IN THE SUPREME COURT OF TENNESSEE
AT NASHVILLE FILED
September 3, 1996
GENEVA COFFEY, ) FOR PUBLICATION Crowson
Cecil W.
) Appellate Court Clerk
Filed: September 3, 1996
Plaintiff-Appellant, )
)
v. ) OVERTON CIRCUIT
)
FAYETTE TUBULAR PRODUCTS, ) Hon. John J. Maddux, Jr., Judge
LIVINGSTON DIVISION, DANAHER )
CORPORATION )
)
Defendant-Appellee. )
)
) No. 01S01-9601-CV-00003
For Plaintiff-Appellant: For Defendant-Appellee:
Ernest C. Onks, Sr. W. Kerby Bowling
Cookeville, Tennessee W. Kerby Bowling II
Joseph M. Crout
Ronald Thurman M.V. Tichenor
Craig P. Fickling Memphis, Tennessee
Ronald Thurman & Associates
Cookeville, Tennessee
O P I N I O N
COURT OF APPEALS REVERSED;
JUDGMENT OF TRIAL COURT REINSTATED. DROWOTA, J.
In this retaliatory discharge action, the plaintiff, Geneva Coffey, appeals from
two aspects of the Court of Appeals’ judgment: (1) its suggested remittance of the
punitive damage award from $500,000 to $150,000; and (2) its disallowance of the
$20,000 in “front pay” awarded by the trial court. After a careful consideration of the
law and the record in this case, we conclude that the Court of Appeals erred in both
respects. Therefore, we reverse that court’s judgment, and reinstate, in its entirety,
the judgment rendered by the trial court.
FACTS AND PROCEDURAL HISTORY
Geneva Coffey began work on the production line for Fayette Tubular
Products, a manufacturer of air conditioning units, in April 1988. On July 19, 1990,
Coffey injured her back on the job; she was paid worker’s compensation benefits for
this injury and placed on leave until January 1991. After returning to work, Coffey re-
injured her back in March 1991 and was unable to return to work until May of that
year.
In June 1991, Coffey brought a lawsuit against Fayette Tubular for worker’s
compensation benefits. On July 15, 1991, the day Fayette Tubular was served with
the complaint, a representative of the company informed Coffey that her position was
to be eliminated; and a few days later, she was assigned to a more strenuous job.
Coffey began to have more difficulties with her back and requested medical
treatment. She soon found out, however, that her worker’s compensation claim
would not be honored. She sought medical treatment independently from the
company-approved doctor and reported the results of this visit to Bob Farris, Fayette
2
Tubular’s Human Resources Director, who told her that she did not need treatment
and, furthermore, that “worker’s compensation was going to stop because it was
taking the company under.”
On July 31, 1991, Coffey received a written excuse from her physician stating
that she was not to return to work until August 6. On that same date, however,
Fayette Tubular made the decision to fire Coffey, the purported reason being that she
had violated a company policy by being absent from work for three consecutive days
without giving the company notice. When Coffey received notification of her
termination by mail on August 1, 1991, she called Farris and told him that she had
left a message explaining the reasons for her absence on the company’s answering
machine and that her termination was, thus, unfair. After denying that any message
had been left, Farris answered Coffey’s charge of unfairness with the statement that
“there are a lot of unfair things in life;” he then and hung up on her.
Coffey was not released by the company-approved physician until February
1992, at which time she filed an application with the Department of Employment
Security for unemployment benefits. This application was opposed by Fayette
Tubular, but after a hearing the department found that Coffey had not violated the
company policy requiring notification of absences. After the department rendered its
decision, Fayette Tubular offered to reinstate Coffey if she would accept a
substantially reduced compromised settlement of her worker’s compensation claim.
Coffey refused to accept this offer.
