Court Opinion

ID: 9552882
Source: CourtListenerOpinion
Date Created: 2023-08-07 19:18:49.517376+00
Date Added: 2024-06-11T15:29:17.163156
License: Public Domain

ROSE, Chief Justice,
dissenting.
As noted in the majority opinion, this appeal asks whether a corporate employer will be held vicariously liable for punitive damages resulting from the misconduct of a nonmanagerial employee. In settling this issue, the majority of the court have adopted the rule embraced by Restatement, Torts 2d, § 909, and Restatement, Agency 2d, § 217C.1 The appeal has also raised a question having to do with the manner in which evidence of wealth of the corporate employer will be made available to the jury. In response to this second issue, the opinion *1133adopts a bifurcated-trial scheme in which, contrary to well-established practice in Wyoming, evidence of pecuniary worth of the employer is not submitted to the jury until it has first decided that the employer is liable for punitive damages.
Both of the conclusions enunciated in the majority opinion have raised substantial problems for me, and, for the reasons set out below, I will dissent.
The majority correctly note that the question concerning corporate liability for punitive damages has been a much disputed one. Instead of adopting the compensatory-damage vicarious-liability rule where exemplary or punitive damages are asked of the employer, many states have required that the employer be shown to have participated in, authorized or ratified the actual tortious act of the agent. Other jurisdictions have adopted the Restatement rule. However, the majority of the courts have extended the doctrine of vicarious liability to include punitive as well as compensatory damages. The preeminent authority in the field of tort law has stated:
“The majority of the courts, however, have held that the vicarious liability of the master for acts within the scope of the employment extends to punitive as well as compensatory damages, even in the absence of approval or ratification, and that this is true especially in the case of corporations, who can only act through their agents. They have been concerned primarily with the deterrent effect of the award of exemplary damages, and have said often enough that if such damages will encourage employers to exercise closer control over their servants for the prevention of outrageous torts, that is sufficient ground for awarding them.” (Footnotes omitted.) Prosser, Law of Torts, p. 12 (4th ed. 1971).
The Prosser doctrine is typically exemplified in Stroud v. Denny’s Restaurant, Inc., 271 Or. 430, 532 P.2d 790 (1975).2 In that appeal, the Supreme Court of Oregon rejected Restatement, Agency 2d, § 217C, and adopted a rule which would render the corporation liable for punitive damages where its employee, acting within the scope of employment, was found to have committed such an act as would render the employee liable for punitive damages. The Restatement’s philosophy was rejected because the Oregon court was unable to discern any logical validity in the distinction which that rule seeks to make (unsuccessfully, I think) between the acts of a menial versus a managerial employee. Stroud v. Denny’s Restaurant, supra, 532 P.2d at 792. For me, the Oregon Supreme Court points out a blatant incongruity in the Restatement § 217C approach which has been, in this appeal, adopted by the majority opinion. This flaw asserts itself in the Restatement’s underlying assumption that, where acts constituting wilful and wanton misconduct are concerned, a corporation can only act through its managerial employees. I would hold that, in the realm of wilful acts, the corporate entity acts through all of its employees, as is the case where compensatory damages are in issue.
The flaw in the Restatement’s reasoning appears more vivid when it is understood that, according to § 217C, a plaintiff who is injured through the wilful and wanton misconduct of an officer of a corporation is eligible for punitive damages from both the officer and the corporation; however, as in this case, where the plaintiff is injured by reason of the wanton misconduct of a “menial’’ employee, then the plaintiff must prove some act of authorization on the part of the corporation before punitive damages can be assessed. There is, of course, little doubt that such authorization as the Restatement rule contemplates would necessarily have to come from some managerial employee. Thus under § 217C, a corporation can really only act wantonly or with reckless disregard when such act is committed by a managerial employee, or under managerial authorization.
