to the Northern District of Iowa and this case
    arises in the Southern District of Iowa is of no moment because all
    judges and magistrate judges are cross-designated to preside over
    both districts. 
    Pulla, 882 F. Supp. at 845
    n.3.
    -5-
    additional witnesses to close out the presentation of all of the evidence,
    Amoco failed to renew its motion for judgment as a matter of law.
    Amoco agreed to most of the jury instructions governing liability, but
    contended that the instruction on Amoco's ratification of the invasion of
    Pulla's privacy should not be submitted to the jury because no evidence in the
    record could support such a finding.     Amoco also objected to submitting the
    punitive damages instructions to the jury on the ground that there was
    insufficient evidence to support those instructions.   The court rejected these
    two objections and submitted all of Pulla's claims to the jury.
    The jury found in favor of Amoco on the ADEA claims, but found for Pulla
    on the invasion of privacy claim.   On the invasion of privacy claim, the jury
    awarded Pulla $1 in actual damages for past pain and suffering and $1 in actual
    damages for future pain and suffering.        The jury also answered special
    interrogatories explaining that it found clear and convincing evidence that
    Amoco's invasion of Pulla's privacy willfully and wantonly disregarded his
    rights and that Amoco's conduct was specifically directed at Pulla.   Finally,
    the jury awarded Pulla a total of $500,000 in punitive damages.
    On May 20, 1994, Amoco filed a series of post-trial motions, contending
    that, with respect to both the determination of liability and the award of
    punitive damages, it deserved judgment   as a matter
    -6-
    of law under Fed. R. Civ. P. 50, or in the alternative, that the court should
    order a new trial pursuant to Fed. R. Civ. P. 59 and remit the punitive damages
    award.   The district court held that Amoco waived most of its claims of error,
    but proceeded to reject them all on the merits.      In so doing, the district
    court engaged in the necessary post-trial review of the punitive damages award
    to determine whether it was excessive under Iowa law, unconstitutional under
    the Due Process Clause, and/or should be remitted.   Focusing on the potential
    damages arising from invasions to credit card privacy, the district court
    concluded that the award did not warrant a new trial nor need to be remitted.
    Amoco then brought this timely appeal, challenging the district court's
    post-trial rulings.    Pulla cross appealed, contending that the district court
    erroneously rejected his breach of contract claim, and that it erred by
    refusing to allow him to amend his complaint to conform to the evidence
    presented in support of a disparate impact violation of the ADEA.
    III.   DISCUSSION
    A.   AMOCO'S POST-TRIAL CHALLENGES
    The district court carefully analyzed Amoco's claims of error, explaining
    that Amoco waived most of its claims by (1) failing to move for judgment as a
    matter of law on that ground; (2) failing to move for judgment as a matter of
    law at the close of the evidence; and/or (3) failing to object to the relevant
    jury instruction(s).    In this appeal, Amoco re-asserts four of its claims of
    error, the
    -7-
    first three of which we deal with in this Section A.3 These three claims
    challenge the district court's rulings that: (1) the search of Pulla's credit
    card records was sufficiently offensive so as to invade Pulla's privacy; (2)
    Amoco maliciously searched Pulla's credit card records so as to support an
    award of punitive damages; and (3) Amoco ratified the offensive conduct at
    issue.4 The district court held that Amoco waived its first claim of error by
    failing to renew its motion for judgment as a matter of law at the close of all
    of the evidence as required by Rule 50(b), and by failing to object to the
    relevant jury instruction, thereby waiving its right to move for a new trial
    under Rule 59.5 The court also explained that Amoco waived its second argument
    under Rule 50(b) by failing previously to raise it at all, and did not preserve
    it for a motion for a new trial by a sufficiently specific objection to a
    relevant jury instruction.   Finally, the court held that, although Amoco had
    not
    3
    As explained in Section C, we sustain Amoco's fourth claim of
    error: that the district court erroneously held that the punitive
    damages award passed constitutional muster.
    4
    The district court carefully outlined Amoco's various
    post-trial claims of error in a chart, explaining why Amoco had
    waived its various claims, and how the court disposed of the claims
    on the merits. 
    Pulla, 882 F. Supp. at 848
    .
    5
    In its post-trial motion, Amoco parcelled its challenge to the
    invasion of privacy verdict into three specific claims of error: (1)
    Pulla did not suffer the necessary level of anguish; (2) Amoco had a
    legitimate interest in the information; and (3) Amoco's means were
    not objectionable. 
    Pulla, 882 F. Supp. at 848
    . The district court
    explained that, for purposes of its post-trial motion for judgment as
    a matter of law, Amoco waived the second two arguments by failing
    previously to raise them at all, and it waived the first argument by
    failing to comply with Rule 50(b). 
    Id. On appeal,
    Amoco abandons its
    second and third arguments, simply focusing on whether its conduct
    was sufficiently offensive and caused the necessary level of anguish
    to constitute an invasion of Pulla's privacy.
    -8-
    previously objected to the sufficiency of evidence on ratification (and thus,
