Opinion ID: 167974
Heading Depth: 2
Heading Rank: 1

Heading: Fairfield's Appeal Issues

Text: 7 Fairfield has appealed on several issues: it claims that district court erred in 1) denying its Fed.R.Civ.P. 50 motions for judgment as a matter of law on the issue of punitive damages; 2) refusing its proposed jury instruction; and 3) excluding as hearsay emails written by one of Fairfield's managers. We affirm the district court's decision on each of these issues.
8 We review the sufficiency of the evidence to support a punitive damages award de novo. See Deters, 202 F.3d at 1269. We also review a district court's disposition of a motion for judgment as a matter of law de novo. See Baty, 172 F.3d at 1241. 9 Such a judgment is warranted only if the evidence points but one way and is susceptible to no reasonable inferences supporting the party opposing the motion. We do not weigh the evidence, pass on the credibility of the witnesses, or substitute our conclusions for those of the jury. However, we must enter judgment as a matter of law in favor of the moving party if there is no legally sufficient evidentiary basis with respect to a claim or defense under the controlling law. We must view the evidence and any inferences to be drawn therefrom most favorably to the non-moving party. 10 Id. (citations, quotations, alterations omitted); see also Fed.R.Civ.P. 50(a). 11 A Title VII plaintiff is entitled to punitive damages if his or her employer engaged in discriminatory practices with malice or with reckless indifference to [her] federally protected rights. 42 U.S.C. § 1981a(b)(1). Malice or reckless indifference do not require a showing of egregious or outrageous conduct, but instead require proof that the employer acted in the face of a perceived risk that its actions [would] violate federal law. Kolstad v. Am. Dental Ass'n, 527 U.S. 526, 535-36, 119 S.Ct. 2118, 144 L.Ed.2d 494 (1999). An employer may be either directly or vicariously liable for the malicious or recklessly indifferent acts of its officers and employees. 12 An employer is vicariously (or indirectly) liable for compensatory damages when a supervisor with immediate (or successively higher) authority over the employee perpetrates the Title VII violation. See Faragher v. City of Boca Raton, 524 U.S. 775, 807, 118 S.Ct. 2275, 141 L.Ed.2d 662 (1998), and Burlington Indus., Inc. v. Ellerth, 524 U.S. 742, 765, 118 S.Ct. 2257, 141 L.Ed.2d 633 (1998); see also Deters, 202 F.3d at 1270 n. 3. Because it is `improper ordinarily to award punitive damages against one who himself is personally innocent and therefore liable only vicariously,' Kolstad, 527 U.S. at 544, 119 S.Ct. 2118 (quoting Restatement (Second) of Torts, § 909, cmt. b), before a company is held liable for punitive damages for acts of harassment by low-level employees, there [must] be some culpability beyond mere negligence at the management level, Danco, Inc. v. Wal-Mart Stores, Inc., 178 F.3d 8, 18 (1999) (first emphasis in original; second emphasis added). Thus, an employer is vicariously liable for punitive damages where an employee serving in a `managerial capacity' committed the wrong while `acting in the scope of employment.' Kolstad, 527 U.S. at 543, 119 S.Ct. 2118. 2 However, in the punitive damages context, an employer may not be vicariously liable for the [violative] decisions of managerial agents where th[o]se decisions are contrary to the employer's good faith efforts to comply with Title VII. Id. at 545, 119 S.Ct. 2118 (quotations omitted); see also Deters, 202 F.3d at 1271. 3 13 Here, the evidence was sufficient to support the jury's punitive damages award under a vicarious liability theory because managerial employees within Fairfield maliciously and recklessly retaliated against McInnis for reporting sexual harassment. 4 Specifically, the evidence indicates that after McInnis first complained to Gray about Thull's sexual harassment and Turolla's, Thull's, and Mikula's retaliation, Gray began retaliating against her by interfering with her ability to perform her job and documenting alleged problems with McInnis's performance that had not previously existed. After McInnis's second complaint to Gray, he told her that he did not want to get involved and almost immediately thereafter decided to terminate her employment. Then, the day after Gray discovered that McInnis complained to Fogel, the Vice President of Property Management, about Gray's retaliation and his failure to respond to her complaint, Gray scheduled a meeting with McInnis and Mikula and immediately terminated McInnis's employment. Based on this evidence, a reasonable jury could find that McInnis's termination was illegal retaliation against her federally protected rights for reporting sexual harassment. 14 As Fairfield acknowledges, it regularly trained its employees concerning Title VII's prohibitions against harassment and retaliation. In fact, Turolla testified that the training was mandatory. More importantly, Gray specifically testified that he understood that employees have a right to complain formally or informally about sexual harassment. A reasonable jury could therefore have concluded that at least one managerial agent, the Senior Regional Vice President of Property Management for the western region, was aware of the relevant federal prohibitions and nevertheless retaliated against McInnis. By terminating McInnis's employment in retaliation for reporting sexual harassment in the face of a perceived risk that [such] actions w[ould] violate federal law, Kolstad, 527 U.S. at 543, 119 S.Ct. 2118, the jury could reasonably have found Fairfield vicariously liable in punitive damages. 15 Fairfield argues that punitive damages were nevertheless not warranted because 1) it made good-faith efforts to comply with Title VII; and 2) McInnis failed to follow Fairfield's complaint procedure. We reject both of these arguments.
