Case Title: Jensen v. Medley

Citation: 

Docket Number: S48487

State: oregon

Court: Oregon Supreme Court

Date: 2003-12-26T00:00:00Z

Document:
Filed: December 26, 2003
IN THE SUPREME COURT OF THE STATE OF OREGON
 
NANCY J. JENSEN,
Respondent on Review-Petitioner on Review,
    v.
WALTER R. MEDLEY,
SUBLIMITY INSURANCE COMPANY,
LOCAL UNION NO. 49,
and ROOFERS BUILDING ASSOCIATION 
& CHARLES OUELLETTE,
Defendants,
    and
THE UNITED UNION OF ROOFERS,
WATERPROOFERS & ALLIED WORKERS,
Petitioner on Review-Respondent on Review.
(CC 9410-07258; CA A97720; SC S48478, S48487)
    On review from the Court of Appeals.*
    Argued and submitted March 10, 2003.
    Steven Feinberg, of Asher, Gittler, Greenfield, Cohen &
D'Alba, Ltd., Chicago, Illinois, argued the cause and filed the
briefs for petitioner on review-respondent on review.  With him
on the briefs were Marvin Gittler, of Asher, Gittler, Greenfield,
Cohen & D'Alba, Ltd., Chicago, Illinois, and Janet M. Schroer, of
Hoffman, Hart & Wagner, Portland.
    I. Franklin Hunsaker, of Bullivant Houser Bailey, Portland,
argued the cause and filed the briefs for respondent on review-petitioner on review.  With him on the briefs was Steven V.
Rizzo, of Seidl & Rizzo, LLP, Portland.
    Gene B. Mechanic, of Goldberg, Mechanic, Stuart & Gibson,
Portland, filed the brief for amicus curiae American Federation
of Labor-Congress of Industrial Organizations.  With him on the
brief was Craig Becker, Chicago, Illinois.
    Maureen Leonard, Portland, filed the brief for amicus curiae
Oregon Trial Lawyers Association.
    Before Carson, Chief Justice, and Gillette, Durham, Riggs,
and Balmer, Justices.**
    BALMER, J.
    The decision of the Court of Appeals is affirmed in part and
reversed in part.  The judgment of the circuit court is affirmed
in part and reversed in part. 
    *Appeal from Multnomah County Circuit Court, Harl H. Haas, Judge. 170 Or App 42, 11 P3d 678 (2000).
    **De Muniz and Kistler, JJ., did not participate in the
consideration or decision of this case.
         BALMER, J.
         This case requires us to determine and apply the
standards under which an international union can be held liable
for the wrongful actions of an affiliated local union.  Plaintiff
brought this action against the United Union of Roofers,
Waterproofers & Allied Workers (International), its Local No. 49
(Local), and others.  She alleged various claims, including
employment discrimination in violation of the Oregon
whistleblower law, former ORS 659.550 (1991), renumbered as ORS
659 A. 230 (2001), following her employment and subsequent
discharge as a bookkeeper and secretary at Local.  The
whistleblower law claim is the only claim on review.  
         A jury determined that International was liable for the
whistleblower law violation and returned a verdict for plaintiff
on that claim for noneconomic and punitive damages.  Plaintiff
appealed, and International cross-appealed.  The Court of Appeals
affirmed International's liability for plaintiff's damages, but
ordered a new trial unless plaintiff agreed to a reduction of the
award of punitive damages because, the court concluded, the
amount of that award violated the Due Process Clause of the
Fourteenth Amendment to the United States Constitution.  Jensen
v. Medley, 170 Or App 42, 11 P3d 678 (2000).  Plaintiff and
International each petitioned for review, and we allowed both
petitions. (1)  As explained below, we affirm the jury's award
of noneconomic damages because, although the trial court erred in
giving certain jury instructions, that jury award was supported
by an alternative theory of liability that International did not
challenge on appeal.  We reverse the jury's award of punitive
damages because, applying the appropriate standard of liability,
plaintiff presented no evidence from which a reasonable jury
could find International liable for punitive damages. 
Accordingly, we affirm in part and reverse in part the decision
of the Court of Appeals, and affirm in part and reverse in part
the judgment of the trial court.
I.  BACKGROUND
         We state the facts in the light most favorable to
plaintiff, because she was the prevailing party before the jury. 
Northwest Natural Gas Co. v. Chase Gardens, Inc., 328 Or 487,
490, 982 P2d 1117 (1999) (viewing evidence and reasonable
inferences to be drawn therefrom in light most favorable to party
in whose favor verdict was returned and considering whether any
evidence exists to support jury's verdict); Or Const, Art VII
(Amended), § 3 (standard of review when jury has rendered
verdict).  Local is one of 96 local unions affiliated with
International.  The constitution of International defines the
relationship between International and its affiliated locals.  