*1134For me,' a rule which utilizes different classes of employee action or inaction as justification for charging a corporation with punitive liability is anomalous. I can see no difference between that situation in which an officer injures someone while acting maliciously or wantonly, as compared to the situation in which the same act is committed by any other employee. No matter who the actor may be, it does not alter the character of the act itself. The ability to recover punitive damages has always been dependent upon a finding that the act complained of was done intentionally, maliciously, or with wanton disregard for safety, Hall Oil Co. v. Barquin, 33 Wyo. 92, 237 P. 255 (1925); Cosgriff v. Miller, 10 Wyo. 190, 68 P. 206 (1902), and it has always been the rule that a corporation can only act through natural persons. I cannot be convinced that any social utility is served in drawing the distinction contemplated by § 217C. It is to be remembered that the purpose of punitive damages is not only to punish the actor but also to deter similar conduct in the future. Hall Oil Co. v. Barquin, supra; Cosgriff v. Miller, supra. The approach adopted by the majority opinion provides no incentive for corporations to control the acts of their lower-level employees, but rather § 217C informs corporations that liability for punitive damages will only be assessed when an unfortunate plaintiff is “lucky” enough to be injured by the wanton misconduct of an employee in its management hierarchy. The act of any corporate employee done in the furtherance of the corporation’s business is the act of the corporation, and the particular corporate status of the actor makes his act no less or no more that of the corporate employer.
I also fail to see the need for the bifurcated trial procedure as a solution for the purported prejudicial effect that evidence of wealth can have on a jury’s determination of liability. When punitive damages are claimed, we in Wyoming have never doubted that admission of a defendant’s pecuniary wealth is proper evidence to be submitted to the jury. Hall Oil Co. v. Barquin, supra; Cosgriff v. Miller, supra. The rationale for admitting evidence of wealth is that it provides the jury with a guideline for determining what amount will punish the wrongdoer. Hall Oil Co. v. Barquin, supra, 273 P. at 276. Clearly, punishment is one of the ends sought in any award of punitive damages.
We said in Hall Oil Co. v. Barquin, supra, that
“The theory, upon which punitive or exemplary damages are generally held in this country to be allowable, is that of punishment of the offender and a warning to others.” 273 P. at 275.
I have no quarrel with the majority opinion’s position that only evidence of a defendant’s net worth should be admitted. I also agree with the opinion where it suggests that such evidence should only be admissible in documentary form. These are constructive suggestions for the control of this type of evidence. I do not feel, however, that it is proper for this court to embark upon the unnecessary procedure of introducing this evidence through a bifurcated-trial process. The bifurcated trial proposed by the majority opinion bottoms its justification on the erroneous assumption that juries always misuse evidence of wealth. This assumption overlooks the fact that in Hall Oil Co., this court established standards to guide a jury in determining the sums that can properly be awarded as punitive damages. 273 P. at 279. It has always been the rule, until today, that an award of punitive damages will be overturned if such award is so disproportionate to actual damages as to signify that the jury was influenced by passion or prejudice. No substantial disparity in the awards in this case was shown, yet the majority opinion has adopted this new bifurcated approach. In light of our rules concerning the admissibility of evidence of wealth and our constant recognition that trial judges have wide discretion in controlling proceedings before them, I fail to see the need for such a two-tiered jury determination.
The trial judge in this case followed the majority rule of vicarious liability and the historically accepted procedure for consider*1135ing exemplary damages, and I would have affirmed his judgment which was entered upon a proper jury verdict.

. See the Restatement rule set out at p. 1125 of the majority opinion.

. Other cases adopting the majority or Prosser approach are: Western Coach Corporation v. Vaughn, 9 Ariz.App. 336, 452 P.2d 117 (1969); Northrup v. Miles Homes, Inc., of Iowa, Ia., 204 N.W.2d 850 (1973); Griffin v. Starlite Disco, Inc., 49 N.C.App. 77, 270 S.E.2d 613 (1980); Clemmons v. Life Insurance Co. of Georgia, 274 N.C. 416, 163 S.E.2d 761 (1968).