Miller v. Rykoff-Sexton, Inc., RYKOFF-SEXTO

• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)
• Writing for the Court: Before O'SCANNLAIN and LEAVY; LEAVY
• Citation: 845 F.2d 209
• Parties: Marilyn MILLER, Plaintiff-Appellee, v., et al., Defendants, and Atlas Hotels, Inc., Defendant-Appellant.
• Decision Date: 25 April 1988
• Docket Number: INC,RYKOFF-SEXTO,No. 87-5610

Page 209

845 F.2d 209 Marilyn MILLER, Plaintiff-Appellee,
v.
RYKOFF-SEXTON, INC., et al., Defendants,
and
Atlas Hotels, Inc., Defendant-Appellant. No. 87-5610. United States Court of Appeals,
Ninth Circuit. Argued and Submitted Dec. 10, 1987.
Decided April 25, 1988.

Page 210

Morgan & Armbrister, Los Angeles, Cal., Horvitz, Levy & Amerian, George P. Schiavelli (argued), Sharon Munson Swanson, Encino, Cal., for defendant-appellant.

James P. Cinque, Robert W. Cinque, Cinque & Cinque, New York City, for plaintiff-appellee.

Appeal from the United States District Court for the Central District of California.

Before O'SCANNLAIN and LEAVY, Circuit Judges, and ORRICK, ^* District Judge.

LEAVY, Circuit Judge:

OVERVIEW

Atlas Hotels, Inc. (Atlas) appeals from a judgment entered pursuant to a jury verdict awarding Marilyn Miller compensatory and punitive damages. Miller brought this diversity action against Atlas for injuries suffered because Atlas used sulfites on a salad consumed by Miller. Atlas asserts that the district court erred in instructing the jury concerning a missing witness, comparative fault, and damages for future pain and suffering. Atlas also asserts that the district court erred by failing to grant Atlas' motion for a directed verdict on Miller's punitive damages claim and by denying Atlas' motion to amend its answer to add settlement as an affirmative defense. We reverse the denial of Atlas' motion to amend its answer, affirm the district court's other rulings and remand for proceedings consistent with our opinion.

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FACTS AND PROCEEDINGS BELOW

On March 12, 1984, in Palm Springs, Miller ate a Cobb salad with bleu cheese dressing for lunch. Soon thereafter, she had an asthma attack and went to the hospital emergency room for treatment. This attack was no different from others she had experienced in the past; Miller told the hospital staff it might have been an allergic reaction to the salad dressing.

The same day, Miller went to dinner at the Carriage Inn in Los Angeles. Atlas owns the Carriage Inn. After eating several bites of a dinner salad, she began wheezing and lost consciousness. Miller remained in a "life threatening" situation for forty-eight hours.

Miller later tested positive for sulfite sensitivity and learned that the sulfites used as a preservative on the salad at the Carriage Inn had been the cause of her reaction. She then brought this action against Atlas.

Atlas moved to amend its answer ten months before trial to add settlement as an affirmative defense. According to an affidavit by Atlas' attorney, Miller's attorney demanded $50,000 in settlement on September 30, 1985, and Atlas offered that amount on October 8, 1985. On October 11, Miller's attorney indicated she wanted $100,000 to settle. Miller opposed the motion to amend; her attorney declared in an affidavit that the $50,000 figure had been conditioned on early settlement and that there had been no settlement. Atlas' motion to amend was denied.

At trial Atlas asserted that Atlas' former Vice-President of Hotel Operations, Giacomini, sent a memorandum to Atlas employees in 1983, banning the use of sulfites in Atlas kitchens. This memo was allegedly sent in response to a "60 Minutes" program on the danger of sulfites to asthmatics. According to Atlas, the Carriage Inn chef, Fernandez, knew of the ban but decided to use sulfites anyway. His supervisors allegedly did not detect his use of sulfites until Miller reacted to the salad.

Miller introduced evidence that Giacomini lied to Miller when she asked him the identity of the manufacturer of the substance on the salad. She also introduced evidence of later Atlas memos discussing use of sulfites, quarterly Atlas kitchen inspections which should have detected Fernandez' use of sulfites, and Atlas' invoice monitoring system which also should have detected the purchase of sulfites, if unauthorized.

Trial began on November 18, 1986. Atlas had listed Giacomini as a witness and, on November 4, had accepted a subpoena on his behalf. On November 13 Atlas notified Miller that Giacomini was no longer in its employ and would not be produced for trial. Miller informed the court of this sequence of events on the opening day of trial and requested a missing witness instruction. The court instructed Atlas to "make every attempt to obtain [Giacomini]." The following morning Atlas reported that it was continuing its efforts to have Giacomini testify and requested an opportunity to demonstrate why he did not appear if the court decided to give a missing witness instruction. On November 20 Atlas reported that Giacomini had left town and would not be appearing. The court said it would give the "agreed-upon instruction, regarding his being absent." Atlas made an offer of proof showing its unsuccessful efforts to produce Giacomini. Miller objected; the objection was overruled. However, Atlas never presented the evidence of its efforts to produce Giacomini to the jury. The court gave the missing witness instruction.

Following presentation of Miller's case in chief, Atlas moved for a directed verdict against Miller's claim for punitive damages on the ground that "there is no evidence that [Atlas] ratified or condoned or approved of" Fernandez' conduct as required by California Civil Code section 3294(b). The court denied the motion.

Miller and Atlas submitted proposed jury instructions. Atlas did not propose an instruction concerning California Civil Code section 3294's requirements for corporate liability for punitive damages; the court did not give such an instruction.

Miller requested an instruction allowing the jury to award damages for "any pain,

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suffering and mental anguish which you find from the evidence of the case she is reasonably certain to suffer in the future from the same cause." Atlas objected to the instruction on the ground that Miller had not submitted evidence of future pain and suffering. The court gave the requested instruction. At trial, Miller testified that her reaction at the Carriage Inn caused her greatly increased concern about eating in restaurants. She also testified that, as a result of the reaction, her asthma attacks had to be treated with medication supplied intravenously, a process that took five to six hours, rather than with shots of the same medication, which could be given in one hour.

Atlas requested two instructions on contributory negligence. The first set forth the general principles of the defense; the second gave the particulars of how Miller was allegedly contributorily negligent. The court gave the first instruction but not the second.

The jury returned a verdict in favor of Miller and awarded compensatory damages of $213,200 and punitive damages of $300,000. Atlas moved for a judgment notwithstanding the verdict, or, alternatively, for a new trial. The motion was denied. Atlas timely appealed.

DISCUSSION

1. Missing Witness Instructions

Atlas contends that the district court erred in instructing the jury that it could infer a missing witness' testimony would be unfavorable to Atlas. Atlas argues that Giacomini, the witness upon whose absence the instruction was based, was equally available to both parties and could...