    waived its motion for judgment as a matter of law), it did preserve the issue
    for a Rule 59 motion by objecting to the relevant jury instruction, but that
    this claim of error did not warrant a new trial.6
    We concur with the district court that Amoco waived its right to file a
    post-trial motion for judgment as a matter of law.     However because Amoco's
    motion for a new trial rested on evidentiary-as opposed to legal-grounds, the
    district court erred in holding that Amoco's failure to object properly to the
    relevant jury instructions waived its right to move for a new trial on two of
    its professed grounds but not the third.    Thus, we must deal with the merits
    of these three grounds for a new trial.   As to these three claims of error, we
    conclude that the district court's denial of Amoco's motion for a new trial did
    not constitute a clear abuse of its discretion.
    1.   Amoco's Post-Trial Motion for Judgment As A Matter of Law
    Under Rule 50(b),7 a litigant who fails to move for judgment as a   matter
    of law at the close of the evidence cannot later
    6
    As noted above, the district court also analyzed the substance
    of the claims of error waived by Amoco, and concluded that they were
    meritless.
    7
    Rule 50(b) provides, in relevant part, that:
    Whenever a motion for judgment as a matter of law made at
    the close of all the evidence is denied or for any reason
    is not granted, the court is deemed to have submitted the
    action to the jury subject to a later determination of the
    legal questions raised by the motion.
    Fed. R. Civ. P. 50(b) (emphasis added).
    -9-
    argue-either in a post-trial Rule 50 motion or on appeal-that the verdict was
    supported by insufficient evidence.   Catlett v. Local 7370 of the United Paper
    Workers Int'l Union, No. 95-1431, 
    1995 WL 638351
    , at *4 (8th Cir. Nov. 1,
    1995); Smith v. Farrell, 
    852 F.2d 1074
    , 1075 (8th Cir. 1988); Myers v. Norfolk
    Livestock Market, Inc., 
    696 F.2d 555
    , 558 (8th Cir. 1982).8   Amoco argues that
    its failure to move for judgment at the close of the evidence should be excused
    as it submits would be the case in other circuits.   While we have not endorsed
    the broad exception to Rule 50(b) adopted by some circuits,9 we have adopted two
    narrow exceptions.   Under the first exception, litigants can challenge a jury
    verdict without moving for judgment as a matter of law at the close of the
    evidence if their earlier Rule 50 motion (1) closely preceded the close of all
    of the evidence; and (2) the court somehow indicated that the movant need not
    renew its motion in order to preserve its right to challenge the verdict.
    Halsell v. Kimberly-Clark Corp., 
    683 F.2d 285
    , 294 (8th
    8
    See 9A Charles A. Wright & Arthur R. Miller, Federal Practice
    and Procedure, § 2534, at 322-23 (1995); 5A James W. Moore, Moore's
    Federal Practice, ¶ 50.08, 50-84 - 50-85 (1995). The twin purposes of
    this rule are to: (1) enable the trial court to examine all of the
    evidence before submitting the question to the jury; and (2) alert
    the opposing party to any defect in its case, thereby affording it an
    opportunity to cure any such defects. Halsell v. Kimberly-Clark
    Corp., 
    683 F.2d 285
    , 294 (8th Cir. 1982), cert. denied, 
    459 U.S. 1205
    (1983); Moore, supra, ¶ 50.08, at 50-88.
    9
    As discussed infra, the broad exception to Rule 50(b) allows
    litigants, post-trial, to move for judgment as a matter of law even
    though they failed to file a Rule 50 motion at the close of the
    evidence where (1) an earlier such motion has been filed and the
    district court defers ruling on the motion; (2) no evidence related
    to the claim is presented after the motion; and (3) very little time
    passes between the original assertion and the close of defendant's
    case.
    -10-
    Cir. 1982), cert. denied, 
    459 U.S. 1205
    (1983); United States v. 353 Cases *
    * * Mountain Valley Mineral Water, 
    247 F.2d 473
    , 477 (8th Cir. 1957) ("as a
    practical matter the Government did all that was necessary to preserve" this
    issue for   a   post-trial   Rule   50(b)   motion).   The   second   exception   allows
    litigants to present sufficiency of the evidence challenges where not to do so
    would constitute plain error that would result in a manifest miscarriage of
    justice.   Jones v. St.   Clair, 
    804 F.2d 478
    , 479-80 (8th Cir. 1980); 353 
    Cases, 247 F.2d at 477
    ; 9A Charles A. Wright & Arthur R. Miller, Federal Practice and
    Procedure, § 2536, at 331 (1995).     As to the first exception, Amoco's previous
    Rule 50 motion did not closely precede the close of the evidence.          While Amoco
    does not suggest that this case fits within the plain error exception, we note
    that the district court's analysis of the merits suggests that the district
    court's failure to consider the merits of Amoco's Rule 50 (b) motion did not
    constitute plain error.
    While we have never endorsed the broad exception to Rule 50(b),10 we have
    previously assumed, without deciding, that we would do so.
    10
    We acknowledge that it is a fine distinction between the
    exception set forth in 353 
    Cases, 247 F.2d at 477
    , and 
    Halsell, 683 F.2d at 294
    , and the broad exception adopted by other circuits. That
    is, the exception endorsed in Halsell and 353 Cases requires that the
    judge somehow indicate that the litigant need not renew its motion
    for judgment as a matter of law, while the "broad exception" contains
    no such requirement. However, Myers, which was decided after Halsell
    and cited to 353 Cases, makes clear that we have yet to adopt the
    broad exception to Rule 
    50(b). 696 F.2d at 558-59
    .
    -11-
    
