Court Opinion

ID: 9860168
Source: CourtListenerOpinion
Date Created: 2023-09-24 23:13:10.330127+00
Date Added: 2024-06-11T11:18:37.974771
License: Public Domain

TOMUANOYICH, Justice.
This appeal relates to awards of punitive damages and attorney fees for violations of Minn.Stat. § 181.75, prohibiting employee polygraph testing.
In 1976, the Minnesota Legislature deleted the phrase “by coercion” from the statute prohibiting employers from soliciting or requiring polygraph tests of their employees or prospective employees. See Act of April 13, 1976, ch. 256, § 1, subd. 1, 1976 Minn. Laws 950 codified at Minn.Stat. § 181.75, subd. 1 (1990). The legislature also added criminal penalties, injunctive remedies, and a private cause of action to the statute. The polygraph statute has not been amended since then.
As of December 1980, Robert Bucko had worked in the stockroom at First Minnesota Savings Bank for eight months. Bucko had access to cash in a vending machine in the stockroom and took $32 for his personal use. As part of an investigation into losses from the machine, the Bank’s security officer asked Bucko and several other employees to take polygraph examinations. Bucko took the examination and “failed,” although he was offered the opportunity to take it again. Bucko refused to take the exam again and was terminated the following day.
Terrence Jaskowiak worked with Bucko in the Bank’s stockroom. He had no access to cash in the stockroom vending machine, but was asked to undergo a polygraph examination. Although Jaskowiak “passed” the examination, he testified that he was disturbed to be suspected of wrongdoing and felt severe emotional distress as a result of the exam. Jaskowiak ended his employment at the Bank in September 1982.
The Bank asked Jodi Lynn Crace to take a polygraph examination in connection with its February 1982 investigation of losses in her department. Crace did not take the examination, but remained an employee of the Bank. After suffering an assault that was unrelated to her employment, she resigned from the Bank in September 1982.
The Bank ended its practice of requesting employees to take polygraph examinations in 1984, after Bucko, Jaskowiak, and Crace left the Bank but before they began their separate lawsuits in 1986 and 1987.
*97Bucko, Jaskowiak, and Crace each initiated legal action against the Bank, claiming it violated the polygraph statute when it requested them to submit to polygraph examinations. Each plaintiff also claimed punitive damages against the Bank under the general punitive damages statute, Minn.Stat. § 549.191 (1990). The Bank subsequently made an offer of judgment of $5,000 to each plaintiff pursuant to Minn. R.Civ.P. 68. All three plaintiffs declined the offers and moved to have their actions consolidated for trial. The motion was granted and the case was tried to a jury.
At trial, the Bank conceded liability for violating the polygraph statute but contested what damages it was liable for. The jury awarded Bucko $800 in compensatory damages, Jaskowiak $3,500 in compensatory damages, and Crace $0 in compensatory damages. The jury also awarded each plaintiff $33,333.33 in punitive damages. The trial court awarded all three plaintiffs trial costs and attorney fees, though in amounts substantially less than each requested.
On appeal, the court of appeals reversed the punitive damages awards to Bucko and Jaskowiak, but affirmed the award of punitive damages to Crace. See Bucko v. First Minnesota Savings Bank, 452 N.W.2d 244, 253 (Minn.App.1990). The court concluded that although the trial court abused its discretion in granting plaintiffs’ motion for consolidation, the error did not require reversal. See id. at 250-51. Further, the court held that the Bank’s Rule 68 offers of judgment, which exceeded the amount each plaintiff recovered in compensable damages, did not prevent plaintiffs from recovering fees and costs and that the trial court did not abuse its discretion in awarding attorney fees in an amount substantially less than requested. See id. at 251-52. Finally, the court granted each plaintiff leave to petition for costs and fees related to their appeals and subsequently awarded costs and fees to each. See id. at 253.
All three plaintiffs now contend they are entitled to punitive damages irrespective of whether they are entitled to compensatory damages. All three also contend that the trial court correctly granted their motion for consolidation, that its award of costs and fees is not precluded by the Bank’s Rule 68 offers of judgment, and that they are each entitled to costs and fees related to both their appeals before the court of appeals and before this court.
