Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-4_03-cv-00335/USCOURTS-azd-4_03-cv-00335-1/pdf.json

Nature of Suit Code: 360
Nature of Suit: Other Personal Injury
Cause of Action: 28:1332 Diversity-Other Contract

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The Court notes that the parties did not request oral arguments on these motions, and a

conference call with the parties was held on 2/14/06 whereby both parties agreed that they did not

wish to have oral arguments. As such, the Court will rule on the pending motions without oral

argument. Further, the Court finds that a response to the Motion for Reconsideration is not

necessary because the issue has been previously fully briefed by the parties.

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Ivan Tomkins, et al., 

Plaintiffs, 

vs.

Schmid Systems, Inc. (USA), et al., 

Defendants. 

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No. CIV 03-335-TUC-CKJ

ORDER

Pending before the Court are Defendants' Motion for Summary Judgment and Motion for

Reconsideration. For the reasons stated below, the Motion for Reconsideration is granted

and the Motion for Summary Judgment is denied in part and granted in part.1

I. STANDARD OF REVIEW

Summary judgment is appropriate where "there is no genuine issue as to any material

fact." Fed. R. Civ. P. 56(c). A genuine issue exists if "the evidence is such that a reasonable

jury could return a verdict for the nonmoving party," and material facts are those "that might

affect the outcome of the suit under the governing law." Anderson v. Liberty Lobby, Inc.,

477 U.S. 242, 248 (1986). A fact is "material" if, under the applicable substantive law, it is

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"essential to the proper disposition of the claim." Id. An issue of fact is "genuine" if "there

is sufficient evidence on each side so that a rational trier of fact could resolve the issue either

way." Id. Thus, the "mere scintilla of evidence" in support of the nonmoving party's claim

is insufficient to defeat summary judgment. Id. at 252. However, in evaluating a motion for

summary judgment, "the evidence of the nonmoving party is to be believed, and all

justifiable inferences are to be drawn in his favor." Id. at 255 (emphasis added). Further,

a court "[must] not weigh the evidence[, make credibility determinations,] or determine the

truth of the matter" at the summary judgment stage, but may only determine whether there

is a genuine issue for trial. Abdul-Jabbar v. General Motors Corp., 85 F.3d 407, 410 (9th

Cir.1996); Balint v. Carson City, Nevada, 180 F.3d 1047, 1054 (9th Cir. 1999); see also

Self-Realization Fellowship Church v. Ananda Church of Self-Realization, 206 F.3d 1322,

1328 (9th Cir. 2000) (recognizing that on a motion for summary judgment, "a district court

is entitled neither to assess the weight of the conflicting evidence nor to make credibility

determinations")

II. BACKGROUND

Plaintiff, Ivan Tomkins, began working for Schmid Systems, Inc. (USA)("Schmid") in

January of 1992, and his duties included service and repair of machines manufactured by

Schmid throughout the United States. In 2002, Tomkins began experiencing problems with

hearing loss stemming from high noise levels he encountered at work in repairing and

servicing machines manufactured and sold by Schmid; as such, in November of 2002,

Tomkins filed a workers' compensation claim for hearing loss and notified Schmid of the

filing of this workers' compensation claim. Tomkins also alleges that he reported

Occupational Health and Safety Act ("OSHA") violations regarding baseline hearing tests

to Rebecca Baxter, who was an assistant to Schmid's President. 

On December 10, 2002, Hartford Insurance Company, Schmid's workers' compensation

insurance carrier, officially denied Tomkins' workers' compensation claim. Thereafter,

Tomkins filed a Request for Hearing with the Industrial Commission of Arizona. 

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Tomkins also brought a third claim for interference with contract; however, this claim was

previously dismissed by the Court. See Doc. #25.

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By December of 2002, Schmid's President, Gottfried Floer, decided to terminate Tomkins.

In a meeting with company directors on December 18, 2002, Floer obtained final approval

for his decision to terminate Tomkins. 

