Source: https://casetext.com/case/freund-v-nycomed-amersham
Timestamp: 2019-02-16 20:45:13
Document Index: 241645982

Matched Legal Cases: ['§ 2922', '§ 6310', '§ 6310', '§ 6310', '§ 6310', '§ 2082', '§ 2802', '§ 2802']

Freund v. Nycomed Amersham, 347 F.3d 752 | Casetext
347 F.3d 752 (9th Cir. 2003)
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United States Court of Appeals, Ninth CircuitOct 21, 2003
…Id. (citing Freund v. Nycomed Amersham, 347 F.3d 752, 761 (9th Cir. 2003) and other cases). If a party raises…
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holding that federal law governs the standard of review in diversity cases
holding that even where a party has failed to move for judgment as a matter of law at the close of evidence, Rule 50(c) "requires a district court granting [the party&apos;s post-trial motion for] judgment as a matter of law also to rule [conditionally] on whether to grant a new trial in the event the judgment as a matter of law is reversed on appeal"
Summary of this case from O&apos;PHELAN v. LOY
holding that employers may not terminate at-will employees for reasons that violate public policy
Summary of this case from Hudson v. First Transit, Inc.
Filed October 21, 2003.
Diane Westwood Wilson and Andrew J. Harakas, Condon Forsyth LLP, New York, NY, for the defendants-appellants-cross-appellees.
Before: CANBY, GOULD, and BERZON, Circuit Judges.
Opinion by Judge CANBY; Dissent by Judge GOULD.
Judges Canby and Berzon have voted to grant the petition for panel rehearing in part and to deny it in part. Judge Gould has voted to grant the petition. The petition of Nycomed for panel rehearing is granted in part and denied in part. The majority and dissenting opinions filed in this case on April 22, 2003, and reported at 326 F.3d 1070, 1082, are withdrawn and the attached majority and dissenting opinions are ordered filed herewith.
Judge Berzon has voted to deny the petition for en banc rehearing, and Judge Canby so recommends. Judge Gould has voted to grant the petition for en banc rehearing. The petition for rehearing en banc, the response thereto, and the attached opinion have been circulated to the full court, and no judge has called for a vote to rehear the case en banc. The petition for rehearing en banc is denied.
No further petitions for panel or en banc rehearing may be filed. The mandate shall issue in due course.
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.
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. We remand for the district court to rule on Nycomed's motion for a new trial on the issue of punitive damages.
After a few years, the relationship between Wakefield and Freund soured. They disagreed on a number of work-related issues, including the office temperature, the proper handling of laboratory equipment, and the company's work scheduling policies. Freund lodged complaints about staffing, expressing his concern that overwork of staff members increased the probability that they would make mistakes that endangered their safety and that of their customers. On one occasion, another employee, Mike Thomas, reported to Freund that he had seen Wakefield pierce his hand with a needle while preparing a radiopharmaceutical kit, causing blood to spill in the laboratory. Freund claimed that Wakefield never reported the incident as he was required to do. Freund also accused Wakefield of unfairly reprimanding Thomas for bringing the needle matter to Freund's attention.
Unless the parties contract otherwise, employment relationships in California are ordinarily "at will," meaning that an employer can discharge an employee for any reason. See Cal. Labor Code § 2922. In Tameny v. Atlantic Richfield Co., 27 Cal.3d 167, 164 Cal.Rptr. 839, 610 P.2d 1330 (1980), the California Supreme Court carved out an exception to the at-will rule by recognizing a tort cause of action for wrongful terminations that violate public policy. See id. at 172, 164 Cal.Rptr. 839, 610 P.2d at 1332-33. More recently, that Court elaborated on its meaning of "public policy" sufficient to support a wrongful termination claim. The public policy must be "(1) delineated in either constitutional or statutory provisions; (2) `public' in the sense that it `inures to the benefit of the public' rather than serving merely the interests of the individual; (3) well established at the time of discharge; and (4) substantial and fundamental." City of Moorpark v. Superior Court, 18 Cal.4th 1143, 1159, 77 Cal. Rptr.2d 445, 959 P.2d 752, 762 (1998) (internal quotation omitted).
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). Thus, Hentzel and its progeny appear still to be good law in California notwithstanding the decisions in Foley and Gantt.
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.
