SUPERIOR COURT OF THE STATE OF CALIFORNIA
FOR THE COUNTY OF SAN BERNARDINO
DEPARTMENT
7 HON. MICHAEL A. SMITH, JUDGE
NORMAN
B. COLLETT, )
Plaintiff, )
)
vs. ) NO. SCV-224026
)
PLUESS‑STAUFER,
INC. )
et al, )
)
Defendants. )
__________________________
REPORTER'S TRANSCRIPT
(Court's Ruling at Time of Motion for New Trial
and Judgment Notwithstanding Verdict)
FRIDAY, JUNE 26, 1987
SAN BERNARDINO, CALIFORNIA
APPEARANCES:
For, the Plaintiff: JONATHAN W. BIDDLE
Attorney at Law
8383 Wilshire Blvd. 4,750
Beverly Hills, CA 90211
For the Defendants: MALCOLM G. SMITH
Attorney at Law
Citicorp Plaza, 36th Floor
725 South Figueroa Street
Los Angeles, CA 90017
Reported By: THERESA CHRISTINE HEINTZ, C.S.R.
Official Reporter #6024
SAN BERNARDINO, CALIFORNIA; FRIDAY, JUNE 26, 1987
DEPARTMENT
7 HON. MICHAEL A. SMITH, JUDGE
‑
10:00 A.M. ‑
THE COURT: Obviously, the first hurdle, or the key issue that needs to be resolved before any of the other issues is whether or not there's substantial evidence to support the jury's finding that the plaintiff was an employee of Pluess-Staufer A.G., as well as Pluess-Staufer (California); because if there is not substantial evidence of that and if the plaintiff is not an employee of Pluess-Staufer A.G., then obviously there can be no valid cause of action against Pluess-Staufer A.G. for wrongful termination. And if that's true, then certainly there can be no punitive damages against Pluess-Staufer A.G. on that cause of action, which was the only substantive cause of action alleged by the plaintiff.
And so that's the first threshold issue as it relates to Pluess-Staufer A.G.
The Court does find that there is substantial evidence to support the finding that: the plaintiff was an employee of Pluess-Staufer A.G., as well as Pluess-Staufer (California) for the following reasons:
First, the evidence was clear that when Mr. Collett was first interviewed
by Mr. Enderli, at least a reasonable inference from the testimony of
both Mr. Collett and Mr. Enderli with regards to the hiring procedures, was
that Mr. Enderli, at that point, did not have sole authority to hire Mr. Collett
without first obtaining approval from either Vermont or New York, where Mr.
Collett was sent to be interviewed by Mr. Slansky who was the representative
of Pluess-staufer Industries and Pluess-Staufer A.G.
And it was after Mr. Slansky gave his approval that Mr. Enderli then went ahead with the hiring.
Immediately
after the hiring of plaintiff, plaintiff was then sent to Oftringen,
Switzerland, for a tour of what was referred to as World Headquarters of Pluess‑Staufer,
or what has been referred to by some of the witnesses as the Pluess‑Staufer Group.
And
during that trip he met Max Andre Schachenmann as well as others involved in
the management of what has been referred to as the ultimate parent, Pluess‑Staufer A.G.
Upon plaintiff's hiring, he was also given various brochures that had been referred to as the Pluess‑Staufer Group partner brochures. And the content of those brochures certainly would indicate to one that a member of Pluess‑Staufer (California) or any other Pluess‑Staufer subsidiary is in effect ‑‑ the ultimate employer is indeed Pluess‑Staufer A.G., their "good partner" is referred to in the brochures.
As Mr. Biddle has pointed out in his arguments and in his briefs with regard to the Omyalene project of Pluess‑Staufer (California), there was a substantial, not only participation, but control of that project by Pluess‑Staufer A.G. In fact, when the project was reaching the point where they were about to engage in a significant contract that would produce, hopefully, mass production. of Omaylene with Mr. Prine, it was evident that that project could not go forward without approval directly from Max Schachenmann. And for that purpose, a meeting was arranged between Max Schachemann Max Andre Schachenmann Mr. Enderli and Mr. Prine.
And
it was at that meeting, it was clear from the testimony both from Mr. Collett
and from Mr. Prine, that the person in ultimate control of the development of
Omyalene by Pluess‑Staufer (California) was in fact Max Schachenmann the
director of Pluess‑Staufer A.G.
The
Telex received from Mr. Schachenmann from Switzerland where he indicated that
the plaintiff was no longer with, quote, Pluess‑Staufer, end‑quote,
without making any differentiation to Pluess‑Staufer (California) as
opposed to Pluess‑Staufer A.G., would certainly be another indication
from which the jury could reasonably infer that Pluess‑Staufer A.G. who Mr. Schachenmann was speaking for in the Telex considered Mr. Collett to be an ultimate employee of A.G.
