Opinion
Civil No. 00-1262-KI
December 13, 2001
Stephen L. Griffith, Leta E. Gorman, Stoel Rives, LLP, Portland, Oregon, Attorneys for Plaintiffs.
Gary V. Abbott, Alan Gladstone, Abbott, Davis, Rothwell, Mullin Earle, P.C., Portland, Oregon, Attorneys for Defendants.
OPINION
Plaintiff Alfredo Julian-Ocampo hired the services of an air ambulance, operated by the corporate defendants, to transport him from Mexico City to Portland, Oregon, so that he could be screened for a heart transplant. After not receiving the services for which he believes he contracted, Julian-Ocampo and several family members sued the corporate defendants running the ambulance service and a few of their employees. The case proceeded to trial against a single corporate defendant, known as Air Ambulance, on claims of fraud, breach of contract, and a violation of the Washington Consumer Protection Act ("CPA"). The jury awarded: (1) economic damages of $23,900 for breach of contract; (2) economic damages of $23,900 and punitive damages of $1,000,000 for fraud; and (3) $20,000 for damages under the Washington CPA.
The specific plaintiffs who prevailed in each claim is not relevant to the issues before me.
Before the court is defendant's renewed motions for judgment as a matter of law and/or motions for a new trial (#152). For the reasons below, I deny the motion for a new trial, conditioned on plaintiffs' acceptance of a remittitur.
LEGAL STANDARDS
A motion for judgment as a matter of law must be denied, and a jury's verdict must be upheld, if the verdict is supported by substantial evidence. Johnson v. Paradise Valley Unified School District, 251 F.3d 1222, 1227 (9th Cir.), cert. denied, 70 U.S.L.W. 3193 (2001). Substantial evidence is evidence adequate to support the jury's conclusion, even if it is possible to draw a contrary conclusion from the same evidence. The court must review the record as a whole but disregard all evidence favorable to the moving party that the jury is not required to believe. All reasonable inferences must be drawn in favor of the nonmoving party. Moreover, the court may not substitute its view of the evidence for the jury's, may not make credibility determinations, and may not weigh the evidence. Id.
Even if a verdict is supported by substantial evidence, the court may grant a motion for a new trial if it concludes that the verdict is contrary to the clear weight of the evidence, is based on evidence which is false, or to prevent a miscarriage of justice. Silver Sage Partners v. City of Desert Hot Springs, 251 F.3d 814, 819 (9th Cir. 2001). The court may weigh the evidence, may evaluate the credibility of the witnesses, and is not required to view the evidence from the perspective most favorable to the prevailing party. United States v. Kellington, 217 F.3d 1084, 1095 (9th Cir. 2000).
Remittitur is available to correct excessive verdicts. Pershing Park Villas v. United Pacific Insurance, 219 F.3d 895, 905 (9th Cir. 2000). A trial court reviewing a damages award attacked as excessive must consider the evidence of damages in a light most favorable to the prevailing party. Seymour v. Summa Vista Cinema, Inc., 809 F.2d 1385, 1387 (9th Cir. 1987), opinion amended on other grounds, 817 F.2d 609 (9th Cir. 1987). If the court concludes that a damages award is excessive, it may either grant the defendant's motion for a new trial, or deny the motion, conditioned upon the prevailing party's acceptance of a remittitur. Silver Sage Partners v. City of Desert Hot Springs, 251 F.3d 814, 818 (9th Cir. 2001). A trial court granting a motion for remittitur does not substitute its judgment for that of the jury, but instead reduces the judgment to the maximum amount sustainable by the proof. D S Redi-Mix v. Sierra Redi-Mix Contracting Co., 692 F.2d 1245, 1249 (9th Cir. 1982) (citations omitted).
DISCUSSION
I. Washington Consumer Protection Act
The Washington CPA states that a plaintiff may:
recover the actual damages sustained by him or her, or both, together with the costs of the suit, including a reasonable attorney's fee, and the court may in its discretion, increase the award of damages to an amount not to exceed three times the actual damages sustained: PROVIDED, That such increased damage award for violation of RCW 19.86.020 may not exceed ten thousand dollars. . . .
RCW 19.86.090. The parties agree that the discretionary treble damages, limited to $10,000, are in addition to actual damages awarded. Cuevas v. Montoya, 740 P.2d 858, 862 (Wash.App. 1987).
