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PARRISH v. SOLLECITO

September 3, 2003

DONNA PARRISH, PLAINTIFF,
v.
LOUIS SOLLECITO, INDIVIDUALLY, JAMES GALLAGHER, INDIVIDUALLY, MOUNT KISCO IMPORT CARS, LTD. D/B/A MOUNT KISCO HONDA, AND WESTCHESTER IMPORT CARS, LTD, D/B/A/ ACURA OF BEDFORD HILLS, DEFENDANTS.



The opinion of the court was delivered by: VICTOR Marrero, District Judge.

DECISION AND ORDER

Plaintiff Donna Parrish ("Parrish") brought this action alleging sexual discrimination and retaliation in violation of Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq., and the New York State Human Rights Law § 296.*fn1 Defendants comprise Parrish's former employers and supervisor, whose alleged misconduct gave rise to this action. On April 11, 2003, after a trial in this matter, the jury returned a verdict of liability against defendants Louis Sollecito ("Sollecito"), James Gallagher ("Gallagher") and Acura of Bedford Hills ("Acura") (collectively, "Defendants") on Parrish's retaliation claim, but found for Defendants, as well as for defendant Mount Kisco Honda ("Honda"), on Parrish's hostile work environment sexual harassment claim. The jury awarded Parrish $15,000 in compensatory damages for lost back-pay and $500,000 in punitive damages. Judgment was entered on the jury's verdict on May 20, 2003.

At the close of Parrish's case-in-chief, Defendants moved for judgment as a matter of law, pursuant to Fed.R.Civ.P. 50(a), on various issues, including punitive damages, arguing that Parrish had not presented sufficient evidence to warrant a jury award of punitive damages. The Court reserved judgment on this issue, as well as on the other issues raised by Defendants for determination as a matter of law, and indicated that it would render its decision after the completion of the jury trial. In support of their motion for judgment as a matter of law pursuant to Fed.R.Civ.P. 50(a), Defendants now submit a memorandum of law with regard to the sufficiency of the evidence presented at trial to satisfy the legal requirements for an award of punitive damages. Also with regard to punitive damages, Defendants move in the alternative for judgment as a matter of law precluding such an award pursuant to Fed.R.Civ.P. 50(b). In the event that their motion for judgment as a matter of law with regard to punitive damages is denied, Defendants request, in the alternative, a new trial and/or remittitur of the punitive damages awarded pursuant to Fed.R.Civ.P. 59. Within this motion, Defendants address the April Order, and in opposition to Defendants' motion, Parrish also addresses the Court's April Order. Parrish applies for an award of attorney's fees and costs, to which Defendants object, in part, on various grounds.

For the reasons set forth below, Defendants' motion for judgment as a matter of law and for a new trial is DENIED, Defendants' motion for a reduction in punitive damages is GRANTED and Parrish's application for attorney's fees is GRANTED in part.

I. DISCUSSION

A. STANDARD FOR JUDGMENT AS A MATTER OF LAW

Rule 50(a) of the Federal Rules of Civil Procedure allows a party to move for judgment as a matter of law at any time before the case has been submitted to the jury. See Wimmer v. Suffolk County Police Dep't, 176 F.3d 125, 134 (2d Cir. 1999). A motion filed pursuant to Rule 50(a) may be granted if a legally sufficient evidentiary basis to support the non-moving party's claim or defense is absent from the record. See Fed.R.Civ.P. 50(a); Wimmer, 176 F.3d at 134; Piesco v. Koch, 12 F.3d 332, 340 (2d Cir. 1993); Sanders v. The City of New York, 200 F. Supp.2d 404, 406 (S.D.N.Y. 2002). In assessing the merits of a Rule 50(a) motion, courts must view the evidence in the light most favorable to the non-moving party and draw all reasonable inferences in its favor. See Wimmer, 176 F.3d at 134; Piesco, 12 F.3d at 340; Sanders, 200 F. Supp.2d at 406.

