MOORE, Judge.
Vinland Energy Operations, LLC, and its owner, Majeed Saiedy Nami, appeal a jury verdict rendered in Laurel Circuit Court, including punitive damages, in the amount of nearly $1 million in favor of Janice Engle in this hostile work environment and retaliation case brought pursuant to Kentucky Revised Statute (KRS) Chapter 344 and common law battery. After oral argument and upon review of the record and briefs, we vacate and remand.
Janice Engle began working for Vinland Energy Operations, LLC, in May 2007, via a temporary placement agency, the Job Shop. After working temporarily for Vinland for two weeks, she was permanently hired at Vinland by Sandy Smith. Engle worked at Vinland for only five months and was thereafter terminated. She contends that she was subjected to a hostile work environment and was battered by Majeed Saiedy Nami, the owner of Vinland; that she was retaliated against for reporting the sexual harassment; and that she suffered emotional distress, humiliation and embarrassment as a result of Nami and Vinland's actions. Consequently, she filed a complaint in Laurel Circuit Court. After a jury trial that lasted less than six hours with only about one hour of proof by Engle, the jury returned a verdict in her favor after Engle of nearly $1 million.
At trial, Engle testified as to the facts that resulted in her claims against Vinland and Nami. According to Engle, the first time she met Nami, she was introduced to him by Vinland's office manager, Jade Schnabel, while in the company's kitchen. Engle extended her hand to shake Nami's. Engle testified that in response, Nami stated, "Let me introduce myself properly." She claims he reached around and grabbed her butt. Engle pushed him away and told him to quit. She testified that he attempted to reach her again, but she again pushed him away. Engle testified that Julie Vigeant and Schnable were both present when this took place. According to Engle, Nami then went over to Vigeant and grabbed her butt with both hands and had his hands all over her while Vigeant attempted to push him away. Schnable was not deposed nor called to testify at trial. Vigeant testified at trial that she did not recall these incidents.
Engle testified that on another day, she witnessed Nami in the office of Vinland's mapping manager, Lesa Gilbert. Engle saw Nami rubbing Gilbert's shoulders. Engle was seated on a backless stool in the same office. She testified that as Nami was leaving Gilbert's office, he walked around Engle's desk and slapped her on the butt. Engle testified that she pushed Nami away and told him to stop. Gilbert testified at trial that she did not recall these incidents.
Engle testified that she complained to Gilbert about Nami's behavior and asked Gilbert what to do in regard to it. Engle testified that Gilbert's response was "don't make such a big issue out of it, he does it to all the females."
On another day, Nami came into where Engle and Vinland's receptionist, Amber Hendricks Shaw, were working. Engle testified that Nami placed his hand on Shaw's stomach, jiggling it, and asked "can I f*** that off for you?" Engle testified that this comment offended her. Shaw did not testify at the trial.
Engle testified to another occasion when Nami came into her office area with a group of businessmen. She testified that Nami walked over to her and grabbed her left breast and asked "why aren't they growing." Engle responded by saying "excuse me?" Nami repeated his statement. Engle testified that she was offended by this.
Engle testified that she then complained about Nami to Vinland Land Development Supervisor, Rob Conley. According to Engle's testimony, Conley's response was "don't make an issue out of it." Approximately two weeks after Engle spoke to Conley, she was terminated at a meeting with Conley and Sandy Smith. Nami owns Vinland but does not operate it. He owns other business entities and was only at the Vinland facility occasionally. During his testimony, he denied all of Engle's claims of sexual harassment and battery.
The jury returned a verdict in favor of Engle, which in total, was nearly $1 million, and the court awarded her attorneys' fees. Vinland and Nami filed a motion for judgment notwithstanding the verdict, which the trial court denied. They now appeal. Additional facts relevant to the issues on appeal will be set forth as the claims are reviewed.
