Becker v. Alloy Hardfacing & Engineering Co.

• Decision Date: 06 March 1987
• Docket Number: No. C6-85-2340,C6-85-2340
• Citation: 401 N.W.2d 655
• Parties: , 116 Lab.Cas. P 56,345 William BECKER, Respondent, v. ALLOY HARDFACING & ENGINEERING COMPANY, et al., Petitioners, Appellants.
• Court: Minnesota Supreme Court

Page 655

401 N.W.2d 655

55 USLW 2512, 116 Lab.Cas. P 56,345

William BECKER, Respondent, v. ALLOY HARDFACING & ENGINEERING COMPANY, et al., Petitioners Appellants.

No. C6-85-2340.

Supreme Court of Minnesota.

March 6, 1987.

Syllabus by the Court

1. Trial court's omission of jury instruction explaining "clear and convincing" evidence standard for awarding punitive damages was fundamental error resulting in prejudice to appellants.

2. Failure to raise evidentiary objection in motion for new trial precludes review.

3. Trial court's refusal to instruct jury on conditional privilege did not prejudice appellants where jury found appellants acted with actual malice.

4. General damages are presumed in action for defamation per se.

5. Compensatory damage award was not excessive as a matter of law.

6. Trial court should have stated reasons in denying motion for attorney fees.

Jan Stuurmans, Minneapolis, for appellants.

Thomas M. Neuville, Northfield, for respondent.

Heard, considered, and decided by the court en banc.

AMDAHL, Chief Justice.

Respondent William Becker ("Becker") filed suit against appellants Alloy Hardfacing & Engineering Company ("Alloy") and Alloy's officers William Aulik and his son Mark Aulik, seeking damages for defamation, unpaid wages, and wage penalties following his dismissal as a salesman for Alloy. The jury returned a special verdict awarding Becker $2,107.18 in unpaid wages, $30,000 in compensatory damages, and $30,000 in punitive damages, and the trial court entered judgment. Alloy and the Auliks appealed from the trial court's denial of post-trial motions for judgment notwithstanding the verdict ("JNOV") or a new trial.

The Court of Appeals held that the trial court had failed to instruct the jury that a clear and convincing evidence standard of proof applied to punitive damage awards, but found the error to be nonprejudicial. The Court of Appeals affirmed the trial court in all other respects and remanded for a determination of wage penalties. We affirm in part and reverse in part, having determined that the trial court's omission of a clear and convincing evidence instruction on punitive damages was prejudicial error. We affirm the Court of Appeals with respect to the other issues presented.

William Becker was employed by Alloy as a salesman from November 1980 to July 1982. Alloy manufactures and sells machines used in the animal rendering business. Becker started at a base salary of $24,000. In July 1981, Alloy gave Becker use of a company car and a set of gasoline credit cards. Becker also began receiving separate checks totaling $500 per month, in addition to his base salary. The check stubs listed the payments as advances on commissions, although Becker believed it was an increase in his base salary. Becker also received $1,500 which he thought was payment for previous car expenses; Mark Aulik testified it was also an advance on commissions.

On July 19, 1982, Becker was called into a late meeting with the Auliks. William Aulik handed Becker a letter stating that "in consideration of recent events," Becker would be terminated from his position as Alloy sales representative. The "recent events" referred to in the letter were alleged derogatory remarks about Alloy management made by Becker to other salesmen. The Auliks gave Becker the option of working independently and on commission as a manufacturer's representative rather than as a salaried employee. The letter indicated Becker had until 4:30 the next day to either accept the position or resign and turn in his sales materials and building and vehicle keys.

At trial, Becker testified that the Auliks screamed obscenities at him and pressed him for an immediate decision during the meeting. Becker also testified that he did not think he could rationally discuss the situation with the Auliks at the time because it appeared that William Aulik had been drinking. Becker stated that he decided to go home, think about the situation for 24 hours, and give the Auliks his decision the next day. Becker made his way to his company car to drive home, but the Auliks told him he could not take the car. Becker, who lived 35 to 40 miles away from the plant, had no other way to go home and, based on the letter, felt he had a day to make his decision. He thus drove the car away with the intent of returning it the next day. Becker tried to reach his attorney in Northfield before going home but could not contact him. Becker then phoned home, and his wife informed him that the Auliks had called and demanded Becker return the car that night or a stolen car report would be filed. In fact, the Auliks had already filed a stolen car report with the police. Becker returned the car that evening. He testified that he left all his company sales materials either in his car or at his desk.