The Bank argues that it is not liable for punitive damages because it was without actual knowledge of the polygraph statute until after its admitted violations of that statute. It further argues that it cannot be liable for punitive damages where no com-pensable damages were awarded, that its offers of judgment exceeding the compen-sable damages actually recovered preclude the trial court’s award of attorney fees, that Crace should be awarded neither costs nor fees because she is not entitled to any damages, and that the court of appeals erred in awarding costs and fees related to the appeals before it.
I
The Bank contends that it is not liable for punitive damages. We agree with respect to Crace, but reinstate the punitive damage awards to Bucko and Jaskowiak reversed by the court of appeals.
In Freeman v. Q Petroleum Corp., 417 N.W.2d 617 (Minn.1988), this court held that the liability created by the polygraph statute is not a civil “penalty,” because recovery under the polygraph statute is not “a fixed amount arising solely from a violation,” and because “recovery is inextricably tied” to demonstrated actual loss. Freeman, 417 N.W.2d at 619. Given this link between damages for violation of the polygraph statute and demonstrated actual loss, we conclude that any recovery under that statute requires proof of compensable damages. Because Crace did not demonstrate any compensable loss, we reverse the award of punitive damages to her.
The Bank claims it is not liable for punitive damages because its employees did not actually know of the polygraph statute when they violated it. At the time each of the plaintiffs was asked to undergo a polygraph test, the Minnesota punitive *98damages statute permitted punitive damages against a defendant who “show[ed] a willful indifference to the rights or safety of others.” Minn.Stat. § 549.20 (1988) amended by Act of May 3, 1990, ch. 555, § 15, subd. 1(a), 1990 Minn. Laws 1557, 1563 codified at Minn.Stat. § 549.20, subd. 1 (1990) (replacing “willful indifference” with “deliberate disregard”). This court has never concluded that a defendant must have actual knowledge of a law in order to be willfully indifferent to rights of others and thereby liable for punitive damages. We are not persuaded that we should do so now.1
The jury was properly instructed as to the clear and convincing evidence necessary for a finding of willful indifference and an award of punitive damages. See Becker v. Alloy Hardfacing & Engineering Co., 401 N.W.2d 655, 659 (Minn.1987). Although Bank officers testified they were unaware of the polygraph statute, they admitted requesting Bucko, Jaskowiak and Crace to undergo polygraph testing. Based on this admission, the jury was entitled to find the Bank was willfully indifferent of plaintiffs’ rights and thus liable for punitive damages. Recognizing that this court does not disturb an award of punitive damages unless that award is so excessive as to be unreasonable, see Stuempges v. Parke, Davis & Co., 297 N.W.2d 252, 259 (Minn.1980), we conclude that both Bucko and Jaskowiak, who proved compensable damages, are entitled to punitive damages in the amounts awarded at trial.
II
The Bank contends that because its Rule 68 offers of judgment exceeded the compensable damages recovered by each plaintiff, none of the plaintiffs were entitled to an award of trial costs and attorney fees. Minn.R.Civ.P. 68 permits any party to make an offer of judgment in order to encourage settlement prior to trial. “If the judgment finally entered is not more favorable to the offeree than the offer, the of-feree must pay the offeror’s costs and disbursements.” Minn.R.Civ.P. 68. The judgments finally entered for Bucko and Jas-kowiak exceed the Bank’s offers of judgment to each of them, thus neither Bucko nor Jaskowiak must pay the Bank’s trial costs. Both Bucko and Jaskowiak remain entitled to costs and disbursements as awarded pursuant to the polygraph statute. Crace, however, recovered nothing and must therefore pay the Bank’s costs and disbursements incurred from the date of its offer of judgment until judgment was entered by the trial court.
For purposes of applying Minn. R.Civ.P. 68, “costs” do not include attorney fees. See 2A David S. Herr & Roger S. Haydock, Minnesota Practice § 68.3 (2d ed. 1985). The Bank’s Rule 68 offers of judgment therefore do not alter Bucko’s and Jaskowiak’s recovery of attorney fees under the polygraph statute and do not entitle the Bank to recover attorney fees from Crace.
