Rhyne v. K-Mart Corp.

• Citation: 358 N.C. 160,594 S.E.2d 1
• Decision Date: 02 April 2004
• Docket Number: No. 522A02.,522A02.
• Court: United States State Supreme Court of North Carolina
• Parties: Dan RHYNE and Alice Rhyne v. K-MART CORPORATION, Shawn Roberts, and Joseph Hoyle.

594 S.E.2d 1

358 N.C. 160

Dan RHYNE and Alice Rhyne v. K-MART CORPORATION, Shawn Roberts, and Joseph Hoyle.

No. 522A02.

Supreme Court of North Carolina.

April 2, 2004.

Center for Constitutional Litigation, P.C., by Robert S. Peck, pro hac vice; Gray, Layton, Kersh, Solomon, Sigmon, Furr & Smith, P.A., by William E. Moore, Jr.; and Arcangela M. Mazzariello, Gastonia, for plaintiff-appellees and -appellants.

Alston & Bird LLP, by James C. Grant, pro hac vice; and Womble Carlyle Sandridge & Rice, PLLC, by Burley B. Mitchell, Jr. and Sean E. Andrussier, Raleigh, for defendant-appellees and -appellants.

Patterson, Harkavy & Lawrence, L.L.P., by Burton Craige, on behalf of the North Carolina Academy of Trial Lawyers; North Carolina Friends of Residents in Long Term Care, Inc.; American Civil Liberties Union Legal Foundation of North Carolina; and North Carolina Justice and Community Development Center, amici curiae.

Smith Moore, LLP, by J. Donald Cowan, Jr. and Lisa Frye Garrison, Greensboro, on

behalf of the Product Liability Advisory Council, Inc., amicus curiae.

Shook, Hardy & Bacon, L.L.P., by Bruce O. Jolly, Jr., Washington, DC, on behalf of the American Tort Reform Association and the National Association of Manufacturers, amici curiae.

Moore & Van Allen, by George M. Teague; and North Carolina Retail Merchants Association, by Andrew Ellen, General Counsel, on behalf of the North Carolina Citizens for Business and Industry, amicus curiae.

Helms Mulliss & Wicker, PLLC, by Robert H. Tiller; and Robbins, Russell, Englert, Orseck & Untereiner, LLP, by Alan E. Untereiner, pro hac vice, on behalf of the Chamber of Commerce of the United States, amicus curiae.

Boyce & Isley, PLLC, by Philip R. Isley; and Washington Legal Foundation, by Paul D. Kamenar, pro hac vice, on behalf of the Washington Legal Foundation and the Allied Educational Foundation, amici curiae.

BRADY, Justice.

The issues presented by the instant case concern the constitutionality and applicability of N.C.G.S. § 1D-25, a statute which limits the amount of punitive damages recoverable in civil actions. We conclude that N.C.G.S. § 1D-25 is not violative of the North Carolina Constitution and applies to limit recovery of punitive damages per each plaintiff, even where multiple plaintiffs are joined together in one suit. Accordingly, we affirm the opinion of the North Carolina Court of Appeals.

The action underlying the issues before this Court arose out of an incident between plaintiffs Dan and Alice Rhyne and defendants Shawn Roberts and James Hoyle, security employees for defendant K-Mart Corporation (K-Mart). On or about 28 April 1998, K-Mart employees confronted plaintiffs as the couple was walking near a K-Mart retail store in Gaston County, North Carolina. Roberts, one of the employees, inquired of plaintiffs as to whether they had been rummaging through K-Mart's dumpsters. Mr. Rhyne responded that plaintiffs had not touched the dumpsters and were walking for exercise purposes only.

The following day, plaintiffs were again walking in the store's parking lot when they were approached by Roberts and Hoyle. This time, Roberts grabbed Mr. Rhyne, placed him in a choke-hold, and forced him to the ground. As Mrs. Rhyne attempted to assist her husband, who was at that time struggling to break free from Roberts, Hoyle pushed Mrs. Rhyne to the ground.

When two Gastonia police officers arrived on the scene approximately fifteen to twenty minutes later, K-Mart personnel informed the officers that the corporation would be pressing trespassing charges against both plaintiffs. However, K-Mart later pressed charges only against Mr. Rhyne for two counts of assault. Those charges were subsequently dismissed. As a result of the incident, plaintiffs sought and received medical attention for various physical and psychological ailments. Mr. Rhyne sustained a total of $5,376.12 in medical bills and lost wages, while Mrs. Rhyne sustained a total of $13,582.40 in medical bills.

On 31 December 1998, plaintiffs filed a civil action against K-Mart, Roberts, and Hoyle. Plaintiffs sought compensatory and punitive damages for assault, battery, slander, false imprisonment or unlawful detention, malicious prosecution, intentional infliction of emotional distress, and negligent infliction of emotional distress. Plaintiffs further alleged claims against K-Mart for negligence based upon premises liability and negligent supervision and training of employees.

