Jensen v. Medley

• Decision Date: 26 December 2003
• Parties: Nancy J. JENSEN, Respondent on Review-Petitioner on Review, 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, Petitioner on Review Respondent on Review.
• Court: Oregon Supreme Court

82 P.3d 149

336 Or. 222

336 Or. App. 222

Nancy J. JENSEN, Respondent on Review-Petitioner on Review, 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, Petitioner on Review Respondent on Review.

(CC 9410-07258; CA A97720; SC S48478, S48487).

Supreme Court of Oregon.

Argued and Submitted March 10, 2003.

Decided December 26, 2003.

Steven Feinberg, of Asher, Gittler, Greenfield, Cohen & D'Alba, Ltd., Chicago, Illinois, argued the cause and filed the briefs for petitioner on review-respondent on review. With him on the briefs were Marvin Gittler, of Asher, Gittler, Greenfield, Cohen & D'Alba, Ltd., Chicago, Illinois, and Janet M. Schroer, of Hoffman, Hart & Wagner, Portland.

I. Franklin Hunsaker, of Bullivant Houser Bailey, Portland, argued the cause and filed the briefs for respondent on review-petitioner on review. With him on the briefs was Steven V. Rizzo, of Seidl & Rizzo, LLP, Portland.

Gene B. Mechanic, of Goldberg, Mechanic, Stuart & Gibson, Portland, filed the brief for amicus curiae American Federation of Labor-Congress of Industrial Organizations. With him on the brief was Craig Becker, Chicago, Illinois.

Maureen Leonard, Portland, filed the brief for amicus curiae Oregon Trial Lawyers Association.

Before CARSON, Chief Justice, and GILLETTE, DURHAM, RIGGS, and BALMER, Justices.¹

BALMER, J.

This case requires us to determine and apply the standards under which an international union can be held liable for the wrongful actions of an affiliated local union. Plaintiff brought this action against the United Union of Roofers, Waterproofers & Allied Workers (International), its Local No. 49 (Local), and others. She alleged various claims, including employment discrimination in violation of the Oregon whistleblower law, former ORS 659.550 (1991), renumbered as ORS 659A.230 (2001), following her employment and subsequent discharge as a bookkeeper and secretary at Local. The whistleblower law claim is the only claim on review.

A jury determined that International was liable for the whistleblower law violation and returned a verdict for plaintiff on that claim for noneconomic and punitive damages. Plaintiff appealed, and International cross-appealed. The Court of Appeals affirmed International's liability for plaintiff's damages, but ordered a new trial unless plaintiff agreed to a reduction of the award of punitive damages because, the court concluded, the amount of that award violated the Due Process Clause of the Fourteenth Amendment to the United States Constitution. Jensen v. Medley, 170 Or.App. 42, 11 P.3d 678 (2000). Plaintiff and International each petitioned for review, and we allowed both petitions.² As explained below, we affirm the jury's award of noneconomic damages because, although the trial court erred in giving certain jury instructions, that jury award was supported by an alternative theory of liability that International did not challenge on appeal. We reverse the jury's award of punitive damages because, applying the appropriate standard of liability, plaintiff presented no evidence from which a reasonable jury could find International liable for punitive damages. Accordingly, we affirm in part and reverse in part the decision of the Court of Appeals, and affirm in part and reverse in part the judgment of the trial court.

I. BACKGROUND

We state the facts in the light most favorable to plaintiff, because she was the prevailing party before the jury. Northwest Natural Gas Co. v. Chase Gardens, Inc., 328 Or. 487, 490, 982 P.2d 1117 (1999) (viewing evidence and reasonable inferences to be drawn therefrom in light most favorable to party in whose favor verdict was returned and considering whether any evidence exists to support jury's verdict); Or Const, Art VII (Amended), § 3 (standard of review when jury has rendered verdict). Local is one of 96 local unions affiliated with International. The constitution of International defines the relationship between International and its affiliated locals.

In 1993, Medley, the business agent and financial secretary for Local, hired plaintiff as his secretary and as bookkeeper. Ziegler, a vice president on International's executive board, trained plaintiff to use International's accounting software. During plaintiff's employment, she came to believe that Medley had stolen petty cash from Local and had altered financial records to disguise his thefts. In February 1994, plaintiff reported Medley's alleged theft to the Department of Labor (DOL) and informed Ziegler that she had made that report. Ziegler indicated that he wished that she had not made the report. Neither Local's internal investigation nor a subsequent inquiry by DOL revealed evidence of financial impropriety by Medley.

