Opinion ID: 556612
Heading Depth: 2
Heading Rank: 3

Heading: The Dismissal of the Claim for Punitive Damages

Text: 49 In a Sec. 1983 action, as the trial court here properly instructed the jury, punitive damages may be awarded when the defendant's conduct is shown to be motivated by evil motive or intent, or when it involves reckless or callous indifference to the federally protected rights of others. Smith v. Wade, 461 U.S. 30, 56, 103 S.Ct. 1625, 1640, 75 L.Ed.2d 632 (1983). In the present case, the court set aside the jury's finding that such an award was warranted, (a) indicating the court's assumption that the threshold levels for the award of compensatory and punitive damages cannot be the same, (b) implying that Vasbinder had shown no more than the minimum necessary to establish his claim for compensatory damages, and (c) concluding that no reasonable juror could have concluded that Scott and Switzer engaged in conduct that was outrageous or in callous disregard of Vasbinder's rights. We disagree with all three of these premises. 50 First, in Smith v. Wade, the Supreme Court expressly rejected the proposition that the deterrence and punitive purposes of punitive damages are served only if the threshold for punitive damages is higher in every case than the underlying standard for liability. The Court noted that at common law there was no difference in the two thresholds, and it perceived no reason to introduce different thresholds in actions brought under Sec. 1983. Although the claim before the Court in Smith was one for the use of excessive force, which has a somewhat elevated threshold for the establishment of liability, the Court's general discussion was not limited to that type of claim. Rather, the Court observed that though entitlement to compensatory damages is automatic upon a finding that the plaintiff's rights have been violated, an award of punitive damages is discretionary, reflecting a moral judgment, id. at 52, 103 S.Ct. at 1638, and that the threshold of proof need not be different. Id. at 52-55, 103 S.Ct. at 1638-40. 51 In the present case, we need not decide whether proof that an employer's demotion of an employee because of his report of possible criminal conduct to law enforcement authorities is, without more, the type of conduct that may merit an award of punitive damages, for the jury was not so instructed. Rather, it was instructed that if it found Vasbinder's constitutional rights had been violated it must award him compensatory damages, whereas an award of punitive damages was within its discretion, and it was given clearly different instructions as to what findings would justify each type of award. Thus, as to liability and compensatory damages, the court instructed the jury, in pertinent part, as follows: 52 in order for the plaintiff to prove his [retaliation] claim against the defendants, the plaintiff must establish by a preponderance of the evidence that the acts of speech engaged in by him were a substantial or motivating factor in the defendants' decision to remove the plaintiff from his probationary employment and return him to his former position. 53 .... 54 If you return a verdict in the plaintiff's favor against either or both of the defendants, you must award him such a sum of money as you believe will fairly and justly compensate him for any injury you find he actually sustained as a direct consequence of the conduct of the defendant. 55 In connection with punitive damages, in contrast, the court instructed the jury that it could make such an award only if it found that the disregard of Vasbinder's First Amendment rights was malicious or wanton. Thus, the jury was advised that it might award such damages 56 to punish the defendants and others like him and to prevent him from committing such conduct in the future. You may award plaintiff punitive damages if you find that either or both of the defendants' actions were done maliciously or wantonly. 57 An act is maliciously done if it is prompted by ill will or spite toward the plaintiff. An act is wantonly done if it is done in reckless or careless disregard of or with indifference to the rights of the injured plaintiff. 58 The plaintiff has the burden of proving by a fair preponderance of the credible evidence that a defendant acted maliciously or wantonly with regard to his rights. I instruct you, however, that even if plaintiff succeeds in proving that a defendant acted maliciously or wantonly, an award of punitive damages is entirely discretionary. Even if the legal damages [sic ] for punitive damages are satisfied, you may still decide not to award punitive damages. 59 In making this particular decision, you should consider the underlying purpose of punitive damages. Punitive damages are awarded to punish a defendant for outrageous conduct and to deter him and others like him from engaging in similar conduct in the future. 60 Thus, in deciding whether to award punitive damages, you should consider whether the defendant may be adequately punished by an award of actual damages only or whether the conduct is so extreme and outrageous that actual damages are inadequate to punish the wrongful conduct. You should also consider whether actual damages, standing alone, are likely to deter or prevent this defendant and others like him from engaging in the wrongful acts that may have been performed or whether punitive damages are necessary to provide deterrence. 61 Thus, the instructions in the present case did not purport to advise the jury that the threshold for an award of compensatory damages was the same as that for an award of punitive damages. 