AMOS L. MAZZANT, III, District Judge.
Pending before the Court is Defendant 24 Hour Fitness USA, Inc.'s Renewed Motion for Judgment as a Matter of Law (Dkt. #73) and, alternatively, Motion for New Trial (Dkt. #74).
Defendant is a corporation that operates gyms. Plaintiff Susan Jung was a member of Defendant's gym located in Lewisville, Texas. On May 3, 2017, Plaintiff arrived at the gym and placed her belongings in a locker. In the locker, Plaintiff discovered and removed a set of keys. Plaintiff sealed her belongings in the locker with a lock and returned the keys to Defendant's employee—Zach Turner—at the front desk. Plaintiff then exercised in the gym.
During Plaintiff's workout, another gym member returned to the gym searching for the keys left inside Plaintiff's locker. Although Plaintiff previously returned the keys to the front desk, Zach Turner directed another employee to cut Plaintiff's lock from Plaintiff's locker to search for the keys. After failing to find the keys inside the locker, Defendant's employees left Plaintiff's cut lock hanging on the locker:
(Dkt. #4 ¶ 8; Dkt. #24-5 at p. 14).
When Plaintiff returned to her locker and discovered the cut lock, she went to the front desk to ask why Defendant's employees cut the lock. After an explanation, Plaintiff retrieved her belongings from the locker and discovered that her wallet—containing her driver's license, debit and credit cards, and other items—was missing. Plaintiff called the police who generated a report on the incident.
Plaintiff filed suit against Defendant on October 4, 2017 (Dkt. #4). Plaintiff alleged invasion of privacy, negligence, and gross negligence claims against Defendant, and Plaintiff sought actual, mental anguish, emotional distress, and exemplary damages (Dkt. #4 ¶¶12-13). Defendant removed the case to this Court on November 3, 2017 (Dkt. #1). On October 17, 2018, the Court granted in part and denied in part a motion for summary judgment filed by Defendant (Dkt. #28). Specifically, the Court granted summary judgment on Plaintiff's negligence claim pursuant to a valid and enforceable negligence release found in Plaintiff's membership agreement (Dkt. #28 at pp. 5-12, 16). The Court denied Defendant's request for summary judgment on Plaintiff's remaining claims (Dkt. #28 at p. 16).
On March 18 and 19, 2019, the parties tried the remaining claims to a jury (Dkt. #62; Dkt. #63). At the end of the trial, the jury returned a verdict finding:
On April 5, 2019, the Court entered judgment on the jury's verdict (Dkt. #72). On May 3, 2019, Defendant filed the motions at issue (Dkt. #73; Dkt. #74). On May 14, 2019, Plaintiff filed a joint response to Defendant's motions (Dkt. #75). On May 21, 2019, Defendant filed replies in support of its motions (Dkt. #76; Dkt. #77). Consequently, Defendant's motions are ripe for review.
Upon a party's renewed motion for judgment as a matter of law following a jury verdict, the Court should properly ask whether "the state of proof is such that reasonable and impartial minds could reach the conclusion the jury expressed in its verdict." FED. R. CIV. P. 50(b); see also Am. Home Assurance Co. v. United Space All., 378 F.3d 482, 487 (5th Cir. 2004). The decision to grant such a motion lies not within a court's discretion, but is rather "`a conclusion of law based upon a finding that there is insufficient evidence to create a fact question for the jury.'" Conkling v. Turner, 18 F.3d 1285, 1300 (5th Cir. 1994) (quoting In re Letterman Bros. Energy Sec. Litig., 799 F.2d 967, 972 (5th Cir. 1986). Under Fifth Circuit law, a court should be "especially deferential" to a jury's verdict and must not reverse the jury's findings unless substantial evidence does not support the findings. Baisden v. I'm Ready Prods., Inc., 693 F.3d 491, 499 (5th Cir. 2012). "Substantial evidence is defined as evidence of such quality and weight that reasonable and fair-minded men in the exercise of impartial judgment might reach different conclusions." Threlkeld v. Total Petroleum, Inc., 211 F.3d 887, 891 (5th Cir. 2000). A motion for judgment as a matter of law must be denied "unless the facts and inferences point so strongly and overwhelming in the movant's favor that reasonable jurors could not reach a contrary conclusion." Baisden, 693 F.3d at 498 (citation omitted). However, "[t]here must be more than a mere scintilla of evidence in the record to prevent judgment as a matter of law in favor of the movant." Arismendez v. Nightingale Home Health Care, Inc., 493 F.3d 602, 606 (5th Cir. 2007).
