Scott Kingston v. IBM ( 2022 )

NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS AUG 1 2022
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
SCOTT KINGSTON, No. 21-35548
Plaintiff-Appellee, D.C. No. 2:19-cv-01488-MJP
v.
MEMORANDUM*
INTERNATIONAL BUSINESS
MACHINES CORPORATION, a New York
corporation,
Defendant-Appellant.
Appeal from the United States District Court
for the Western District of Washington
Marsha J. Pechman, District Judge, Presiding
Argued and Submitted June 8, 2022
Seattle, Washington
Before: GILMAN,** IKUTA, and MILLER, Circuit Judges.
Dissent by Judge IKUTA.
Scott Kingston sued International Business Machines Corporation (IBM) for
wrongful termination and retaliation in violation of Washington public policy and
the Washington Law Against Discrimination, alleging that he was fired for
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
**
The Honorable Ronald Lee Gilman, United States Circuit Judge for
the U.S. Court of Appeals for the Sixth Circuit, sitting by designation.
opposing what he believed to be wage theft and race discrimination. The jury
found for Kingston and awarded him about $5 million in economic damages and
$6 million in non-economic damages. The district court denied IBM’s motions for
judgment as a matter of law, a new trial, and remittitur. The district court had
jurisdiction under 28 U.S.C. § 1332, and we have jurisdiction under 28 U.S.C.
§ 1291. “We review denial of a motion for judgment as a matter of law de novo,
and denial of a motion for new trial and remittitur for abuse of discretion.” DSPT
Int’l, Inc. v. Nahum, 624 F.3d 1213, 1218 (9th Cir. 2010). We affirm in part, vacate
in part, and remand with instructions to order remittitur of the excessive award of
non-economic damages.
1. IBM is not entitled to judgment as a matter of law on Kingston’s
wrongful-termination and retaliation claims. “Judgment as a matter of law is
appropriate when the evidence presented at trial permits only one reasonable
conclusion,” so that “no reasonable juror could find” to the contrary. Torres v. City
of Los Angeles, 548 F.3d 1197, 1205 (9th Cir. 2008) (first quoting Santos v. Gates,
287 F.3d 846, 851 (9th Cir. 2002), and then quoting El-Haken v. BJY Inc., 415
F.3d 1068, 1072 (9th Cir. 2005)). Kingston presented evidence at trial that the
stated reason for his termination was pretextual and that at least one of the IBM
executives who made the termination decision was aware of his complaints and
forwarded an email summarizing them to other decisionmakers during their
2
deliberations.
In particular, although IBM claims to have fired Kingston for declining to
cap a white salesman’s commission payment, the company apparently has a policy
to the contrary—that commissions are uncapped. And the record shows that when
Kingston learned that a black salesman would not be receiving his full
commission, he told a sales executive that the decision was “completely
unacceptable, it was a violation of the rules of our commission program,” and that
“in light of the recent payment” with the white salesman who did receive his full
uncapped commission, “it looked like it might have been racial discrimination.”
That conversation was summarized in an email forwarded to Cindy Alexander,
vice president of finance, explaining that Kingston “was not thrilled but
understood” and IBM needed to make sure “‘caps’ are known up-front going
forward” so “people don’t think they are being singled out or treated unfairly.”
Although that email did not expressly refer to race discrimination, its author had
instructed Kingston not to put the words “race discrimination” in email. Months
later—on the same day that Alexander agreed to terminate Kingston—Alexander
forwarded the email to the HR representative who had recommended firing
Kingston. As the district court reasoned, “the jury could have considered this as
evidence that Alexander and the Review Board were looking at Kingston’s
complaints about [the black salesman]’s treatment in making their termination
3
decision.” And around the same time, Alexander expressed concern that “people
were paid incorrectly vs what was approved, or something else is amiss” regarding
the commission that went unpaid to the black salesman—again, even though the
deliberations about terminating Kingston supposedly had nothing to do with that
incident.
A reasonable jury could infer from that evidence that (1) Kingston was
opposing or reporting what he believed to be employer misconduct in the form of
race discrimination and withholding of earned wages, and (2) his opposition
activity was known by decisionmakers and was “a substantial factor in IBM’s
decision to terminate” him. The district court therefore did not err in denying
IBM’s motion for judgment as a matter of law. For similar reasons, IBM is not
entitled to a new trial on those claims. See Crowley v. Epicept Corp., 883 F.3d 739,
751 (9th Cir. 2018) (per curiam) (explaining that the district court’s decision not to
grant a new trial is “virtually unassailable,” and that “we reverse for a clear abuse
of discretion only where there is an absolute absence of evidence to support the
jury’s verdict” (quoting Desrosiers v. Flight Int’l of Fla., Inc., 156 F.3d 952, 957
(9th Cir. 1998) (emphasis omitted))).
