UPS v. Jones

FILED
United States Court of Appeals
Tenth Circuit
October 24, 2011
PUBLISH Elisabeth A. Shumaker
Clerk of Court
UNITED STATES COURT OF APPEALS
TENTH CIRCUIT
KEITH JONES,
Plaintiff-Appellee,
v. No. 09-3275
UNITED PARCEL SERVICE, INC.,
Defendant-Appellant.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF KANSAS
(D.C. No. 2:06-CV-02143-JPO)
Thomas B. Weaver of Armstrong Teasdale LLP, St. Louis, Missouri (Laurence R.
Tucker and Melody L. Nashan of Armstrong Teasdale LLP, Kansas City,
Missouri, with him on the briefs), for Defendant-Appellant.
George A. Barton, Law Offices of George A. Barton, P.C., Kansas City, Missouri
(Frederick D. Deay, II, Law Offices of Frederick D. Deay, II, Overland Park,
Kansas, with him on the brief), for Plaintiff-Appellee.
Before BRISCOE, Chief Judge, MCKAY, and HARTZ, Circuit Judges.
BRISCOE, Chief Judge.
In this diversity action, Defendant United Parcel Service, Inc. (“UPS”)
appeals following a jury verdict awarding Plaintiff Keith Jones (“Jones”) over
$2.5 million in actual and punitive damages based on UPS’s retaliatory discharge
in violation of Kansas common law. See Gonzalez-Centeno v. N. Cent. Kan.
Reg’l Juvenile Det. Facility, 101 P.3d 1170, 1173 (Kan. 2004) (describing
common law cause of action for retaliatory discharge). Jones alleged, and the
jury found, that UPS terminated Jones in retaliation for filing a workers’
compensation claim. UPS alleges on appeal that (1) it is entitled to judgment as a
matter of law on Jones’s retaliation claim; (2) the district court erred in giving
two improper jury instructions; (3) it is entitled to judgment as a matter of law on
Jones’s claim for punitive damages; (4) the district court erred in allowing the
jury to decide the amount of punitive damages; and (5) the jury’s award of $2
million in punitive damages violated its federal due process rights.
We have jurisdiction pursuant to 28 U.S.C. § 1291, and affirm in part,
reverse in part, and remand. The evidence presented supports a reasonable
inference in support of Jones’s retaliation claim. Therefore, we affirm the district
court’s conclusion that UPS is not entitled to judgment as a matter of law on
Jones’s retaliation claim. We also conclude that the jury instructions in this case,
although not a model of clarity, were not improper and that UPS, based on the
evidence presented, is not entitled to judgment as a matter of law on Jones’s
claim for punitive damages. We ultimately conclude the district court did not err
in instructing the jury to determine the proper amount of punitive damages in this
case, relying on Federal Rule of Civil Procedure 38 and its incorporation of the
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Seventh Amendment right to trial by jury in federal cases. This reasoning
obviates the need for any Erie analysis. Finally, we conclude that the jury’s $2
million punitive damage award is excessive and violates UPS’s federal due
process rights. We reverse and remand on this limited issue to permit Jones to
choose between a new trial solely to determine punitive damages or acceptance of
a remittitur to be determined by the district court.
I
Factual Background
Jones began working at the UPS Kansas City warehouse in 1985. Initially,
Jones worked loading UPS delivery trucks, but in 1989 he was promoted to the
position of package car driver. A package car driver delivers packages to UPS
customers along a prescribed route, and as part of the job, must be able to lift
packages weighing up to 70 pounds. While working as a driver, Jones suffered a
series of work-related injuries. In 1991, he injured his left shoulder and
underwent surgery to repair the damage. In 1993, he twisted his knee, although
this injury did not require surgery. In 1996 and again in 1999, he injured his right
shoulder and underwent surgery and extensive rehabilitation in order to fully
recover. Jones filed workers’ compensation claims for each of these injuries.
On October 6, 2003, Jones suffered his most recent work-related injury,
this time to his left shoulder. Within six weeks, Jones filed a workers’
compensation claim, and he began receiving workers’ compensation benefits by
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mid-November 2003. Dr. Gary Legler, UPS’s company doctor, examined Jones
and concluded that he could return to work if he did not lift packages weighing
more than 20 pounds and if he did not lift anything above shoulder level. Dr.
Legler also referred Jones to an orthopedic specialist, Dr. Daniel Stechshulte, for
further evaluation.
Dr. Stechshulte examined Jones four times during October and November
of 2003. During one of his visits, Jones took a functional capacity exam (“FCE”),
which tests the ability of an employee to perform a desired job. A physical
therapist interpreted the results of the test and concluded that Jones could not lift
70 pounds from his waist to his shoulder or over his head. Jones took another
FCE on December 4 with the same results. Based largely on these test results,
Dr. Stechshulte concluded that Jones could return to work, but with the following
permanent lifting restrictions: no overhead lifting over 20 pounds and no
chest-to-shoulder lifting over 45 pounds.
Jones alleges that Don Lewick, UPS’s labor manager, reviewed Dr.
Stechshulte’s work release and told Jones that he could no longer work as a
package car driver because of his permanent lifting restrictions. According to
Jones, Lewick also told him that he could not work in any job at UPS with his
restrictions. Jones subsequently contacted his union representative, who
suggested he see another doctor. On February 4, 2004, Dr. Michael Poppa
examined Jones and concluded that, as of the date of his examination, Jones could
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return to work as a package car driver without restrictions. Dr. Poppa’s medical
opinion, however, did not enable Jones to return to work. Pursuant to the
collective bargaining agreement (“CBA”) between UPS and the union, once Jones
was cleared to work by his own doctor, he had to be re-examined by Dr. Legler.
Jones returned to Dr. Legler for a second examination on February 9, 2004.
During this visit, Jones provided Dr. Legler with a copy of his work release from
Dr. Poppa, but he did not disclose the results of his previous FCEs or the fact that
Dr. Stechshulte had imposed permanent lifting restrictions. As a part of his
examination by Dr. Legler, Jones successfully performed a lift test which required
him to demonstrate that he could lift 70 pounds. Following the examination, Dr.
Legler released Jones to work without restrictions.
Dr. Legler sent a copy of Jones’s work release to Monica Sloan, an
occupational health manager in the human resources department at UPS. Her job
was to “coordinate care for injured workers and to manage the disabilities of
[UPS] employees.” App. Vol. 8, at 1679. In that capacity, she received reports
from physicians on “virtually a daily basis.” Id. at 1698.
Sloan contacted Dr. Legler the same day she received Jones’s work release
and asked him if he was aware that Dr. Stechshulte had imposed a permanent
20-pound overhead lifting restriction on Jones in December 2003. Dr. Legler
testified at trial that when he told Sloan he was unaware of Dr. Stechshulte’s
report, Sloan asked him “if he would . . . mind changing [his] return to work
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evaluation to reflect the 20 pound lift limit that Dr. Stechschulte had given
[Jones].” Id. Vol. 4, at 851. Sloan testified, however, that she did not ask Dr.
Legler to change his diagnosis; she simply asked him if he would review Dr.
Stechschulte’s work status report and the FCE evaluations and if he would “be
willing to rethink the full duty release.” Id. Vol. 8, at 1686-87. Following his
conversation with Sloan, Dr. Legler changed Jones’s work restriction to match Dr.
Stechshulte’s, at which point UPS again refused to permit Jones to return to work.
The following day, Jones filed a grievance with the union, alleging that
UPS would not permit him to return to work despite being released by both Dr.
Poppa and Dr. Legler. Add., at 209. The grievance panel directed UPS and Jones
to follow the CBA’s third-doctor procedure. Under the CBA, if the UPS doctor
and the employee’s doctor disagree, the parties must select a third doctor, “whose
decision shall be final and binding.” Id. at 35. The CBA further states that
“[n]either the [e]mployer nor the Union [may] attempt to circumvent the
decision” of the third doctor. Id. Shortly after the grievance panel issued its
ruling, the parties selected Dr. Frederick Buck to examine Jones.
In May 2004, Dr. Buck examined Jones, watched him successfully
complete basic lifting and strength tests, and concluded that another FCE would
help him better evaluate Jones’s abilities and limitations. Dr. Buck called Sloan
and asked permission to perform another FCE, but Sloan stated that UPS would
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not pay for an FCE because Jones had received one the previous December. 1
Sloan also informed Dr. Buck that his evaluation of Jones was supposed to be
based on Jones’s prior medical records, rather than his current physical
examination of Jones. Dr. Buck testified that he thought Sloan’s request was
unusual because he had never been asked to provide a medical opinion for an
employer based solely on an employee’s past medical records. Nonetheless, Dr.
Buck followed Sloan’s instructions and, using only “the medical records
provided,” concluded that Jones could not perform the essential functions of a
package car driver. Id. at 211.
