Contreras-Velazquez v. Family Health Centers of San Diego, Inc. ( 2021 )

Filed 4/7/21 (unmodified opn. attached)
CERTIFIED FOR PUBLICATION
COURT OF APPEAL, FOURTH APPELLATE DISTRICT
DIVISION ONE
STATE OF CALIFORNIA
ROSARIO CONTRERAS-VELAZQUEZ, D075577
Plaintiff and Appellant,
v. (Super. Ct. No. 37-2014-
00026469-CU-WT-CTL)
FAMILY HEALTH CENTERS OF SAN
DIEGO, INC., ORDER MODIFYING OPINION
AND DENYING REHEARING
Defendant and Appellant.
NO CHANGE IN JUDGMENT
THE COURT:
It is ordered that the opinion filed herein on March 18, 2021, be
modified as follows:
1. On page 13, line 4, the sentence commencing with “Because the entire”
and ending with “preclusion doctrine” is modified to read as follows:
Because the entire judgment entered on the first jury’s special
verdict was vacated and held in abeyance, the first jury’s ability-
to-perform findings were not final when Family Health tried to
invoke the issue preclusion doctrine.
2. On page 13, the first sentence of the first full paragraph is modified to
read as follows:
Family Health asserts three arguments concerning the alleged
finality of the first jury’s ability-to-perform findings.
3. On page 16, the third paragraph is modified to read as follows:
Given the absence of finality, the trial court properly declined to
apply issue preclusion to the first jury’s ability-to-perform
findings.
There is no change in the judgment.
The petition for rehearing is denied.
McCONNELL, P. J.
Copies to: All parties
2
Filed 3/18/21 (unmodified opinion)
CERTIFIED FOR PUBLICATION
COURT OF APPEAL, FOURTH APPELLATE DISTRICT
DIVISION ONE
STATE OF CALIFORNIA
ROSARIO CONTRERAS-VELAZQUEZ, D075577
Plaintiff and Appellant,
v. (Super. Ct. No. 37-2014-
00026469-CU-WT-CTL)
FAMILY HEALTH CENTERS OF SAN
DIEGO, INC.,
Defendant and Appellant.
APPEALS from a judgment and a postjudgment order of the Superior
Court of San Diego County, Jeffrey B. Barton, Judge. Affirmed.
Mulvaney Barry Beatty Linn & Mayers, John A. Mayers, Patrick L.
Prindle; Law Offices of Mary A. Lehman and Mary A. Lehman, for Defendant
and Appellant.
Law Office of Martin N. Buchanan, Martin N. Buchanan; Hogue &
Belong, Jeffrey L. Hogue and Tyler Belong, for Plaintiff and Appellant.
I
INTRODUCTION
Rosario Contreras-Velazquez (Velazquez) sued her former employer,
Family Health Centers of San Diego, Inc. (Family Health), alleging disability
discrimination and related causes of action after she suffered a work-related
injury and Family Health terminated her employment. A jury found Family
Health not liable, but the trial court ordered a new trial as to three of
Velazquez’s causes of action after finding the evidence was insufficient to
support the jury’s verdict—a ruling we affirmed in a prior appeal.
(Contreras-Velazquez v. Family Health Centers of San Diego, Inc. (Aug. 9,
2017, D071083) [nonpub. opn.] (hereafter, Velazquez I).)
At the ensuing retrial, a jury found in favor of Velazquez. The jury
awarded her $915,645 in compensatory damages and $5 million in punitive
damages. However, the trial court granted in part a motion for judgment
notwithstanding the verdict (JNOV) and reduced the punitive damages
award to $1,831,290 (a 2:1 ratio of punitive to compensatory damages). The
court reasoned a punitive damages award equal to twice the compensatory
damages award was the maximum amount permissible under the due process
clause of the Fourteenth Amendment to the United States Constitution.
Family Health appeals the judgment and contends certain special
verdict findings returned by the first jury estopped Velazquez from prevailing
at the retrial under the issue preclusion doctrine. Family Health also
appeals the JNOV order on the basis that the reduced punitive damages
award remains grossly excessive in violation of Family Health’s due process
rights. Family Health requests the punitive damages award be further
reduced to $915,645 (a 1:1 ratio of punitive to compensatory damages).
Velazquez cross-appeals the JNOV order and requests reinstatement of the
$5 million punitive damages award.
We conclude the first jury’s special verdict findings did not constitute a
final adjudication of any issue and, therefore, the trial court correctly ruled
that the issue preclusion doctrine did not require entry of judgment in Family
2
Health’s favor. Further, we conclude the trial court properly reduced the
punitive damages award to an amount equal to twice the compensatory
damages award—and no further. Therefore, we affirm both the judgment
and the JNOV order.
II
BACKGROUND
A
Velazquez’s Termination
From 2003 to 2006, Velazquez worked as a medical records clerk and a
patient service representative for Family Health, a non-profit organization
that operates community health clinics. She stopped working for Family
Health in 2006, but was rehired to Family Health’s medical records
department in 2008.
In 2012, Velazquez suffered a work-related repetitive stress injury to
her right upper arm. She underwent surgery to treat the injury, but the
surgery was not effective.
Velazquez returned to work after her surgery and, in December 2013,
was transferred to Family Health’s call center to work as an appointment
technician. In her new position, Velazquez was required to use a headset and
a computer mouse repetitively for approximately 6–8 hours per day. Family
Center provided Velazquez a right-handed computer mouse and a pull-out
tray for her mouse situated on the right side of her desk.
Within days of beginning her new position, Velazquez experienced pain
in her right arm. She told her supervisor about her condition and requested
an accommodation such as a left-handed mouse or a roller mouse. Family
Health provided Velazquez a roller mouse, but it did not function properly. A
week and a half after Velazquez began her new position, Velazquez’s
3
supervisor instructed her to stop coming into work, schedule an appointment
with her doctor, and provide a doctor’s report before returning to work.
