Juarez v. Menard, Inc.

• Decision Date: 26 April 2004
• Docket Number: No. 03-2598.,03-2598.
• Citation: 366 F.3d 479
• Parties: Maria F. JUAREZ Plaintiff-Appellant, v. MENARD, INC., Defendant-Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

366 F.3d 479

Maria F. JUAREZ Plaintiff-Appellant, v. MENARD, INC., Defendant-Appellee.

No. 03-2598.

United States Court of Appeals, Seventh Circuit.

Argued December 1, 2003.

Decided April 26, 2004.

Terrance M. Rubino, Steven J. Sersic (argued), Rubino & Crosmer, Dyer, IN, for Plaintiff-Appellant.

Richard A. Smikle, Michael A. Wilkins (argued), Ice Miller, Indianapolis, IN, for Defendant-Appellee.

Before POSNER, EASTERBROOK, and ROVNER, Circuit Judges.

ILANA DIAMOND ROVNER, Circuit Judge.

Menards,¹ a chain of home improvements stores operates under a business model which combines warehouse with retail store. Customers make their selections from merchandise displayed on lower shelves and excess merchandise is stored on shelves high above. Consequently, employees at Menards often use machinery to load and unload merchandise from high shelves at the same time that customers are shopping in the store. On January 19, 2002, two Menard employees were stocking doors in the millwork department of a Menards in Schererville, Indiana, when the doors they were stocking onto a high shelf on one side of an aisle pushed up against a steel door perched on a storage shelf high above the adjacent aisle. The steel door fell from its shelf, hitting Maria Juarez, and, according to Juarez, broke four vertebrae in her back, and caused head injuries, blurred vision, and permanent back and neck injuries.

Juarez filed a complaint in the district court invoking diversity jurisdiction pursuant to 28 U.S.C. § 1332, and seeking compensatory and punitive damages for her injuries. Prior to a trial on the amount of Menard's liability, Menard filed a motion asking the district court to grant summary judgment on Juarez's punitive damages claim, alleging that, even taking the facts in the light most favorable to Juarez, a reasonable jury could not conclude that Menard's actions constituted the type of intentional conduct for which a reasonable jury could award punitive damages. The district court agreed, and on appeal its grant of summary judgment is subject to our de novo review. Lang v. Ill. Dept. of Children and Family Sevs., 361 F.3d 416, 418 (7th Cir.2004).

Juarez proceeded to trial on her remaining claims where a jury determined that she was entitled to $385,000 in compensatory damages.² She now appeals the district court's summary judgment determination on punitive damages maintaining that because Menard knew of the risks of falling merchandise but consciously disregarded those risks, she is entitled not only to the compensatory damages awarded by the jury, but to punitive damages as well.

As support for her claim that Menard knew of but disregarded the risks of falling merchandise, Juarez points to several facts, the truth of which we must assume in our review of the grant of summary judgment. Frobose v. Am. Sav. and Loan Ass'n of Danville, 152 F.3d 602, 604 (7th Cir.1998). First, Juarez claims that Menard required all employees to watch a videotape of an episode of the television show "Inside Edition," which featured a story regarding the dangers of falling merchandise at Home Depot, a competing chain of warehouse hardware stores. The videotape chronicles the dangers associated with this shopping format and mentions safeguards and procedures used by Home Depot to reduce the likelihood of injuries. Menard, she claims, failed to implement similar safety procedures such as using fall protection, cordoning off aisles, warning customers of the dangers of falling merchandise, or keeping customers away from merchandise while employees load and unload shelves. In fact, Juarez claims that Menard specifically prohibited employees from cordoning off aisles and posting warning signs in "high risk aisles" so as not to ruin the "shopability" of those aisles. Finally, Juarez argues that Menard knew of the dangers of this type of accident because between June 28, 1997, and January 19, 2002, merchandise fell and injured customers on sixteen separate occasions.

