King v. U.S. Bank Nat'l Ass'n

• Decision Date: 28 July 2020
• Docket Number: C085276
• Citation: 266 Cal.Rptr.3d 520,53 Cal.App.5th 675
• Court: California Court of Appeals Court of Appeals
• Parties: Timothy KING, Plaintiff and Appellant, v. U.S. BANK NATIONAL ASSOCIATION, Defendant and Appellant.

53 Cal.App.5th 675

266 Cal.Rptr.3d 520

Timothy KING, Plaintiff and Appellant,

v.U.S. BANK NATIONAL ASSOCIATION, Defendant and Appellant.

C085276

Court of Appeal, Third District, California.

Filed July 28, 2020

As Modified on Denial of Rehearing August 24, 2020

Christopher H. Whelan, Inc. and Christopher H. Whelan, Gold River, CA; Whelan Law Group and Brian D. Whelan, Fresno, CA; Brian D. Coolidge, for Plaintiff and Appellant.

Drinker Biddle & Reath, Cheryl D. Orr, Vernon I. Zvoleff, Ramon A. Miyar, San Francisco, CA, and Philippe A. Lebel, Los Angeles, CA; Mayer Brown, Donald M. Falk, Palo Alto, CA, Evan M. Tager, and Miriam R. Nemetz, Washington, DC, for Defendant and Appellant.

Robie, J.

A jury returned verdicts in favor of plaintiff Timothy King against defendant U.S. Bank National Association (U.S. Bank) for defamation, wrongful termination in violation of public policy, and breach of the implied covenant of good faith and fair dealing, awarding King almost $24.3 million in compensatory and punitive damages. U.S. Bank filed a motion for judgment notwithstanding the verdict on the ground that there was no substantial evidence to support the jury's verdicts and the award of punitive damages. The trial court denied the motion. U.S. Bank also filed a motion for new trial on the grounds that there was insufficient evidence to support the verdicts, the damages were excessive, and there was an irregularity in the proceedings that prevented a fair trial. The trial court conditionally granted the motion for new trial on the excessive damages ground conditioned upon King agreeing to a remittitur, but denied the motion on the other grounds asserted. King accepted the remittitur and the trial court entered judgment on the remitted award of over $5.4 million.

U.S. Bank appeals, challenging the jury's verdicts on each of the causes of action and the remitted award of punitive damages. King cross-appeals, challenging the trial court's new trial orders on excessive damages.¹ We find no merit in U.S. Bank's challenge to the jury's verdicts in favor of King; we do, however, find merit in some of King's arguments.

We reverse the trial court's new trial orders, but agree with the trial court, following our own independent review, that a one-to-one ratio between compensatory and punitive damages is the constitutional limit under the facts of this case. We remand with directions to modify the judgment accordingly. As a result, King is awarded $8,689,696 in compensatory damages and $8,489,696² in punitive damages, for a total of $17,179,392.

FACTUAL AND PROCEDURAL BACKGROUND

For the reader's ease, we discuss the pertinent facts relating to the trial here and the facts relating to the new trial motion in the discussion section pertaining to that issue. "In summarizing the facts, we view the evidence in favor of the judgment." ( Roby v. McKesson Corp. (2009) 47 Cal.4th 686, 693-694, 101 Cal.Rptr.3d 773, 219 P.3d 749 ( Roby ).)

IGeneral Background

King started in the position of senior vice president regional manager, market lead, and market president for U.S. Bank's Sacramento area in January 2007. He managed the commercial banking business for the region. The commercial banking division worked with companies whose revenues were between $25.1 million and $750 million.

In the summer of 2007, King got involved in the "building deeper relationships" initiative (the initiative) to drive increased revenue; he was one of the core members of the initiative. King later trained employees on the initiative, including how to track the requirements in the tracking system called Siebel. He received strong annual performance reviews from 2007 through 2011. King substantially exceeded the majority of his financial goals in 2010 and 2011.

In November 2012,³ four people reported to King -- Kim Thakur, John Flinn, Edgar Gill, and Caroline Kim -- and King reported to Michael Walker, who reported to Kenneth Ladd. Thakur, Flinn, and Gill were relationship managers and Kim was King's administrative assistant. King had performance concerns as to Thakur and Flinn. According to King, Flinn was upset with him about the performance review ratings King gave him in 2012 and because King assigned a deal to Thakur rather than to him. Thakur had made several mistakes in 2012; King told her to look into a potential position in a different area of the bank because he was imminently intending to place her on a performance improvement plan. In September, King also rescinded his prior recommendation to have Thakur join a nonprofit board due to his concern that she would not be employed with the bank in the long term.

