Opinion ID: 2611102
Heading Depth: 1
Heading Rank: 2

Heading: Corporate Malice

Text: Malice is essentially a mental concept, a cognitive process; and definitionally we run into trouble when we start talking about malice's being exhibited by a corporate entity. Malice as a state of mind must in some way be accommodated to the corporate mentality if corporations are, indeed, to be found guilty of malice, express or implied. It is settled law, however, that corporations can be guilty of malice and can be mulcted in punitive damages for such malice. [T]o render a corporation liable in exemplary damages, the intent or malice necessary to warrant the imposition of such damages must be brought home to it.  2 S. Speiser, C. Krause & A. Gans, The American Law of Torts, § 8.51 (1985) (my emphasis). Punitive damage liability of a corporation for malice may be brought home to a corporation directly or vicariously. By directly I mean malice and ill will that issues forth from the corporation itself. For example, a corporate board could decide that the corporation was going to inflict wrongful or unwarranted injury on a competitor and thereby render the corporation liable for punitive damages by reason of such express corporate malice. A corporation could also be guilty directly by reason of the implied malice in a case where corporate management orders corporate actions, knowing that the probable consequences of the corporate actions would be injury to others. A good example of implied malice's being directly attributed to or brought home to a corporation can be found in the previously mentioned case of Nevada Cement Co. v. Lemler, 89 Nev. 447, 514 P.2d 1180 (1973), in which the corporation knew of the probable harmful results of its wrongful acts. The Nevada Cement Company  knew from the outset that a large volume of dust was being discharged wrongfully into populated areas by one of its cement kilns. 89 Nev. at 452, 514 P.2d at 1183 (my emphasis). After becoming aware of the harmful effects of the emissions from its kiln, the company intentionally operated the kiln anyway. The Nevada Cement Company was directly guilty of implied malice, even though this court erroneously labeled the conduct malice in fact. Id. at 452, 514 P.2d at 1183. Another excellent example of malicious misconduct's having been brought home directly to the corporation itself is found in the California case of Grimshaw v. Ford Motor Co., 119 Cal. App.3d 757, 174 Cal. Rptr. 348 (1981). Although the current California punitive damage statute does not, as in Nevada, refer to civil malice in terms of being either express or implied, the California statute, Civil Code section 3294, does define two different species of malice: one is conduct which is intended by the defendant to cause injury to the plaintiff (express malice); and the other is where malice is present not because the defendant has the intent to cause injury to someone but, rather, because the defendant has acted with a willful and conscious disregard of the rights or safety of others (implied malice). Cal.Civ.Code § 3294(c)(1) (West Supp. 1990). In Grimshaw, Ford Motor Company was held liable for punitive damages by reason of Ford's corporate decision to continue to install dangerous fuel tanks on its Pinto automobiles. The evidence was that Ford management could have corrected the hazardous design defects at minimal cost but made a knowing corporate decision to defer such correction, the decision being based on a cost-benefit analysis which balanced human life and safety against corporate profit. This kind of corporate decision-making was held to have constituted `conscious disregard' of the probability of injury to members of the consuming public. Grimshaw, 174 Cal. Rptr. at 384 (my emphasis). It was clear that corporate management  knew that the Pinto's fuel tank and rear structure would expose consumers to serious injury or death and that Ford management could have corrected the hazardous design defects at minimal cost but decided  not to on the basis of a cost-benefit analysis balancing human lives and limbs against corporate profits. Id. (my emphasis). Such willful wrongdoing on the part of the Ford corporation, whose management knew of the injuries that would probably result from the corporate decision, is a very lucid example of what I would call direct implied malice. [6] Direct implied malice would not, on the other hand, be present in the absence of some conscious wrongdoing that can be attributed to the corporation itself. For example, in Jeep Corp. v. Murray, 101 Nev. 640, 651, 708 P.2d 297, 304 (1985), malice was held to be missing in a product liability case involving design defects in the Jeep CJ-5. Unlike the Grimshaw case, the proof did not show corporate knowledge of a dangerous tendency to roll nor did it show any conscious corporate action which knowingly subjected Jeep operators to probable injury as was the case in Grimshaw. Id. Because the Jeep Corporation had not acted consciously or deliberately, and hence maliciously, this court affirmed the trial court's refusal to give punitive damage instructions. Id. In Nevada Cement, Murray and Grimshaw the malice in question is that of the corporate entity itself. It is the institutional mentality of the corporation ( Grimshaw, 174 Cal. Rptr. at 384) that is guilty of this kind of implied malice and which can be blamed for injuries to others even though the corporation had no plan to injure any specific person. It is the corporate entity itself that is acting maliciously in these cases. In Nevada Cement and Grimshaw the corporations, as corporations, acted wrongfully in their corporate guise. Their acts were not intended to do particular harm in the sense that the infliction of injury was not the corporation's conscious object; rather the corporate decisions were known by corporate management to be likely to produce injury to others. Such corporations are guilty of direct implied malice. A corporation may also be derivatively liable for malice, express or implied. A management employee may in the course and scope of managerial operations intend to injure someone. The corporation would then be held vicariously liable for the express malice of its managing agent. An example of indirect or vicarious corporate liability for punitive damages can be found in the case Cerminara v. California Hotel and Casino, 104 Nev. 372, 760 P.2d 108 (1988). In Cerminara we recognized the right of an injured plaintiff to recover punitive damages against a corporation where there is an act of malice on the part of any officer, director or managing agent of the corporation. Id. at 378, 760 P.2d at 111. I would hold that a corporation could also be liable vicariously for the implied malice of its officer, director or managing agent, absent the kind of direct corporate action found in Nevada Cement and Grimshaw. For example, if the general manager of Circus-Circus actually had known that a criminal assault was the probable consequence of maintaining the security system then in place, yet notwithstanding such knowledge continued at the same dangerous level of security, I would say that this corporate agent could be found guilty of implied malice and that such malice could be imputed to the corporation. In the case at hand there appears to be no direct malice on the part of Circus-Circus Corporation. There is no direct corporate action, as there was in Nevada Cement and Grimshaw, which was either intended to harm or which showed an irresponsible, conscious disregard for the safety of others. If corporate malice is to be found in this case, it must be derivative in nature, derived vicariously from the malicious acts of the corporation's officers, directors or managing agents. Since there is no evidence that any agent of the Circus-Circus Corporation intended to injure Craigo, the only possible malice that can be attributed to the Circus-Circus Corporation is implied malice on the part of a managing agent of the corporation. I now consider the question of whether any agent of the Circus-Circus Corporation has been guilty of implied malice that can be imputed to Circus-Circus.