Coffey subsequently sued Fayette Tubular, alleging that it had discharged her
3
in retaliation for making a worker’s compensation claim. Fayette Tubular denied the
allegations, claiming that Coffey was fired for violating the company policy regarding
notification of absences. During the trial, two former employees of Fayette Tubular
testified, over the defendant’s objection, that they had filed worker’s compensation
claims and were subsequently discharged. After the conclusion of the proof, the jury
returned its verdict, finding for the plaintiff and awarding $30,000 in compensatory
damages and $1,500,000 in punitive damages. On its review of the verdict, the trial
court first reduced the punitive damages awarded by the jury to $500,000, the
amount prayed for in the plaintiff’s complaint. The court then proceeded, however,
to review and approve the reduced award. Finally, the trial court awarded $20,000
to the plaintiff as “front pay.”
Fayette Tubular then filed a motion pursuant to Rule 59 of the Tennessee
Rules of Civil Procedure in which it requested any of the following forms of relief: (1)
a new trial; (2) judgment in accordance with a motion for directed verdict; (3)
amendment of the judgment; and (4) remittitur. After conducting a second review of
the punitive damages award, the trial court denied the motion in its entirety.
Fayette Tubular appealed from this judgment to the Court of Appeals, which
affirmed both the company’s liability for retaliatory discharge and the $30,000
compensatory damage award. The Court, however, remitted the punitive damage
award from $500,000 to $150,000, and it vacated the $20,000 in front pay awarded
by the trial court. The plaintiff accepted the suggested remittitur under protest, Tenn.
Code Ann. § 20-10-103; and both parties applied to this Court for permission to
appeal pursuant to Tenn. R. App. P. 11. We granted the plaintiff’s application in
4
order to consider the issues of punitive damages and front pay.
I.
The first issue for our consideration is whether the Court of Appeals erred in
remitting the punitive damages from $500,000 to $150,000. Initially, it is well-settled
that punitive damages are not intended to compensate an injured plaintiff but may be
awarded by the jury for the purposes of punishing wrongdoers and deterring them
from similar conduct in the future. Huckeby v. Spangler, 563 S.W.2d 555, 558-59
(Tenn. 1978). Moreover, we have specifically held that punitive damages may be
assessed in retaliatory discharge cases to insure that employers comply with the
duties imposed upon them by the Tennessee Worker’s Compensation Act. Clanton
v. Cain-Sloan, 677 S.W.2d 441, 445 (Tenn. 1984).
The availability of punitive damages is, however, by no means unlimited. In
Hodges v. S.C. Toof & Co., 833 S.W.2d 896, 900-01 (Tenn. 1992), we held that in
order to recover punitive damages, a plaintiff must prove, by clear and convincing
evidence, that the defendant acted (1) intentionally, (2) fraudulently, (3) maliciously,
or (4) recklessly. Furthermore, in Hodges we set forth a list of factors to guide the
discretion of the fact finder in assessing the amount of punitive damages. We
instructed the fact finder to consider:
(1) The defendant’s financial affairs, financial condition, and net worth;
(2) The nature and reprehensibility of the defendant’s wrongdoing, for
example
5
(A) The impact of defendant’s conduct on the plaintiff, or
(B) The relationship of defendant to plaintiff;
(3) The defendant’s awareness of the amount of harm being caused
and defendant’s motivation in causing the harm;
(4) The duration of defendant’s misconduct and whether defendant
attempted to conceal the conduct;
(5) The expense plaintiff has borne in the attempt to recover the losses;
(6) Whether defendant profited from the activity, and if defendant did
profit, whether the punitive award should be in excess of the profit in
order to deter similar future behavior;
(7) Whether, and the extent to which, defendant has been subjected to
previous punitive damage awards based upon the same wrongful act;
(8) Whether, once the misconduct became known to the defendant,
defendant took remedial action or attempted to make amends by
offering a prompt and fair settlement for actual harm caused;
(9) Any other circumstances shown by the evidence that bear on
determining the proper amount of the punitive award.
Hodges, 833 S.W.2d at 901-02.
Finally, we made it very clear that the trial court must thoroughly review any award
of punitive damages made by the jury. We stated:
After a jury has made an award of punitive damages, the trial judge
shall review the award, giving consideration to all matters on which the
jury is required to be instructed. The judge shall clearly set forth the
reasons for decreasing or approving all punitive awards in findings of
fact and conclusions of law demonstrating a consideration of all factors
on which the jury is instructed.
