Source: https://m.openjurist.org/347/f3d/752/freund-v-nycomed-amersham
Timestamp: 2019-11-15 08:03:09
Document Index: 294314329

Matched Legal Cases: ['§ 6310', '§ 6310', '§ 6310', '§ 2802', '§ 2802', '§ 2802', '§ 2802', '§ 2802']

347 F3d 752 Freund v. Nycomed Amersham | OpenJurist
347 F. 3d 752 - Freund v. Nycomed Amersham
347 F3d 752 Freund v. Nycomed Amersham
347 F.3d 752
NYCOMED AMERSHAM, a business entity, form unknown; Amersham Holdings, Inc.; Nycomed Amersham Imaging, a division of Nycomed Amersham;
Amersham/Medi-Physics, Inc., a division of Nycomed Amersham, Defendants-Appellants-Cross-Appellees.
Argued and Submitted November 5, 2002 — Pasadena, California.
Diane Westwood Wilson and Andrew J. Harakas, Condon & Forsyth LLP, New York, NY, for the defendants-appellants-cross-appellees.
John S. Adler, San Diego, California, for the plaintiff-appellee-cross-appellant.
Before: William C. CANBY, Jr., Ronald M. GOULD, and Marsha S. BERZON, Circuit Judges.
Nycomed now appeals the judgment of compensatory damages, and Freund appeals the order overturning the award of punitive damages. We affirm the judgment for compensatory damages and reverse the order overturning the punitive damages as a matter of law.2 We remand for the district court to rule on Nycomed's motion for a new trial on the issue of punitive damages.
Nycomed argues that Hentzel is no longer good law in light of intervening decisions by the California Supreme Court. Nycomed relies particularly on Foley v. Interactive Data Corp., 47 Cal.3d 654, 670, 254 Cal.Rptr. 211, 765 P.2d 373, 380 (1988), which ruled that discharge of an employee for reporting an employer's embezzlement did not give rise to a claim for discharge in violation of public policy, and on Gantt v. Sentry Ins., 1 Cal.4th 1083, 1092, 4 Cal. Rptr.2d 874, 824 P.2d 680 (1992), overruled on other grounds by Green v. Ralee Eng'g Co., 19 Cal.4th 66, 80 n. 6, 78 Cal.Rptr.2d 16, 960 P.2d 1046, 1054 n. 6 (1998), which ruled that the requisite public policy must be clearly articulated in a statute or constitutional provision. The flaw in Nycomed's argument is that both Foley and Gantt cite Hentzel as an example of a situation in which a plaintiff can raise a wrongful termination claim because a public policy was violated. See Foley, 47 Cal.3d at 670, 254 Cal.Rptr. 211, 765 P.2d 373 (citing Hentzel for the proposition that an employee fired for "disclos[ing] other illegal, unethical, or unsafe practices" can bring a wrongful termination claim); Gantt, 1 Cal.4th at 1091, 4 Cal.Rptr.2d 874, 824 P.2d 680 (citing Hentzel as an example of a wrongful termination in violation of public policy for "reporting an alleged violation of a statute of public importance"). Furthermore, California appellate courts have continued to find that a violation of § 6310 gives rise to a wrongful termination tort action even after the Supreme Court's decisions in Foley and Gantt. See, e.g., Taylor v. Lockheed Martin Corp., 78 Cal.App.4th 472, 485, 92 Cal.Rptr.2d 873 (2000) ("A private cause of action for retaliatory discharge under Labor Code section 6310 is part of California's statutory scheme for occupational safety."); Cabesuela v. Browning-Ferris Indus., 68 Cal.App.4th 101, 107-10, 80 Cal.Rptr.2d 60 (1998); Barton v. New United Motor Mfg., Inc., 43 Cal.App.4th 1200, 1205, 51 Cal.Rptr.2d 328 (1996) ("An employer who fires an employee in retaliation for protesting unsafe working conditions violates fundamental public policy....") (citations omitted).6 Thus, Hentzel and its progeny appear still to be good law in California notwithstanding the decisions in Foley and Gantt.7
Nycomed contends that these cases are undermined by Moorpark, in which the California Supreme Court stated that "when the constitutional provision or statute articulating a public policy also includes certain substantive limitations in scope or remedy, these limitations also circumscribe the common law wrongful discharge cause of action. Stated another way, the common law cause of action cannot be broader than the constitutional provision or statute on which it depends...." Moorpark, 18 Cal.4th at 1159, 77 Cal. Rptr.2d 445, 959 P.2d 752. Seizing upon this language, Nycomed argues that Freund's damages are limited to that provided by § 6310 — back pay and reinstatement. All other relief, argues Nycomed, including front pay, emotional damages, and punitive damages, must be overturned because it is not authorized explicitly by § 6310.