The next day, Velazquez saw her doctor, who prepared a report
indicating Velazquez complained of pain on both sides, did not feel able to do
her usual job duties, and wanted to be taken completely off work because of
significant discomfort. Nonetheless, the report indicated she could return to
modified work with four restrictions: (1) “Limited use of right upper
extremity”; (2) “Repetitive hand, wrist and keyboard work limited to 10
minutes per hour”; (3) “No overhead lifting or reaching with the right upper
extremity”; and (4) “No forceful pushing and pulling with the right upper
extremity.” The report stated Velazquez was “eventually going to wind up
with some fairly profound limitations in the long run” and Family Health
should contact her doctor to discuss her work status because “whatever they
have her doing at work is just aggravating everything, which is going to be to
nobody’s advantage.”
A few days after the doctor’s visit, Velazquez provided the doctor’s
report to her supervisor and spoke with a human resources representative
regarding her injury. The human resources representative instructed
Velazquez to refrain from coming into work and to continue seeing her doctor.
For the next three months, Velazquez did not come into work per her
instructions. She visited her doctor once per month and provided Family
Health a doctor’s report after each visit.
Family Health did not contact Velazquez’s doctor to discuss possible
work arrangements to accommodate her injury. However, one of Family
Health’s human resources representatives searched online for employment
positions that were available and suitable for Velazquez given her
4
qualifications and work restrictions. She was unable to identify a position
appropriate for Velazquez.
Family Health terminated Velazquez’s employment in April 2014. In
two separate conversations, Velazquez told one of Family Health’s human
resources representatives she wanted to remain employed and asked whether
there were any job positions available for her. The human resources
representative stated Family Health could not accommodate Velazquez’s
disability and could no longer employ her.
B
The First Trial
Velazquez sued Family Health alleging six causes of action under the
Fair Employment and Housing Act (FEHA): disparate treatment based on
physical disability (Gov. Code, § 12940, subd. (a)); failure to accommodate
physical disability (id., § 12940, subd. (m)); failure to engage in the
interactive process (id., § 12940, subd. (n)); hostile work environment (id.,
§ 12940, subd. (j)); retaliation (id., § 12940, subd. (h)); and failure to prevent
discrimination (id., § 12940, subd. (k)); as well as a cause of action for
wrongful termination in violation of public policy.
The case proceeded to a jury trial resulting in a verdict in favor of
Family Health on all seven causes of action. For the disparate treatment and
failure to accommodate causes of action, the jury returned special verdict
findings that Velazquez was unable to perform essential job duties with
reasonable accommodation for her physical disability. For the interactive
process cause of action, the jury returned a special verdict finding that
Family Health did not fail to participate in a timely, good-faith interactive
process with Velazquez to determine whether a reasonable accommodation
could be made. For the failure to prevent discrimination cause of action, the
5
jury returned a special verdict finding that Family Health did not fail to take
all reasonable steps to prevent discrimination. The jury found Family Health
not liable on the remaining causes of action for reasons not pertinent to this
appeal.
After the court entered judgment in favor of Family Health, Velazquez
moved for a new trial on grounds that the evidence was insufficient to justify
the verdict. In her motion, she did not limit the scope of her request for a
new trial; therefore, she presumably sought a new trial as to all seven causes
of action. However, in a supplemental brief filed with the court’s permission,
Velazquez limited the scope of her new trial request to three causes of
action—the FEHA causes of action for failure to accommodate, failure to
engage in the interactive process, and failure to prevent discrimination.
The court granted the motion for a new trial as limited by Velazquez in
her supplemental brief. The new trial order stated in relevant part as
follows: “It is not only the right, but the duty of the trial court to grant a new
trial when, in its opinion, the court believes the weight of the evidence to be
contrary to the finding of the jury. [Citation.] [¶] [Velazquez] has met her
burden on this motion. [¶] The weight of the evidence in this case was that
(1) [Family Health] failed to participate in a timely, good faith interactive
process with [Velazquez] to determine whether reasonable accommodation
could be made; (2) [Velazquez] was able to perform essential job duties with
reasonable accommodation for the physical disability; and (3) [Family Health]
failed to provide reasonable accommodation for [Velazquez].” Based on these
findings, the court ordered a new trial for the failure to accommodate, failure
to engage in the interactive process, and failure to prevent discrimination
causes of action.
6
C
The First Appeal
Family Health appealed the order granting a partial new trial. It
argued among other things that substantial evidence did not support the trial
court’s reasons for granting a new trial.
We rejected Family Health’s sufficiency of the evidence argument and
affirmed the partial new trial order. (Velazquez I, supra, D071083.) In
relevant part, we concluded as follows:
“The [trial] court found the weight of the evidence showed
Velazquez was qualified for and could perform the appointment
technician position with reasonable accommodation…. There is
substantial evidence to support the [trial] court’s determination.
[¶] . . . [¶]
“Regarding the existence of a reasonable accommodation,
the evidence showed Velazquez could perform the job with her
left hand if she had an operational roller mouse. [Citation.]
Family Health provided her with a defective roller mouse and,
when Velazquez pointed this out to Family Health, Family
Health indicated it would try to get her a new mouse, but there is
no evidence it did so….
“Regarding Family Health’s engagement in the interactive
process, the evidence shows Family Health engaged in the
process until Velazquez aggravated her injury working as an
appointment technician. At that point, Family Health believed
no further accommodations for the appointment technician
position could reasonably and effectively be made because Family
Health mistakenly believed Velazquez was restricted from using
both of her hands repetitively. [Citation.] Family Health based
its mistaken belief on limitations specified in admittedly vague
doctor’s reports, the import of which Family Health did not
attempt to clarify with Velazquez’s doctor despite language in one
of the reports inviting a conversation between the doctor and
Family Health to discuss Velazquez’s limitations.