         In 1993, Medley, the business agent and financial
secretary for Local, hired plaintiff as his secretary and as
bookkeeper.  Ziegler, a vice president on International's
executive board, trained plaintiff to use International's
accounting software.  During plaintiff's employment, she came to
believe that Medley had stolen petty cash from Local and had
altered financial records to disguise his thefts.  In February
1994, plaintiff reported Medley's alleged theft to the Department
of Labor (DOL) and informed Ziegler that she had made that
report.  Ziegler indicated that he wished that she had not made
the report.  Neither Local's internal investigation nor a
subsequent inquiry by DOL revealed evidence of financial
impropriety by Medley. 
         Medley became concerned that plaintiff's allegations
against him would hurt him in an upcoming union election. 
Plaintiff's husband was a member of Local and opposed Medley's
re-election, and Medley believed that plaintiff might have been
using her position to undermine Medley's credibility with members
of Local.  Medley told plaintiff that International's executive
board wanted him to fire her.  In March 1994, Medley reduced
plaintiff's hours to two days per week.  Medley told Ziegler that
he wanted to fire plaintiff, and Ziegler, without knowing that
Medley already had reduced plaintiff's hours, suggested that
Medley reduce her hours and that that reduction might induce her
to resign.  One week after reducing her hours, Medley terminated
plaintiff's employment. 
         Plaintiff brought this action, alleging, among other
things, a violation of the whistleblower law, former ORS 659.550. 
Plaintiff sought to hold International liable for Local's
wrongdoing under the theory that Local was the agent of
International, at least for purposes of plaintiff's whistleblower
law claim.  At trial, International proposed a jury instruction
that stated that its constitution did not establish that Local
was "an arm of the International for all purposes" and a second
instruction that set out International's version of the law of
agency applicable to the relationship between international
unions and their affiliated local unions.  The trial court
refused to give those instructions and, instead, instructed the
jury based on its understanding of Oregon agency law.  On the
whistleblower claim, the jury found that Medley and Local
wrongfully had terminated plaintiff's employment or reduced her
hours and that International also was liable for those actions. 
The jury awarded plaintiff noneconomic damages in the amount of
$35,000 and punitive damages in the amount of $1,250,000. (2) 
Because plaintiff had prevailed on the whistleblower claim, which
is a statutory employment discrimination claim, the trial court
awarded plaintiff her attorney fees, although in an amount lower
than plaintiff had requested.
         As noted, plaintiff appealed, and International cross-appealed.  Plaintiff argued that the trial court erred in
determining the amount of the attorney fees award.  International
raised a number of assignments of error, including challenges to
the jury instructions and to the award of punitive damages.
         The Court of Appeals affirmed the trial court's ruling
on plaintiff's attorney fees request without discussion.  As
noted, the Court of Appeals went on to hold that the trial court
had not erred in giving plaintiff's proposed instructions or in
refusing to give International's proposed instructions.  170 Or
App at 47-55.  The court also rejected International's argument
that the trial court should have granted International's motion
for a directed verdict on plaintiff's claim for punitive damages
against International because there was no evidence that
International's conduct had shown wanton disregard for
plaintiff's rights or that International had ratified wanton
conduct by Medley or Local.  Id. at 55-57.  Finally, the court
concluded that the award of $1,250,000 in punitive damages was
excessive and that a punitive damages award of $175,000 was
"reasonably related to the harm that occurred[.]"  Id. at 60.  It
therefore ordered the trial court to grant International's motion
for a new trial unless plaintiff agreed to submit an amended
judgment with a punitive damages award in the amount of $175,000.
         On review, International again argues that the jury
instructions that the trial court gave improperly stated the law
of agency as it applied to the liability of an international
union for the acts of an affiliated local union.  Plaintiff
challenges several aspects of the Court of Appeals decision,
including the reduction of the jury's award of punitive damages.

II.  JURY INSTRUCTION ISSUE
A.  Background
         We begin with International's claim that the trial
court incorrectly instructed the jury on the law of agency and,  
specifically, on the circumstances in which International could
be found liable for Medley's termination of plaintiff's
employment with Local.  The jury instructions are critical,
because they formed the basis for the jury's answers to questions
posed on the verdict form.  International argues that, because
the agency instruction was erroneous, this court must reverse the
judgment and remand the case for a new trial.  As we explain
below, although we agree with International that the jury
instruction regarding agency was erroneous, we affirm the award
of noneconomic damages on an alternative basis.  Nevertheless,
the jury instruction issue is relevant to our reversal of the
punitive damages award, and we therefore consider it at some
length here.             