In March and May of 2003, hearings regarding Tomkins' workers' compensation claim

were held before Administrative Law Judge Luann Haley of the Arizona Industrial

Commission. On May 14, 2003, Judge Haley ruled in favor of Tomkins and thereby

concluded that Tomkins' had a compensable hearing loss that was caused in part by his

cumulative industrial noise exposure at Schmid. In addition, on May 14, 2003, Floer met

with Tomkins, and informed him that he was being laid off from the company for economic

reasons. Thereafter, Tomkins filed suit against the Defendants alleging: (1) he was retaliated

against for reporting OSHA violations; and (2) he was retaliated against for pursuing his

workers' compensation claim.2

III. DISCUSSION

A. Defendant's Motion for Reconsideration: Retaliation for Reporting OSHA

 Violations

Tomkins' retaliation claim for reporting OSHA violations is made pursuant to A.R.S. §23-

1501(3)(c)(ii). In a previous Order (Doc. #26), the Court denied Defendants' Motion to

Dismiss this claim and found that Plaintiff could state a claim under this section of the

statute. However, upon further analysis and review of the relevant authorities, the Court

issued a subsequent opinion in another case holding that there was no legally cognizable

claim for retaliation for reporting OSHA violations pursuant to A.R.S. §23-1501(3)(c)(ii).

See Welch v. Professional Transit Management of Tucson, Inc., 2005 WL 2897354, *8-10

(D. Ariz. 2005). Citing Welch, Defendants' have asked the Court to reconsider the previous

ruling in this case, and dismiss Plaintiff's OSHA retaliation claim based on the analysis in

Welch. The Court agrees that the more appropriate analysis of the statute occurred in the

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The Court notes that after the Court initially denied Defendants' Motion to Dismiss the

OSHA retaliation claim (Doc. #26), the case was temporarily placed into arbitration. Defendants

subsequently filed another Motion to Dismiss the same claim before the arbitrator; as this was an

improper attempt to make an end run around the Court's Order, Defendants were sanctioned. See

Doc. #97, 4/27/05 Order at 9-10. In that Order imposing sanctions, the Court noted that Defendants

could have properly filed a Motion for Reconsideration before this Court. Indeed, Defendants

subsequently filed a Motion for Reconsideration with this Court and relief has been granted. As the

previous sanction was imposed for the reasons stated above, the sanction is not affected by the

Court's favorable ruling on Defendants' current Motion for Reconsideration.

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As there is limited Arizona case law regarding discrimination, Arizona courts look to federal

law analyzing discrimination as persuasive authority. See Francini v. Phoenix Newspaper, Inc., 188

Ariz. 576, 582, 937 P.2d 1382, 1388 (Ct. App. 1996); St. Lukes Health System v. State, Dept. of Law,

Civil Rights Div., 180 Ariz. 373, 377 (Ct. App. 1994); Najar v. State, 198 Ariz. 345, 347, 9 P.2d

1084, 1086 (Ct. App. 2000). 

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subsequent Welch opinion, and therefore grants Defendants' Motion for Reconsideration.3

As Plaintiff does not have a legally cognizable claim pertaining to retaliation for reporting

OSHA violations pursuant to A.R.S. §23-1501(3)(c)(ii), this claim is dismissed.

B. Retaliation for Pursuing the Workers' Compensation Claim

Tomkins' retaliation claim for pursuing his workers' compensation action is made pursuant

to A.R.S. §23-1501(3)(c)(iii). This section states in relevant part that an employee has a

claim for wrongful termination if the employer terminates the employment relationship in

retaliation for the "exercise of rights under the workers' compensation statutes." Although

there is no definitive Arizona case law discussing the standard for establishing retaliation

pursuant to A.R.S. §23-1501(3)(c)(iii), there is Arizona case law regarding the standard for

establishing retaliation in the context of civil rights retaliation; as such, the Court will use

that standard in evaluating Tomkins' claim. See Najar v. State of Arizona, 198 Ariz. 345,

348, 9 P.3d 1084, 1087 (Ct. App. 2000).4

To establish a retaliation claim, Arizona courts have held that the plaintiff must first

establish a prima facie case of retaliation by showing that: (1) he engaged in statutorily

protected activity, (2) the employer imposed an adverse employment action, and (3) there

was a causal connection between the two actions. See Najar, 198 Ariz. at 348, 9 P.3d at

1087; see also Stegall v. Citadell Broadcasting Co., 350 F.3d 1061, 1065-66 (9th Cir. 2004).

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If a prima facie case is established, "the burden shifts to the employer to articulate some

legitimate nonretaliatory reason for the adverse action. If it does, the employee must show

that the employer's proffered explanation was merely a pretext or that a

discriminatory[/statutorily prohibited] reason more likely motivated its actions." Id.

First, there is no question that Tomkins' pursuit of his workers' compensation claim is

statutorily protected activity. See A.R.S. §23-1501(3)(c)(iii). Second, Defendants'

termination of Tomkins clearly constitutes an adverse action.