Also,
the testimony of Mr. Eisenberg with regard to the chain of command within the
Pluess‑Staufer organization as it related to Pluess‑Staufer
(California), I think, also indicates that the ultimate employers of Pluess‑Staufer
(California) and their employees would be Pluess‑Staufer A.G.
Mr. Eisenberg testified that Mr. Enderli reported to Mr. Prine who was the President of Pluess‑Staufer Industries. And Mr. Prine, in turn, reported either to ‑‑ directly to Max Schachenmann or to Max Andre Schachenmann, when Max Andre was present in the United States.
Mr.
Eisenberg referred to Pluess‑Staufer A.G. as the ultimate parent of
Pluess‑Staufer (California), and indicated that the ultimate parent,
Pluess‑Staufer A.G.,, sent Max Andre Schachenmann as its ‑‑
as its ‑‑ A.G. 's representative in the United States to take charge of the overall operations in the United States.
Mr. Eisenberg went on to say that while Mr. Andre -- Max Andre Schachenmann was in the United States for A.G. and for this purpose, people such as Enderli and Prine would report directly to Max Andre Schachenmann.
When he was specifically asked if there were situations where Mr. Enderli would have to report directly to Max Andre Schachenmann Mr. Eisenberg indicated, yes, that in areas involving the expenditure of large sums of money and in major policy decisions, such as the development of a new product such as Omyalene, that Mr. Enderli would have to report directly to Max Andre Schachenmann who was A.G.'s representative in the United States.
Also,
as pointed out by counsel, during Mr. Max Andre Schachenmann's presence in the
United Stater, for Pluess‑Staufer A.G., he made several trips to the
Pluess‑Staufer (California) plant on company business.
All of this certainly leads to the conclusion
The
Court therefore finds that the Jury's finding that the plaintiff was employed
by Pluess‑Staufer A.G. as well as Pluess‑Staufer (California) is supported by substantial evidence; and that that finding by the jury is reasonable in light of the evidence that was presented.
The next threshold issue with regard to the issue of punitive damages, obviously is with regard to the issue of whether or not there was any malice, oppression or fraud as defined by Civil Code Section 3294.
For
even if the plaintiff were an employee of Pluess‑Staufer A.G. and Pluess‑Staufer (California), and was wrongfully terminated, if there was no malice or oppression as defined by 3294, then, of course, there would be no basis for an award of punitive damages.
The plaintiff's evidence in this case certainly lent itself at least to the inference that the plaintiff was not going along with the program of business of Pluess-Staufer, Pluess-Staufer (California), and that plaintiff was a thorn in the side of management of Pluess‑Staufer California and that he was terminated both in retaliation for his refusing to go along and in order to remove him as an obstacle. And that --
The
plaintiff's evidence, in that regard related to three
basic areas: One was the plaintiff's statements in evidence suggesting there
was a considered program of Pluess-Staufer salesmen, including the plaintiff,
to obtain trade secrets from its customers. And the plaintiff refused to participate
in that program.
The second is the development of Omyalene which the plaintiff did not desire to participate in.
And the third would be the adoption of the defendant's strategy strategy in the Prine lawsuit, which the plaintiff refused to go along with.
The timing of the plaintiff's firing would certainly lend itself, at least again to the inference, that the firing was in retaliation, at least in part, for the plaintiff's refusal to go along with the defense's strategy in the Prine lawsuit.
While it is true that all of this evidence presented by the plaintiff, defense did produce evidence to rebut each of those allegations, to indicate that there was no such program of obtaining trade secrets; there was no such program to attempt to surreptitiously gain FDA approval of Omyalene; and there was no unethical or any other problems with the strategy in the lawsuit; and that had nothing to do with the defendant's -- strike -- with the plaintiff's termination; that evidence produced by the defense, of course, simply indicated a conflict in the evidence. And the jury resolved that conflict in favor of the plaintiff's allegations and evidence and against the defendants.
The Court does find that the evidence on those issues produced by the ‑‑ or the finding of the jury in that regard is supported by substantial evidence.
And, again, the Court does not feel it can say that the jury's resolution of that conflict is unreasonable in any way. And therefore the Court does find that there is substantial evidence to support a finding that there was in fact a ‑‑ some form of malice and oppression on the part ‑‑ at least on the part of Mr. Enderli and on the part of Pluess‑Staufer (California).
For ‑‑ if in fact the plaintiff was terminated for his refusal to participate in business practices which he felt were unethical, and he was terminated in retaliation for that refusal and to remove him as an obstacle, the Court is satisfied, based on all of the cases that have been cited defining malice and oppression, that that would constitute malice and oppression.
Therefore, that finding is supported by substantial evidence.
The next issue, of course, is whether or not any -- whether or not any of that malice or oppression on the part of Mr. Enderli and on the part of Pluess‑Staufer
(California) can be imputed or held against Pluess‑Staufer A.G.
Again,
the cases are clear as to what is necessary to hold an employer or a parent,
such as Pluess‑Staufer A.G., liable for punitive damages for the acts of its agents or employers.