    Myers, 696 F.2d at 558-59
    .11   We again assume that we would interpret Rule 50(b)
    as allowing for such an exception to its literal terms, but hold that Amoco's
    failure to offer its Rule 50(b) motion at the close of the evidence does not
    fall within such an exception.   Under the broad exception to Rule 50(b), courts
    excuse a litigant's failure to re-assert a Rule 50(b) motion where (1) the
    party files a Rule 50 motion at the close of plaintiff's case; (2) the district
    court defers ruling on the motion; (3) no evidence related to the claim is
    presented after the motion; and (4) very little time passes between the
    original assertion and the close of defendant's case.    Purcell v. Seguin State
    Bank & Trust Co. , 
    999 F.2d 950
    , 956 (5th Cir. 1993); Boynton v. TRW, Inc.,
    
    858 F.2d 1178
    , 1186 (6th Cir. 1988) (en banc); Wright & Miller, supra, § 2537,
    at 339-43.   In the instant case, however, the third and fourth factors are not
    present because Pulla made an effort to admit evidence supporting his invasion
    of privacy claim and Amoco presented four witnesses after Amoco moved for
    judgment as a matter of law.       Hence, we concur with the district court's
    characterization that "Amoco's failure to reassert its motion was not a 'de
    minimis' departure from standard procedures, but a major oversight." 
    Pulla, 882 F. Supp. at 855
    .   Therefore, we refuse to excuse Amoco's failure to reassert
    its Rule 50(b) motion, and do not consider Amoco's argument that it deserved
    judgment as a matter of law.
    11
    We note that some circuits have declined to adopt such a
    flexible approach, strictly construing Rule 50(b)'s requirement that
    objections must be filed at the close of the evidence to preserve any
    post-trial challenges to the verdict. See, e.g., DeMarines v. KLM
    Royal Dutch Airlines, 
    580 F.2d 1193
    , 1195 n.4 (3d Cir. 1978).
    -12-
    2.   Amoco's Motion for A New Trial
    Amoco also challenged the jury's verdict and award of punitive damages
    under Fed. R. Civ. P. 59, arguing that it deserved a new trial because the
    jury's findings were against the great weight of the evidence so as to
    constitute a miscarriage of justice.   White v. Pence, 
    961 F.2d 776
    , 780-81 (8th
    Cir. 1992).   Specifically, Amoco complained about the district court's rulings
    that (1) Amoco's behavior was so offensive as to constitute an invasion of
    privacy; (2) Amoco acted with the requisite malice to justify an award of
    punitive damages; and (3) Amoco ratified the wrongful acts at issue.12      The
    district court held that Amoco waived its right to challenge the first two
    findings by failing to object adequately to the relevant jury instruction(s),
    explaining that Amoco's failure to argue specifically that the evidence could
    not support a finding in Pulla's favor waived the issue under Fed. R. Civ. P.
    51.   The district court then analyzed all of Amoco's contentions on the merits,
    concluding that the verdict was not against the weight of the evidence.
    As we noted above, a litigant may move for a new trial under Rule 59 based
    on the overwhelming evidence contrary to the verdict without ever previously
    raising such an objection.     Harris v. Zurich Insurance Co., 
    527 F.2d 528
    ,
    529-30 (8th Cir. 1975) (plaintiff waived his right to move for judgment as a
    matter of law, but still could file a post-trial motion for a new trial, and
    appeal the denial of
    12
    As noted earlier, see 
    n.3 supra
    , Amoco also set forth another
    ground for a new trial-i.e., the unconstitutionality of the punitive
    damages award-which we address in Section C.
    -13-
    that motion). Because the district court erred in ruling that Amoco waived its
    Rule 59 motion under Rule 51,13 we must now consider the merits of each of its
    grounds for a new trial.
    We have made clear that district courts enjoy broad discretion in choosing
    whether to grant a new trial, and thus, we accord great deference to their Rule
    59 rulings.   
    White, 961 F.2d at 781
    .    While we may reverse a district court's
    denial of a Rule 59 motion where its judgment rests on an erroneous legal
    standard, 
    id. at 782,
    where the basis of a Rule 59 ruling is that the verdict
    is not against the weight of the evidence, and where the district court
    balances and weighs the evidence based on the proper legal standards, 
    id., the court's
    denial of a Rule 59 motion is virtually unassailable, Keenan v.
    Computer Associates International, Inc. 
    13 F.3d 1266
    , 1269 (8th Cir. 1994). In
    such cases, we reverse for a clear abuse of discretion only where there is an
    "absolute absence of evidence" to support the jury's verdict.    Gopher Oil Co.
    v. Union Oil Co. of California, 
    955 F.2d 519
    , 526 (8th Cir. 1992).
    13
    While Rule 51 prevents litigants from offering legal arguments
    in a Rule 59 motion where the litigant did not previously present
    those specific objections to the district court, a party need not
    object to the relevant jury instructions on evidentiary grounds in
    order to file a Rule 59 motion on sufficiency of the evidence
    grounds. See, e.g., 
    Jones, 804 F.2d at 480
    . That is, Rule 51 governs
    only challenges to the text of the jury instructions, requiring
    litigants to raise any objections to them in a timely manner in order
    to "afford the trial court an opportunity to cure a defective
    instruction and to prevent litigants from ensuring a new trial in the
    event of an adverse verdict by covertly relying on the error." Doyne
    v. Union Electric Co. , 
    953 F.2d 447
    , 450 (8th Cir. 1992) (internal
    quotations and citations omitted).
    -14-
    As indicated above, the district court, while ruling that there had been
    waivers under Rule 50(b) and also under Rule 51 except on the issue of
    ratification, went on to pass on the merits of the post-trial motion for
    judgment as a matter of law by pointing to the evidence justifying submitting
    the case to the jury.   In light of that evidence, and after reviewing the rules
    that a district court must follow in ruling on motions for new trial, the
    district court also denied on the merits Amoco' s motion for new trial in its
    entirety.    We conclude that this ruling was not a clear abuse of discretion
    under our precedents, except insofar as the district court held that the
    punitive damages award did not violate the Due Process Clause of the Fourteenth
    Amendment.
    B.   PULLA'S CROSS APPEAL
    Pulla argues in his cross appeal that the district court erred by (1)
    granting Amoco's motion for summary judgment on his breach of contract claim;
    and (2) refusing to conform the pleadings to the proof so as to allow him to
    present a disparate impact ADEA claim to the jury.     We reject each of these
    claims of error in turn.
    1.    Breach of Contract Claim
    In ruling for Amoco on Pulla's breach of contract claim, the district
    court concluded that Pulla failed to come forth with sufficient evidence to
    establish a fact issue as to whether Amoco's employment policies constituted
    an exception to Iowa's employment-at-will doctrine.         The district court
    recognized that Iowa law provides
    -15-
    for an exception to the employment-at-will doctrine "'where a contract created
    by   an   employer's   handbook    or   policy    manual    guarantees    an   employee    that
    discharge will occur only for cause or under certain conditions.'"                        Aplt.
    Addendum at 6-7 (quoting Fogel v. Trustees of Iowa College, 
    446 N.W.2d 451
    , 455
    (Iowa 1989)). The court also explained that such a document can only give rise
    to a contract if it is sufficiently definite to constitute an offer, and that
    whether a document constitutes a contract is a question of law. 
    Id. at 7
    (quoting 
    Fogel, 446 N.W.2d at 456
    ).              Finally, the court held that, because
    Pulla failed to present sufficient evidence to support the creation of a
    contract, Amoco deserved judgment as a matter of law. 
    Id. Pulla contends
    that the evidence of an employment contract, when viewed
    in the light most favorable to him, created a genuine dispute of material fact.
    Pulla explains that a series of documents, when viewed collectively, give rise
    to   an   employment   contract.        Pulla    suggests     that   several   documents    are
    particularly    important   in     supporting      a   just    cause   requirement:   (1)    a
    progressive discipline policy that managers "should" follow; (2) a merit
    employment policy that managers "should" follow; (3) statements by Amoco that
    it will follow the law and maintain equal opportunity in employment; and (4)
    statements that the workplace should be friendly and cooperative.               Based on our
    review of these statements, we concur with the district court that they were
    not sufficiently definite or mandatory so as to constitute a binding contract.
    See Falczynski v. Amoco Oil Co.,
    -16-
    
