Danco, Inc. v. Wal-Mart Stores, Inc.

• Decision Date: 06 April 1999
• Docket Number: Nos. 98-2101,WAL-MART,98-2269,s. 98-2101
• Citation: 178 F.3d 8
• Parties: 79 Fair Empl.Prac.Cas. (BNA) 1689, 79 Fair Empl.Prac.Cas. (BNA) 1737, 75 Empl. Prac. Dec. P 45,859 DANCO, INC. and Benjamin Guiliani, Plaintiffs, Appellees/Cross-Appellants, v.STORES, INC., Defendant, Appellant/Cross-Appellee. . Heard
• Court: U.S. Court of Appeals — First Circuit

178 F.3d 8

79 Fair Empl.Prac.Cas. (BNA) 1689,

79 Fair Empl.Prac.Cas. (BNA) 1737,

75 Empl. Prac. Dec. P 45,859

DANCO, INC. and Benjamin Guiliani, Plaintiffs, Appellees/Cross-Appellants, v. WAL-MART STORES, INC., Defendant, Appellant/Cross-Appellee.

Nos. 98-2101, 98-2269.

United States Court of Appeals, First Circuit.

Heard April 6, 1999.

Decided May 12, 1999.

Mark V. Franco with whom Michael R. Bosse and Thompson & Bowie were on brief for defendant.

Harold J. Friedman with whom Karen Frink Wolf and Friedman Babcock & Gaythwaite were on brief for plaintiffs.

Before TORRUELLA, Chief Judge, BOUDIN and STAHL, Circuit Judges.

BOUDIN, Circuit Judge.

In the district court, Danco, Inc., and its owner Benjamin Guiliani, brought suit against Wal-Mart, which is a major discount retailer. On a claim for racial discrimination under 42 U.S.C. § 1981, the jury awarded the plaintiffs $650,000, based on a hostile work environment theory; the judge reduced the award to $300,000. Wal-Mart appeals from this judgment; the plaintiffs cross-appeal from the district court's dismissal prior to the jury's verdict of plaintiffs' claim for punitive damages.

Benjamin Guiliani--a Mexican-American--started his company, Danco, in 1988 to engage in the business of maintaining parking lots (cleaning, striping, etc.). He incorporated the company in 1994. He continued to be the sole shareholder, but employed his son, Daniel, and a small number of other employees from time to time. His principal contracts during the time in question were with various Wal-Mart stores.

On September 15, 1994, Guiliani signed a contract, on behalf of Danco, agreeing to perform parking lot maintenance for the Wal-Mart store in Augusta, Maine. The agreement called for Danco to clear litter from the lot three times each week, and to clear sand from the lot (using a vacuum-type sweeper) once a week. The sweeping provision was included in the contract because the Augusta Wal-Mart had a special site approval permit, from the Maine Department of Environmental Protection, requiring the lot to be swept of sand each week to prevent the sand from being washed into a nearby brook.

According to Guiliani's trial testimony, he felt unwelcome at Wal-Mart soon after he signed the contract to maintain its lot. Early in October 1994, there were two men in a truck in the parking lot when he arrived to start working. They asked him what he was doing in the lot, and if "Big Bob" knew he was there. When the men told Big Bob (later identified as Bob Amadei, the maintenance supervisor) that Guiliani was in the lot, Big Bob told Guiliani to leave, saying that he did not know of anyone who had been hired to work on the lot. At trial, Amadei denied that he had ever had words with Guiliani.

Also early in October 1994, the words "White Supremacy" were spray-painted on the Wal-Mart parking lot, near to the spot where Guiliani and his son usually unloaded their equipment. Guiliani testified that he saw Amadei walking toward the store shortly before Guiliani drove over to the spot where the words were painted. His son Daniel testified that he had seen Amadei at the spot with a can of spray paint, leaning over as if he were spraying the paint. Amadei denied that he had anything to do with the graffiti.

Guiliani offered to cover over the spray paint in the parking lot, but Curtis Scheffe, the manager of the Augusta store and the person to whom Guiliani reported, said that he would take care of it and would investigate to find out who had done it. Although Scheffe testified at trial that he thought he had had an employee cover the graffiti with paint shortly after the incident, all other testimony indicated that the words remained on the lot for over a month. Guiliani claimed that he told Scheffe that he believed Amadei was the culprit, but Scheffe took no action against Amadei. Scheffe said he did investigate and concluded that no one was willing to say that they knew anything about the incident, although two of Wal-Mart's night shift workers testified that he had not spoken personally to them about it.