On November 7, Thakur contacted Maureen McGovern, a human resources generalist for U.S. Bank, raising claims of gender discrimination and harassment against King. During the investigation of Thakur's claims, Thakur and Flinn made other allegations as well, including that King told them to falsify their expense reports and input meetings required under the initiative into Siebel when the meetings had not occurred. Based on the findings from McGovern's investigation, U.S. Bank terminated King's employment on December 27.

King sued U.S. Bank for defamation, wrongful termination in violation of public policy (citing Lab. Code, § 200 et seq. ), and breach of the implied covenant of good faith and fair dealing. The jury found in favor of King on all causes of action, submitting its findings to the court on a special verdict form.

As to the defamation cause of action, the jury found one or more U.S. Bank former or current employees had made the following statements in the scope of their employment: King instructed Thakur and Flinn to falsify reports or records to reflect initiative meetings had taken place when none had actually occurred; King told Thakur to record him present at all initiative meetings even if King did not attend; King instructed others to falsify expense reports; King falsified his vacation records or instructed others to falsify their vacation records; King made inappropriate remarks to and/or about Thakur based on gender or sex; King retaliated against Thakur and/or Flinn after they communicated with U.S. Bank's human resources department; King was a member of the Mafia; and King was stalking Thakur. And, as to "any [such] statement(s)," the statement(s) was a statement of fact and not substantially true, and the person who made the statement(s) reasonably understood the statement(s) was about King, did not use reasonable care to determine the truth or falsity of the statement(s), and made the statement(s) with hatred or ill will toward King or without reasonable grounds for believing the truth of the statement(s). The jury awarded King $6 million in damages, consisting of $1 million for harm to his property, business, trade, profession, or occupation, $4 million for harm to his reputation, and $1 million for shame, mortification, or hurt feelings.

As to the wrongful termination cause of action, the jury found, among other things, that, as of the date of his termination, King had earned a bonus pursuant to a document titled the 2012 "Relationship Management Plan" (2012 Plan) and U.S. Bank's desire to deprive King of that bonus was a substantial motivating reason for the decision to terminate his employment. The jury awarded King $2,489,696 in damages, consisting of $1,035,430 for past lost earnings and $1,454,266 for future lost earnings.

As to the breach of the implied covenant of good faith and fair dealing cause of action, the jury found King and U.S. Bank entered into a contract for a bonus in 2012, King performed all or substantially all of the significant requirements of the contract, all conditions required for U.S. Bank's performance occurred, U.S. Bank unfairly interfered with King's right to receive the benefits of the contract (i.e., a 2012 bonus), and King was harmed by U.S. Bank's conduct. The jury awarded King $200,000 in past economic damages as the value of his 2012 bonus.

As to the request for punitive damages, the jury found: (1) the defamatory statements were made with malice, oppression, or fraud and were made by an officer, director, or managing agent of U.S. Bank or ratified or approved by an officer, director, or managing agent of U.S. Bank; and (2) the decision to terminate King was committed with malice, oppression, or fraud, and made by one or more officers, directors, or managing agents of U.S. Bank. The jury awarded King $15.6 million in punitive damages.

IIPertinent Trial Testimony

There were many witnesses at trial. We set forth only the trial testimony pertinent to the issues before us on appeal given the standard of review.

AHuman ResourcesMcGovern

In 2012, McGovern was the human resources generalist for U.S. Bank covering the commercial banking divisions throughout the United States. She reported to Kelly Gerlach, who reported to Arno Ellis, who reported to Brian Bebel. When McGovern conducted the investigation into Thakur's claims, there were no rules, policy, procedure, practice or criteria to determine whether to allow an employee to respond to accusations against him or her. McGovern also had never prepared a written investigation plan, attended any training, or read any materials on how to conduct an investigation prior to the King investigation. She had to consult with a supervisor on how to conduct an investigation on a case-by-case basis, depending on the circumstances. It was up to McGovern to decide the issues she would take to her supervisor.

McGovern explained U.S. Bank had a policy of providing fair, thorough investigations into employment matters. Part of such an investigation was to determine the truthfulness of the allegations, to find the relevant facts, witnesses, and documents, to look for information that supported or contradicted the allegations, and to interview key witnesses. McGovern knew part of her job as an investigator was to determine the witnesses’ veracity and that an employee facing...