And in that regard, the Court notes the case of Agarwal v. Johnson at 25 C.A.3d 932 and Merlo v. Standard
And the Court will consider each of those separate prongs individually as to whether or not there is substantial evidence to support a finding of malice against Pluess-staufer A.G. on any of those theories.
The plaintiff contends that the termination of Mr. Collett was, in effect, authorized by Pluess‑Staufer A.G., the ultimate parent, by Mr. Eisenberg who was admittedly involved in advising Mr. Enderli as to whether or not he could or ‑‑ when he could fire Mr. Collett.
However, there's no indication that Mr. Eisenberg is an officer, director or managing agent of
Mr. Eisenberg was an officer, and I believe, a director as well of Pluess‑Staufer Industries. And if there were punitive damages against Pluess‑Staufer Industries then Mr. Eisenberg actions might well be considered authorization of Pluess‑Staufer Industries. But, of course, Pluess‑Staufer Industries is not a party in this action.
There certainly is no ‑‑ the only other reference that could be made to Pluess-Staufer A.G. is with regard to the Telex that was sent by Max Schachenmann. That obviously was well after the time that plaintiff was terminated. And Mr. Schachenmann, in that Telex, indicated that he had only recently learned -- or incidentally learned after the fact that Mr. Collett was no longer with Pluess-Staufer.
That certainly could not constitute authorization, or prior authorization, of the firing.
The Court is also of the opinion that that cannot constitute a ratification of the termination by Mr. Schachenmann or by Pluess‑Staufer A.G. The reason being is that Mr. Schachenmann -- well, first of all, the time at which Mr. Schachenmann learned of the termination appears to be well past the time that anything could have been done to remedy the situation.
Secondly, although Mr. Schachenmann indicates he became aware of the fact that Mr. Collett was no longer with Pluess-Staufer there is nothing to indicate that Mr. Schachenmann had any knowledge of the circumstances under which Mr. Collett left the employ of Pluess-Staufer (California) and Pluess-Staufer A.G.
That
being the case, the Court feels that would not be sufficient to constitute a
ratification by Mr. Schachenmann or of Pluess‑Staufer A.G. of the termination that was done by Mr. Enderli.
There certainly is no suggestion anywhere in the evidence that was presented in the case to suggest that somehow Mr. Enderli was unfit for the position of President of Pluess‑Staufer (California) or was reckless in that regard and that Pluess‑Staufer A.G. either knew of that condition of Mr. Enderli or was reckless in not determining it. And so the acts of Mr. Enderli cannot be imputed to Pluess‑Staufer A.G. on that ground, either.
The only remaining ground for imputing the acts of Mr. Enderli to Pluess‑Staufer A.G., then, would be if Enderli were employed in a managerial capacity by Pluess‑Staufer A.G. In that regard, as I indicated at the outset, the Court has a portion of Mr. Enderli's testimony transcribed for the Court's review, to attempt to analyze Mr. Enderli's role with Pluess‑Staufer (California) and his role, if any, with Pluess‑Staufer A.G.
In that regard, Mr. Enderli testified that he joined Pluess‑Staufer North American as treasurer and he reported directly to the President of Pluess‑Staufer North American.
In
his position as treasurer, he supervised the three Plants of Pluess‑Staufer
in Brazil and he supervised everything but the sales department. And in 1970,
he was promoted to general manager where he supervised all of the Brazilian
operation of Pluess‑Staufer, apparently including sales, at that point.
He then indicated in 1972, Pluess‑Staufer North American was sold; that Enderli then stayed on with the now owners of the Brazilian operation until 1973, at which time he went back to Pluess‑Staufer A.G. in Oftringen, Switzerland, who was the ultimate parent.
And the Court noted he used the term that, "He went back to Pluess‑Staufer A.G." as opposed to, "He then went to Pluess‑Staufer A.G. for the first time."
When he went back to Pluess‑Staufer A.G. in 1973, indicated he was supposed to be assigned by Pluess‑Staufer A.G. to a plant in the United States or Australia.
He was instead assigned by Pluess‑Staufer A.G. to a Plant in France that was part of the Omni, a group which is one of the subsidiaries of Pluess‑Staufer A.G.
He indicated that the reason for that was to become more familiar with the limestone type of operations. He also indicated that while he was with the plant in France, that he continued his duties of auditing in what he referred
Early
in 1974, Mr. Enderli indicated Pluess Staufer A.G. still had not: progressed on
their plans to build a plant in the United States. And he was interested in
going to the United States. So at that time he left Pluess‑Staufer A.G. and went to another company, Swiss Aluminum.
In ‑‑
later that same year, in the spring of 1974, he was called by Pluess‑Staufer
A.G. and told by Pluess‑Staufer A.G. that Pluess‑Staufer A.G. was
now serious regarding acquiring plants in the United States. And that Pluess‑Staufer
A.G. wanted to know if Mr. Enderli were interested in returning to Pluess‑Staufer
A.G. in order to run a plant of Pluess‑Staufer A.G. in the United States.