In its post-trial motions, Nycomed requested the district court to order a new trial pursuant to Rule 59 of the Federal Rules of Civil Procedure.13 Nycomed's motion urged a new trial on two grounds that it had also urged in support of its motion for judgment as a matter of law: (1) insufficiency of evidence of malice, and (2) insufficiency of evidence of the financial condition of Nycomed. The district court denied the motion.14 In so doing, the district court stated that "[b]ecause the Court has already vacated the punitive damages award, the Court need not address defendants' argument that a new trial should be granted on the ground that the punitive damages award was excessive." Nycomed argues that, having reversed the judgment as a matter of law, we should now remand so the district court can address the arguments for a new trial that it did not reach. We conclude that Nycomed's contention has merit.
When a district court fails to enter a Rule 50(c) conditional order on a new trial motion, "we have discretion to either remand to the district court to let it decide the new trial motion or to decide the new trial motion ourselves." Acosta v. City and County of San Francisco, 83 F.3d 1143, 1149 (9th Cir.1996); see also Gordon Mailloux Enters., Inc. v. Firemen's Ins. Co., 366 F.2d 740, 741-42 (9th Cir.1966). In the present case, we exercise our discretion to remand so that the district court can address the motion in the first instance. The district court is most familiar with the context of the trial, and enjoys broad discretion with regard to a new trial motion. See Murphy, 914 F.2d at 186. We elect not to exercise that discretion for the district court.
We reject Freund's contention that Nycomed has waived its right to a new trial motion. Unlike a motion for judgment as a matter of law, a motion for new trial does not have to be preceded by a Rule 50(a) motion prior to submission of the case to the jury. See Williams v. Fenix & Scisson, Inc., 608 F.2d 1205, 1207 (9th Cir.1979) (holding that failure to move for directed verdict nullifies a motion for judgment notwithstanding the verdict, but leaves open for review a motion for new trial); see also Farley Transp. Co. v. Santa Fe Transp. Co., 786 F.2d 1342, 1347 (9th Cir.1985); Gilchrist v. Jim Slemons Imports, Inc., 803 F.2d 1488, 1493 (9th Cir. 1986).15
We also reject Freund's contention that Nycomed waived its right to a new trial by not drawing the district court's attention to its failure to make a conditional ruling as required by Rule 50(c). Freund relies on Arenson v. Southern Univ. Law Ctr., 43 F.3d 194, 197, clarified, 53 F.3d 80 (5th Cir.1995), which held that a litigant who fails to secure a Rule 50(c) conditional ruling in the district court loses the right to a new trial if the judgment as a matter of law is reversed. With all due respect to our sister circuit, we decline to follow its rule. Our decisions in Acosta and Gordon Mailloux suggested no such limitation on our discretion to remand for the district court to address a motion for new trial after failing to make a conditional ruling under Rule 50(c). Moreover, in the present case the district court actually did enter an order denying new trial; it was only in a footnote to its decision that the court indicated that it had found it unnecessary to address the new trial contentions because of its decision to grant judgment as a matter of law. Nycomed appealed from the order denying a new trial and raised the issue at the first appropriate point in its appellate briefs. We conclude that there was no waiver, and we accordingly remand the matter to the district court so that it may address a renewed motion for new trial on punitive damages.
Section 2802 does not authorize Freund to receive attorney's fees. As the language of the statute makes clear, § 2802 is designed to indemnify employees for their legal defense costs when they are sued for actions arising out of their employment. See, e.g., Devereaux v. Latham & Watkins, 32 Cal.App.4th 1571, 1583, 38 Cal.Rptr.2d 849 (1995); Jacobus v. Krambo Corp., 78 Cal.App.4th 1096, 1100, 93 Cal.Rptr.2d 425 (2000). It does not require an employer to pay the fees to support an employee's affirmative litigation against the employer. Indeed, Freund does not cite a single case in which the court interpreted § 2802 to authorize attorneys' fees in this context.16 We affirm the district court's denial of attorneys' fees under § 2802.