[¶] . . . [¶]
7
“As there is substantial evidence to support the [trial]
court’s reasons for granting a new trial, we conclude the court did
not abuse its discretion in doing so. We, therefore, affirm the
order.”
(Velazquez I, supra, D071083.)
D
The Retrial
On remand, Family Health moved for summary judgment on grounds
that issue preclusion foreclosed Velazquez from prevailing on any of the three
causes of action that were the subject of the partial new trial order. Family
Health asserted that all three causes of action required Velazquez to show
that she was able to perform her essential job duties with reasonable
accommodation for her disability. According to Family Health, the first jury
resolved this issue against Velazquez when it returned its special verdict
finding Family Health not liable for disparate treatment based on physical
disability. As noted, Velazquez did not pursue—and the trial court did not
grant—a new trial for Velazquez’s disparate treatment cause of action.
The trial court denied Family Health’s motion for summary judgment,
reasoning as follows: “The issue of whether Plaintiff could have performed
her essential job duties with reasonable accommodation as it related to the
three causes of action remaining has not been finally adjudicated and
collateral estoppel, therefore, does not bar [Velazquez] from proceeding on the
three pending causes of action.” The court added that it “saw no persuasive
authority to support [Family Health’s] position … that because a trial court
granted a new trial on less than all the causes of action (thereby simply
reducing [Velazquez’s] claims) that [Velazquez] nevertheless had to proceed
to overturn the jury’s findings as to any cause of action containing a common
element.”
8
Family Health repeated its issue preclusion argument in a pretrial
motion in limine and a motion for judgment on the pleadings. The court
denied the motion in limine without elaboration. It is not apparent from the
appellate record whether the trial court adjudicated Family Health’s motion
for judgment on the pleadings.1
At the retrial, a jury found in favor of Velazquez on all three causes of
action. It awarded Velazquez $915,645 in compensatory damages consisting
of $115,645 for past economic loss, $50,000 for future economic loss, $450,000
for past non-economic loss, and $300,000 for future non-economic loss. It also
returned a special verdict finding Family Health engaged in conduct with
malice, oppression, or fraud. Following a bifurcated trial on the issue of
punitive damages, the jury awarded Velazquez $5 million in punitive
damages. The court entered judgment in favor of Velazquez in the amount of
$5,915,645.
Thereafter, Family Health filed a motion for JNOV arguing, among
other things, that the punitive damages award was grossly excessive in
violation of Family Health’s due process rights. The court granted the motion
in part. It found, on the one hand, that Family Health’s conduct “appear[ed]
to be the product of neglect as opposed to intentional malice,” the
compensatory damages award was “substantial,” and the award for
noneconomic damages appeared to contain a “punitive element,” factors that
weighed in favor of a reduced punitive damages award. It found, on the other
hand, that Family Health’s conduct was at least moderately reprehensible
because it caused Velazquez physical harm in the form of emotional distress,
Velazquez was financially vulnerable, and Family Health engaged in a
1 Family Health states without record support that the trial court denied
its motion for judgment on the pleadings.
9
“course of conduct showing a conscious disregard [for] the health, safety and
rights of [Velazquez],” factors that weighed against a reduction of the
punitive damages award. Based on these findings, the court determined a
2:1 ratio of punitive to compensatory damages was the maximum
constitutionally-permissible ratio for any punitive damages award. It
therefore reduced the punitive damages award from $5 million to $1,831,290.
The court subsequently awarded Velazquez attorney fees and costs
totaling approximately $1.1 million.
III
DISCUSSION
A
Issue Preclusion Did Not Require Entry of Judgment in
Favor of Family Health2
Family Health contends the trial court erred in declining to give
preclusive effect to the findings of the first jury—which it returned as part of
its special verdict on Velazquez’s disparate treatment cause of action—that
Velazquez was not able to perform the essential duties of her job with
reasonable accommodation for her disability. According to Family Health,
this ability-to-perform issue was an essential element of all three of the
causes of action in the retrial. Family Health asserts the issue preclusion
doctrine, properly applied as to the ability-to-perform issue, required the trial
court to enter judgment in Family Health’s favor as to all three of the causes
of action for which a new trial was ordered.
2 The terms “issue preclusion” and “collateral estoppel” are sometimes
used interchangeably. The Supreme Court “use[s] ‘issue preclusion’ in place
of ‘direct or collateral estoppel[.]’ ” (Samara v. Matar (2018) 5 Cal.5th 322,
326.) We will follow the Supreme Court’s lead and use the term “issue
preclusion” to refer to the preclusion doctrine under discussion here.
10
Velazquez asserts Family Health waived or forfeited its issue
preclusion argument by failing to raise it in the Velazquez I appeal.3 To the
extent the argument is adequately preserved, Velazquez contends the
argument is meritless because the first jury did not finally adjudicate
Velazquez’s ability to perform, issue preclusion does not apply to proceedings
in the same litigation, the ability-to-perform issue was not an essential
element of all three causes of action in the retrial, and the public policies
underpinning the equitable issue preclusion doctrine did not support the
application of issue preclusion in this case.
1
Legal Principles
Issue preclusion “precludes relitigation of issues argued and decided in
prior proceedings. [Citation.] Traditionally, we have applied the doctrine
only if several threshold requirements are fulfilled. First, the issue sought to
be precluded from relitigation must be identical to that decided in a former
proceeding. Second, this issue must have been actually litigated in the
former proceeding. Third, it must have been necessarily decided in the
former proceeding. Fourth, the decision in the former proceeding must be
final and on the merits. Finally, the party against whom preclusion is sought
must be the same as, or in privity with, the party to the former proceeding.