Mt.
Enderli indicated that he was interested and did come back to Pluess‑Staufer
A.G. in Oftringen, Switzerland, for that purpose. His first assignment
back with Pluess‑Staufer A.G. was the acquisition of a limestone plant in Austria.
After
that, his next assignment for Pluess‑Staufer A.G. was ‑‑ strike.
Shortly after the acquisition of the plant in Austria, Pluess‑Staufer A.G. acquired a plant in Sycamore, Alabama. And Mr. Enderli was assigned by Pluess-Staufer A.G. to run the plant in Sycamore, Alabama.
While he was running the plant in Sycamore, Alabama, he indicated that he was still conducting some of his duties in Oftringen, Switzerland, and was traveling back and forth between Alabama and Oftringen, Switzerland, to complete his duties as they related to both Alabama and his duties in Oftringen.
He then indicated that in December of 1976 the Pluess‑Staufer Group, which is headed by Pluess‑Staufer A.G., acquired the Lucerne Valley plant. He indicated at that time he was asked by Pluess‑Staufer A.G. if he wished to run the Lucerne Valley plant. He indicated that he was interested. And at that time he was assigned by Pluess‑Staufer A.G. to run the Lucerne Valley plant. And since that time he has been President of Pluess‑Staufer (California).
In
attempting to then determine whether or not that relationship between Mr.
Enderli and Mr. ‑‑ strike between Mr. Enderli and Pluess‑Staufer
A.G.. as well as the relationship of Pluess‑Staufer A.G. to Pluess‑Staufer (California), as the Court has previously mentioned, throughout the testimony of Mr. Eisenberg, whether or not that would be sufficient to constitute Mr. Enderli being a managing agent of Pluess‑Staufer A.G.
The Court referred to several cases, the first of which is Egan v. Mutual of Omaha Insurance, 24 C.3d 809. And in that regard, the California Supreme Court reiterated the criteria that the Court has previously mentioned with
The Supreme Court, however, in Egan went on to say that those criteria are not to be interpreted, or not to be given a narrow interpretation. The key issue with regard to whether or not an individual is employed in a managerial capacity of a parent or employer corporation, for purposes of 3294 of the Civil Code, the Supreme Court held was the degree of discretion that the employee has in making decisions that ultimately determine or affect corporate policy, and not the title or position that the individual has or does not have with the parent or employer.
In
the Egan case, the defendant, Mutual of Omaha, of course, was a national
insurance company. The individual who was, claimed to be a managerial agent of
the national insurance company, was a claims agent in one of their offices. And
he apparently had ‑‑ this claim agent had the authority to dispose of insurance claims with little or no supervision from any supervisors or anyone in a management level above him.
The Supreme Court held that that was sufficient discretion to determine ‑‑ to declare that claims agent to be employed in a managerial capacity of the Mutual of Omaha Insurance Company. And therefore the acts of malice or oppression of the claims agent were sufficient to impose liability for punitive damages under 3294 on the employer, the defendant Mutual of Omaha Insurance Company.
Next, the Court looked to the case of Bertero v. National General Corporation. The plaintiff was awarded
And
the court held that that position of control of that one lawsuit was sufficient
‑‑ gave the president of the one corporation sufficient discretion to hold him to be a managing agent of the other corporation as well, at least as far as it related to that particular claim of the plaintiff.
Next, the Court looked to the case of Hobbs v. Bateman, Eichler, Hill, Richard, at 164 C.A.3d 174. In that case, of course, Bateman, Eichler, Hill, Richard is a national brokerage, stock brokerage firm. The officer manager of one of the branch offices was held to have a sufficient degree of discretion over the corporate activities of that one office to be held to be employed in a managerial capacity of the corporation. And therefore the acts or omissions of the office manager of that one office would be imputed to the ultimate employer or parent, Bateman, Eichler, Hill, Richard under 3294 of the Civil Code.
The same analysis was held by the court in the case of Chodos v. Insurance Company of North America at 126 C.A.3d 86, where the court employed the same analysis regarding a claims manager of a Los Angeles office of a national insurance company, holding that such a claims manager would also be considered a managing agent under 3294 for purposes of holding the employer, the National Insurance Company, liable for punitive damages as a result of actions of the claims agent.
Finally, the Court notes ‑‑ noted the case of Agarwal v. Johnson, which the Court has previously cited. In that case, the plaintiff's action ‑‑ plaintiff brought an action for wrongful termination and for intentional infliction of emotional distress against the corporate employer, as well as his immediate supervisor, at the San Francisco branch office.