A second incident occurred on October 14, 1994. Guiliani testified that Hamlin, another night shift employee, said to him, "I don't like your kind." When Guiliani asked what he meant, Hamlin said "Puerto Ricans." Guiliani said that he was Mexican-American. Then, Guiliani said, Hamlin pushed him and threatened to rip his head off. Guiliani returned to his vehicle, where his younger son (Benjamin, Jr., age 8) was waiting, and called the police a short time later. Hamlin testified that he had made only a harmless jest not involving race, that Guiliani started the quarrel, and that there was no pushing.

The final incident took place in November 1994. Guiliani testified that Hamlin yelled a racial slur at him from a passing vehicle. His son Benjamin, Jr., also testified that he heard the slur. Guiliani said that he was shaken by the incident, and again called the police. Hamlin again denied the incident. Scheffe testified that he again investigated, but did not discipline Hamlin because he could prove neither Guiliani's nor Hamlin's story.

In January 1995, Scheffe left the Augusta Wal-Mart, and James Helterbrake replaced Scheffe as the manager. Guiliani testified that when he told Helterbrake in February about the earlier incidents, Helterbrake became angry about the police's having been called. Later in the month, Helterbrake gave Danco notice that the company's services were to be terminated, assertedly because Helterbrake was unhappy with Danco's work. After further discussions, a new contract was signed on February 21, 1995, calling for Danco to sweep twice a week. However, Helterbrake remained unhappy with the sweeping and terminated that contract at the end of March.

At trial, Charles Kellogg of the Maine Department of Environmental Protection testified that he had been displeased about the amount of sand left on the lot. He said that he spoke to Scheffe and Helterbrake a number of times about the sand on the lot, as both confirmed. In February 1995, Kellogg sent a letter to Wal-Mart stating that the sand removal had not been adequate. Kellogg also testified that he had spoken to Guiliani about the state of the lot, but Guiliani denied this. At the time Guiliani was terminated, Kellogg said that he was considering steps against Wal-Mart to enforce the permit condition.

In March 1997, approximately two years after the termination of Danco's contract, Guiliani and Danco sued Wal-Mart. The complaint alleged a violation of civil rights under 42 U.S.C. § 1981, denial of public accommodations in violation of 5 Maine 1 R.S.A. § 4551 et seq., breach of written contract, breach of oral contract, unjust enrichment, negligence, intentional infliction of emotional distress, negligent infliction of emotional distress, and requests for compensatory and punitive damages. Wal-Mart moved for summary judgment on all counts. The district judge then dismissed three of the state claims and set the others for trial. ¹

The case was tried to a jury in late April 1997. At the close of the plaintiffs' case, Wal-Mart moved for a directed verdict on all remaining claims, but the district court granted the motion only as to the request for punitive damages. As part of its motion, Wal-Mart argued unsuccessfully that the civil rights claim under section 1981 should be treated as comprising only a wrongful termination and not a hostile work environment theory. The court also refused to reconsider its pre-trial decision not to allow Wal-Mart to impeach Guiliani's credibility based on an incident that occurred some 15 years before.

Before instructing the jury, the judge told counsel that he would tell the jury to treat the two plaintiffs as one person--Benjamin Guiliani--for the purpose of their deliberations. Neither side objected to this instruction which the judge then gave. The judge's instructions as to section 1981 included separate instructions on the discriminatory termination theory and the hostile work environment theory. For the hostile work environment theory, the judge gave instructions that would be standard for a Title VII hostile work environment claim, but omitted any references to "employee" (because of Danco's independent contractor status). Throughout, the court rejected Wal-Mart's argument that independent contractors had no right to make such claims based on a hostile work environment theory.

By special verdict, the jury found for the plaintiffs on the hostile work environment theory under section 1981, the claim for negligent infliction of emotional distress, and one of several contract theories. ² The jury found for Wal-Mart on the discriminatory termination theory under section 1981 and on the remaining contract theories. The jury awarded the plaintiffs $650,000 on the hostile work environment claim and--despite the liability finding--zero damages on the claim for negligent infliction of emotional distress. The judge granted a remittitur to which the plaintiffs assented, reducing the jury's award of $650,000 to $300,000. Cf. Farber v. Massillon Bd. of Educ., 917 F.2d 1391, 1396 (6th Cir.1990), cert. denied, 498 U.S. 1082, 111 S.Ct. 952, 112 L.Ed.2d 1041 (1991).

Wal-Mart now appeals on two different grounds from the district court's refusal to award Wal-Mart judgment as a matter of law: first, that an independent contractor cannot bring suit based on a hostile work environment under section 1981, and second, that the evidence presented at trial was insufficient to show a hostile work environment. Wal-Mart also says that the district court erred in refusing to admit proffered evidence to impeach Guiliani's credibility. Plaintiffs cross-appeal challenging the district court's decision to withdraw their punitive damages request from the jury.

We review de novo the district court's denial of judgment as a matter of law, viewing the evidence in the light most favorable to the nonmovant. Se...