In evaluating a motion for judgment as a matter of law, a court must "draw all reasonable inferences in the light most favorable to the verdict and cannot substitute other inferences that [the court] might regard as more reasonable." E.E.O.C. v. Boh Bros. Constr. Co., 731 F.3d 444, 451 (5th Cir. 2013) (citation omitted). However, "[c]redibility determinations, the weighing of evidence, and the drawing of legitimate inferences from the facts are jury functions, not those of a judge." Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150 (2000). "[T]he court should give credence to the evidence favoring the nonmovant as well as that `evidence supporting the moving party that is uncontradicted and unimpeached, at least to the extent that the evidence comes from disinterested witnesses.'" Id. at 151 (citation omitted).
Defendant moves for judgment as a matter of law asking the Court to set aside the exemplary and actual damages awards contending: (a) Texas Civil Practice and Remedies Code § 41.005(a) precludes an award of exemplary damages; (b) the gross negligence found by the jury cannot be imputed on Defendant; (c) Plaintiff did not prove the objective or subjective components of her gross negligence claim; and (d) the Court's summary judgment order precludes the award of actual damages (Dkt. #73 pp. 1-2). The Court addresses each argument in turn.
Defendant first contends that Texas Civil Practice and Remedies Code § 41.005(a) prevents the Court from awarding exemplary damages (Dkt. #73 at pp. 2-8).
The parties' first dispute whether Section 41.005(a) applies in this case. Defendant contends Section 41.005(a) requires the Court to set aside the exemplary damages award. It is difficult for the Court to interpret Plaintiff's response (Dkt. #75 at pp. 8-9). On the one hand, Plaintiff appears to argue that there is no criminal act implicated in this case. On the other hand, Plaintiff seems to contend that the Court may separate the criminal act from Defendant's conduct to avoid Section 41.005(a).
Plaintiff first appears to argue that Section 41.005(a) does not apply because Plaintiff did not implicate a criminal act in her pleadings or during trial:
(Dkt. #75 at p. 8). The Court cannot agree with Plaintiff for two reasons.
First, Plaintiff pleaded more than simply "the opening of her locker" harmed her. In her Second Amended Complaint, Plaintiff alleged, "As a result of Defendant's negligence, Plaintiff's personal property was stolen and she suffered actual damages, as well as mental anguish and emotional damages." (Dkt. #4 ¶ 13). Moreover, in the Final Pretrial Order, Plaintiff alleged:
(Dkt. #56 at p. 2) (See also Dkt. #73 at pp. 3-4). Accordingly, Plaintiff directly implicated a criminal act in her pleadings.
Second, Plaintiff recovered damages resulting from the criminal act. Plaintiff sought actual and mental anguish damages resulting from the theft of her property (Dkt. #4 ¶¶ 11-13). At trial, Plaintiff testified to the value of her stolen property and that the theft of her wallet— containing her Driver's License and financial cards—caused her mental anguish as she worried that the thief might steal her identity. The jury awarded Plaintiff $200.00 representing the "market value of the property Plaintiff . . . lost from the gym locker." (Dkt. #68, Questions 3 and 5). As Plaintiff sought and recovered damages resulting from the theft of her personal property, Plaintiff cannot now argue that she did not implicate a criminal act in this case.
Plaintiff next seems to contend that the Court can separate the criminal theft from Defendant's conduct and award exemplary damages based solely on Defendant's conduct. Other cases suggests the Court cannot do so. Multiple courts have held that Section 41.005(a) precludes exemplary damages awards when a defendant and criminal's acts concurrently cause harm to a plaintiff. See Miles v. Jerry Kidd Oil Co., 363 S.W.3d 823, 826 (Tex. App.-Tyler 2012, no pet.) ("We construe Section 41.005 to preclude punishing a defendant for harm resulting from a criminal act of a third party when that defendant's actions are a concurrent cause of the harm."); accord Kinney v. Brink's Inc., 4:15-CV-03512, 2018 WL 375393, at *2 (S.D. Tex. Jan. 11, 2018) (citing Miles, 363 S.W.3d at 823); Bhatti v. Concepts Am. Inc., 3:14-CV-3445-L, 2016 WL 3880747, at *17 (N.D. Tex. July 18, 2016) (citing Miles, 363 S.W.3d at 824). The concurrent causes found in cases applying Section 41.005(a) are similar to the concurrent causes found in this case.