The Auliks denied at trial that William Aulik had been drinking and denied that Becker had 24 hours to return the company car and property. The Auliks argued that Becker was given a day to decide whether to take the job offer, but was required to immediately return the company property. Mark Aulik stated that Becker went out of the door after reading the letter and ignored requests to turn over the car keys and credit cards. Mark Aulik called the police in an attempt to have Becker stopped because Aulik was concerned Becker was too emotionally upset to drive safely. The police arrived after Becker had already left, so the Auliks filed a stolen vehicle report. The next day, Becker received a call from Bloomington police indicating he should return Alloy's credit cards by 4:30 p.m. or a criminal complaint would be issued. Becker returned all the credit cards to the police.

John Randall, a plant superintendent at Alloy, discovered the car on the Alloy premises the day after it was returned. Mark Aulik testified he inspected the car and did not find any sales materials in the vehicle. The car was given to another salesman, Gray Crystal, to use starting that day. It was later determined that the sales manual which Becker was subsequently accused of stealing was actually left in the trunk of the car, where it was found by Gray Crystal and taken for his own use. The records and files left on Becker's desk were moved into William Aulik's office. Mark Aulik testified by deposition that he knew some of the customer lists that Becker was later accused of stealing were actually left by Becker at his desk.

After his dismissal from Alloy, Becker obtained a sales position with Anderson International ("Anderson"), a manufacturing company whose products Alloy sold and distributed. When the Auliks discovered Becker was working for Anderson, William Aulik indicated to Randall that Aulik was going to be calling Anderson "and taking care of that particular problem."

On August 6, 1982, after Becker began work with Anderson, the Auliks' attorney sent a letter to Anderson's president accusing Becker of keeping confidential business property belonging to Alloy. The letter warned that if Anderson attempted to use any of Alloy's business records allegedly kept by Becker, Alloy would file suit. Alloy never directly contacted Becker regarding the business information allegedly missing prior to sending the accusatory letter to Anderson. After the materials were found, neither Alloy nor the Auliks sent a retraction of the letter sent to Anderson.

Becker filed suit in Hennepin County, seeking wages allegedly owed for work prior to termination, wage penalties on the amount owed, damages for alleged defamatory statements made about Becker to Bloomington police, and damages for alleged defamatory statements made in the letter sent to Anderson. Appellants defended on the grounds that the statements were not libelous and that any amounts owed to Becker were offset by amounts allegedly owed by Becker to Alloy for private use of the company car and for an alleged unauthorized trip. Appellants also claimed a conditional privilege. Appellants additionally filed a set of counterclaims against Becker, alleging business defamation and fraud. Three weeks prior to trial, however, Alloy dismissed all of its counterclaims against Becker, citing prohibitively high costs to pursue the claims.

Prior to the close of trial, both parties submitted proposed jury instructions. Appellants requested specific instructions on conditional privilege and actual malice. The trial court declined to provide the specific instructions submitted by appellants, relying instead upon the special verdict questions dealing with appellants' motivations for their actions. The court also declined to give an instruction submitted by respondent Becker with respect to the clear and convincing evidence standard applicable to punitive damage awards. Instead, the trial court substituted the following explanation:

Then there is the last type of damages which may or may not apply in this case. It's up to you. They are called punitive damages. It has nothing to do with a person's injury. You may only have been injured to the extent of one dollar which maybe entitles you to punitive damages as a means of punishing. Punitive damages are awarded only if it is necessary to punish the Defendant so as to deter him from doing the same thing again or sofar [sic] as it gets known publicly to stop others from doing the same thing again. So punitive damages are only awarded if it is necessary to punish in order to prevent a reoccurrence of the incident. Now, therefore, in order for there to be punitive damages it must be necessary that the Defendant acted with willful indifference which are pretty strong words, willful indifference or with deliberate disregard. Again, strong words, deliberate disregard. These words are in the verdict form for you. You must find this if there are to be any punitive damages.

Appellants did not object to the jury instructions prior to the close of trial. The jury returned a special verdict awarding respondent backpay...