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Merchants FoodService v. Rice

Supreme Court of Alabama

March 1, 2019

Merchants FoodService, a foreign corporation
v.
Denny Rice

          Appeal from Mobile Circuit Court (CV-15-900376)

          MENDHEIM, JUSTICE.

         Merchants FoodService, a foreign corporation ("Merchants"), appeals from a final judgment entered by the Mobile Circuit Court following a jury verdict in a retaliatory-discharge action filed by Denny Rice. The jury awarded Rice compensatory damages of $314, 862.88 and punitive damages of $944, 588.64. We affirm.

         I. Facts

         Merchants owns and operates a wholesale-food delivery business throughout the southeastern United States. Rice began working for Merchants in October 2012 as a delivery driver in its Mobile, Alabama, shuttle yard. The Mobile yard is in Merchants' Clanton division, which coordinates deliveries in Alabama for the company. Merchants' largest customer in the Mobile area was the Mobile School System. Rice was injured on the job, and, when he returned to work following his injury, Josh Averhart was the Clanton division's transportation manager. Immediately below Averhart was Rice's immediate supervisor, Brian Maryland.

         On July 24, 2014, after Rice had finished his own deliveries, Rice decided to help another driver, Joe Paige, finish his deliveries. Rice drove his personal vehicle to help Paige unload food at Murphy High School in Mobile. The delivery for Murphy High School was 600 cases, and Paige testified that this required a driver to travel up and down the delivery ramp 40 to 50 times to complete the delivery. According to Paige, the ramp on the Merchants' truck trailer that day did not fit the trailer. When that is the case, Merchants instructs its drivers to secure the ramp with straps, but, according to Paige, the straps have difficulty holding the weight of the cases, the cart, and a driver. On one of Rice's trips, as he was climbing up the ramp, a strap broke loose, causing Rice and the ramp to hit the ground. Rice landed awkwardly and jammed his neck and his back. Paige telephoned Maryland to report the accident. Rice attempted to work the next day, but with his injuries he was not able to perform any heavy lifting.

         Rice saw a physician, who placed him on work restrictions. Because the restrictions prevented Rice from commercial driving or heavy lifting, there was no position at the Mobile shuttle yard for Rice to perform. As a result, Rice was on leave from work for approximately four and one-half months, and he received full worker's compensation benefits during that period. Rice regularly informed Maryland of his medical condition and return-to-work status during his absence. During Rice's absence, Merchants hired another driver to make deliveries from the Mobile shuttle yard.

         On Wednesday, December 3, 2014, Rice's physician released him to return to work effective Monday, December 8, 2014. That same day, Rice provided Maryland with his physician's return-to-work clearance form, and, according to Rice, Maryland told him that he would get with a supervisor and place Rice back on the work schedule. Rice talked with Maryland again on December 7, 2014, and Maryland told Rice that he and Averhart wanted to meet with Rice at the Mobile shuttle yard at 5:30 a.m. the following morning, which was around Rice's usual starting time for making deliveries. On December 8, 2014, at 5:30 a.m., immediately after Rice got out of his vehicle at the Mobile shipping yard, Averhart and Maryland met Rice, and Averhart terminated Rice's employment with Merchants. According to Rice, Averhart told Rice that "[a]t this point we have more drivers than we do routes and we don't need you [any] more."

         Rice testified that, after he was fired, he felt shocked, "like somebody had sucker punched me right in the face." He said he felt a lot of self-doubt, a lot of stress, and he was "was up at night trying to figure out how I'm going to take care of this, how am I going to fix this, how am I going to pay the bills until [I get a job]." At times, he would wake up in the middle of the night in a sweat, and then he would pace up and down the hallway. Rice testified that he developed trust issues as a result of the firing. He also stated that he supports his fiancée Michelle and her two daughters and that he became a lot more irritable toward them after he lost his job. He stated that he and Michelle had planned to get married in 2015 but that their plans were indefinitely postponed because of his trust issues.

         Following the termination of his employment with Merchants, Rice did not immediately begin looking for work because he knew that it was not a good time of the year for drivers to be hired. To meet expenses, Rice had to withdraw $20, 000 from his 401(k) retirement account. Rice then studied for and took Alabama Department of Transportation tests to add further endorsements to his commercial driver's license ("CDL") so that he would be qualified to pull double-trailers and to transport hazardous substances. He knew that the added endorsements would make him a more marketable commercial driver. Rice also reached out to contacts in his field, including a friend who worked at Estes Express Lines ("Estes").