         The first question on the verdict form was the
following:
"Did Walter Medley and Local 49 terminate or reduce the
hours of plaintiff's employment because she made a good
faith report to the Department of Labor that Mr. Medley
had engaged in criminal activity?"
If the jury answered "yes" to that question, it was to proceed to
the second question:
"Was the defendant International Union liable for the
plaintiff's hours being reduced or being terminated
from her employment?"
If the jury answered "yes" to the second question, it was to
determine plaintiff's damages.  The jury answered "yes" to both
those questions and then determined noneconomic and punitive
damages, as stated above.
         The permissibility of the jury's answer to the first
question is not at issue here.  We need to determine whether the
trial court's instructions accurately stated the legal principles
that would allow the jury to answer "yes" to the second question,
that is, the legal principles that would allow the jury to find
International liable for the actions of Medley and Local in
reducing plaintiff's hours or terminating her employment.  At the
outset, we observe that plaintiff does not argue that she was the
employee of International, rather than Local.  She also does not
argue that Medley, who had made the decision to terminate her,
was an employee of International or that Ziegler, who was an
employee of International, had terminated her employment or
reduced her hours.  Instead, plaintiff asserts that International
should be held liable for her termination as an employee of Local
because Medley terminated her in his capacity as an officer of
Local and Local, in turn, was acting as the agent of
International.  Alternatively, as discussed below, plaintiff
argues that International is liable because it ratified Medley's
termination of plaintiff.
B.  "Servant" and "Non-servant" Agents Under Agency Law
         Agency law recognizes two kinds of agents that need to
be distinguished here:  employees, who still often are referred
to as "servants" in discussions of agency law, and "non-servant"
agents.  See Wilken v. Freightliner, 265 Or 42, 45, 507 P2d 1150
(1973) (distinguishing between corporation's liability for acts
of employee and acts of "non-servant agent").  In general, an
employer (master) is liable for the torts of its employee
(servant) committed by the employee while acting in the scope of
his or her employment.  Minnis v. Oregon Mutual Ins. Co., 334 Or
191, 201, 48 P3d 137 (2002).  However, different rules apply to
the liability of a principal for the torts of an agent that is
not a servant.  Compare Restatement (Second) of Agency §§ 219-249
(1958) (principal's liability for torts of servants) with id. at
§§ 250-264 (principal's liability for torts of non-servant
agents).  For example, although a principal is liable for
physical injuries to a third party caused by the negligence of
the principal's employee acting within the scope of employment,
id. at § 243, a principal ordinarily is not liable for similar
injuries caused by the negligence of a non-servant agent, unless
the principal had a specific duty to the third party, id. at §
250. (3)  Thus, in Wilken, 2650 at 45-47, this court held that
a principal was not liable for an automobile accident caused by a
non-servant agent, even if the accident occurred in the course of
the agent's activities on behalf of the principal.     
         Plaintiff's theory in this case involves two agency
relationships:  Medley as the agent of Local, and Local as the
agent of International.  It is undisputed that Medley, as the
business manager of Local, was an agent of Local and that, in
hiring, supervising, and terminating plaintiff's employment, he
was acting within the scope of his employment.  In the
nomenclature of agency law, Medley was a "servant" of Local and,
because he was acting within the scope of his employment, Local
was liable for his wrongful termination of plaintiff.  Neither
Local nor Medley, however, was a "servant" of International.  The
relationships among Medley, Ziegler, Local, and International,
described above, demonstrate that Local was, at most, a "non-servant agent" of International.  
         As noted above, a principal is liable for the actions
of an employee or "servant agent" only if the employee is acting
within the course and scope of his or her employment.  However, a
principal can be liable for the actions of a non-servant agent
only if those actions are within the actual or apparent
authorization of the principal.  See Wiggins v. Barrett &
Associates, Inc., 295 Or 679, 686-88, 669 P2d 1132 (1983)
(describing elements required to find agent's actual or apparent
authority to act for principal).  For example, a principal is not
liable for misrepresentations by an agent "unless the agent is
authorized or apparently authorized to make the statements or it
is within his inherent power to conduct the transaction in the
course of which they are made."  Warren A. Seavey, Agency 163
(1964).  As applicable here, those black letter statements of the
law mean that a finding that Local was an agent of International
does not necessarily mean that International can be held liable
for all Local's actions, or even for all Local's actions that
further the interests of International.  Instead, as described
below, International can be held liable only for the acts of
Local that are within Local's actual or apparent authority to act
on behalf of International.
