STEPHEN COLUCCI v. T-MOBILE USA, INC.
D075932
COURT OF APPEAL, FOURTH APPELLATE DISTRICT DIVISION ONE STATE OF CALIFORNIA
Filed 4/29/20
CERTIFIED FOR PUBLICATION. Super. Ct. No. CIVDS1502822. APPEAL from a judgment of the Superior Court of San Bernardino County, Keith D. Davis, Judge.
Barrera & Associates, Patricio T.D. Barrera, Ashley A. Davenport; McCormick, Barstow, Sheppard, Wayte & Carruth and Scott M. Reddie for Plaintiff and Respondent.
T-Mobile USA, Inc. (T-Mobile) appeals a judgment entered on a $5 million jury verdict in favor of former employee Stephen Colucci in a workplace retaliation case. T-Mobile primarily challenges the $4 million punitive damages award, arguing there is insufficient evidence that a managing agent engaged in retaliatory conduct or that the managing agent‘s actions were malicious or oppressive (
FACTUAL AND PROCEDURAL BACKGROUND
“In summarizing the facts, we view the evidence in favor of the judgment.” (Roby v. McKesson Corp. (2009) 47 Cal.4th 686, 693-694 (Roby).)
T-Mobile, headquartered in the State of Washington, sells wireless telephones and plans to consumers at retail store locations. There are hundreds of T-Mobile retail stores in California, which the company groups into smaller geographic regions and districts.
Colucci worked for T-Mobile from 2007 until 2014 as the manager of a store in Ontario, California, known as the Milliken store. As store manager, he supervised around 10 employees, participated in hiring and training these employees, conducted physical inventories, and completed other tasks to support sales. Colucci was a good employee and garnered positive performance reviews. His direct supervisor was the district manager of “Inland Empire West.” Inland Empire West was comprised of about nine stores including Milliken.
In February 2014, Brian Robson became the new district manager of Inland Empire West. Robson was responsible for operating his district‘s stores and roughly 100 employees. His job duties included coaching and developing individual retail store managers; making final decisions on hiring and firing employees; and handling a wide range of operational issues in partnership with personnel from other T-Mobile departments, such as human resources (HR) and loss prevention.
As the new district manager, Robson planned to transfer Colucci from the Milliken store to a kiosk located inside the Ontario Mills mall (mall location), which had no store manager at the time. However, Colucci suffered from a medical disability—an anxiety disorder—that prevented him from performing his job in the crowded mall location. When Robson told Colucci of his plans, Colucci informed him of his disability and requested an accommodation (accommodation request). Colucci was willing to transfer to a different store not located inside a mall. Robson was highly skeptical of Colucci‘s condition (“this is the most ridiculous thing I‘ve ever heard“) but referred the matter to HR. An HR representative was likewise doubtful and requested a doctor‘s note from Colucci that described his precise limitations. Colucci obtained a medical diagnosis and physician‘s letter confirming his limitations. HR
Several months later, in July 2014, Colucci learned that one or more of the Milliken retail sales associates was spreading inflammatory rumors and/or making defamatory statements about him (defamation incident), and Colucci asked Robson to investigate. Robson agreed to do so but allowed the investigation to languish, telling Colucci he should “quit complaining” and that he had been “nothing but problems.”
In the same time frame, Robson heard from a part-time Milliken sales associate (associate) that Colucci had an outside business (Auto Compound) in which he was licensed to sell used cars. The associate had recently been disciplined by Colucci due to work performance issues and was looking to transfer out of the Milliken store. According to the associate, Colucci had, at some time during the past year, used T-Mobile‘s resources to support Auto Compound, including occasionally using T-Mobile‘s fax machine and requiring the associate to answer an Auto Compound cell phone while he was on the clock at T-Mobile.1 Based on the associate‘s report, Robson promptly initiated an investigation of Colucci with the help of a loss prevention manager.2
On July 21, 2014, Colucci called T-Mobile‘s “integrity line” (a designated means for employees to report workplace issues) to notify the company of the unresolved defamation incident. After the defamation incident, the work environment in the store had been tense and uncomfortable.
