CROSKEY, Acting P. J.
Rudolphus LeFlore appeals a judgment awarding him no relief on his complaint for employment discrimination and retaliation and awarding Los Angeles County Metropolitan Transportation Authority (MTA) and Public Transportation Services Corporation (PTSC) compensatory and punitive damages on their cross-complaint against him.
We conclude that LeFlore has shown no prejudicial error in the judgment as to the denial of relief on his counts for wrongful termination in violation of public policy and violation of due process. We also conclude that the judgment of nonsuit against LeFlore's counts for employment discrimination and retaliation was error; that the evidence does not support the award of damages for misappropriation, but supports the awards of damages for conversion and fraudulent inducement; and that absent evidence of LeFlore's financial condition, MTA cannot recover punitive damages. We therefore will affirm in part and reverse in part both the judgment and the denial of LeFlore's motion for judgment notwithstanding the verdict.
MTA hired LeFlore in 1998 as a Director of Contract Administration. LeFlore is an African-American. He was one of five Directors of Contract Administration. His job duties involved implementing policies and procedures for ensuring MTA's compliance with rules governing procurement. He established a compliance unit and eventually supervised more than 30 employees performing not only compliance duties but also cost estimating analysis and contract administration. LeFlore was referred to informally as the Director of Procurement Compliance.
Colonus Mitchell, MTA's Executive Officer for Procurement and Material Management, was LeFlore's supervisor from June 2000 to October 2002. Mitchell is an African-American.
Michael Davis was an MTA employee who worked under Mitchell and was a friend as well. Two or three female MTA employees formally complained that Davis had sexually harassed them. One of the women was LeFlore's subordinate. LeFlore became aware of the complaint by his subordinate and spoke with some of her coworkers, one of whom stated that Davis had made unwanted sexual advances toward her as well and that she did not want to make a formal complaint. LeFlore reported the results of his inquiry to MTA's human resources department.
Mitchell notified LeFlore in writing in October 2002 that his employment was terminated effective immediately "based on the business necessity to meet the changing needs of the MTA organization." LeFlore's position was eliminated, the staff that had worked under him was reduced, and a new Director of Contract Administration position was created with responsibilities for "streamlining" and "process improvement." Ruthe Holden, who previously had worked as a Director of Contract Administration with other responsibilities, filled the new position. Holden is a Caucasian. Another individual was hired to fill Holden's prior position.
After his discharge, LeFlore retained possession of many documents that he had obtained in the course of his employment with MTA, including personnel records, audit reports showing labor and overhead costs associated with contract proposals, attorney-client communications, and other confidential documents.
LeFlore contacted Tutor-Saliba Perrini (Tutor-Saliba), a construction company, after his discharge and offered to provide consulting services regarding MTA's procurement practices. He was aware that MTA was involved in litigation against Tutor-Saliba at the time. He received a call from Tutor-Saliba's litigation counsel and provided consulting services to the attorneys for $150 per hour for a period of time.
LeFlore filed a complaint against MTA, Mitchell, and MTA's chief executive officer in July 2003. He filed a separate complaint against MTA in January 2004. The trial court consolidated the two actions. LeFlore filed a consolidated first amended complaint against MTA and Mitchell in September 2004. LeFlore alleges in the operative complaint that his employment was terminated because of his race; in retaliation for his reporting to state and federal authorities, and others, the MTA's failure to comply with regulations; and in retaliation for his reporting of sexual harassment committed against other MTA employees. He also alleges that his termination violated his due process "property" interest under article I, section 7 of the California Constitution. He alleges counts against all defendants for (1) employment discrimination based on race in violation of the California Fair Employment and Housing Act (Gov. Code, § 12900 et seq.) (FEHA); (2) retaliation in violation of FEHA; (3) retaliation in violation of Labor Code section 1102.5; (4) wrongful termination in violation of public policy; and (5) violation of due process under the California Constitution.
MTA filed a cross-complaint against LeFlore and filed a second amended cross-complaint in March 2006. MTA alleges that LeFlore misrepresented his employment history in his employment application. MTA also alleges that after his discharge, LeFlore retained confidential documents belonging to MTA that he had taken home contrary to company policy. MTA alleges further that after his discharge, LeFlore assisted Tutor-Saliba in its litigation against MTA. MTA alleges counts against LeFlore for (1) violation of Public Utilities Code section 130051.20;
The trial court apparently granted a motion to strike the first, second and fourth counts alleged against Mitchell in the complaint. The court denied LeFlore's special motion to strike three of the counts alleged against him. We affirmed the denial in an unpublished opinion. (LeFlore v. Los Angeles County Metropolitan Transportation Agency (Sept. 9, 2006, B184654).) The court apparently granted a motion for summary adjudication against LeFlore's third count.