The defendants against whom judgment was entered were Nycomed Amersham, Amersham Holdings, Inc., Nycomed Amersham Imaging, a division of Nycomed Amersham, and Amersham/Medi-Physics, Inc., a division of Nycomed Amersham. Unless the context indicates to the contrary, "Nycomed" is used hereinafter to refer to the defendants collectively
Contrary to the view stated by the dissent herein, our decision does not run afoul ofHonda Motor Co. v. Oberg, 512 U.S. 415, 114 S.Ct. 2331, 129 L.Ed.2d 336 (1994). Honda held unconstitutional an Oregon statute that prohibited courts from reviewing excessiveness of punitive damages unless there was no evidence at all to support the verdict. See id. at 418, 426-27, 114 S.Ct. 2331. Reviewability of excessiveness of the award was conceded by the parties here and we addressed the only claim of excessiveness raised by Nycomed. Our decision that Nycomed could not challenge the punitive damages award for lack of evidence of malice is not a categorical prohibition of such review, of the type prohibited by Honda Motor Co. We merely hold that Rule 50 governs the means of securing such post-verdict review. To the extent that the right to such review is protected by the Constitution, it may be waived or forfeited like many other constitutional rights by failing to follow the requisite procedure. Here, the right to challenge the punitive damages award for lack of evidence of malice was lost because that challenge could have been raised prior to verdict in a Rule 50(a) motion and it was not.
Although Nycomed did not make a Rule 50 motion with respect to the evidence of financial condition, the parties concede that Rule 50 does not bar its excessiveness claim. We accept this concession, and do not otherwise rule on the point. Contrary to the suggestion in footnote 7 of the dissent herein, our acceptance of this concession does not reveal any inadequacy in the theory on which we hold Rule 50 to bar Nycomed's challenge to the jury's finding of malice. Any deficiency in evidence of malice should be apparent at the close of evidence, and should be the subject of a pre-verdict Rule 50(a) motion. The excessiveness of theamount of the jury's award of punitive damages cannot be known prior to verdict, however, and thus cannot be made the subject of a Rule 50(a) motion. There is accordingly no inconsistency in our theory when we treat malice and excessiveness of amount differently.
The district court also refused conditionally to grant a new trial unless Freund accepted a reduced award of damages
We do not regardJanes v. Wal-Mart Stores Inc., 279 F.3d 883 (9th Cir.2002), as casting any doubt on this proposition. In Janes, the defendant argued that it was entitled to a new trial because the evidence established as a matter of law that it had good cause to terminate the plaintiff's employment. Janes held that the failure to make a timely Rule 50(a) motion foreclosed that contention. Id. at 888. Janes cited both Gilchrist and Farley, which it was bound to follow, without casting any doubt on the holding of those cases that a motion for new trial is not foreclosed by failure to make an earlier Rule 50(a) motion.
The majority reverses the district court's order overturning as a matter of law punitive damages awarded to Freund. These punitive damages, in my view, were correctly stricken by the district court on post-verdict motion because of lack of evidence of malice. The majority errs in reinstating these punitive damages even though subject to the district court's decision on remand about new trial on punitive damages.1
The majority's decision is based on the requirement of Rule 50(b) of the Federal Rules of Civil Procedure that a motion for post-trial relief must state the same grounds for relief as the litigant's Fed. R.Civ.P. 50(a) directed verdict motion.2 In so doing, my colleagues expand the scope of a federal court's power in a diversity action beyond permissible bounds, produce a result that is contrary to both Adams and the Due Process Clause of the Fourteenth Amendment, and create a circuit split in the process. See Simmons v. City of Philadelphia, 947 F.2d 1042, 1085-1087 (3d Cir.1991) (Becker, J.) (applying Pennsylvania substantive rule preventing waiver of municipalities' sovereign immunity and allowing municipality to raise sovereign immunity in 50(b) motion notwithstanding failure of municipality to raise immunity in 50(a) motion).
* The complexities of choice-of-law rules in Federal diversity actions took an important turn in Erie R.R. v. Tompkins, which overturned Swift v. Tyson, 41 U.S. (16 Pet.) 1, 10 L.Ed. 865 (1842), and held that federal courts sitting in diversity must apply state law to resolve substantive issues, but apply federal law to resolve procedural issues. Erie R.R. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938).
The defendant moved for summary judgment on the ground that service had not been made within either the 2-year limitations period3 or the 60-day period for service after filing required by Kansas law. Id. at 531, 69 S.Ct. 1233. The plaintiff defended on the ground that Rule 3 of the Federal Rules of Civil Procedure provided that an action in federal court commenced upon the filing of the complaint in federal court. Id. at 531, 69 S.Ct. 1233. Despite Rule 3, the Supreme Court dismissed the action, relying on the Erie doctrine and concluding that a cause of action could not have a "longer life in the federal court than it would have had in the state court," and that the state service of summons statute controlled because it was an integral part of the state statute of limitations. Id. at 533-34, 69 S.Ct. 1233.