We review a decision on a JNOV for clear error. Moore v. Envtl. Constr. Corp., 147 S.W.3d 13, 16 (Ky. 2004). In reviewing the evidence presented to the jury, all reasonable inferences are drawn as most favorable to the verdict returned by the jury and the trial court's decision must be upheld if a reasonable person could not have found as the jury did. Id. Additionally, our review must be tempered by keeping in mind that
Taylor v. Kennedy, 700 S.W.2d 415, 416 (Ky.App. 1985).
The majority of Vinland and Nami's claims on appeal regard the judgment entered in this case and the trial court's denial of their JNOV motion. They argue the evidence was lacking to support a number of Engle's claims, even under the high standard necessary to prevail on a JNOV motion. Before we review the merits of the sufficiency of evidence issues, a review of the record causes this Court to pause to determine if all of the issues are properly preserved. Regarding sufficiency of the evidence claims, Vinland and Nami cite to the directed verdict motion their trial counsel
Steel Technologies, Inc. v. Congleton, 234 S.W.3d 920, 926 (Ky. 2007).
Regarding a directed verdict motion,
Carr v. Kentucky Utilities Co., 301 S.W.2d 894, 897 (Ky.1957); see also Lucas & Hussey Loose-Leaf Tobacco Warehouse, Inc. v. Howell, 320 S.W.2d 613 (Ky. 1959); Whitesides v. Reed, 306 S.W.2d 249, 250 (Ky. 1957); Gulf Oil Corp. v. Vance, 431 S.W.2d 864, 865 (Ky. 1968) (record must show the specific grounds stated in the motion for a directed verdict).
Accordingly, a generic motion for directed verdict will not properly support a JNOV based on specific claims of insufficiency of evidence. Vinland and Nami were obligated to raise explicit sufficiency of the evidence claims in regard to the causes of action Engle relied upon. If they failed to do so or failed to raise specific arguments before the trial court, they denied the trial court "the opportunity to pass on the issue[s] in light of all the evidence." Schoenbachler v. Commonwealth, 95 S.W.3d 830, 836 (Ky. 2003) (quoting Baker v. Commonwealth, 973 S.W.2d 54, 55 (Ky. 1988)). And, "[a] new theory of error cannot be raised for the first time on appeal." Springer v. Commonwealth, 998 S.W.2d 439, 446 (Ky. 1999) (citations omitted).
We outline the above after reviewing Vinland and Nami's preservation statement as relying on trial counsel's motion for directed verdict made at the end of the Engle's proof. Vinland and Nami do not cite for preservation of their argument the motion made by their counsel at the end of all proof.
At the end of Engle's proof, trial counsel for Vinland and Nami made an oral motion for directed verdict, which was based solely on a lack of proof regarding whether the number of touching incidents and conduct at the workplace amounted to hostile work environment, as it related to the corporate defendant, Vinland. No other basis was given for the motion for directed verdict; Vinland and Nami's trial counsel did not make any arguments relating to any other claims or elements regarding hostile work environment. At the end of the proof in the case, trial counsel for Vinland and Nami stated that she "renew[ed] [her] motion for direct verdict." That was the extent of her argument for directed verdict. Consequently, pursuant to well-settled law and the rules of civil procedure, the only issue that was properly presented to the trial court for a ruling, and therefore the only issue preserved for our review in regard to sufficiency of evidence, is the evidence in regard to whether Nami's conduct, i.e., the number of touching incidents and comments, created a hostile work environment for liability as it related to the corporate defendant, Vinland. No other sufficiency of the evidence claims are properly preserved and therefore have been waived.
The first issue raised on appeal is whether the standard for hostile work environment was satisfied by the evidence presented at trial. Vinland argues that Engle did not establish that Nami's conduct was severe and pervasive as to be actionable. Consistent with Title VII of the 1964 Federal Civil Rights Act, 42 U.S.C. § 2000e-2(a)(1), the Kentucky Civil Rights Act, KRS Chapter 344, prohibits sexual harassment in the workplace that results in "a hostile or abusive work environment."
Ammerman, 30 S.W.3d at 798.