Defendants argue, however, that Plaintiff can not show a causal connection between his

termination and his pursuit of his workers' compensation claim; further, Defendants argue

that they had a legitimate, non-retaliatory reason for terminating Tomkins. Thus, Defendants

argue that Tomkins' claim must be dismissed. To support this position, Defendants' primarily

argue that Tomkins was terminated for a legitimate business reason. Defendants argue that

in both 2002 and 2003, Schmid was experiencing a horrible economic situation. In 2002,

Schmid had a net loss of $80,000. In 2003, Schmid had a net loss of $400,000. Schmid

argues that in late 2002, Schmid was considering measures and holding meetings to discuss

the poor economic outlook for the company in 2003 and possible ways to cut costs. Besides

Floer, Tomkins was the most expensive employee at Schmid. As such, on December 18,

2002, Defendants argue that Schmid executives decided to terminate Tomkins to cut costs

in light of the poor economic condition of the company. Thereafter, Defendants argue that

Floer finalized plans to fly out to Tucson on April 29, 2003 for the purpose of terminating

Tomkins, and that Floer terminated Tomkins on May 14, 2003 for purely economic reasons.

The Court disagrees with Defendants' position; as Plaintiff has introduced admissible

evidence creating genuine issues of material fact as to causation and the efficacy of

Defendants' non-retaliatory justification, summary judgment must be denied. Plaintiff

introduced evidence that Schmid's industry, circuit boards, is cyclical and that Schmid

experienced numerous economic booms and busts throughout its existence in the industry

which did not result in employment terminations; thus, Plaintiff argues that Defendants'

economic justification for his termination is questionable. Further, as Plaintiff correctly

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Defendants argue that it did not actually receive notice of the decision in favor of Tomkins

until several days later and that Tomkins did not receive the decision in the mail until the day after

he was terminated. However, Plaintiff points out, and Defendants do not dispute, that the decision

was available to the public on the day that he was terminated.

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argues, the timing of his termination creates an issue of fact as to causation and the pretextual

nature of Defendants' justification. See Little v. Windermere Relocation, Inc., 301 F.3d 958,

970 (9th Cir. 2002)(proximity in time between plaintiff engaging in protected activity and the

employer taking an adverse employment action "provides circumstantial evidence of

retaliation that is sufficient to create a prima facie case of discrimination"); Raad v.

Fairbanks North Star Borough School District, 323 F.3d 1185, 1197 (9th Cir. 2003)(same);

Miller v. Fairchild Industries, Inc., 885 F.2d 498, 505 (9th Cir. 1989)(same). For example,

Tomkins officially filed his workers' compensation claim in November of 2002, and by

December of 2002, Schmid executives had already decided to terminate him. Furthermore,

Schmid terminated Tomkins the same day5

 that Judge Haley of the Arizona Industrial

Commission issued an opinion finding that Tomkins suffered a compensable hearing loss

related to his employment at Schmid. 

Tomkins also argues that Floer repeatedly warned Tomkins not to pursue his OSHA claim;

as Tomkins stated in relevant part in his deposition: ". . . I met privately with Mr. Floer in

. . . early March of 2003 . . . and he told me that he – he once again told me, because he had

previously done this, but he told me he agreed that I had hearing loss and that he had hearing

loss, but in our business this cannot be. That was his words, it can not be . . . Also, Mr.

Floer, a few days after filing the Workers' Comp claim, Mr. Floer took a special flight – it

was very rare that he would do something like this – to a company in Brea, California, where

I was working, pulled me into the lobby and warned me not to pursue a hearing loss claim

and that I was a crybaby about insurance, and that OSHA was none of my business because

our company is too small . . ." See Plaintiffs' Ex. 1, Tomkins' Depo at 22. Tomkins also

emphasizes that Floer admits that he was concerned about Tomkins' workers' compensation

claim because it could increase insurance premiums for Schmid, that he wanted to protect

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Schmid against future workers' compensation claims for hearing loss, and that Floer

voluntarily flew out to the workers' compensation hearing to actively oppose Tomkins' claim.

