A-G Foods, Inc. v. Pepperidge Farm, Inc.

• Decision Date: 07 August 1990
• Docket Number: A-G,No. 13789,13789
• Citation: 579 A.2d 69,216 Conn. 200
• Parties: FOODS, INC. v. PEPPERIDGE FARM, INC., et al.
• Court: Connecticut Supreme Court

Page 69

579 A.2d 69

216 Conn. 200

A-G FOODS, INC. v. PEPPERIDGE FARM, INC., et al.

No. 13789.

Supreme Court of Connecticut.

Argued May 9, 1990.

Decided Aug. 7, 1990.

Louis B. Blumenfeld, with whom were Vincent M. DeAngelo and Lorinda S. Coon, Hartford, for appellant-appellee (plaintiff).

John B. Farley, with whom was Joseph G. Lynch, Hartford, for appellee-appellant (named defendant).

Before PETERS, C.J., and CALLAHAN, GLASS, HULL and FRANCIS X. HENNESSY, JJ.

CALLAHAN, Associate Justice.

The plaintiff, A-G Foods, Inc., doing business as Fitzgerald Foods, brought this action for damages against the defendants, Pepperidge Farm, Inc. (Pepperidge Farm), and Anthony Spinelli. The revised complaint alleged, inter alia, that Spinelli, a distributor of Pepperidge Farm bakery goods, had defrauded the plaintiff by charging its stores for goods he had not delivered. As to Pepperidge Farm, the complaint alleged that, under the doctrine of respondeat superior, Pepperidge Farm was vicariously liable for each of the following: fraud (sixth count); reckless indifference and/or intentional and wanton disregard for the plaintiff's rights (seventh count); theft (eighth count); and a violation of the Connecticut Unfair Trade Practices Act (CUTPA), General Statutes §§ 42-110a through 42-110q (tenth count). It further alleged that Pepperidge Farm was negligent in failing to supervise Spinelli properly (ninth count) and that its negligence in failing to supervise Spinelli and to discover the fraud constituted a violation of CUTPA (tenth count).

Before the trial of this matter, in a criminal proceeding, Spinelli pleaded guilty to larceny. In that case, the trial court imposed a suspended sentence, placed him on probation for five years, and ordered as a condition of probation that he make restitution to the plaintiff. Spinelli paid the plaintiff approximately $88,000 pursuant to the restitution order.

This case was thereafter tried to a jury, which answered twenty interrogatories and returned a verdict for the plaintiff on all counts, finding that the plaintiff had sustained damages of $250,000. ¹ Pepperidge Farm moved to set aside the verdict against it and for judgment notwithstanding the verdict, claiming, inter alia, that there was insufficient evidence to conclude that Spinelli was acting within the scope of his employment and in furtherance of Pepperidge Farm's business when he stole from the plaintiff. The trial court agreed and rendered judgment in favor of Pepperidge Farm notwithstanding the verdict only on the sixth, seventh and eighth counts. In addition, the trial court ordered a remittitur, as to Pepperidge Farm, of $88,000, the amount the plaintiff had received from Spinelli as restitution, and set aside, as to Pepperidge Farm, the jury's verdict awarding treble damages to the plaintiff. The plaintiff appealed the trial court's decision to the Appellate Court and Pepperidge Farm cross appealed. We transferred these appeals to ourselves pursuant to Practice Book § 4023.

On appeal, the plaintiff contends that the trial court was incorrect when it: (1) concluded that there was insufficient evidence to support the jury's finding that Spinelli was acting within the scope of his employment and in furtherance of Pepperidge Farm's business when he defrauded and stole from the plaintiff; (2) set aside the jury's award of treble damages; and (3) allowed a remittitur. On its cross appeal, the defendant raises two issues: (1) whether its negligent supervision of Spinelli constituted a violation of CUTPA; and (2) if so, whether the trial court properly instructed the jury on the CUTPA claim. ² We reverse in part the decision of the trial court.

The jury could reasonably have found the following facts. In October, 1982, the defendants entered into a consignment agreement whereby Pepperidge Farm granted Spinelli an exclusive franchise to distribute Pepperidge Farm bakery products within a specified geographical area. ³ By the terms of the agreement, Spinelli delivered Pepperidge Farm bakery products to both "chain" and "independent" grocery stores, including two independent grocery stores owned and operated by the plaintiff, in the towns of Avon and Simsbury. The consignment agreement required Spinelli to maintain records of the "consigned products received and sales and deliveries made" and allowed Pepperidge Farm to inspect those records.

Spinelli ordered bakery products from Pepperidge Farm on a weekly basis. Each morning he would pick up his order at the Pepperidge Farm depot and deliver the bakery goods to the various grocery stores. With respect to the independent grocery stores, Spinelli testified to the following billing procedure. ⁴ Pepperidge Farm billed Spinelli once a week for all of the bakery goods that he purchased less those returned. Spinelli then billed each store, on an individual basis, for the bakery items he had delivered the previous week. The stores remitted payment directly to Spinelli rather than to Pepperidge Farm. Spinelli's profit was the difference between the sales price, which he controlled, and the price he had paid Pepperidge Farm for its products. Pepperidge Farm was unaware of the quantity or type of goods delivered to each independent grocery store.

