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Case 11-1 Young v. Becker & Poliakoff
Court of Appeals of Florida, Fourth District 88 So.3d 1002 (2012)
Jacquelyn Young hired the law firm of Becker & Poliakoff to represent her in her federal employment discrimination lawsuit against her employer. The firm associate that filed the action made a mistake by attaching the wrong U.S. Equal Employment Opportunity Commission (EEOC) right-to-sue letter. The court dismissed the claims. The law firm did not try to re-file using the correct attachment, or try to dismiss the motion. Thirteen months later, the law firm informed Young that the claims had been dismissed, and that the firm was withdrawing from representing her further with the case.
Young argued that the firm had a conflict of interest when it continued to represent other employees of Young’s employer, and when their settlement included a rule barring the firm from suing the employer in the future. Young believed that the firm had waited to pursue her case until its other case was settled. The jury determined that Becker & Poliakoff knew that the case had been dismissed, but withheld that information from Young so they could settle the other case and secure the $2.9 million fee and cost reimbursement in that case. The jury returned a verdict for Young of $394,000 in compensatory damages as a result of Becker & Poliakoff’s breach of fiduciary duty. The total compensatory damages consisted of $144,000 in past lost wages and $250,000 in damages for “pain and suffering, mental anguish, or loss of dignity.” However, the court reduced the punitive damages to $2 million, claiming that no evidence was presented to show that the firm could afford the award without facing bankruptcy. Both parties appealed.
Justice Taylor
We grant appellee’s motion for rehearing, withdraw our previous opinion, and substitute the following in its place. No further motions for rehearing or clarification will be entertained. . . .
“Under Florida law, a trial court’s determination of whether a damage award is excessive, requiring a remittitur or a new trial, is reviewed by an appellate court under an abuse of discretion standard.” In ruling on a motion for remittitur, the trial court must evaluate the verdict in light of the evidence presented at trial. . . .
In evaluating a punitive damages award, the trial court must also determine whether the award comports with constitutional due process requirements. “The three criteria a punitive damages award must satisfy under Florida law to pass constitutional muster are: (1) ‘the manifest weight of the evidence does not render the amount of punitive damages assessed out of all reasonable proportion to the malice, outrage, or wantonness of the tortious conduct;’ (2) the award ‘bears some relationship to the defendant’s ability to pay and does not result in economic castigation or bankruptcy to the defendant;’ and (3) a reasonable relationship exists between the compensatory and punitive amounts awarded.”
In this case, the trial court found that the $4.5 million punitive damages award overcame the presumption of excessiveness under Section 768.73, Florida Statutes. The court, however, concluded that the award did not satisfy the criteria for constitutionality. Although the court found that the first and third criteria mentioned above were met because the award was proportional to reprehensible conduct of the defendant and bore a reasonable relationship between the compensatory and punitive amount awarded, it found that the award fell short on the second criteria; it was excessive because it was “too much for Defendant to bear without economic castigation or bankruptcy.” As explained in the trial court’s thorough and detailed order, this finding is supported by the record.
After noting that the jury apparently discredited evidence presented by the defense regarding Becker & Poliakoff’s financial picture, the trial court turned to testimony of Young’s financial expert, Dr. Pettingil, in determining that the $4.5 million punitive damages award would bankrupt Becker & Poliakoff. In short, the trial court found that Dr. Pettingil’s opinion placed the law firm’s net worth at $9.7 million to $11.1 million, and that “a $4.5 million punitive damages award constitutes forty percent of the net worth of the company.” This amount, the court reasoned, was “too large” and exceeded “the highest amount that can be sustained based upon the evidence.” Explaining how it arrived at the $2 million remittitur amount, the court stated the following:
The court finds that the maximum award that will not be excessive is $2 million which constitutes about 18%–20% of the firm’s net worth. Dr. Pettingil’s testimony establishes sufficient assets to bear this amount. His testimony established annual earnings of $675,000.00 per year increasing by 3% in 2010 and every year thereafter, $3 million per year in extraordinary compensation and a total of $1.5 million in retained earnings. Over 2009 and 2010 this would amount to assets exposable to collection of a punitive damage award of $6 million to $9 million, depending upon the extent of payment to officers’ extraordinary compensation.