Ragan was not the last word on the interplay between the Federal Rules of Civil Procedure and state law in diversity actions. In Hanna v. Plumer, 380 U.S. 460, 85 S.Ct. 1136, 14 L.Ed.2d 8 (1965), the Supreme Court clarified the Erie doctrine's application to the Federal Rules of Civil Procedure. The Supreme Court held that the first inquiry was whether the Federal Rule of Civil Procedure is "sufficiently broad" that it creates a "direct collision" with state law, thereby leaving no room for the operation of that law. Hanna, 380 U.S. at 471-472, 85 S.Ct. 1136; see also Burlington N. R.R. Co. v. Woods, 480 U.S. 1, 5, 107 S.Ct. 967, 94 L.Ed.2d 1 (1987) (explaining Hanna). If the Federal Rule of Civil Procedure is applicable, then it applies regardless of any contravening state law, so long as the Federal Rule complies with the requirements of both the Rules Enabling Act and the Constitution. Hanna, 380 U.S. at 471, 85 S.Ct. 1136 ("[T]he 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."); see also Gasperini v. Ctr. for the Humanities, 518 U.S. 415, 428 n. 7, 116 S.Ct. 2211, 135 L.Ed.2d 659 (1996) ("Concerning matters covered by the Federal Rules of Civil Procedure, the characterization question is usually unproblematic: It is settled that if the Rule in point is consonant with the Rules Enabling Act, 28 U.S.C. § 2802, and the Constitution, the Federal Rule applies regardless of contrary state law."); Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1103 (9th Cir. 2003) ("In other words, if a Federal Rule of Civil Procedure is valid under the Constitution and the Enabling Act, it applies according to its terms in all civil cases in federal district court.").
Although as yet no Federal Rule of Civil Procedure has been wholly invalidated because of the Enabling Act or the Constitution,4 rules including Rule 50 have been narrowed by federal courts to avoid abridging substantive rights. See Ragan, 337 U.S. at 533, 69 S.Ct. 1233 (narrowing Rule 3); Walker v. Armco Steel Corp., 446 U.S. 740, 750-51, 100 S.Ct. 1978, 64 L.Ed.2d 659 (1980) (narrowing Rule 3); Simmons, 947 F.2d at 1085-86 (narrowing Rule 50 to avoid abridging state rule against waiver of governmental immunity).5 Here, if Rule 50 is to be limited to its intended procedural scope, and not to supplant substantive California Law and Constitutional protection under the Due Process Clause, it must be narrowed.
* The Rules Enabling Act authorizes the adoption of the Federal Rules of Civil Procedure, but provides that "[s]uch rules shall not abridge, enlarge or modify any substantive right." 28 U.S.C. § 2802(b). The majority's application of Rule 50 frustrates a substantive right granted by California law because it permits punitive damages to stand without post-verdict judicial review of the validity of the punitive damages award. Rule 50's application in this case must be restricted to comply with the California Supreme Court's rule in Adams v. Murakami ("Adams rule").
In my view, the Adams rule reflects a substantive policy decision of California to require meaningful judicial review before a defendant is subjected to punitive damages. Under California substantive law governing punitive damages, the public interest must be recognized and assessed before California courts may permit an award punitive damages to stand. Stated another way, California does not allow punitive damages except when and to the extent that the punitive damage award promotes the public interest. Viewed in this light, the Adams rule is not a mere rule of procedure, as the majority incorrectly characterizes it. The Adams rule does not make the litigation process more efficient, more accurate, or serve any procedural function that would favor applying Rule 50 in place of the Adams rule.6 As the California Supreme Court in Adams made clear, the reasoning for the rule is based upon the "public interest in punitive damage awards in appropriate amounts." Adams, 284 Cal.Rptr. 318, 813 P.2d at 1354 n. 5. The Adams rule gives defendants a non-waivable right to judicial review of a punitive damages award post-verdict.