Nycomed's argument is unpersuasive. Moorpark does not refer to either Rojo or Hentzel in the two sentences of the decision relied on by Nycomed, and it is unlikely that the Moorpark Court intended to overturn those decisions by a casual turn of phrase. Second, both Rojo and Hentzel grounded their decisions in the maxim that "where a statutory remedy is provided for a preexisting common law right, the newer remedy is generally considered to be cumulative, and the older remedy may be pursued at the plaintiff's election." Rojo, 52 Cal.3d at 79, 276 Cal. Rptr. 130, 801 P.2d 373 (citations omitted). Moorpark never took issue with this principle. The existence of an independent tort remedy for wrongful discharge based upon, but not limited by, § 6310 is too firmly established in California case law for us to accept Moorpark's two sentences as implicitly overturning that established law.
Contrary to the view stated by the dissent herein, our decision does not run afoul of Honda 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 the amount 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.
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. 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. 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.
The district court also refused conditionally to grant a new trial unless Freund accepted a reduced award of damages.
The district court should not have declined to reach the motion for new trial on punitive damages on the ground that it had already granted judgment as a matter of law on that issue. Rule 50(c) of the Federal Rules of Civil Procedure requires a district court granting a judgment as a matter of law also to rule on whether to grant a new trial in the event the judgment as a matter of law is reversed on appeal. The efficiency of such a rule is apparent here; if the district court had entered such a ruling, we could review it as part of this appeal.
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).
We do not regard Janes 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.
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.
The district court's judgment awarding compensatory damages is affirmed. Its order setting aside punitive damages is reversed and the matter is remanded for the district court to address a renewed motion by Nycomed for a new trial on the issue of punitive damages. The district court's denial of attorneys' fees for Freund under § 2082 is affirmed.
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.
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.
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. 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).
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.
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). Erie established the basis for the result in Ragan v. Merch. Transfer Warehouse Co. 337 U.S. 530, 69 S.Ct. 1233, 93 L.Ed. 1520 (1949), a case applying the Erie doctrine to the Federal Rules of Civil Procedure. In Ragan, the plaintiff filed a complaint in federal court on September 4, 1945, arising from an accident that occurred on October 1, 1943, and served the defendant on December 28, 1945, notwithstanding a Kansas statute which provided:
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.").
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").
The majority's view of Rule 50 abridges this California substantive right because it precludes defendants from obtaining judicial review of a punitive damages award if they do not anticipate an improper punitive damages award pre-verdict and raise the objection by a Rule 50(a) motion. The majority's decision to adhere to Rule 50 violates fundamental limitations of the Supreme Court's rulemaking power as delineated by the Rules Enabling Act because the majority abridges a substantive right of a defendant to be protected against an improper punitive damages award. In enacting the Rules Enabling Act, Congress made clear that it did not authorize the Supreme Court to modify substantive policies such as the California substantive policy that punitive damages be permitted only when they serve the public interest. Because application of Rule 50 would transgress the authority granted by Congress under the Rules Enabling Act, I would apply the Adams rule requiring post-verdict judicial review of a punitive damages award.
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. 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.
This position is supported by the Supreme Court's precedent. In its recent decision in State Farm Mutual Automobile Ins. Co. v. Campbell, 538 U.S. 408, 123 S.Ct. 1513, 155 L.Ed.2d 585 (2003), the Supreme Court explicitly held and explained:
The Supreme Court made clear in Hanna that its decision did not purport to abridge either the Rules Enabling Act or the guarantees of the Constitution. Hanna, 380 U.S. at 473-74, 85 S.Ct. 1136. Notwithstanding the explicit language of Hanna, the majority concludes that what I consider to be a substantive right in California and a federal constitutional guarantee relating to a court's ability to check punitive damage awards of the jury post-verdict cannot even be considered because of Rule 50, on the theory that the Rule "affects only the process of enforcing litigants' rights and not the rights themselves." Ibid. at 762 (internal quotation marks omitted). This incorrect majority view of Rule 50 jettisons the California substantive law requirement that punitive damages must advance public interest and violates the related federal Due Process requirement that courts must be permitted to conduct post-verdict review of punitive damages awards. The procedural nature of Rule 50 is inadequate support for this transgression of state substantive law and federal Due Process. It is untenable to conclude that established California precedent and a Fourteenth Amendment Due Process right allowing judicial review of punitive damage awards following a jury verdict must be subordinate to Rule 50.