16 To avail itself of Kolstad's good-faith-compliance standard, an employer must at least 1) adopt antidiscrimination policies; 2) make a good faith effort to educate its employees about these policies and the statutory prohibitions; and 3) make good faith efforts to enforce an antidiscrimination policy. Cadena v. Pacesetter Corp., 224 F.3d 1203, 1210 (10th Cir.2000) (quotations omitted) (emphasis in original). Fairfield contends that it maintained a written policy against discrimination and retaliation. 5 While there is some debate regarding whether Fairfield demonstrated good-faith efforts to educate its employees about its specific policies, we need not address that issue because the jury could have reasonably concluded that Fairfield failed to enforce, or make good-faith efforts to enforce, any antidiscrimination policies it adopted. We have previously explained that, even if an employer[] adduces evidence showing it maintains on paper a strong non-discrimination policy and makes good faith efforts to educate its employees about that policy and Title VII, a plaintiff may still recover punitive damages if she demonstrates the employer failed to adequately address Title VII violations of which it was aware. Cadena, 224 F.3d at 1210. 17 Here, the evidence indicates that, in December 1999, McInnis complained to Jamtaas, her then-immediate supervisor, about Thull's sexually harassing behavior. Although Jamtaas contacted Thull about McInnis's complaint, he never followed up with McInnis and later made light of her complaint. 6 In January 2001, McInnis called Gray, her immediate supervisor at the time, to complain about Thull's sexual harassment and Turolla's, Thull's, and Mikula's retaliation against her. Gray told McInnis that [she] [could] always look at something different, when you step away from it, out of sight and out of mind and that McInnis needed to not let emotions take over. After this phone call, Gray did not follow-up with McInnis about her complaint. McInnis called Gray a second time to raise her sexual harassment and retaliation complaint. During this conversation, Gray told McInnis that after their first telephone call, he talked to Thull, Mikula, and Fogel about her complaint. Gray then told McInnis that he did not need this on [his] 90 day [probation period]. He directed McInnis to report any past personnel issues to Mikula because he did not want to get involved. McInnis then contacted Mikula to complain about being harassed and retaliated against, and he instructed her to put her retaliation complaint in writing. While preparing this written complaint, McInnis sent a memorandum to Fogel complaining of Gray's retaliation and his failure to respond to her complaint. Fogel then contacted Gray by email and informed him of McInnis's complaint. 18 In short, the evidence in this case indicates that between December 1999 and February 2001, McInnis reported harassment and retaliation to at least the Senior Regional Vice President of Property Management, the Vice President of Property Management, and the Regional Human Resource Director, all of whom failed to take any action to remedy the situation or stop the retaliation. 7 Because sufficient evidence was presented on which a jury could have found [Fairfield] did not make good faith efforts to comply with Title VII, this court will not enter judgment as a matter of law in favor of [Fairfield] on the question of punitive damages. Cadena, 224 F.3d at 1210.