         In the spring of 2015, Rice applied for and obtained a job with Estes. Rice testified that, during his interview with Estes before he secured the job, most of his time was spent discussing the termination of his employment with Merchants. Rice testified that that experience contributed to his belief that his termination from Merchants could harm his future employability if he were unable to remain with Estes.

         Rice began working for Estes on March 30, 2015. Estes pays its drivers by the hour. When he was initially hired by Estes, Rice earned $20.35 per hour. Eventually, he received a raise to $24.33 per hour. For Estes, Rice works an average of 50 hours per week or more. It is undisputed that Rice works 18 hours or more per week more for Estes than he did for Merchants, meaning that Rice works 936 hours more per year with Estes than he did with Merchants. During his first full year with Estes, Rice earned a total of $49, 000.

         Merchants does not pay drivers by the hour. Instead, it pays based on a productivity formula consisting of cases delivered, number of delivery stops, mileage, and whether the full load is actually delivered. At trial, Rice testified that he worked an average of 32 hours per week for Merchants. Rice testified that he typically got off work in the early afternoon at one or two o'clock and that he had planned before he was injured to start a side business mowing lawns. Rice further testified that it was not possible to have such a side business with the extra hours he works for Estes.[1] According to Merchants' records, on average Rice earned $911.43 per week. According to Rice, his effective hourly rate at Merchants was $28.48 per hour. During his last full year with Merchants, Rice earned a total of $42, 000.

         On February 6, 2015, Rice sued Merchants in the Mobile Circuit Court alleging retaliatory discharge. Following discovery, on June 2, 2017, Merchants filed a motion for a partial summary judgment concerning the issue of "frontpay." Frontpay refers to future earnings awarded in lieu of being reinstated to a former position. In its motion, Merchants conceded that, if Rice had been discharged for filing a worker's compensation claim, he would be entitled to seek compensation for the earnings he would have received between the date his employment was terminated by Merchants (December 8, 2014), and the date he was hired by Estes (March 30, 2015) -- a total of $14, 582.88. Merchants disputed, however, that Rice was entitled (1) to an award of any future earnings from the date he began working for Estes through a date just before the trial began (June 9, 2017)[2] --a total Rice calculated to be $14, 824.00 -- or (2) to an award of future earnings from the date of trial through Rice's estimated date of retirement at age 65 (April 1, 2031) -- a total Rice calculated to be $190, 855.71. Merchants argued that, as a matter of law, Rice was not entitled to recover any future earnings because "he makes more money in his new job than he did with Merchants." In other words, Merchants asserted that "Alabama's law makes clear that because [Rice] currently takes home more money [with Estes] than while employed by Merchants, he has suffered no future lost wages or actual future economic damages that could entitle him to a front pay award."

         The trial court heard Merchants' argument on its motion for a partial summary judgment before the trial began, and it concluded:

"I'm going to let the evidence come out and you can argue at the appropriate time. And you can, if you want to, bring it up on a motion for a directed verdict.[3] At this point I'm going to deny your motion for a summary judgment on that point and I'm going to let the evidence come in."

         On June 6, 2017, Merchants filed a motion in limine in which it sought, among other things, to exclude former Merchants employee John Nims from testifying at trial. Nims worked for Merchants as a driver at the Pensacola, Florida, shuttle yard. On May 12, 2014, he was injured on the job, and, like Rice, he was placed on restriction from work by his physician for an extended period. During Nims's absence, Merchants hired another driver at the Pensacola shuttle yard to perform deliveries. On January 8, 2015, Nims was cleared to return to work for Merchants. Nims's employment was terminated on the day he returned to work, for the same reason that had been given to Rice, i.e., Merchants no longer had a position open for him because it had hired another driver to fill his position. Merchants did not attempt to place Nims in another position in the company. Nims filed a retaliatory-discharge action against Merchants that eventually was settled, with Merchants admitting no fault.

         In its motion in limine, Merchants contended that Nims's testimony should be excluded because, it argued, even if Nims's employment termination was considered to be analogous to Rice's termination, one example does not establish a "pattern or practice" of retaliatory discharge by Merchants under Rule 404(b), Ala. R. Evid.[4] Merchants argued that, to fit within a "pattern or practice," there must be evidence of "a significant number of other employees in the plaintiffs' protected class" or evidence indicating that retaliatory discharge "was Merchants' 'standard operating procedure.'" (Quoting Cooper v. Federal Reserve Bank of Richmond, 467 U.S. 867, 876 (1984).) Rice responded that he was offering Nims's testimony for the purpose of establishing intent on Merchants' part, not on the issue of punitive damages.