In June 2004, Jones filed a second grievance with the union, this time
alleging that his visit to Dr. Buck had been “unfair” because UPS would not pay
for another FCE and because UPS “didn’t want Dr. Buck’s opinion” regarding
Jones’s current physical state. Id. at 214. After holding a hearing on the matter,
the grievance panel instructed Jones to see Dr. Buck again in order to “comply
with [its previous] decision to implement the third party procedure.” Id. at 217.
Jones returned to Dr. Buck in August 2004. However, when Dr. Buck met
with Jones again, Dr. Buck was still under the impression that he was to base his
opinion solely on the medical records as they existed as of May 2004.
Consequently, Dr. Buck again concluded, based on the “medical record office
1
Pursuant to the CBA, UPS and Jones would have each paid half of the
cost of the FCE.
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notes” of Dr. Stechshulte and Dr. Legler and without any “additional
information,” that Jones could not perform the work of a package car driver. Id.
at 218. After receiving Dr. Buck’s report, the union informed Jones that Dr.
Buck’s opinion was controlling, and UPS again told Jones that he could not return
to work.
In January of 2005, Jones filed suit against UPS in the United States
District Court for the District of Kansas, alleging disability discrimination and
retaliation in violation of the Americans with Disabilities Act of 1990 (ADA), 42
U.S.C. § 12101 et seq., and alleging retaliatory discharge in violation of Kansas
common law. The district court subsequently granted UPS’s motion for summary
judgment on Jones’s ADA claims, see Jones v. United Parcel Serv., Inc., 411 F.
Supp. 2d 1236 (D. Kan. 2006) (Jones I), and we affirmed on appeal, see Jones v.
United Parcel Serv., Inc., 502 F.3d 1176, 1180-82 (10th Cir. 2007) (Jones II).
However, the district court denied UPS’s motion for summary judgment on
Jones’s state law claim and because Jones had not alleged diversity of citizenship,
declined to exercise supplemental jurisdiction over the claim prospectively. Jones
I, 411 F. Supp. 2d at 1261.
Jones subsequently re-filed his state law retaliatory discharge claim, this
time in the District Court of Wyandotte County, Kansas. UPS then removed this
action to federal district court. After a six day trial, the jury found in Jones’s
favor, awarding him $630,307 in actual damages and $2 million in punitive
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damages. 2 Shortly thereafter, UPS filed a motion for a new trial and a motion for
judgment as a matter of law. The district court denied these motions and entered
judgment on the jury verdict. UPS then timely appealed to this court.
II
Judgment as a Matter of Law on Jones’s Claim of Retaliation
UPS alleges the district court erred in denying its motion for judgment as a
matter of law and its motion for a new trial. We review de novo the district
court’s denial of a motion for judgment as a matter of law. Cummings v. Gen.
Motors Corp., 365 F.3d 944, 949 (10th Cir. 2004). In diversity cases, “the
substantive law of the forum state governs the analysis of the underlying claims,
including specification of the applicable standards of proof, but federal law
controls the ultimate, procedural question whether [judgment as a matter of law]
is appropriate.” Wagner v. Live Nation Motor Sports, Inc., 586 F.3d 1237, 1244
(10th Cir. 2009) (internal quotation marks omitted). Under federal law, “[a] party
is entitled to judgment as a matter of law only if all of the evidence, viewed in the
light most favorable to the nonmoving party, reveals no legally sufficient
evidentiary basis to find for the nonmoving party.” Burrell v. Armijo, 603 F.3d
825, 832 (10th Cir. 2010). Judgment as a matter of law “is warranted only if the
2
Pursuant to 28 U.S.C. § 636(c) and Rule 73 of the Federal Rules of Civil
Procedure, the parties agreed to try this case before a United States magistrate
judge. See Dist. Ct. Dkt. #102.
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evidence points but one way and is susceptible to no reasonable inferences to
support the party opposing the motion.” Baty v. Willamette Indus., Inc., 172 F.3d
1232, 1241 (10th Cir. 1999) (citation and quotation omitted).
UPS argues it is entitled to judgment as a matter of law on Jones’s claim
for retaliatory discharge because (1) he failed to establish a prima facie case of
retaliation; and (2) he failed to prove that UPS’s reason for discharging him was
pretextual.
The employer-employee relationship in Kansas is governed by the doctrine
of employment-at-will. Goodman v. Wesley Med. Ctr., LLC, 78 P.3d 817, 821
(Kan. 2003). Pursuant to this doctrine, “an employer can terminate an employee
for good cause, for no cause, or even for a wrong cause, without incurring
liability to the employee for wrongful discharge.” Bracken v. Dixon Indus., Inc.,
38 P.3d 679, 682 (Kan. 2002) (internal quotation marks omitted). There are,
however, several recognized exceptions to Kansas’s employment-at-will doctrine.
For example, an employer may not terminate an employee “in retaliation for filing
a workers compensation claim, or in anticipation of the employee filing [such a]
claim.” Id. (internal citations omitted).
“Kansas has adopted the McDonnell Douglas burden-shifting analysis for
employment discrimination cases.” 3 Rebarchek v. Farmers Co-op. Elevator, 35
3
Our court has held that the McDonnell Douglas burden shifting analysis
(continued...)
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P.3d 892, 898 (Kan. 2001) (citations omitted). Thus, when a plaintiff alleges he
or she was terminated in retaliation for filing a workers’ compensation claim, the
plaintiff bears the burden of establishing a prima facie case of retaliatory
discharge. Id. In order to establish a prima facie retaliation claim, the plaintiff
must show: (1) he or she filed a claim for workers’ compensation benefits; (2) the
employer had knowledge of the plaintiff’s workers’ compensation claim; (3) the
employer terminated the plaintiff’s employment; and (4) a causal connection
existed between the workers’ compensation claim and his or her termination. Id.
3
(...continued)
does not apply beyond the summary judgment stage. When a plaintiff brings
federal discrimination claims, and “establishes a prima facie case . . . , the case
then moves to trial, where the presumption of discrimination created by the prima
facie showing simply drops out of the picture.” Randle v. Aurora, 69 F.3d 441,
453 (10th Cir. 1995) (citation and internal quotation marks omitted). We are
unable to find a similar pronouncement from the Kansas courts. It appears from a
reading of Kansas discrimination cases that Kansas courts follow the McDonnell
Douglas framework in discrimination cases without distinguishing between trials
and motions for summary judgment. See Rebarchek, 35 P.3d at 898. This is
evident from the fact that fact-finders in Kansas discrimination trials address the
prima facie discrimination prong of the McDonnell Douglas analysis in
determining whether the defendant is liable for discrimination. See Beech
Aircraft Corp. v. Kan. Human Rights Comm’n, 864 P.2d 1148, 1153, 1158 (Kan.
1993) (The district court, as the “finder of fact[,] . . . determined that the
complainant . . . failed to establish a prima facie case.”); Woods v. Midwest
Conveyer Co. Inc., 648 P.2d 234, 239 (Kan. 1982) (“The record discloses the
complainant’s evidence was determined by the trier of fact to establish a prima
facie case of discrimination.”); Kan. Human Rights Comm’n v. Dale, 968 P.2d
692, 695 (Kan. App. 1998) (affirming the district court’s adoption of the Kansas
Human Rights Commission’s factual finding that the plaintiff presented a prima
facie discrimination case). Accordingly, we will address whether the jury
correctly concluded that Jones presented a prima facie case of discrimination.
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at 899. The burden of establishing these elements “is not . . . onerous.” Id. at
901.
In Kansas, “an employer may avoid liability by demonstrating that the
discharge was motivated by the employee’s [physical] inability to return to his
duties, rather than because the employee exercised his rights under the Workers
Compensation Act.” Sanjuan v. IBP, Inc., 275 F.3d 1290, 1294 (10th Cir. 2002).
Nonetheless, “[i]t does not follow . . . that retaliatory animus can never exist if
the discharged employee is unable to perform his duties at the time he was fired.”
Id. Accordingly, “in the final analysis,” the court must ask “what was the
motivation for firing the plaintiff?” Id. at 1295 (internal quotation marks and
alterations omitted).
UPS claims the district court erred in denying its motion for judgment as a
matter of law because Jones failed to establish a prima facie case of retaliation.
Specifically, UPS asserts that “there is no evidence that Ms. Sloan’s contacts with
Dr. Legler and Dr. Buck, even if inappropriate, were in retaliation for a workers’
compensation claim, or that [Jones’s] workers’ compensation claim played any
role in his initial discharge or in the decision by UPS not to reinstate him.” Aplt.
Br. at 23. In response, Jones argues the district court correctly denied UPS’s
motion because he brought forth evidence that “there was a close temporal
proximity between the filing of [his] workers’ compensation claim . . . and the
onset of UPS’s retaliatory conduct against [him]” Aple. Br. at 24.
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We agree with Jones and conclude that there was a legally sufficient
evidentiary basis for the jury to find that Jones presented a prima facie claim of
retaliation for filing a workers’ compensation claim in October 2003.