Circumstances that may be figured into this analysis include "the frequency of the discriminatory conduct; its severity; whether it is physically threatening or humiliating, or a mere offensive utterance; and whether it unreasonably interferes with an employee's work performance." Id. However, "offhand comments, and isolated incidents (unless extremely serious) will not amount to discriminatory changes in `the terms and conditions of employment.'" Faragher v. City of Boca Raton, 524 U.S. 775, 788, 118 S.Ct. 2275, 2283 (1998).
The harassment must be both objectively and subjectively offensive as determined by the totality of circumstances. Harris, 510 U.S. at 23, 114 S.Ct. at 371; Thus, the conduct must both create an "objectively hostile or abusive work environment" and cause the victim to "subjectively perceive the environment to be abusive." Harris, 510 U.S. at 21, 114 S.Ct. at 370. Regarding the latter element, "`if the victim does not subjectively perceive the environment to be abusive, the conduct has not actually altered the conditions of the victim's employment, and there is no . . . violation.'" Gallagher v. C.H. Robinson Worldwide, Inc., 567 F.3d 263, 273 (6th Cir.), rehearing and rehearing en banc denied (2009) (quoting Williams, 187 F.3d at 566) (quoting Harris, 510 U.S. at 21-22, 114 S.Ct. 367)); see also Black v. Zaring Homes, Inc., 104 F.3d 822, 826 (6th Cir. 1997). Thus, sexual harassment must alter the conditions of the victim's employment to be actionable. Meritor, 477 U.S. at 67, 106 S.Ct. at 2405; see also Meyers, 840 S.W.2d at 821. However, the Sixth Circuit has made clear that the victim does not have to "prove a tangible decline in her work productivity; only `that the harassment made it more difficult to do the job.'" Gallagher, 567 F.3d at 274 (quoting Williams, 187 F.3d at 567) (quoting Davis v. Monsanto Chemical Co., 858 F.2d 345, 349 (6th Cir. 1988)).
On review of a motion for directed verdict, "the reviewing court must ascribe to the evidence all reasonable inferences and deductions which support the claim of the prevailing party." Meyers, 840 S.W.2d at 821 (quoting Brown Hotel Co. v. Marx, 411 S.W.2d 911 (Ky. 1967)). The question of whether a work environment is hostile and the conduct is severe and pervasive is a question of fact. Meyers, 840 S.W.2d at 821-22.
Id. at 821-22.
Harassment involving "an element of physical invasion" is considered more severe than harassing comments alone. Hawkins v. Anheuser-Busch, Inc., 517 F.3d 321, 334 (6th Cir. 2008) (quoting Williams, 187 F.3d at 563). In Williams, the Court found that harassing sexual comments and one act of touching contained an element of physical invasion, raising a question of fact for the jury. Williams, 187 F.3d at 563.
Embedded in Vinland's contention that Engle did not present sufficient evidence of a hostile work environment is an argument that there was no testimony that Nami's conduct made it more difficult for Engle to do her job, i.e., that it impacted or altered the terms of her employment. Based upon the evidence at trial, we are inclined to agree. But, as noted supra, the motion for directed verdict was only made in reference to whether the number of touching incidents and conduct by Nami in the workplace was sufficient to sustain a hostile work environment claim. The motion did not include whether there was evidence that Nami's conduct impacted or altered the terms of Engle's employment. We believe this illustrates the type of issue that the Court in Carr referenced when it cautioned that general motions are insufficient and that motions should be argued so that the "attention of the trial court can . . . be focused on possible reversible errors, which might otherwise be obscured . . . ." 301 S.W.2d at 897. Here, the motion for directed verdict did not raise sufficiency of the evidence regarding this issue. Consequently, the trial court was not given the opportunity to rule on it; therefore, it is not properly before this Court.