19 Fairfield also contends that punitive damages were not warranted because McInnis failed to follow Fairfield's complaint procedure. Under Faragher and Ellerth, an employer is shielded from vicarious liability for Title VII violations where no tangible employment action was taken against the employee if it can prove a two-pronged affirmative defense: 1) the employer exercised reasonable care to prevent and correct promptly any sexually harassing behavior, and 2) the plaintiff unreasonably failed to take advantage of any preventative or corrective opportunities provided by the employer or to avoid harm otherwise. Faragher, 524 U.S. at 807, 118 S.Ct. 2275; Ellerth, 524 U.S. at 765, 118 S.Ct. 2257. Fairfield acknowledges that it is not entitled to the Faragher/Ellerth defense because terminating McInnis's employment constituted a tangible employment action; however, it urges us to adopt a new rule precluding punitive damages where an employee fails to follow known procedures for reporting Title VII violations. 20 None of the cases cited by Fairfield in support of their position, Williams v. Missouri Dep't of Mental Health, 407 F.3d 972 (8th Cir.2005), cert. denied, 74 U.S.L.W. 3384 (U.S. Jan 09, 2006) (NO. 05-515); Cooke v. Stefani Mgmt. Servs., 250 F.3d 564 (7th Cir.2001); and Williams v. Trader Publ'g Co., 218 F.3d 481 (5th Cir.2000), adopt or apply the rule Fairfield urges us to adopt. More importantly, unlike the Faragher/Ellerth doctrine, Kolstad does not depend on the actions of the plaintiff but merely requires that the employer demonstrate it made good-faith efforts to prevent discrimination in the workplace. Kolstad, 527 U.S. at 546, 119 S.Ct. 2118; see also Cadena, 224 F.3d at 1210 (describing the acts an employer must take to be shielded from vicarious punitive damages liability without any reference to actions (or inactions) by the plaintiff). The Supreme Court thus did not impose a requirement that an employee follow known procedures for reporting harassment or retaliation in order to receive punitive damages. 21 In any event, although Fairfield contends otherwise, sufficient evidence exists for the jury to have found that McInnis followed Fairfield's complaint procedures. Fairfield's Employee Handbook directed employees to report harassment to their supervisor. 8 Fairfield does not dispute that Gray was McInnis's supervisor. 9 Thus, when McInnis informed Gray of Thull's sexual harassment and Turolla's, Thull's, and Mikula's retaliation, she complied with Fairfield's complaint policies.
22 In its second issue on appeal, Fairfield claims it was prejudiced by the district court's erroneous refusal to give the jury the following tendered instruction: Fear of retaliation is not a legitimate reason for failure to use a reasonable and available procedure for reporting alleged harassment. It argues that the district court's refusal to give this instruction allowed the jury to ignore McInnis's failure to follow Fairfield's policy and likely nullified Fairfield's good-faith Kolstad defense to punitive damages. We disagree. 23 We review for abuse of discretion a district court's decision not to give a tendered jury instruction. Quigley v. Rosenthal, 327 F.3d 1044, 1062 (10th Cir.2003). In doing so, we also consider the instructions as a whole de novo to determine whether they accurately informed the jury of the governing law. Id. (quotations omitted). [F]aulty jury instruction[s] require[] reversal when (1) we have substantial doubt whether the instructions, considered as a whole, properly guided the jury in its deliberations; and (2) when a deficient jury instruction is prejudicial. Townsend v. Lumbermens Mut. Cas. Co., 294 F.3d 1232, 1242 (10th Cir.2002) (quotations, citations omitted). 24 The instruction tendered by Fairfield appears to be a correct statement of federal law for purposes of applying the Faragher/Ellerth defense. See Harrison v. Eddy Potash, Inc., 248 F.3d 1014, 1026 (10th Cir.2001) (recognizing a similar proposed jury instruction to be a correct statement of federal law); see also Barrett v. Applied Radiant Energy Corp., 240 F.3d 262, 267 (4th Cir.2001) (stating, in the context of the Faragher/Ellerth defense, that [a] generalized fear of retaliation does not excuse a failure to report sexual harassment); Shaw v. AutoZone, Inc., 180 F.3d 806, 813 (7th Cir.1999) ([A]n employee's subjective fears of confrontation, unpleasantness or retaliation do not alleviate the employee's duty under Ellerth to alert the employer to the allegedly hostile environment.). But the Faragher/Ellerth defense does not apply in cases where the employer takes an adverse employment actions; here, Fairfield terminated McInnis's employment. 10 See Harrison, 248 F.3d at 1024. It was not an abuse of discretion for the district court to refuse to give a proper instruction on an irrelevant issue. The district court's instructions properly conveyed to the jury the issues to be decided. 11
25 We review a district court's evidentiary rulings for an abuse of discretion. United States v. Visinaiz, 428 F.3d 1300, 1313 (10th Cir.2005), cert. denied, 74 U.S.L.W. 3393 (U.S. Jan. 9, 2006) (No. 05-7839). We will not overturn an evidentiary ruling absent a distinct showing that it was based on a clearly erroneous finding of fact or an erroneous conclusion of law or manifests a clear error of judgment. Id. (quotations omitted). Even assuming the district court abused its discretion in excluding evidence, we must also determine whether the exclusion was harmless error because we will not set aside a jury verdict unless the error prejudicially affects a substantial right of a party. Praseuth v. Rubbermaid, Inc., 406 F.3d 1245, 1253 (10th Cir.2005). An error affecting a substantial right of a party is an error which had a `substantial influence' or which leaves one in `grave doubt' as to whether it had such an effect on the outcome. United States v. Sarracino, 340 F.3d 1148, 1171 (10th Cir.2003) (citing Kotteakos v. United States, 328 U.S. 750, 66 S.Ct. 1239, 90 L.Ed. 1557 (1946)). When conducting our harmless error analysis, we review the record as a whole. Id. (quotations omitted). 26 At trial, Fairfield offered a series of emails written by Turolla as evidence of Turolla's state of mind and to rebut McInnis's charge that his complaints against her were motivated by a desire to retaliate. The district court refused to admit the emails on the ground that they were inadmissible hearsay, which Fairfield contends was prejudicial error. We disagree with Fairfield's contention.