Approximately one year after he took over his route from his predecessor, Spinelli began charging the plaintiff for goods he did not deliver. Because of the lax check-in procedure at the plaintiff's stores, Spinelli was able surreptitiously to alter the invoices by inflating the amount of bakery products he delivered to them. Pepperidge Farm was unaware of Spinelli's scheme and never received any money as a result of it. Spinelli testified that he did not overcharge any other stores on his route. After the fraudulent invoices were discovered, Spinelli was arrested in September, 1985, and subsequently pleaded guilty to larceny. Thereafter, the plaintiff commenced this civil action against both Spinelli and Pepperidge Farm.

I

A

The plaintiff first argues that the trial court should not have set aside the jury verdict on the sixth, seventh and eighth counts because there was sufficient evidence presented to the jury to show that Spinelli acted within the scope of his employment and in furtherance of Pepperidge Farm's business when he stole from the plaintiff. In rendering judgment for the defendant, ⁵ the trial court concluded that "there was no evidence: that Pepperidge Farm conspired with Spinelli or ratified his actions afterward; that Pepperidge Farm profited in any significant or even measurable way from Spinelli's theft; that Spinelli's thefts were motivated in the slightest by the intent to serve Pepperidge Farm's interests; or that Spinelli's conduct in stealing was of the same general nature as that which Pepperidge Farm had authorized, or incidental to such conduct." Specifically, the plaintiff objects to the trial court's second and fourth conclusion.

"The trial court has the inherent power to set aside a jury verdict which, in the court's opinion, is either against the law or the evidence. Maltbie, Conn.App.Proc. § 181.... The decision to set aside a verdict involves the exercise of a broad discretion in the trial court which, in the absence of a clear abuse, will not be disturbed and, in reviewing the exercise of that discretion, every reasonable presumption should be indulged in favor of its correctness. Jacobs v. Goodspeed, 180 Conn. 415, 429 A.2d 915 (1980)." O'Brien v. Seyer, 183 Conn. 199, 208, 439 A.2d 292 (1981); Palomba v. Gray, 208 Conn. 21, 23-24, 543 A.2d 1331 (1988). " ' "[The trial court] should not set aside a verdict where it is apparent that there was some evidence upon which the jury might reasonably reach their conclusion and should not refuse to set it aside where the manifest injustice of the verdict is so plain and palpable as clearly to denote that some mistake was made by the jury in the application of legal principles, or as to justify the suspicion that they or some of them were influenced by prejudice, corruption or partiality." Burr v. Harty, 75 Conn. 127, 129, 52 A. 724 (1902).' Palomba v. Gray, [supra, 208 Conn. at 24, 543 A.2d 1331]." Champagne v. Raybestos-Manhattan, Inc., 212 Conn. 509, 555, 562 A.2d 1100 (1989).

"Ordinarily, it is a question of fact as to whether a wilful tort of the servant has occurred within the scope of the servant's employment and was done to further his master's business. See, e.g., Rappaport v. Rosen Film Delivery System, Inc., [127 Conn. 524, 526, 18 A.2d 362 (1941) ]. But there are occasional cases where a servant's digression from duty is so clear-cut that the disposition of the case becomes a matter of law. Bradlow v. American District Telegraph Co., 131 Conn. 192, 195, 196, 38 A.2d 679 [1944]; Turner v. American District Telegraph & Messenger Co., 94 Conn. 707, 715, 110 A. 540 [1920]." Pelletier v. Bilbiles, 154 Conn. 544, 547-48, 227 A.2d 251 (1967).

"In reviewing the court's action in rendering a judgment notwithstanding the verdict, we consider the evidence in the light most favorable to the [plaintiff]. Petrizzo v. Commercial Contractors Corporation, 152 Conn. 491, 499, 208 A.2d 748 [1965]; Hemmings v. Weinstein, 151 Conn. 502, 504, 199 A.2d 687 [1964]; Lurier v. Danbury Bus Corporation, 144 Conn. 544, 547, 135 A.2d 597 [1957]." Pelletier v. Bilbiles, supra at 546, 227 A.2d 251. In support of its argument that Pepperidge Farm benefited from Spinelli's fraud, the plaintiff refers to testimony regarding the location and amount of shelf space devoted to Pepperidge Farm's products. According to the testimony presented at trial, a distributor, such as Spinelli, attempts to maximize the shelf space devoted to his products because "ideally" more shelf space helps to stimulate demand and hence would increase the likelihood of sales. Because grocery stores are concerned with the dollar sales volume for every foot of shelf space in the store, the...