Opinion ID: 443256
Heading Depth: 1
Heading Rank: 12

Heading: indemnification and city liability for the participation

Text: OF WOELFEL AND GLASER IN THE CONSPIRACY 294 The names of Leo Woelfel and Rudolph Glaser were included in the special verdict as potential co-conspirators, much like unindicted co-conspirators in a criminal context, notwithstanding the fact that they are deceased, they were never named in the complaint and had no opportunity to defend this action. Their names were included in the event that plaintiffs could establish an independent theory by which the City would be liable for their actions in regard to the conspiracy. Bell III, 536 F.Supp. 462, 472. The jury found that Woelfel and Glaser were in fact members of the conspiracy, assessing punitive damages of $75,000 and $100,000 against them, respectively. 295 The district court properly held that plaintiffs cannot recover from the City (nor from other defendants) the $175,000 assessed in the names of these non-parties. As the district court noted, the basis of the City's liability for the entire judgment in this case, i.e., the conspiracy damages as well as the damages against Grady arising from the shooting, is the Wisconsin indemnity statute, Wis.Stat. Sec. 895.46, 75 which provides that a defendant public employee against whom a judgment of damages is entered for activities within the scope of employment shall be indemnified by the political subdivision which employed the defendant. The purpose of Section 895.46 is to prevent government employees from having to pay out of their own pockets judgments arising out of their official duties. Horace Mann Insurance Co. v. Wauwatosa Board of Education, 88 Wis.2d 385, 389, 276 N.W.2d 761, 764-765 (1979). As the district court recognized, this policy is not served in regard to Woelfel and Glaser. No judgment has been entered against them or their estates, and they as nonparties are not liable for anything. Therefore the City bears no obligation to indemnify with respect to this portion of the damages. 296 Notwithstanding the lack of indemnification, plaintiffs contend that Woelfel's and Glaser's conduct amounted to a municipal policy, practice, custom, or usage, mandating municipal liability under Monell v. Department of Social Services, 436 U.S. 658, 98 S.Ct. 2018, 56 L.Ed.2d 611. In the event that Monell conduct is not found, plaintiffs assert that the City can be held liable for punitive damages on a theory of respondeat superior, under 42 U.S.C. Secs. 1981, 1985(2), 1985(3), and 1986. We disagree. 297 Regardless of the disposition of the Monell 76 and respondeat superior 77 issues, the import of City of Newport v. Fact Concerts, Inc., 453 U.S. 247, 101 S.Ct. 2748, 69 L.Ed.2d 616, precludes plaintiffs from recovering punitive damages against municipalities absent indemnification. There the City of Newport, Rhode Island, cancelled a license for a concert the day before the first scheduled performance on the grounds that one of the acts played rock music rather than jazz, the city council fearing that the act would attract a rowdy and undesirable audience. City of Newport, 453 U.S. at 250, 101 S.Ct. at 2751. The concert promoter sued the City under Section 1983, alleging that the City's actions violated his First Amendment rights. The jury awarded both compensatory and punitive damages against the City, and the court of appeals affirmed. The Supreme Court granted certiorari to address the punitive damages issue, holding that a municipality is immune from punitive damages in a Section 1983 action. 298 Although Monell, supra, held that municipalities, like other persons under Section 1983, may be sued for deprivations of constitutional rights committed under color of law, Justice Blackmun speaking for the Court in City of Newport made clear that: 299 By the time Congress enacted what is now Sec. 1983, the immunity of a municipal corporation from punitive damages at common law was not open to serious question. It was generally understood by 1871 that a municipality, like a private corporation, was to be treated as a natural person subject to suit for a wide range of tortious activity, but this understanding did not extend to the award of punitive or exemplary damages. 300 City of Newport v. Fact Concerts, Inc., 453 U.S. at 259-260, 101 S.Ct. at 2755-2756 (footnote omitted). The Court, in reviewing the common law surrounding punitive damages, noted that: 301 The courts readily distinguished between liability to compensate for injuries inflicted by a municipality's officers and agents, and vindictive damages appropriate as a punishment for the bad faith conduct of those same officials and agents. Compensation was an obligation properly shared by the municipality itself, whereas punishment properly applied only to the actual wrongdoers. The courts thus protected the public from unjust punishment, and the municipalities from undue physical constraints. 302 453 U.S. at 263, 101 S.Ct. at 2757 (footnote omitted). While recognizing that [i]t is perhaps possible to imagine an extreme situation where the taxpayers are directly responsible for perpetrating an outrageous abuse of constitutional rights, 453 U.S. at 267 n. 29, 101 S.Ct. at 2760 n. 29, the Court explained that: 303 [P]unitive damages imposed on a municipality are in effect a windfall to a fully compensated plaintiff, and are likely accompanied by an increase in taxes or a reduction of public services for the citizens footing the bill. Neither reason nor justice suggests that such retribution should be visited upon the shoulders of blameless or unknowing taxpayers. 304 453 U.S. at 267, 101 S.Ct. at 2760. 