Hodges, 833 S.W.2d at 902.
In the case before us, the trial court reduced the punitive damages award from
6
$1,500,000 to $500,000, the amount demanded in the ad damnum clause of
Coffey’s complaint. The Court of Appeals, however, reduced the punitive damages
by an additional $350,000, resulting in a final award of $150,000. The court
supported its judgment as follows:
Defendant insists that the trial judge, in addition to reducing the verdict
for punitive damages to the ad damnum stated in the complaint, should
have reviewed the verdict as required by Hodges v. Toof, and
suggested an appropriate remittitur. This court agrees with this latter
insistence. After a review of all the evidence in the record, this court
concludes that an appropriate amount of punitive damages would be
$150,000, and will suggest a remittitur to reduce the award to this
amount.
With all due respect, we cannot agree that the trial judge simply reduced the
verdict to conform to the ad damnum clause in the complaint and, thus, failed to
discharge its duty under Hodges. Although there was a discussion between the trial
court and counsel about whether the ad damnum clause constituted the upper limit
of the allowable award, the trial court conducted, pursuant to Hodges, an extensive
and probing review of the award after this discussion. The Court stated:
Well, I think I’m required under Hodges v. Toof to review the award and
give consideration to the matters in which the jury was required to have
been instructed, and I need to set forth the reasons for the punitive
award.
...
The court recognizes that the net worth of Fayette Tubular is over
$35,000,000. That’s the amount that was stipulated by the attorneys
... The factors that the jury considered were, number one, the
defendant’s financial affairs, financial condition, and net worth. And all
we had was the net worth, and as I indicated that was over
$35,000,000.
7
Factor number two was the nature and reprehensibility of the
defendant’s wrongdoing. That is the impact of the defendant’s conduct
on the plaintiff. The defendant removed plaintiff for a period of time
from her livelihood. She had a great deal of trouble seeking and finding
other employment, and went to a number of places before she was
finally hired at Berkline. She had never been fired from a job before
she was fired from her job by the defendant company and the impact
on the plaintiff, based on the way plaintiff testified ... the court was of
the opinion that this had a devastating impact on her.
...
Factor number three was the defendant’s awareness of the amount of
harm being caused, and the defendant’s motivation in causing the
harm. It’s apparent to me that Fayette Tubular employees were aware
that this was causing the plaintiff a great deal of difficulty. They were
there and contested her employment benefits claim, and they
recognized from her conversations that the plaintiff had with the
defendant’s employees, that this was causing harm to the plaintiff and
to her ability to make a living.
Factor number four was the duration of the defendant’s misconduct
and whether the defendant attempted to conceal the conduct. Well,
the duration of the misconduct continued right on through the date of
the trial. The defendant had taken action only when it was forced to
take action. The defendant denied all of the statements of the plaintiff
right on through the entire proceeding, and up until the Employment
Security hearing indicated that the plaintiff was going to receive
unemployment security. It wasn’t until then that the defendant made
an offer of reinstatement.
Factor number five was the expense plaintiff has borne in attempting
to recover the losses ... This has been a protracted and very
complicated proceeding and litigation ... and I’m confident that the
plaintiff is expending some considerable resources to have this case
heard.
Factor number six is whether the defendant profited from the activity,
and if the defendant did profit, whether the punitive award should be in
excess of the profit in order to deter similar future behavior. The profit
on the part of the defendant is not clear on the record. But the court is
of the opinion that the punitive award should be significant so as to
deter similar future behavior both on the part of the defendant, and on
the part of others who might attempt to do to the plaintiff what has been
done in this case.
Factor number seven is whether once the misconduct became known
to the defendant, the defendant took remedial action or attempted to
make amends by offering a prompt and fair settlement for actual harm
8
caused. The defendant offered reinstatement with back pay, but the
reinstatement offer was one that plaintiff felt that she could not accept
and the amount of back pay was not sufficient. The defendant has
tried to convince the jury and the court that this offer of reinstatement
and back pay was sufficient ... [The defendant] obviously did not
convince the jury, and I would announce that they did not convince the
court ... The court certainly wasn’t surprised that she rejected the offer,
and didn’t even respond to that offer, because it was so insufficient on
its face.
