Jouflas v. Fox Television Stations, Inc.

• Decision Date: 15 November 1996
• Docket Number: No. 950162,950162
• Parties: 303 Utah Adv. Rep. 37 Milton JOUFLAS, Plaintiff and Appellant, v. FOX TELEVISION STATIONS, INC., Defendant and Appellee.
• Court: Utah Supreme Court

Page 170

927 P.2d 170

303 Utah Adv. Rep. 37

Milton JOUFLAS, Plaintiff and Appellant, v. FOX TELEVISION STATIONS, INC., Defendant and Appellee.

No. 950162.

Supreme Court of Utah.

Nov. 15, 1996.

M. David Eckersley, Salt Lake City, for plaintiff.

Walter F. Bugden, James E. Morton, Jacquelynn Davis, Salt Lake City, and Gary Roberts, Ann Calfas, Los Angeles, CA, for defendant.

HOWE, Justice:

Plaintiff Milton Jouflas appeals from the trial court's judgment in favor of defendant Fox Television Stations, Inc. (Fox), on plaintiff's action for breach of his employment contract.

FACTS

In April 1990, Fox acquired KSTU, a Salt Lake City-based television station, from Mountain West Television, including KSTU's most significant asset--its license to broadcast. As an assignee of the license, Fox was subject to all terms and conditions imposed by the Federal Communications Commission upon the original licensee, Mountain West Television. Fox retained the employees who staffed the station. On or about May 15, Fox entered into a three-year employment agreement with Jouflas, the Mountain West general manager, making him general manager and vice president of KSTU-Fox. The parties specified that the contract would be governed by California law.

At all times relevant, Fox had a policy of prohibiting sexual harassment in the work place. Soon after the acquisition, Jouflas's name appeared on a memorandum banning "Playboy type" pinups as impermissible sexual harassment, and the trial court found that he was aware of the policy. Jouflas signed the Federal Communications Commission's equal employment opportunity program certification that KSTU-Fox engaged in no discrimination on the basis of race, color, religion, national origin, or sex. The accompanying model program listed him as the person responsible for implementation.

During the summer of 1990, Fox received reports of sexual harassment of female employees and misuse of company funds by Jouflas. This information was of particular concern to Fox because renewal of the station's license was conditioned in part upon satisfaction of the federal equal employment opportunity requirements. In response, the vice president of personnel for Fox, Jean Fuentes, conducted an investigation from which Fox concluded that Jouflas had engaged in serious misconduct, including sexual harassment of female subordinates, disloyalty to Fox, misappropriation of company funds, sexual favoritism, and retaliation. Jouflas's pattern of misbehavior had begun before the acquisition but continued after he entered into his contract with Fox. Following the investigation, Fox terminated Jouflas's employment, and he brought this suit against Fox for breach of contract.

In the ensuing bench trial, the court considered extensive and conflicting testimony and explicitly resolved issues of credibility in favor of Fox. The court found that after entering into his personal services contract with Fox, Jouflas subjected Fox employees to a work environment which was conditioned on whether the employees "got along with Jouflas." It found that employees who "fit in" would be included in meetings, consulted, and respected. On the other hand, employees who did not conform to Jouflas's personal whims would routinely be ignored, shunned, and/or communicated with through notes and messages rather than through in-person contact. Finally, employees who refused to "go along with Jouflas" were subject to retaliation which did not include job loss, but did include the silent treatment and other conduct that rendered the work environment difficult and uncomfortable.

The trial court found that "[u]nder any objective analysis, the sexually explicit conversation which was the norm at KSTU under the Plaintiff's direct leadership was offensive [and] inappropriate in a work environment." In addition, Jouflas's conduct included favoritism, or at least the appearance of favoritism, on repeated occasions to attractive female employees, especially promotion manager Devi Fournier. His behavior gave the impression that she in particular and other favored employees were rewarded in the work environment for participating with him in creating an atmosphere where sexually explicit conversation and conduct flourished. The court found that Jouflas gave Fournier credit cards, contrary to Fox policy, instructing her not to tell anyone about it. ¹ Moreover, he made comments to her in the presence of other employees, such as "You look awesome," "I love your lips," "You have great wheels," and "You should hear the dream I had about you last night." The court noted that Fox offered into evidence a note from Jouflas to Fournier commenting on her "sensational!!!" appearance, with instructions to destroy the letter after reading it. The court found that "[t]hese comments were uninvited, unappreciated, and inappropriate under any circumstances in the workplace." The court further noted that employees looked to Jouflas, as general manager, to " 'set the tone' for the station, both by way of example and by terminating inappropriate conduct."

