Freund v. Nycomed Amersham

• Decision Date: 21 October 2003
• Docket Number: No. 01-56494.,No. 01-56491.,01-56491.,01-56494.
• Citation: 347 F.3d 752
• Parties: Jeffrey R. FREUND, Plaintiff-Appellee-Cross-Appellant, v. NYCOMED AMERSHAM, a business entity, form unknown; Amersham Holdings, Inc.; Nycomed Amersham Imaging, a division of Nycomed Amersham; Amersham/Medi-Physics, Inc., a division of Nycomed Amersham, Defendants-Appellants-Cross-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

347 F.3d 752

Jeffrey R. FREUND, Plaintiff-Appellee-Cross-Appellant, v. NYCOMED AMERSHAM, a business entity, form unknown; Amersham Holdings, Inc.; Nycomed Amersham Imaging, a division of Nycomed Amersham;

Amersham/Medi-Physics, Inc., a division of Nycomed Amersham, Defendants-Appellants-Cross-Appellees.

No. 01-56491.

No. 01-56494.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted November 5, 2002 — Pasadena, California.

Filed October 21, 2003.

COPYRIGHT MATERIAL OMITTED

Diane Westwood Wilson and Andrew J. Harakas, Condon & Forsyth LLP, New York, NY, for the defendants-appellants-cross-appellees.

John S. Adler, San Diego, California, for the plaintiff-appellee-cross-appellant.

Appeal from the United States District Court for the Southern District of California; Irma E. Gonzalez, District Judge, Presiding. D.C. No. CV-99-02202-IEG(LSP).

Before: William C. CANBY, Jr., Ronald M. GOULD, and Marsha S. BERZON, Circuit Judges.

Opinion by Judge CANBY; Dissent by Judge GOULD.

ORDER

Judges Canby and Berzon have voted to grant the petition for panel rehearing in part and to deny it in part. Judge Gould has voted to grant the petition. The petition of Nycomed for panel rehearing is granted in part and denied in part. The majority and dissenting opinions filed in this case on April 22, 2003, and reported at 326 F.3d 1070, 1082, are withdrawn and the attached majority and dissenting opinions are ordered filed herewith.

Judge Berzon has voted to deny the petition for en banc rehearing, and Judge Canby so recommends. Judge Gould has voted to grant the petition for en banc rehearing. The petition for rehearing en banc, the response thereto, and the attached opinion have been circulated to the full court, and no judge has called for a vote to rehear the case en banc. The petition for rehearing en banc is denied.

No further petitions for panel or en banc rehearing may be filed. The mandate shall issue in due course.

OPINION

CANBY, Circuit Judge:

A jury in district court found that defendant Nycomed Amersham¹ had wrongfully terminated the employment of plaintiff Jeffrey R. Freund for making bona-fide safety complaints, thereby committing the California state-law tort of wrongful termination in violation of public policy. The jury awarded compensatory damages of $1,150,000 and punitive damages of $1,150,000. The district court overturned the jury's award of punitive damages, granting Nycomed judgment as a matter of law on that issue.

Nycomed now appeals the judgment of compensatory damages, and Freund appeals the order overturning the award of punitive damages. We affirm the judgment for compensatory damages and reverse the order overturning the punitive damages as a matter of law.² We remand for the district court to rule on Nycomed's motion for a new trial on the issue of punitive damages.

Factual Background

In 1992, Freund was hired by Nycomed as a pharmacist in Nycomed's nuclear pharmacy in San Diego.³ Freund was hired by Mike Wakefield, who remained his supervisor for the entire term of his employment. Freund eventually was appointed a "Radiation Safety Officer" with responsibility for safety compliance at the San Diego pharmacy. The San Diego pharmacy for which Freund worked was operated by Medi-Physics, Inc., which is a wholly-owned subsidiary of Nycomed.

After a few years, the relationship between Wakefield and Freund soured. They disagreed on a number of work-related issues, including the office temperature, the proper handling of laboratory equipment, and the company's work scheduling policies. Freund lodged complaints about staffing, expressing his concern that overwork of staff members increased the probability that they would make mistakes that endangered their safety and that of their customers. On one occasion, another employee, Mike Thomas, reported to Freund that he had seen Wakefield pierce his hand with a needle while preparing a radiopharmaceutical kit, causing blood to spill in the laboratory. Freund claimed that Wakefield never reported the incident as he was required to do. Freund also accused Wakefield of unfairly reprimanding Thomas for bringing the needle matter to Freund's attention.

Wakefield subsequently gave Freund a negative performance evaluation and a written warning for having an improper attitude and for failing to act as a positive example for other employees. The next day, a telephone conference was held between Freund, Wakefield, Rich De Veau, Nycomed's Director of Pharmaceutical Operations, and Karen Mertins, Nycomed's Human Resources Representative. Wakefield and De Veau admonished Freund for his "aggressive" and "confrontational" attitude. After the conversation, De Veau placed Freund on ninety days probation for his poor attitude and his failure to develop a better working relationship with Wakefield.