The defendant was not prompt in making this offer of reinstatement.
The defendant delayed until after the employment security decision
was handed down, some several months, quite possibly up to a year
later. Then and only then did the defendant scramble to try to stop the
damage, not to the plaintiff, but the apparent damage that was about
to be caused to the defendant, and then make this offer of
reinstatement which was only one half of the back wages.
Factor number eight is any other circumstances shown by the evidence
that bear on the proper amount of the punitive award. The court, in
listening to the testimony in this case, finds the plaintiff to be a very
credible witness. Conversely the court is not persuaded by the
testimony of the employees of the defendant, and the entire
circumstances indicate that there should be a significant amount of
punitive award in this case ...
Taking all of this into consideration, this court is of the opinion that the
punitive damage award is appropriate ... In terms of the amount, the
court having made the findings of fact in regard to the eight factors that
were considered in this case, the court is of the opinion that the
punitive award in this case should be set in the amount of $500,000,
and the court so orders.
Furthermore, the defendant argued in its Rule 59 motion that the punitive
damages award of $1,500,000 was 50 times the amount of back wage award,
($30,000), and was thus violative of Hodges. The trial court rejected this argument,
and in so doing made it perfectly clear that the reduction of the award was not based
on the ad damnum clause, but rather on the Hodges factors. The court stated:
We had a discussion about whether or not the [pIaintiff’s recovery was
limited to the ad damnum.] But I don’t want to leave the impression
9
that I’ve reduced the amount from $1,500,000 to $500,000 just
because of what the plaintiff’s ad damnum was. My decision was
based exclusively on the factors that I am to consider when making that
determination. And it was my opinion that $500,000 was the
appropriate amount of punitive damages that should be awarded in this
case under the factors that I was to consider, and that I did consider.
It just so happened that the plaintiff’s ad damnum was at $500,000, but
those are two independent situations. I didn’t reduce it just because
that what the plaintiff had sued for.
Having determined that the trial court did conduct a review as required by
Hodges, and that its reduction of the award was intended as a remittitur, we next
consider whether the Court of Appeals was justified in further remitting the award.
In order to resolve this issue, we must examine the trial court’s authority to suggest
a remittitur, and the appellate court’s authority to review this decision.
It is now well-settled that trial judges may suggest adjustments when the jury
verdict is within the range of reasonableness of the credible proof as an alternative
to the practice of granting a new trial if they are of the opinion that the jury verdict
“[i]s not adequate” (suggesting additur) or excessive and “should be reduced”
(suggesting remittitur). Tenn. Code Ann. § 20-10-101 and 102, Foster v. Amcon Int’l.,
Inc., 621 S.W.2d 142, 147 (Tenn. 1981). 1
Appellate courts also have the authority to suggest a remittitur although this
authority is naturally more circumscribed than that possessed by the trial courts.
Tenn. Code Ann. § 20-10-102(b) provides that if the trial court suggests a remittitur,
1
Foster actually dealt with the trial court’s authority to suggest an additur, but the
standards governing an additur and remittitur are analogous. Foster, 621 S.W.2d
at 143 n. 2.
10
the Court of Appeals shall review that judgment using the standard of review
applicable to decisions of trial courts sitting without a jury. See also Thrailkill v.
Patterson, 879 S.W.2d 836, 841 (Tenn. 1994). This standard is set forth in Tenn. R.