         In a hearing on pending motions held a few days before the jury was empaneled, the trial court denied Merchants' motion in limine with regard to Nims, explaining:

"Let's talk about what happened to Mr. Nims. If you look at the Alabama Rules of Evidence I think that in this particular situation this other act can be offered for the purpose for which [Rice is] offering this particular case to show that Merchants, I guess, arguably was at least in these two situations in the way they handled the return to work on the part of the injured worker. ...
"... I'm going to deny [the motion in limine] as to Nims."

         At trial, when Nims's video deposition was introduced, Merchants raised several objections to specific portions of his testimony but did not raise any objection predicated on the notion that Nims should not be permitted to testify at all.

         At trial, Merchants defended its termination of Rice's employment by contending that Rice was one of eight delivery drivers covering eight delivery routes in Mobile; that Merchants could not hold Rice's delivery routes open during his lengthy medical leave, part of which was during Merchants' busiest delivery season; and that, by the time Rice was cleared to return to work, Merchants had a full complement of eight delivery drivers and did not have enough volume to justify employing a ninth driver.

         Rice introduced evidence indicating that Merchants' employee handbook contained a policy as to what should be done when an employee returns to work following a leave in which the employee received worker's compensation benefits. Specifically, Section 7.7 of the employee handbook provides:

"Any employee returning from non-FMLA medical leave of absence under this Section will be allowed to return to his or her former position if there is an opening available. If there is no opening available, an effort will be made to place the employee in another available position for which he or she is qualified and capable of performing."

         It is undisputed that Merchants did not follow the above-quoted policy with regard to Rice because Averhart did not make any effort to place Rice in another position in the company, even though Averhart testified that he was aware of the policy. Rice also introduced deposition testimony from one of Merchants' corporate witnesses, Jan Farve, who initially denied that Merchants had a policy for employees returning from worker's compensation leave, but who later admitted that Merchants' managers should have followed the policy in Rice's case. Rice also introduced an e-mail sent from Farve to Averhart, Maryland, and another supervisor on January 8, 2015, after Farve learned that Nims's employment had been terminated:

"With the changing federal WC [workers' compensation] laws....going forward we do not need to term someone right off of WC Leave. If their position isn't open any longer, we need to find something for them to do, and work the process. Thanks guys....[T]his one will probably come back to bite us, so stay tuned, I'll probably need y'all."

         (Ellipses in original.)

         Rice also introduced deposition testimony from Merchants employee Charles Tillman, who testified that in October 2014 he was placed in a new-driver recruiting position in Newberry, South Carolina, to recruit drivers for new business Merchants had acquired. Tillman stated that the Newberry location went from employing around 10 drivers to employing over 40 drivers. On November 19, 2014, Farve sent Merchants' chief executive officer Andy Mercier an e-mail asking him how many markets Merchants needed to "ramp up" recruitment in at that time, and Mercier responded: "All markets." In a November 25, 2014, e-mail from Farve to a hiring recruiter, Farve stated that "[w]e are in a spot where we need to double our drivers for all branches." Rice also introduced evidence indicating that on December 19, 2014, 11 days after Rice's employment was terminated, Merchants posted an opening for a delivery driver for its Mobile shuttle yard. Rice also introduced other Merchants' job postings for drivers in Mobile and Pensacola between November 2014 and February 2015.

         At the close of Rice's case-in-chief, Merchants made an oral motion for a judgment as a matter of law solely with respect to the issue of Rice's claim for lost future earnings.

"MS. KAFFER [Merchants' counsel]: Yes, sir. Your Honor, we have a motion [for a] directed verdict[5] just on the issue of front pay damages. The lost pay damages from the time Mr. Rice started with the new employment.
"His own testimony is that in his new employment he makes more money than his old employment. For that reason and the undisputed evidence in the record he cannot prevail on the claim for lost pay from the time he started his new employment.
"Evidence that if [he] had more time off work he could have earned money with the lawn care business is too speculative to support the damages that he's claiming.
"THE COURT: Go ahead, Mr. O'Hara [Rice's counsel]. Any other motions besides that, Ms. Kaffer?
MS. KAFFER: No, sir.
"THE COURT: Go ahead and address that one issue on the economic damages.
"MR. O'HARA: Judge, the law of Alabama on retaliatory discharge says that we're entitled compensatory damage and punitive damages just like any other tort. I believe that because of the difference in pay systems between Merchants and his new employer Estes we had to extract from Merchants' pay system an hourly wage, effective hourly wage, averaged over the period that he worked there. Doing that we made a -- we presented substantial evidence of loss in earning capacity and loss of wages. He made close to [$4.15] per hour less. On that basis I believe we presented substantial and sufficient evidence to allow the issue to go to the jury for them to determine whether we've met our burden and whether he's entitled to those lost future wages.
"THE COURT: Anything else, Ms. Kaffer?
"MS. KAFFER: No, Your Honor.
"THE COURT: I'm going to deny [Merchants'] motion and let it go to the jury on that issue. I think the[re is a] fact question[] with regard to the effect of the subsequent employment as compared to his prior employment."