Around noon on July 22, 2014, Robson and the loss prevention manager visited the Milliken store, intending to interview Colucci about Auto Compound. However, they did not have an opportunity to complete any interview or tell Colucci why they were there. Colucci was experiencing severe back pain that day, for which he later required surgery. His back pain was aggravated by anxiety over the tense work environment. Colucci complained to Robson, stating his (1) distress over Robson‘s failure to resolve the defamation incident and (2) his belief that Robson was treating him unfairly due to his medical condition and accommodation request. Colucci requested that he be permitted to go on a medical leave of absence. Robson responded that it was Colucci‘s “right” to take medical leave, and he approved Colucci‘s taking the rest of the day off. Colucci left the premises.
Between July 23 and 24, consistent with his last conversation with Robson and still unaware of any pending termination, Colucci submitted a formal request to HR for a medical leave of absence. Colucci also lodged a second complaint to the integrity line, reporting that Robson was discriminating against him and neglecting to resolve the defamation incident. Undeterred, Robson proceeded with processing Colucci‘s termination.
On July 25, Robson prepared and mailed Colucci a letter informing him of his employment termination, bearing an effective date of July 22, 2014, per HR‘s instructions.3 On July 28, the loss prevention manager who had been assisting Robson reported to his colleagues during a weekly staff call that Colucci had been “turned into a customer” (internal company jargon for firing an employee) because of his complaints or the way he had acted. The loss prevention manager made no mention on the call that Colucci was terminated due to a conflict of interest.
In February 2015, Colucci filed a complaint against T-Mobile. Of relevance here, he alleged a cause of action for retaliation in violation of the Fair Employment and Housing Act (FEHA) (
The jury returned a unanimous verdict in Colucci‘s favor on his claim of retaliation. It awarded $1,020,042 in total compensatory damages as follows:
In a bifurcated proceeding on punitive damages, the parties stipulated that the jury would receive certain information about T-Mobile‘s financial condition. For 2015 and 2016, respectively, T-Mobile had: total revenue of $32.1 and 37.2 billion; net income of $733 million and $1.460 billion;5 free cash flow of $690 million and $1.433 billion; and total assets of $62.4 and $65.9 billion. Colucci‘s counsel argued that T-Mobile generated $4 million in net income in one day, based on its 2016 net income of $1.460 billion divided by 365 days.
The jury awarded $4 million in punitive damages, and the trial court entered judgment accordingly. Later, the court denied T-Mobile‘s motions for new trial and for judgment notwithstanding the verdict. This appeal followed.6
DISCUSSION
I. Substantial Evidence Supports an Award of Punitive Damages
At trial, Colucci argued that Robson was a managing agent of T-Mobile and that Robson‘s actions were committed with malice or oppression. The jury agreed, finding clear and convincing evidence that Colucci was entitled to punitive damages. On appeal, T-Mobile contends there is insufficient evidence to support either (1) that Robson was a managing agent of T-Mobile, or (2) that he engaged in acts of malice or oppression.
A. Standard of Review
A jury may award punitive damages in a tort action “where it is proven by clear and convincing evidence that the defendant has been guilty
B. Managing Agent
In the seminal case of White v. Ultramar (1999) 21 Cal.4th 563 (White), our high court construed managing agent as follows: “[T]he Legislature intended that principal liability for punitive damages not depend on employees’ managerial level, but on the extent to which they exercise substantial discretionary authority over decisions that ultimately determine corporate policy. Thus, supervisors who have broad discretionary powers and exercise substantial discretionary authority in the corporation could be managing agents. Conversely, supervisors who have no discretionary authority over decisions that ultimately determine corporate policy would not be considered managing agents even though they may have the ability to hire or fire other employees. In order to demonstrate that an employee is a true managing agent under section 3294, subdivision (b), a plaintiff seeking punitive damages would have to show that the employee exercised substantial discretionary authority over significant aspects of a corporation‘s business.” (Id. at pp. 576-577.)
