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Manzo v. Sovereign Motor Cars

May 11, 2010

ISABEL MANZO, PLAINTIFF,
v.
SOVEREIGN MOTOR CARS, LTD., EDWARD FELDMAN, AND JACK MATALON, DEFENDANTS.



The opinion of the court was delivered by: John Gleeson, United States District Judge

FOR ONLINE PUBLICATION ONLY

MEMORANDUM AND ORDER

Plaintiff Isabel Manzo brought this action pursuant to Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. §§ 2000e et seq., and the New York City Human Rights Law, New York City Administrative Code ("NYCHRL") §§ 8-107 et seq., alleging that defendants sexually harassed Manzo through the creation of a hostile work environment and fired her in retaliation for her complaining about it.*fn1 On January 25, 2010, following a five-day trial, the jury returned a verdict in Manzo's favor and awarded her $50,000 in compensatory damages and $200,000 in punitive damages. Defendants now move pursuant to Fed. R. Civ. P. 50(b) to set aside the punitive damage award as a matter of law, or, in the alternative, for a remittitur or a new trial pursuant to Fed. R. Civ. P. 59(a) and (e). Manzo moves pursuant to 42 U.S.C. § 2000e-5(k) and Fed. R. Civ. P. 54(d)(1) for an award of attorneys' fees and costs.

The defendants' motion is denied in its entirety; the plaintiff's motion is granted to the extent set forth below.

BACKGROUND

Familiarity with the facts and procedural history of the case is assumed. For a more complete description of the underlying facts, see Manzo v. Sovereign Motor Cars, Ltd., No. 08-CV-1229 (CPS), 2009 WL 3151094 (E.D.N.Y. Sept. 29, 2009). A brief summary of the essential facts follows.

Isabel Manzo was an employee of Sovereign Motor Cars ("SMC"), a Mercedes-Benz retailer, from February 26, 2007 until June 7, 2007. During that relatively brief period of employment, she was subjected to a continuous and concerted campaign of sexually harassing remarks and behavior by her direct supervisor, Jack Matalon, and she was fired in direct retaliation for filing of a complaint of sexual harassment with SMC's vice president, Edward Feldman. At trial, defendants disputed that any sexual harassment had occurred and argued that the company had promptly investigated and addressed Manzo's complaint. The defendants asserted that Manzo was terminated for performance-based reasons. The jury credited Manzo's testimony and awarded her $25,000 for her hostile work environment claim against SMC and Matalon, $25,000 for her retaliation claim against SMC and Feldman, and at total of $200,000 in punitive damages, of which it attributed $50,000 to SMC, $50,000 to Feldman, and $100,000 to Matalon.

DISCUSSION

A. Defendants' Challenge to Punitive Damages

Defendants seek to set aside the punitive damage award as a matter of law pursuant to Fed. R. Civ. P. 50(b), or, in the alternative, for a remittitur or a new trial pursuant to Fed. R. Civ. P. 59(a) and (e). Defendants do not challenge the jury's finding of liability or its award of compensatory damages.

1. Standard of Review

Federal Rule of Civil Procedure 50 provides that where there is no "legally sufficient evidentiary basis" for a reasonable jury to find for a party on a particular issue, the court may resolve the issue against that party and may grant a motion for judgment as a matter of law. "A movant seeking to set aside a jury verdict faces a 'high bar.'" See Tse v. UBS Fin. Servs., Inc., 568 F. Supp. 2d 274, 311-12 (S.D.N.Y. 2008) (citing Lavin-McEleney v. Marist Coll., 239 F.3d 476, 479 (2d Cir. 2001)). "A jury verdict should be set aside under Rule 50 only where 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 [jurors] could not arrive at a verdict against him.'" Id. (citing Kosmynka v. Polaris Indus., Inc., 462 F.3d 74, 79 (2d Cir. 2006)). In making its determination, the court must not make credibility assessments and must view the evidence in the light most favorable to the non-moving party. Tolbert v. Queens Coll., 242 F.3d 58, 70 (2d Cir. 2001). Accordingly, while the court "should review the record as a whole, it must disregard all evidence favorable to the moving party that the jury is not required to believe." Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 15 (2000).