         Both parties at times conflate the issue whether Local
was an agent of International for any purpose with the ultimate
issue at trial, viz., whether International is liable for the
wrongful acts of Local and Medley towards plaintiff.  In the
context of an employer-employee (master-servant) relationship,
that conflation rarely confuses the inquiry, because of the
employer's broader liability for the employee's conduct.  In the
context of the relationship between a principal and a non-servant
agent, however, as the discussion above suggests, it is important
to recall that one party may be determined to be the agent of
another (the principal), but also that the principal still might
not be liable for specific wrongful acts of that agent.  
C.  Jury Instructions on Agency
         The foregoing discussion demonstrates that, properly
framed, the issue on review is whether the jury instructions
correctly stated the law regarding when an international union
can be held liable for particular wrongful actions of an
affiliated local union.  International proposed the following
jury instruction on agency:
"The International Union cannot be liable for the
wrongful acts of Local 49 or any of Local 49 officers
or employees absent an agency relationship between the
International and Local 49 or the International and any
Local 49 officer or employee such as defendant Medley
or defendant Ouellette.  This agency relationship can
be established only if the international instigated,
supported, ratified, or encouraged the local's wrongful
acts.  Knowledge of a local's possibly illegal
activities does not impose a duty upon the
international to intervene."  
(Emphasis added.)
         Instead, the trial court gave the following
instruction, to which International objected:
"The International can only be liable for Local
49's act if Local 49 was the agent of the International
and acted in the scope of that agency or if the
International ratified Local 49's actions.  I instruct
you a principal [is] responsible for the acts of an
agent who is acting within the scope of the agency.  
An agent is authorized to act for and is subject to the
control or right to control of the principal.  An agent
acts within the scope of his agency if, at the time of
commission of the act in question, he was performing a
service for the principal in furtherance of the
principal's business.  The acts of an agent within the
scope of that agent's authority are to be considered by
you as the acts of the principal.  You must determine
if Local 49 was the agent of the International union,
and you must determine whether or not the International
union ratified Local 49's action."  
(Emphasis added.)
         International makes several arguments regarding the
jury instructions set out above.  International first argues that
the second instruction quoted above, read together with several
related instructions, was erroneous because it improperly
suggested that International, as a matter of law, was liable for
all acts of Local and Local's employees.  International asserts
that the Court of Appeals erred in construing International's
constitution to "conclusively establish, as a matter of law, that
an affiliated local union is an actual agent of the International
for all purposes."  International notes that its constitution is
substantially similar to the constitutions of other international
labor unions.  International cites provisions in the constitution
that, it asserts, provide for substantial autonomy for the local
unions affiliated with it. (4)  It also cites federal cases
holding that certain union constitutions do not establish, for
all purposes, an agency relationship between International and
its locals. (5)
         The problem with that argument is that, contrary to
International's assertion, the Court of Appeals did not hold that
International's constitution, standing alone, affirmatively
established agency as a matter of law "for all purposes."  On the
contrary, that court merely held that the constitution and other
evidence made the relationship between International and Local
similar enough to other relationships previously subjected to
Oregon's common law of agency that Local could be found by a
reasonable jury to be an agent of International.  Jensen, 170 Or
App at 52.  We discuss that conclusion by the Court of Appeals in
greater detail below.  At this point, however, it is sufficient
to note that, contrary to International's assertion, neither the
trial court nor the Court of Appeals ruled that International's
constitution established, as a matter of law, that Local was the
agent of International for all purposes.
         We also reject International's second argument that,
because the constitution does not establish agency affirmatively
as a matter of law -- and we agree that it does not -- Local, as
a matter of law, cannot be the agent of International. 
International does not argue and, indeed, could not argue, that
the constitution is not evidence to be considered in determining
whether an agency relationship exists for particular purposes. 
That is all that the constitution was used for here, and there
was nothing inappropriate in using it as evidence of the
relationship between International and Local. 
         We now turn to International's argument that the trial
court's instruction incorrectly stated the applicable law of
agency.  Much of the dispute between the parties centers on
whether federal labor law or Oregon's common law of agency should
have been the basis for the agency instruction, and the parties'
arguments in that regard are the same arguments that they made
before the trial court and the Court of Appeals.  
         International argues that the federal common law of
agency, as set out in Carbon Fuel Co. v. United Mine Workers, 444
US 212, 100 S Ct 410, 62 L Ed 2d 394 (1979), should apply to the
question whether International is vicariously liable for Local's
conduct towards plaintiff.  In that case, the Court held that an
international union was not liable under the Labor Management
Relations Act (LMRA) for damages that an employer suffered as a
result of wildcat strikes that the international had opposed, but
that had been undertaken by an affiliated local, because the
international had not "instigated, supported, ratified, or
encouraged any of the work stoppages."  444 US at 218. 