         Following the presentation of evidence from Merchants, the case proceeded to the jury-charge conference. Merchants did not move for a judgment as a matter of law at the close of all the evidence.

         During the charge conference, Rice submitted a proposed jury instruction with regard to lost future earnings that tracked Alabama Pattern Jury Instruction -- Civil 11.17 for "Loss of Future Earnings or Future Earnings Capacity."[6] The trial court rejected the proposed instruction in favor of its own charge, explaining:

"On the future earnings charge it implies that part of that is because of his physical limitations. I've taken all that out. It's strictly on his loss of earning capacity. They can look at his physical condition kind of -- Let me see how I put it in the charge so I can be clear on this. What I said was this regarding future earnings. Denny Rice's earning power or capacity before his injury and what they are now -- This is what they can consider with regard to the future lost wages. Denny Rice's earning power or capacity before his injury and what they are now, the type and degree of his alleged financial loss and whether or not the jury is reasonably satisfied there will be future financial loss and, if so, how long it will last. Here's the only thing that I think might be confusing to the jury. I disallowed [Rice's] expert. I don't know how else to handle this because it's a correct statement of the law. But if you decide that Denny Rice will lose future earnings and has lost future earning capacity, you must then determine the amount he is reasonably certain to lose and reduce that to present value. That's a correct statement of the law. I don't know how they will do it. They're just going to have to make their best effort at it, I suppose. There's been no testimony. I'm not aware of any formula to use as a matter of law. There may be one but I'm just not aware of it. I think they will have to use their own discretion on that."[7]

         Neither party registered an exception to the trial court's ruling on this instruction.

         As to lost future earnings, the trial court instructed the jury as follows:

"Denny Rice says that Merchants FoodService's conduct caused him to lose future earnings. To decide that amount with regard to the loss of future earnings, you must first determine the effect, if any, the injury had on his future earnings. To decide this question you must consider the following. Number one, Denny Rice's earning power or capacity before this injury and what they are now and, two, the type and degree of the financial loss and, three, whether or not you are reasonably satisfied there will be future loss and how long it will last. If you decide that Denny Rice will lose future earnings then you must determine the amount that he is reasonably certain to lose and reduce that amount to its present value. Again, I want to tell you that in determining the loss of earnings it has nothing to do with his workman's compensation injury. This only pertains to the claim that he is making against [Merchants] for being wrongfully terminated."

         Merchants did not object to this jury instruction.

         The trial court also explained during the jury-charge conference that it believed Merchants was entitled to a limiting instruction with regard to Nims's testimony:

"[Merchants' proposed charge number] 28. I am giving the [Rule] 404(b)[, Ala. R. Evid., instruction]. I think you're entitled to a limited instruction on that. I'm going to instruct them that the evidence regarding John Nims is admitted only for your consideration in determining whether Merchants acted with the intent to terminate [Rice] solely because he claimed workers' compensation benefits. I take out that next sentence, you cannot consider in assessing punitive damages because I think it's a little bit misleading and it's not in the pattern charges. So I'm not going to give that sentence. I will tell them, however, they are to consider this evidence along with the rest of the evidence but only for the purpose for which it was admitted."

         Merchants did not object to the trial court's modification of Merchants' proposed instruction.

         The trial court instructed the jury as follows with regard to Nims's testimony:

"Now, I want to point out to you that the evidence regarding John Nims is admitted only for your consideration in determining whether Merchants acted with the intent to terminate Denny Rice solely because he claimed workers' compensation benefits. You will consider this evidence along with the rest of the evidence but only for the limited purpose for which it was admitted."

         Merchants did not object to this instruction.