Similarly, judgment as a matter of law following a jury verdict, pursuant to Rule 50(b) of the Fed.R.Civ.P., should be entered only when "there is `such a complete absence of evidence supporting the verdict that the jury's findings could only have been the result of sheer surmise and conjecture, or [where there is] such an overwhelming amount of evidence in favor of the movant that reasonable and fair minded [persons] could not arrive at a verdict against [the movant].'" Logan v. Bennington College Corp., 72 F.3d 1017, 1021 (2d Cir. 1995) (quoting Concerned Area Residents for Env't v. Southview Farm, 34 F.3d 114, 117 (2d Cir. 1994)). Moreover, in a motion pursuant to Fed.R.Civ.P. 50(b), a trial court "must view the evidence in a light most favorable to the nonmovant and grant that party every reasonable inference that the jury might have drawn in its favor." Samuels v. Air Transport Local 504, 992 F.2d 12, 16 (2d Cir. 1993). A jury verdict is not to be set aside unless "the evidence is such that, without weighing the credibility of the witnesses or otherwise considering the weight of the evidence, there can be but one conclusion as to the verdict that reasonable triers of fact could have reached." Id. at 14 (quoting Simblest v. Maynard, 427 F.2d 1, 4 (2d Cir. 1970)).

B. JUDGMENT AS A MATTER OF LAW ON PUNITIVE DAMAGES

Defendants argue that Parrish has failed, as a matter of law, to satisfy the burden for demonstrating the requisite malice or reckless indifference necessary to support a punitive damages award in this case. Alternately, Defendants argue that they have established a good faith effort to enforce a discrimination policy, thereby legally barring an award of punitive damages. As Defendants first made this argument at the close of Parrish's case-in-chief, they request judgment as a matter of law pursuant to Fed.R.Civ.P. 50(a), or alternately pursuant to Fed.R.Civ.P. 50(b).

Punitive damages are available under Title VII in cases in which "the employer has `engaged in intentional discrimination and has done so with malice or with reckless indifference to the federally protected rights of an aggrieved individual.'" Zimmermann v. Assoc. First Cap. Corp., 251 F.3d 376, 384 (2d Cir. 2001) (quoting Kolstad v. American Dental Ass'n, 527 U.S. 526, 529-530, 119 S.Ct. 2118, 144 L.Ed.2d 494 (1999) and 42 U.S.C. § 1981a(b)(3)(D)). In Kolstad, the Supreme Court held that the statutory terms "malice" and "reckless" in 42 U.S.C. § 1981a refer to an actor's state of mind. 527 U.S. at 535, 119 S.Ct. 2118. In other words, punitive damages are available to victims of employment discrimination when the employer knowingly violates federal law: "[A]n employer must at least discriminate in the face of a perceived risk that its actions will violate federal law to be liable in punitive damages." Id. at 536, 119 S.Ct. 2118.

The Supreme Court specifically noted that the cases in which punitive damages are available are only a subset of the cases in which unlawful discrimination can be found, reciting instances in which punitive damages could not be sustained: (1) where an employer is unaware of the federal prohibition; or (2) where an employer discriminates with the belief that its discrimination is lawful, i.e., where the discrimination claim is based on a novel theory of liability or the employer reasonably believes that its alleged discriminatory conduct fell within an exception to liability. Id. at 536-537, 119 S.Ct. 2118. Moreover, although egregious or outrageous conduct is evidence of the subjective intent to violate federal law, such conduct is not necessary for a finding of intentional discrimination warranting punitive damages. Id. at 538, 119 S.Ct. 2118.

