474 S.W.3d 100
Ark. Ct. App.2015Background
- Huff and Ward, mechanics at Family Dollar’s West Memphis distribution center, were fired after Family Dollar investigated sales of failed trailers that Huff and Ward had sold and profited from; they testified they had supervisor Dennis Stripling’s permission and corporate approval was allegedly known to certain managers.
- Family Dollar’s investigator, Dan Gazaway, prepared reports and signed affidavits for arrest warrants; prosecutors charged Huff, Ward, and Stripling; Huff and Ward agreed to testify against Stripling; Stripling pled guilty and made restitution; charges against Huff and Ward were later nolle prossed.
- Huff and Ward sued Family Dollar for malicious prosecution and outrage, seeking compensatory and punitive damages; Family Dollar counterclaimed for conversion of trailers.
- At trial the jury awarded Huff $1.75 million and Ward $1.0 million on malicious-prosecution claims, and $250,000 each on outrage claims; the jury rejected punitive damages and found for Huff and Ward on the conversion counterclaim.
- On appeal Family Dollar challenged sufficiency of evidence and excessiveness of damages; the appellate court affirmed the malicious-prosecution verdicts and damages as supported by substantial evidence, reversed and dismissed the outrage claims, and rejected remittitur.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether malicious-prosecution claim had sufficient evidence (lack of probable cause, malice, termination in favor) | Huff/Ward: Family Dollar prosecuted them despite lack of probable cause because they had supervisor authorization; malice inferred from lack of probable cause and directives from senior management to prosecute | Family Dollar: Probable cause existed because a judge issued warrants and prosecutors reviewed reports; Family Dollar relied on prosecutor advice and made a full disclosure to counsel | Held: Sufficient evidence supported malicious-prosecution claims; jury could find lack of full disclosure to prosecutor and infer malice; verdict affirmed |
| Whether advice-of-counsel/prosecutor-discretion shields Family Dollar | Huff/Ward: Family Dollar did not fully and truthfully disclose material facts to prosecutor (e.g., manager permission), so defense fails | Family Dollar: Acted on deputy prosecutor’s advice and judge-issued warrants, which establishes probable cause and shields it | Held: Jury could reasonably find Family Dollar failed to make full, fair disclosure; advice-of-counsel defense not established as matter of law |
| Whether outrage (intentional infliction of emotional distress) claim was established | Huff/Ward: Arrests, job loss, and emotional harm amounted to outrageous conduct | Family Dollar: Conduct did not rise to the extreme, atrocious standard required for outrage | Held: Outrage claim insufficient under Arkansas’ narrow standard; verdict and damages for outrage reversed and dismissed |
| Whether compensatory damages for malicious prosecution were excessive or the product of passion/prejudice | Huff/Ward: Damages for mental anguish, reputational harm, and defense costs justified large award | Family Dollar: Awards were excessive relative to proof (limited out-of-pocket fees, no medical treatment, short jail time) and should be remitted or reversed | Held: On appellate review the awards were supported by substantial evidence and did not shock the court’s conscience; remittitur denied |
Key Cases Cited
- McMullen v. McHughes Law Firm, 454 S.W.3d 200 (Ark. 2015) (elements of malicious-prosecution claim and standards for probable cause and malice)
- Wal-Mart Stores, Inc. v. Williams, 29 S.W.3d 754 (Ark. App. 2000) (malice may be inferred from lack of probable cause)
- Wal-Mart Stores, Inc. v. Yarbrough, 681 S.W.2d 359 (Ark. 1984) (condemning automatic prosecutions directed by employer)
- Cordes v. Outdoor Living Ctr., Inc., 781 S.W.2d 31 (Ark. 1989) (arrest alone insufficient to establish outrage)
- Dillard Dep’t Stores, Inc. v. Adams, 867 S.W.2d 442 (Ark. 1993) (outrage requires extreme, atrocious conduct beyond bounds of decency)
- M.B.M. Co. v. Counce, 596 S.W.2d 681 (Ark. 1980) (definition of outrageous conduct for intentional infliction tort)
- Allstate Ins. Co. v. Dodson, 376 S.W.3d 414 (Ark. 2011) (standard for appellate review of alleged excessive damages)
- Kellerman v. Zeno, 983 S.W.2d 136 (Ark. App. 1998) (advice-of-counsel defense requires full, fair, truthful disclosure to counsel)