The trial court granted the defendants' motion for a separate, nonjury trial on certain affirmative defenses. After hearing argument by counsel, the court concluded that MTA, as a public entity, and Mitchell, as an employee of a public entity, were immune from tort liability pursuant to Government Code section 815. The court also concluded that LeFlore had failed to allege his count for violation of due process within six months after the rejection on April 30, 2003, of his claim for damages presented to the County of Los Angeles, as required by Government Code section 945.6, subdivision (a), and that the six-month limitations period was not equitably tolled during the time that LeFlore pursued a remedy with the United States Equal Employment Opportunity Commission (EEOC). The court therefore concluded that the defendants were entitled to judgment in their favor on LeFlore's fourth count for wrongful termination in violation of public policy and fifth count for violation of due process.
A jury trial commenced in July 2008. MTA and Mitchell moved for a nonsuit against LeFlore's two remaining counts after LeFlore had presented his case-in-chief. The trial court concluded that LeFlore had failed to present a prima facie case of employment discrimination based on race or retaliation and granted a nonsuit against both counts.
The jury returned a special verdict on MTA's cross-complaint, finding against LeFlore on each count. The jury found (1) on the first count for violation of Public Utilities Code section 130051.20, that LeFlore worked for Tutor-Saliba within three years after his discharge, that he was unjustly enriched in the amount of $9,900 as a result, and that MTA suffered $9,900 in damages as a result; (2) on the second count for misappropriation, that LeFlore retained copies of confidential MTA documents, attorney-client communications and personnel records after his discharge, and breached his duty of confidentiality, that he was unjustly enriched in the amount of $13,300 as a result, and that MTA suffered damages in the amount of $19,000 as a result; (3) on the third count for conversion, that LeFlore wrongfully retained copies of MTA documents, that he was unjustly enriched in the amount of $13,300 as a result as a result of his possession, use or disclosure of information in those documents, and that MTA suffered damages of $72,067 as a result; and (4) on the fourth count for fraudulent inducement, that LeFlore misrepresented a material fact, knowingly or recklessly without regard to its truth, that MTA reasonably relied on the misrepresentation, that LeFlore was unjustly enriched in the amount of $22,500 as a result, and that MTA suffered damages of $296,800 as a result. The jury also found that LeFlore had acted with malice, oppression or fraud and awarded MTA $150,000 in punitive damages.
The trial court entered a judgment in September 2008 awarding MTA a total of $606,767 on its cross-complaint against LeFlore and awarding LeFlore no relief on his complaint.
LeFlore contends (1) the judgment in favor of the defendants on his fourth count for wrongful termination in violation of public policy was error because the statutory immunity is inapplicable; (2) the judgment in favor of the defendants on his fifth count for violation of due process was error because the limitations period was equitably tolled during the time that he pursued a federal remedy; (3) the granting of a nonsuit against his first count for employment discrimination in violation of FEHA was error; (4) the granting of a nonsuit against his second count for retaliation in violation of FEHA was error; (5) MTA's count for misappropriation is preempted by the Uniform Trade Secrets Act; (6) the instruction given on misappropriation was erroneous because it omitted an essential element; (7) the evidence does not support the award of damages for misappropriation because there is no evidence of any damages caused by the misappropriation; (8) the evidence does not support the award of damages for conversion because there is no evidence of the fair market value of the documents; (9) the evidence does not support the award of damages for fraudulent inducement; and (10) the evidence does not support the punitive damages award because there is no evidence of his financial condition at the time of trial.
A common law cause of action for wrongful termination in violation of public policy arises if an employer terminates an employee for a reason that contravenes a fundamental public policy.
Government Code section 815, subdivision (a) abolishes common law tort liability for public entities, including tort liability for wrongful termination in violation of public policy.
LeFlore argues that Miklosy, supra, 44 Cal.4th 876, is distinguishable because it involved a cause of action for wrongful termination in violation of public policy based on retaliation, rather than race discrimination. This factual distinction provides no basis to limit the holding in Miklosy. Miklosy affirmed a judgment of dismissal after the sustaining of a demurrer, stating that the defendant public entity could not be liable for wrongful termination in violation of public policy because "[Government Code] section 815 abolishes common law tort liability for public entities. [Citations.]" (Id. at p. 899.) Miklosy stated further, "section 815 bars Tameny actions against public entities." (Id. at p. 900.) Thus, the rationale for the holding in Miklosy was in no way limited to wrongful termination based on retaliation.
Watson v. Department of Rehabilitation (1989) 212 Cal.App.3d 1271, 1285, cited by LeFlore, provides no support for his argument. Watson involved a judgment after a jury verdict based on counts for employment discrimination under FEHA and breach of the implied covenant of good faith and fair dealing. (Watson, supra, at pp. 1278-1279.) Watson held that Government Code section 815 did not bar the plaintiff's action, stating, "acts of supervisorial employees ostensibly directed at other employees in the normal course of the employment relationship, motivated by and resulting in discrimination based on race and age, are not so insulated. [Citation.]" (Watson, supra, at p. 1285.) Watson did not involve a count for wrongful termination in violation of public policy and therefore is not on point.