Direct evidence that an employer acted with knowledge that the discrimination found by a jury violated federal law is not necessary to prove the requisite state of mind of the employer to justify an award of punitive damages. Rather, the Second Circuit has found that general training in equal opportunity protocol and hiring practices is sufficient to infer awareness of Title VII requirements. See Zimmermann, 251 F.3d at 385. Similarly, district courts in this Circuit have held that some familiarity with sexual harassment policies is sufficient to infer knowledge of the federal laws against discrimination. See Kuper v. Empire Blue Cross & Blue Shield, No. 99 Civ. 1190, 2003 WL 359462, at *5 (S.D.N.Y. Feb.18, 2003) (testimony concerning knowledge that the ADA prohibited disability discrimination and receipt of ADA training were sufficient to justify jury award of punitive damages); Lamberson v. Six West Retail Acquisition, No. 98 Civ. 8053, 2002 WL 59424, at *5 (S.D.N.Y. Jan.16, 2002) (knowledge that it was discrimination to punish an employee for complaining of sexual harassment was sufficient to attribute requisite knowledge of Title VII to employer for purposes of allowing punitive damages); Equal Employment Opportunity Comm'n v. Yellow Freight Sys., No. 98 Civ. 2270(THK), 2002 WL 31011859, at *35 (S.D.N.Y. Sept. 9, 2002) (inferring that a "large and sophisticated national corporation," which indicated in its collective bargaining agreement that it would abide by the ADA, and had made an offer of accommodation upon notice of the discrimination complaint, had the requisite mental state to support an award of punitive damages). Moreover, general knowledge of anti-discrimination law and policy is sufficient to ascribe awareness that particular discriminatory acts are prohibited by federal law. See Lamberson, 2002 WL 59424, at *6.

The question here is whether a reasonable trier of fact could have inferred from the evidence presented at trial that Acura knowingly violated federal law in retaliating against Parrish. In so determining, the Court must be mindful that all possible inferences are drawn in Parrish's favor. Applying the legal standard in this case, the Court notes that, at trial, Parrish only narrowly satisfied her burden for presenting sufficient evidence to justify a finding of punitive damages, but that, viewed in the light most favorable to her, a jury could reasonably find that punitive damages are warranted in this case.

Specifically, the testimony in the record that there was an attempt, albeit unsuccessful, by Thomas Murray ("Murray"), who acted at the time as the General Manager of Honda, to initiate a sexual harassment policy, as well as Sollecito's testimony that he had dealt with legal counsel on at least one other allegation of sexual harassment, can fairly be understood to establish an awareness by Sollecito, who as the owner of Acura and Honda was ultimately responsible for Parrish's termination, of the prohibitions entailed in Title VII. (See transcript of the jury trial in this case conducted from April 7, 2003 through April 11, 2003 ("Tr.") at 174.) Furthermore, Lori Rowe ("Rowe"), an employee of both Honda and Acura, testified that a sexual harassment policy was in place at both those dealerships. Rowe's testimony, much relied upon by Defendants although contradicted by Murray, could also support a jury determination that Sollecito and Gallagher, the General Manager of Acura during Rowe's tenure, were generally aware of sexual harassment prohibitions. (Id. at 212.) Accordingly, the evidence presented at trial was sufficient to support a jury determination that Sollecito and/or Gallagher acted with the requisite general knowledge of federal prohibitions against sexual discrimination and retaliation to satisfy the legal standard for awarding punitive damages.

Moreover, Title VII imposes employer liability for the malicious or recklessly indifferent discrimination of its agents where an employee serving in a managerial capacity commits the wrong within the scope of his employment, "unless the discriminatory actions were in contravention of the employer's good faith efforts to comply with Title VII." Kuper, 2003 WL 359462, at *4 (citing Kolstad, 527 U.S. at 545, 119 S.Ct. 2118). This defense, which bars the award of punitive damages by a jury even if sufficient evidence of the intent to violate federal law is presented, "requires an employer to establish both that it had an anti-discrimination policy and made [a] good faith effort to enforce it." Zimmermann, 251 F.3d at 385.

