Title: Watson v. Dixon
Citation: 352 N.C. 343
Docket Number: 103A99
State: north-carolina
Issuer: north-carolina Supreme Court
Date: July 13, 2000

SARAH JOAN WATSON v. BOBBY DIXON and DUKE UNIVERSITY
No. 103A99
(Filed 13 July 2000)
Damages and Remedies--punitive damages--vicarious liability--ratification--employer
liability in excess of employee’s
In a case where plaintiff sued a co-employee and their employer for the co-employee’s
intimidation and harassment of plaintiff in the workplace, the Court of Appeals did not err by
concluding that punitive damage liability of an employer under a theory of vicarious liability,
such as ratification, can exceed the punitive damage liability of the employee because: (1) unlike
compensatory damages, punitive damages are not necessarily intended to restore plaintiff to her
original condition or to make plaintiff whole; and (2) limiting an employer’s punitive damages to
the amount assessed against the employee whose tortious conduct the employer ratified would
chill the deterrent and penal effects of punitive damages on the employer. 
Appeal pursuant to N.C.G.S. § 7A-30(2) from the decision of
a divided panel of the Court of Appeals, 132 N.C. App. 329, 511
S.E.2d 37 (1999), affirming after rehearing its earlier unanimous
opinion, 130 N.C. App. 47, 502 S.E.2d 15 (1998), in which it
affirmed in part and reversed and remanded in part an order
entered 15 November 1996 by Stanback, J., in Superior Court,
Durham County.  Heard in the Supreme Court 13 March 2000.
Glenn, Mills & Fisher, P.A., by Stewart W. Fisher and
William S. Mills, for plaintiff-appellee.
Ogletree, Deakins, Nash, Smoak and Stewart, P.C., by Guy F.
Driver, Jr., and Robert A. Sar, for defendant-appellant Duke
University.
FRYE, Chief Justice.
The sole issue in this case is whether the Court of Appeals
erred by concluding that the punitive damage liability of an
employer under a theory of vicarious liability, such as
ratification, can exceed the punitive damage liability of the
employee.  For the reasons stated herein, we conclude that the
 Since chapter 1D of the North Carolina General Statutes,
1
pertaining to punitive damages, was enacted after the lawsuit in
this case was initiated, it does not apply.
Court of Appeals did not err, and we affirm its decision.1
Since the issue in this case is not fact-laden and presents
only a question of law, only a brief recitation of the facts is
necessary.  Sarah Watson (plaintiff) and defendant Bobby Dixon
(Dixon) were employed by defendant Duke University (Duke). 
Plaintiff and Dixon were co-employees in the sterile processing
department of the Duke University Medical Center.  Shortly after
plaintiff began working at Duke in July 1991, Dixon engaged in a
seven- to eight-month campaign of intimidation and harassment
against plaintiff.  Stripped of the graphic details, Dixon’s
conduct consisted of extremely inappropriate comments to
plaintiff and offensive touching of plaintiff in the workplace. 
On the several occasions when Dixon harassed or intimidated
plaintiff, plaintiff reported Dixon’s conduct to various Duke
officials; however, Duke took no serious action until after March
1992, when management finally transferred plaintiff to another
department.   As a result of Dixon’s conduct, plaintiff suffered
a variety of ailments including crying spells, vomiting,
headaches, nightmares, and insomnia.  Plaintiff was also later
diagnosed with depression and post-traumatic stress disorder.  
On 22 October 1992, plaintiff initiated the underlying
action against defendants.  In her complaint, plaintiff asserted
claims for intentional infliction of emotional distress;
negligent infliction of emotional distress, including claims of
Duke’s negligent hiring and retention of Dixon; and assault. 
Defendants answered the complaint, denying all pertinent
allegations and asserting various defenses.  Defendants
subsequently filed motions to dismiss and for summary judgment. 
On 18 July 1995, the trial court granted Duke’s motions to
dismiss on plaintiff’s claims for assault and negligent hiring
and dismissed the negligent infliction of emotional distress
claims against both defendants.
The remaining claims of intentional infliction of emotional
distress and negligent retention of employee against Duke and the
remaining claims of assault and intentional infliction of
emotional distress against Dixon were tried before a jury at the
23 September 1996 Civil Session of Superior Court.  At the close
of the presentation of evidence from both sides, the jury
answered the issues submitted by the trial court as follows:
(1)  Did the defendant, Bobby Dixon, assault the
plaintiff, Sarah JoAn Watson?