Immediately after Dr. Legler determined that Jones could return to work in
February 2004, Sloan called Dr. Legler and asked if he would change his
evaluation to correspond with work restrictions Dr. Stechschulte had placed on
Jones. In addition, Sloan told Dr. Buck, the third-party doctor, that UPS would
not pay for another FCE (which Dr. Buck had wanted to complete his evaluation
of Jones) and that he should base his opinion solely on Jones’s previous medical
records. Finally, after the grievance panel ordered Jones to return to Dr. Buck for
an examination in compliance with the CBA, Sloan made no effort to inform Dr.
Buck that, contrary to what she had previously told him, the grievance panel
wanted him to make an independent determination regarding whether Jones could
return to work based on his present physical condition. We conclude that this
evidence, taken together, indicates UPS may have retaliated against Jones for
filing a workers’ compensation claim. 4
4
Although the dissent would sustain the jury’s verdict regarding UPS’
liability for retaliation, it is uncomfortable with the court’s conclusion that there
is a sufficient temporal proximity to give rise to a finding of causation. The
dissent claims that “three months . . . is too long a period from which to infer
causation absent other evidence.” Dissent at 2. The dissent correctly notes that a
three month period from the date of the worker’s compensation claim to the
adverse employment action, standing alone, does not give rise to causation. See
(continued...)
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UPS also claims that even if Jones did establish a prima facie case of
retaliation, it is still entitled to judgment as a matter of law because Jones failed
to prove that its reason for terminating his employment was pretextual.
According to UPS, it decided not to reinstate Jones based solely upon Dr. Buck’s
second diagnosis. UPS further alleges that any evidence of Sloan’s interference
with Jones’s medical treatment fails to establish that UPS’s stated reasons for
terminating his employment were pretextual.
Having reviewed the record on appeal, we conclude that there was a legally
sufficient evidentiary basis for the jury to find that UPS terminated Jones for
pretextual reasons. UPS alleges it terminated Jones based solely on Dr. Buck’s
second report, but this report was clearly incomplete. As with his first report, Dr.
Buck stated that his second report was based only on Jones’s previous medical
reports and that he did not perform an independent medical evaluation. Dr. Buck
testified that he did not know why Jones had come for a second examination, and
that Jones never explained why he was there. 5 App. Vol. 8, at 1644-45. This fact
4
(...continued)
Trujillo v. PacifiCorp, 524 F.3d 1149, 1157 n.5 (10th Cir. 2008) (collecting
cases). However, in this case, there is sufficient evidence, in addition to the three
month period, that supports the jury’s conclusion that UPS retaliated against
Jones. As noted above, Sloan’s phone call to Dr. Legler (immediately after she
learned that Jones would be able to return to work), her conversations with Dr.
Buck, and her failure to inform Dr. Buck of the purpose of Jones’ second visit all
support the jury’s verdict.
5
Although the dissent argues that Dr. Buck would have heard only from
(continued...)
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is particularly important given that the grievance panel ordered Jones to return to
Dr. Buck in order to “comply with [its previous] decision to implement the third
party procedure.” App., at 217.
Moreover, in addition to knowing the grievance panel was not satisfied
with Dr. Buck’s initial report, there is evidence that UPS knew one of its
employees was responsible for Dr. Buck’s confusion and chose not to remedy the
situation. Don Lewick, the labor relations manager, testified that he spoke with
Sloan about her conversation with Dr. Buck and then instructed her not to speak
with Dr. Buck before the second evaluation because she might “muddy the
waters.” Id. Vol. 5, at 1177-78. Given Dr. Buck’s incomplete initial reports,
which pursuant to Sloan’s instructions were based on Jones’ past evaluations and
not his present condition; the grievance panel’s order that Jones return to Dr.
Buck for an evaluation of his present condition; and Lewick’s instructions to
Sloan to not speak with Dr. Buck before he conducted his second evaluation, 6
5
(...continued)
Jones regarding the reason for his second visit, and that it is “baffling” why Jones
did not explain the reason behind the second visit (dissent at 6), from Dr. Buck’s
own testimony, it is clear the reason for Jones’ second visit was not explained to
him by any party, thus leaving Dr. Buck to just repeat in his second report what
he said in his first.
6
UPS argues that Lewick’s instructions to Sloan actually indicate his desire
that UPS not interfere with Jones’ medical treatment so that Jones could truly
obtain an independent medical examination as required under the CBA. We note
that the jury could have viewed this evidence in this manner; nonetheless, we also
conclude that the jury could have reasonably viewed this evidence to mean that
(continued...)
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thereby leaving Dr. Buck with the impression that he was to again base his
evaluation of Jones on his past evaluations, we conclude that a jury could have
reasonably determined that UPS’s stated reason for terminating Jones’s
employment was pretextual. Accordingly, the district court did not err in denying
UPS’s motion for judgment as a matter of law on Jones’s retaliation claim.
Jury Instructions 15 and 16
UPS argues it is entitled to a new trial because the district court gave two
jury instructions that misstated Kansas law. “We review the district court’s
decision to give a particular jury instruction for abuse of discretion and consider
the instructions as a whole de novo to determine whether they accurately
informed the jury of the governing law.” Garcia v. Wal-Mart Stores, Inc., 209
F.3d 1170, 1173 (10th Cir. 2000) (internal quotation marks omitted). “Faulty jury
instructions require reversal when (1) we have substantial doubt whether the
instructions, considered as a whole, properly guided the jury in its deliberations;
and (2) when a deficient jury instruction is prejudicial.” McInnis v. Fairfield
Cmtys., Inc., 458 F.3d 1129, 1141 (10th Cir. 2006) (internal quotation marks and
alteration omitted).
UPS argues that Instructions 15 and 16 were improper. They read as
6
(...continued)
Lewick wanted Dr. Buck to remain under the assumption that he was to base his
medical evaluation solely on Jones’ prior medical history.
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follows:
Instruction 15:
Provided you find plaintiff is entitled to recover under Instruction
12, you are further instructed that Kansas law does not prohibit the
termination of an employee who is unable to perform his work at the
time of his discharge, even if the inability to work was due to a work-
related injury.
App. Vol. 1, at 138 (underline in original).
Instruction 16:
Provided you find plaintiff is entitled to recover under Instruction
12, you are further instructed that the Kansas Workers’ Compensation
Act does not impose a legal duty on the employer to consider or find
alternative employment for an injured employee who is unable to return
to his former position at the time of his discharge.
Id. at 139 (underline in original).
Instruction 12, which is referenced in instructions 15 and 16, reads as
follows:
To prevail on his claim of retaliatory discharge, the plaintiff,
Keith Jones, has the burden of proving by a preponderance of the
evidence that there is a causal connection between his worker’s
compensation claim and the termination of his employment by the
defendant, UPS.
If plaintiff meets his burden, UPS must offer evidence of a non-
retaliatory reason for plaintiff’s discharge other than the fact that
plaintiff had filed a worker’s compensation claim. If you find UPS has
failed to offer evidence of a legitimate non-retaliatory reason for
plaintiff’s discharge, then you must find for the plaintiff. If you find
UPS has presented evidence of a non-retaliatory reason for plaintiff’s
discharge, plaintiff must prove the reasons stated by defendant are
merely a pretext for UPS’[s] actual intent to retaliate.
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Id. at 135.
UPS alleges that Instructions 15 and 16 misstate Kansas law because the
phrase “provided you find” instructed the jurors to first decide if plaintiff
prevailed under Instruction 12, and only then consider whether UPS avoided
liability based on Instructions 15 and 16. Thus, according to UPS, Instructions 15
and 16 turned the reasons for UPS’s termination into “affirmative defenses” and
therefore improperly “shifted the burden to UPS to undo the jury’s determination
of liability under Instruction 12.” Aplt. Br. at 30.
We conclude that Instructions 15 and 16 did not inform the jury regarding
the law as well as they could have. We find it somewhat unusual that the district
court instructed the jury to consider potential defenses to Jones’ claim for
retaliatory discharge only after it found that Jones was entitled to recover under
this cause of action. It would have been more helpful for the district court to
inform the jury that Instructions 15 and 16 identify acceptable defenses to Jones’
claim and that they should be considered in conjunction with Instruction 12,
which outlined Kansas law regarding retaliatory discharge.
Despite our concern regarding Instructions 15 and 16, however, we
conclude that the district court’s failure to adequately instruct the jury in this
regard was not prejudicial to UPS. As noted previously, Kansas has adopted the
McDonnell Douglas burden-shifting analysis for employment discrimination
cases. Rebarchek, 35 P.3d at 898. Accordingly, Instruction 12 properly informed
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the jury that Jones was required to put forth a prima facie case of retaliation, at
which point UPS was required to present the jury with a legitimate, non-
pretextual reason for terminating his employment. Bracken, 38 P.3d at 682.
Although it would have been better if the district court had not instructed the jury
to consider UPS’s defenses only after determining whether Jones could recover
for retaliatory discharge, we conclude that Instructions 12, 15, and 16, taken
together, accurately summarized the law in such a way that the jury could render
a proper verdict in light of all the evidence. For this reason, we deny UPS’s
request for a new trial based on improper jury instructions.