The trial court also found that Jouflas appropriated Fox assets for his personal use or the use of other employees without authorization. This misuse of company assets included the purchase of a new suit for himself from a local clothing store using credit for air time provided by KSTU, plane fare to Las Vegas for an employee when the trip had no visible business purpose, personal accommodations in Sun Valley, Idaho, paid for through an air-time trade with Fox which was neither approved nor reimbursed, and additional accommodations in Sun Valley several months later. All of these incidents took place subsequent to May 1, 1990, after Fox acquired KSTU.

In addition, the trial court found that when Steven LeBlang, the vice president of Fox's programming department, called personally to instruct KSTU to change the airing time of "A Current Affair," Jouflas disagreed "adamantly" with the decision and exclaimed "[expletive deleted] LeBlang and [expletive deleted] Fox." Second, Jouflas ignored Fox's charitable donations policy that any contribution of over $500 must be cleared with Fox. When he wrote a personal check for $600 to a charity golf tournament and sought reimbursement from the station, Wayne Marion, the business manager and controller, reminded him of the approval requirement. Marion testified that when he showed Jouflas a copy of the Fox policy, "[h]e blew up, he hit the ceiling, and he basically said do it my way, do it just exactly the way I told you." When Marion instead submitted the check and accompanying documentation according to policy, Jouflas called Marion into his office and, according to Marion's testimony,

basically he exploded more. He went red-faced. He got up around his desk. He came over and put his face about [a foot away].... He proceeded to ream me a new one. He chewed me out royally, this was under his purview, I was to do it the way he said to do it.... It was very intimidating, to say the least.... [H]e was red-faced, he was mad, shouting, and it was all right there in my face.

A number of employees corroborated Jouflas's breach of financial policies, unauthorized air-time trades, hostility to Fox, discriminatory treatment of the female employees, retaliatory behavior, and violation of Fox policies. The station personnel manager testified that Jouflas instructed her and other employees not to talk to Fox unless he cleared it first. "He told the staff that he was in charge and would always be in charge, regardless of what Fox said. He also said that he would run the station in the manner that he saw fit."

The trial court's factual findings included seven pages of excerpts of trial testimony relating to the above issues. The court noted that all of the events which gave rise to the termination occurred after plaintiff entered into his employment contract with Fox. Moreover, the trial court admitted evidence from the period before the execution of the employment contract, under Utah Rule of Evidence 404(b). The most influential piece of precontract evidence cited was a letter from Jouflas to Fournier, stating, "You are more than a fantasy, you have become my passion.... You could also go a long way in this company if you would cooperate with a sexual favor from time to time," and suggesting times and places for such trysts. Jouflas alleged that the letter was written as an April Fool's joke, but Fournier testified: "I didn't think it was funny. It scared me to death." The court stated that it received the precontract evidence solely for the limited rule 404(b) purpose of considering plaintiff's motives, intent, preparation, plan, knowledge, and absence of mistake and that no conclusion of law was premised upon any of the earlier conduct.

The trial court concluded that any breach of FCC equal employment opportunity laws could result in the revocation or nonrenewal of Fox's broadcasting license and that the precontract evidence was properly admitted under Utah Rule of Evidence 404(b) in that it "aided the Court as trier of fact to see that the Plaintiff had engaged in a pattern of behavior and that the post-contract conduct ... was neither harmless nor innocent ... when viewed in the context of historical events and Plaintiff's sexually charged relationships with various subordinate female employees." Nevertheless, the trial court stated at the close of the trial that no single post-contract incident rose to the level of sexual harassment. Consequently, the court did not specifically rely on sexual harassment in its conclusion that Jouflas had willfully breached his duties, including a duty of loyalty, that Fox properly terminated his employment, and that he therefore was not entitled to any relief.

Jouflas appeals, contending that the trial court erred in sustaining his termination because the evidence fails to support his violation of any rule, order, or instruction of his employer...