Further, Floer also told another Schmid employee/contractor, Greg Michel, that he thought

Tomkins' workers' compensation claim was "nonsense" and discouraged employees from

making such claims. In addition, although Tomkins' didn't disclose his workers'

compensation claim, Schmid employees were made aware of the claim, discussed that the

hearing loss claim was bad for business, and believed that Tomkins' termination was related

to his workers' compensation claim. Given the nature of Tomkins' retaliation claim which

implicates issues involving motive and intent, and in light of the disputed material facts

related to Tomkins' retaliation claim, summary judgment is denied. See generally, Mustafa

v. Clark County School Dist., 157 F.3d 1169, 1180 (9th Cir. 1998)(the "crux of disparate

treatment claims is the elusive factual question of intentional discrimination . . . Therefore,

because of the inherently factual nature of the inquiry, the plaintiff need produce very little

evidence of discriminatory motive to raise a genuine issue of fact.")(internal quotes and

citations omitted); Lyons v. England, 307 F.3d 1092, 1113 (9th Cir. 2002)("any indication of

discriminatory motive . . . may suffice to raise a question that can only be resolved by a

factfinder, and for that reason summary judgment for the defendant will ordinarily not be

appropriate on any ground relating to the merits because the crux of a Title VII dispute is the

elusive factual question of intentional discrimination.")(internal quotes and citations

omitted).

C. Punitive Damages

Defendants argue that Tomkins has failed to meet the standard for establishing punitive

damages. However, taking Plaintiff's evidence as true and drawing all reasonable inferences

in his favor as required at summary judgment, there are material issues of fact precluding

summary judgment as to Tomkins' claim for punitive damages.

As Arizona case law reflects:

Punitive damages are awarded primarily to punish the wrongdoer and deter others from

similar conduct . . . The award of punitive damages is limited to situations where these

objectives can be furthered . . . Punitive damages are therefore awarded only where the

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The Arizona Supreme Court has stated that "[t]his requirement [of something more than the

mere commission of a tort] does not preclude the existence of torts whose prima facie case will

necessarily satisfy the elements and evidentiary burden of a prima facie claim for punitive damages."

Thompson v. Better-Bilt Aluminum Products Co., Inc., 171 Ariz. 550, 556 n.12, 832 P.2d 203, 209

n.12 (1992).

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defendant's wrongful conduct is the result of an evil mind, something more than the

mere commission of a tort[6

] . . . Accordingly, the primary inquiry is based on the

wrongdoer's state of mind or attitude . . . An evil mind is found where the defendant

intended to injure the plaintiff, or where the defendant, not intending to cause injury,

consciously pursued a course of conduct knowing that it created a substantial risk of

significant harm to others . . . [P]unitive damages [are available] only upon clear and

convincing evidence of the defendant's evil mind

Olson v. Walker, 162 Ariz. 174, 177, 781 P.2d 1015, 1018 (Ct. App. 1989)(internal quotes

and citations omitted); see also Linthicum v. Nationwide Life Ins. Co., 150 Ariz. 326, 331,

723 P.2d 675, 680 (1986)("The key [for punitive damages] is the wrongdoer's intent to injure

the plaintiff or his deliberate indifference with the rights of others, consciously disregarding

the unjustifiably substantial risk of significant harm. While the necessary 'evil mind' may be

inferred, it is still this 'evil mind' in addition to outwardly aggravated, outrageous, malicious,

or fraudulent conduct which is required for punitive damages."). 

As the Arizona Supreme Court has already found, in "appropriate circumstances, punitive

damages may be recovered in an action for wrongful discharge in violation of public policy,

including discharge for filing a workers' compensation claim." Thompson v. Better-Bilt

Aluminum Products Co., Inc., 171 Ariz. 550, 555-556, 832 P.2d 203, 208-209 (1992). In

Thompson, the plaintiff claimed that he was discharged by his employer in retaliation for

filing a workers' compensation claim. Thompson, 171 Ariz. at 555-559, 832 P.2d at 208-212.

At trial, the plaintiffs introduced evidence supporting this claim, and also submitted evidence

suggesting that the employer may have had an informal, underhanded policy of discharging

employees who filed workers' compensation claims. Id. The trial court, however, entered

a directed verdict as to the plaintiffs' claim for punitive damages. Id. On appeal, the Arizona

Supreme Court reversed the trial court, and emphasized that in "resolving all issues of

credibility in favor of the plaintiffs, and allowing the plaintiffs all inferences that may

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In reaching its decision, the Arizona Supreme Court also cited with favor numerous cases

from other jurisdictions finding that punitive damages were proper in cases involving an employer's

retaliatory termination of an employee for exercising the right to pursue a workers' compensation

claim stemming from an on the job injury. See Thompson, 171 Ariz. at 556 & 556 n.11, 832 P.2d

at 209 & 209 n.11. Among the cases cited was Hansen v. Harrah's, 100 Nev. 60, 675 P.2d 394