[Citations.]’ ” (Hernandez v. City of Pomona (2009) 46 Cal.4th 501, 511.)
“Besides the classic five criteria for applicability, ‘[t]here is an equitable
component to [issue preclusion]’ as well. [Citation.] ‘ “[E]ven where the
3 In connection with this argument, Velazquez seeks judicial notice of
appellate briefing and the appellate docket from the Velazquez I appeal.
Because we conclude Family Health’s collateral estoppel argument fails on
the merits, we deny the request for judicial notice as unnecessary to the
disposition of this appeal.
11
technical requirements are all met, the doctrine is to be applied ‘only where
such application comports with fairness and sound public policy.’ ” ’ ” (Union
Pacific Railroad Co. v. Santa Fe Pacific Pipelines, Inc. (2014) 231 Cal.App.4th
134, 185.) Thus, a court must consider whether application of the issue
preclusion doctrine would comport with the doctrine’s core policies, namely
the preservation of the integrity of the judicial system, the promotion of
judicial economy, and the protection of litigants from harassment by
vexatious litigation. (Lucido v. Superior Court (1990) 51 Cal.3d 335, 343
(Lucido).)
2
Application
Velazquez asserts several arguments as to why issue preclusion did not
bar her causes of action in the retrial. We do not address all of Velazquez’s
arguments because one will suffice: the first jury’s findings concerning
Velazquez’s ability to perform was not preclusive because it was not final.
After the first jury returned its verdict and the trial court entered
judgment in Family Health’s favor, the court granted a partial new trial as to
three causes of action. “When [the] court grant[ed] [the] partial new trial,
‘the new trial order ha[d] the effect of vacating the entire judgment and
holding in abeyance the portions which [were] not subject to a new trial until
one final judgment [could] be entered.’ ” (Newstart Real Estate Investment
LLC v. Huang (2019) 37 Cal.App.5th 159, 163–164, quoting Beavers v.
Allstate Ins. Co. (1990) 225 Cal.App.3d 310, 329 (Beavers).) Thus, “there was
no final judgment; it was vacated by operation of law” when the trial court
granted the partial new trial. (Newstart, at p. 164; see Ferraro v. Pacific
Finance Corp. (1970) 8 Cal.App.3d 339, 345 [an “order granting a limited new
trial ha[s] the effect of vacating the earlier judgment.”].) And, our
12
subsequent affirmance of the partial new trial order guaranteed that “the
underlying judgment [was] ‘absolutely vacated.’ ” (Pacific Corporate Group
Holdings, LLC v. Keck (2014) 232 Cal.App.4th 294, 304 (Keck), italics added.)
Because the entire judgment entered on the first jury’s special verdict was
vacated and held in abeyance, the first jury’s ability-to-pay findings were not
final when Family Health tried to invoke the issue preclusion doctrine.
Family Health asserts three arguments concerning the alleged finality
of the first jury’s ability-to-pay findings. First, it argues an aggrieved party
can always appeal a portion of a judgment unaffected by a partial new trial
order; therefore, Family Health claims the first jury’s ability-to-perform
findings became final when Velazquez did not appeal the judgment entered
on the first jury’s verdict. In support of this argument, Family Health cites
language from two decisions, Baker v. American Horticulture Supply, Inc.
(2010) 186 Cal.App.4th 1059 (Baker) and Prichard v. Liberty Mutual Ins. Co.
(2000) 84 Cal.App.4th 890 (Prichard), suggesting a party can “attack even
those parts of [a] judgment that [are] not subject to [a] new trial order” on
appeal after an order granting a partial new trial. (Prichard, at p. 901; see
Baker, at p. 1071, fn. 5.) We are not persuaded.
The Baker and Prichard decisions both cite another decision, Beavers,
supra, 225 Cal.App.3d 310, for the proposition that a party can challenge on
appeal the parts of a judgment not subject to a partial new trial order.
(Prichard, supra, 84 Cal.App.4th at p. 901; Baker, supra, 186 Cal.App.4th at
p. 1071, fn. 5.) In Beavers, the court articulated the general rule, discussed
above, “that a partial new trial order vacates and holds in abeyance the
entire judgment.” (Beavers, at p. 330.) It then recognized an exception to the
general rule, stating that “ ‘when an appeal is taken from [a new trial] order
the vacating effect is suspended, and the judgment remains effective for the
13
purpose of an appeal from the judgment.’ ” (Ibid., quoting Spencer v. Nelson
(1947) 30 Cal.2d 162, 164.) Baker and Prichard cite the Beavers exception
without further elaboration. (Prichard, at p. 901; Baker, at p. 1071, fn. 5.)
The exception referenced in Beavers merely stands for the proposition
that a protective cross-appeal may be filed by a party whose motion for a new
trial has been granted. (Keck, supra, 232 Cal.App.4th at p. 304.) “The cross-
appeal is ‘protective’ because it ensures the right to obtain appellate review of
the judgment if the order granting a new trial is reversed. [Citations.] [¶]
‘The cross-appeal from the judgment is only operative if the order granting
the new trial is reversed thus reinstating the judgment.’ [Citation.] ‘The
reviewing court will first consider the main appeal from the order granting a
new trial and will decide the cross-appeal from the judgment only if it
reverses the order. [Citations.] But if, as is usual, the order granting a new
trial is affirmed, the effect is that there is no longer a final judgment.”
(Grobeson v. City of Los Angeles (2010) 190 Cal.App.4th 778, 798–799.)
As this court has recognized, the availability of a protective cross-
appeal does not—as the Baker and Prichard decisions might be read to
suggest—supplant “the ‘settled’ rule … that where a reviewing court affirms
an order granting a partial new trial, issues that are unrelated to the new
trial order must await review in an appeal from the final judgment.” (Keck,
supra, 232 Cal.App.4th at p. 305, italics added.) Pursuant to this settled
rule, we reject Family Health’s claim that a party can always seek immediate
review of any portion of a judgment unaffected by a partial new trial order.