The standard for granting a new trial pursuant to Fed. R. Civ. P. 59 "is less stringent than that for judgment as a matter of law." Zakre, 541 F. Supp. 2d at 560. A motion for a new trial should be granted when, in the opinion of the district court, "the jury has reached a seriously erroneous result or . . . the verdict is a miscarriage of justice." Song v. Ives Labs., Inc., 957 F.2d 1041, 1047 (2d Cir. 1992). In contrast to a motion for judgment as a matter of law, a new trial may be granted even if there is substantial evidence to support the jury's verdict. Id. Moreover, "a trial judge hearing a motion for a new trial 'is free to weigh the evidence himself and need not view it in the light most favorable to the verdict winner.'" Id. (citation omitted). However, "[w]here the resolution of the issues depended on assessment of the credibility of the witnesses, it is proper for the court to refrain from setting aside the verdict and granting a new trial." Zakre, 541 F. Supp. 2d at 560 (citing Piesco v. Koch, 12 F.3d 332, 345 (2d Cir. 1993)).

If a district court finds that a verdict is excessive, it may reduce the jury's award through the process of a remittitur, whereby a plaintiff is given the option of either accepting damages in a (specified) reduced amount or consenting to a new trial. See Cross v. N.Y. City Transit Auth., 417 F.3d 241, 258 (2d Cir. 2005). However, "it is not among the powers of the trial court, where the jury has awarded excessive damages, simply to reduce the damages without offering the prevailing party the option of a new trial." Zakre, 541 F. Supp. 2d at 560.

2. Motion to Vacate the Punitive Damages Award as a Matter of Law

Punitive damages may be awarded for a civil rights claim against a defendant employer under either Title VII or the NYCHRL if "the defendant's conduct is shown to be motivated by evil motive or intent, or when it involves reckless or callous indifference to the federally protected rights of others." Tolbert, 242 F.3d at 77 (citing Smith v. Wade, 461 U.S. 30, 56 (1983)); see also 42 U.S.C. § 1981a(b)(1). An award of punitive damages against an individual is governed by the same standard, but such damages are available only under the NYCHRL.*fn2 See Tomka v. Seiler Corp., 66 F.3d 1295, 1314 (2d Cir. 1995) (individual liability not available under Title VII). "Malice and reckless indifference refer to 'the employer's knowledge that it may be acting in violation of federal law, not its awareness that it is engaging in discrimination.'" Farias v. Instructional Sys., Inc., 259 F.3d 91, 101 (2d Cir. 2001) (citing Kolstad v. Am. Dental Ass'n,527 U.S. 526, 535 (1999)).

Direct evidence that an employer acted with knowledge that the discrimination and retaliation violated federal law is not required; rather, the requisite state of mind may be inferred from the circumstances. See, e.g., Zimmermann, 251 F.3d at 385 (general training in equal opportunity protocol and hiring practices is sufficient to infer awareness of Title VII requirements); see also Hill v. Airborne Frgt. Corp., 212 F. Supp. 2d 59, 76 (E.D.N.Y. 2002) ("Arguably, it was reasonable for the jury to infer that [defendant's] managers knew that their actions were in violation of federal law simply by virtue of the well-established Supreme Court case law on discrimination and retaliation, the long standing statutory schemes proscribing such conduct, the size of [defendant's company], and the common knowledge in today's society that employment discrimination is impermissible."). Morever, where a defendant is aware that its actions violate federal law, it is not necessary that the misconduct itself be independently reprehensible or egregious. See Kolstad,527 U.S. at 538.

There is no dispute that the evidence at trial was sufficient to allow a reasonable jury to award compensatory damages. However, defendants contend that the award of punitive damages was precluded as a matter of law on three grounds: (1) their actions were taken on the advice of counsel; (2) they believed their conduct was lawful; and (3) they made good faith efforts to promptly take corrective action following Manzo's complaint. As explained below, each of these arguments is unavailing.