International based its proposed instruction, quoted above, on
those words from Carbon Fuel.  
         Plaintiff responds, as she did below, that the
instruction regarding International's liability for the acts of
Medley and Local should be based on Oregon's common law of
agency.  She argues that, under applicable principles of agency
law, International could be held liable for the wrongful acts of
Medley and Local if it had the "right to control" Medley and
Local and if, at the time of the wrongful acts, Local was
performing a service "in furtherance of" International's
business.  Plaintiff based her proposed jury instruction, quoted
above, on what she argued were similar Oregon cases applying the
common law of agency.
         As discussed above, the trial court gave plaintiff's
proposed instruction and declined to give International's
proposed instruction.  The Court of Appeals agreed with that
decision, stating that the trial court properly had declined to
give International's proposed instruction because there had been
no reason to use a standard that Congress had adopted under the
LMRA in a case involving a state law employment claim by a
nonmember employee of a local union.  170 Or App at 50.  The
Court of Appeals then turned to Oregon's common law of agency to
determine whether the trial court's instruction, proposed by
plaintiff, accurately stated the law:
"Under Oregon law, the common law of agency
relationships has developed around the 'right to
control' standard, as set forth in the jury instruction
that the trial court gave the jury.  Although the test
is most often used in an employer-employee agency
relationship, it also has been used to determine agency
relationships between certain types of business
entities.  Most notably, it has been applied to
franchiser-franchisee relationships and
manufacturer/distributor-dealer relationships that are
in some ways analogous to the international-local union
relationship at issue in this case."
Id. at 50.  The court then discussed Peeples v. Kawasaki Heavy
Indust., Ltd., 288 Or 143, 603 P2d 765 (1979), and Miller v.
McDonald's Corp., 150 Or App 274, 945 P2d 1107 (1997), in which
the "right to control" test was applied to determine whether one
business entity could be liable for the torts of another entity. 
As discussed in greater detail below, the Court of Appeals agreed
with plaintiff that those decisions supported the jury
instruction that based liability on whether International had a
"right to control" Local.  
         On review, International argues that, whether
considered solely as a matter of the common law of agency or with
reference to federal labor law standards based on Carbon Fuel,
the "right to control" test is inapplicable here.  Instead,
International argues, it can be liable for the actions of Local,
its "non-servant agent," only if it actively participated in or
ratified Local's actions.  Plaintiff counters that Peeples and
Miller correctly state the common-law agency principles
applicable here and that the Court of Appeals correctly affirmed
the trial court's decision to give a jury instruction that
focused on whether International had the "right to control"
Local.  For the reasons that follow, we agree with International.
         As noted in our earlier discussion of agency law, an
employer generally is liable for the torts of its employees when
the employees are acting within the scope of their employment. 
The familiar "right-to-control" test, as the Court of Appeals
observed in this case, is most often used in the employer-employee agency relationship.  Jensen, 170 Or App at 50.  If one
has the "right to control" the physical conduct of a person in
the performance of a service, that person is usually considered a
"servant" or employee.  Schaff v. Ray's Land & Sea Food Co.,
Inc., 334 Or 94, 99-100, 45 P3d 936 (2002); see also Restatement
at § 220 (1958) (defining "servant").  In extending the "right-to-control" test from the employer-employee context to the
International-Local relationship, the Court of Appeals, as noted,
relied on this court's decision in Peeples and the Court of
Appeals' own decision in Miller.  Those cases, however, do not
support the trial court's jury instruction at issue here.  
         In Peeples, a motorcyclist claimed that a motorcycle
manufacturer and a distributor were vicariously liable for the
negligence of a dealer who had performed service work under terms
of a warranty agreement.  This court affirmed a jury verdict
against the distributor, because the contract between the
distributor and the dealer gave the distributor the "right to
control the manner in which the dealer performed warranty service
* * *."  288 Or at 149-50 (emphasis added).  However, the court
reversed the judgment against the manufacturer, because there was
no comparable evidence that the manufacturer had the right to
control "the dealer's performance of service work."  Id. at 150. 
In Miller, the Court of Appeals reversed summary judgment for a
fast-food franchiser on a claim by a customer for damages
resulting from a foreign object in the customer's hamburger.  The
court examined in detail the contractual relationship between the
franchiser and the franchisee and the aspects of the franchisee's
business operations that were subject to the franchiser's
control.  That contract gave the franchiser the right to control
the franchisee's "food handling and preparation," which had been
"the precise part of its business that allegedly resulted in
plaintiff's injuries."  150 Or App at 281.  In those
circumstances, the court held, the franchisee could be the agent
of the franchiser.  Id.
