Grounds vs. Reasons

King v. U.S. Bank, N.A., No. C085276 (D3 Jul. 28, 2020)

Plaintiff, an employee of a Bank, won a $24.4 million jury verdict in a wrongful termination and defamation action based on the Bank’s having trumped up a bunch of fake grounds for discipline. The damages award has several elements: front and back pay, occupational harm, reputational injury, and emotional distress. Plus $15.6 million in punitives. On a new trial motion, the trial court issued a remittur on various grounds, reducing the judgment to $5.6 million, which Plaintiff accepted. 

The Bank appeals on the insufficiency of the evidence on a host of different issues. As is generally the case, it loses.

Plaintiff appeals the grant of the new trial motions and remittitur. Generally, a plaintiff who accepts a remittitur can’t appeal. But he can cross-appeal if the defendant does. The rationale is that the appeal deprives the plaintiff of the benefit of the remittitur.

The Court of Appeal reverses part of the new trial grant, where the trial court ruled that some of the categories of damages were repetitive. The reasons stated in the trial court’s order weren’t supported by the record.

It also reverses a reduction of the $1 million emotional distress award to $25k, but on a procedural grounds. As I have discussed elsewhere, the Code of Civil Procedure imparts very specific requirements on a trial court judge who grants a new trial on certain grounds, including excessive damages. Under § 657, the court needs to issue an order that states both the statutory grounds for the order as well as its reasons. A statement of reasons doesn’t need to be a tome. But it does need to make at least some reference to the evidence that is sufficient to facilitate appellate review. And if the order is procedurally inadequate, the new trial is reversed and the original judgment automatically reinstated. There’s no chance to fix anything on remand.

On the emotional distress reduction, the court’s order stated only that it “finds that the evidence does not clearly support the emotional distress damages award and the award is excessive,” and that the award should accordingly be reduced to $25k. That’s not good enough because it’s little more than a statement of grounds of excessive damages. To hold up, it needed to at least refer to what aspects of the evidence the trial court found to be inadequate.

Finally, in an order that was adequate to hold up under § 657, the trial court found that the evidence of the Bank’s misconduct was sufficient to withstand only a 1:1 ratio of compensatory to punitive damages. The Court of Appeal does not agree with certain aspects of that analysis. But, subjecting the award to the independent due process review required of punitive awards, the Court of Appeal nonetheless agrees that the evidence supports only a 1:1 ratio. Therefore, the punitives were reduced to about $8 million.

Affirmed on modified judgment of $17,179,392.