$2 million is as close to disgorging what the jury determined to be ill-gotten gains as Defendant’s financial wealth will tolerate.
Contrary to Young’s contention, the trial court did not improperly substitute its judgment for that of the jury, but instead properly exercised its discretion in reviewing the award upon the financial information in evidence. While a punitive damages award should be painful enough to provide some retribution and deterrence, it should not financially destroy a defendant. We, therefore, do not disturb the amount of the punitive damages ordered by remittitur; reasonable people could differ over this matter, and, therefore, no clear abuse of discretion is shown.
We further find any error in the trial court’s ruling that prohibited Dr. Pettingil from testifying that an award of $10 million would not bankrupt Becker & Poliakoff to be harmless. Here, the witness was allowed to state his opinion concerning valuation of the firm’s net worth and its financial ability to pay an award. And, even without hearing the witness’s opinion as to whether an award of $10 million would bankrupt the firm, the jury still awarded $4.5 million in punitive damages—an amount the trial court found to be excessive in relation to the firm’s net worth.
We reject Becker & Poliakoff’s argument that the punitive damages award should have been set aside or remitted further. In connection with this argument, Becker & Poliakoff argues that the only “loss” cognizable in this case would have been loss of wages and that mental anguish damages were precluded by the impact rule. Assuming, without deciding, that the damages for mental anguish were not properly awardable as compensatory damages in this case, it is clear that the jury awarded at least some compensatory damages for breach of fiduciary duty. Thus, we need not consider whether punitive damages could have been awarded in this case in the absence of actual damages.
*
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Young v. Becker & Poliakoff 88 So.3d 1002 (2012).
Accordingly, we affirm the final judgment.
Although the BMW v. Gore guidelines have led to even more damages awards being overturned, most people fail to recognize that even before BMW and Campbell, most multimillion-dollar damages awards by juries making headlines and fueling the debate over limiting punitive damages were rarely paid and certainly not promptly paid. In September 1995, for example, a federal jury in Alaska slapped Exxon Corporation with the largest punitive damages award ever imposed on a corporation: $5 billion awarded to 32,000 people who were injured by the Exxon Valdez oil spill in March 1989. The award was 10 times the economic loss of $500 million suffered by the plaintiffs. Before the time for filing posttrial material had closed, Exxon had filed a total of 22 motions. Eventually, the appellate court ordered the trial judge to reduce the “excessive” award, so District Court Judge Holland reduced the punitive damages award to $4 billion— but in 2006, the appellate court said that the reduction was insufficient and further reduced the award to $2.5 billion. In late 2007, the U.S. Supreme Court refused to hear the final appeal of Exxon in this case. See
Table 11-2
for some examples of appeals courts’ reductions of extravagant punitive damages awarded by juries.
States tend to take a more active role in limiting punitive damages. For example, on February 2, 1994, the Texas Supreme Court handed down a decision in the case of Transportation v. Moriel
8
that is expected to make it more difficult for plaintiffs in that state to recover punitive damages, and many commentators believe that the ruling will influence decision makers in other states. Moriel suffered a broken pelvis and became impotent as a result of having a stack of countertops fall on him while he was working. He sued the insurance company when it delayed payment on some of his medical bills. The jury awarded Moriel $101,000 in compensatory damages, with $100,000 of that total being for mental anguish, and $1 million in punitive damages. The state court of appeals affirmed