2. The jury instruction for wrongful termination based on reporting wage
theft was not erroneous. The court instructed the jury that Kingston had to prove,
in part, that he reported what he reasonably believed to be “employer misconduct
4
in the form of withholding of earned wages.” Washington law encompasses
“retaliation for whistleblowing on illegal or wrongful employer conduct.” Gardner
v. Loomis Armored Inc., 913 P.2d 377, 380 (Wash. 1996) (emphasis added). Thus,
contrary to IBM’s contention, the district court did not need to specify that the
conduct had to be “unlawful.” In any event, the withholding of earned wages is
unlawful under Washington law. See Wash. Rev. Code § 49.52.050(2). And the
district court did not abuse its discretion by refusing to give the jury an instruction
on “at will” employment. See Kastanis v. Educational Emps. Credit Union, 859
P.2d 26, 35 (Wash. 1993), amended by 865 P.2d 507 (Wash. 1994).
3. IBM is entitled to remittitur of the $6 million non-economic damages
award. Under Washington law, “[a]n appellate court will not disturb an award of
damages made by a jury unless it is outside the range of substantial evidence in the
record, or shocks the conscience of the court, or appears to have been arrived at as
the result of passion or prejudice.” Bunch v. King Cnty. Dep’t of Youth Servs., 116
P.3d 381, 387 (Wash. 2005) (quoting Bingaman v. Grays Harbor Cmty. Hosp., 699
P.2d 1230, 1233 (Wash. 1985)); see also Wash. Rev. Code § 4.76.030. We do not
agree with IBM’s assertion that Kingston’s closing argument, to which IBM did
not object, was unduly prejudicial. Nevertheless, the $6 million non-economic
damages award is “so excessive as to strike mankind, at first blush, as being,
beyond all measure, unreasonable and outrageous.” Bunch, 116 P.3d at 389
5
(quoting Kramer v. Portland-Seattle Auto Freight, Inc., 261 P.2d 692, 697 (Wash.
1953)). Although we do not question that Kingston suffered psychological distress
because of his termination, his distress does not appear to have been significantly
greater than what anyone might suffer from being fired. Based on the evidence
presented at trial, $6 million is shockingly excessive. It also far exceeds the
amounts that Washington courts have upheld in similar cases—so far as we have
been able to determine, no Washington court has upheld an award of greater than
$1.5 million in non-economic damages in a wrongful-termination case. See, e.g.,
Collins v. Clark Cnty. Fire Dist. No. 5, 231 P.3d 1211, 1231–32 (Wash. Ct. App.
2010) (upholding award of $875,000 in non-economic damages); Elias v. City of
Seattle, 2 Wash. App. 2d 1039, 2018 WL 993644, at *4 (2018) (upholding awards
of $1.5 million and $750,000 in non-economic damages). The district court is
therefore ordered to reduce the non-economic damages award to an amount
supported by the record and consistent with Washington law. If Kingston does not
accept the remittitur, IBM is entitled to a new trial on the issue of non-economic
damages.
The parties shall bear their own costs on appeal.
AFFIRMED in part, VACATED in part, and REMANDED with
instructions.
6
FILED
Scott Kingston v. IBM, 21-35548
AUG 1 2022
IKUTA, Circuit Judge, dissenting: MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
Can an employer be held liable for terminating an employee because of the
employee’s protected activities if the employer did not know about those
activities? Apparently yes, according to the majority.
I
Washington law prohibits an employer from terminating an employee
“because he or she has opposed any practices forbidden by” state anti-
discrimination law. See RCW 49.60.210. Under the statute, the word “oppose”
“carries i[t]s ordinary meaning: ‘to confront with hard or searching questions or
objections’ and ‘to offer resistance to, contend against, or forcefully withstand.’”
Lodis v. Corbis Holdings, Inc., 172 Wash. App. 835, 848 (2013) (citing Webster’s
Third New International Dictionary 1583 (2002)). Washington law also prohibits
an employer from terminating an employee for whistleblowing, i.e., reporting
employer misconduct. Martin v. Gonzaga Univ., 191 Wash.2d 712, 721–23
(2018).
Kingston claimed that IBM terminated him because he opposed racial
discrimination and reported the improper withholding of wages. In order to
prevail, Kingston had to show that the relevant decisionmakers at IBM who
decided to terminate him were aware of Kingston’s opposition to and reporting of
these unlawful practices. See Cornwell v. Microsoft Corp., 192 Wash.2d 403, 414
(2018) (“Because retaliation is an intentional act, an employer cannot retaliate
against an employee for an action of which the employer is unaware.”); see also
Martin, 191 Wash.2d at 727.
