Jottings By An Employer's Lawyer

Tuesday, October 05, 2010

If You Have a Choice, Would You Bifurcate Punitive Damages?

That was a question I was discussing with a colleague Friday just before we gave a seminar presentation on Things that Employers Do to Make Juries Mad, and Pay for it with Big Verdicts. Fortunately in our case it was purely hypothetical.

But I was reminded of it when I saw today's report of a follow up punitive damage award of $4.8 million, after an earlier award of $3.4 million in compensatory damages. See, Former Rite Aid Employee Wins $4.8 Million Punitive Damages Award.

The award to Maria C. Martinez came in a disability and retaliation case, with the retaliation following her complaint that she had been sexually harassed.

The Beverly Hills Courier story says the defense counsel urged the jury not to award punitive damages, saying they "had already sent the chain store a strong message with the compensatory award." The sad fact is that is pretty much all there is to say.

In Texas state courts, the defendant gets to make the election. Unless there are strong and unique reasons not to, I opt against bifurcation. Basically, I don't want to be in the position of the defense attorney, having to come back after the jury has already hammered you, and your message is "now we get it." A hard sell when you have pushed hard to win on liability.

The clearest benefit is that you get to keep out the net worth of the company in the trial on the merits, but unless it is a stealth company, most jurors know that you are big.

I don't think that small benefit comes close to the cost of losing the opportunity of having it all settled in one bite, where if you have any jurors on your side, they probably have the best opportunity to effect a reasonable compromise.

And another factor I had not really considered is the anger of the jury. Sure, they are angry with you, because they found against you, including the issue, usually some sort of malice, that will justify punitive damages. But it's not that anger I am talking about.

It is the anger that they had to come back and do it again. Since jurors are not told about the possibility of punitive damages (at least in Texas), they are not aware when they answer that magical question a certain way they have just insured another day or two of jury service. Not exactly something that most of them are excited about.

Maybe that's why it only took one-half hour of deliberations to more than double the amount awarded.

Update (5.2.13): I don't follow up on MDV's, although I probably should, because almost always they end up looking much better than they did on the day that the verdict was rendered. Here, thanks to a comment, is the result of this one at the appellate court. Martinez v. Rite Aid (CA Ct. App. 2nd Dist. Div. 7) (4.23.13).


Carney Shegerian was the plaintiff's lawyer. He has a long record of success in trial and has been nominated for CAALA Trial Lawyer of the Year, which is reserved for trial lawyers of the utmost excellence. Mr. Shegerian's excellence probably had something to do with this trial result.
Actually, the judge allowed so much evidence that was inadmissible and improper that this case has little chance to stand.
This verdict has been reversed on appeal just a few days ago. Punitive damages were thrown out entirely. Liability was affirmed on two claims and a new trial was ordered on compensatory damages only.
After retrial, the jury awarded plaintiff $321,000 - just 3% of the original verdict.
At the retrial, the jury awarded only 321,000 against Rite Aid. So much for all that work. Why didn't Mr. shegerian settle?
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