8
879 S.W.2d 10 (Tex. 1994).
Table 11-2 Some Major Punitive Damage Awards
|
Case |
Jury Award |
Ultimate Resolution |
|
Geragos v. Borer |
Attorney Geragos was defending Michael Jackson. Geragos chartered a private plane from XtraJet, Inc., to fly with Jackson from Las Vegas to Santa Barbara, so that Jackson could surrender for his arrest. Borer, the owner of XtraJet, installed hidden cameras on the plane, and then attempted to sell the recordings of Jackson and Geragos on their flight. When Geragos found out, he sued Borer, claiming, among other things, invasion of privacy, misappropriation of name and likeness, and unfair business practices. He received an award for $2.25 million in compensatory damages and $9 million in punitive damages. |
On appeal in 2010, compensatory damages were reduced to $150,000 and punitive damages to $600,000. The judge found the punitive award to be so excessive under the circumstances as to violate due process. He believed that a ratio of no more than 4 to 1 was appropriate given that Borer’s conduct was not as reprehensible as other forms of punishable conduct, in that he did not endanger anyone’s health or safety, he did not target a financially vulnerable victim, and he had never engaged in similar misconduct in the past. |
|
Frankson v. Browne & Williamson |
A jury awarded the widow Gladys Frankson $350,000 in compensatory damages and $20 million in punitive damages following the death of her husband, who died from lung cancer caused by his using the defendant’s cigarettes. |
In June 2004, the Supreme Court of New York did not strictly follow the 4:1 ratio in State Farm v. Campbell, but it held that the punitive damages were still excessive and reduced the punitive damages award to $5 million if the plaintiff agreed to the new amounts. Otherwise, the judge directed a new trial on the issue of punitive damages. |
|
Diamond Woodworks, Inc. v. Argonaut Insurance Co. |
A jury awarded compensatory damages and $14 million in punitive damages to an employee who was denied insurance benefits after being injured at his place of employment. |
The trial court reduced the punitive damages to $5.5 million, but the appellate court granted the defendant’s motion for a new trial only if the defendant agreed to a remittitur of $1 million in punitive damages, in accordance with the 4:1 ratio established in State Farm v. Campbell. |
|
Conroy v. Owens-Corning Fiberglass |
A jury awarded $3.37 million in compensatory damages and $54 million in punitive damages to the families of three men who contracted mesothelioma from long-term workplace exposure to asbestos. |
On appeal, punitive damages were reduced from $18.2 million per plaintiff to $1 million and one cent per plaintiff. The plaintiffs then settled for an undisclosed amount. |
|
Liebeck v. McDonald’s |
A jury awarded Stella Liebeck $2.9 million in damages, including $2.7 million in punitive damages for extensive burns she received when she spilled hot coffee (170°F) on her legs. Jurors were influenced by McDonald’s having known that prior customers had received severe burns from its coffee and its ongoing failure to warn customers about its unusually hot product. |
The trial court reduced the award by 77 percent to $640,000. The parties subsequently settled the case for an undisclosed amount. |
the verdict. The Texas Supreme Court struck down the punitive damages award, holding that an insurance company’s refusal to pay a claim does not justify punitive damages unless the failure to pay was in bad faith and the insurer knew that its action would probably bring about extraordinary harm such as “death, grievous physical injury or genuine likelihood of financial catastrophe.”
An example of a state law limiting punitive damages is that of Missouri, which limits punitive damages to five hundred thousand dollars or five times the net amount of the judgment awarded to the plaintiff against the defendant. Such limitations, however, do not apply if the state of Missouri is the plaintiff requesting the award of punitive damages, or the defendant pleads guilty to or is convicted of a felony arising out of the acts or omissions pled by the plaintiff. The restriction also doesn’t apply to cases arising under a limited number of Missouri statutes.