Upon defendants' motion pursuant to N.C.G.S. § 1D-30, the trial was bifurcated. In the first phase of trial, the jury considered the issues of liability and compensatory damages. The jury found Hoyle not liable, and although the jury found Roberts liable, plaintiffs voluntarily dismissed with prejudice all claims against him. Regarding K-Mart, the jury returned a verdict finding that the corporation, through its agent Roberts, falsely imprisoned or unlawfully detained plaintiffs, inflicted intentional emotional distress on plaintiffs, maliciously prosecuted Mr. Rhyne, and negligently injured both plaintiffs. The jury awarded compensatory damages to Mr. Rhyne in the amount of $8,255.00, which included $1,790.00 in legal expenses he incurred as a result of the assault prosecutions. The jury awarded compensatory damages to Mrs. Rhyne in the amount of $10,730.00.

In the second phase of trial, the jury considered the issue of punitive damages. Upon hearing the evidence and considering those factors listed in N.C.G.S. § 1D-35, the jury found that each plaintiff was entitled to an award of punitive damages in the amount of $11.5 million. After the jury returned its verdict, the trial court reviewed the punitive damages awards and concluded that they were not grossly excessive and, therefore, did not violate K-Mart's due process rights as guaranteed by the United States Constitution. The statute at issue in the present appeal, N.C.G.S. § 1D-25, instructs trial courts to reduce awards of punitive damages to an amount that is three times the compensatory damages award or $250,000.00, whichever amount is greater. Pursuant to that statute, the trial court reduced the amount awarded each plaintiff to $250,000.00. Plaintiffs filed a motion to have N.C.G.S. § 1D-25 declared unconstitutional, and the trial court denied plaintiffs' motion.

Plaintiffs and K-Mart appealed to the North Carolina Court of Appeals. A divided panel of that court concluded that N.C.G.S. § 1D-25 was constitutional under the North Carolina Constitution and that the trial court correctly applied the statute by reducing each plaintiff's award to $250,000.00. Rhyne v. K-Mart Corp., 149 N.C.App. 672, 562 S.E.2d 82 (2002). The majority further concluded that awarding each plaintiff $250,000.00 was not grossly excessive and, therefore, did not violate the Due Process Clause of the United States Constitution. Id. at 689, 562 S.E.2d at 94. The dissent disagreed with the majority concerning the constitutionality of N.C.G.S. § 1D-25, concluding instead that N.C.G.S. § 1D-25 was constitutionally overbroad in that it infringed upon plaintiffs' right to trial by jury and that the statute violated Article I, Section 19 of the North Carolina Constitution. Id. at 701, 562 S.E.2d at 101 (Greene, J., dissenting). The dissent nonetheless concluded that the amount of punitive damages awarded to plaintiffs by the jury was grossly excessive and, therefore, violated K-Mart's due process rights as guaranteed by the United States Constitution. Id. at 701, 562 S.E.2d at 101-02 (Greene, J., dissenting).

The case is now before this Court pursuant to plaintiffs' notice of appeal based on the dissenting opinion and substantial constitutional questions, as well as K-Mart's petition for discretionary review of an additional issue regarding the applicability of N.C.G.S. § 1D-25.

We will first address issues arising from plaintiffs' appeal. Punitive damages or exemplary damages, as they are sometimes called, hold "an established place" in North Carolina common law. Hinson v. Dawson, 244 N.C. 23, 27, 92 S.E.2d 393, 396 (1956); see also Carruthers v. Tillman, 2 N.C. 501 (1797) (reporting the first case where this Court discussed an award of exemplary damages). "Punitive damages are awarded on grounds of public policy." Osborn v. Leach, 135 N.C. 628, 633, 47 S.E. 811, 813 (1904). North Carolina courts have consistently awarded punitive damages "solely on the basis of [their] policy to punish intentional wrongdoing and to deter others from similar behavior." Newton v. Standard Fire Ins. Co., 291 N.C. 105, 113, 229 S.E.2d 297, 302 (1976); see also Watson v. Dixon, 352 N.C. 343, 348, 532 S.E.2d 175, 178 (2000)

; Oestreicher v. American Nat'l Stores, Inc., 290 N.C. 118, 134, 225 S.E.2d 797, 807-08 (1976). "Punitive damages are never awarded as compensation. They are awarded above and beyond actual damages, as a punishment for the defendant's intentional wrong." Overnite Transp. Co. v. International Bhd. of Teamsters, 257 N.C. 18, 30, 125 S.E.2d 277, 286 (emphasis added), cert. denied, 371 U.S. 862, 83 S.Ct. 120, 9 L.Ed.2d 100 (1962). Prior to 1996, North Carolina juries determined the amount of punitive damages constrained only by the trial court's ability to order a new trial where the award was determined to be excessive or inadequate and "given under the influence of passion or prejudice," N.C.G.S. § 1A-1, N.C. R. Civ. P. 59(a)(6) (1983), or where the award did not satisfy principles of due process as guaranteed by the United States Constitution, see generally Pacific Mut. Life Ins. Co. v. Haslip, 499 U.S. 1, 111 S.Ct. 1032, 113 L.Ed.2d 1 (1991).

In 1995, our General Assembly modified the common law as it pertained to punitive damages by enacting Chapter 1D of the North Carolina General Statutes, the statutory scheme now governing the standards and procedures for awarding punitive damages in this state. Act of July 29, 1995, ch. 514, sec. 1, 1995 N.C. Sess. Laws 1825, 1825-28 (...