    533 N.W.2d 226
    , 235 (Iowa 1995) (Amoco's nondiscrimination policies were not
    sufficiently definite so as to constitute a contract). Thus, we affirm the
    district court's grant of summary judgment to Amoco on Pulla's breach of
    contract claim.14
    2.     Motion to Amend The Pleadings
    At   trial,   Pulla   contended   that   Amoco's   policy   of   not    allowing
    non-supervisory personnel, such as himself, to apply for supervisory positions
    constituted a form of discrimination in violation of the ADEA.                    After the
    district court pointed out that Pulla's pleadings did not state such a claim,
    Pulla moved to amend the pleadings to conform with the evidence.                  The court
    summarily denied this motion.      Pulla now appeals this ruling, arguing that (1)
    this claim fell within the pleadings under the liberal pleading standard set
    forth in Fed. R. Civ. P. 8; and in the alternative, (2) that the district
    should have allowed him to conform the pleadings to the evidence under Fed. R.
    Civ. P. 15(b).     We reject each of these arguments in turn.
    Pulla maintains that his claim that Amoco's policy of not allowing
    non-supervisory personnel to apply for supervisory positions constituted a form
    of age discrimination (i.e., under a disparate impact theory), and thus, fell
    within the Rule 8's liberal pleading standard.         Pulla suggests that his claim
    that Amoco discriminated
    14
    Thus, we need not consider Amoco's argument that Iowa's
    exception to the employment-at-will doctrine does not extend to
    wrongful demotion claims. See Zimmerman v. Buchheit of Sparta, Inc.,
    