Judgment as a Matter of Law on Punitive Damages
Next, UPS argues the district court erred when it denied its motion for
judgment as a matter of law on Jones’s claim for punitive damages. According to
UPS, we should reverse the district court’s decision (1) because there is
insufficient evidence to indicate that Sloan acted “with the intent necessary for
the imposition of punitive damages” and (2) because there is no evidence that
UPS authorized or ratified Sloan’s conduct. Aplt. Br. at 34. As noted previously,
we review the district court’s denial of a motion for judgment as a matter of law
de novo, Cummings, 365 F.3d at 949, and will reverse “only if all of the
evidence, viewed in the light most favorable to the nonmoving party, reveals no
legally sufficient evidentiary basis to find for the nonmoving party,” Burrell, 603
F.3d at 832.
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1. Availability of Punitive Damages
In diversity cases, state law governs the substantive elements upon which a
punitive damage award may be based. Miller v. Cudahy Co., 858 F.2d 1449,
1457 (10th Cir. 1988). In Kansas, a plaintiff may recover punitive damages if he
or she proves by “clear and convincing evidence” that the defendant acted “with
willful conduct, wanton conduct, fraud, or malice.” Kan. Stat. Ann. § 60-3702(c).
We start by noting that in retaliation claims in Kansas, “punitive damages
may not be imposed automatically on an employer when a jury finds unlawful
retaliation.” Hysten v. Burlington N. Santa Fe Ry. Co., 530 F.3d 1260, 1277
(10th Cir. 2008). This is because an award of punitive damages is improper when
“the evidence . . . show[s] that the employer reasonably believed that his
retaliatory conduct was entirely lawful.” Id. at 1277-78. Nonetheless, an
employer can be liable for punitive damages, even if it does not know it is
violating an employee’s rights, “so long as the employer appreciates the
wrongfulness, harmfulness, or injuriousness of the act itself.” Id. at 1277.
Accordingly, “when an employer terminates an employee in contravention of
Kansas public policy and presents pretextual justifications to conceal this
conduct, a jury [can] infer that the employer was acting with the purpose of doing
something wrongful.” Id.
The jury’s imposition of punitive damages was appropriate here because
there was a legally sufficient evidentiary basis for the jury to find that Sloan’s
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conduct was willful and malicious. The evidence indicates that Sloan, on
multiple occasions, intentionally interfered with the doctors’ medical evaluations
in an attempt to prevent Jones from returning to work. Sloan first called Dr.
Legler and asked him to change his diagnosis, even though he observed Jones
perform a lift test and concluded that he could return to work. Sloan also told Dr.
Buck that UPS would not pay for another FCE even though two other doctors had
indicated that Jones could return to work. Moreover, Sloan misled Dr. Buck
when she told him that he was supposed to base his opinion solely on Jones’s past
medical records. Finally, after the grievance panel instructed Jones to return to
Dr. Buck in order to comply with the CBA’s third-party doctor procedure, Sloan
made no effort to inform Dr. Buck that, contrary to what she had previously told
him, he was to make an independent determination regarding Jones’s present
physical limitations. In light of Sloan’s repeated attempts to prevent Jones from
returning to work by both omission and commission, we conclude that a jury
could reasonably find that punitive damages were appropriate.
2. UPS’s Knowledge
UPS also argues that even if Sloan’s actions warranted an award of punitive
damages, it cannot be liable for punitive damages because it did not authorize or
ratify her conduct. Under Kansas law, punitive damages may not be assessed
against “[an] . . . employer for the acts of . . . [an] employee unless the questioned
conduct was authorized or ratified by a person expressly empowered to do so on
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behalf of the . . . employer[.]” Kan. Stat. Ann. § 60-3702(d)(1). Authorization or
ratification under § 60-3702(d)(1) “may be either express or implied.” Smith v.
Printup, 866 P.2d 985, 1003 (Kan. 1993). Implied ratification may be “based on a
course of conduct indicating the approval, sanctioning, or confirmation of the
questioned conduct.” Id.
We first address whether there was a legally sufficient evidentiary basis for
the jury to conclude that a UPS employee was “expressly empowered” by UPS to
authorize or ratify Sloan’s improper conduct. Based on the evidence presented at
trial, we conclude that the jury could have reasonably determined that Don
Lewick, the labor manager in UPS’s Kansas City office, was such an individual.
Lewick testified at trial that as a labor manager he worked to resolve “labor
issues” arising from certain employment situations. App. Vol. 5, at 1154. As
part of this work, Lewick would hear grievances filed by employees, attempt to
settle those grievances, and, in the event the grievance could not be settled,
present UPS’s case before the union grievance panels. Id. at 1154-55. Not
surprisingly, the record indicates Lewick was actively involved in Jones’s dispute
with UPS. According to Jones, it was Lewick who first told Jones that he would
not be able to return to work at UPS. And Lewick himself testified that he
received reports from the human resources department regarding Jones’s doctors
appointments, that he represented UPS in Jones’s grievance proceedings, and that
he met with Sloan regarding her interactions with Dr. Buck and instructed her
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regarding how to proceed. Id. Vol. 5, at 1162-66, 1175, 1177-78. Given these
facts, we conclude that the jury could have reasonably found that Lewick was
authorized by UPS to authorize or ratify Sloan’s conduct.
We also conclude that there was a legally sufficient evidentiary basis for
the jury to find that Lewick did in fact authorize or ratify Sloan’s interference
with Jones’s attempts to return to work. Lewick knew Dr. Legler initially
concluded that Jones could return to work without restrictions. Lewick testified
that he received Dr. Legler’s initial report and that after he read the report, he was
informed by someone in the human resources department that an “amended
release” from Dr. Legler would be forthcoming. Id. at 1162-63. Lewick then
received an amended report from Dr. Legler which indicated Dr. Legler had
changed his initial conclusions to now conclude that Jones could not return to
work. Id.
In addition, as Lewick represented UPS in Jones’s grievance proceedings,
he was aware of all of the facts surrounding Jones’s grievances and was therefore
likely on notice regarding Sloan’s providing misinformation to Dr. Buck. Lewick
testified that he read Dr. Buck’s first report, in which Dr. Buck stated that his
medical opinion was based upon the “medical records provided” to him by Dr.
Stechschulte, Dr. Legler, and Bob Mitchell, the physical therapist. Id. at 1174;
Add. at 211. In addition, Lewick testified that when he read Jones’s grievance
complaint in which Jones alleged that “UPS didn’t want Dr. Buck’s opinion” and
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instead wanted only the “opinion of [the] doctor related to the company,” he
called Sloan because he was “concerned.” App. Vol. 5, at 1173-74.
After speaking with Sloan about this matter, Lewick instructed her not to
speak with Dr. Buck prior to Jones’s second visit so that she would not “muddy
the waters” further. Id. at 1177-78. Lewick instructed Sloan in this manner even
though Lewick knew (1) that Jones had complained to the grievance panel that
UPS interfered with Dr. Buck’s analysis at Jones’s first visit; (2) that Dr. Buck’s
first report was based solely on Jones’s past medical reports; and (3) that the
grievance panel had ordered Jones to see Dr. Buck again—this time in accordance
with the CBA. Id. at 1173-76. Ignorant of the import of the grievance panel’s
order regarding Jones’s second visit, Dr. Buck again followed Sloan’s previous
instructions and issued a report based only on Jones’s prior medical reports.
In light of this evidence, we conclude that there was a legally sufficient
factual basis for the jury to find that UPS authorized or ratified Sloan’s improper
behavior. Lewick himself testified that he knew of the previous medical reports
releasing Jones to work and that he also knew that Dr. Legler then issued an
amended report recanting his prior conclusion that Jones could return to work
without restrictions. More important, Lewick was directly involved with Jones’s
union grievances, and as a result, he knew not only of Jones’s complaint
regarding UPS’s interference, but also that Dr. Buck had issued a report based
solely on Jones’s prior medical records. Knowing this, and knowing that the
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grievance panel instructed Jones to obtain a second opinion from Dr. Buck, he
instructed Sloan not to speak with Dr. Buck further. While we recognize that it
could potentially be argued that Lewick’s instruction that Sloan not speak with
Dr. Buck was not made in an attempt to prevent Jones from obtaining a fair
evaluation, we can only reverse a jury’s finding “if the evidence points but one
way.” Baty, 172 F.3d at 1241. In this case, based on the evidence presented,
there is a sufficient factual basis to support the jury’s finding that UPS authorized
or ratified Sloan’s conduct. We therefore affirm the district court’s denial of
UPS’s motion for judgment as a matter of law on Jones’s request for punitive
damages.
