Lawyers defending against punitive damages claims ought to put on their dancing shoes after the North Carolina Supreme Court’s decision Friday in Scarborough v. Dillard’s, Inc.
That’s because the majority opinion by Chief Justice Parker makes it easier for trial and appellate judges to set aside a jury’s award on punitive damages. With Scarborough on the books, a "scintilla of evidence" is no longer enough to support a judgment granting punitive damages.
The Plaintiff in Scarborough was a shoe salesman for Dillard’s. Dillard’s had him indicted for embezzlement for letting two customers leave the store without paying for shoes. He said was a mistake and that his employer’s actions were malicious.
A jury found the Plaintiff not guilty, and he then sued Dillard’s for malicious prosecution. He won a jury award of $30,000 in compensatory damages and $77,000 in punitive damages.
Dillard’s moved for JNOV on the punitive damages award. The trial court granted the motion, ruling that the plaintiff hadn’t shown the "clear and convincing evidence" required by G.S. §1D-15(b) for an award of punitive damages.
The Court of Appeals reversed in a 2-1 ruling and reinstated the punitive damages award. It ruled that the JNOV motion should have been denied based on the familiar standard that such a motion should be denied so long as there was "more than a scintilla of evidence to support the plaintiff’s prima facie case."
The Majority Opinion
The Supreme Court majority ruled that a different standard than a "scintilla of evidence" applies to a JNOV motion when punitive damages are at issue.
The proper standard, said the majority, was the one set out in Section 1D-15(b) itself: the trial judge must be satisfied that the evidence to support the award is "clear and convincing." Chief Justice Parker ruled that the evidence hadn’t been clear and convincing, that the trial judge had properly set aside the award of punitive damages, and reversed the Court of Appeals.
The holding was: "the proper standard of review of a trial court’s ruling on a motion for judgment notwithstanding the verdict as to punitive damages is whether the nonmovant produced clear and convincing evidence of of one of the statutory aggravating factors for punitive damages."
That’s a whole lot different than looking for a "scintilla." The Random House Dictionary defines a scintilla as "a minute particle; [a] spark; [a] trace." Merriam-Webster’s Dictionary of Law says it is "a small trace or barely perceptible amount of something."
Justice Timmons-Goodson disagreed, quite strongly. She said that the standard for setting aside a jury verdict doesn’t change because the burden of persuasion is higher than the usual preponderance of the evidence standard, as it is when punitive damages are involved.
She ruled that once the jury is instructed on the clear and convincing standard, the determination of whether that burden had been met is "the exclusive province of the factfinder." And once the jury has made its decision, Justice Timmons-Goodson ruled, it should not be set aside "unless only a single inference, unfavorable to the plaintiff, is possible from the evidence."
Justice Timmons-Goodson said that the majority’s statement of the facts, and its perception that they did not rise to the level of being clear and convincing, "illuminate[d] the difficulty of reviewing a cold record." She observed that the majority’s interpretation of the evidence might be right, but that there was "an equally plausible view of the evidence" that would support a punitive damages award.
She concluded with this statement:
It was the jury’s role to sift through the evidence, evaluate the demeanor and credibility of the witnesses, and determine whether plaintiff met his burden of persuasion by producing clear and convincing evidence in support of his claim for punitive damages. The jury did so and found in favor of plaintiff. The majority’s decision usurps the jury’s role and imposes its own view of the evidence, contrary to well-established case law.
This is a decision that is going to have a broad day to day (or at least trial to trial) application. And if defense lawyers really are dancing in the streets over this one, plaintiffs’ counsel have got to be tearing their hair out. Judges now have way more authority to question the conclusion of a jury on punitive damages and to throw out such an award.
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