Next, Family Health argues that even if a partial new trial order may
vacate the entire judgment in some circumstances, it does not (or should not)
vacate the entire judgment in other circumstances—where, as here, the new
trial order mandates a retrial for some causes of action and does not require a
14
retrial for other causes of action. Under this theory, Family Health contends
a portion of the underlying judgment—the portion finding Family Health not
liable as to certain causes of action—was left untouched by the partial new
trial order and became final when Velazquez did not appeal the judgment
entered on the first jury’s verdict.
Family Health’s argument reflects a misunderstanding concerning the
reason why the entire judgment is vacated when a partial new trial is
ordered. When a new trial is granted in part, the entire judgment is vacated
so as to avoid a possible violation of the one final judgment rule. (Beavers,
supra, 225 Cal.App.3d at p. 329; Love v. Wolf (1967) 249 Cal.App.2d 822,
840.) Vacatur of the entire judgment guarantees that if a partial new trial
order is affirmed, “ ‘there will be no final judgment until the [re]trial … ends
…..’ ” (Beavers, at p. 329.) “Were the rule otherwise, two appealable
judgments would be entered in violation of the one judgment rule.” (Ibid.)
That is precisely the problematic outcome that would occur here if we
were to adopt Family Health’s novel argument. Under Family Health’s
theory, it would be acceptable for one judgment to be entered as to a subset of
Velazquez’s causes of action and a second judgment to be entered (after
affirmance of the partial new trial order and the retrial) as to her remaining
causes of action. This would violate the one final judgment rule, which states
that “ ‘ “an appeal may be taken only from the final judgment in an entire
action.” ’ ” (In re Baycol Cases I & II (2011) 51 Cal.4th 751, 756; see Kurwa v.
Kislinger (2013) 57 Cal.4th 1097, 1107 [“The one final judgment rule does not
permit parties ‘to separate [their] causes of action into two compartments for
separate appellate treatment at different points in time.’ ”].) Thus, we
decline to adopt Family Health’s theory of appealability.
15
Finally, Family Health contends the first jury’s special verdict findings
were sufficiently final even if Velazquez did not yet have an opportunity to
appeal them. There is no merit to this claim. An adjudication is final for
issue preclusion purposes if it is “free from direct attack ….” (Lucido, supra,
51 Cal.3d at p. 342; Mueller v. J.C. Penney Co. (1985) 173 Cal.App.3d 713,
719 [“For purposes of [issue preclusion], a judgment free from direct attack is
a final judgment.”].) An adjudication is not final “if an appeal is pending or
could still be taken.” (Riverside County Transportation Com. v. Southern
California Gas Co. (2020) 54 Cal.App.5th 823, 838; People v. Burns (2011)
198 Cal.App.4th 726, 731 [“the judgment is not final and preclusive if it is
still subject to direct attack”].)
Here, the first jury’s special verdict findings remained vulnerable to
direct attack at the time Family Health tried to invoke collateral estoppel
because Velazquez still could have challenged the findings on appeal from the
final judgment after the retrial. Because an appeal of the first jury’s findings
was still possible when Family Health sought to invoke collateral estoppel,
the jury’s findings were not a final adjudication entitled to a preclusive effect.
Given the absence of finality, the trial court properly declined to apply
issue preclusion to the first jury’s ability-to-pay findings.4
B
The Reduction to the Punitive Damages Award was Proper
Family Health also appeals the partial JNOV order reducing the
punitive damages award from $5 million to $1,831,290 (a 2:1 ratio of punitive
4 Family Health claims for the first time in its reply brief that the first
and second juries’ verdicts are irreconcilable. Because Family Health failed
to raise its inconsistent verdicts argument in its opening brief, the argument
is forfeited. (High Sierra Rural Alliance v. County of Plumas (2018) 29
Cal.App.5th 102, 111, fn. 2.)
16
to compensatory damages). It contends any punitive damages award
exceeding $915,645 (a 1:1 ratio of punitive to compensatory damages) violates
its federal due process rights.
Velazquez cross-appeals the partial JNOV order and asserts the jury’s
original punitive damages award of $5 million (a 5.46:1 ratio of punitive to
compensatory damages) was constitutionally permissible. On this basis,
Velazquez seeks reinstatement of the original $5 million punitive damages
award.
1
Legal Principles
“In our judicial system, ‘[a]lthough compensatory damages and punitive
damages are typically awarded at the same time by the same decisionmaker,
they serve distinct purposes. The former are intended to redress the concrete
loss that the plaintiff has suffered by reason of the defendant’s wrongful
conduct. [Citations.] The latter ... operate as “private fines” intended to
punish the defendant and to deter future wrongdoing.’ ” (Nickerson v.
Stonebridge Life Ins. Co. (2016) 63 Cal.4th 363, 371 (Nickerson I); State Farm
Mut. Auto. Ins. Co. v. Campbell (2003) 538 U.S. 408, 416 (State Farm)
[“ ‘Punitive damages may properly be imposed to further a State’s legitimate
interests in punishing unlawful conduct and deterring its repetition’ ”].)
“States necessarily have considerable flexibility in determining the
level of punitive damages that they will allow in different classes of cases and
in any particular case.” (BMW of N. Am., Inc. v. Gore (1996) 517 U.S. 559,
568 (Gore).) However, “[t]he due process clause of the Fourteenth
Amendment to the United States Constitution places constraints on state
court awards of punitive damages.” (Roby v. McKesson Corp. (2009) 47
Cal.4th 686, 712 (Roby).) In particular, due process prohibits the imposition
17
of grossly excessive or arbitrary punitive damages awards, “ ‘for due process
entitles a tortfeasor to “ ‘fair notice not only of the conduct that will subject
him to punishment, but also of the severity of the penalty that a State may
impose.’ ” ’ [Citation.]” (Roby, at p. 712.)