Jury to Determine Amount of Punitive Damages
UPS argues the district court erred in permitting the jury to determine the
appropriate amount of punitive damages because Kansas law requires the court to
make this determination. Under Kan. Stat. Ann. § 60-3702(a), if a civil jury
determines that punitive damages “shall be allowed,” the state court must conduct
a “separate proceeding . . . to determine the amount of . . . damages to be
awarded.” The district court held that § 60-3702(a) was procedural in nature,
applied federal law regarding punitive damages, and submitted this issue to the
jury. See Pac. Mut. Life Ins. Co. v. Haslip, 499 U.S. 1, 16 (1991) (holding that
under federal common law, juries determined issues relating to punitive
damages). Because this issue involves only questions of law, we review the
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district court’s decision de novo. Wolfgang v. Mid-Am. Motorsports, Inc., 111
F.3d 1515, 1524 (10th Cir. 1997).
“When a situation is covered by one of the Federal Rules . . . the court has
been instructed to apply the Federal Rule, and can refuse to do so only if the
Advisory Committee, this Court, and Congress erred in their prima facie judgment
that the Rule in question transgresses neither the terms of the Enabling Act nor
constitutional restrictions.” Hanna v. Plumer, 380 U.S. 460, 471 (1965). Absent
any conflicting constitutional requirements, federal statutes or Federal Rules of
Civil Procedure, a federal district court sitting in diversity applies federal
procedural law and state substantive law. Gasperini v. Ctr. for Humanities, Inc.,
518 U.S. 415, 427, 428 n.7 (1996).
Applying the Erie doctrine, the district court held that § 60-3702(a) was not
substantive, but rather procedural in nature. The court reasoned that applying
federal procedural law and submitting the punitive damages issue to the jury
would not cause future plaintiffs to bring their claims in federal court instead of
state court. The district court further held that while “many believe that juries are
far more likely than judges to go overboard and render ‘big’ punitive damage
awards,” it had not seen any persuasive evidence in support of this theory. App.
Vol. 2, at 615. After determining that § 60-3702(a) was procedural, the district
court followed Erie and applied federal procedural law by instructing the jury to
determine the appropriate amount of punitive damages.
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Rule 38 of the Federal Rules of Civil Procedure addresses the right to a
trial by jury, and that Rule controls here. Rule 38 states: “The right of trial by
jury as declared by the Seventh Amendment to the Constitution . . . is preserved
to the parties inviolate.” Fed. R. Civ. P. 38(a). The Seventh Amendment
provides that “[i]n Suits at common law, where the value in controversy shall
exceed twenty dollars, the right of trial by jury shall be preserved.” U.S. Const.
amend. VII. The Seventh Amendment “governs proceedings in federal court, but
not in state court.” Gasperini, 518 U.S. at 418.
In Shady Grove, the Supreme Court set out a framework for determining
when to apply a federal rule that appears to conflict with state law. “The
framework for our decision is familiar. We must first determine whether [the
rule] answers the question in dispute. If it does, it governs—[state] law
notwithstanding—unless it exceeds statutory authorization or Congress’s
rulemaking power. We do not wade into Erie’s murky waters unless the federal
rule is inapplicable or invalid.” Shady Grove Orthopedic Assoc., P.A. v. Allstate,
130 S. Ct. 1431, 1437 (2010). If a federal rule applies, we need not embark upon
an analysis of the state’s purpose in passing the conflicting state law. Id. at 1441-
42.
Whether Rule 38 meets the first requirement of Shady Grove, that the Rule
“answers the question in dispute,” depends on the scope of the Seventh
Amendment. Shady Grove, 130 S. Ct. at 1437. “The Seventh Amendment is
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silent on the question whether a jury must determine the remedy in a trial in
which it must determine liability.” Tull v. United States, 481 U.S. 412, 425-26
(1987). Therefore, in determining whether the Amendment requires a jury to
decide the amount of punitive damages (or for that matter, if a jury must decide
any issue), courts must determine “whether the jury must shoulder this
responsibility as necessary to preserve the substance of the common-law right of
trial by jury.” Id. at 426 (quoting Colgrove v. Battin, 413 U.S. 149, 157 (1973)
(internal quotation marks omitted)).
The Supreme Court has indicated that litigants have a Seventh Amendment
right to have federal juries determine whether punitive damages should be
awarded. In Curtis v. Loether, for example, the Court held it was improper under
the Seventh Amendment for a district court to award punitive damages to a
plaintiff asserting a claim under the Civil Rights Act. 415 U.S. 189, 191 (1974).
The Court held that a jury should have made this determination because lawsuits
seeking “actual and punitive damages . . . are traditional form[s] of relief offered
in the courts of law.” Id. at 196. We note that the Court did not specifically hold
that a jury must determine the amount of a punitive damage award; instead, it
held that plaintiffs have a Seventh Amendment right to a jury trial when they seek
punitive damages. See id. Nonetheless, given the Court’s clear holding that there
exists a common law right to a jury determination regarding punitive damages,
Curtis suggests that juries must also determine the amount of punitive damage
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awards. See Capital Solutions, LLC v. Konica Minolta Bus. Solutions U.S.A.,
Inc., 695 F. Supp. 2d 1149, 1153 (D. Kan. 2010) (holding that “Curtis suggests
that the amount of punitive damages is a question for the jury under the Seventh
Amendment”).
The Supreme Court’s decision in Pacific Mutual Life Insurance Co. v.
Haslip compels a similar conclusion. In that case, the Supreme Court upheld a
large punitive damage verdict against an insurance company for acting in bad
faith. 499 U.S. 1, 15-16 (1991). In doing so, the Court noted that “[u]nder the
traditional common law approach, the amount of the punitive damage award is
initially determined by a jury instructed to consider the gravity of the wrong and
the need to deter similar wrongful conduct.” Id. at 15. Emphasizing the
historical underpinnings of this right, the Court further held that decisions
regarding the amount of punitive damages “ha[ve] been always left to the
discretion of the jury” and that it “more than once has approved the common-law
method for assessing punitive damages.” Id. at 16 (citation omitted).
In addition to this Supreme Court precedent, this court has previously held
that the Seventh Amendment protects a federal plaintiff’s right to have a jury
determine the amount of a punitive damage award. In O’Gilvie v. International
Playtex, Inc., the district court reduced a punitive damage verdict, awarded by a
jury, from $10 million to under $1.5 million. 821 F.2d 1438, 1440 (10th Cir.
1987). We held that the district court erred in doing so because it did not obtain
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the plaintiff’s consent prior to the remittitur. Id. at 1447. We observed that “in
an ordinary remittitur case, the plaintiff must be offered a choice between a new
trial and accepting a remittitur to avoid a serious problem under the Seventh
Amendment, which reserves to the jury the determination of damages.” Id.
(citations omitted); see also Defender Indus., Inc. v. Nw. Mut. Life. Ins. Co., 938
F.2d 502, 506-07 (4th Cir. 1991).
Despite Supreme Court precedent and our ruling in O’Gilvie, UPS argues
that the Seventh Amendment permits courts to determine punitive damage awards.
UPS first directs our attention to Cooper Industries, Inc. v. Leatherman Tool
Group, Inc., in which the Supreme Court held that appellate courts reviewing
district court rulings regarding punitive damage awards must do so under a de
novo standard. 532 U.S. 424, 436 (2001). The Court noted that this holding does
not implicate the Seventh Amendment because a jury’s award of punitive
damages is not really a “fact” that is “tried” by the jury. Id. at 437. Moreover,
the Court observed, appellate review of punitive damage awards focuses on due
process concerns, not the right to a trial by a jury. Id.
UPS argues that because the Cooper Court held that the amount of a
punitive damage award is not a factual determination, this issue is beyond the
scope of the Seventh Amendment and may be decided by a court. Not only do we
disagree with this argument, but also we conclude that Cooper actually supports
Jones’s position regarding the unconstitutionality of § 60-3702(a) when applied in
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federal court. UPS’s reliance on Cooper is misplaced because the Court’s
decision was based on the “re-examination clause” of the Seventh Amendment,
not the “trial by jury clause.” 532 U.S. at 437 n.11. In Cooper, the Court noted
that while it had previously held that “‘it is the peculiar function of the jury to’
set the amount of punitive damages,” id. (quoting Barry v. Edmunds, 116 U.S.
550, 565 (1886) (emphasis added)), this did not mean that “the amount of punitive
damages imposed by the jury is itself a “fact” within the meaning of the Seventh
Amendment’s Reexamination Clause.” Id.
UPS also claims the Court’s decision in Tull v. United States supports its
argument. In Tull, a real estate developer alleged that the district court violated
his Seventh Amendment rights when it denied his request for a jury trial in a
claim for civil penalties brought against him by the government under the Clean
Water Act. 481 U.S. 412, 415-16 (1987). The Court disagreed and held that the
Seventh Amendment does not entitle defendants to jury trials in claims for civil
penalties brought against them under the Clean Water Act. Id. at 426. The Court
reasoned that because an “action to recover civil penalties usually seeks the
amount fixed by Congress,” it is not necessary to have a jury determine the
“assessment of a civil penalty” in order “to preserve the substance of the
common-law right of trial by jury.” Id. (quotation and citation omitted). The
Court further observed that “[s]ince Congress itself may fix the civil penalties, it
may delegate that determination to trial judges.” Id. at 427.