         Here, the Court of Appeals examined various aspects of
the contractual relationship between International and Local.  It
noted that, under International's constitution and bylaws, local
unions come into existence by applying for a charter and being
accepted by International; that a local's constitution and bylaws
must conform to International's; that International may revoke a
local's charter whenever necessary or advisable, with the assets
of the local reverting to International; that detailed rules and
requirements apply to a local's receipt, handling, and transfer
of payments from local union members to International; and that 
International may impose a trusteeship upon a local to deal with
financial mismanagement or carry out other legitimate objects of
the organization.  Jensen, 170 Or App at 51-52.  
         Based on the foregoing review, the Court of Appeals
concluded that the relationship between the International and
Local was "similar enough in nature to an agreement between a
franchiser and a franchisee to be subject to the same common-law
'right to control' test of agency under Oregon law."  Id. at 52. 
It held that the jury instruction the trial court gave
"satisfactorily described that common-law test."  Id.
         The flaw in the Court of Appeals' reasoning, and in
plaintiff's argument, is that the instruction that the trial
court gave failed to connect the International's "right to
control" to the conduct that was the basis for plaintiff's
complaint.  As we previously noted in our discussion of agency
law, whether one entity can be liable to a third party for the
wrongful conduct of another entity in a context other than
master-servant depends not only on whether the second entity is
an "agent" of the first for some purpose, but also on whether the
principal authorized or intended the agent to act on its behalf
with respect to the conduct that gave rise to the third party's
claim.  The trial court's instruction here was based on the
abstract question whether Local "was authorized to act for and
subject to the control or right to control of the principal."  In
Peeples, this court stressed that the distributor was liable for
the dealer's negligence only because the distributor had had the
right to control the manner in which the dealer performed the
particular kind of work that had provided the basis for the
complaint.  Similarly, in Miller, the Court of Appeals noted that
the franchiser could be liable because it had the right to
control the franchisee "in the precise part of its business" that
had provided the basis for plaintiff's complaint.  Here, however,
nothing in the trial court's instruction told the jury that it
was to determine whether Local had been authorized to act for and
had been subject to the control or right to control of
International with respect to Local's hiring and firing of an
employee.  Indeed, the only evidence that was introduced
regarding the nature of International's "right to control"
indicated that International had had the right to control Local's
organizational structure and the way that Local collected and
accounted for union dues, but that International had had no
authority over Local's employment policies, including its
decision to reduce plaintiff's hours or terminate her employment. 
Unlike the Court of Appeals, we do not find the nature of the
relationship between International and Local to be so similar to
the business relationships in Peeples and Miller that the "right-to-control" test used in the trial court's instruction was the
appropriate standard to determine whether Local had been the
agent of International for purposes of Local's own employment
practices.
         As discussed above, the fact that a principal has the
right to control some acts of its non-servant agent in
furtherance of the principal's business does not mean that the
principal has the right to control all those acts.  If a
principal were liable for all the torts of a non-servant agent
performed in furtherance of the principal's business, whenever
there was some evidence that the principal had a "right to
control" the agent only in some respects, then the principal
could face liability for conduct of the agent that the principal
did not in fact control or have a right to control.  The law of
agency does not extend that far.  Both the trial court's contrary
conclusion, and the Court of Appeals affirmance of it, were
error.
         In summary, the trial court's instructions allowed the
jury to hold International liable for all acts of Local related
to union business, so long as International had the right to
control anything that Local did.  The instruction thus allowed
the jury to impose liability on International for Local's acts in
circumstances in which neither Oregon's existing agency cases,
such as Peeples and Miller, common-law agency principles outlined
in the Restatement, nor federal cases such as Carbon Fuel would
permit.  The instruction was erroneous. 
D.  Ratification and Shoup
         Based on our holding above that the agency instruction
was erroneous, we ordinarily would consider next whether that
error required us to reverse the judgment and remand for a new
trial.  Plaintiff, however, argues that, even if the agency
instruction was erroneous, this court should affirm
International's liability because the trial court also instructed
the jury that it could find International liable on the
alternative ground that International had ratified Local's
actions regarding plaintiff's termination.  We first describe and
then evaluate plaintiff's argument, with which we agree in part.
         Plaintiff rests her argument on three assertions. 
