Jensen v. Medley

• Decision Date: 27 September 2000
• Citation: 170 Or. App. 42,11 P.3d 678
• Parties: Nancy J. JENSEN, Respondent—Cross-Appellant, v. Walter R. MEDLEY, Sublimity Insurance Company, Local Union No. 49, and Roofers Building Association & Charles Ouellette, Defendants, and The United Union of Roofers, Waterproofers & Allied Workers, Appellant—Cross-Respondent.
• Court: Oregon Court of Appeals

11 P.3d 678

170 Or. App. 42

Nancy J. JENSEN, Respondent—Cross-Appellant, v. Walter R. MEDLEY, Sublimity Insurance Company, Local Union No. 49, and Roofers Building Association & Charles Ouellette, Defendants, and The United Union of Roofers, Waterproofers & Allied Workers, Appellant—Cross-Respondent.

(9410-72587; CA A97720)

Court of Appeals of Oregon.

Argued and Submitted March 30, 2000.

Decided September 27, 2000.

Stephen Feinberg, Chicago, Illinois, argued the cause for appellant—cross-respondent. With him on the briefs were Marvin Gittler and Asher, Gittler, Greenfield, Cohen & D'Alba, Ltd., Chicago, Illinois. On opening brief were Janet M. Schroer and Hoffman, Hart & Wagner.

I. Franklin Hunsaker, Portland, argued the cause for respondent—cross-appellant. With him on the briefs were Bullivant Houser Bailey, Steven V. Rizzo and Seidl & Rizzo.

Before De MUNIZ, Presiding Judge, and HASELTON and WOLLHEIM, Judges.

De MUNIZ, P.J.

Defendant United Union of Roofers, Waterproofers & Allied Workers (International) appeals from a jury verdict in favor of plaintiff Nancy Jensen on a statutory claim under ORS 659.550 (the whistleblower law). International asserts that the trial court made numerous errors: in instructing the jury; in denying International's motion for a directed verdict and judgment notwithstanding the verdict on the question of whether plaintiff was entitled to punitive damages; and in failing to reduce the $1,250,000 punitive damage award. On cross-appeal, plaintiff asserts that the trial court erred in determining the amount of attorney fees to award. As explained below, we conclude that the trial court properly instructed the jury and properly denied International's motions regarding whether plaintiff's claim for punitive damages should go before the jury. We further conclude that the jury's award of punitive damages was excessive, and therefore order a remittitur. We affirm without discussion on cross-appeal.

We state the evidence in the light most favorable to the party in whose favor the verdict was returned. Northwest Natural Gas Co. v. Chase Gardens, Inc., 328 Or. 487, 490, 982 P.2d 1117 (1999). Plaintiff Jensen began work in June 1993 as a bookkeeper for Local 49 (Local) of the United Union of Roofers, Waterproofers and Allied Workers. She was hired by and worked for Medley, the Local's business agent and financial secretary. Plaintiff maintained an accounting system known as the "McBee" system and was trained by Ziegler, International's vice-president, in the use of its computerized financial software. Plaintiff also handled petty cash.

By the fall of 1993, plaintiff came to believe that there were discrepancies in the books concerning certain payments that had been received by her predecessor. She became concerned that members had been given "unofficial" receipts for payments under the McBee accounting system that were not properly reflected in the "official" computerized accounting system. She believed that certain records of the McBee accounting system were missing. She also had difficulty balancing the petty cash and would occasionally make up small amounts of missing money from her own pocket in order to make the books balance. She observed Medley taking petty cash on occasion and gambling with it. She discussed the problems with the books with Medley, who did not want her to pursue the matter. She then discussed her concerns with Ziegler. Ziegler was based at International's California office but was often in Portland during the time that plaintiff worked for Medley. Although plaintiff expressed concerns to Ziegler, she was unable to provide him with any documentation that demonstrated that money was missing. Ziegler reported plaintiff's concerns to International's president but took no further action.