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We disagree with UPS’s assertion that Tull stands for the proposition that
courts are permitted to determine the amount of punitive damage awards in cases
like the one presently presented. In Feltner v. Columbia Pictures Television, Inc.,
the Court clarified any potential uncertainty created by Tull. In Feltner, the Court
held that a claim for statutory damages under the Copyright Act carried with it a
right to a jury trial because “there [was] historical evidence that cases involving
discretionary monetary relief were tried before juries.” 523 U.S. 340, 353 (1998).
The Court further held that “[t]he right to a jury trial includes the right to have a
jury determine the amount of statutory damages, if any, awarded to the copyright
owner.” Id. (emphasis in original). In so holding, the Court rejected the
argument that Tull required courts to determine statutory damage awards. The
Court noted that in Tull, it was “presented with no evidence that juries
historically had determined the amount of civil penalties to be paid to the
[g]overnment,” while in Feltner there was “clear and direct historical evidence
that juries, both as a general matter and in copyright cases, set the amount of
damages awarded to a successful plaintiff.” Id. at 354-55.
The Supreme Court has repeatedly affirmed the historical nature of the
Seventh Amendment right to a trial by jury in federal cases involving punitive
damages. Its decisions, taken together, indicate that this right includes the right
to a jury determination regarding the amount of punitive damages. See Capital
Solutions, 695 F. Supp. 2d at 1152 (holding that “the Seventh Amendment does
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require that the jury also be allowed to determine the amount of any punitive
damages awarded”). Rule 38, by preserving “the right to a trial by jury as
declared by the Seventh Amendment,” answers the question in dispute and
requires that the jury determine the amount of the punitive damage award in
federal court, despite conflicting state law. Thus, Rule 38 satisfies the first part of
the Shady Grove test.
Rule 38 also satisfies the second Shady Grove requirement, that it not,
“exceed[] statutory authorization or Congress’s rulemaking power.” Shady
Grove, 130 S. Ct. at 1437. The Rule, which in relevant part merely incorporates
an amendment to the Constitution, does not exceed Congress’s rulemaking power.
In testing whether Rule 38 “exceeds statutory authorization,” we measure it
against the Rules Enabling Act. In the Rules Enabling Act, Congress authorized
the Supreme Court to promulgate rules of procedure subject to its review, with the
limitation that those rules “shall not abridge, enlarge or modify any substantive
right.” 28 U.S.C. § 2072(a). “The test must be whether a rule really regulates
procedure,—the judicial process for enforcing rights and duties recognized by
substantive law and for justly administering remedy and redress for disregard or
infraction of them.” Sibbach v. Wilson & Co., 312 U.S. 1, 14 (1941); see also
Shady Grove, 130 S. Ct. at 1442. We do not look to the purpose of the
conflicting state law, but rather we look to Rule 38 itself; the purpose of the state
law, even if substantive, is immaterial to our analysis. Shady Grove, 130 S. Ct. at
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1441-42. Rule 38 governs procedure. It determines only who will serve as fact
finder in federal cases, not what law will apply to those facts. While application
of Rule 38 may affect, to some degree, the outcome of this litigation, that
possibility does not preclude the Rule’s application. “To hold that a Federal Rule
of Civil Procedure must cease to function whenever it alters the mode of
enforcing state-created rights would be to disembowel either the Constitution’s
grant of power over federal procedure or Congress’ attempt to exercise that power
in the Enabling Act.” Hanna, 380 U.S. at 473-474. Here, Rule 38 regulates only
the procedure used to enforce a state-created right, and thus it is a procedural
rule, authorized by the Rules Enabling Act.
Thus, because the Rule answers the question in dispute, and because it does
not exceed the Rule Enabling Act’s authorization or Congress’s rulemaking
power, Rule 38 controls. Shady Grove, 130 S. Ct. at 1437. We therefore affirm
the district court’s denial of UPS’s motion for a new trial on this ground. 7
The Amount of Punitive Damages
Finally, UPS argues the district court erred when it held that the jury’s $2
7
While neither Jones nor UPS argued that a federal statute or federal rule
controls the issue of whether the district court erred in instructing the jury to
determine the size of the punitive damage award, both parties provided extensive
briefing on the applicability of the Seventh Amendment. “We may uphold the
district court’s decision . . . under any ground that the record supports.” United
States v. Flower, 29 F.3d 530, 536 n.9 (10th Cir. 1994). See Stewart, 487 U.S. at
25 (affirming Eleventh Circuit’s choice-of-law decision “under somewhat
different reasoning”).
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million punitive damage award did not violate its federal due process rights. We
review the district court’s determination of the constitutionality of an award of
punitive damages de novo. Cooper, 532 U.S. at 424.
“[T]he Due Process Clause of the Fourteenth Amendment prohibits the
imposition of grossly excessive or arbitrary punishments on a tortfeasor.”
Hardman v. City of Albuquerque, 377 F.3d 1106, 1121 (10th Cir. 2004) (internal
quotation marks and alteration omitted). “In analyzing the constitutionality of
punitive damages, the Supreme Court has instructed courts to look to (1) the
degree of reprehensibility of the defendant’s action; (2) the disparity between the
actual harm suffered by the plaintiff and the punitive damage award; and (3) the
difference between the punitive damage award and the civil penalties authorized
or imposed in comparable cases.” Id. (citing BMW of N. Am., Inc. v. Gore, 517
U.S. 559, 574-75 (1996)). We will address these three factors in light of the facts
of this case.
1. Degree of Reprehensibility
The degree of reprehensibility of the defendant’s conduct is “the most
important indicium of the reasonableness of a punitive damages award.” Gore,
517 U.S. at 575. In addressing this issue, courts are to consider the following: (1)
whether the harm caused was physical as opposed to economic; (2) whether the
defendant acted with indifference or a reckless disregard for the health or safety
of others; (3) the financial vulnerability of the plaintiff; (4) whether the
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defendant’s wrongful conduct involved repeated actions or was an isolated
incident; and (5) whether the harm was the result of intentional malice, trickery,
or deceit, or mere accident. State Farm Mut. Auto. Ins. Co. v. Campbell, 538
U.S. 408, 419 (2003).
Although it is a close question, these five factors weigh in favor of finding
that the jury’s $2 million punitive damage award was excessive. We are
persuaded primarily by the fact that Sloan’s conduct resulted solely in economic
injury to Jones and that Sloan did not act with disregard for the health and safety
of others. We recognize that Sloan attempted on multiple occasions to prevent
Jones from returning to work and that her conduct was both wilful and improper.
We reiterate that it is for this reason that we uphold the jury’s decision to award
punitive damages in this case. Nonetheless, given the factors set forth by the
Supreme Court, we conclude that Sloan’s conduct was not so reprehensible as to
warrant a $2 million punitive damage award.
2. Disparity between Actual and Punitive Damages
The Supreme Court has held that “[t]he precise award” of punitive damages
“must be based upon the facts and circumstances of the defendant’s conduct and
the harm to the plaintiff.” Id. at 425. For this reason, the Court has been
“reluctant to identify concrete constitutional limits on the ratio between harm . . .
to the plaintiff and the punitive damages award.” Id. at 424 (citation omitted).
The Court’s “jurisprudence [does] demonstrate[], however, that, in practice, few
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awards exceeding a single digit-ratio between punitive and compensatory
damages, to a significant degree, will satisfy due process.” Id. at 425. Moreover,
“an award of more than four times the amount of compensatory damages might be
close to the line of constitutional impropriety.” Id. (citing Haslip, 499 U.S. at 23-
24). Nonetheless, the Court has made clear that the amount of compensatory
damages awarded plays a role in determining whether a punitive damage award is
appropriate. “When compensatory damages are substantial, then a lesser ratio,
perhaps only equal to compensatory damages, can reach the outermost limit of the
due process guarantee.” Id.
UPS argues that because the jury’s award of $630,307 in actual damages
was substantial, its $2 million punitive damages verdict was excessive under the
Fourteenth Amendment. We agree. Although the overall ratio of actual to
punitive damages in this case probably does not push the boundaries of due
process requirements, the jury awarded Jones a substantial compensatory damage
award in light of the injuries he suffered. Given his substantial recovery of
compensatory damages, we conclude that the jury’s punitive damage award was
grossly excessive and therefore in violation of UPS’ due process rights.
3. Comparable Cases
A review of comparable employment cases supports our conclusion that the
jury’s punitive damage award was excessive. For example, in Morgan v. New
York Life Insurance a jury awarded a former insurance company executive $6
-37-
million in compensatory damages and $10 million in actual damages in his age
discrimination lawsuit against his former company. 559 F.3d 425, 428 (6th Cir.
2009). The Sixth Circuit, citing the Supreme Court’s decision in Campbell v.