    645 N.E.2d 877
    , 881-82 (Ill. 1994).
    -17-
    against him allowed him to advance any specific theory that a certain act or
    policy effected such discrimination.        Thus, Pulla asserts that, based on his
    general allegation of discrimination, he could later advance the discriminatory
    impact theory that Amoco's supervisor promotion policy constituted a form of
    age discrimination.    We disagree.     Pulla had the responsibility of specifically
    identifying the conduct challenged in his complaint in order to put Amoco on
    notice of the specific charges levied against it.            See Smith v. St. Bernards
    Regional Medical Ctr., 
    19 F.3d 1254
    , 1255 (8th Cir. 1994). In Smith, we
    explained   that   a   civil   rights   plaintiff   who    claimed   that   her   employer
    discharged her on account of her race stated a specific claim for relief.             
    Id. In that
    case, the face of the complaint pointed to the challenged action (i.
    e., Smith's discharge); however, in the instant case, Pulla's complaint failed
    to identify the action that Pulla now suggests he is challenging (i.e., Amoco's
    promotion policy).
    Pulla also maintains that the district court abused its discretion by not
    allowing him to amend his pleadings to conform to the evidence under Fed. R.
    Civ. P. 15(b). Pulla contends that the district court's denial of his Rule
    15(b) motion constituted an abuse of its discretion under Gamma-10 Plastics v.
    American President Lines, Ltd., 
    32 F.3d 1244
    (8th Cir. 1994) , cert. denied,
    