Defendants argue that because they have produced evidence that a sexual harassment policy was in place at Acura and that it was enforced in good faith, a jury award of punitive damages should be precluded as a matter of law. Defendants argument is flawed in two respects. First, although Lori Rowe testified that a sexual harassment policy existed at Acura and Honda, a jury could reasonably credit the testimony elicited from Murray that, although he attempted to initiate a sexual harassment policy, his efforts were ultimately thwarted by the union-members' demand that any such policy be contained in the union contract' and that ultimately, therefore, there was no sexual harassment policy in place at Honda. (Tr. at 174.) Since Murray's testimony undermines the credibility of Rowe's belief that Honda and Acura maintained a sexual harassment policy, and neither Gallagher nor Sollecito testified that a policy was in place at Honda or Acura, nor produced a copy of such a policy, and because Lori Rowe was only an employee of the dealerships, the evidence would justify a reasonable inference that there was not a sexual harassment policy in place at either dealership.

Second, there is no evidence in the record of Defendants' good faith enforcement of such a policy, even if the jury were to find it was in place at Acura. That Sollecito retained counsel to deal with discrimination complaints may fairly justify an inference that Sollecito had knowledge of the relevant federal law relating to sexual harassment, but does not definitively establish that any sexual harassment policy in place at Acura was enforced in good faith merely because once a complaint was lodged, defense counsel was retained. Therefore, a jury determination that Acura's sexual harassment policy, if one existed, was not enforced in good faith, is supported by the evidence in the record.

In sum, therefore, the issue of the propriety of punitive damages in this case was properly placed before the jury and was not precluded as a matter of law. Similarly, because there was sufficient evidence in the record to support the jury's verdict that punitive damages were warranted in this case, the jury finding will not be set aside by the Court.

C. TITLE VII STATUTORY CAP

The parties do not dispute that the total award of punitive damages and future compensatory damages in this case, not including lost income and benefits, is subject to a mandatory statutory cap that varies with the size of the employer:

The sum of the amount of compensatory damages awarded under this section for future pecuniary losses, emotional pain, suffering, inconvenience, mental anguish, loss of enjoyment of life, and other nonpecuniary losses, and the amount of punitive damages awarded under this section, shall not exceed, for each complaining party — (A) in the case of a respondent who has more than 14 and fewer than 101 employees in each of 20 or more calendar weeks in the current or preceding calendar year, $50,000; (B) in the case of a respondent who has more than 100 and fewer than 201 employees in each of 20 or more calendar weeks in the current or preceding calendar year, $100,000; and (C) in the case of a respondent who has more than 200 and fewer than 501 employees in each of 20 or more calendar weeks in the current or preceding calendar year, $200,000; and (D) in the case of a respondent who has more than 500 employees in each of 20 or more calendar weeks in the current or preceding calendar year, $300,000.

42 U.S.C. § 1981a(b)(3) (emphasis added); see also Zimmermann, 251 F.3d at 384. The statutory cap is properly excluded from jury instructions, and only after a verdict is submitted, the trial court must ensure that any award complies with the relevant statutory maximums applicable. See Luciano v. The Olsten Corp., 110 F.3d 210, 221 (2d Cir. 1997). However, Parrish requests that an evidentiary hearing be held to determine the identity and size of the employer in this case. Defendants counter that any such inquiry is inappropriate since its purpose would be to determine the number of employees at companies not even party to this action and would be prejudicial to such entities at this late date in the proceedings.

Parrish argues that for purposes of applying the statutory cap applicable in this case, the size of the employer should be based on the number of employees in all of Sollecito's nine dealerships, not just in Acura or Honda, which were the entities that actually employed Parrish during the time of the unlawful retaliation found by the jury. To this effect, Parrish argues that because Sollecito owned all nine dealerships, employees often worked for more than one of his dealerships, or were transferred among dealerships, and because payroll for all nine entities was handled by one service, Sollecito's dealerships should be treated as a single entity and the employees of all nine car dealerships counted in determining the size of the employer for purposes of applying the statutory cap pursuant to 42 U.S.C. § 1981a(b)(3).

