Joachim v. Crater Lake Lodge, Inc.

• Jurisdiction: Oregon
• Parties: Janice JOACHIM, Respondent-Cross-Appellant, v. CRATER LAKE LODGE, INC., an Oregon Corporation, and Ralph Peyton, Appellants-Cross-Respondents. ; CA 12971.
• Citation: 617 P.2d 632,48 Or.App. 379
• Docket Number: No. 420-787,420-787
• Court: Oregon Court of Appeals
• Decision Date: 22 September 1980

Page 632

617 P.2d 632

48 Or.App. 379

Janice JOACHIM, Respondent-Cross-Appellant, v. CRATER LAKE LODGE, INC., an Oregon Corporation, and Ralph Peyton, Appellants-Cross-Respondents.

No. 420-787; CA 12971.

Court of Appeals of Oregon.

Argued and Submitted June 18, 1980.

Decided Sept. 22, 1980.

Henry C. Willener, Portland, argued the cause for appellants-cross-respondents. With him on the briefs were Souther, Spaulding, Kinsey, Williamson & Schwabe, Wayne A. Williamson, Ridgway K. Foley, Jr., Katherine H. O'Neil and Elizabeth K. Reeve, Portland.

Don S. Willner, Portland, argued the cause for respondent-cross-appellant. With him on the briefs were Willner, Bennett, Bobbitt & Hartman, Kafoury & Hagen and Charles S. Tauman, Portland.

Before RICHARDSON, P. J., and WARDEN and WARREN, JJ.

WARDEN, Judge.

After a trial by jury in Multnomah County, plaintiff recovered a judgment for $4000 compensatory damages and $15,000 punitive damages from defendants for illness caused by drinking contaminated water at Crater Lake National Park in the summer of 1975. Defendants appeal only the award of punitive damages. Their seven assignments of error raise four contentions: (1) punitive damages cannot be awarded on the allegations contained in the complaint; (2) the trial court improperly instructed the jury on the standard to be applied in awarding punitive damages; (3) evidence of events occurring after plaintiff left the lodge was improperly admitted; and (4) there was insufficient evidence to support the award of punitive damages. On cross-appeal, plaintiff assigns as error (1) denial of plaintiff's motion for class action certification; (2) admission of evidence of the fact and amount of plaintiff's prior settlement with the United States; and (3) the trial court's withdrawal of count two of plaintiff's complaint based on strict products liability. We affirm in all respects.

In 1975, defendant Peyton was president and manager of defendant Crater Lake Lodge, Inc., which operated a concession at Crater Lake National Park consisting of a lodge with dining room, a separate cafeteria and a gas station. The park itself was under the jurisdiction of the United States Department of Interior. The lodge opened for the 1975 season on June 13, and by June 20 some employees began to experience gastrointestinal problems of diarrhea, nausea, cramps and vomiting. Such illness, recurring at the start of each season, had earned the sobriquet "Crater Lake Crud," which some attributed to changes in altitude, climate and food for those stricken. This year the symptoms were more severe and persistent. By June 30, nearly three-quarters of the lodge employees were sick. During the outbreak of illness, a number of state and federal agencies became involved in trying to pinpoint the source of the problem, including the Klamath County Health Service, the United States Environmental Protection Agency, the Oregon State Health Office, the Oregon Office of Disease Control and the Center for Disease Control in Atlanta, Georgia. The chlorine level in the water supply was tested repeatedly and considered adequate. Food or water contamination and communicable disease were suspected as possible causes, but the authorities were baffled. The source of the illness was not discovered until July 10, when a maintenance man discovered sewage overflowing from a manhole in the watershed. The sewage contained a virulent strain of the E. coli microorganism, which had not been eliminated by chlorination of the water.

Plaintiff visited Crater Lake National Park on July 7, 1975. She drank water at the gas station in the park and stayed overnight in Klamath Falls. Returning to the park the next day, she drank more water from a fountain along the rim of the lake, not under the control of defendants, but within the National Park, and ate dinner at the lodge dining room, where she drank a quantity of water. On July 9, she experienced the onset of the illness which is the subject of this action.

In the Third Amended Complaint plaintiff alleged the following in support of the claim for punitive damages:

"Plaintiff became ill as a proximate result of the willful, wanton and malicious misconduct of the defendants as hereinafter set forth in one or more of the following particulars:

"1. Defendants knew that the agent of the illness was located in the food or water, but the defendants wantonly, maliciously and willfully did not give the plaintiff adequate warning of the source of the illness, and interfered with the attempts by others to give warning of the source of the illness;

"2. Defendants knew that one or more of their employees had contracted a disease in a communicable form, but defendants wantonly, maliciously and willfully permitted, encouraged or required such employees to continue working;

"3. Defendants knew that the agent of the illness was located in the food or water, but the defendants wantonly, willfully and maliciously interfered with attempts by others to locate and identify the source of the illness;

"4. Defendants knew that an epidemic of gastrointestinal illness was occurring among their employees, but wantonly, maliciously and willfully failed to take reasonable precautions during the epidemic of illness in that defendants did not warn plaintiff of the existence of the epidemic and continued to operate their business and supplied food and water to the plaintiff."