State Farm, determined that the jury’s compensatory damage award was
substantial and that the $10 million punitive damage award therefore violated the
insurance company’s due process rights. Id. at 442. In Watson v. E.S. Sutton,
Inc., another analogous case, a corporation appealed a jury verdict awarding a
former employee over $2 million in compensatory and punitive damages after
finding that the corporation unlawfully retaliated against her. 225 F. App’x 3, 4
(2nd Cir. 2006). Applying the three factor test set forth in Campbell, the Second
Circuit upheld the jury’s punitive damage award, noting that it was only “half the
size of the compensatory damages award.” Id. at 5.
We also note that outside of the employment arena, courts have struck
down large punitive damage awards when compensatory damages have been
substantial. See Mendez-Matos v. Municipality of Guaynabo, 557 F.3d 36, 55
(1st Cir. 2008) (striking down a $350,000 punitive damage award in a § 1983 case
because the $35,000 compensatory damage award “amply compensated” the
plaintiff); Bridgeport Music, Inc. v. Justin Combs Publ’g, 507 F.3d 470, 488-89
(6th Cir. 2007) (overturning a punitive damage award of $3.5 million in a
copyright infringement case when the plaintiff received a “substantial”
compensatory award of $366,939); Boerner v. Brown & Williamson Tobacco Co.,
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394 F.3d 594, 603 (8th Cir. 2005) (striking down a punitive damage award of $15
million in a design defect case because the plaintiff received a “substantial”
compensatory damage award of over $4 million).
In conclusion, having considered the degree of reprehensibility, the size of
the punitive damage award compared to the compensatory damage award, and
comparable cases, we conclude that the jury’s award of $2 million was
constitutionally excessive. We therefore reverse the judgment of the district court
and remand for the limited purpose of permitting Jones to choose between a new
jury trial solely to determine the amount of punitive damages, or acceptance of a
remittitur to be set by the district court in accordance with this ruling.
III
The judgment of the district court is AFFIRMED in part and REVERSED
in part as follows:
The district court’s denial of UPS’s motion for judgment as a matter of law
is AFFIRMED.
The district court’s denial of UPS’s motion for a new trial based on
improper jury instructions and submission of the amount of damages to the jury is
AFFIRMED.
The district court’s denial of UPS’s motion for a new trial regarding the
amount of punitive damages is REVERSED and REMANDED for the limited
purpose of permitting Jones to choose between a new jury trial solely to
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determine the amount of punitive damages, or acceptance of a remittitur to be
determined by the district court in accordance with this ruling.
Entered for the Court
Mary Beck Briscoe
Chief Judge
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09-3275 - Jones v. United Parcel Service, Inc.
HARTZ, Circuit Judge, dissenting:
I respectfully dissent from the affirmance of the punitive-damages award. I
do not believe that a reasonable jury could have found by clear and convincing
evidence that UPS authorized or ratified Sloan’s retaliation. In addition, I write
separately to express my disagreement with UPS’s argument on an issue that has
divided the district judges in Kansas but is not addressed by the majority
opinion— namely, the argument that Kan. Stat. Ann. § 60-3702(a) is procedural
for purposes of the Erie doctrine. I would hold that state statutes allocating
decision-making to a judge rather than a jury “are prototypical procedural rules,”
Schriro v. Summerlin, 542 U.S. 348, 353 (2004), and therefore are superseded by
federal law in federal-court trials.
Sufficiency of the Evidence
Although I am not dissenting from the panel decision affirming the verdict
that Sloan retaliated against Jones for filing a workers’ compensation claim, the
evidentiary support for the verdict is thin. My particular concern is the element
of causation—that is, whether Sloan’s misconduct was motivated by Jones’s
having filed a workers’ compensation claim. The majority opinion agrees with
Jones that causation is shown by the “close temporal proximity between the filing
of [his] workers’ compensation claim . . . and the onset of UPS’s retaliatory
conduct against [him].” Op. at 12 (internal quotation marks omitted); see id. at
13. But Jones filed his workers’ compensation claim by mid-November 2003, and
there is no allegation of any wrongdoing by Sloan before she received Dr.
Legler’s report of his February 9, 2004, examination—a temporal proximity of
about three months. Our precedents suggests that this is too long a period from
which to infer causation absent other evidence. See Trujillo v. PacifiCorp, 524
F.3d 1149, 1157 n.5 (10th Cir. 2008) (collecting cases). The majority makes no
attempt to distinguish those precedents; although it sets forth evidence that Sloan
engaged in misconduct, it does not explain how that misconduct suggests that the
motive for the misconduct was retaliation for filing the workers’ compensation
claim.
Still, out of great deference to the jury, I can accept the verdict on liability.
But that is as far as deference can take me. It is one thing to say that the jury,
based upon all the evidence at trial, could infer—under a preponderance-of-the-
evidence standard—that Sloan was acting in retaliation for Jones’s having filed a
compensation claim. It is quite another to say that the jury could infer—under a
clear-and-convincing standard—not only that Jones was retaliating but also that
Lewick (1) knew that Sloan had engaged in misconduct, (2) knew that Sloan’s
motive was retaliation for the workers’ compensation claim, and (3) approved of
and ratified both the misconduct and the motive.
The evidence relied on by the majority opinion is inadequate to support the
necessary inference. As labor manager for UPS, Lewick handled 35 to 50
grievances per week. Jones’s first grievance contended that he should be returned
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to work because both his personal physician and a UPS physician, Dr. Legler, had
released him to return to work. Dr. Legler, however, had amended the release and
imposed permanent restrictions. Under the collective-bargaining agreement
(CBA) between UPS and the Teamsters Union, the parties are to agree on a third
doctor to perform an examination when the personal physician and the UPS
physician disagree. The arbitration panel provided by the CBA heard Jones’s
grievance and adopted Lewick’s position, ordering the parties to enter the third-
doctor procedure. Lewick and the Union representative both struck names from a
list of doctors, ultimately selecting Dr. Buck. Lewick testified that once the
doctor is selected, UPS is to arrange an appointment for the employee to see the
doctor, but is not to communicate anything about what the doctor is supposed to
do. Up to the time of Dr. Buck’s examination of Jones, there is no evidence that
Lewick knew of any wrongdoing by Sloan, so he could hardly have ratified it.
After Dr. Buck issued his report, Jones filed another grievance, this time
complaining that UPS had improperly interfered with the third-doctor procedure
by refusing to authorize Dr. Buck to order a functional-capacity examination
(FCE). When Lewick received the grievance, he contacted Sloan because he was
concerned about the failure to approve an FCE. He testified that Sloan told him
that she had simply informed Dr. Buck that there had been an earlier FCE. In any
event, Jones’s second grievance was upheld by the arbitration panel, and a second
third-doctor exam was ordered. The selection of Dr. Buck to conduct the second
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examination was not preordained. According to Lewick’s testimony, the parties
did not strike names from a list on the second go-round because the Union
business agent told Lewick that Jones requested Dr. Buck.
There is no evidence that Lewick authorized or ratified Sloan’s
conversation with Dr. Buck by anything he said or did during the second
grievance proceeding. What the majority opinion relies on for ratification is
Lewick’s instruction to Sloan not to talk to Dr. Buck before he conducted his
second examination of Jones, four months after the first examination. The
majority’s theory is that a rational jury could infer that Lewick wanted Dr. Buck
to continue to be misinformed about what he could do.
In my view, however, a rational jury could not draw that inference by clear
and convincing evidence. 1 The jury was instructed that “[t]o be clear and
1
In Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 254–55 (1986), the
Court held that the clear-and-convincing-evidence standard must be considered in
determining whether summary judgment was appropriate. The rationale for that
decision indicates that we must likewise consider that standard in determining the
sufficiency of the evidence to support a jury verdict. The Court wrote:
[I]n ruling on a motion for summary judgment, the judge must view
the evidence presented through the prism of the substantive
evidentiary burden. This conclusion is mandated by the nature of
this determination. The question here is whether a jury could
reasonably find either that the plaintiff proved his case by the quality
and quantity of evidence required by the governing law or that he did
not. Whether a jury could reasonably find for either party, however,
cannot be defined except by the criteria governing what evidence
would enable the jury to find for either the plaintiff or the defendant:
It makes no sense to say the jury could reasonably find for either
(continued...)
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convincing, evidence should be ‘clear’ in the sense that it is certain, plain to the
understanding, and unambiguous, and ‘convincing’ in the sense that it is so
reasonable and persuasive as to cause you to believe it.” Aplt. App., Vol. I at 136
(Doc. 145, Instruction No. 13). There is nothing “certain,” “plain to the
understanding,” or “unambiguous” about the inference that Lewick wished
Dr. Buck to be misinformed. To begin with, there is no evidence to contradict, or
undermine in any way, Lewick’s testimony that he believed the third-doctor
procedure prohibited any communication by UPS to the doctor except to set an
appointment. Moreover, one would expect Jones to inform Dr. Buck of the reason
for the repeated visit—Sloan’s improperly telling Dr. Buck not to order a
functional evaluation. Silence by UPS would therefore mean that Dr. Buck would
hear only from Jones what the purpose of the examination was and why it was
ordered. Indeed, it is baffling why Jones did not so inform Dr. Buck. Perhaps
one could speculate that Lewick was so clever and insightful that he predicted
that Jones would not explain his visit to Dr. Buck and that Dr. Buck would not
1
(...continued)
party without some benchmark as to what standards govern its
deliberations and within what boundaries its ultimate decision must
fall, and these standards and boundaries are in fact provided by the
applicable evidentiary standards.