Juarez does not challenge the jury's verdict awarding her $385,000 in compensatory damages as unsatisfactory, and theoretically at least, she has been made whole by that award. Punitive damages, however, go beyond compensating a tort victim for a cognizable wrong. They are designed to deter and punish wrongful activity, and as such, are quasi-criminal in nature. Cheatham v. Pohle, 789 N.E.2d 467, 471 (Ind.2003). Under Indiana law, which we must apply in this diversity action, (see Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78, 58 S.Ct. 817, 82 L.Ed. 1188 (1938)) civil plaintiffs have no right to receive punitive damages. Cheatham, 789 N.E.2d at 472. And, in fact, the Indiana General Assembly has demonstrated a disinclination toward allowing unchecked punitive damages awards by enacting legislation that limits the amount of money a plaintiff may receive from a punitive damages award (Ind.Code § 34-51-3-6) and by requiring that a plaintiff establish the facts warranting an award of punitive damages by clear and convincing evidence rather than the usual preponderance of the evidence standard. Ind.Code § 34-51-3-2. Thus in Indiana, before a court may award punitive damages, a plaintiff must demonstrate by clear and convincing evidence that the defendant acted with malice, fraud, gross negligence or oppressiveness that was not the result of mistake of fact or law, honest error of judgment, overzealousness, mere negligence, or other human failing. USA Life One Ins. Co. v. Nuckolls, 682 N.E.2d 534, 541 (Ind.1997); Bell v. Clark, 670 N.E.2d 1290, 1294 (Ind.1996) (incorporating by reference Bell v. Clark, 653 N.E.2d 483, 490 (Ind.App.1995)); Romine v. Gagle, 782 N.E.2d 369, 384 (Ind.App.2003) transfer denied, 804 N.E.2d 750; Wohlwend v. Edwards, 796 N.E.2d 781, 784 (Ind.App.2003). Moreover, a trier of fact is not required to award punitive damages even after finding all of the facts necessary to justify the award. Cheatham, 789 N.E.2d at 472. The requirements for an award of punitive damages, therefore, go far above and beyond those required for a finding of negligence. Menard does not dispute that it was negligent in allowing this accident to happen. It argues, however, that it did not have the requisite intent needed for an award of punitive damages.

Juarez begins her argument for punitive damages with the premise that "[i]f Menard knew of but disregarded the harmful consequences of its conduct, punitive damages would be appropriate." Appellant's Brief at 9. For this proposition, she cites Purnick v. England, 269 F.3d 851 (7th Cir.2001). But her paraphrased reference to Purnick oversimplifies its statement of Indiana law and omits the critical element of conduct warranting an assessment of punitive damages — conscious and intentional misconduct. In fact, Purnick states that a plaintiff may recover punitive damages "only if he can show by clear and convincing evidence that the defendant engaged in conscious and intentional misconduct that he knew would probably result in injury." Id. at 852 (emphasis ours). It is not enough that the tortfeasor engage in conduct that she knows will probably result in injury. After all, most business owners understand that their operations pose some level of risk of injury to consumers. The tortfeasor must act with conscious indifference or heedless disregard of the consequences of her actions. Orkin Exterminating Co., Inc. v. Traina, 486 N.E.2d 1019, 1023 (Ind.1986). Other Indiana courts have described this consciousness and intention as requiring a show of willful and wonton conduct or a "quasi-criminal state of mind." Stroud v. Lints, 760 N.E.2d 1176, 1179 (Ind.App.2002), vacated on other grounds, 790 N.E.2d 440 (Ind.2003); Mitchell v. Stevenson, 677 N.E.2d 551, 564 (Ind.App.1997). It was this consciousness and intent — or quasi-criminal state of mind — that the district court found lacking when it concluded, based on the evidence presented by Juarez, that no reasonable jury could impose punitive damages. Juarez v. Menard, No. 2:02-CV-55, slip op. at 18 (N.D.Ind. May 15, 2003). And upon our de novo review, we must agree.

As evidence that Menard knew of but disregarded the harmful consequences of its behavior, Juarez points to the "Inside Edition" videotape which depicts injuries and fatalities from falling merchandise at Home Depot. Juarez maintains that not only was Menard aware of the video, but also that it required all of its employees to watch it. As the district court noted, nothing in the "Inside Edition" videotape, however, suggests that stores like Menards should keep customers out of adjacent aisles when employees are stacking merchandise. Id. at 15. The "Inside Edition" story notes that it is Home Depot's policy to rope off the aisles where merchandise is being loaded, to use spotters to monitor the area around heavy machinery, and to shrink-wrap merchandise stored on high shelves to prevent stray pieces from falling. The videotape story does not discuss merchandise falling in adjacent aisles at all. Consequently, the "Inside Edition" story gave Menard no additional knowledge about the risk of merchandise falling into...