Wangen v. Knudson

• Decision Date: 27 July 1988
• Docket Number: 15740 and 15743,Nos. 15723,s. 15723
• Parties: 47 Empl. Prac. Dec. P 38,354 Darrell K. WANGEN, Plaintiff and Appellant, v. David R. KNUDSON, Northwestern Bell Telephone Company, Joe Elmore and U.S. West Direct, Defendants and Appellees.
• Court: South Dakota Supreme Court

Page 242

428 N.W.2d 242

47 Empl. Prac. Dec. P 38,354

Darrell K. WANGEN, Plaintiff and Appellant, v. David R. KNUDSON, Northwestern Bell Telephone Company, Joe Elmore and U.S. West Direct, Defendants and Appellees.

Nos. 15723, 15740 and 15743.

Supreme Court of South Dakota.

Argued Nov. 16, 1987.

Decided July 27, 1988.

David V. Vrooman, Sioux Falls, for plaintiff and appellant.

James E. McMahon, Sioux Falls, for defendants and appellees David R. Knudson and Northwestern Bell Telephone Co.

John E. Simko, Sioux Falls, for defendants and appellees Joe Elmore and U.S. West Direct.

TUCKER, Circuit Judge.

Plaintiff, Darrell K. Wangen (Wangen), appeals from a trial court's order granting defendants' motion for new trial unless Wangen accepted a reduction in the amount of punitive damages awarded by the jury. Defendants, David R. Knudson (Knudson), Northwestern Bell Telephone Company (Northwestern Bell), Joe Elmore (Elmore), and U.S. West Direct (U.S. West) have filed notices of review alleging that the trial court erred in denying their motions for directed verdict and judgment notwithstanding the verdict. Elmore and U.S. West also allege that the trial court gave prejudicial and erroneous jury instructions. We affirm the order denying directed verdicts and judgment notwithstanding the verdict and reverse the order granting a new trial unless the remittitur was accepted.

FACTS

From 1977 to 1985 Wangen was one of the top salesmen for U.S. West. In 1983 and 1984, however, Wangen began to suffer from bouts of severe depression. Because of his depression, his job performance began to deteriorate. He uncharacteristically fell behind in the completion of sales calls, and customer complaints began to appear. Although he had consumed alcoholic beverages earlier in his life, Wangen quit drinking in 1977. In June 1984 Wangen started to drink beer again. His drinking made him feel better and helped him escape from his problems. He usually drank alone in his motel room, but he never drank at home or on weekends.

Because of concern over his depression and sudden change in alcohol consumption, Wangen saw Dr. Peters, a physician, in August 1984. Dr. Peters conferred with Dr. Arbes, a psychologist, and they admitted Wangen to McKennan Hospital. Wangen did not notify U.S. West that he was going to be admitted to the hospital nor that he would be missing work. While he was hospitalized, Wangen was also treated by Dr. Gehlhoff, a psychiatrist. Wangen was discharged from the hospital four days later. The doctors prescribed medication for his depression and recommended that Wangen take some time off from work. At no time did any of the doctors who treated Wangen diagnose him as an alcoholic. Wangen's hospitalization was the first time he missed work because of illness since starting to work for U.S. West.

Wangen disregarded the doctors' advice to take some time off and returned to work. The following day, he met with his supervisor, Elmore, to discuss his hospitalization. Prior to this meeting Wangen's wife had expressed concern to Elmore about her husband's drinking. When Elmore met with Wangen, he suggested that Wangen visit with Knudson, the counselor and employee assistance program/chemical dependency coordinator for Northwestern Bell in Sioux Falls. Although Northwestern Bell and U.S. West are separate and distinct corporations, they had entered into a contract where Northwestern Bell provided U.S. West with services from its medical department.

Wangen met with Knudson and a company nurse, Bev Rohl. Knudson asked Wangen questions concerning Wangen's prior history of drinking and the recent change in his drinking habits. Knudson told Wangen that his recommendation was that Wangen submit to in-patient alcohol treatment for 30 days or face termination of his employment. Elmore was present when Knudson gave this recommendation to Wangen. Knudson asked Elmore if his recommendation was correct, and Elmore signified that it was something Wangen was going to have to face. Knudson told Wangen that he was an alcoholic and that Wangen needed to quit denying it because alcoholism is a disease of denial. Both Elmore and Knudson knew that Wangen had just been hospitalized for depression, was under Dr. Arbes' and Dr. Peters' treatment, was taking medication for his depression, and was still extremely emotional.

At this point Wangen became extremely upset. He was told to make a decision before leaving the office. When Wangen asked for more time, he was told he could have until four o'clock that afternoon to make his decision. Wangen requested the opportunity to call his wife. While Wangen was speaking to his wife (who lived at the family residence in Rapid City), Knudson picked up the extension and told her that her husband was an alcoholic and that since the spouse of an alcoholic uses the same method of denial as an alcoholic, he expected her to reject this.