Answer:  no
(2)  Did the defendant, Bobby Dixon, commit a battery
upon the plaintiff, Sarah JoAn Watson?
Answer:  yes
. . . .
(3)  What amount is the plaintiff, Sarah JoAn Watson,
entitled to recover for her personal injury as a result
of the assault and/or battery committed by the
defendant, Bobby Dixon?
Answer:  $100
(4)  Did the defendant, Bobby Dixon, intentionally
cause severe emotional distress to the plaintiff?
Answer:  yes
. . . .
(5)  Did the defendant, Duke University, by its
actions, ratify the actions of the defendant, Bobby
Dixon, that you found intentionally caused severe
emotional distress to the plaintiff, Sarah JoAn Watson?
Answer:  yes
. . . .
(6)  What amount is the plaintiff, Sarah JoAn Watson,
entitled to recover for her personal injury as a result
of the intentional infliction of emotional distress?
Answer:  $100,000
. . . .
(7)  What amount of punitive damages, if any, does the
jury, in its discretion[,] award to the plaintiff as a
result of the intentional infliction of emotional
distress from the defendant, Bobby Dixon?
Answer:  $5000
. . . .
(8)  What amount of punitive damages, if any, does the
jury, in its discretion[,] award to the plaintiff as a
result of the intentional infliction of emotional
distress from the defendant, Duke University?
Answer:  $500,000
. . . .
(9)  Was the plaintiff injured as a proximate result of
the defendant Duke University’s negligence in retaining
the defendant Bobby Dixon as its employee?
Answer:  no 
On 21 October 1996, the trial court entered its judgment
incorporating the jury’s findings; adding interest; and taxing
defendants for expert witness fees, deposition expenses, and
court costs.  On 28 October 1996, defendants filed a motion for
judgment notwithstanding the verdict, a new trial, or a
remittitur as to damages, which the trial court denied on
15 November 1996.  Both defendants appealed the trial court’s
denial of this motion to the Court of Appeals.
On appeal, the Court of Appeals concluded that “the trial
court properly entered judgment on plaintiff’s claims against
Dixon for intentional infliction of emotional distress and
against Duke for ratification.”  Watson v. Dixon, 130 N.C. App.
47, 56, 502 S.E.2d 15, 22 (1998).  However, the Court of Appeals
reversed the judgment of the trial court as to the punitive
damages award and remanded the case for a determination of the
punitive damages to be awarded against both defendants.  See id. 
All parties petitioned for a rehearing, which the Court of
Appeals allowed without additional briefing or arguments.
Upon rehearing, a majority of the Court of Appeals panel
affirmed the trial court’s judgment awarding punitive damages and
stated that it could not “say that as a matter of law the
punitive damage awards against Dixon for $5,000 and Duke for
$500,000 was [sic] an abuse of discretion.”  Watson v. Dixon, 132
N.C. App. 329, 334, 511 S.E.2d 37, 41 (1999).  Judge McGee
concurred in part and dissented in part, concluding that “the
liability of the employer under a theory of vicarious liability,
such as respondeat superior or ratification, cannot be in excess
of that of the employee.”  Id. at 335, 511 S.E.2d at 41 (McGee, 
J., dissenting in part).
The propriety and sufficiency of the evidence to support
punitive damages is not at issue in this case since all three
judges on the Court of Appeals panel agreed that there was direct
evidence to support punitive damages against both Dixon and Duke. 
Id. at 334, 511 S.E.2d at 41; id. at 335, 511 S.E.2d at 41
(McGee, J., concurring in part).  Our review here is limited to
the resolution of defendant Duke’s contention, based on Judge
McGee’s dissenting opinion, that the punitive damage liability of
an employer under a theory of vicarious liability, such as
ratification, cannot exceed the punitive damage liability of the
employee.  For the reasons below, we disagree with defendant’s
contention.