The immediate supervisor in the branch office was not in charge of the entire office, was not in charge of the entire branch office, but: was in charge of -- or assistant head of one of the departments within that branch office. But among the duties that that supervisor had was the authority to terminate employees within that department. And the court held that that was sufficient authority to hold the supervisor in one of the branch offices to be a managing agent under Civil Code Section 3294. And therefore, the acts of the plaintiff's supervisor in that
When
the Court compares the facts of the cases that have just been cited to the
relationship of Mr. Enderli to Pluess‑Staufer (California) and Pluess‑Staufer
A.G., based on Mr. Enderli's testimony as the Court has just related it, the
Court finds that there is substantial evidence to uphold the proposition that
Mr. Enderli is indeed a managing agent of Pluess‑Staufer A.G.
Mr.
Enderli certainly has more authority and more discretion than the claims agent
did in Egan. He had at least, if not more, than the discretion of the
branch manager in Hobbs. Certainly he had more discretion and authority
than the claims supervisor in Chodos or of the supervisor of the
plaintiff in the Agarwal case.
For
those reasons, the Court is satisfied that the evidence does show and is
supported by substantial evidence that Mr. Enderli was in fact a managing agent
of Pluess‑Staufer A.G.; and that therefore his actions can be imputed to
Pluess‑Staufer A.G. for purposes of punitive damages against Pluess‑Staufer A.G. under 3294 of the Civil Code.
That, then, brings us to what both counsel, I think, has indicated is perhaps the most crucial issue in the case. And that is the meaning of the jury's verdicts in this case. There is, as both counsel have indicated ‑‑ the jury in this case returned a general verdict in favor of the plaintiff and assessed comepnsatory damages at $500,000 against Pluess-Staufer ( California). And they wrote in zero or no damages, compensatory damages, against Pluess-Staufer A.G., and no compensatory damages against Defendant Enderli.
The
cases cited by both counsel, Haydel v. Morton, Clark v. McClurg, as well
as more recent cases citing those, all made clear that ‑‑ or state the proposition that punitive damages cannot be upheld without a finding of actual damages.
In reviewing some of the more recent cases that have dealt with the issues following Haydel v. Morton and Clark v. McClurg, the Court notes the case of Weiss v. Blumencranc at 61 C.A.3d 535. In that case, the plaintiff, in his complaint, did not seek compensatory damages and therefore there was no award of compensatory damages. But the jury awarded punitive damages.
In
upholding the punitive damages, the court held the fact that the plaintiff ‑‑ plaintiffs were not given an award of monetary damages of a certain amount was not determinative. And that the requirement of actual damages for punitive damages under 3294 is simply the requirement that a tortious act be proven; and that if a tortious act is in fact proven, that some actual damages are either inferred from the evidence or implied by law. And that the jury need not fix the amount.
This, of course, was a case factually more in line with Clark v. McClurg as the jury made no award and did not specify any amount.
The court in James used the same analysis as the court in Weiss used and held that the rule that punitive damages cannot ordinarily be awarded without a showing that the plaintiffs sustained actual damages from defendant's wrongful acts is only a requirement that the plaintiff prove a tortious act by the defendant.
Once the tortious act is proven, that either some actual damages are inferred from the evidence or implied by law. The court then went on to discuss in detail Haydel v. Morton and Clark v. McClurg. In discussing Haydel v. Morton, the court noted that Haydel v. Morton, when it was decided, discussed, the state of law with regard to whether or not if the plaintiff proves a tortious act and some damages are inferred or implied, whether or not the jury must then specify the actual amount of damages. And Haydel v. Morton held that the jury did have to make that specification in order to justify punitive damages.
The court in James, in reviewing more recent authority, concluded that the weight of authority now is that the better rule is that the Jury need not make an express finding of actual damages, nor need the jury make a
In our case, the jury did find a tortious act. They did find a wrongful termination of the plaintiff's employment. And they did find some actual damage in awarding compensatory damages of $500,000.
The
fact that they did not assess or apportion any of those damages to Pluess‑Staufer
A.G. or to Mr. Enderli would not prevent them awarding punitive damages against
Pluess‑Staufer A.G. or Enderli under the James case, as the Court
has cited the analysis of James.
Furthermore, the facts of this case, as suggested by Mr. Biddle in his Points and Authorities, suggest that if the jury had attempted to make such an apportionment, or if the award of all the $500,000 against Pluess‑Staufer(California) was meant by the jury to be an apportionment, of the damages, that it would not be appropriate for the
jury to make such an apportionment in this case.
For the reasons that the liability of the defendants in this case would be joint and several for the actual compensatory damages.
The reason for that is that the Court has found that the plaintiff was an employee of both Pluess‑Staufer (California) and Pluess‑Staufer A.G.; that substantial evidence has supported the jury's finding, number one, that plaintiff was wrongfully terminated from his employment with Pluess
Under those facts, it would appear to the Court that the liability for actual damages for that wrongful termination would be joint and several among the three defendants. That being the case, of course, the rule is that no apportionment of compensatory damages among joint tortfeasors is appropriate by the jury.