Defendants argue that because the underlying cause of action was based on ordinary negligence, punitive damages cannot be sustained. ¹

Defendants point to the following passage in the Supreme Court's decision in Chamberlain v. Jim Fisher Motors, Inc., 282 Or. 229, 237, 578 P.2d 1225 (1978):

"In Harrell v. Travelers Indemnity Co., 279 Or. 199, 208-212, 567 P.2d 1013 (1977), decided after the trial of this case, this court discussed some of the problems resulting from the extension of liability for punitive damages to cases in which there was no wanton misconduct or intentional infliction of injury, but in which defendant's conduct was grossly negligent or reckless. For those reasons, as stated in Harrell, we hold that gross negligence or recklessness is not, in and of itself, sufficient to support an award of punitive damages.

"It follows, in our opinion, that it was not proper to instruct the jury in this case that 'wanton misconduct,' includes not only a 'deliberate disregard' of the rights of others, but also a 'reckless indifference to such rights.' This case, however, was tried prior to our decision in Harrell and we do not consider this case to be an appropriate one in which to attempt to otherwise limit or redefine the nature of the misconduct which will properly support an award of punitive damages, as that rule was stated in Noe v. Kaiser Foundation Hosp., supra, (248 Or. 420, 425, 435 P.2d 306 (1967))." (Emphasis added)

Chamberlain concerned the alleged misrepresentation by the seller of a used automobile that it had in its possession the requisite assigned certificate of title from the prior owner. The passage set forth above appears to be by way of dicta, for the court reversed the award of punitive damages on purely evidentiary grounds. Defendants argue that if gross negligence cannot support an award of punitive damages, then ordinary negligence certainly may not.

In Harrell v. Travelers Indemnity Co., supra, referred to in the above passage, the only issue decided was whether liability for punitive damages was insurable. The award of punitive damages in that case had already been affirmed by the Supreme Court in its previous decision in Harrell v. Ames, 265 Or. 183, 191, 508 P.2d 211 (1973). In that case, where plaintiff sought compensatory and punitive damages for personal injuries sustained when plaintiff's car was hit head-on by a drunken driver, the court reaffirmed the following principles expressed in Dorn v. Wilmarth, 254 Or. 236, 239-241, 458 P.2d 942 (1969):

"This court has long approved the award of punitive damages in appropriate cases to punish the defendant and to thus deter him and all others from like conduct. * * * (Citations omitted)

" * * *

"Although this court has used a variety of terms to describe conduct justifying punitive damages it has consistently held that such damages are proper to deter wanton misconduct. In Day v. Holland, supra, (15 Or. 464, 15 P. 855 (1887)), the court said:

" ' * * * (W)here a tort is committed with a bad motive, or so recklessly as to imply a disregard of social obligations, and generally when the defendant appears to have done the act wantonly, maliciously, or wickedly, the jury may, in their discretion, give exemplary damages. * * * ' 15 Or. at 469 (15 P. at 858).

"The above statement has been quoted in several later cases and in many other cases conduct warranting punitive damages has been described as wanton. * * *

" * * *

"Wantonness has been generally equated with recklessness, * * *."

The court in Chamberlain, in proposing a distinction between wanton misconduct and gross negligence, implied that wanton misconduct may properly be characterized as "the deliberate disregard of the rights of others." Chamberlain v. Jim Fisher Motors, Inc., supra, 282 Or. at 237-38, 578 P.2d at 229. The same formulation was employed in Harrell v. Ames, supra, 265 Or. at 192, 508 P.2d at 218. See also, McElwain v. Georgia-Pacific, 245 Or. 247, 249, 421 P.2d 957 (1966), where the court stated that "(t)he intentional disregard of the interest of another is the equivalent of legal malice, and justifies punitive damages for trespass." Other phrases have been used as well. Wanton misconduct is also described in Chamberlain as conduct that is "sufficiently arbitrary and unconscionable to constitute a grievous violation of societal interests." Supra, 282 Or. at 238, 578 P.2d at 229. The most recent pronouncement from the Supreme Court on the issue of punitive damages occurs in the fraud case of Milliken v. Green, 283 Or....