9
Many pieces of legislation designed to reform tort law have been proposed at both the federal and the state levels. The majority of these proposals contained provisions limiting punitive damages, and many focused on medical malpractice. For example, in 1995, the proposed federal Common Sense Legal Reform Act contained a provision limiting punitive damages in certain types of tort cases—namely, torts involving defective products (so-called product liability cases, which are discussed in
Chapter 12
). This legislation would allow punitive damages in such cases only when the plaintiff could prove by clear and convincing evidence that the harm suffered was caused by “actual malice.” Such damages would also be limited to $250,000 or three times the actual economic harm incurred by the plaintiff, whichever was greater. Part of this legislation, including the cap on punitive damages, was passed in 1996 but was vetoed by President Clinton. In 2011, HR 5, the Help Efficient, Accessible, Low-cost, Timely Healthcare (HEALTH) Act of 2011 was proposed. The act would have imposed limits on medical malpractice litigation in state and federal courts by capping awards and attorney fees, modifying the statute of limitations, and eliminating joint and several liability.
9
Missouri Revised Statutes Chapter 510, Section 510-265, August 28, 2012.
Until 2005, reformers at the federal level had very little success. In February of 2005, however, in response to arguments that state tort laws lack uniformity, the Class Action Fairness Act, designed to transfer jurisdiction in large, multistate class action tort suits from state courts to federal courts, was signed into law. Because state courts commonly give larger awards in class action suits than do federal courts, the new legislation was seen as a way to reduce the awards in such cases.
According to the Federal Judicial Center, the law did have one very swift and certain impact on the courts: It sharply increased the number of class action suits filed in and removed to the federal courts.
10
Under the law, the federal courts have jurisdiction over class action cases in which (1) the aggregate value
10
Maricia Coyle, “Class Action Changes Bring Quick Impact,” National Jaw Journal 6 (Oct. 2, 2006).
Comparative Law Corner Punitive Damages in Japan
Punitive damages have been a major source of contention in the United States. Tort reformists in the United States argue fervently for caps on the amount of punitive damages. Other groups argue that large punitive damages are necessary to discourage large corporations from committing torts, because compensatory damages are often less expensive than ceasing to commit torts. Very few people in the United States, however, argue for the complete elimination of punitive damages.
The view of punitive damages is very different in Japan. Japan’s Supreme Court has ruled many times that punitive damages violate Japan’s public policy. Recently, the Japanese legislature passed a law forbidding the acceptance of punitive damages in foreign courts as well. Although Japan’s lack of punitive damages is not entirely unusual (many European countries do not have a system of punitive damages either), the reinforcement of this ban on punitive damages is atypical. Many of the other European countries that lack systems of punitive damages are moving toward having damages beyond compensation and acceptance of foreign awards of punitive damages.
Not everyone in Japan is against punitive damages, however. Some Japanese businesses have indicated that they would like some sort of punitive damages in cases of patent infringement. Most of the companies that favor an expansion of infringement damages are secondary industries, such as pharmaceuticals, rather than major industries such as automobiles. The major industries seem content with the damages system in its current form.
Linking Law and Business Marketing
The establishment of torts for the purpose of deterring future crimes relates to a familiar concept in the field of marketing. This idea, advertising, is defined as the “presentation and promotion of ideas, goods, or services by an identified sponsor.” Advertisers hope that what they are promoting will gain acceptance by the general public. Similarly, the law of torts is created to promote fair and just behavior among civilians. One intent of torts is that potential wrongdoers will refrain from injuring other persons or their property because of the consequences entailed in tort laws.
of the claims exceeds $5 million; (2) there are at least 100 class members; (3) any member of the plaintiff class is a citizen of a state different from any defendant; and (4) two-thirds or more of the class members and primary defendants are not members of the state in which the action was originally filed.
Tort reform advocates at the state level have been more successful thus far. Almost every state has passed some sort of tort reform legislation. Since 1986, 34 of these state tort reform laws limited punitive damages awards in some fashion.
11
Many of these reform efforts, however, have been struck down by the courts.
11
Congressional Budget Office, The Effects of Tort Reform: Evidence from the States (June 2004).