Moreover, the instructions in this matter never required the jury to consider, as an element of Engle's hostile work environment claim, whether Nami's conduct impacted or altered the terms of Engle's employment. Even under the bare bones instructions rule followed in Kentucky, the necessary elements of the cause of action should be included. For example, in Lumpkins ex rel. Lumpkins v. City of Louisville, 157 S.W.3d 601 (Ky. 2005), a civil rights case, the Court reviewed whether the instructions were proper. The instructions given in Lumpkins, 157 S.W.3d at 604-05, included:
In the case at bar, the given instructions did not "convey the standard enunciated in Harris." Lumpkins, 157 S.W.3d at 605. The jury was not instructed on whether Nami's alleged conduct interfered with Engle's ability to perform her work. There were no objections made to the jury instructions to preserve it.
And, even if this Court agreed that the bare bones instructions given were sufficient, trial counsel was obligated to flesh them out during closing arguments. Id. (citing Rogers, 612 S.W.2d 133) ("The concept permits the instructions to be `fleshed out' in closing arguments.") In trial counsel's closing argument, no reference was made to Engle's evidence or testimony, or lack thereof, regarding whether Nami's alleged conduct interfered with her ability to do her job.
Regarding Vinland's argument that Engle's co-workers witnessed Nami's conduct and interpreted it as merely joking around, this was a credibility issue for the jury to decide. Even so, "[h]umor is not a defense under the subjective test if the conduct was unwelcome." Williams, 187 F.3d at 566.
Nami's alleged conduct toward Engle was overtly physical and, in addition to exhibiting physical contact of a sexual nature with other workers in Engle's presence, his actions were accompanied by blatantly sexual comments. This alleged conduct clearly establishes an element of physical conduct, combined with sexual comments, sufficient to submit the hostile work environment claim to the jury. Consequently, Vinland's sufficiency of the evidence claims fail.
Vinland and Nami next argue that the trial court incorrectly admitted evidence regarding Nami's prior alleged acts of sexual harassment. Presumably, this argument is in reference to Casey Sutton and Julie Osborne, about whom Engle's counsel questioned Nami. Neither Sutton nor Osborne worked with Engle at Vinland. Apparently, the only basis for allowing in this testimony was that Engle's counsel represented to the trial court, prior to seating the jury, that Osborne had filed suit against Nami for sexual harassment and that Sutton had informed Engle's counsel that Nami had sexually harassed her. Vinland and Nami argue that the trial court erred in allowing in this testimony under KRE
Vinland and Nami argue that the trial court abused its discretion in allowing Engle's counsel to question Nami about his national origin. On this, a review of the trial reveals that Engle's counsel only asked Nami if he was born in Iran, to which there was no objection. Consequently, this issue was not properly preserved.
Alternatively, this argument is waived. On direct examination of Nami, defense counsel herself asked Nami the same question.
Nami and Vinland next argue that the court erred by allowing questions regarding Nami's financial condition. We agree.
Engle presents two arguments in response: (1) that the objection is not preserved; and (2) that this evidence was admitted for purposes of impeaching Nami's credibility as a witness. We find fault with both responses.
Vinland and Nami argue that the trial court erred in allowing Engle's counsel to question Nami regarding whether he paid $7 million for an airplane and whether Vinland was for sale for $25 million. In Engle's brief, she references the line of questioning regarding whether Vinland was for sale for $25 million and argues it is not preserved, as there was no objection to the question. We agree regarding the questions of whether Vinland was for sale for $25 million; trial counsel did not object to these questions. Thus, this objection is waived.
However, regarding questions about Nami's purchasing an airplane for $7 million, defense counsel did object at trial. In a footnote in Engle's brief, she cites to the trial proceedings and states that "Appellants waived any objection to this issue during the trial. At the bench hearing, Appellants' counsel advised the trial court `I will let him testify that the plane is not worth seven million bucks.'" This Court watched this bench conference and notes that defense counsel chuckled in making this remark as if being somewhat sarcastic in a lighthearted manner, not as if to waive this objection. Thereafter, counsel stated that the reference was extremely prejudicial, as if to show that Nami had "an extremely deep pocket." Moreover, the trial court ruled on the objection. Accordingly, Engle's argument that it is waived is lacking in all merit.
