Wilkinson v. Shoney's, Inc., 82,611.

Decision Date28 April 2000
Docket NumberNo. 82,611.,82,611.
Citation269 Kan. 194,4 P.3d 1149
PartiesRAYMOND WILKINSON, Appellee/Cross-Appellant, v. SHONEY'S, INC., a/d/b/a CAPTAIN D's SEAFOOD, and NEC, INC., Appellants/Cross-Appellees.
CourtKansas Supreme Court

Jack L. Whitacre, of Spencer Fane Britt & Browne LLP, of Kansas City, Missouri, argued the cause, and Michaela M. Warden, of Spencer Fane Britt & Browne LLP, of Overland Park, and William C. Martucci, of the same firm, were with him on the briefs for appellant/cross-appellee Shoney's, Inc.

J. Eugene Balloun, of Shook, Hardy & Bacon L.L.P., argued the cause, and David J. Waxe and Barbara A. Harmon, of the same firm, were with him on the briefs for appellant/cross-appellee NEC, Inc.

Brian J. Niceswanger, of McDowell, Rice, Smith & Gaar, of Overland Park, argued the cause, and Richard W. Holmes, of Goodell, Stratton, Edmonds & Palmer, of Topeka, was with him on the briefs for appellee/cross-appellant Raymond Wilkinson.

The opinion of the court was delivered by

LARSON, J.:

Raymond Wilkinson sued Shoney's and its agent in unemployment compensation matters, National Employers' Council, Inc. (NEC), after being fired from his management position at Shoney's and having his unemployment benefits claim challenged. Wilkinson alleged claims for defamation, malicious prosecution (malicious defense), wrongful discharge/ breach of implied employment contract, and negligent misrepresentation. A jury awarded Wilkinson damages of $533,271 and recommended the imposition of punitive damages, which were assessed by the court in the amount of $800,000. Shoney's and NEC appeal, raising numerous issues. Wilkinson cross-appeals.

This matter has previously been before our court in Wilkinson v. Shoney's, Inc., 265 Kan. 141, 958 P.2d 1157 (1998), where we dismissed that appeal as not being from a final judgment because the issue of the amount of punitive damages to be awarded had not been finally determined.

Our jurisdiction is pursuant to K.S.A. 20-3017 (transfer from the Court of Appeals).

We first consider Shoney's and NEC's challenges to the damage award for malicious defense and resulting punitive damages. We will later consider Shoney's contentions and arguments against the separate jury award for wrongful discharge and negligent misrepresentation. We will finally consider Wilkinson's cross-appeal. The facts relating to Wilkinson's various contentions are intertwined and we will set them forth generally with later elaboration as to particular issues.

Factual background

Shoney's and NEC entered into an agreement for NEC to represent Shoney's in responding to and defending against claims for unemployment compensation filed by Shoney's former employees. Shoney's was obligated to provide NEC with factual information regarding particular claims and NEC would make an appropriate response. NEC had the right to conduct its own investigation, obtain information from Shoney's management and employees, and arrange for witnesses at hearings. Although it was up to NEC to decide whether to contest a particular claim, Shoney's had instructed NEC to contest "any and all claims that [Shoney's] possibly can," and NEC challenged 75% to 80% of Shoney's unemployment claims.

Raymond Wilkinson and his wife, Rhonda, began working for Shoney's in the mid-1980's. Wilkinson entered the management trainee program and, after working in various Shoney's restaurants in Kansas and Missouri, eventually advanced to the position of store manager. In August 1992, while serving as kitchen manager in a Topeka Shoney's, he quit after being verbally abused by his area supervisor, Tommy Burkett. Although Shoney's disputed Wilkinson's claim for unemployment benefits, the Kansas Department of Human Resources (KDHR) determined Wilkinson was eligible, and he was paid benefits.

Wilkinson then obtained employment at Bennigan's restaurant, initially as a cook, but later was promoted to a trainer's position. In June 1993, Wilkinson had a chance meeting with Shoney's regional director, Robert White, at a Shoney's in Missouri where Rhonda was working. White told Wilkinson that Shoney's had changed, and he should consider coming back to work for them.

After phone conversations between the parties and consideration of the offer, Wilkinson told White he would come back to work for Shoney's but that he needed to give Bennigan's 2 weeks' notice. White told Wilkinson that he had to appear before the Rehire Board that met in Raytown, Missouri, before he could be approved for rehire. White told Wilkinson to talk to Mike Tucker, the manager of the State Avenue store in Kansas City, Kansas, to see if they could "get together" and "if they wanted to work together and establish a starting date position and salary."