The White court went on to discuss how “Salla,” who supervised the wrongfully terminated plaintiff/employee, was a managing agent of corporate
The facts of White are practically indistinguishable from the facts of this case. Robson was a district manager, responsible for managing nine retail stores and 100 employees. Individual store managers reported to him, and he in turn reported to a more senior manager. Robson had independent, final authority to hire or fire employees within his district; indeed, he alone decided to fire Colucci. Further, as in White, Robson had substantial discretionary authority over daily store operations, which led to the ad hoc formulation of policy. For example, Robson decided whether and where to transfer employees; whether to institute disciplinary measures; and whether and how to investigate employees’ reported concerns. These decisions affected company policy over a significant aspect of T-Mobile‘s business.
T-Mobile‘s primary counterargument is that Robson was not in a high enough position to determine official corporate policies, i.e., he was not a corporate policymaker. T-Mobile posits that managing agents must be corporate policymakers and “policies” in this context refers only to “formal policies that affect a substantial portion of the company and that are the type likely to come to the attention of corporate leadership.” (Roby, supra, 47 Cal.4th at p. 715.) In its reply brief, T-Mobile argues that the California Supreme Court‘s decision in Roby, at pages 714-715, limited or disapproved White on this precise point.
In Roby, which was a harassment and discrimination case, the supervisor in question (Schoener) worked at one of the company‘s distribution centers and supervised four employees in a company of over 20,000. (Roby, supra, 47 Cal.4th at p. 714White, was not reviewing whether substantial evidence supported the jury‘s decision to award punitive damages, but rather the constitutionality of the amount of the jury‘s award. (Id. at pp. 712, 714.) In deciding whether the award was excessive under the due process clause, the court analyzed the corporation‘s degree of reprehensibility, noting that Schoener did not have “broad authority” in determining formal corporate policies. (Id. at p. 715.) However, two mid-level managers, one of whom was the head of the distribution center where plaintiff and Schoener worked, had become aware of Schoener‘s discriminatory conduct and did nothing to correct it. (Ibid.) The court therefore assumed without deciding that at least one of the mid-level managers was a managing agent. (Ibid.) Although that person‘s inaction was wrongful, the court concluded the corporation‘s reprehensibility, in totality, was on the low end of the range of wrongdoing. (Id. at p. 717.)
Read in context and considering what was actually at issue in Roby, we do not believe the California Supreme Court intended to modify or limit White‘s careful formulation of the managing agent test. Before White, our high court already rejected the view that a managing agent must be involved in ” ‘high-level policymaking.’ ” (Egan, supra, 24 Cal.3d at p. 822Id. at pp. 822-823.) In Egan, the court upheld the finding that two claims managers were managing agents of the defendant insurance company. The court opined that a corporate defendant ” ‘should not be allowed to insulate itself from liability by giving an employee a nonmanagerial title and relegating to him crucial policy decisions.’ ” (Id. at p. 823.)
We have considered all the cases cited by T-Mobile and are not persuaded by its argument that only T-Mobile‘s corporate leaders who played a role in setting official corporate policies—e.g., those contained in an employee handbook—could be considered managing agents. (See, e.g., Cruz v. HomeBase (2000) 83 Cal.App.4th 160, 164, 168 [security guard and his immediate supervisor, both of whom were subordinate to the store‘s general manager, were not managing agents]; Gelfo v. Lockheed Martin Corp. (2006) 140 Cal.App.4th 34, 63 [no substantial evidence presented regarding vice-president‘s duties or authority].) Courts evaluate numerous factors in the “managing agent equation . . . in determining whether the supervisor was a managing agent whose conduct could justify awarding punitive damages against his employer.” (White, supra, 21 Cal.4th at p. 574, citing with approval Kelly-Zurian v. Wohl Shoe Co. (1994) 22 Cal.App.4th 397.) Managing agents are not limited to those individuals with the ability to set handbook policies. (E.g., White, supra, 21 Cal.4th at p. 577 [manager of eight retail stores]; Davis v. Kiewit Pacific Co. (2013) 220 Cal.App.4th 358, 370
T-Mobile argues that Robson could not be considered a policy setting managing agent based solely on his deviations from T-Mobile‘s official company policy, such as discharging Colucci despite the company‘s progressive discipline policy or sending Colucci a termination letter even though managers were not supposed to communicate with employees who had requested medical leave. However, based on our review of the record, Robson had substantial discretionary authority to override these general policies. For example, T-Mobile‘s progressive discipline policy arguably might have prevented Colucci‘s firing had it been followed, but Robson testified that discipline was not required to be progressive under the policy and that he decided the appropriate action to take, depending on the circumstances. Likewise, Robson testified that management “typically” would not communicate with employees once they requested leaves of absences, but he could situationally deviate. Robson suffered no consequences for deviating from these policies and indeed, was authorized to do so. Accordingly, Robson formulated operational policies through his discretionary decisions. (White, supra, 21 Cal.4th at p. 577.)