305 In this case plaintiffs do not argue that the taxpayers of the City of Milwaukee were directly responsible for the abuse of the constitutional rights of Daniel Bell and his family. Instead plaintiffs seek to limit the punitive damages rule of City of Newport to civil rights actions brought under Section 1983. Because the conspiracy to infringe upon the Bell family's constitutional rights constitutes a violation of Section 1985, and possibly (though we do not decide) Section 1981 as well, plaintiffs contend that the rule of City of Newport does not preclude municipal punitive damage liability under those Sections. 306 Plaintiffs' contention is without merit. The punitive damages rule of City of Newport is not confined to Section 1983 and applies to Section 1985 as well as to Section 1981. The holding in City of Newport is based in part upon the broad-based common law immunity of municipalities from punitive damages: [M]embers of the 42d Congress were familiar with common law principles [and] they likely intended these common law principles to obtain, absent specific provisions to the contrary. City of Newport, 453 U.S. at 258, 101 S.Ct. at 2755. This same Congress passed Section 1985; moreover, plaintiffs have not demonstrated that the Congress that passed the 1866 Act, the origin of Section 1981, wished to discard the same common law principle. 307 Additionally, the Supreme Court based its holding in City of Newport on the recognition that the goals underlying punitive damages--retribution and deterrence--would not be significantly advanced by awarding punitive damages in Section 1983 actions against a municipality. 453 U.S. at 258-260, 101 S.Ct. at 2755-2756. This is equally true for suits brought under other Sections of the civil rights laws. See Heritage Homes of Attleboro, Inc. v. The Seekonk Water District, 670 F.2d 1 (1st Cir.1982) (regarding Section 1981), certiorari denied, 457 U.S. 1120, 102 S.Ct. 2934, 73 L.Ed.2d 1333; Carter v. City of Emporia, 543 F.Supp. 354, 359 (D.Kan.1982) (regarding Sections 1981, 1985 and 1986). 308 Similarly, the Supreme Court's discussion in Smith v. Wade, 461 U.S. 30, 103 S.Ct. 1625, 75 L.Ed.2d 632, of punitive damages in civil rights actions supports our conclusion that, absent waiver of immunity, municipalities may not be held liable for punitive damages under Sections 1985(2) (second portion) and 1985(3). In an action brought under Section 1983 Smith addressed primarily the conduct that must be proven to sustain punitive damage awards against defendants generally. The Court also commented broadly upon the holding in City of Newport: 309 In Newport v. Fact Concerts, Inc.    we held that a municipality (as opposed to an individual defendant) is immune from liability for punitive damages under Sec. 1983. A significant part of our reasoning was that deterrence of constitutional violations would be adequately accomplished by allowing punitive damage awards directly against the responsible individuals   . 310 Smith v. Wade, 461 U.S. at 36 n. 5, 103 S.Ct. at 1629 n. 5 (emphasis added). 311 Irrespective of the Section of the civil rights statute that plaintiffs invoke in seeking recovery for the denials of due process and equal protection, the well-established policy of municipal immunity from punitive damages cannot be ignored. Accordingly, we affirm the district court's holding that the City of Milwaukee is not liable for the $175,000 assessed in the names of non-parties Woelfel and Glaser. 312 Although the argument in the briefs is imprecise on this point, the City apparently also invokes City of Newport in an effort to avoid indemnification of the punitive damages awarded against defendants Grady, Johnson, and Shaffer in this action. 78 This contention is rejected. Since the punitive damages awarded were improper as to Johnson and excessive as to Shaffer, this issue is relevant only in regard to the $50,000 punitive damages against Shaffer sustained herein and the total of $50,000 punitive damages awarded against Grady. It is well settled that a municipality's immunity from liability, including liability for punitive damages, may be waived by federal or state law. See, e.g., Owen v. City of Independence, Missouri, 445 U.S. 622, 647-648, 100 S.Ct. 1398, 1413-1414, 63 L.Ed.2d 673. The indemnity afforded governmental employees under Wis.Stat. Sec. 895.46 applies to all judgments, no distinctions being made for compensatory versus punitive damages. As noted earlier, since non-parties are not liable for a judgment, the City cannot be liable for the damages assessed in the names of Woelfel and Glaser. The City does not contend that Section 895.46 does not apply to punitive damages. Rather, the City argues that the punitive damages rule of City of Newport precludes municipal liability irrespective of Wisconsin law, so that the City is not responsible for the punitive damages of Grady, Johnson, and Shaffer. This contention, however, directly conflicts with the recognition in City of Newport that some state indemnification statutes exclude indemnification for malicious or willful misconduct by employees, 453 U.S. at 269 n. 30, 101 S.Ct. at 2761 n. 30, and that these limited statutes do not shift the liability from the offending official to the municipality for such conduct. Wisconsin does not so limit its indemnification law. The obvious implication is that, regardless of the willfulness of the conduct at issue, an unlimited indemnification statute superimposes upon the common law a state-created rule which shifts the liability to the municipality. Therefore the district court rightly held that the City must indemnify Grady and Shaffer for the punitive damages arising from the shooting and from the conspiracy (Johnson's punitive damages being vacated and Shaffer's reduced in regard to the conspiracy), as well as indemnify all defendants for the compensatory damages arising out of the killing and the conspiracy.