But a quick review of the record shows that none of the relevant
decisionmakers were aware that Kingston had engaged in such protected activities.
The record shows that Kingston was a second line manager who supervised
two first line managers, who in turn supervised sales representatives, including
Nick Donato and Jerome Beard. Kingston himself was supervised by a third-line
manager, Dave Mitchell, who was subsequently replaced by Dorothy Copeland.
Many other executives and decisionmakers were involved in the events at issue
here, and a number of names are referenced below. But only one executive and
decisionmaker is truly important here—Cindy Alexander, a Vice President of
Finance—because in addition to being involved in the decision to terminate
Kingston, she was the only decisionmaker who was supposedly aware of
Kingston’s protected activities.
In June 2017, Donato worked on a deal with SAS, which resulted in a multi-
million dollar sales contract. Under one approach used for calculating
commissions, Donato was owed a $1.6 million commission. Kingston approved
2
the commission, but questions arose due to the large amount, and Karla Johnson,
Director of Sales Incentives, referred the matter to internal auditing and
investigator Charles Larkin in October 2017.
In September 2017, Beard closed a deal with HCL worth roughly $16
million. Under the same approach used for calculating Donato’s commission,
Beard was owed roughly $1.5 million. Kingston approved the commission.
Again, questions arose due to the size of the commission. Brian Mulada, the chief
financial officer of the relevant IBM business unit, Maria Lipner, Vice President of
Global Sales Incentives, and Karla Johnson agreed that a different approach should
have been used to calculate the commission. In November 2017, Mulada told Rose
Nunez, an IBM Director of Channel Management, that the $1.5 million
commission was “inappropriate and unacceptable given the nature of this
transaction.” Nunez agreed.
Soon after, Nunez discussed the commission issue with Kingston.
According to Kingston, he argued that because Beard was black and Donato was
white, reducing Beard’s commission and not Donato’s would raise questions about
racial discrimination. Kingston also claims he argued that reducing Beard’s
commission was improper because it raised the goalposts on compensation after
the fact.
3
On November 14, 2017, Nunez summarized her conversation with Kingston
in the following email addressed to Mulada:
Brian – I connected with Scott yesterday. He was not thrilled but
understood.
His general comments:
1. Make sure these “caps” are known up-front going forward. They are okay
with the limitation but they don’t want reps think they are being singled out
or treated unfairly
-It is like playing football, winning the game, then someone tells you the
touchdowns are now worth 3 pts instead of 7 pts.
-I made the justification clear as this is related to broader deals coordinated
by JEK
2. Remove this from the base for next year plan……if we cap this looking
backward AND use this is the baseline for planning to establish next year
quota, this will be tough to explain.
Other than that, he gets it….he agrees that $1.5M is a lot.
Let me know if you want to talk.
Mulada forwarded Nunez’s email to Cindy Alexander on November 15, 2017.
By February 2018, the internal audit Johnson had initiated in October 2017
regarding Donato’s commission was complete. The resulting report determined
that Kingston had been negligent in approving Donato’s $1.6 million commission,
and recommended that IBM “[t]ake appropriate disciplinary action with Mr.
Kingston for not initiating an adjustment for excessive commissions paid to Mr.
Donato.”
4
After receiving this report, Linda Kenny, an HR Case Manager at IBM,
recommended that IBM terminate Kingston. Kenny forwarded her
recommendation to Russ Mandel, the North America Consistency Leader, for
approval, and Mandel approved Kenny’s recommendation. Kenny then requested
and received approval from Dorothy Copeland, Kingston’s new supervisor.
Finally, Kenny requested and received approval from the Review Board for
Kingston’s business unit, which was composed of Lisa Mihalik, Cindy Alexander,
and Scott Ferrauiola. After Kenny received all necessary approvals to terminate
Kingston, he was subsequently terminated.
Kingston then sued IBM on the theory that IBM fired him due to his
complaints about race discrimination and the improper withholding of wages. The
jury found in favor of Kingston, and the district court rejected IBM’s motion for
judgment as a matter of law on Kingston’s claims of illegal retaliation and
wrongful termination, or in the alternative, for a new trial.
II
As this recital of the facts makes clear, there is no evidence that Linda
Kenny, Russ Mandel, Scott Ferrauiola, Lisa Mihalik— four of the five relevant
decisionmakers in Kingston’s termination—heard anything about Kingston’s
complaints regarding IBM’s decision to reduce the commission owed to Beard.