Plaintiffs ask me to award the maximum of $10,000 in treble damages to each of the two plaintiffs who recovered under this claim. They contend the award is necessary for deterrence and to compensate them for their inconvenience in pursuing their claim, which has the effect of pursuing justice for other citizens.
Treble damages are designed to punish the defendant and deter further violations. Keyes v. Bollinger, 640 P.2d 1077, 1084 n. 2 (Wash.App. 1982). In my discretion, I decline to award additional damages under the treble damages provision. Amounts awarded on the fraud and breach of contract claims provide sufficient punishment and deterrence.
II. Fraud Claim
A. Choice of Law
Air Ambulance renews its motion that Washington, and not Oregon, law applies to the fraud claim. Washington law does not allow punitive damages for fraud.
In an opinion granting summary judgment against many of plaintiffs' claims, I relied upon Oregon law to hold that emotional distress damages were not recoverable for fraud. Both parties solely briefed Oregon law. I have previously told Air Ambulance that I would not change course and consider a choice of law argument. This was particularly in light of the fact that many of plaintiffs' claims were dismissed based on somewhat recent nuances in Oregon tort law which may or may not differ from Washington law.
Judicial estoppel protects the integrity of the judicial process by preventing a party from gaining an advantage by taking one position and then seeking a second advantage by taking an incompatible position. Rissetto v. Plumbers and Steamfitters Local 343, 94 F.3d 597, 600-01 (9th Cir. 1996). The policies underlying the doctrine are the general consideration of the orderly administration of justice and regard for the dignity of judicial proceedings. Judicial estoppel, an equitable doctrine invoked at the discretion of a court, is "intended to protect against a litigant playing fast and loose with the courts." Id. at 601 (quotation omitted). The Ninth Circuit recently adopted the majority view which holds that judicial estoppel is inapplicable unless the court actually adopted the first inconsistent statement. Interstate Fire Cas. Co. v. Underwriters at Lloyd's, 139 F.3d 1234, 1239 (9th Cir. 1998); Masayesva v. Hale, 118 F.3d 1371, 1382 (9th Cir. 1997), cert. denied, 66 U.S.L.W. 3435 (1998).
Air Ambulance contends that it should not be judicially estopped from arguing that I must perform a choice of law analysis. It argues that I was never presented with a choice of law question and thus never adopted the view that Oregon law applies.
I disagree. Although it is true that the question was not raised, I did adopt the view that Oregon law applies when I relied upon it in my earlier opinion. I continue to believe that the issue should not be revisited at this point.
I also want to address Air Ambulance's contention that it is unfair to apply Washington law under that state's Consumer Protection Act but apply Oregon law to the common law fraud claim. When analyzing Air Ambulance's summary judgment motion, I agreed with its argument that there was insufficient nexus between Oregon and the misrepresentations made to plaintiffs in Washington to apply Oregon's Unlawful Trade Practices Act. Consequently, I dismissed the claim and later allowed plaintiffs to amend the complaint to allege a similar claim under Washington's Consumer Protection Act. Then, I followed the lead of all parties and relied upon Oregon law when analyzing the common law claims. This resulted in numerous claims being dismissed, to the advantage of Air Ambulance. Washington's Consumer Protection Act is being applied because there is sufficient nexus between the acts of defendant and the State of Washington. Oregon's fraud law is being applied because of judicial estoppel. Although it seems incongruous, there are specific reasons for each decision.
B. Sufficiency of the Evidence
Air Ambulance contends that there was no clear and convincing evidence that it knew the representations made to plaintiffs were false or that it intended to deceive plaintiffs. Air Ambulance is referring to its representations that it would provide the transport in a Lear jet it owns or leases which would be equipped with intensive care and cardiac care equipment and two properly certified physicians. It relies on the evidence that it checked out these issues with Global Life Flight ("Global") and did not broker the transport with Global until it was confident that its requests would be properly carried out.
The jury is entitled to disbelieve Gincel's testimony concerning her discussions when brokering the flight to Global. Based on the evidence concerning the state of the plane and its equipment and personnel when the transport was performed, there is substantial evidence to support the jury deciding the fraud claim in plaintiff's favor.
III. Economic Damages
The jury awarded plaintiffs economic damages equal to the full amount paid for the transport, $23,900. Air Ambulance contends that plaintiffs' testimony that the transport was of no value is beyond the bounds of reason and cannot support the award. Air Ambulance also notes that plaintiffs provided no evidence of the actual value of the services provided, a chartered Lear jet which completed the journey safely but lacked basic safety equipment such as seatbelts.