We also disagree with Engle's statements in her brief regarding the reasons why questioning Nami regarding the airplane was proper, i.e., as being responsive to Vinland and Nami's lack of profits and bad economy (a "poverty defense") and to impeach Nami's credibility. Rather, at the point in the trial when Engle's counsel questioned Nami regarding whether he paid $7 million for an airplane and defense counsel objected, no reference whatsoever had been made to Nami's answers during his deposition regarding the airplane. Engle cannot offer a different theory on appeal than the one presented to the trial court of why the evidence was admissible. See Lewis, 318 S.W.2d at 859.
Furthermore, at the bench conference regarding defense counsel's objection, Engle's counsel argued specifically that he had "a battery claim and punitive damages are available and it will help [him] get to [Nami's] net worth." Engle's counsel did not argue in any way that this questioning was being used to rebut a "poverty defense" or for impeachment purposes.
"It has been the law of this Commonwealth for [over] one hundred years that in an action for punitive damages, the parties may not present evidence or otherwise advise the jury of the financial condition of either side of the litigation." Hardaway Management Co. v. Southerland, 977 S.W.2d 910, 916 (Ky. 1998) (note omitted) (citing Hensley v. Paul Miller Ford, Inc., 508 S.W.2d 759, 764 (Ky. 1974); Givens v. Berkley, 108 Ky. 236, 56 S.W. 158 (1900)); see also Singer Sewing Mach. Co. v. Dyer, 160 S.W. 917, 918 (Ky. 1913); White v. Piles, 589 S.W.2d 220, 222 (Ky. App. 1979). Kentucky's highest Court has specifically held that evidence of a party's financial condition is inadmissible in a case where punitive damages might be recovered. Givens, 108 Ky. 236, 56 S.W. at 159. A case should be tried on the merits without reference to the wealth or poverty of the parties. White, 589 S.W.2d at 222 (citing Southern-Harlan Coal Co. v. Gallaier, 240 Ky.106, 41 S.W.2d 661 (1931)).
Whether to admit evidence is reviewed for an abuse of discretion. A trial court's evidentiary rulings amount to an abuse of discretion if they are unsupported by sound legal principles. Goodyear Tire & Rubber Co. v. Thompson, 11 S.W.3d. 575, 581 (Ky. 2000) (citing Commonwealth v. English, 993 S.W.2d 941, 945 (Ky. 1999)). Here, the trial court's ruling was not supported by the law of the Commonwealth regarding the introduction of the financial condition of the parties. Accordingly, it was clearly an abuse of discretion.
Engle argues, however, that Vinland and Nami have not shown that the introduction of this evidence affected the outcome of the trial. We disagree and will evaluate this in light of Vinland and Nami's claims that the damages were excessive.
Under KRS Chapter 344, the measure of actual damages for sexual harassment is emotional distress and humiliation. "[E]vidence of [discriminatory harassment] alone is not the standard by which to evaluate damages: there must be evidence of actual humiliation and embarrassment." Kentucky Comm'n on Human Rights v. Fraser, 625 S.W.2d 852, 856 (Ky. 1981). "Although medical evidence is not necessary in order for a plaintiff to be compensated for emotional distress, `damages for mental and emotional distress will not be presumed, and must be proven by "competent evidence."`" Betts v. Costco Wholesale Corp., 558 F.3d 461, 472 (6th Cir. 2009) (quoting Turic v. Holland Hosp., Inc., 85 F.3d 1211, 1215 (6th Cir. 1996) (quoting Carey v. Piphus, 435 U.S. 247, 263-64 & n.20, 98 S.Ct. 1042, 1052-53 & n.20 (1978))).
While we are highly reluctant to take a verdict from the jury, the amount awarded herein—based on Engle's evidence— appears excessive. The law is well established that damages must be proportional to compensate the injury actually suffered. Moore v. KUKA Welding Systems, 171 F.3d 1073, 1082 (6th Cir. 1999). In Kentucky, punitive damages are not recoverable under KRS Chapter 344. See Kentucky Dept. of Corrections v. McCullough, 123 S.W.3d 130, 138 (Ky. 2003). Thus, it was the duty of the jury to evaluate the evidence Engle presented regarding the emotional distress, humiliation and embarrassment she actually suffered and to compensate her in accordance.