Here, Defendant's employees' conduct (cutting Plaintiff's lock) exposed Plaintiff to danger (potential theft) that resulted in the harm Plaintiff suffered and recovered for at trial (the theft of her property from the locker). Accordingly, the Court may not award exemplary damages pursuant to Section 41.005(a), unless a valid exception applies.
After determining that the Section 41.005(a) exemption applies, the parties next dispute whether an exception to the exemption enables the Court to award exemplary damages. Section 41.005(b) reads in relevant part, "(b) The exemption provided by Subsection (a) does not apply if: (1) the criminal act was committed by an employee of the defendant . . . ." Section 41.005(c) expands on this exception:
Unfortunately, the identity of the thief who stole Plaintiff's personal property remains unknown. Therefore, as might be expected, the parties dispute who bears the burden of proving the Subsection (b)(1) exception (Dkt. #73 at pp. 6-7; Dkt. #75 at pp. 8-9; Dkt. #76 at p. 2). Without specifically addressing the issue, at least two courts have placed the burden to prove the exception on the plaintiff. See Kinney, 2018 WL 375393, at *3; Bhatti, 2016 WL 3880747, at *17; but see Croxton v. Washington Mut. Bank, 05-07-00585-CV, 2008 WL 3984048, at *4 (Tex. App.-Dallas Aug. 29, 2008, no pet.) (placing burden on defendants). Kinney and Bhatti comply with the general rule under Texas law that "`[t]he burden of proving a statutory exception rests on the party seeking the benefit from the exception,' not on the party seeking to avoid that benefit." Phila. Indem. Ins. Co. v. White, 490 S.W.3d 468, 494 (Tex. 2016) (quoting Better Bus. Bureau of Metro. Dall., Inc. v. BH DFW, INC., 402 S.W.3d 299, 309 (Tex. App.-Dallas 2013, pet. denied)). Here, Plaintiff would benefit from establishing the exception as doing so would enable Plaintiff to recover exemplary damages against Defendant. Considering the cited cases, the Court agrees with Kinney and Bhatti, and finds that Plaintiff bore the burden of proving the Subsection (b)(1) exception at trial. As neither party provided more than mere speculation as to the thief's identity at trial, Plaintiff did meet her burden of proving that Subsection (b)(1) applies. As the exception does not apply, the Court is bound by the Subsection (a) exemption and cannot award exemplary damages in this case. Accordingly, the Court must set aside the exemplary damages award pursuant to Section 41.005(a).
Even if the Court's application of Section 41.005(a) is incorrect, the Court would still set aside the exemplary damages award, as the gross negligence of Defendant's employees cannot be imputed on Defendant. At trial, Plaintiff sought to impute the gross negligence of Defendant's employees on Defendant (See Dkt. #75 at pp. 1-2, 8-9). The Court's instructions to the jury reflected Plaintiff's argument:
(Dkt. #64 at pp. 6-7) (emphasis added).
The pleadings and evidence at trial established that Zach Turner directed another one of Defendant's employees to cut Plaintiff's lock to search for the other gym member's lost keys (Dkt. #73 at pp. 14-16). Plaintiff claims that Mr. Turner qualifies as Defendant's "manager" because (1) Defendant employed Mr. Turner as an "Operation Manager" and (2) Defendant stipulated that Mr. Turner was acting in the course and scope of his employment when he cut Plaintiff's lock (Dkt. #75 at pp. 1-2, 8-9). The Court cannot agree with Plaintiff for two reasons. First, Mr. Turner's title as "Operation Manager" does not qualify him as a manager for the purposes of proving gross negligence under Texas law. See U-Haul Int'l, Inc. v. Waldrip, 380 S.W.3d 118, 138 (Tex. 2012) (citations omitted) ("We agree with the court of appeals that Waldrip presented no evidence that Coffee [(Director of Repair Analysis & Support)] was employed by UHI in a managerial capacity. An employee's title alone is not dispositive of whether he is a vice principal.").