The statute, however, applies to the "respondent" in the current action, not a theoretical respondent alluded to in post-trial briefs. See 42 U.S.C. § 1981a(b)(3); see also Greenbaum v. Handlesbanken, 26 F. Supp.2d 649, 652 (S.D.N.Y. 1998) ("The cap is based on how many employees the "respondent" has; assuming this word has the same meaning throughout § 1981a, the `respondent' is the entity against whom the `action [is] brought by a complaining party'") (quoting 42 U.S.C. § 1981a(a)). That many of Sollecito's employees were employed by more than one dealership that he owned, or that one billing system was used to pay employees and various dealerships owned by Sollecito, does not alter the identity of Parrish's chosen respondent in this case.

Parrish cites to only one case in this Circuit, Greenbaum, that considered the issue of determining an integrated employer for purposes of applying the statutory cap. 26 F. Supp.2d at 651-652. The Greenbaum court, paying very close attention to the singular meaning of "respondent" in the statute, made a specific finding that the branch which was a named defendant and its parent were one legal entity based on the well-settled legal principle that a domestic branch of a foreign bank is not a separate entity under New York or federal law. Id. at 652-653. Based on this finding of legal equivalence, indicating that naming the branch as a respondent was the same as naming the parent, the court in Greenbaum found it appropriate to allow the size of the parent to be the relevant inquiry for imposing the statutory cap.

Moreover, the single employer theory for imposing liability on affiliates of a primary employer in Title VII cases alluded to by Parrish, although not thoroughly argued under the legal standard for applying the theory to aggregate multiple legal entities, does not necessarily apply to the circumstances presented here. Under the single employer theory, "`a wronged employee may impose liability on an entity that, although not his employer of record, exercises sufficient control over employment decisions to bear responsibility for the wrong in question.'" Campbell v. Int'l Brotherhood of Teamsters, 69 F. Supp.2d 380, 385 (E.D.N.Y. 1999) (quoting Murray v. Miner, 876 F. Supp. 512, 515 (S.D.N.Y. 1995)). In order for the single employer doctrine to apply, the two entities must share control at the time of the alleged wrong. See Miner, 876 F. Supp. at 515.

Here, Parrish is not attempting to impose liability on Sollecito's other dealerships despite the fact that Parrish was not employed by them, but to include the employees of these entities in determining the size of the relevant employer, the "respondent" for the purposes of 42 U.S.C. § 1981a(b)(3). Moreover, Parrish does not allege that Sollecito's other dealerships shared control of the labor decisions made at Acura. The Court is persuaded that the two inquires are distinct because at issue here is only the size of the employer, not the liable entity, which has already been determined by the jury to be Acura. In this regard, the Court notes that the Greenbaum court did not apply the single employer theory for determining the proper entity to examine when applying the statutory cap, nor has any other court in this Circuit. Id. at 651-652.

However, a number of courts in other Circuits have determined that the inquiry into the identity of an employer for liability purposes is equivalent to the inquiry for determining the relevant employer when applying the statutory cap on punitive damages. See Vance v. Union Planters Corp., 209 F.3d 438, 447 (5th Cir. 2000); Story v. Vae Nortrak, Inc., 214 F. Supp.2d 1209 (N.D.Ala. 2001) (indicating that the `law of the case' as determined by the Eleventh Circuit is that the single entity inquiry is applied in determining the size of the employer).

To the extent that the single employer theory would apply in determining the size of the employer when imposing the statutory cap in Title VII cases, the doctrine would not rescue Parrish's claim that all of Sollecito's dealerships should be considered and essentially aggregated for this purpose. "To determine whether two entities should be treated as a single employer for Title VII purposes, the Second Circuit considers whether the two entities have: (1) interrelated operations; (2) centralized control of labor relations; (3) common management; and (4) common ownership or financial control." Campbell, 69 F. Supp.2d at 384 (citing Cook v. Arrowsmith Shelburne, Inc., 69 F.3d 1235, 1240 (2d Cir. 1995)); Brower-Coad v. Fundamental Brokers, Inc., 856 F. Supp. 147, 150 (S.D.N.Y. 1993). The second factor has been determined to be the most important. Id. Generally, such a collapsing of two separate corporate entities should not be found unless the interrelatedness of the companies is pervasive. See Coraggio v. Time Inc. Magazine Co., No. 94 civ. 5429 (MBM), 1995 WL 242047, at *2 (S.D.N.Y. April 26, 1995).