The
jury's role is simply to determine whether or not a tort occurred and then to
award a total sum of damages, which the jury did in this case, awarding total
sum of actual damage of $500,000. Who is to pay how much of that total amount
of damages among the defendant tort‑feasors is not of the jury's concern. And so even if the Court had -- strike. Even if the jury had attempted to make an apportionment of the damages in this case, it would not have been appropriate for them to do so. The apportionment would properly have been set aside and the general verdict of $500,000 compensatory damages against all three defendants would remain.
The
Court cites for that proposition Witkin California Procedure, Trial Section
333, Page 333; and the case of Weddle v. Leges at 52 C.A.2d 115.
Witkin goes on in California Procedure, Trial
Witkin continues at Section, 341, that every reasonable inference in favor of the general verdict should be indulged and all parts of the verdict are to be reconciled in support therefor, if it can be reasonably done. If any conclusion could be drawn thereunder which would explain the apparent conflict, the jury will be deemed to have drawn that.
In this case, as the Court has indicated, based upon the facts and circumstances of this case, it is certainly reasonable to believe that the jury's verdict of $500,000 was meant to be a general verdict as a total amount of damages sustained by plaintiff, as to the damages incurred by plaintiff as a result of the wrongful termination of plaintiff as a result of the actions of all three defendants. And that that was what that slim was intended to be.
That being the case, the jury is deemed to have made such an inference and such a conclusion. And therefore, the Court finds, and the Court does find, that such a conclusion is supported by the weight of the evidence in this case and that the logical and reasonable way of interpreting the Jury's verdict in this case is that the jury awarded a general verdict against all three defendants
The Court notes that the court in the case of All-West Design, Inc. v. Boozer, which was cited, I believe, by both counsel at 183 C.A.3d 1212, basically used that same analysis in upholding an award of punitive damages for a cause of action where the jury found, quote, no further damages.
The court in that case held that the term "no further damages" meant that the level of compensatory damages had already been awarded to the plaintiff and that there were no damages in addition to that award already made for other causes of action; and that there ‑‑‑ that was sufficient to uphold the subsequent finding of punitive damages on that cause of action. And that, of course, was in effect the same analysis used by the Supreme Court in Clark v. McClurq, which again was cited by both sides at 215 Cal. 279.
Defendant
Enderli further contends as an additional grounds for a motion for new trial
that there was no evidence as to the net worth of Mr. Enderli and that that
being the case, that it precludes an analysis of the three‑pronged factors that the Court is to use to evaluate the size of a punitive damage award. And that being the case, the award cannot stand.
The Court, in that regard, notes the case of Vossler v. Richards Manufacturing at 143 C.A.3d 952, in
The court specifically held that such evidence was not required. The court held that that requirement is simply one factor that the court may, but not must, look at in evaluating the validity of the size of the punitive award. And that no review of the defendant's wealth is mandated to uphold any award of punitive damages.
The
court in Vossler then went on to state that the trend of the modern cases was to place the burden of proof of producing evidence of the defendant's wealth for such a review on the defendant rather than on the plaintiff, since the defendant is in the best position to produce such evidence.
Therefore, the fact that there was no evidence with regard to the net worth of Mr. Enderli presented does not preclude an award of punitive damages against Mr. Enderli.
All the defendants, I believe, have also urged as an additional ground for a new trial the denial of the two‑week continuance in order to allow Mr. Enderli to return from a business trip to Brazil to attend the trial.
The Court discussed that issue, of course, at length with counsel on the record at the commencement of the trial. The matter was previously announced ready for trial by both sides, or all parties. The matter was trailing on ‑‑ in Department 8 on the Assignment Calendar, apparently for several weeks with both sides and all parties continually announcing ready for trial.
The Court ‑‑ when a court became available, the Assignment Calendar Court assigned the matter to a trial department to commence trial immediately following a criminal case that was in progress. And it was after the last announcement of ready for trial by all parties and after the assignment of the case to a trial department to commence trial, that Mr. Enderli left the United States for Brazil for a business trip.
Under these circumstances, the Court finds that Mr. Enderli voluntarily absented himself from the trial at a time when he knew or certainly should have known upon advice of counsel, that the trial could start at any time.
While the trial that was in progress was estimated to be four weeks and at the time this case commenced, we were, I believe, two weeks in that trial, certainly experienced counsel would have to be aware and have to realize that there are numerous possibilities that could cause a trial in progress to abruptly end well before the estimated time of the trial, especially in this case where the trial that was in progress was involved in pretrial motions.
There's certainly the realistic possibility that the resolution of the motions could resolve the case. There's also the possibility that the case could be settled once it's actually started.
So the Court does find that Mr. Enderli absented himself at a time after all parties have announced ready for trial and after the case had been assigned to a trial department to commence trial. And that was at a time when he knew, or should have known, that trial could start at any time.