5
Although Kingston claimed that he expressed concerns to other IBM employees
(namely to his supervisors (Mitchell and Copeland) and to investigator Charles
Larkin), none of them were decisionmakers, and there is no evidence that any of
them informed the decisionmakers about Kingston’s statements. Indeed, Mitchell
and Larkin expressly denied talking to the decisionmakers about Kingston’s
concerns.
The fifth decisionmaker, Cindy Alexander, had only one piece of relevant
information—Nunez’s email to Mulada, which was forwarded to Alexander. But
even viewing this email in the light most favorable to Kingston, it is not evidence
that Kingston engaged in protected activity by opposing racial discrimination or
whistle-blowing about employer misconduct. Nothing in the email shows that
Kingston confronted his employer “with hard or searching questions or objections”
or offered resistance to IBM with respect to alleged race discrimination. Lodis,
172 Wash. App. at 848 (citation omitted).1 Nor does anything in the email show
1
The majority incorrectly states that Nunez’s email “summarized”
Kingston’s alleged conversation about racial discrimination and the improper
withholding of wages. Majority at 3. The full text of Nunez’s email is provided
above, and did not summarize those issues.
Further, the majority’s statement that Nunez “had instructed Kingston not to
put the words ‘race discrimination’ in email” is entirely irrelevant to our analysis.
Majority at 3. The only question before us is whether Nunez’s email would make
a reader aware of Kingston’s protected complaints, and on its face, Nunez’s email
(continued...)
6
that Kingston was reporting that IBM engaged in misconduct by wrongfully
withholding wages. Rather, the email merely shows that Kingston was concerned
about the effects that reducing commissions would have on morale and advised his
supervisors on how to better implement their policy going forward. Accordingly,
the email says that Kingston was “not thrilled” with IBM’s approach “but
understood,” and recommended IBM set the ground rules more clearly in advance
to avoid future disappointment. Kingston thought that the sales representatives
would be “okay with the limitation[s]” so long as they did not think they were
being “singled out or treated unfairly.” Kingston also recommended that the deal
should be removed from the base for the next year’s plan, because it “will be tough
to explain.” Nunez summed up that Kingston “gets it” and understood IBM’s
reasoning that the $1.5 million commission “is a lot.”
In an effort to disguise the lack of any evidence that the decisionmakers
knew about Kingston’s protected activities, the majority offers some irrelevant
information. First, the majority notes that around the time the review board was
considering Kenny’s recommendation to terminate Kingston, Alexander forwarded
Nunez’s email to Kenny. Majority at 3. Because Kenny had already
1
(...continued)
did not do so.
7
recommended firing Kingston, and the email does not indicate that Kingston
engaged in protected activities, this sheds no light on the basis for the decision to
fire Kingston. Second, the majority points out that around that same time,
Alexander sent an email to various individuals involved in the HCL transaction.
Majority at 4. The email stated that because the amount “paid on HCL” was
“well beyond what was authorized,” it must be that “something is wrong. Either
people were paid incorrectly vs what was approved, or something else is amiss.”
Again, this statement demonstrates no awareness of Kingston’s protected activities.
Because Nunez’s email does not indicate that Kingston opposed racial
discrimination or reported employer misconduct, and thus failed to make the
decisionmakers aware of Kingston’s protected activities, Kingston is left with the
argument that the jury could have believed that other employees who heard
Kingston’s complaints could have communicated with the relevant
decisionmakers, and that the jury could disbelieve any statements to the contrary.
Such speculation does not constitute evidence. See 9A Wright & Miller, Federal
Practice and Procedure Civil 2d § 2527, at 288 (1990) (“The party with the burden
of proof does not make an issue for the jury’s determination by relying on the hope
that the jury will not trust the credibility of the witnesses . . . [t]here must be some
affirmative evidence that the event in question actually occurred.”). In other
8
words: there was no evidence that any person responsible for the decision to
terminate Kingston knew that he had opposed racism or reported the improper
withholding of wages. Because no IBM decisionmaker knew that Kingston had
engaged in protected activities, IBM could not possibly have fired him because of
those protected activities.
III
Judgment as a matter of law “is proper if the evidence, construed in the light
most favorable to the nonmoving party, permits only one reasonable conclusion,
and that conclusion is contrary to the jury’s verdict.” Pavao v. Pagay, 307 F.3d
915, 918 (9th Cir. 2002). In this case, there is no evidence in the record that the
decisionmakers who terminated Kingston knew that Kingston opposed racism and
the improper withholding of wages. When there is no evidence of a crucial
element of the plaintiff’s case, the jury’s ruling cannot be sustained. Therefore,
IBM is entitled to judgment as a matter of law, or in the alternative to a new trial.
See Crowley v. Epicept Corp., 883 F.3d 739, 751 (9th Cir. 2018) (per curiam).
Accordingly, I dissent.
9