Case Analysis Format
Read and understand the case or question assigned. Show your Analysis and Reasoning and make it clear you understand the material. Be sure to incorporate the concepts of the chapter we are studying to show your reasoning. Dedicate at least one heading to each following outline topic:
Parties [Identify the plaintiff and the defendant]
Facts [Summarize only those facts critical to the outcome of the case]
Procedure [Who brought the appeal? What was the outcome in the lower court(s)?]
Issue [Note the central question or questions on which the case turns]
Explain the applicable law(s). Use the textbook here. The law should come from the same chapter as the case. Be sure to use citations from the textbook including page numbers.
Holding [How did the court resolve the issue(s)? Who won?]
Reasoning [Explain the logic that supported the court’s decision]
Do significant research outside of the book and demonstrate that you have in an obvious way. This refers to research beyond the legal research. This involves something about the parties or other interesting related area. Show something you have discovered about the case, parties or other important element from your own research. Be sure this is obvious and adds value beyond the legal reasoning of the case.
1. Dedicate 1 heading to each of the case question(s) immediately following the case, if there are any. Be sure to restate and fully answer the questions
2. Quality in terms of substance, form, grammar and context. Be entertaining! Use excellent visual material
3. Wrap up with a Conclusion. This should summarize the key aspects of the decision and your recommendations on the court’s ruling.
4. Include citations and a reference page with your sources. Use APA style citations and references
5. Submit your assignment
WEEK 3 JACQUELYN N. YOUNG V. BECKER & POLIAKOFF, 2
WEEK 3 JACQUELYN N. YOUNG V. BECKER & POLIAKOFF, 4
Running head: WEEK 3 JACQUELYN N. YOUNG V. BECKER & POLIAKOFF, 1
Parties
Jacquelyn N. Young v. Becker & Poliakoff, P.A.
Facts
“Yong hired the Becker & Poliakoff law firm to represent her in her federal employment discrimination lawsuit against her employer, Bellsouth. The firm associate attached the wrong EEOC right to sue letter” (Florida District Court of Appeals, 2011, para. 2). The firm failed to file the appropriate letter with the EEOC in the time frame need. In the complaint, the firm also didn’t notify their client about the outcome for a very unreasonable amount of time. There is also an allegation of the firm having a conflict of interest. Unknown to Ms. Young who hired the defendants to represent her. The defendants were handling a similar case against her former employer and they failed to inform her of that. The jury determined that the defendants failed to inform the plaintiff of the dismissal in order to recover their fees.
Procedure
The jury awarded the plaintiff in just under $5 million in compensatory and punitive damages. However, “the trial court remitted them to $2 million, finding that the amount was not supported by evidence that the law firm had enough financial resources to support such a verdict without facing bankruptcy” (Kubasek, Brennan, & Browne, 2017, p. 303). The client rejected the new trial order and appealed, and the law firm cross-appealed.
Issue
The question is an attorney’s fiduciary duty. In this case, the question is did the firm’s associate breach their contract with Young when she wasn’t notified that her case was dismissed in a timely manner.
Holding
The testimony of a defense’s witness stating the amount would not in excess “The District Court of Appeal of Florida, Fourth District, held that the record supported the trial court’s finding that the punitive damage award was in an amount that would cause the firm to have to declare bankruptcy” (Kubasek et al., 2017, p. 303).
Reasoning
This decision underscores the dangers and consequences of a law firm’s failure to properly supervise associates’ work and the failure to timely and fully disclose to clients all material facts concerning the representation
.
References
Florida Distict Court of Appeals. (2011). Jacquelyn N. Young v. Becker & Poliakoff, P.A. Retrieved from https://caselaw.findlaw.com/fl-district-court-of-appeal/1589213.html
Kubasek, N., Brennan, B. A., & Browne, N. M. (2017). The Legal Environment of Business: A Critical Thinking Approach (8th ed.). Retrieved from https://online.vitalsource.com/#/books/9781323829264/cfi/6/4!/4/2/2/2@0:0
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