62 Moreover, we disagree with the trial court's assessment that to hold, on this record, that punitive damages were legally warranted would be to equate success on the merits of the underlying cause of action with entitlement to punitive damages. Posttrial Order at 4 (emphasis added). If Scott and Switzer had been somewhat more forthright and taken the position that they could no longer work with Vasbinder and demoted him because of his contact with the FBI, Vasbinder would still have prevailed on his First Amendment claim because defendants failed to show that, in light of the seriousness of the matters communicated to the FBI, the state's efficiency interests outweighed Vasbinder's speech interests. 63 The present record, however, taken in the light most favorable to Vasbinder, shows culpable conduct well in excess of any such forthright action. Instead of pleading inefficiency born of lack of trust due to the FBI contact, Scott and Switzer, while taking their actions because of that contact, filled Vasbinder's record with damaging personnel actions. Thus, though they previously had consistently rated Vasbinder's performance as very high or outstanding, though OVR placements flourished with Vasbinder as statewide coordinator, and though the audit resulting from Vasbinder's actions caused OVR to revise its procedures and to seek credits from several private facilities, as soon as Vasbinder revealed that he had spoken to the FBI, defendants found his performance barely effective. They promptly stripped him of his most significant duties as statewide coordinator and then increased his probationary period; the jury could well have found this two-step sequence in itself devious, for it seems to minimize the opportunity for the employee to prove his merit in the extended period. Indeed, Vasbinder's probationary appointment was terminated months before the end of the extended period, since, as soon as Scott was informed that the government would not bring criminal charges, Vasbinder was officially demoted. 64 In sum, though Scott conceded at trial that Vasbinder's concerns were genuine, and though he and Switzer had promoted Vasbinder with full awareness of the personality problems on which they purported to rely in demoting him, Scott and Switzer chose to proceed, after learning of Vasbinder's report to the FBI, by filling his record with damaging evaluations and job modifications. On this view of the record, it was not irrational or impermissible for the jury to infer that defendants' personnel actions toward Vasbinder were in callous disregard of his rights, and were intended both to deter other potential whistle-blowers and to disguise the retaliatory nature of their action from outsiders. It was surely within the jury's discretion to send a message, to Scott and Switzer and to others, that such retaliation is intolerable. 65 Accordingly, we reverse so much of the judgment as dismissed Vasbinder's claim for punitive damages, and we remand for a trial as to the amount to be awarded. 66 Finally, we are constrained to note the practical flaw in the trial court's decision to dismiss the punitive damages claim without having the jury make a finding as to the amount of punitive damages it would have awarded. We have repeatedly cautioned trial judges, usually in the context of liability determinations, that it is preferable,  'in the best interests of efficient judicial administration,'  to refrain from granting directed verdicts and to allow the case to be decided, at least in the first instance, by the jury. See, e.g., Konik v. Champlain Valley Physicians Hospital Medical Center, 733 F.2d 1007, 1013 n. 4 (2d Cir.) (quoting Mattivi v. South African Marine Corp., Huguenot, 618 F.2d at 166 & n. 2), cert. denied, 469 U.S. 884, 105 S.Ct. 253, 83 L.Ed.2d 190 (1984); Ebker v. Tan Jay International, Ltd., 739 F.2d 812, 824 n. 15 (2d Cir.1984). Thereafter, if the court believes the jury has reached an irrational verdict, it may grant judgment n.o.v.; if that ruling is reversed on appeal, the matter may be efficiently concluded by reinstatement of the jury's verdict, without the need to hold an entire new trial. This principle is no less applicable to issues of damages. See, e.g., Oboler v. Goldin, 714 F.2d 211, 212-13 (2d Cir.1983). 67 In the present case, we have no difficulty in theory with a bifurcation of the punitive damages issue, postponing the jury's consideration of the amount of such an award until a later stage in the trial. Punitive damages are to be tailored to the defendant's ability to pay, and normally that class of evidence is not admitted or desirable during the liability and compensatory damages phase of the case. See, e.g., Smith v. Lightning Bolt Productions, Inc., 861 F.2d 363, 373-74 (2d Cir.1988); Simpson v. Pittsburgh Corning Corp., 901 F.2d 277, 283 (2d Cir.), cert. dismissed, --- U.S. ----, 111 S.Ct. 27, 111 L.Ed.2d 840 (1990). However, once the jury had returned its finding that punitive damages should be awarded, the court should have proceeded directly to a resolution of the amount--taking such appropriate additional evidence as the parties wished to present, asking the jury to determine an amount, and reserving the right to set aside the award thereafter through the grant of judgment n.o.v. Had this procedure been followed, our reversal on this appeal could be followed efficiently by reinstatement of the jury's verdict. Given the court's dismissal without allowing the jury to determine the amount, however, the matter now will apparently have to go back for a duplicative presentation of the evidence as to the defendants' actions so that a new jury may assess the amount to be awarded.