Furthermore, once the Court's attention was brought to the fact that. Mr. Enderli was out of the country, the Court did not commence the trial immediately. There was a period of several days before we actually commenced jury selection in the matter, and several more days before the evidence portion of the trial commenced.
That being the case, Mr. Enderli certainly had the opportunity, if he desired to do so, to cut his business trip short and return to San Bernardino for purposes of attending the trial. He apparently made the decision that the business trip had more priority at that time and elected to complete the business trip rather than attending the trial.
That being the case, it does not appear that Mr. Enderli or any of the defendants can complain at this point with regard to his failure to be at the trial for the first two weeks.
For all the above reasons, each of the defendants' motions for judgment notwithstanding the verdict are denied.
The motions for new trial with regard to theissues that have already been discussed are denied.
There is still, of course, the remaining issues raised by each of the defendants on the motion for new trial with regard to the issue of damages.
Each of the defendants has made a motion for new trial on the grounds that the punitive damages as to each defendant are excessive as a matter of law and that the Court should either grant a new trial on the issue of punitive damages or at a minimum substantially reduce the awards of punitive damages.
In that connection, the Court, of course, is cited to numerous cases for the analysis that the Court is to use. Principally, the Court notes the case of Neal v. Farmers Insurance, at 21 Cal.3d 910, as well as the Goshgarian v. George case, at 161 C. A. 3d 1214. And the case of Devlin v. Kearney Mesa Jeep that was cited by both parties and the case of Downey Savings v. Ohio Casualty Company, at 189 C.A.3d 1072. And of course the three‑prong analysis that the Court is to consider in evaluating the awards of punitive damages are the nature of the defendants' acts; the degree of their reprehensibility the amount of the compensatory damages, and the ratio of compensatory to punitive damages, and the wealth of the defendant,, in order to assess what is an appropriate level to punish and deter the defendants without being excessive.
All of the cases cited certainly stand for the proposition that the only relevant actions of the defendants that can properly be considered in determining the level of
In
the Neal case, the Supreme Court upheld the trial court's reduction of punitive damages where the trial court found that undue elements of sympathy for the plaintiff was one of the factors which contributed to the size of the verdict.
As
cited by defense counsel, Mr. Smith, in the case of Goshgarian v. George, the defendant who was a pro per had demonstrated during the trial what the court considered objectionable or unlikable tactics or actions and attitudes. And the court held that there was a reasonable likelihood that these actions influenced the jury's award of punitive damages. And in fact that the jury was punishing the defendant in that case for his actions in court, rather than the actions which gave rise to the cause of action. And the court held that that was improper. And that motion for a new trial, therefore, on the issue of punitive damages or a substantial reduction of the punitive damages would be appropriate.
In this case, the Court does find that there are similar factors outside of the actions of the defendants that give rise to the cause of action that the Court is satisfied did play a significant role in determining the size of the punitive damages award. And those factors are as follows:
The first is the factor of sympathy. In this
Secondly, the jury was made aware that ‑‑ or it was certainly apparent that neither Mr. Max Schachenmann or Max Andre Schachenmann nor anyone from Pluess‑Staufer A.G. was present at the trial or testified with regard to any matters involving Pluess‑Staufer A.G. during the trial.
The jury, in addition, was told that the Pluess‑Staufer A.G. refused to provide court‑ordered discovery of financial documentation. While the Court believes that this was a proper sanction for the failure, willful failure of the defendants to comply with the Court's previous orders of discovery, the Court does find that there is significant likelihood that the jury in their ‑‑ in determining the size of the award was attempting to punish the defendants
And
under the Goshgarian case, of course, that would be an improper basis to award punitive damages.
The
Court also notes that simply the personalities of the parties involved
contributed to both of these factors that the Court has mentioned, the sympathy
and the punishment factors. The plaintiff apparently was viewed as a relatively
sympathetic, likable figure; and the defendants, Mr. Enderli personally,
apparently was viewed as not likable and that may well have been substantially
as a result of his ‑ what the jury found to be his actions; with regard to the cause of action.
But the Court is satisfied there was significant reference to other matters outside of the cause of action that would have contributed to that feeling and contributed to the size of the award.
The Court also finds that the awards of punitive damages as to all three defendants does exceed the amount necessary to adequately and appropriately punish the defendants and to deter similar conduct in the future, based upon the nature of the defendants' actions and based upon the financial status of each of the defendants.
With regard to the issue of the financial status each of the defendants, the Court notes the cases of Downey Savings & Loan and the Devlin case which both make
The courts, of course, have noted that in addition, other assets and income figures and data may be relevant to that determination.
In
this case, of course, there was no direct evidence or no real evidence at all
of the net worth of Pluess‑Staufer A.G. The plaintiff did testify to one conversation in which he was
allegedly told, or at least the statement was made, that the net worth of
Pluess‑Staufer A.G. was in the neighborhood of fifteen billion dollars.