App. P. 13(d), which provides in pertinent part:
Unless otherwise required by statute, review of findings of fact by the
trial court in civil actions shall be de novo upon the record of the trial
court, accompanied by a presumption of correctness of the finding,
unless the preponderance of the evidence is otherwise. . . .2
After reviewing the record, we cannot say that a preponderance of the
evidence is contrary to the trial court’s findings. The weight of the evidence seems
to indicate that Coffey was fired, for a pretextual reason, after she attempted to
enforce her worker’s compensation rights. It is also clear that the defendant did
nothing to remedy the situation until the unfavorable decision of the Board of
Employment Security demanded that some sort of action be taken. Additionally, we
note that there is another “aggravating” factor that the trial court did not discuss. At
trial two former Fayette Tubular employees testified that they had been fired after
attempting to enforce rights under the Worker’s Compensation Act. Thus, there is
evidence that Coffey’s termination was not an isolated incident, but that the
2
If, however, the jury verdict is approved by the trial court in its role as “thirteenth
juror,” (deals with consent of party to additur) the standard of review to be utilized
by the Court of Appeals is more deferential: in that case, the appellate court must
affirm if there is any material evidence to support the verdict. Ellis v. White
Freightliner Corp., 603 S.W.2d 125, 129 (Tenn. 1980); Benson v. Tennessee
Valley Elec. Co-op., 868 S.W.2d 630, 640 (Tenn. App. 1993). This deferential
standard of review is consonant with the principle, long recognized in Tennessee
law, that the jury bears primary responsibility for awarding damages in a personal
injury case, followed closely by the trial court in its role as thirteenth juror. See
e.g., Foster, 621 S.W.2d at 143-44 n.3.
11
defendant pursued a policy of terminating employees for this illegal purpose; we think
a fact finder may legitimately impose a greater amount of punitive damages upon a
defendant guilty of such conduct. Taking all these factors into consideration, we
conclude that the award of $500,000, 1.5% of Fayette Tubular’s net worth, is rational
in light of the dual purposes of punitive damages: punishment and deterrence.
Therefore, the judgment of the Court of Appeals on this ground is reversed, and the
judgment of the trial court reinstated.
II.
The next issue for our consideration is whether the Court of Appeals erred in
vacating the $20,000 in “front pay” awarded by the trial court. This issue requires us
first to discuss the remedies available to a plaintiff who has been discharged from
employment for an illegal reason.
In these cases, courts are invariably faced with two issues: (1) how to
compensate a plaintiff for past injuries -- those occurring between the date of the
discharge and the date of trial; and (2) how to compensate for future injuries -- those
occurring after the trial. The first issue is straightforward: the court simply awards
the plaintiff “back pay,” the amount he or she would have earned during the period
between the discharge and the trial. Sasser v. Averitt Express, Inc., 839 S.W.2d 422,
433 (Tenn. App. 1992). The issue of future damages is, however, more problematic.
While virtually all courts agree that the clearest way to make the plaintiff whole is to
supplement the back pay award with reinstatement to the job, Wilson v. S & L
Acquisition Co. L.P., 940 F.2d 1429, 1438 (11th Cir. 1990); Spulak v. K-Mart Corp.,
12
894 F.2d 1150, 1157 (10th Cir. 1990), courts have also realized that reinstatement
is not feasible in some situations. Perhaps the most common circumstance
rendering reinstatement infeasible is “where the employer has demonstrated such
extreme hostility that, as a practical matter, a productive and amicable working
relationship would be impossible ...” Sasser, 839 S.W.2d at 433 (citations omitted).
Where reinstatement is not feasible, the court may order front pay -- a
monetary award intended to compensate the plaintiff for the loss of future earnings.
Because of its prospective nature, front pay is inherently speculative. In order to limit
this speculativeness, courts have applied the following factors, which were set forth
by our Court of Appeals in Sasser:
(1) the employee’s future in his or her old job [meaning an estimation
of what the employee could have earned in the old job if the discharge
had not taken place]; (2) the employee’s work and life expectancy; (3)
the employee’s obligation to mitigate his or her damages; (4) the
availability of comparable employment opportunities and the time
reasonably required to find another job; and (5) the amount of any
award for liquidated or punitive damages.
Sasser, 839 S.W.2d at 434 (emphasis added) (citation omitted).
In the case before us, the trial court found that reinstatement was not feasible
due to the animosity exhibited by Fayette Tubular towards Coffey. After conducting
a review of the factors enunciated in Sasser, it awarded $20,000 in front pay. The
Court of Appeals, however, reversed this aspect of the judgment, relying upon factor
five (5) of the Sasser decision. It reasoned that: “in view of the punitive damage
award, even when reduced by the suggested remittitur, the award of front pay is
inappropriate. In other words, the anticipated loss of future earnings is more than
13
compensated by the punitive damage award which is not based upon any particular
loss by plaintiff.”