This case appears to present an issue of first impression
for this Court.  In support of its position, defendant relies on
Pinnix v. Griffin, 221 N.C. 348, 20 S.E.2d 366 (1942), and its
progeny.  See also MacFarlane v. N.C. Wildlife Resources Comm’n,
244 N.C. 385, 93 S.E.2d 557 (1956), overruled in part on other
grounds by Barney v. N.C. State Highway Comm’n, 282 N.C. 278, 192
S.E.2d 273 (1972).  These cases addressed compensatory damages
and not punitive damages.  Compensatory damages serve a purpose
different from that of punitive damages.  The objective of
compensatory damages is to restore the plaintiff to his original
condition or to make the plaintiff whole.  See Bowen v. Fidelity
Bank, 209 N.C. 140, 144, 183 S.E. 266, 268 (1936)
(“[C]ompensatory damages are allowed as indemnity to the person
who suffers loss in satisfaction and recompense for the loss
sustained.  The purpose of the law is to place the party as near
as may be in the condition which he would have occupied had he
not suffered the injury complained of.”).  Thus, it is axiomatic
that an employer’s liability for compensatory damages based on
ratification of the employee’s tortious conduct may not exceed
the employee’s liability for that conduct.  The plaintiff, who
has been injured by the tortious conduct of the employee, is not
entitled to additional compensation solely because of the
ratification by the employer.  Stated differently, the amount of
damages required to restore the plaintiff to his original
condition or to make the plaintiff whole is the same,
notwithstanding ratification by the employer.  See Pinnix, 221
N.C. at 351, 20 S.E.2d at 369 (“The plaintiff can have but one
satisfaction--payment of the damages caused by the wrongful act
of [the employee].”).
Punitive damages, on the other hand, are not necessarily
intended to restore the plaintiff to his original condition or to
make the plaintiff whole.  In Oestreicher v. American Nat’l
Stores, Inc., this Court noted the standard applied to the
imposition of punitive damages:
It is generally held that punitive damages are
those damages which are given in addition to
compensatory damages because of the “wanton, reckless,
malicious, or oppressive character of the acts
complained of.”  22 Am. Jur. 2d, Damages § 236 (1965). 
Such damages generally go beyond compensatory damages,
and they are usually allowed to punish defendant and
deter others.  It is generally held that punitive
damages are recovered not as a matter of right, but
only in the discretion of the jury.  As a rule you
cannot have a cause of action for punitive damages by
itself.  If the complainant fails to plead or prove his
cause of action, then he is not allowed an award of
punitive damages because he must establish his cause of
action as a prerequisite for a punitive damage award.
Oestreicher, 290 N.C. 118, 134, 225 S.E.2d 797, 807-08 (1976)
(citations omitted); see also Newton v. Standard Fire Ins. Co.,
291 N.C. 105, 229 S.E.2d 297 (1976) (explaining punitive
damages); Holloway v. Wachovia Bank & Trust Co., 339 N.C. 338,
452 S.E.2d 233 (1994) (explaining punitive damages).  Since
punitive damages and compensatory damages serve different
purposes, defendant’s reliance on cases dealing with compensatory
damages is misplaced.
This Court has also stated that “it is well established that
evidence as to the financial worth of a defendant is competent
for consideration by the jury when an issue as to punitive
damages is warranted and submitted.”  Hinson v. Dawson, 244 N.C.
23, 29, 92 S.E.2d 393, 397 (1956); see also Harvel’s, Inc. v.
Eggleston, 268 N.C. 388, 392, 150 S.E.2d 786, 790 (1966) (“[T]he
admission of evidence tending to establish [financial] ability is
held to be prejudicial, except in cases warranting an award of
punitive damages.”).
Limiting an employer’s punitive damages to the amount
assessed against the employee whose tortious conduct the employer
ratified would chill the deterrent and penal effects of punitive
damages on the employer.  It may take a different amount of money
to deter or punish an employer-defendant like Duke than it would
to deter or punish an employee-defendant like Dixon.  An employer
who has ratified an employee’s tortious conduct should not be
allowed to use its employee’s limited financial resources as a
shield against additional punitive damages.  
We reach our decision here by harmonizing our case law with
the policies underlying punitive damages.  Further, we note that
other courts have reached similar results.  See, e.g., Weeks v.
Baker & McKenzie, 63 Cal. App. 4th 1128, 1154-55, 74 Cal. Rptr.
2d 510, 526-27 (1998) (“‘[O]bviously, the function of deterrence
. . . will not be served if the wealth of the defendant allows
him to absorb the award with little or no discomfort . . . .’”);
O’Donnell v. K-Mart Corp., 100 A.D.2d 488, 490, 474 N.Y.S.2d 344,
346-47 (1984) (allowing an award of punitive damages against a
corporate employer to stand in the absence of an award of
punitive damages against the employee where the corporate
employer ratified the employee’s malicious acts and where the
court’s charge permitted such an award).
We conclude that the liability of an employer for punitive
damages based on ratification is not limited to the punitive
damage liability of the employee whose conduct the employer
ratified.  Thus, we affirm the decision of the Court of Appeals.
AFFIRMED.