This apparently was accepted by the jury in that the jury's award of punitive
damages against Pluess‑Staufer A.G. was one percent of that figure, which is the figure that plaintiff's counsel suggested in his argument as being appropriate figure.
The Court finds that the conclusion that Pluess‑Staufer A.G.'s net worth is in the area of fifteen billion dollars is not supported by evidence in the trial. While don't have any exact figures, we do know that the net worth of Pluess‑Staufer Industries, which would be the net worth of Pluess‑Staufer A.G.'s United States operations is approximately thirty‑five million dollars. While we don't have any figures as to what the net worth of Pluess‑Staufer A.G.'s European or other operations would be, there is certainly nothing to suggest that those net worth figures
Therefore,
the Court is satisfied that the substantial evidence in the case that was
presented does support a finding that the net worth of Pluess‑Staufer
A.G. is well in excess of thirty‑five million dollars.
The
net worth, or the financial status of Pluess‑Staufer (California) is a more difficult matter to determine with the records that were provided.
The
Court is reminded of the old saying that CPA ‑‑ the term "CPA" often in regard to public accountants referring to statistics and figures, often could, be referred to as standing for "Can Prove Anything with Statistics."
There
are a number of figures that relate to Pluess‑Staufer (California), all
of which would lead to contradictory conclusions. The total assets of Pluess‑Staufer
(California), the Court is satisfied that substantial evidence supports the conclusion
that the total assets of Pluess‑Staufer (California) are in the
neighborhood of $26,750,000. And that the total annual sales for Pluess‑Staufer (California) for the year 1986, was approximately $13 million. And that the cost of -- strike -- and that that figure of $13 million in sales is up from the figure of $5.5 million in sales for 1982. That is, from 1982 to 1984, sales went up some $5.5 million to $13 million.
With regard to the cost of the sales, the Court is satisfied that the cost of sales for 1986 are approximately $10.2 million. And in that regard, the Court is
Dr. Findley testified that the -- classified $21.3 million out of the $25 million that was invested into Pluess‑Staufer (California) by Pluess‑Staufer Industries as an inter‑company loan rather than equity did give a false impression with regard to the amount of money actually invested into Pluess‑Staufer (California).
When he was specifically asked whether or not the so‑called losses of Pluess‑Staufer and the net worth figure of $3.7 million was in effect due to the balance
If
100 percent of the loans were classified as equity, the Court finds that based
on the testimony of Dr. Findley‑and Exhibit 188, that the net worth of
Pluess‑Staufer (California) would then be classified as in the area of $25 million; the net profit for 1986 would be approximately $2.8 million.
If
one were to take a more conservative approach and suggest a proper or
reasonable indication of the amount of money invested by Pluess‑Staufer
Industries would be fifty‑fifty, that is, fifty percent: to stockholder
equity and fifty percent to inter‑company loans that would result in a
net worth figure of approximately fourteen to $15 million for Pluess‑Staufer (California) and net sales in the area of $2 million for 1986.
The Court finds that based on the testimony of Dr. Findley and on the sales history of Pluess‑Staufer (California), that at least fifty percent of the loans should probably be classified as net worth or shareholder equity rather than -- rather than inter‑company loans,
For the reasons just discussed by the Court, namely that the size of the ‑verdict was influenced by sympathy and a desire to punish the defendants for actions or attitudes not related to the ‑‑ to the plaintiff's cause action; and that the size of the punitive award as to the defendants is greater than necessary to adequately punish and deter these defendants from similar conduct in the future, the defendants' ‑‑ each of the defendants' motions for a new trial are granted as to the issue of punitive damages only; and are denied as to all other grounds. And it is granted on the issue of punitive damages only, on the grounds that the amount of such damages are excessive as the Court has just discussed.
The Court's rule in this regard is subject to the condition, however, that said motion for new trial regarding the punitive damages is denied if the plaintiff files with this Court by July the 2nd, 1987, written consent to a reduction of the verdicts regarding punitive damage to the sum of $3 million as to Pluess‑Staufer A.G.; $750,000 as to Pluess‑Staufer (California); and $100,000 as to Defendant Enderli. The Court feels that these levels more adequately reflect the appropriate level of punitive
With
that ‑‑ with regard to the ratio of punitive to compensatory
damages, the Court, based upon its earlier rulings, is finding that the award
of compensatory damages as to all defendants is $500,000. And that the
appropriate ratios, then, with regard to punitive damages as to Pluess‑Staufer
A.G. would be $500,000 compensatory to the level that the Court has suggested
as the appropriate level of $3 million, and $500,000 as to $750,000 as to
Pluess‑Staufer (California); and $500,000 as to $100,000 as to Defendant Enderli in that those ratios are certainly well within any of the ratios discussed by any of the cases.
Anything further, gentlemen?
MR. SMITH Nothing.
MR. BIDDLE: Nothing further, your Honor.
THE COURT: All right. The Court.
will be in recess.
(Proceedings concluded.)
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