Consultation with counsel might show that a defendant lacked the requisite subjective intent to violate federal law, but it does not operate as a per se bar to an award of punitive damages. See Quinby v. WestLB AG, No. 04-CV-7406 (WHP), 2008 WL 3826695, at *2 (S.D.N.Y. Aug. 15, 2008)("[S]eeking advice of counsel does not as a matter of law preclude a punitive damage award; indeed, such consultation may instead establish that a defendant knew about the legal consequences of its action."); see also Greenbaum v. Handelsbanken, 67 F. Supp. 2d 228, 264 (S.D.N.Y. 1999) (rejecting challenge to punitive damages award and concluding that "the fact that [defendant-employer] retained legal counsel does not establish as a matter of law that [it] must have been trying in good faith to refrain from retaliation."). Moreover, there was no testimony at trial concerning what advice was rendered by SMC's counsel, or evidence that defendants complied with any such advice. The bare fact that defendants spoke to an attorney after learning of Manzo's allegations, even if believed, does not preclude a finding that they acted with the subjective intent required for an award of punitive damages. See Zakre, 541 F. Supp. 2d at 562-63 (rejecting "advice of counsel" defense where there was no evidence as to what counsel told the defendant).

The contention that defendants actually believed their conduct to be lawful fails because the evidence at trial amply supported the jury's contrary conclusion. There was considerable evidence that Matalon and Feldman were aware that their conduct violated federal and city law. Matalon acknowledged that he was aware of the inappropriateness of sexual harassment in the workplace. See Tr. 633 ("At that time, harassment in the workplace was a big issue, and it was a very sensitive issue, and I wasn't -- I wasn't -- I should have been much more careful at that time."); see also Tr. 634 ("[O]f course we know [] all along [that] it's an issue. It's in the news all the time."). Multiple witnesses testified at trial as to the existence of Sovereign's anti-discrimination and harassment policies, which are set forth in SMC's employee manual. Matalon also conceded at trial that he was aware of the inappropriateness of certain of his comments to Manzo. See Tr. 628-29, 634. These facts are more than sufficient to permit a jury to infer that Matalon was aware his actions may have been in violation of the law. See Tse, 568 F. Supp. 2d at 309-10 (evidence that the employer was generally familiar with anti-discrimination law and knew its actions may be in violation of the law is sufficient to support jury award of punitive damages). A jury could also infer the requisite malice or intent from the nature of Matalon's conduct. See Kolstad, 527 U.S. at 538 ("To be sure, egregious or outrageous acts may serve as evidence supporting an inference of the requisite 'evil motive.'"). Manzo testified to an pattern of inappropriate remarks, culminating in one particularly egregious incident occurring during a business trip, in which defendant Matalon entered her hotel room on the pretense of having lost his room key, laid down on plaintiff's bed, unbuttoned his shirt, and demanded a "bedtime story." The egregiousness of such conduct can hardly be disputed. See Tr. 720 (reflecting Feldman's acknowledgment that the alleged behavior by Matalon, if true, was "outrageous" and "very concerning.").

As for Feldman, who attended law school but does not practice law, he was identified in SMC's employee manual as a contact person for reports of alleged harassment. His testimony at trial suggested that he was aware of the illegality of terminating an employee for retaliatory reasons. See, e.g.,Tr. 740-42. Although there was testimony that Feldman promptly directed an investigation into plaintiff's allegations, and he claimed that he fired Manzo due to performance errors, the jury might have reasonably concluded that his asserted non-retaliatory reasons were pretextual,*fn3 that the investigation was superficial, and that its outcome was preordained. Specifically, a reasonable juror might have inferred from Manzo's testimony, taken together with the timing of her termination, Feldman's long-standing relationship with Matalon and the limited reprimand and training received by Matalon (who continues to be employed at SMC) that Feldman intentionally violated her rights in order to protect his business concerns and avoid a confrontation with Matalon, who generated significant business for SMC.*fn4

Finally, defendants contest the punitive damages award by arguing that, as a matter of law, they are entitled to the affirmative defense recognized in Kolstad, which "insulates an employer from punitive damages liability if it has made 'good faith efforts to enforce an antidiscrimination policy.'" Zimmermann, 251 F.3d at 385 (citing Kolstad, 527 U.S. at 546). This argument fails because, as discussed above, a reasonable juror could have concluded that SMC's antidiscrimination policies were intentionally ignored by both Manzo's direct supervisor, Matalon, and by SMC's co-owner and ...


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