Wilkinson was approved by the Rehire Board and testified that he viewed this approval as meaning that once approved, he could not be penalized or treated unfairly for anything that had happened during a previous employment. When Wilkinson arrived for the first day of work at the Kansas City, Kansas, store, Tucker showed him the "Welcome to Shoney's Inc." poster that described various laws and rules applicable to employees, including Shoney's fair treatment guarantee and rehire policy. The poster states, in part: "You as an employee of Shoney's Inc., have certain rights. Realizing that problems do occur from time to time, we have prepared this poster to help you understand your rights. We want to make sure that you are always treated in a fair and consistent manner." Tucker also showed him a booklet containing Shoney's policies, including that of progressive discipline. Under the "Fair Treatment Guarantee," the poster said: "Our Fair Treatment Guarantee provides that every employee, regardless of position, be treated with respect and in a fair and just manner at all times."

After being rehired, Wilkinson was promoted to kitchen manager and subsequently transferred to Shoney's Raytown, Missouri, store in October 1993 as assistant store manager.

Nineteen-year-old Jenny DeLapp worked as a waitress at the Raytown Shoney's. During a shift, Wilkinson was drawn into a conversation between DeLapp and the kitchen manager, Tracy Burrick. According to Wilkinson, DeLapp told them that men would not date her more than once because she would not "put out." Wilkinson said he replied to her in a joking manner that he would not go out with her either if he were single. Wilkinson stated that he perceived no indication that DeLapp felt harassed by his response.

On December 3, 1993, DeLapp's boyfriend complained that she had been sexually harassed during a conversation involving Wilkinson. When the lead dining room manager at the Raytown store, Carol Sutton, called DeLapp to inquire about the problem, DeLapp agreed to write her a letter to explain what had happened.

DeLapp's letter described Wilkinson's behavior during her shifts with him. She described Wilkinson as having asked her to go out after work and "get a room," and that he stared at her as she sorted silverware. She quoted several comments allegedly made by him that had implicit sexual overtones, and she described him as having had conversations with waiters about how to engage in sexual discrimination without getting caught.

Sutton conveyed the letter to management and informed her supervisor, Mickey Brown, about the complaint. Brown told Wilkinson about the allegations 2 days later and also told his superior, White, who directed another of Wilkinson's supervisors, Hossein Nikzad, to get information from Sutton and report the allegation to Shoney's headquarters in Nashville and its Equal Employment Opportunity (EEO) office.

H. Benny Ball, who was Shoney's executive vice president of human resources, sent Juanita Presley, Shoney's EEO Manager, to investigate. She talked with Sutton and then spoke privately with Wilkinson who told her that he had stumbled into a conversation about DeLapp's dating which had been correctly described. Presley told him it was her obligation to make recommendations to her supervisor, and she did not know how the matter would turn out. Though her initial attempts to speak with DeLapp were unsuccessful, she did speak with several other Raytown employees.

While the investigation was still ongoing, Ball informed Shoney's regional vice-president, William Marstellar, about DeLapp's allegations. He learned from Ball that Wilkinson had worked the year before under another regional manager, Mike Cotter, at the Topeka store. Marstellar called Cotter, who told him that when Wilkinson worked for him, he had demoted Wilkinson from store manager to kitchen manager and then had fired him in 1992 because he did not keep a well-staffed, clean, well-operated store, and because he liked to party and come to work late. Marstellar asked if White had contacted Cotter for a reference before Wilkinson was rehired. Cotter said he had not been contacted and that he would not have rehired Wilkinson.

Marstellar called White and asked why he had not contacted Cotter for a reference prior to Wilkinson's rehire, and White said, he just had not. Marstellar decided then to terminate Wilkinson's employment even though the DeLapp investigation was not complete. He also terminated White's employment. Marstellar directed Nikzad to terminate Wilkinson's employment and assigned the code "management loss of confidence" as the reason for the termination.

Nikzad testified that he told Wilkinson on December 11, 1993, that he had been fired because of the allegations against him, but Wilkinson testified that Nikzad told him that it had been a decision by Marstellar in Nashville and that Nikzad did not know the reasons.

Wilkinson applied for unemployment benefits at the Division of Unemployment Security in Independence, Missouri, but the initial separation fact-finding report stated that Kansas was the state which was liable, and the matter was transferred to the KDHR. Wilkinson's application stated: "I...

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