Shortly thereafter, Freund sent Wakefield several e-mail messages reiterating his earlier complaints and accusing Wakefield of opening his mail. Wakefield responded and then forwarded the entire correspondence to Mertins and De Veau. De Veau decided to terminate Freund's employment, and a letter was sent by Human Relations Director Vinci to Freund terminating Freund's services with Nycomed due to "disruptive behavior."

Proceedings in the District Court

Freund filed a one-count complaint alleging that he was wrongfully terminated in violation of public policy.⁴ Freund asserted that the public policy that was violated by his firing was expressed in California Labor Code § 6310,⁵ which prohibits an employer from terminating an employee for raising bona fide complaints relating to workplace health or safety. Freund sought both compensatory and punitive damages.

The case proceeded to trial, and at the conclusion of the evidentiary phase, Nycomed moved for judgment as a matter of law, pursuant to Federal Rule of Civil Procedure 50(a), solely on the ground that Freund's complaints did not implicate any public policy that could give rise to a wrongful termination claim. The court denied the motion, and the jury returned a verdict in favor of Freund. The jury awarded Freund $20,000 in emotional distress damages, $1,130,000 in compensatory damages, and $1,150,000 in punitive damages.

Following the trial, Nycomed filed a motion for judgment as a matter of law, pursuant to Rule 50(b), in which it reiterated the argument from its earlier Rule 50(a) motion and also raised a new argument that the punitive damages award should be overturned because Freund did not prove that either De Veau or Vinci acted with malicious intent in terminating him. Nycomed also moved for a new trial pursuant to Federal Rule of Civil Procedure 59. The district court granted in part Nycomed's motion for judgment as a matter of law, overturning the jury's award of punitive damages, but upholding the jury's verdict that Freund was wrongfully terminated in violation of public policy. The court denied Nycomed's motion for a new trial. Both parties then appealed.

Nycomed's Appeal

A. Ability of § 6310 to Support a Claim for Wrongful Termination

Unless the parties contract otherwise, employment relationships in California are ordinarily "at will," meaning that an employer can discharge an employee for any reason. See Cal. Labor Code § 2922. In Tameny v. Atlantic Richfield Co., 27 Cal.3d 167, 164 Cal.Rptr. 839, 610 P.2d 1330 (1980), the California Supreme Court carved out an exception to the at-will rule by recognizing a tort cause of action for wrongful terminations that violate public policy. See id. at 172, 164 Cal.Rptr. 839, 610 P.2d at 1332-33. More recently, that Court elaborated on its meaning of "public policy" sufficient to support a wrongful termination claim. The public policy must be "(1) delineated in either constitutional or statutory provisions; (2) `public' in the sense that it `inures to the benefit of the public' rather than serving merely the interests of the individual; (3) well established at the time of discharge; and (4) substantial and fundamental." City of Moorpark v. Superior Court, 18 Cal.4th 1143, 1159, 77 Cal. Rptr.2d 445, 959 P.2d 752, 762 (1998) (internal quotation omitted).

Nycomed contends that § 6310 does not meet these requirements, particularly the requirement that it embody a "fundamental" public policy. We reject the contention because the California courts have long held to the contrary. In Hentzel v. Singer Co., 138 Cal.App.3d 290, 188 Cal.Rptr. 159 (1982), the Court of Appeal held that § 6310 embodies a public policy against retaliatory firings, and that violation of § 6310 could serve as the basis for a claim of wrongful termination in violation of public policy. See id. at 298, 188 Cal.Rptr. 159.

Nycomed argues that Hentzel is no longer good law in light of intervening decisions by the California Supreme Court. Nycomed relies particularly on Foley v. Interactive Data Corp., 47 Cal.3d 654, 670, 254 Cal.Rptr. 211, 765 P.2d 373, 380 (1988), which ruled that discharge of an employee for reporting an employer's embezzlement did not give rise to a claim for discharge in violation of public policy, and on Gantt v. Sentry Ins., 1 Cal.4th 1083, 1092, 4 Cal. Rptr.2d 874, 824 P.2d 680 (1992), overruled on other grounds by Green v. Ralee Eng'g Co., 19 Cal.4th 66, 80 n. 6, 78 Cal.Rptr.2d 16, 960 P.2d 1046, 1054 n. 6 (1998), which ruled that the requisite public policy must be clearly articulated in a statute or constitutional provision. The flaw in Nycomed's argument is that both Foley and Gantt cite Hentzel as an example of a situation in which a plaintiff can raise a wrongful termination claim because a public policy was violated. See Foley, 47 Cal.3d at 670, 254 Cal.Rptr. 211, 765 P.2d 373 (citing Hentzel for the proposition that an employee fired for "disclos[ing] other illegal, unethical, or unsafe practices" can bring a wrongful termination claim); Gantt, 1 Cal.4th at 1091, 4 Cal.Rptr.2d 874, 824 P.2d 680 (citing Hentzel as an example of a wrongful...