         After the trial court gave its instructions to the jury, Merchants requested that the verdict form reflect that damages be divided into past and future damages, as § 6-11-1, Ala. Code 1975, allows.[8] After some discussion with the trial court and counsel for Rice, Merchants withdrew its request for a verdict form that distinguished between past and future damages.[9] Thus, the verdict form submitted to the jury asked the jury simply to distinguish between compensatory damages and punitive damages.

         During jury deliberations, the jury asked a question concerning the proposed calculation of Rice's lost-earnings damages that Rice's counsel had presented in a trial exhibit during closing arguments. The jury noticed a calculation error in the trial exhibit and asked whether it could correct the error.[10] Merchants concedes that the trial court correctly instructed the jury that "a factual question about damages was within the province of the jury to resolve." Merchants' brief, p. 5.

         The jury returned a verdict in Rice's favor, awarding compensatory damages in the amount of $314, 862.88, and punitive damages in the amount of $944, 588.64, for a total of $1, 259, 451.52. The jury did not indicate the basis for the compensatory-damages award. On June 20, 2017, the trial court entered a judgment on the jury verdict.

         On July 19, 2017, Merchants filed a "Motion for Judgment as a Matter of Law, To Alter, Amend, or Vacate the Judgment, or, in the alternative, Motion for New Trial." In the motion, Merchants contended that there was not substantial evidence that Merchants had terminated Rice's employment solely because he made a claim for worker's compensation benefits. Merchants also argued that it was entitled to a judgment as a matter of law because Rice "made more money in his new job than he made at Merchants" and that, thus, the issue of lost future earnings was erroneously submitted to the jury. It contended that the verdict was against the great weight or preponderance of the evidence or that it was contrary to law. Finally, in the alternative, Merchants argued that the compensatory damages and the punitive damages should be remitted as excessive under common law and on statutory and constitutional grounds. On the same date, Merchants filed a "Motion to Conduct Hammond/Green Oil Hearing and to Remit Damages." In that motion, Merchants contended that "the present punitive damages verdict is greater than any of the net punitive awards" affirmed in retaliatory-discharge cases in the past 20 years.

         On September 5, 2017, Merchants filed an amended postjudgment motion in which it withdrew its argument "seeking judgment as a matter of law as to [Rice's] retaliatory discharge claim as a whole." Merchants repeated all the other arguments it had related in its original postjudgment motion.

         On September 22, 2017, the trial court held a hearing on Merchants' postjudgment motion and its motion seeking remittitur of the compensatory-damages and punitive-damages awards.

         On November 16, 2017, the trial court entered an order denying Merchants' postjudgment motion and its motion to remit the compensatory-damages award and the punitive-damages award.[11] The order first addressed Merchants' arguments that the compensatory-damages award was excessive. The trial court noted that

"[t]he verdict does not apportion or allocate between lost back pay, lost future pay, mental anguish, and other compensatory damages. The court cannot and will not speculate on such apportionment. If the evidence supports the compensatory damages award on any element of damages, or a combination thereof, the Court must defer to the jury's verdict."

         As to mental anguish, the trial court declined to apply a "strict-scrutiny" standard to the evidence of mental anguish, pursuant to Kmart Corp. v. Kyles, 723 So.2d 572, 578 (Ala. 1998), concluding that "Rice's testimony regarding his mental anguish was not scant within the meaning [of] Kmart." It added that, even if such a standard was applied, "Rice presented substantial evidence of his mental anguish."

         With respect to lost future earnings, the trial court observed:

"Rice testified that the circumstances under which he was fired by Merchants monopolized his job interview with Estes. He testified that his firing and the lawsuit created a stigma during his job interview that led to him being hired at a lower hourly wage. Rice testified that, but for a friend that worked at Estes putting in a good word for him, he would not have received a job offer from Estes."

         The trial court described Merchants' argument on this issue as seeking "to reweigh the competing testimony and exhibits, and substitute Merchants' version of the inferences to be drawn therefrom for those of the Jury regarding ... the amount of his lost wages and earning capacity." Overall, the trial court concluded that "the Jury's compensatory damages award is supported by substantial evidence and not against the great weight and preponderance of the evidence."

         Regarding the punitive-damages award, the trial court recounted and examined each of the applicable factors for examining such an award expounded in BMW of North America, Inc. v. Gore, 517 U.S. 559 (1996), Green Oil Co. v. Hornsby, 539 So.2d 218 (Ala. 1989), and Hammond v. City of Gadsden, 493 So.2d 1374 (Ala. 1986). Following that examination, the trial court concluded that the punitive-damages award was not excessive.

         Merchants appeals.

         II. ...


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