The Due Process Clause of the Fourteenth Amendment, which requires meaningful post-verdict judicial review of punitive damage awards fashioned by a jury, also dictates against applying the terms of Rule 50 in this case. Honda, 512 U.S. at 434-35, 114 S.Ct. 2331.7 The wise principle that courts should not allow the imposition of excessive or arbitrary exemplary damage awards is long established; this principle predated our Constitution and still recurs in current times. Fabrigas v. Mostyn, 2 Bl.W. 928, 96 Eng. Rep. 549 (K.B.1774) ("Some [awards] may be so monstrous and excessive, as to be in themselves an evidence of passion or partiality in the jury"); Day v. Woodworth, 54 U.S. (13 How.) 363, 371, 14 L.Ed. 181 (1851) (exemplary, punitive or vindictive damages should reflect the "enormity of [the] offence"); Browning-Ferris Indus. of Vermont, Inc. v. Kelco Disposal Inc. 492 U.S. 257, 293, 109 S.Ct. 2909, 106 L.Ed.2d 219 (1989) (O'Connor, J., concurring in part and dissenting in part) ("Chapter 20 of Magna Carta, 9 Hen. III, ch. 14 (1225), prohibited amercements that were disproportionate to the offense or that would deprive the wrongdoer of his means of livelihood: `A Free-man shall not be amerced for a small fault, but after the manner of the fault; and for a great fault after the greatness thereof.'"); Honda, 512 U.S. at 434, 114 S.Ct. 2331 (due process dictates that a defendant cannot be subjected to exemplary damages absent post-verdict judicial review); BMW of N. Am., Inc. v. Gore, 517 U.S. 559, 587, 116 S.Ct. 1589, 134 L.Ed.2d 809 (1996) (Breyer, J., concurring) ("This constitutional concern, itself harkening back to the Magna Carta, arises out of the basic unfairness of depriving citizens of life, liberty, or property, through the application, not of law and legal process, but of arbitrary coercion."); Ciraolo v. City of New York, 216 F.3d 236, 245 (2d Cir.2000) (Calabresi, J., concurring) ("Although widely accepted by economists and acknowledged by some courts, the multiplier function of punitive damages has nonetheless been applied haphazardly at best. One reason this is so is that the twin goals of deterrence and retribution are often conflated, rather than recognized as analytically distinct objectives."); State Farm Mutual Automobile Ins. Co. v. Campbell, 538 U.S. 408, 123 S.Ct. 1513, 155 L.Ed.2d 585 (2003) ("The Due Process Clause of the Fourteenth Amendment prohibits the imposition of grossly excessive or arbitrary punishments on a tortfeasor.") (emphasis added). Though each of these cases might be distinguished in some way, a general principle favoring judicial review of punitive damages runs through these cases and should illuminate our judgment.8
As Adams recognized, based on the Supreme Court's reasoning in Pac. Mut. Life Ins. Co. v. Haslip, 499 U.S. 1, 111 S.Ct. 1032, 113 L.Ed.2d 1 (1991), there is "a constitutional mandate for meaningful judicial scrutiny of punitive damages awards." Adams, 284 Cal.Rptr. 318, 813 P.2d at 1356. In Haslip, the Court held that Alabama's system of jury instructions and judicial review that governed an award of punitive damages protected a civil defendant's due process interests. Id. at 20-24, 111 S.Ct. 1032. The Supreme Court also made it clear that Alabama's system for reviewing punitive damage awards satisfied due process because it provided a "definite and meaningful constraint" on a jury's discretion to award punitive damages by allowing post-verdict review procedures. Id. at 22, 111 S.Ct. 1032. This constitutional mandate requiring meaningful judicial scrutiny of punitive damages post jury-verdict was further clarified in Honda Motor Co. v. Oberg. In Honda, the Supreme Court specifically held that Oregon's system for awarding punitive damages violated procedural Due Process because it did not permit meaningful post-verdict review of jury verdicts that included punitive damages. 512 U.S. at 434-35, 114 S.Ct. 2331. More importantly, the Court made clear that post-verdict review of punitive damage awards is the most important procedural safeguard on punitive damage awards and held that the lack of meaningful review of jury verdicts violates the Due Process Clause of the Fourteenth Amendment. Id. at 435, 114 S.Ct. 2331; see also White v. Ford Motor Co., 312 F.3d 998, 1025 (9th Cir.2002) ("Read together Haslip and Honda teach that ... it is the availability of post-verdict review of punitive damages that provides the most substantial procedural check on punitive damages.") (Graber, J., concurring in part and dissenting in part). The Due Process guarantee mandating post-verdict judicial review of punitive damages provides an additional reason against the application of Rule 50 in this case.
The majority's reversal of the district court's order overturning such punitive damages in this case is error, even if on remand the district court decides to grant a new trial on punitive damages. Because inadequate evidence of malice was presented in the first trial, the district court was correct to strike punitive damages and defendants in law deserve to be free of any risk that punitive damages be awarded in a new trial. One can only hope that the district court on remand will at least alleviate the error of the majority's decision by ordering a new trial on punitive damages
As the majority correctly states: "Federal Rule of Civil Procedure 50(a) permits a party to move for judgment as a matter of law after the opposing party has been fully heard and prior to the submission of the case to the jury. Fed.R.Civ.P. 50(a). If such a motion made at the close of all the evidence is denied, Rule 50(b) allows the moving party to `renew' its motion within ten days after the court's entry of final judgment in the case. Fed.R.Civ.P. 50(b)."supra at 758.