27 Fairfield contends that the emails were admissible 1) under Fed. R. of Evid. 801(d)(1)(B) as prior consistent statements, 2) as nonhearsay, 3) under Fed.R.Evid. 803's state of mind exception, or 4) under the Best Evidence Rule. 28
29 Fed. R. of Evid. 801(d)(1)(B) provides that a statement is not hearsay if: 30 The declarant testifies at the trial or hearing and is subject to cross-examination concerning the statement, and the statement is . . . consistent with the declarant's testimony and is offered to rebut an express or implied charge against the declarant of recent fabrication or improper influence or motive. 31 The Supreme Court has held that this rule permits the introduction of a declarant's consistent out-of-court statements to rebut a charge of recent fabrication or improper influence or motive only when those statements were made before the charged recent fabrication or improper influence or motive. Tome v. United States, 513 U.S. 150, 167, 115 S.Ct. 696, 130 L.Ed.2d 574 (1995) (emphasis added). Under this requirement, then, Turolla's prior consistent statements are inadmissable hearsay unless he made them before his improper motive arose. See United States v. Albers, 93 F.3d 1469, 1482 (10th Cir.1996). 32 According to McInnis, Turolla's improper motive arose in September 2000, immediately after the telephone call between her and Thull and once Thull again became Turolla's direct boss. Prior to that conversation, McInnis had no documented performance issues. The record indicates that, after that telephone call and upon Thull's return to Pagosa Springs, Turolla informed McInnis that he had spoken with Thull about her and Turolla's attitude toward her changed abruptly after that conversation. The emails offered by Fairfield are dated October 17, October 31, and November 4, 2000. Thus, the premotive requirement for prior consistent statements was not met because the emails were written after the conflict between Turolla and McInnis arose. The district court therefore did not abuse its discretion by refusing to admit the emails as prior-consistent statements. 33 b. Nonhearsay because not offered for the truth of the matter asserted but merely to show Fairfield's state of mind 34 Fairfield alternatively argues that the emails were admissible as nonhearsay to show its agents' states of mind in making the decision to discharge McInnis and not to prove the truth of the matter asserted in the emails. We have previously held that out-of-court statements may properly be admitted to show an employer's state of mind in making employment decisions. See Faulkner v. Super Valu Stores, Inc., 3 F.3d 1419, 1434-35 (10th Cir.1993) (holding admissible certain out-of-court statements which were offered to establish [defendant's] state of mind in making its hiring decisions and [were] not offered for the truth of the matter asserted); see also Staniewicz v. Beecham, Inc., 687 F.2d 526, 530-31 (1st Cir.1982) (permitting, in an age discrimination case, the supervisor to testify as to conversations with third parties about plaintiff because they were offered to show [the supervisor's] intent in calling the meeting with [the plaintiff] which ultimately resulted in the resignation of [plaintiff]); Haddad v. Lockheed Cal. Corp., 720 F.2d 1454, 1456 (9th Cir.1983) (permitting, in an age and national origin discrimination case, management witnesses to testify about complaints received about plaintiff because the testimony was relevant in demonstrating [the employer's] non-discriminatory intent in its employment practices). Turolla's emails, however, were only sent to Thull or Mikula or both. Neither of these men made the decision to termination McInnis. As a result, the statements were inadmissible to show Fairfield's state of mind in discharging McInnis because there is no evidence the decision-maker responsible for McInnis's termination—Gray—ever read or learned of the contents of the emails. 35 c. Rule 803(3) state of mind exception 36 Fairfield also argues that the emails were admissible under Fed.R.Evid. 803(3), the state of mind exception to the general hearsay rule. 12 That Rule expressly excludes from the exception a statement of memory or belief to prove the fact remembered or believed unless it relates to the execution, revocation, identification, or terms of declarant's will. Fed. R.Evid. 803(3). Based on this limitation to the exception, we have held that 803(3) does not permit the witness to relate any of the declarant's statements as to why [the declarant] held the particular state of mind, or what [the declarant] might have believed that would have induced the state of mind. United States v. Joe, 8 F.3d 1488, 1493 (10th Cir.1993). 