Id. See Applied Genetics Int’l, Inc. v. First Affiliated Sec., Inc., 912 F.2d 1238,
1244 (10th Cir. 1990) (summary judgment for defendants had been appropriate in
part “[b]ecause of the high standard of proof”—clear and convincing evidence—
required for a fraud claim.)
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make any further inquiry. But no rational person could find that this was plainly,
certainly, or unambiguously Lewick’s plan. I should add that the theory
expressed in the majority opinion (that Lewick ratified Sloan’s retaliation by
telling her not to contact Dr. Bush) was not raised by Jones at trial or in his
appellate briefs. In sum, I would reverse the award of punitive damages.
The Kansas Statute Is Procedural
Although I believe that there was insufficient evidence to support the award
of punitive damages and that it is therefore unnecessary to reach the other
punitive-damages issues raised in this case, I will address one of the issues
briefed by UPS because it has divided the very capable district judges in Kansas
and additional analysis may be helpful. In my view, the Kansas statute that
delegates to the judge, rather than the jury, the assessment of the amount of
punitive damages is a procedural rule, not a substantive one, for purposes of the
Erie doctrine, and therefore must yield to a contrary federal rule in federal-court
trials.
In Schriro the Supreme Court considered the retroactivity of its decision in
Ring v. Arizona, 536 U.S. 584 (2002), which had held that in a death-penalty
proceeding the existence of an aggravating factor must be proved to a jury, rather
than the judge. The Court held that Ring did not apply retroactively because it
was procedural (and was not a “watershed” procedural rule entitled to retroactive
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effect). In support, it said that under the Erie doctrine it had ruled that allocation
of decisionmaking authority is a procedural matter. The Court wrote:
Ring altered the range of permissible methods for determining
whether a defendant’s conduct is punishable by death, requiring that
a jury rather than the judge find the essential facts bearing on
punishment. Rules that allocate decisionmaking authority in this
fashion are prototypical procedural rules, a conclusion we have
reached in numerous other contexts. See Gasperini v. Center for
Humanities, Inc., 518 U.S. 415, 426 (1996) (Erie doctrine) . . . .
542 U.S. at 353 (emphasis added).
The Erie-doctrine opinion cited by the Court—Gasperini—is a complicated
one. But it is worth summarizing to show its relevance here. Gasperini was a
diversity case in which the plaintiff sought damages for the loss of some
photographic transparencies. The New York statute at issue empowered the New
York Appellate Division “to review the size of jury verdicts and to order new
trials when the jury’s award deviates materially from what would be reasonable
compensation.” Gasperini, 518 U.S. at 418 (internal quotation marks omitted).
The question was whether the state statute should apply in whole or in part in
federal court. The Supreme Court analyzed the statute as containing two
components. First, the statute set a limit on punitive-damages awards—an award
could not depart too far from reasonable compensation. The Court considered
this component of the law to be the functional equivalent of a statutory cap on
damages, “differ[ing] from a statutory cap principally in that the maximum
amount recoverable is not set forth by statute, but rather is determined by state
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law.” Id. at 429 (internal quotation marks omitted). The second component of
the law assigned the task of applying that limit to the state intermediate appellate
court. Thus, on the page of Gasperini cited by Schriro, the Court wrote that the
New York statute:
appraised under [Erie] and decisions in Erie’s path, is both
‘substantive’ and ‘procedural’: ‘substantive’ in that [the statute’s]
‘deviates materially’ standard controls how much a plaintiff can be
awarded; ‘procedural’ in that [the statute] assigns decisionmaking
authority to New York’s Appellate Division. . . . The dispositive
question . . . is whether federal courts can give effect to the
substantive thrust of [the statute] without untoward alteration of the
federal scheme for the trial and decision of civil cases.
Id. at 426.
The Court’s holding in Gasperini was twofold: It upheld the application in
federal court of the substantive component—the cap on punitive damages; but it
refused to uphold the application of the procedural component—the assignment to
the appellate court of determining whether the award deviated materially from
reasonable compensation. Under federal law, it said, the role of the federal
appellate court was limited to determining whether the district court’s decision,
either to uphold the jury award or to set it aside and require a new trial (because
the award deviated materially), was an abuse of discretion. See id. at 437–39. To
comply with federal procedural law, the federal district court would make the
deviated-materially determination, and the circuit court would decide only
whether that determination was an abuse of discretion. Thus, as noted in Schriro,
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Gasperini held that federal law governed the allocation of decision-making
authority between the trial and appellate courts because such allocation rules are
procedural. Applying Gasperini to this case, it is clear that what we have is a
question of the allocation of decision-making authority—whether the court or the
jury determines the amount of punitive damages—which is a procedural matter
governed by federal law. The Kansas statute does not impose a cap on punitive
damages or its functional equivalent, so Gasperini’s holding on the substantive
component of the New York statute is irrelevant.
UPS invokes the outcome-determination test of Guaranty Trust Co. of New
York v. York, 326 U.S. 99 (1945), which is generally applied to determine, for
Erie purposes, whether a state law is substantive or procedural. But that test is
not always the applicable one. As the Gasperini opinion reminds us, the Supreme
Court decision in Byrd v. Blue Ridge Rural Electric Cooperative, Inc., 356 U.S.
525, 537 (1958), “said that the Guaranty Trust ‘outcome-determination’ test was
an insufficient guide in cases presenting countervailing federal interests.”
Gasperini, 518 U.S. at 432. Gasperini went on to quote the following passage
from Byrd as describing the countervailing interest in that case, which concerned
whether the federal court sitting in diversity should follow a state-law rule
requiring that the issue be tried to the court:
“The federal system is an independent system for administering
justice to litigants who properly invoke its jurisdiction. An essential
characteristic of that system is the manner in which, in civil
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common-law actions, it distributes trial functions between judge and
jury and, under the influence—if not the command—of the Seventh
Amendment, assigns the decisions of disputed questions of fact to the
jury.”
Id. (quoting Byrd, 356 U.S. at 537 (footnote omitted)). Byrd therefore held that,
despite state law to the contrary, in federal court the issue must be tried to the
jury.
I recognize that very recently Justice Scalia, writing for himself and three
other members of the Court, said that in the “Erie . . . context, it ma[kes] no
difference whether the rule [is] technically one of substance or procedure; the
touchstone [is] whether it significantly affects the result of a litigation.” Shady
Grove Orthopedic Assocs., P.A. v. Allstate Ins. Co., 130 S. Ct. 1431, 1442 (2010)
(alteration and internal quotation marks omitted). But the sentence was dictum
whose purpose was only to distinguish Erie-doctrine cases from the case before
the Court, which addressed the Rules Enabling Act and the applicability of a
federal rule of civil procedure in a diversity case. The sentence was not intended
to capture all the subtleties of the Erie doctrine; elaboration was unnecessary
because the Erie doctrine was not the issue. In particular, nothing in Shady Grove
involved the allocation of decision-making authority between judge and jury, so
the specifics of the Erie doctrine in that context were hardly relevant. There is no
reason to think that Justice Scalia’s single sentence in Shady Grove signaled the
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repudiation of what he had written in his Gasperini dissent, where he considered
specifically the allocation of authority between judge and jury:
Outcome determination was never intended to serve as a talisman,
and does not have the power to convert the most classic elements of
the process of assuring that the law is observed into the substantive
law itself. The right to have a jury make the findings of fact, for
example, is generally thought to favor plaintiffs, and that advantage
is often thought significant enough to be the basis for forum
selection. But no one would argue that Erie confers a right to a jury
in federal court wherever state courts would provide it; or that, were
it not for the Seventh Amendment, Erie would require federal courts
to dispense with the jury whenever state courts do so.
518 U.S. at 465 (citation and internal quotation marks omitted). The majority
opinion in Gasperini said nothing to the contrary.
Returning to the language in Schriro that I find controlling, I would take it
seriously when that opinion states that “[r]ules that allocate decisionmaking
authority in this fashion [by requiring fact-finding by a jury rather than a judge]
are prototypical procedural rules, a conclusion we have reached in numerous other
contexts,” and then cites “Erie doctrine” as the first “other context.” 542 U.S. at
353. Until instructed otherwise by the Supreme Court, I would read its opinions
as stating that the allocation of authority between a judge and a jury in diversity
cases is a matter of federal law. See 8 James Wm. Moore et al., Moore’s Federal
Practice §38.14[1] (3d ed. 2011) (“The right to a jury trial in the federal courts is
to be determined as a matter of federal law in diversity as well as other actions.”);
9 Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure §2303
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(3d ed. 2008) (“[T]he Byrd decision establishes the proposition that federal
practice controls the scope and incidence of jury trial, even when federal practice
is not constitutionally required.”).
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