Wangen left the meeting and went to visit Dr. Arbes. Although Dr. Arbes had spoken to Knudson and consented to Knudson meeting with Wangen, he was surprised that Knudson had determined that Wangen should undergo alcohol treatment. Dr. Arbes recommended that Wangen call Knudson from his office and get a postponement on the decision until Dr. Arbes could speak to Knudson. Wangen phoned Knudson and asked for a postponement, but was told postponing his decision was the same as a rejection of Knudson's recommendation. Knudson then added Elmore to the phone conversation and told Elmore that Wangen was rejecting the recommendation. Knudson asked Elmore if he agreed that this rejection meant the loss of Wangen's job. Elmore agreed and told Wangen to come down to Elmore's office and turn in his equipment. Wangen did this.

Although Wangen had been told he was being fired, he never actually was. His wife was notified the next day that he had not been fired, and Wangen was told this by his wife. Wangen received his normal pay for the entire time he was out of work, a period of five weeks. This incident added to Wangen's depression and required continued treatment.

Wangen commenced this action against Knudson, Northwestern Bell, Elmore and U.S. West for the intentional infliction of emotional distress. The jury returned a verdict against them and awarded Wangen compensatory damages of $30,000.00 and punitive damages of $100,000.00. Following the defendants' motion for judgment notwithstanding the verdict, or in the alternative a new trial, the trial court ruled that the compensatory damages award should stand, but that Wangen must accept a remittitur for the punitive damage award in the amount of $70,000.00 or face a new trial on all issues.

ISSUE I

DID THE TRIAL COURT ABUSE ITS DISCRETION WHEN IT ORDERED A NEW TRIAL SUBJECT TO WANGEN'S ACCEPTANCE OF A REMITTITUR? WE HOLD THAT IT DID.

The trial court held that the compensatory damage award of $30,000.00 did not appear to be the result of either passion or prejudice, and was within the limitations justified by the evidence. However, the trial court held that the punitive damage award of $100,000.00 was excessive and that the plaintiff had to accept a remittitur of $70,000.00 within 14 days or a new trial would be granted on all issues. ^* Wangen alleges that the trial court improperly substituted its judgment for that of the jury, and, therefore, the court's order granting defendants' motions for a new trial unless Wangen accepted a remittitur was improper.

This court need not address the issue of whether the remittitur was properly ordered. The trial court granted defendants' motion for a new trial unless within 14 days after service on Wangen's attorney of a copy of that order, Wangen filed a written consent to reduce the punitive damage award. Wangen did not file such a consent and appealed to this court. The filing of an appeal from an order of a remittitur is an indication of a plaintiff's intention to reject the remittitur. See Harmon v. Motors Insurance Corp., 493 So.2d 1370 (Ala.1986). Thus, this court must determine whether the granting of defendants' motion for a new trial based on excessive punitive damages was proper.

The test to be employed by trial courts in determining when damages are excessive is contained in Schuler v. City of Mobridge, 44 S.D. 488, 493, 184 N.W. 281, 283 (1921):

The damages, therefore, must be so excessive as to strike mankind at first blush, as being beyond all measure, unreasonable and outrageous, and such as manifestly show the jury to have been actuated by passion, partiality, prejudice or corruption. In short, the damages must be flagrantly outrageous and extravagant, or the court cannot undertake to draw the line; for they have no standard by which to ascertain the excess.

Ruple v. Brooks, 352 N.W.2d 652 (S.D.1984); Klug v. Keller Industries, Inc., 328 N.W.2d 847 (S.D.1982). "This obviously creates an extremely difficult burden for anyone attempting to overturn a verdict on the ground of excessive damages." Brewer v. Mattern, 85 S.D. 356, 365, 182 N.W.2d 327, 332-333 (1970). We are mindful that the trial court in passing upon the reasonableness of the jury verdict has had the benefit of hearing and observing the same things as the jury, has had the opportunity to observe the jury itself for signs of passion and prejudice, and has considered the amount of the verdict. Id. For this reason the trial court has wide discretion in granting a new trial based upon excessive damages. Hulstein v. Meilman Food Industries, 293 N.W.2d 889 (S.D.1980).

The cases, however, maintain two important distinctions that courts should note when reviewing new trial motions. First, if the trial court granted the motion for a new trial, review by the appellate court is more stringent than if the motion were denied. See Rabun v. Kimberly-Clark Corporation, 678 F.2d 1053 (11th Cir.1982); Evers v. Equifax, 650 F.2d 793 (5th Cir.1981). Second, although the abuse of discretion standard governs regardless of the grounds...