Additionally, Air Ambulance contends that there is insufficient evidence of a specific showing of injury to support the $20,000 award under Washington's Consumer Protection Act ("CPA"). Air Ambulance relies on the same argument as the one made against the economic damages awards under the fraud and contract claims.
The only evidence before the jury is plaintiffs' testimony that the transport was of no value. Although I consider this a close question, I am not prepared to say as a matter of law that the jury could not reasonably find that to be true. The economic damages under both claims will stand.
IV. Election of Remedies
Air Ambulance contends that plaintiffs must make an election of remedies between their fraud and breach of contract claims. It contends that if plaintiffs sought rescission and restitution damages on their fraud claim, it would be inconsistent legally with the contract claim. Alternatively, if plaintiffs sought actual damages on their fraud claim, it is duplicative of the contract claim.
A party may not affirm and rescind a contract at the same time. A fraud claim is only inconsistent with a claim for breach of contract if the fraud claim is an action to rescind the contract rather than to affirm the contract and sue for damages. Eurlich v. Snap-On Tools Corp., 121 Or. App. 25, 41, 853 P.2d 1350, rev. denied, 317 Or. 583 (1993). If there is an inconsistency between remedies, plaintiff must make an election of remedies after the case has gone to judgment on the merits. Id.
Plaintiffs state that they are not rescinding the contract. Rather, they sought to affirm the contract and recover damages. They do acknowledge, however, that the economic damages awarded for the fraud claim, the breach of contract claim, and the actual damages for the Washington CPA claim represent multiple recoveries. Consequently, plaintiffs agree that a judgment would award punitive damages plus $23,900 economic damages plus any treble damages under the Washington CPA, which I decline to award as stated above.
V. Punitive Damages
A. Insufficient Supporting Evidence
Air Ambulance moves for judgment as a matter of law because plaintiffs failed to present substantial evidence to make a prima facie showing of conduct warranting punitive damages. Alternatively, it moves for a new trial, contending that the verdict was against the clear weight of the evidence.
Air Ambulance contends that the gravamen of plaintiff's case for punitive damages is that defendant engaged in the required aggravated conduct by contracting with Global without determining anything about the company's qualifications and personnel, even though it was aware of the serious risks associated with Julian-Ocampo's health, and in disregard of possible consequences. Air Ambulance also notes plaintiffs' testimony that Air Ambulance did not inform them that the flight would be brokered.
Air Ambulance countered plaintiffs' case with the following evidence: (1) the medical director approved Global prior to this occasion after high recommendations; (2) Gincel reviewed the file information about Global and its staff and equipment before determining that it was properly credentialed for the flight; (3) Air Ambulance had multiple telephone conversations with Julian-Ocampo's treating physician about his medical needs; (4) Air Ambulance relayed this information to Global and was assured that it would provide two specialist doctors on the flight with all necessary equipment; and (5) Air Ambulance had a written contract with Global in which Global agreed to provide two critical care doctors on the flight. Based on this evidence, Air Ambulance contends that any inadequate service on the part of Global is not sufficient to award punitive damages against Air Ambulance.
Plaintiffs note that Air Ambulance knew that Julian-Ocampo's health was perilous but elected to broker the transport to a company with which it had no experience. The plane was not equipped with the specific medical equipment requested and the medical personnel were not the specialists requested. Plaintiffs also note the lack of specifics in the written contract. There was also evidence that plaintiffs were extremely interested in obtaining the highest quality transport for Julian-Ocampo and might have made a different decision if fully advised of the brokered contract. Under Oregon law:
Punitive damages are not recoverable in a civil action unless it is proven by clear and convincing evidence that [defendant] has acted with malice or has shown a reckless and outrageous indifference to a highly unreasonable risk of harm and has acted with conscious indifference to the health, safety and welfare of others.
I conclude that there is adequate evidence to support submission of punitive damages to the jury and to support an award in some amount.
B. Due Process Analysis
Air Ambulance contends that the $1,000,000 punitive damages award is prohibited by the Due Process Clause because the degree of reprehensibility is grossly out of proportion with the size of the award. It also contends that the lack of evidence regarding its financial worth removed a necessary limit on the jury's discretion, particularly when the defendant has very limited financial resources.
Plaintiffs contend that Air Ambulance's conduct was deceptive in the extreme because its continual references to "our" planes, crew, medical staff and equipment were intended to lead plaintiffs to believe that Air Ambulance knew for a fact how the plane would be equipped. Plaintiffs also rely on the evidence discussed above in the analysis of whether sufficient evidence supported an award of punitive damages in any amount. Plaintiffs contend that the award is well within the rational juror range explained in the case law.