37 Turolla's emails contain hearsay statements expressing his then existing state of mind ( i.e., I hate to be in this predicament; I am at my wits end; I am concerned for the future) as well as assertions of why Turolla had these feelings ( i.e., descriptions of conversations, interactions, incidents, and problems he was allegedly having with McInnis). The statements explaining why Turolla had these feelings are expressly outside the state-of-mind exception. 13 See Joe, 8 F.3d at 1493 (holding that victim's hearsay statement that she was afraid sometimes was admissible under Rule 803(3) but that remainder of statement indicating  why she was afraid was clearly a statement of memory or belief and was not admissible under Rule 803(3)) (emphasis in original); United States v. Tome, 61 F.3d 1446, 1453-54 (10th Cir.1995) (holding that a child's statements that she did not want to return to her father because my father gets drunk and he thinks I'm his wife were not a state-of-mind expression because the first statement was not an expression of fear and the second was a statement of memory to prove the fact remembered); see also Fed.R.Evid. 803(3) advisory committee's note (The exclusion of `statements of memory or belief to prove the fact remembered or believed' is necessary to avoid the virtual destruction of the hearsay rule which would otherwise result from allowing state of mind, provable by a hearsay statement, to serve as the basis for an inference of the happening of the event which produced the state of mind.). 38 Fairfield does not argue, nor does the evidence suggest, that Fairfield offered to redact the inadmissible portion of the emails. Nevertheless, to the extent that the court abused its discretion by not admitting the emails in redacted form, any error did not prejudice Fairfield for the reasons described more fully below. 39 d. Best Evidence Rule 40 Finally, Fairfield argues that the exclusion of Turolla's emails prevented it from presenting the best evidence of his true motive. Fed.R.Evid. 1002, known as the best evidence rule, states that [t]o prove the content of a writing, recording, or photograph, the original writing, recording, or photograph is required, except as otherwise provided in these rules or by Act of Congress. The best evidence rule is not an exception to the general rule excluding the admission of hearsay. Instead, 41 [w]hile Rule 1002 limits the admissibility of evidence offered to prove the contents of a writing . . . satisfying Rule 1002 does not mean that the evidence in question is necessarily admissible. The evidence remains subject to other admissibility objections under the Evidence Rules and the Constitution. Specifically, the evidence frequently also raises admissibility issues under the rules regulating hearsay and authentication. 42 31 Charles A. Wright and Victor J. Gold, Federal Practice and Procedure § 7183 (2000) (footnotes omitted). Therefore, Fairfield's claim that the emails are the best evidence of Turolla's motivation does not support its argument that the district court abused its discretion by excluding that evidence as hearsay.
43 Assuming exclusion of the emails, in whole or in part, was erroneous, their exclusion did not prejudice Fairfield. Turolla testified at length about his state of mind, his alleged nonretaliatory motive, and his problems with McInnis's performance, which is the same subject matter contained in the excluded emails. There is no indication that Fairfield's substantial rights were affected by the district court's refusal to admit the actual documents into evidence. See Polys v. Trans-Colorado Airlines, Inc., 941 F.2d 1404, 1407 n. 3 (10th Cir.1991) (recognizing that a district court's error in excluding evidence is harmless if the excluded evidence would not have added anything new to the evidence already presented or if the outcome of the trial would have been the same if the excluded evidence had been admitted). 44 Accordingly, we hold that it was not an abuse of discretion for the district court to exclude the emails, and that, even if it was, any error did not prejudice Fairfield's rights because the author testified to the substance of the excluded emails. We therefore affirm the district court's exclusion of this evidence.