(1984); in Hansen, the Nevada Supreme Court described the importance these issues in cases

involving retaliation for filing a workers' compensation claim: "The [Workers' Compensation] Act

creates a duty in the employer to compensate employees for work-related injuries (through

insurance) and a right in the employee to receive such compensation. But in order for the goals of

the Act to be realized and for public policy to be effectuated, the employee must be able to exercise

his right in an unfettered fashion without being subject to reprisal. If employers are permitted to

penalize employees for filing workmen's compensation claims, a most important public policy will

be undermined. The fear of being discharged would have a deleterious effect on the exercise of a

statutory right. Employees will not file claims for justly deserved compensation--opting, instead, to

continue their employment without incident. The end result, of course, is that the employer is

effectively relieved of his obligation . . . We know of no more effective way to nullify the basic

purposes of Nevada's workmen's compensation system than to force employees to choose between

a continuation of employment or the submission of an industrial claim. In the absence of an injury

resulting in permanent total disability, most employees would be constrained to forego their

entitlement to industrial compensation in favor of the economic necessity of retaining their jobs."

Hansen,100 Nev. at 63-63, 675 P.2d at 396-397 (internal quotes and citations omitted).

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The Court notes that the cases cited by Defendants in support of dismissing the punitive

damages claim do not implicate the same issues presented in workers' compensation retaliation

cases, and are factually distinguishable from the serious allegations presented by Tomkins' in his

opposition to summary judgment.

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legitimately be drawn from the evidence . . . the jury could have found that [the defendant

employer] was pursuing a course of conduct to serve its own interests despite knowledge that

its acts were wrongful and in conscious disregard for the legal right of its employees. This

would provide a sufficient basis to send the punitive damages issues to the jury." Thompson,

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171 Ariz. at 559, 832 P.2d at 212.8 Similarly, taking Tomkins' facts as true and drawing all

reasonable inferences in his favor, a jury could find the same way and award punitive

damages in this case. 

Here, taking Tomkins' facts as true and drawing all reasonable inferences in his favor, the

jury could find as follows. Tomkins worked for Schmid for over a decade, and over time,

suffered a permanent physical injury due to the conditions at work. The injury at issue, a

permanent, premature loss of his full hearing ability, was caused by exposure to extremely

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It is granted in part to the extent that the OSHA retaliation claim has been dismissed as

explained in relation to Motion for Reconsideration.

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loud, cumulative industrial noise stemming from Schmid machines. Throughout the workers'

compensation claim process, Floer actively engaged in actions to undermine Tomkins' right

to seek relief for his job related injury. He engaged in these actions to protect against future

claims, and wanted to discourage other employees from filing similar future workers'

compensation claims. Indeed, Floer met with Tomkins and warned him not to file his claim,

received approval for his decision to fire him within approximately one month of Tomkins'

filing of his workers' compensation claim, and fired Tomkins the same day that a favorable

workers' compensation decision was issued. Employees were made aware of the

circumstances surrounding Tomkins' workers' compensation claim, and believed that the

termination stemmed from Tomkins' pursuing his workers' compensation claim for hearing

loss. Under these circumstances, a reasonable jury could find that Defendants were

"pursuing a course of conduct to serve its own interests despite knowledge that its acts were

wrongful and in conscious disregard for the legal rights of its employees. This would

provide a sufficient basis to send the punitive damages issues to the jury." Thompson, 171

Ariz. at 559, 832 P.2d at 212. As such, Defendants' Motion for Summary Judgment as to

punitive damages is denied.

IV. CONCLUSION

Accordingly, IT IS HEREBY ORDERED as follows:

(1) Defendants' Motion for Reconsideration (Doc. #130) is granted;

(2) Defendants' Motion for Summary Judgment (Doc. #126) is denied in part and granted

in part.

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(3) The parties shall file a Joint Proposed Pretrial Order and any Motions in Limine within

30 days of the filing date of this Order. See Doc. #41 (Scheduling Order at 4-5).

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(4) Alternatively, if the parties so choose, they may engage in a settlement conference with

a Magistrate Judge at no cost to the parties. If the parties choose this option, they should

contact the Court which can set up the conference and stay the remaining deadlines.

 DATED this 22nd day of March, 2006.

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