The evidence of Air Ambulance's financial condition was limited to statements in its marketing materials that it is a multi-million dollar business, with no explanation of whether that refers to gross income, net income, assets, inventory, or debts. Air Ambulance contends that the court cannot determine if the award is within constitutional limits without more complete financial information.
Although evidence of the defendant's financial worth is a relevant inquiry, it is not required under Oregon law. Hicks v. Lilly Enterprises, 45 Or. App. 211, 217, 608 P.2d 186 (1980). My reading of the more recent cases discussed below does not convince me that it is a requirement for a constitutional analysis either. I am concerned that the only evidence the jury had on financial worth was marketing material. While Air Ambulance submitted exhibits to the court which reflect nominal assets and income, I conclude that they should not be considered at this time because Air Ambulance elected not to offer either them, or more complete financial statements, at trial.
The United States and the Oregon Supreme Courts have provided guidance to be used when reviewing punitive damages awards for a violation of due process:
[W]e hold that the standard for post-verdict judicial review of an award of punitive damages is as follows: A jury's award of punitive damages shall not be disturbed when it is within the range that a rational juror would be entitled to award in the light of the record as a whole; the range that a rational juror would be entitled to award depends, in turn, on the statutory and common law factors that allow an award of punitive damages for the specific kind of claim at issue.
Oberg v. Honda Motor Co., Ltd., 320 Or. 544, 549, 888 P.2d 8 (1995) (footnote omitted), cert. denied, 517 U.S. 1219 (1996). Punitive damages were elaborated on further by the United States Supreme Court, resulting in the Oregon Supreme Court holding:
A jury's punitive damages award is not "grossly excessive" — and, therefore, will not be disturbed on review — if it is within the range that a rational juror would be entitled to award in light of the record as a whole. Combining the factors announced by the Supreme Court in Gore with those announced by this court in Oberg (state), the range that a rational juror would be entitled to award depends on the following: (1) the statutory and common-law factors that allow an award of punitive damages for the specific kind of claim at issue; (2) the state interests that a punitive damages award is designed to serve; (3) the degree of reprehensibility of the defendant's conduct; (4) the disparity between the punitive damages award and the actual or potential harm inflicted; and (5) the civil and criminal sanctions provided for comparable misconduct.
Parrott v. Carr Chevrolet, Inc., 331 Or. 537, 555, 17 P.3d 473 (2001) (citing Oberg, 320 Or. 544, and BMW of North America, Inc., v. Gore, 517 U.S. 559, 116 S.Ct. 1589 (1996)) (internal citations omitted). When reviewing a punitive damages award for excessiveness, the court must view the facts in the light most favorable to the jury's verdict, if there is evidence in the record to support the facts. Id. at 556.
I have considered all of the arguments of the parties and the factors stated above. A few factors carry more weight based on the facts before me. The reprehensibility of Air Ambulance's conduct is low. Even in a light most favorable to plaintiffs, there is no evidence that Air Ambulance carried on in spite of actual knowledge that the problems with the crew and equipment would arise. Moreover, the harm suffered was not great. I acknowledge that plaintiffs endured a frightening and aggravating day but fortunately, they were not physically harmed. Consequently, I conclude that the maximum amount of punitive damages sustainable by the proof is $200,000.
Thus, I deny Air Ambulance's motion for a new trial conditioned on plaintiff's acceptance of a remittitur of the punitive damages to $200,000, in addition to the jury award of economic damages of $23,900. If plaintiffs do not accept the remittitur, we will hold a new trial. Prior to the new trial, there will be a full analysis of the choice of law question and summary judgment on all claims will be revisited if I decide that law other than from the State of Oregon should be used to analyze the claims.
CONCLUSION
Defendant's renewed motion for judgment as a matter of law (#152-1) is denied. Defendant's motion for a new trial (#152-2) is denied, conditioned on plaintiffs' acceptance of a remittitur as explained above.
If plaintiffs choose to accept the remittitur, they should propose a form of judgment to Air Ambulance and by January 11, 2002, submit a version to me approved by all parties. Alternatively, plaintiffs and Air Ambulance may submit separate versions by that date, along with their objections to the other proposed judgment. The judgment should also include the defaulted third-party defendant. If plaintiffs decide not to accept the remittitur, please contact the court to request a scheduling conference.