Here, Parrish has not come forward with sufficient allegations or evidence of these factors to warrant treating Sollecito's dealership's as one entity in the employment context. In fact, it is only the fourth factor which Parrish sufficiently alleges, and the second crucial factor is the most deficiently supported. At this stage of the proceedings, the Court will not allow reopening of discovery to delve into this complicated inquiry and potentially give rise to a new round of litigation and motion practice, as this information could have been pleaded in the original complaint and addressed during the normal course of pretrial discovery.

Although the court in Story held that the single entity theory applied to both the imposition of liability and determining the size of the statutory cap to be imposed, and that discovery to that effect should be undertaken, the Court is not persuaded that such legal precedent is controlling here. 214 F. Supp.2d at 1210. First, the Story court admits that "[a] good argument can be made that [these] two concepts are not the same, because the congressional purposes under the two statutes are not necessarily identical." Id. at 1210. However, the district court deemed itself bound by Eleventh Circuit precedent to apply the same legal standard for imposing liability and determining the applicable statutory cap. Id. In sofar as this issue has not been resolved by the Second Circuit, such precedent is not controlling in this Circuit and this Court is not bound by it. Moreover, the facts in Story reflect a more persuasive case for finding the defendant in that case and its affiliated companies to be a single entity. The defendant in Story sold the same products as its affiliates and maintained consolidated financial statements, maintained a common company directory,*fn2 and the related entities essentially were separated only by geography. See Id. at 1211. Here, although all owned or controlled by Sollecito, the dealerships were clearly separate franchises as they sold various lines of cars of different manufacturers.

Moreover, in order to increase the applicable cap, Parrish has presented the relevant employer theory in this case too late in the proceedings — after a trial on the merits has been concluded — to justify amending the complaint, further discovery or a hearing. As Defendants point out, even complaints that include such allegations have been dismissed in comparable circumstances where sufficient specificity is not provided. See, e.g., Coraggio, 1995 WL 242047, at *3. Such precedent emphasizes the importance of including such allegations in the complaint and prior to trial to allow proper defense. In Greenbaum, for instance, the plaintiff requested that the caption be changed to include the name of the parent company during the trial because of the issue of the statutory cap, and the trial court permitted presentation of evidence as to the size of the parent company during the trial. Id. Therefore, additional post-trial discovery, and the resultant prejudice to defendants who are not respondents in the action or allotted an opportunity to present defenses at a trial, was not at issue in Greenbaum.

A motion to amend the complaint may be denied, at the discretion of the district court, because of futility of the amendment, undue delay on the part of the movant, had faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed or undue prejudice to the opposing party by virtue of allowance of the amendment. See Foman v. Davis, 371 U.S. 178, 182, 83 S.Ct. 227, 9 L.Ed.2d 222 (1962); John Hancock Mut. Life Ins. Co. v. Amerford Int'l Corp., 22 F.3d 458, 462 (2d Cir. 1994). It is clear in this case that permitting Parrish to essentially amend the complaint by adding new respondents after a jury trial on the merits has been completed would prejudice Defendants, who did not have a fair opportunity to defend against the claims. See Town of Orangetown v. Gorsuch, 718 F.2d 29, 40 n. 10 (2d Cir. 1983) (affirming district court's denial of plaintiffs request to amend complaint, two months after completion of trial, where additional defendants would not have had an opportunity to defend against claims at trial); Campbell v. City of New York, No. 99 Civ. 5129 LTSTHK, 2003 WL 660847, at *4 (S.D.N.Y. Feb.27, 2003) ("Prejudice is inferred if a party did not have a fair opportunity to defend against the new claims"); Miwon v. Nissho-Iwai American Corp., No. 80 Civ. 4731-CSH, 1984 WL ...


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