On February 7, 1994, plaintiff contacted the United States Department of Labor to report her suspicions about the Local's accounting problems. Plaintiff told Ziegler that she had contacted the Department of Labor, and he responded that he wished she had not done so and that he would have to notify International's president. Shortly after plaintiff made contact with the Department of Labor, the Local's computer malfunctioned, and Ziegler came to Portland to help with the problem. Medley consulted Ziegler about plaintiff's allegations, and Ziegler recommended that an accountant go over the books with plaintiff. Ziegler worked with the Local's accountants to develop procedures for dealing with plaintiff's allegations. Ziegler and Medley arranged for plaintiff to spend a day going over several months' financial records with one of the Local's accountants, Mack. Mack discovered some bookkeeping errors but found that no funds were missing. Medley then called Ziegler and asked him if they could stop reviewing the records at that point. Ziegler agreed.

On March 3, 1994, the Local's executive board met, and Medley reported that there was no money missing and that plaintiff had apologized. Several members of the board wished to terminate plaintiff's employment. Rather than terminate her employment entirely, Medley reduced plaintiff's hours from full-time to two days per week. On March 5, Medley told Ziegler that he wished to terminate plaintiff's employment, and Ziegler suggested that her hours be reduced in order to get her to quit the job. At that time, Ziegler was unaware that Medley already had reduced plaintiff's hours. On March 7, Medley threatened to terminate plaintiff's employment unless she signed an apology letter stating that all funds were accounted for. Plaintiff signed the letter. On March 11, Medley terminated plaintiff's employment after expressing anger at her for contacting the Department of Labor.

In the months following plaintiff's termination, Medley and members of the Local's executive board made various defamatory statements about plaintiff. After Medley made such statements at a union meeting in June 1994, plaintiff became upset and stayed in her bedroom for several months.

The Department of Labor investigated plaintiff's report but discovered no misappropriation of funds at the Local. Further investigation did reveal some problems in the ways the books were kept, and it eventually was discovered that plaintiff's predecessor had taken some records. Medley was replaced as business agent by Ouellette, who wrote a letter to union members announcing that the union was being sued by plaintiff and that plaintiff had publicly made false accusations of theft.

Plaintiff initiated this action, originally naming as defendants Medley and the Local. She alleged statutory discrimination under the whistleblower law, wrongful discharge, sexual harassment, racketeering, and intentional infliction of emotional distress. Medley settled with plaintiff, and plaintiff dropped the sexual harassment claim. Several other claims were dropped, and the court granted summary judgment for defendants on the racketeering claim. The case was tried on plaintiff's second amended complaint, which added Ouellette and International as defendants, and alleged statutory whistleblower discrimination, wrongful discharge, slander and libel. The court directed a verdict against plaintiff on the wrongful discharge claim. The jury returned a verdict against defendants on plaintiff's whistleblower claim, awarding $35,000 in noneconomic damages and $1,250,000 in punitive damages. The jury further found that Medley had defamed plaintiff and that the Local was liable for that defamation, but that International was not. The jury awarded $100,000 in noneconomic damages on that claim. The jury also found that defendant Ouellette had defamed plaintiff and that the Local was liable for that defamation, but that International was not. The jury awarded $5,000 in noneconomic damages on that claim.

International moved for a judgment notwithstanding the verdict and for a new trial and sought reduction of the punitive damages. The court reduced the damages by the amount for which Medley had settled and entered judgment against International in the amount of $1,270,000. International appeals from that judgment.

International assigns error to the trial court's rejection of its proffered instructions concerning the relationship between International and the Local and further contends that the trial court erred in giving its instruction concerning vicarious liability and agency relationships. Defendant asserts on appeal that the trial court erred in failing to give its proposed instruction number 18:

"The International's Constitution and Bylaws is a contract between the International and its ninety-six (96) affiliated local labor organizations representing workers in the roofing and waterproofing industry. I instruct you as a matter of law, although the power granted by the International's Constitution which may be exercised by the International Union over Local 49 in some circumstance may be considerable or pervasive, the International's Constitution, and matters contained therein, do not prove that Local 49 or any Local 49 officer or employee was acting for or on behalf of the International Union."

International argues that the proposed instruction would have informed the jury correctly concerning the relationship between the International and the Local. Plaintiff points out in response that International has failed to quote the remainder of its requested jury instruction number 18. The proposed jury instruction went on to state:

"Plaintiff argues that the International retains the right to suspend or remove local officials and take over the conduct of the local union business under a variety of circumstances and that the local union must be organized and operated in the manner outlined in the International Constitution.

This ignores the local's substantial autonomy in handling its own affairs. The local is simply not an arm of the International for all purposes."

The court rejected proposed instruction number...