The U.S. Supreme Court has articulated “a set of substantive
guideposts that reviewing courts must consider in evaluating the size of
punitive damages awards: ‘(1) the degree of reprehensibility of the
defendant’s misconduct; (2) the disparity between the actual or potential
harm suffered by the plaintiff and the punitive damages award; and (3) the
difference between the punitive damages awarded by the jury and the civil
penalties authorized or imposed in comparable cases.’ ” (Nickerson I, supra,
63 Cal.4th at pp. 371–372, quoting State Farm, supra, 538 U.S. at p. 418.)
“A trial court conducts this inquiry in the first instance; its application
of the factors is subject to de novo review on appeal.” (Nickerson I, supra, 63
Cal.4th at p. 372.) “This ‘[e]xacting appellate review’ is intended to ensure
punitive damages are the product of the ‘ “ ‘application of law, rather than a
decisionmaker’s caprice.’ ” ’ ” (Simon v. San Paolo U.S. Holding Co., Inc.
(2005) 35 Cal.4th 1159, 1172 (Simon).) “[F]indings of historical fact made in
the trial court are still entitled to the ordinary measure of appellate
deference” and form the basis for a reviewing court’s punitive damage
analysis so long as substantial evidence supports the trial court’s findings.
(Ibid.)
18
2
Application
i
Reprehensibility
Of the three guideposts articulated by the U.S. Supreme Court, “the
most important is the degree of reprehensibility of the defendant’s conduct.”
(Roby, supra, 47 Cal.4th at p. 713; see State Farm, supra, 538 U.S. at p. 418.)
In assessing reprehensibility, we must consider the following five factors:
“whether ‘[1] the harm caused was physical as opposed to economic; [2] the
tortious conduct evinced an indifference to or a reckless disregard of the
health or safety of others; [3] the target of the conduct had financial
vulnerability; [4] the conduct involved repeated actions or was an isolated
incident; and [5] the harm was the result of intentional malice, trickery, or
deceit, or mere accident.’ ” (Roby, at p. 713, quoting State Farm, at p. 419.)
The first reprehensibility factor is present here because, as the trial
court found, Family Health’s conduct caused Velazquez physical harm in the
form of emotional and mental distress. (See Roby, supra, 47 Cal.4th at
p. 713; Tilkey v. Allstate Ins. Co. (2020) 56 Cal.App.5th 521, 559 (Tilkey)
[“Harm is physical when it affects emotional and mental health and is not
purely economic.”].) Witnesses testified Velazquez suffered depression,
anxiety, sleep loss, and suicidal thoughts due to the termination of her
employment and the resulting financial insecurity she experienced. Further,
Velazquez claimed noneconomic damages for mental suffering, loss of
enjoyment of life, inconvenience, grief, anxiety, humiliation, and emotional
distress, and the jury awarded her $750,000 in noneconomic damages. Under
these circumstances, the first reprehensibility factor weighs in favor of an
aggravated punitive damages award.
19
The second reprehensibility factor is present as well. Family Health
reasonably could have foreseen its discriminatory conduct “would affect
[Velazquez’s] emotional well–being, and therefore [its] ‘conduct evinced an
indifference to or a reckless disregard of the health or safety of others.’ ”
(Roby, supra, 47 Cal.4th at p. 713.) Velazquez was a physically-disabled,
middle-aged immigrant who did not have a college degree. After Family
Health told her of its decision to terminate her employment, she literally
begged Family Health to continue employing her because “it was very
necessary for [her] to continue at work” and she “need[ed] [her] job.” Despite
these pleas, Family Health proceeded with its discriminatory termination of
Velazquez’s employment, thereby depriving her of a vital source of income.
Family Health asserts it terminated Velazquez’s employment not out of
indifference for her health and safety, but rather to protect her from suffering
further work-related injuries. In asking us to accept this farfetched
assertion, Family Health ignores that the trial court made an express
finding—a finding well supported by the evidence—that its conduct “show[ed]
a conscious disregard of the health, safety, and rights of [Velazquez].” It is
not our role to “reweigh the evidence, evaluate the credibility of witnesses or
indulge in inferences contrary to the findings of the trial court.” (In re
Michael G. (2012) 203 Cal.App.4th 580, 589; see Bankhead v. ArvinMeritor,
Inc. (2012) 205 Cal.App.4th 68, 77 [“[W]e, as an ‘appellate court[,] cannot
reweigh the credibility of witnesses or resolve conflicts in the evidence.’ ”].)
Family Health also claims the second reprehensibility factor is not
present because it never disregarded the health or safety of persons other
than Velazquez. However, the second reprehensibility factor may be present
where, as here, the defendant has indifferently or recklessly disregarded the
health and safety of the plaintiff alone. (See, e.g., Roby, supra, 47 Cal.4th at
20
p. 713; Colucci v. T-Mobile USA, Inc. (2020) 48 Cal.App.5th 442, 457
(Colucci); Nickerson v. Stonebridge Life Insurance Co. (2016) 5 Cal.App.5th 1,
17 (Nickerson II); Century Surety Co. v. Polisso (2006) 139 Cal.App.4th 922,
965.) Because the trial court found that Family Health acted in conscious
disregard for Velazquez’s health, safety, and rights, and Family Health does
not challenge the sufficiency of the evidence supporting the court’s finding,
we conclude the second reprehensibility factor is present.
The third reprehensibility factor is present as well because Velazquez
was a financially vulnerable victim. The evidence showed Velazquez
remained unemployed for three and a half years after Family Health
terminated her employment despite a concerted effort to obtain a new job.