Second, although Defendant stipulated that Mr. Turner was acting in the course and scope of his employment at the time he cut Plaintiff's lock, Defendant did not stipulate to any facts concerning Mr. Turner's managerial role. Early in this case, Plaintiff sought to join Mr. Turner by filing a motion for leave to amend complaint (Dkt. #17). Plaintiff argued:
(Dkt. #16 at pp. 2-3). In response, Defendant stipulated:
(Dkt. #20 at pp. 1-2). Considering Defendant's stipulation, the Court denied Plaintiff leave to add Mr. Turner:
(Dkt. #21 at pp. 2-3).
Defendant's stipulation satisfied one facet of the Court's gross negligence instruction— Mr. Turner acted in the course and scope of his employment when he cut Plaintiff's lock. However, as Defendant did not stipulate to any facts concerning Mr. Turner's managerial role, Plaintiff was still required to prove the second facet of the Court's instruction—Mr. Turner was a manager or Defendant employed Mr. Tuner in a managerial capacity. Mr. Turner could only be a manager or be employed in a managerial capacity if Plaintiff proved that Mr. Turner (1) had the authority to employ, direct, and discharge employees or (2) that Defendant confided in Turner the management of the whole or a department or division of Defendant's business.
At trial, Plaintiff testified that Mr. Turner "was [Defendant's] manager" and admitted a police report stating the same (Dkt. #75 at p. 1; Dkt. #75-2 at p. 2). Moreover, the evidence showed that Mr. Turner directed one of Defendant's employees to cut Plaintiff's lock (Dkt. #73 at pp. 14-16). This evidence is insufficient as a matter of law to show that Mr. Turner was a manager or Defendant employed Mr. Turner in a managerial capacity because it does not demonstrate that Mr. Turner (1) possessed the authority to employ and discharge employees or (2) that Defendant confided in Turner the management of the whole or a department or division of Defendant's business. Consequently, even if Section 41.005(a) did not require the Court to set aside the exemplary damages award, the Court could would still set aside the award as the jury's gross negligence finding cannot be imputed on Defendant.
Even if the Court is incorrect on all the above, the Court would set aside the exemplary damages award because Plaintiff did prove, as a matter of law, the objective or subjective elements of her gross negligence claim. "Gross negligence is defined as an `entire want of care which would raise the belief that the act or omission complained of was the result of a conscious indifference to the right or welfare of the person or persons to be affected by it.'" Elbar, Inc. v. Claussen, 774 S.W.2d 45, 48 (Tex. App.-Dallas 1989, writ dism'd) (quoting Williams v. Steves Indus., Inc., 699 S.W.2d 570, 572 (Tex. 1985); Burk Royalty Co. v. Walls, 616 S.W.2d 911 (Tex. 1981)). "Gross negligence consists of both objective and subjective elements." Waldrip, 380 S.W.3d at 137 (citing Lee Lewis Constr., Inc. v. Harrison, 70 S.W.3d 778, 785 (Tex. 2001)). In order to establish gross negligence, "[p]laintiffs must prove by clear and convincing evidence that (1) when viewed objectively from the defendant's standpoint at the time of the event, the act or omission involved an extreme degree of risk, considering the probability and magnitude of the potential harm to others and (2) the defendant had actual, subjective awareness of the risk involved, but nevertheless proceeded with conscious indifference to the rights, safety, or welfare of others." Id. (citing TEX. CIV. PRAC. & REM. CODE § 41.001(11); State v. Shumake, 199 S.W.3d 279, 287 (Tex. 2006)). "Under the objective component, `extreme risk' is not a remote possibility or even a high probability of minor harm, but rather the likelihood of the plaintiff's serious injury." Id. (citing Mobil Oil Corp. v. Ellender, 968 S.W.2d 917, 921 (Tex. 1998); Harrison, 70 S.W.3d at 785). Many courts have described the serious injury under the objective component as one resulting in "`death, grievous physical injury, or financial ruin.'" Tex. Bank & Tr. Co. v. Zucker, 6:18-CV-525-JDK, 2019 WL 1922044, at *8 (E.D. Tex. Apr. 8, 2019) (quoting IP Petroleum Co., Inc. v. Wevanco Energy, L.L.C., 116 S.W.3d 888, 897 (Tex. App.-Houston [1st Dist.] 2003, pet. denied)). "The subjective prong, in turn, requires that the defendant knew about the risk, but that the defendant's acts or omissions demonstrated indifference to the consequences of its acts." Waldrip, 380 S.W.3d at 137-38. (citing La.-Pac. Corp. v. Andrade, 19 S.W.3d 245, 246-47 (Tex. 1999); Wal-Mart Stores, Inc. v. Alexander, 868 S.W.2d 322, 326 (Tex. 1993)). "The defendant need not have anticipated the precise manner of harm or to whom the injury would befall to have had awareness of the extreme risk." Medina v. Zuniga, ___ S.W.3d ___, 17-0498, 2019 WL 1868012, at *5 (Tex. Apr. 26, 2019) (citing Waldrip, 380 S.W.3d at 139).