First, plaintiff notes that the trial court's instruction, quoted
above, stated that International could be held liable if Local
had been the agent of International and had acted within the
scope of its agency "or if the International [had] ratified Local
49's actions."  (Emphasis added.)  Second, she points out that
International did not object to the ratification portion of that
instruction and, moreover, that "ratification" was one of the
grounds for imposing liability set out in International's own
proposed instruction on agency.  Third, she asserts that the
verdict form, to which International did not object, simply asked
the jury whether International was liable for the reduction in
plaintiff's hours or the termination of her employment by Medley
and Local; it did not ask the jury whether it found International
liable because Local had been International's agent or because
International had ratified Local's actions.  
         From the foregoing factual and procedural premises,
each of which is correct, plaintiff argues that this court's
recent decision in Shoup v. Wal-Mart Stores, Inc., 335 Or 164, 61
P3d 928 (2003), requires that the judgment be affirmed.  In
Shoup, this court considered whether a judgment based on a
general verdict should be affirmed when multiple claims were
submitted to the jury and one of the claims was invalid, but
there was evidence to support another, valid claim.  335 Or at
176.  This court held that, in those circumstances, the party
appealing the judgment could not show that the jury had based its
verdict on the invalid claim, rather than on the valid claim. 
Id. at 179.  That party therefore was unable to meet the
statutory requirement that an appellate court may reverse or
modify a trial court judgment only for error "substantially
affecting the rights of a party."  ORS 19.415(2).  
         Plaintiff is correct that Shoup applies to one aspect
of the judgment here.  In Shoup, several specifications of
negligence were submitted to the jury, one of which erroneously
was submitted and two of which properly were submitted.  The
verdict form did not require the jury to identify which
specification was the basis for its verdict in favor of the
plaintiff.  Here, the jury instructions gave the jury two
possible grounds for imposing liability on International:  agency
and ratification.  International objected to the agency
instruction, and, as discussed above, we agree that that
instruction was erroneous.  International did not, however,
object to the ratification instruction. (6)  As noted
previously, the verdict imposing liability on International did
not distinguish between ratification and agency as the basis for
the verdict.  For that reason, International cannot demonstrate
that the verdict was based on the erroneous instruction on
agency, rather than on the correct (or at least unchallenged)
instruction on ratification.  
         Having found that ratification could provide an
alternative basis to support the jury's finding that
International was liable for Local's conduct, under Shoup, we
next would consider whether the record contains sufficient
evidence to support liability on that alternative basis.  Here,
however, as to the noneconomic damages, we do not reach that
issue.  Although at trial International moved unsuccessfully for
a directed verdict and for judgment notwithstanding the verdict
on plaintiff's claim for noneconomic damages, International did
not challenge that award on appeal.  Accordingly, we affirm the
portion of the judgment awarding noneconomic damages.
         As to the award of punitive damages, however,
International did argue on appeal that the record contained no
evidence to support liability on the basis of ratification.  We
address that argument below.

III.  INTERNATIONAL'S MOTION FOR A DIRECTED
VERDICT ON PUNITIVE DAMAGES
         At trial, International moved for a directed verdict
and for judgment notwithstanding the verdict on plaintiff's claim
for punitive damages, arguing that plaintiff had introduced no
evidence from which a reasonable jury could conclude that
International's conduct was wanton or that International had
ratified any other person's wanton disregard of plaintiff's
rights.  The trial court denied those motions, and the Court of
Appeals affirmed.  Jensen, 170 Or App at 55-57.  
         Because of the conclusions that we reach above, we
review the directed verdict motion by examining the record to
determine only whether there is any evidence to support
International's ratification of the willful and wanton misconduct
of Medley and Local, not to determine whether there is evidence
related to agency that would support the jury's decision to hold
International "vicariously liable" for the misconduct of Medley
and Local. 
         A jury may impose punitive damages on a principal for
the wrongful acts of its agent if the principal ratified the acts
of the agent.  Badger v. Paulson Investment Co., Inc., 311 Or 14,
27-28, 803 P2d 1178 (1991).  Ratification of an agent's actions
by a principal can occur only if there is "evidence from which a
jury could properly find that the principal, with knowledge of
the material facts, intended to ratify" the agent's action. 
Minniti v. Cascade Employers Assn, 280 Or 319, 332, 570 P2d 1171
(1977).  We therefore review the record to determine whether
there is any evidence to support plaintiff's claim that
International, with knowledge of the material relevant facts,
intended to ratify the wrongful conduct of Medley or Local
towards plaintiff.  Plaintiff summarized the evidence in support
of her claim in her brief in the Court of Appeals and concluded
with the assertion that substantial evidence exists "that Medley
and Local 49 retaliated against Plaintiff because she made a good
faith report of apparently criminal activity to DOL." 