Medley became concerned that plaintiff's allegations against him would hurt him in an upcoming union election. Plaintiff's husband was a member of Local and opposed Medley's re-election, and Medley believed that plaintiff might have been using her position to undermine Medley's credibility with members of Local. Medley told plaintiff that International's executive board wanted him to fire her. In March 1994, Medley reduced plaintiff's hours to two days per week. Medley told Ziegler that he wanted to fire plaintiff, and Ziegler, without knowing that Medley already had reduced plaintiff's hours, suggested that Medley reduce her hours and that that reduction might induce her to resign. One week after reducing her hours, Medley terminated plaintiff's employment.

Plaintiff brought this action, alleging, among other things, a violation of the whistleblower law, former ORS 659.550. Plaintiff sought to hold International liable for Local's wrongdoing under the theory that Local was the agent of International, at least for purposes of plaintiff's whistleblower law claim. At trial, International proposed a jury instruction that stated that its constitution did not establish that Local was "an arm of the International for all purposes" and a second instruction that set out International's version of the law of agency applicable to the relationship between international unions and their affiliated local unions. The trial court refused to give those instructions and, instead, instructed the jury based on its understanding of Oregon agency law. On the whistleblower claim, the jury found that Medley and Local wrongfully had terminated plaintiff's employment or reduced her hours and that International also was liable for those actions. The jury awarded plaintiff noneconomic damages in the amount of $35,000 and punitive damages in the amount of $1,250,000.³ Because plaintiff had prevailed on the whistleblower claim, which is a statutory employment discrimination claim, the trial court awarded plaintiff her attorney fees, although in an amount lower than plaintiff had requested.

As noted, plaintiff appealed, and International cross-appealed. Plaintiff argued that the trial court erred in determining the amount of the attorney fees award. International raised a number of assignments of error, including challenges to the jury instructions and to the award of punitive damages.

The Court of Appeals affirmed the trial court's ruling on plaintiff's attorney fees request without discussion. As noted, the Court of Appeals went on to hold that the trial court had not erred in giving plaintiff's proposed instructions or in refusing to give International's proposed instructions. 170 Or.App. at 47-55,11 P.3d 678. The court also rejected International's argument that the trial court should have granted International's motion for a directed verdict on plaintiff's claim for punitive damages against International because there was no evidence that International's conduct had shown wanton disregard for plaintiff's rights or that International had ratified wanton conduct by Medley or Local. Id. at 55-57, 11 P.3d 678. Finally, the court concluded that the award of $1,250,000 in punitive damages was excessive and that a punitive damages award of $175,000 was "reasonably related to the harm that occurred[.]" Id. at 60, 11 P.3d 678. It therefore ordered the trial court to grant International's motion for a new trial unless plaintiff agreed to submit an amended judgment with a punitive damages award in the amount of $175,000.

On review, International again argues that the jury instructions that the trial court gave improperly stated the law of agency as it applied to the liability of an international union for the acts of an affiliated local union. Plaintiff challenges several aspects of the Court of Appeals decision, including the reduction of the jury's award of punitive damages.

II. JURY INSTRUCTION ISSUE

A. Background

We begin with International's claim that the trial court incorrectly instructed the jury on the law of agency and, specifically, on the circumstances in which International could be found liable for Medley's termination of plaintiff's employment with Local. The jury instructions are critical, because they formed the basis for the jury's answers to questions posed on the verdict form. International argues that, because the agency instruction was erroneous, this court must reverse the judgment and remand the case for a new trial. As we explain below, although we agree with International that the jury instruction regarding agency was erroneous, we affirm the award of noneconomic damages on an alternative basis. Nevertheless, the jury instruction issue is relevant to our reversal of the punitive damages award, and we therefore consider it at some length here.

The first question on the verdict form was the following:

"Did Walter Medley and Local 49 terminate or reduce the hours of plaintiff's employment because she made a good faith report to the Department of Labor that Mr. Medley had engaged in criminal activity?"

If the jury answered ...