III
The Bank contends the trial court abused its discretion by granting the plaintiffs’ motion to consolidate their separate actions for trial. Trial courts have broad discretion to consolidate separate lawsuits, see Minn.R.Civ.P. 42.01, but must not do so where the convenience and judicial economy achieved by consolidation sacrifices a fair trial. See Sorenson v. Kruse, 293 N.W.2d 56, 62 (Minn.1980). The trial record does not indicate the Bank was prejudiced in any way because plaintiffs’ ac*99tions were consolidated. Rather, it reflects that the jury considered each action separately and entered judgments that appear independent of one another. We therefore conclude the trial court did not abuse its discretion in granting the motion to consolidate.
IV
Plaintiffs contend the trial court erred by awarding attorney fees in amounts substantially less than each plaintiff requested. When a trial court makes specific findings of fact regarding the reasonableness of an attorney fee award, those findings will not be set aside on review unless they are clearly erroneous. Anderson v. Hunter, Keith, Marshall & Co., 417 N.W.2d 619, 630 (Minn.1988). The trial court accepted plaintiffs’ proposed hourly rate in calculating the required “lodestar” figure, see Anderson, 417 N.W.2d at 628 (citing Hensley v. Eckerhart, 461 U.S. 424, 103 S.Ct. 1933, 76 L.Ed.2d 40 (1983)), but determined that the number of hours claimed by the lead attorney for all three plaintiffs was excessive and reduced each fee award accordingly. Based on our independent review of plaintiffs’ petitions for attorney fees, we conclude that the trial court did not clearly err in calculating appropriate attorney fee awards.
V
Plaintiffs contend they are each entitled to costs and attorney fees related to their appeals before both the court of appeals and this court. Where a prevailing plaintiff is entitled by statute to recover attorney fees at trial, that plaintiff may also be entitled to attorney fees on appeal. See Hughes v. Sinclair Marketing, Inc., 389 N.W.2d 194, 200 (Minn.1986). To deny a prevailing plaintiff compensation for fees reasonably incurred in defending a judgment on appeal would defeat the intent of the legislature in providing for recovery of attorney fees. We therefore affirm the court of appeals award of attorney fees to Bucko and Jaskowiak; as Crace is not a prevailing plaintiff, she is not entitled to attorney fees related to her appeal. Further, Bucko and Jaskowiak may, within ten days of the date on which this opinion is released, petition this court for fees incurred in connection with their appeals before this court. The Bank may file written objections to those petitions within five days after it is served with them.
We therefore reinstate the jury’s award of $33,333.33 in punitive damages each to Bucko and Jaskowiak and reverse the award of punitive damages to Crace. We order Crace to pay. the Bank’s costs and disbursements incurred defending against her action after the March 27,1987 offer of judgment and before entry of judgment at trial. We reverse the award of costs and attorney fees to Crace and affirm the awards of costs and fees to Bucko and Jaskowiak in the amounts ordered by the trial court. We affirm the court of appeals’ order granting costs and attorney fees on appeal before it to Bucko and Jas-kowiak and grant Bucko and Jaskowiak ten days from the date of this decision to petition for fees before this court.
GARDEBRING, J., took no part in the consideration or decision of this case.

. The Bank relies on Roworth v. Minnesota Mutual Life Ins. Co., 674 F.2d 756 (8th Cir.1982), for the proposition that actual knowledge of Minnesota law is a prerequisite to a punitive damages award. In Roworth, the Eighth Circuit concluded that Minnesota permits punitive damages " 'only where the harm complained of is the result of conduct done in malicious, willful, or reckless disregard for the rights of others.’ ” Id. at 758 (quoting Wilson v. City of Eagan, 297 N.W.2d 146, 150 (Minn.1980)). It further concluded that "malice means * * * ‘the willful violation of a known right.’ ” Id. (quoting Carnes v. St. Paul Union Stockyard Co., 164 Minn. 457, 462, 205 N.W. 630, 631 (1925)). The decisions quoted in Roworth do not indicate that punitive damages are never appropriate where a plaintiff does not prove the defendant's actual knowledge of the law.