Plaintiff is correct in that regard.
         Under the legal principles set out above, for
International (in contrast to Medley or Local) to be liable to
plaintiff for punitive damages, plaintiff would have to produce
evidence that International had ratified Medley's retaliatory
termination of plaintiff.  There is no such evidence in this
record. (7)  The only evidence that conceivably could point in
that direction is Ziegler's suggestion to Medley, after Medley
expressed his desire to terminate plaintiff, that Medley reduce
plaintiff's hours in the hope that she might quit her job.  But
that evidence cannot demonstrate that International ratified
Medley's termination of plaintiff, because the uncontradicted
evidence at trial was that, unbeknownst to Ziegler, Medley
already had reduced plaintiff's hours, before Ziegler made the
suggestion, in an effort to get plaintiff to quit.  
         The Court of Appeals stated that Ziegler's suggestion
to cut plaintiff's hours was evidence that International ratified
Medley's retaliation against plaintiff.  Jensen, 170 Or App at
56.  However, based on the legal standard described above,
ratification cannot occur unless the principal, with knowledge of
the material facts, intends to ratify the act.  International
could not have intended to ratify conduct that it was not even
aware of at the time that the purported ratification took place. 
Moreover, International lacked knowledge of the material facts,
including the very conduct that it is alleged to have ratified,
at the time of the asserted ratification.  And there is no other
evidence of any ratification by International of Local's
reduction in plaintiff's hours or termination of plaintiff's
employment.
         Because there was no evidence to support
International's liability for punitive damages on the ground that
it ratified the wrongful conduct of Medley and Local, the trial
court erred in denying International's motions for a directed
verdict and for judgment not withstanding the verdict on the
punitive damages claim.  As there is no basis on this record for
the punitive damages award against International, we do not
discuss the parties' arguments regarding the amount of punitive
damages.
IV.  CONCLUSION
         We summarize our conclusions as follows: (1) the trial
court incorrectly instructed the jury on the rules of agency as
they apply to International's liability for the acts of Medley
and Local; (2) International did not object to the ratification
instruction that provided an alternative basis for the jury to
find International liable for the actions of Medley and Local,
nor did it challenge on appeal the sufficiency of the evidence to
support the award of noneconomic damages; (3) the trial court
should have granted International's motion for a directed verdict
on plaintiff's claim for punitive damages against International,
because there was no evidence that International had ratified
Medley's termination of plaintiff or his reduction of her hours. 
The result of those conclusions is that we affirm the award of
noneconomic damages against International and vacate the award of
punitive damages. (8)
         The decision of the Court of Appeals is reversed in
part and affirmed in part.  The judgment of the circuit court is
affirmed in part and reversed in part. 
1. The only parties to the action on review in this court are plaintiff and International. 
2. Local filed a voluntary bankruptcy petition after the jury returned its verdict, but before
the trial court entered judgment, and then settled with plaintiff while the appeal was pending. 
Medley had settled with plaintiff before trial and had received a covenant not to sue or further
execute.  Accordingly, the judgment on the statutory whistleblower claim is against International
only.
3. The Restatement at § 250 summarizes the law this way:
"A principal is not liable for physical harm caused by the negligent physical
conduct of a non-servant agent during the performance of the principal's business,
if he neither intended nor authorized the result nor the manner of performance,
unless he was under a duty to have the act performed with due care." 
4. Those provisions include:  the guarantee that local union members may establish their
own dues and elect their own officers; the right of local members to select delegates who, in turn,
select officers of International; and the requirement that local unions pay International for its
services.
5. See, e.g., Laughon v. Int'l Alliance of Theatrical Employees, 248 F3d 931, 935 (9th Cir
2001); Childs v. Local 18, Int'l Bhd of Elec Workers, 719 F2d 1379, 1382 n 2 (9th Cir 1983);
Shimman v. Frank, 625 F2d 80, 97-99 (6th Cir 1980) (each holding that specific international
union constitution did not, as matter of law, establish agency relationship between international
union and its local union).
6. Because International did not object to the ratification portion of the instruction and
proposed a similar ratification instruction itself, we assume without deciding that the ratification
instruction that was given correctly stated the law.  
7. Plaintiff and others had provided information to International about various improprieties
committed by Medley.  That International apparently ignored that information provides no
support to plaintiff's claim that International ratified plaintiff's termination.  
8. Plaintiff also asserts that the trial court erred in determining the amount of attorney fees to
award her.  As noted, the Court of Appeals affirmed the trial court's ruling without discussion. 
Plaintiff has not made a sufficient showing to cause us to re-examine the Court of Appeals'
affirmance of the trial court's determination.