Plaintiff maintains that—when viewed objectively—Defendant's conduct of cutting her locker and leaving her wallet vulnerable to theft created an extreme probability of serious injury to Plaintiff:
(Dkt. #75 at p. 6). Although the Court believes that the theft of a wallet creates at least some risk of identity theft or stalking. The theft of a wallet does not objectively create a high probability of identity theft or stalking.
Moreover, the only evidence cited by Plaintiff to show the subjective prong of her gross negligence claim is that Plaintiff, and not Defendant's employees, contacted the police. This evidence alone does not show by clear and convincing evidence that Defendant's employees knew that cutting Plaintiff's lock created an extreme risk of serious injury to Plaintiff. Therefore, the Court finds that Plaintiff failed to prove that Defendant's employees' conduct was grossly negligent.
Seeking to avoid all consequences for its employees' acts, Defendant next argues that the jury's $200.00 actual damages award is improper due to the Court's previous summary-judgment order (Dkt. #73 at pp. 17-18). In this order, the Court found that the membership agreement between Plaintiff and Defendant contained a valid and enforceable negligence release (Dkt. #28 at pp. 5-12, 16). Consequently, the Court granted summary judgment for Defendant on Plaintiff's negligence claim. Defendant explains that because "[t]he loss of Plaintiff's property, for which the jury awarded actual damages, relates solely to the negligence claim," Plaintiff cannot recover the actual damages awarded by the jury. The Court disagrees as Plaintiff can recover her actual damages under her invasion of privacy claim.
Defendant first contends that Plaintiff did not seek to recover actual damages under her invasion of privacy claim. However, in her First Amended Petition, Plaintiff specifically sought actual damages under her invasion of privacy claim (Dkt. #4 ¶ 12).
(Dkt. #56 at p. 2). Although Plaintiff did not specifically mention "lost property" under her invasion of privacy claim, Plaintiff clearly sought to recover her lost property—as actual damages—under both her invasion of privacy and negligence claims. Accordingly, the Court's summary judgment order does not bar Plaintiff from recovering her actual damages because Plaintiff sought to recover her lost property through her invasion of privacy claim.
Defendant next argues that because the invasion of privacy occurred when Defendant's employees cut Plaintiff's lock, the actual damages awarded can only relate to Plaintiff's negligence claim:
(Dkt. #73 at pp. 17-18) (citations omitted).
Defendant's argument is unpersuasive for two reasons. First, the argument is irrelevant because Defendant's employees did not take any action to protect Plaintiff's property after invading her privacy. Second, Defendant mistakenly assumes that damages cannot result from more than one act. In this case, Plaintiff recovered $200.00 representing the market value of the property stolen from the locker. The property could not have been stolen from the locker had Defendant's employees not (1) invaded Plaintiff's privacy by cutting her lock and (2) failed to take any steps to protect Plaintiff's property after cutting her lock. In other words, without the first tortious act, there would be no second tortious act or actual damages in this case. Therefore, as Plaintiff's actual damages directly flowed from both acts, Plaintiff may recover actual damages under her invasion of privacy claim.
Defendant argues in its motion for new trial that if the Court denies its motion for judgment as a matter of law, the Court should order a new trial on exemplary damages and for remittitur (Dkt. #74 at p. 1). Defendant "seeks this relief because (a) the amount of exemplary damages is excessive and constitutionally impermissible and (b) the jury's gross-negligence finding is against the greater weight of the evidence." (Dkt. #74). As the Court addressed these issues above, the Court finds Defendant's motion for new trial should be denied as moot (Dkt. #74).
It is therefore
Moreover, as discussed in the next section, Plaintiff did not prove that Zach Turner qualified as Defendant's manager for the purposes of proving gross negligence. As a result, even if Subsection (c) applies, Plaintiff did not provide sufficient evidence to meet the elements of Subsection (c).