The evidence Engle presented on the emotional distress she actually suffered was extremely weak as compared to the verdict rendered for such. And, as to Engle's termination, even if it was in violation of the civil rights law, that alone "does not rise to the level of `extreme and outrageous conduct'." Benningfield v. Pettit Envt'l., Inc.,183 S.W.3d 567, 572 (Ky.App. 2005) (quoting Godfredson v. Hess & Clark, Inc., 173 F.3d 365, 376 (6th Cir.1999)).
Certainly, the allegations made against Nami are outrageous. But, remarkably Engle's testimony fell short of the subjective reaction that one might have reasonably expected and failed to show emotional distress so severe that damages of $850,000 was within "the maximum damages that a jury could reasonably find to be compensatory for [Engle's actual injuries]."
It is imperative to keep in mind here that there is both an objective and subjective component to sexual harassment. And under an emotional distress claim, the actual distress suffered must be severe. Certainly, these are jury issues. But, a review of Engle's testimony reveals only that she stated that she was "offended" and "shocked" by Nami's actions. She did not testify whatsoever to any embarrassment, humiliation, mental anguish or emotional distress. She did not seek counseling and only spoke to her parents about the issue, and that was only after she was terminated.
We find guidance on this issue from the federal courts. In Betts, terminated African-American employees sued alleging discriminatory termination and racially hostile work environment. 558 F.3d 461. One plaintiff, Thomas, received $10,000 for emotional distress. Regarding the actual emotional distress she suffered, Thomas testified that she was "upset" and "disappointed" that she lost her job and stated that she felt "smacked in the face." Id. at 471. The Sixth Circuit held that these generalized comments were not enough to support an award for emotional distress.
In the Betts opinion, the Sixth Circuit reviewed other cases in making its determination. In particular, the Court reviewed Erebia v. Chrysler Plastic Prod. Corp., 772 F.2d 1250 (6th Cir. 1985), regarding whether the evidence was sufficient on an emotional distress claim arising out of a hostile work environment case. The Betts Court noted that in Erebia, the following was held to be insufficient evidence to sustain the jury's emotional-distress award:
Betts, 588 F.3d at 742 (quoting Erebia, 772 F.2d at 1259).
Engle's general statements that she was offended by Nami's actions are somewhat analogous to that which the Sixth Circuit found to be insufficient to justify the jury's awards for emotional distress. Damages must be proportional to the injury actually suffered. Moore, 171 F.3d at 1082. Here, given Engle's evidence, or should we say lack thereof, the damages were not proportional to the injuries she suffered. This combined with the trial court's abuse of discretion in allowing the testimony relating to Nami's wealth warrant setting aside the judgment and ordering a new trial.
A new trial is warranted, and we could view Vinland's and Nami's argument that the jury was not properly instructed regarding punitive damages as moot. We will, however, briefly review this issue. For the sake of clarity, the only punitive damage instruction given was related to the cause of action for battery; a punitive damage instruction was not given relating to Engle's civil rights claims, as Kentucky law does not allow this. See McCullough, 123 S.W.3d at 138.
Before submitting the instructions to the jury, the trial court specifically asked trial counsel for both parties if there were any objections to the instructions. Both answered in the negative; hence, trial counsel did not object to the court's jury instruction on punitive damages.
Vinland and Nami argue that the trial court erred in denying their CR 60.02 motion. Without going into the merits of the motion, it is not properly before this Court.
After Vinland and Nami filed a notice of appeal, they filed a CR 60.02 motion.
Based on the foregoing, the judgment of the Laurel Circuit Court is hereby vacated, and this matter is remanded for a new trial. Any remaining issues are deemed moot.
ALL CONCUR.