Coffey argues that punitive damages are not intended to compensate the
plaintiff for harm suffered but are designed to punish the defendant and deter it from
engaging in similar conduct in the future. Because punitive damages are unrelated
to the amount of compensation the plaintiff is entitled to receive, she argues that it
was inappropriate for the Court of Appeals to consider the amount of the punitive
award when determining the defendant’s liability for front pay.
We first note that of the few courts that have considered this issue, perhaps
a majority have concluded that the trial court must consider any existing award of
liquidated or punitive damages in making its determination of front pay and that a
substantial award may render front pay inappropriate or excessive. Walther v. Lone
Star Gas Co., 952 F.2d 119, 127 (5th Cir. 1992); Tennes v. Massachusetts Dep’t of
Revenue, 944 F.2d 372, 381 (7th Cir. 1991); Wildman v. Lerner Stores Corp., 771
F.2d 605, 616 (1st Cir. 1985).3 These courts generally support this conclusion by
arguing that front pay is an inherently speculative remedy and that if the punitive
award is not taken into account in setting the amount, the plaintiff could receive a
windfall.
After careful consideration, however, we, along with at least one other court,
3
These cases all arose under the Age Discrimination in Employment Act. Under
that act, if the jury finds the illegal age-based discharge to be “willful,” it may
award “liquidated” damages, which are intended to be punitive. Wheeler v.
McKinley Enters., 937 F.2d 1158, 1159 (11th Cir. 1991).
14
see Newhouse v. McCormick & Co., 910 F.Supp. 1451, 1459 (D. Neb. 1996), reject
this position. The first major problem with the “majority” rule is that it turns the proper
relationship between compensatory and punitive damages on its head. Normally, the
reasonableness of a punitive award is tested by its relationship to the harm suffered
by the plaintiff. See BMW of North America, Inc. v. Gore, 64 U.S.L.W. 4335, 4341-42
(U.S. 1996); TXO Production Corp. v. Alliance Resources Corp., 509 U.S. 443, 113
S.Ct.2711, 125 L.Ed.2d 366 (1993); Pacific Mut. Life Ins. Co. v. Haslip, 499 U.S. 1,
111 S.Ct. 1032, 113 L.Ed.2d 1 (1991). However, the reverse is not true: the
reasonableness of a compensatory award, the jury’s valuation of the plaintiff’s harm,
is never tested by its relationship to the punitive award. This is because the
defendant’s actions may have been relatively blameless and worthy of little or no
punitive response from the jury, and yet the plaintiff may have suffered a large
amount of economic damages; on the other hand, the defendant’s actions may have
been particularly egregious and worthy of a substantial punitive response, yet the
plaintiff may have suffered only a small amount of economic damages. See Gore,
64 U.S.L.W. at 4342 (“Indeed, low awards of compensatory damages may properly
support a higher ratio [of punitive to compensatory damages] than high compensatory
awards, if, for example, a particularly egregious act has resulted in only a small
amount of economic damages.”) By making the determination of front pay, which has
no necessary relationship at all to the punitive award, dependent upon that award,
the majority rule violates the normal, rational relationship between compensatory and
punitive damages. Its invocation in setting front pay is therefore arbitrary and
irrational.
Nor is this flaw overcome by the argument concerning the speculativeness of
15
front pay and the possibility of the plaintiff obtaining a windfall. The answer to this
argument is that the speculative nature of the front pay remedy carries just as much
potential to shortchange the plaintiff as it does to grant it a windfall. The
speculativeness of the remedy is a double-edged sword and is not cured by a
mechanism that only allows adjustment in one direction.
Because we conclude that the determination of front pay cannot be based on
the punitive award, we reverse the Court of Appeals’ judgment in that respect and
reinstate the judgment of the trial court.
____________________________________
FRANK F. DROWOTA III
JUSTICE
Concur:
Birch, C. J.
Anderson, Reid, White, JJ.
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Coffey v. Fayette Tubular Products
Combined Opinion