In summary, we conclude substantial evidence supports the jury‘s finding that Robson was a managing agent whose conduct could justify an award of punitive damages against T-Mobile.
C. Malice or Oppression
T-Mobile next contends that, even assuming Robson was a managing agent, there was insufficient evidence to show he acted with malice or oppression as required to support an award of punitive damages. (
“Malice” is defined as “conduct which is intended by the defendant to cause injury to the plaintiff or despicable conduct which is carried on by the defendant with a willful and conscious disregard of the rights or safety of others“; “oppression” is “despicable conduct that subjects a person to cruel and unjust hardship in conscious disregard of that person‘s rights.” (
Based on our review of the record, we conclude substantial evidence supports the jury‘s finding that Robson acted with malice or oppression. “Malice and oppression may be inferred from the circumstances of a defendant‘s conduct.” (Monge v. Superior Court (1986) 176 Cal.App.3d 503, 511.) Here, the jury could reasonably infer from the evidence that Robson became angered by Colucci‘s complaints and decided to concoct a reason for termination, all the while knowing Colucci was in a weak physical and mental state. None of Robson‘s actions strike us as inadvertent or careless; even if his initial termination recommendation was hasty, he had several days to reevaluate and reverse his decision. He did not. Moreover, the jury could consider it despicable of Robson to allow Colucci, who was suffering severe back pain, to leave the store under the belief that he was permitted to go on medical leave, and then turn around and use Colucci‘s inability to complete an interview that day as a basis for firing him. The record supports that Robson willfully and consciously retaliated against Colucci, in violation of Colucci‘s right to complain of discrimination. (Cf. Commodore Home Systems, Inc. v. Superior Court (1982) 32 Cal.3d 211, 220-221 [punitive damages recoverable under
T-Mobile cites Scott v. Phoenix Schools, Inc. (2009) 175 Cal.App.4th 702 (Scott), in support of its position that Robson did not act with requisite malice or oppression. The plaintiff in Scott was a preschool teacher who was terminated by the employer/school due to her decision not to enroll one child in the school, which was part of her job duties. (Id. at p. 707Id. at pp. 709-711Id. at pp. 708, 715Id. at p. 717.)
The
II. The Amount of Punitive Damages Is Excessive and Must Be Reduced
Even if the jury was entitled to award some amount of punitive damages, T-Mobile contends that the jury‘s $4 million award is constitutionally excessive in violation of the federal due process clause. Our review is de novo. (Simon v. San Paolo U.S. Holding Co., Inc. (2005) 35 Cal.4th 1159, 1172 (Simon).)
“The due process clause of the Fourteenth Amendment to the United States Constitution places constraints on state court awards of punitive damages.” (Roby, supra, 47 Cal.4th at p. 712 imposed for the conduct. (State Farm Mutual Automobile Insurance Co. v. Campbell (2003) 538 U.S. 408, 416-417 (State Farm); Simon, supra, 35 Cal.4th at p. 1171.) “Eschewing both rigid numerical limits and a subjective inquiry into the jury‘s motives,” the Supreme Court set forth “a three-factor weighing analysis looking to the nature and effects of the defendant‘s tortious conduct and the state‘s treatment of comparable conduct in other contexts.” (Simon, at pp. 1171-1172.)