    115 S. Ct. 1270
    (1995). In Gamma-10 Plastics, we explained that "a district
    court is not required to grant a motion to amend on the basis of some evidence
    that would be relevant to the new claim if the same evidence was also relevant
    to a claim originally 
    plead." 32 F.3d at 1256
    .            In the instant case,
    -18-
    the evidence presented that related to Amoco's personnel policy served to
    support Pulla's intentional discrimination claim, and thus, did not necessarily
    put   Amoco   on   notice   that   Pulla   intended   to   challenge   the    policy   as
    discriminatory in and of itself.           Therefore, we cannot conclude that the
    district court's denial of Pulla's Rule 15(b) motion constituted an abuse of
    its discretion.
    C.    CONSTITUTIONAL REVIEW OF PUNITIVE DAMAGES AWARD
    It is clear that an award of punitive damages is subject to review to
    determine whether it violates principles of substantive due process, but as
    indicated by the plurality and other opinions filed in TXO Prod.               Corp. v.
    Alliance Resources Corp., 
    113 S. Ct. 2711
    (1993), it is not easy to clearly to
    discern the analytical framework for reviewing such awards.15            However, the
    Supreme Court has twice stated that punitive damages awards must comply with
    the Due Process Clause's "'general concern for reasonableness.'"             
    Id. at 2720
    (quoting Pacific Mutual Life Ins. Co. v. Haslip, 
    499 U.S. 1
    , 18 (1991)). This
    concern requires that an award be "rational in light of [its] purpose to punish
    what has occurred and to deter its repetition."            
    Haslip, 499 U.S. at 20-21
    .
    Amoco argues that the $500,000 punitive damages award levied against it in this
    case is unreasonable and unconstitutional.        While
    15
    We are aware that the Supreme Court is presently considering a
    constitutional challenge to the amount of punitive damages awarded in
    BMW of North America, Inc. v. Gore, 
    646 So. 2d 619
    (Ala. 1994), cert.
    granted, 
    115 S. Ct. 932
    (1995). However, given the stated interest
    of the parties in the expeditious resolution of this matter, and
    since we prepared for and heard oral argument despite the pendency of
    Gore, we choose not to withhold judgment until the Court decides
    Gore.
    -19-
    we accord great deference to the jury's verdict and the district court's
    assessment of the award, we hold that the amount of punitive damages awarded
    in this case is unreasonable and violates Amoco's substantive due process
    rights.
    Whether a punitive damages award is reasonable for purposes of due
    process,     turns   on:   (1)   the   harm    inflicted   on   the   plaintiff;   (2)   the
    reprehensibility of the defendant's conduct; (3) the likely potential harm to
    others arising from the complained of conduct; and (4) the wealth of the
    defendant.16 
    TXO, 113 S. Ct. at 2721
    (plurality 
    opinion); 113 S. Ct. at 2726
    (Kennedy, J., concurring) (explaining that the reprehensibility of defendant's
    conduct and its wealth are important factors).                  Courts must consider the
    totality of these four factors; that is, the presence (or absence) of any one
    of these factors cannot alone justify (or defeat) the constitutionality of a
    punitive damages award.      For example, while a "shocking disparity" in the ratio
    between an award of punitive and actual damages may suggest that the punitive
    damages award is unconstitutional, the existence of potential damages and/or
    the reprehensibility of a defendant's conduct may overcome any such disparity.
    
    Id. at 2722.
       Moreover, not only does the presence of these factors justify a
    large punitive damages award, but their absence also can counsel against a
    large award.
    16
    While a defendant's wealth may be taken into account in order
    to ensure that an award will adequately deter any future such
    conduct, a defendant's wealth cannot alone justify a large punitive
    damages award. 
    TXO, 113 S. Ct. at 2723
    .
    -20-
    While TXO upheld a 526:1 ratio of punitive to actual damages on the basis
    of the potential damages arising from TXO's conduct, it explained that the
    potential damages must be evaluated in light of a defendant's actual conduct.
    The plurality opinion underscored that the relevant inquiry looks to "'whether
    there is a reasonable relationship between the punitive damages award and the
    harm likely to result from the defendant's conduct as well as the harm that
    actually has occurred.'" 
    Id. at 2721
    (quoting 
    Haslip, 499 U.S. at 21
    ) (emphasis
    in original).17          To illustrate the nature of the "the harm likely to result"
    inquiry, TXO referred to the example of a defendant who fired a gun into a
    crowd, but only broke someone's glasses, causing little actual harm, but
    tremendous potential harm. 
    Id. at 2721
    (citing Games v. Fleming Landfill, Inc.,
    