There was also evidence indicating Velazquez depleted her savings during
this timeframe, became indebted, and was homeless for a period of time.
Regarding the fourth reprehensibility factor, there was “scant evidence
[Family Health engaged in] repeated misconduct of the sort that injured”
Velazquez. (State Farm, supra, 538 U.S. at p. 423.) Velazquez introduced
some evidence showing that over a span of several years a handful of Family
Health’s approximately 1,500 employees filed lawsuits or administrative
complaints alleging Family Health engaged in discriminatory conduct against
the complainants. Nevertheless, Velazquez’s evidence disclosed virtually no
information pertinent to the complainants’ allegations or the veracity of the
complaints. On this record, we cannot conclude Family Health engaged in
repeated acts of misconduct of the sort that harmed Velazquez.
Velazquez notes that Family Health did not adopt written policies
pertaining to its interactive process, which threatened harm to other
employees. She also argues there was evidence high-level Family Health
employees participated in, or were aware of, the termination of her
21
employment. Even if true, these issues are inapposite to the fourth
reprehensibility factor, which “considers whether the tortfeasor was
recidivist, i.e., whether its conduct involved repeated actions or was an
isolated incident.” (Nickerson II, supra, 5 Cal.App.5th at p. 19.) Because
Velazquez did not establish that Family Health engaged in repeat acts of
misconduct, we conclude the fourth reprehensibility factor is absent.
The fifth reprehensibility factor “is of little value in assessing a
California punitive damages award because ‘accidentally harmful conduct
cannot provide the basis for punitive damages under our law.’ ” (King v. U.S.
Bank National Assn. (2020) 53 Cal.App.5th 675, 729.) Nonetheless, we note
that the trial court made findings and observations concerning Family
Health’s mental state that cut both ways.
On the one hand, the court found, and we agree, that many of Family
Health’s actions appeared to be the product of “neglect as opposed to
intentional malice, such as [Family Health’s] failure to provide [Velazquez]
with a proper mouse.” Indeed, there is no suggestion in the JNOV order, the
parties’ briefs, or any portion of the appellate record of which we are aware
suggesting Family Health deliberately shirked its duties to accommodate and
engage in the interactive process. Rather, Family Health incorrectly believed
it satisfied its legal obligations merely by providing Velazquez a defective
roller mouse and searching online for substitute employment positions for
her. On the other hand, the court noted there was evidence of deceit when
Family Health filled out employment separation forms falsely stating
Velazquez resigned—thus obscuring the real reason why her employment
was terminated. The totality of Family Health’s conduct suggests the fifth
reprehensibility factor is present but only to a minor degree.
22
In sum, some reprehensibility factors are present, while others are
absent or present only to a small extent. On balance, we agree with the trial
court’s assessment that Family Health’s conduct was moderately
reprehensible.
ii
Disparity Between Compensatory Damages and Punitive Damages
The second guidepost governing the constitutionality of a punitive
damages award is “the disparity between the actual or potential harm
suffered by the plaintiff and the punitive damages award.” (State Farm,
supra, 538 U.S. at p. 418, citing Gore, supra, 517 U.S. at p. 575.)
The U.S. Supreme Court has refrained from “identify[ing] concrete
constitutional limits on the ratio between harm, or potential harm, to the
plaintiff and the punitive damages award.” (State Farm, supra, 538 U.S. at
p. 424; see Gore, supra, 517 U.S. at p. 582 [“we have consistently rejected the
notion that the constitutional line is marked by a simple mathematical
formula, even one that compares actual and potential damages to the
punitive award”].) Nonetheless, it has “establish[ed] a type of presumption:
ratios between the punitive damages award and the plaintiff’s actual or
potential compensatory damages significantly greater than 9 or 10 to 1 are
suspect and, absent special justification … cannot survive appellate scrutiny
under the due process clause.” (Simon, supra, 35 Cal.4th at p. 1182.)
“Multipliers less than nine or 10 are not, however, presumptively valid”
under the due process clause. (Simon, supra, 35 Cal.4th at p. 1182.) “When
compensatory damages are substantial, then a lesser ratio, perhaps only
equal to compensatory damages, can reach the outermost limit of the due
process guarantee.” (State Farm, supra, 538 U.S. at p. 426; see Bridgeport
Music, Inc. v. Justin Combs Pub. (6th Cir. 2007) 507 F.3d 470, 487 [“a ratio in
23
the range of 1:1 to 2:1 is all that due process will allow” when only one
reprehensibility factor is present and there is already a substantial
compensatory damages award].) A lesser ratio may also be warranted where
the compensatory damages award appears to contain a punitive element—for
example, a substantial award of emotional distress damages. (State Farm, at
p. 426; accord Simon, at p. 1189.) Ultimately, the precise amount of an
award “must be based upon the facts and circumstances of the defendant’s
conduct and the harm to the plaintiff.” (State Farm, at p. 425.)
Here, the jury awarded Velazquez $915,645 in compensatory damages
consisting of $165,645 for economic losses and $750,000 for noneconomic
losses including pain and suffering. In our view, there can be no reasonable
dispute the compensatory damages award was substantial, or as the trial
court put it, “quite a handsome recovery.” Further, it is apparent the
compensatory damages contain a punitive element. While the record
supports a finding that Velazquez suffered noneconomic losses, the sheer
amount of the damages that were awarded for noneconomic losses—$750,000,
or 4.5 times the amount of Velazquez’s total economic losses—shows the
compensatory damages award is to some extent duplicative of the punitive
damages award. These factors warrant a lower ratio of punitive to
compensatory damages.