    413 S.E.2d 897
    , 902 (W. Va. 1991)). After offering this example of a situation
    where        a   large   ratio   between   punitive   and   actual   damages    would   pass
    constitutional muster, the TXO plurality explained that the relevant potential
    harm is what "the defendant's conduct would have caused to its intended victim
    if the wrongful plan had succeeded, as well as the possible harm to other
    victims that might have resulted if similar future behavior were not 
    deterred." 113 S. Ct. at 2722
    .         Under this standard, the touchstone is the potential harm
    that would have likely resulted from the dangerousness inherent in defendant's
    actual conduct.          Thus, a court may not justify the award of punitive
    17
    The Court further underscored its commitment to the                      fact that
    the potential harm must be "likely," by highlighting that                      West
    Virginia similarly imposes a likelihood requirement. See                       
    id. at 2721
    (quoting Games v. Fleming Landfill, Inc., 
    413 S.E.2d 897
    ,                      909 (W. Va.
    1991)
    -21-
    damages in a particular case by overlooking the actual events and focusing on
    potential victims of similar hypothetical torts.       
    TXO, 113 S. Ct. at 2734
    (O'Connor, J., dissenting) ("Virtually any tort, however, can cause millions
    of dollars of harm if imposed against a sufficient number of victims.").
    In the instant case, the district court erred by misconceiving the nature
    of potential harm.18   The district court justified the $500,000 punitive damages
    award by reasoning that "[w]ere Amoco or others similarly situated to be
    undeterred from intruding on the privacy of employees' credit cards to check
    up on their use of sick leave or for any other purpose, the aggregate invasion
    of privacy into sensitive matters would be enormous indeed." Pulla, 882 F.
    Supp. at 887.    In so doing, the district court focused on the hypothetical
    result of future such actions, and did not pinpoint any evidence connected to
    the actual search of Pulla's credit card records.     This approach to analyzing
    punitive damages departed from TXO in that it did not require that the
    potential harm was likely to occur.     We
    18
    Amoco also argues that, even if the correct conception of
    potential harm resulting from its conduct could support the amount of
    punitive damages awarded against it, that fact should not justify the
    award in the instant case because the jury instructions did not
    specify that the jury should consider potential damages as a basis
    for a punitive damages award. The jury instructions in TXO, however,
    also did not provide that the amount of potential damages could
    justify a larger award of punitive damages; yet, what the plurality
    considered to be substantial potential damages still played a large
    part in its holding that the punitive damages award passed
    constitutional muster. See 
    TXO, 113 S. Ct. at 2735
    (O'Connor, J.,
    dissenting). Thus, as it is arguable that TXO forecloses Amoco's
    jury instruction argument, we assume that it does, and hold for Amoco
    on other grounds.
    -22-
    emphasize that, because Pulla failed to present any evidence that Amoco put any
    other individual's privacy at risk (e.g., Pulla did not suggest that the search
    of his credit card records stemmed from a company policy), the potential harm
    from the search of his credit cards can only be analyzed as the search affected
    him.   Thus, this case is different from the gunman who fires into a crowd, but
    only breaks someone's glasses, or a manufacturer who puts several thousand
    potentially dangerous products into the marketplace. See, e.g., Hopkins v. Dow
    Corning Corp., 
    33 F.3d 1116
    , 1127 (9th Cir. 1994) (upholding a punitive damages
    award of $6.5 million in a breast implant case because the manufacturer's
    distribution of the silicone gel breast implants knowingly exposed "thousands
    of women to a painful and debilitating disease"), cert. denied, 
    115 S. Ct. 734
    (1995).
    The district court also erred by failing to scrutinize correctly the
    punitive damages award by reference to the level of the offensiveness of
    Amoco's conduct.    We have previously noted that the offensiveness of the
    conduct at issue informs the judgment as to whether a punitive damages award
    "'jars one's constitutional sensibilities.'" Burke v. Deere & Company, 
    6 F.3d 497
    , 512 n.26 (8th Cir. 1993) (quoting 
    Haslip, 499 U.S. at 1043
    ), cert. denied,
    
    114 S. Ct. 1063
    (1994).19   In this case, the offensiveness of Amoco's conduct
    19
    In Burke, we did not actually reach the constitutional inquiry
    because the evidence was insufficient to support any award of
    punitive damages, but we still noted the relationship between the
    offensiveness of the complained of conduct and the constitutionality
    of a punitive damages award. In that case, we held that the "merely
    objectionable" act of "undertak[ing] a less costly alternative to
    remedy a perceived problem before moving to a more expensive recall
    program does not
    amount to willful or wanton conduct in disregard of the rights and
    safety of others" and did not suffice to support an award of punitive
    
    damages. 6 F.3d at 512
    .
    -23-
    at issue starkly contrasts with the conduct that justified a 526:1 ratio of
    actual to punitive damages in TXO.       In TXO, the company's top-level executives
    engaged in a deliberate plan of trickery and deception, while this case grew
    out of the resentment of a single employee and the perhaps understandable
    reaction of the supervisor that he should pass on the facts of Pulla's abuse
    of his sick leave to Amoco's personnel department.         In the instant case, there
    is no evidence or indication that Wieczorek's conduct reflected a company
    policy or practice as was the case in TXO.         In contrast, in TXO, the plaintiff
    presented evidence that TXO deliberately engaged in this wrongful conduct, and
    that prior lawsuits had been filed against it for similar 
    misdeeds. 113 S. Ct. at 2726
    (Kennedy, J., concurring).         Similarly, we would view Amoco's conduct
    in a more critical light if Pulla had presented any evidence rebutting Amoco's
    assertion that this was an isolated and rare incident.          
    TXO, 113 S. Ct. at 2722
    n.28 (it   is   well   settled   that   previous    offensive   conduct   is   "typically
    considered in assessing punitive damages"). However, as Pulla failed to do so,
    we must view this event as a one-time occurrence justifying a limited award of
    punitive damages.
    Finally, the district court overly discounted the effect of the limited
    actual harm suffered by Pulla.          While the Constitution does not impose any
    precise formula or ratio between the amount of punitive and actual damages, the
    amount of punitive damages must bear "some
    -24-
    proportion" and a "reasonable relationship" to the harm that actually occurred.
    
    Id. at 2721
    .   The reasonableness of the relationship in any given case depends
    on the other factors outlined above (i.e., the likelihood and amount of
    potential damages, the offensiveness of the complained of conduct, and the
    wealth of the defendant). In this case, given the limited offensiveness of
    Amoco's actions and the unlikelihood of any serious potential harm from its
    conduct, we hold that the 250,000:1 ratio between punitive and actual damages
    is excessive, unreasonable and violative of due process.
    IV.     CONCLUSION
    We AFFIRM the denial of Amoco's motion for a judgment of a matter of law,
    or in the alternative, motion for a new trial, except with respect to Amoco's
    constitutional challenge to the punitive damages award.              We also AFFIRM the
    district court's grant of summary judgment to Amoco on Pulla's contract law
    claim as well as its denial of Pulla's motion to amend its complaint to include
    a disparate impact ADEA claim.        Finally, as to the $500,000 award of punitive
    damages, we REVERSE the judgment of the district court that this award passes
    constitutional   muster,   and   we    REMAND    this   case   for   further   proceeding
    consistent with this opinion.
    A true copy.
    Attest:
    CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT
    -25-
    

Document Info

Docket Number: 94-4001

Filed Date: 12/19/1995

Precedential Status: Precedential

Modified Date: 3/3/2016

Authorities (20)

Henry P. Halsell v. Kimberly-Clark Corporation , 683 F.2d 285 ( 1982 )

Pacific Mutual Life Insurance v. Haslip , 111 S. Ct. 1032 ( 1991 )

TXO Production Corp. v. Alliance Resources Corp. , 113 S. Ct. 2711 ( 1993 )

Brian Keenan, an Individual Resident of the State of ... , 13 F.3d 1266 ( 1994 )

Gamma-10 Plastics, Inc., and Cross-Appellee v. American ... , 32 F.3d 1244 ( 1994 )

marcellin-l-smith-individually-and-as-father-and-next-friend-of-eric , 852 F.2d 1074 ( 1988 )

Melvin White v. B. Jeffery Pence Natalee Schay, United ... , 961 F.2d 776 ( 1992 )

gopher-oil-company-inc-a-minnesota-corporation-v-union-oil-company-of , 955 F.2d 519 ( 1992 )

Howard R. Myers v. Norfolk Livestock Market, Inc. , 696 F.2d 555 ( 1982 )

62-fair-emplpraccas-bna-1336-62-empl-prac-dec-p-42573-walter-p , 999 F.2d 950 ( 1993 )

Fogel v. Trustees of Iowa College , 1989 Iowa Sup. LEXIS 269 ( 1989 )

United States v. 353 Cases Mountain Valley Mineral Water ... , 247 F.2d 473 ( 1957 )

John J. Demarines and Doris A. Demarines, Husband and Wife ... , 580 F.2d 1193 ( 1978 )

Garnes v. Fleming Landfill, Inc. , 186 W. Va. 656 ( 1991 )

Pulla v. Amoco Oil Co. , 882 F. Supp. 836 ( 1994 )

Mariann HOPKINS, Plaintiff-Appellee, v. DOW CORNING ... , 33 F.3d 1116 ( 1994 )

Floyd Harris and Doretha Harris v. Zurich Insurance Company , 527 F.2d 528 ( 1975 )

Morgan I. DOYNE, Appellee, v. UNION ELECTRIC COMPANY, ... , 953 F.2d 447 ( 1992 )

Falczynski v. Amoco Oil Co. , 1995 Iowa Sup. LEXIS 116 ( 1995 )

Carol D. Smith v. St. Bernards Regional Medical Center Fran ... , 19 F.3d 1254 ( 1994 )

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