Family Health contends the maximum permissible ratio is 1:1 and,
therefore, the trial court erred in reducing the punitive damages award only
down to a 2:1 ratio. We disagree. Certainly, a 1:1 ratio of punitive to
compensatory damages can in some cases—or perhaps in many cases where
the compensatory damages award is substantial—be the constitutional
maximum. (See, e.g., Roby, supra, 47 Cal.4th at pp. 718–720; Johnson v.
Monsanto Co. (2020) 52 Cal.App.5th 434, 462.) However, “there is no fixed
24
formula that requires a court to set punitive damages equal to compensatory
damages” whenever compensatory damages are substantial. (Johnson, at
p. 462; see Bullock v. Philip Morris USA, Inc. (2011) 198 Cal.App.4th 543,
549 (Bullock) [“we do not regard the amount of compensatory damages as a
fixed upper limit where damages are ‘substantial’ ”].) Because multiple
reprehensibility factors are present in this case, we believe the circumstances
dictate a constitutional maximum exceeding a 1:1 ratio. (See Colucci, supra,
48 Cal.App.5th at pp. 459–460 [1.5-to-one ratio was the constitutional
maximum where the compensatory damages award was substantial and
defendant’s conduct had a “low to moderate degree of reprehensibility”].)
Velazquez also disputes the trial court’s determination that the
maximum constitutionally-permissible ratio is 2:1, but unlike Family Health
she argues a larger ratio—5:1, or at minimum 4:1 or 3:1—is the correct ratio.
She asserts Family Health was in excellent financial condition and, given
Family Health’s wealth, a larger ratio is necessary to vindicate the state’s
interest in punishment and deterrence.
“Because a court reviewing the jury’s award for due process compliance
may consider what level of punishment is necessary to vindicate the state’s
legitimate interests in deterring conduct harmful to state residents, the
defendant’s financial condition [is] a legitimate consideration in setting
punitive damages.” (Simon, supra, 35 Cal.4th at p. 1185.) “ ‘[O]bviously, the
function of deterrence ... will not be served if the wealth of the defendant
allows him to absorb the award with little or no discomfort.’ ” (Ibid.; see
Bullock, supra, 198 Cal.App.4th at p. 570 [the state’s “interests are not
served if the amount awarded is so small in relation to the defendant’s
wealth as to constitute only a nuisance or a routine cost of doing business”].)
“On the other hand, ‘the purpose of punitive damages is not served by
25
financially destroying a defendant.’ ” (Simon, at p. 1185; see Grassilli v. Barr
(2006) 142 Cal.App.4th 1260, 1290 [“A punitive damages ‘award should not
be so high as to result in the financial ruin of the defendant.’ ”].)
According to Family Health’s financial statements, Family Health had
a net worth of approximately $213 million at the end of fiscal year 2017–
2018. Accepting for purposes of this appeal Velazquez’s assessment that this
figure represented Family Health’s financial condition, we conclude the trial
court’s decreased punitive damages award vindicates the state’s interests.
The punitive damages award, even as reduced by the trial court, was still
$1,831,290—quite a large figure. This cannot be characterized as a mere cost
of doing business, especially given Family Health’s status as a non-profit
organization and the substantial amounts Family Health was ordered to pay
in compensatory damages ($915,645) and attorney fees costs (approximately
$1.1 million). (See Walker v. Farmers Insurance Exchange (2007) 153
Cal.App.4th 965, 974 [“Paying $1.5 million over and above the nearly $1.7
million in compensatory damages and attorney fees cannot, as respondent[ ]
contend[s], be put down ‘simply [as] just another cost of doing business.’ ”].)
Further, the state’s interests in punishment and deterrence are lesser here
than they might otherwise have been if Family Health had engaged in
exceptionally reprehensible or recalcitrant behavior—which, as previously
discussed, it did not. (See Simon, supra, 35 Cal.4th at p. 1187.)
Given the sizable compensatory damages award as well as the state’s
relatively diminished interests in punishment and deterrence, we conclude
26
Family Health’s financial condition does not warrant a punitive damages
award exceeding a 2:1 ratio of punitive to compensatory damages.5
iii
Comparable Civil Penalties
The final guidepost requires a comparison of the punitive damages
award and civil penalties authorized or imposed in comparable cases. (State
Farm, supra, 538 U.S. at p. 428.) Neither party draws our attention to any
civil penalties authorized or imposed in comparable cases. Therefore, “we do
not consider this guidepost in ‘the calculus of the constitutional maximum of
punitive damages.’ ” (Nickerson II, supra, 5 Cal.App.5th at p. 23; see Tilkey,
supra, 56 Cal.App.5th at p. 559 [considering only first two guideposts where
parties agreed there were no corresponding civil penalties].)
iv
Conclusion
Family Health engaged in misconduct that can be characterized as
somewhat or moderately reprehensible. It caused physical harm to a
financially vulnerable victim in a foreseeable manner. On the other hand, it
was not recalcitrant in its misconduct and much of its behavior appears to
have been the product of mere neglect or accident. Further, the jury awarded
Velazquez a substantial compensatory damages award that appears to
contain a punitive element. Given all these factors, we conclude the trial
court did not err in determining the constitutional maximum ratio for a
5 Family Health contends Velazquez exaggerates its financial condition
and claims a portion of its alleged net worth was earmarked for various
upcoming projects. We need not address this contention because, even
accepting Velazquez’s assessment of Family Health’s financial condition, we
conclude the punitive damages award imposed by the trial court vindicates
the state’s goals of punishment and deterrence.
27
punitive damages award was twice the amount of the compensatory damages
award and therefore reducing the punitive damages award to $1,831,290.
IV
DISPOSITION
The judgment and the order granting partial JNOV are affirmed. The
parties shall bear their own costs on appeal.
McCONNELL, P. J.
WE CONCUR:
BENKE, J.
IRION, J.
28