We conclude that MTA is immune from tort liability for wrongful termination in violation of public policy and that the judgment in favor of MTA on LeFlore's fourth count therefore was proper.
The doctrine of equitable tolling provides that the limitations period for a cause of action is tolled while the plaintiff reasonably and in good faith pursues a separate legal remedy for the same wrong. (McDonald v. Antelope Valley Community College Dist. (2008) 45 Cal.4th 88, 100 (McDonald).) The limitations period begins to run again upon the conclusion of the event that caused the tolling. (Lantzy v. Centex Homes (2003) 31 Cal.4th 363, 370-371.)
Equitable tolling applies regardless of whether the plaintiff was required to pursue the alternative remedy before filing suit. (McDonald, supra, 45 Cal.4th at pp. 101-102; Elkins v. Derby (1974) 12 Cal.3d 410, 414.) The doctrine also applies regardless of whether the plaintiff pursued the alternative remedy through judicial or administrative proceedings. (McDonald, supra, at pp. 100, 108.) In particular, the plaintiff's pursuit of an administrative remedy with the EEOC can provide a basis for equitable tolling. (Downs v. Department of Water & Power (1997) 58 Cal.App.4th 1093, 1102 (Downs).) Equitable tolling applies only if (1) the defendant received timely notice of the claim; (2) application of the doctrine would not prejudice the defendant; and (3) the plaintiff acted reasonably and in good faith. (McDonald, supra, at p. 102 & fn. 2.)
The trial court here did not conduct an evidentiary hearing on the statute of limitations defense or the question of equitable tolling. Instead, the court concluded as a matter of law that LeFlore's filing of a charge with the EEOC did not equitably toll the six-month limitations period under Government Code section 945.6, subdivision (a).
An appellant bears the burden to show not only that the trial court erred, but also that the error was prejudicial in that it resulted in a miscarriage of justice. (Cal. Const., art. VI, § 13; Code Civ. Proc., § 475.) An error resulting in an adverse judgment was not prejudicial and there was no miscarriage of justice if the judgment was proper for another reason. (Bresnahan v. Chrysler Corp. (1998) 65 Cal.App.4th 1149, 1153-1154.)
A violation of the California Constitution does not necessarily give rise to a cause of action for damages. The California Supreme Court in Katzberg v. Regents of University of California (2002) 29 Cal.4th 300, 317 (Katzberg), set forth a framework for determining whether an asserted violation of the California Constitution gives rise to an action for damages absent a statutory provision or an established common law tort cause of action authorizing a damage remedy for such a constitutional violation:
The plaintiff in Katzberg, supra, 29 Cal.4th 300, alleged that the defendant had violated his due process "liberty" interest under article I, section 7(a) of the California Constitution by failing to provide him with a timely "name-clearing" hearing after removing him as a department chairman at a university medical center. (Katzberg, supra, at pp. 303-304.) Applying this framework, Katzberg first concluded that there was no indication that the due process clause of article I, section 7(a) was intended either to authorize or withhold damages as a remedy for violation of the provision. (Katzberg, supra, at pp. 317-324.) Katzberg concluded further that despite the importance of the due process "liberty" interest, the existence of adequate alternative remedies for the asserted due process violation, through mandamus, declaratory or injunctive relief, or a defamation action for damages, militated against recognition of a constitutional tort remedy. (Katzberg, supra, at pp. 325-329.)
Similarly here, there is no indication that the due process clause of article I, section 7(a) of the California Constitution was intended to authorize a damages remedy for a violation of the provision. (Katzberg, supra, 29 Cal.4th at p. 324.) With respect to the constitutional tort analysis, LeFlore's count for violation of due process is based on the same operative facts as his counts for employment discrimination and retaliation under FEHA, which shows that other remedies are available for the asserted due process violation in these circumstances. In light of the existence of adequate alternative remedies, we conclude that the asserted constitutional violation cannot provide the basis for a cause of action for damages in these circumstances.
A nonsuit is proper only if the evidence presented by the plaintiff is insufficient to support a jury verdict in the plaintiff's favor. A trial court considering a motion for nonsuit may not weigh the evidence or consider the credibility of witnesses. Instead, the court must view the evidence in the light most favorable to the plaintiff, indulge all legitimate inferences and presumptions in favor of the plaintiff, and disregard all conflicting evidence. (Nally v. Grace Community Church (1988) 47 Cal.3d 278, 291.) On appeal, we review the trial court's ruling de novo and apply the same standard that governs the trial court. (Ibid.) Our review is limited to the grounds specified in the motion. (Carson v. Facilities Development Co. (1984) 36 Cal.3d 830, 839.)
According to LeFlore's testimony at trial, Mitchell once expressed a concern "about too many Blacks in the department" and prevented LeFlore from promoting an African-American until Mitchell had consulted with the human resources department:
Mitchell testified that he did not recall stating that "there were too many Blacks in the Department," but that "anything is possible."
LeFlore was asked in a pretrial deposition, "Do you think that because you're Black, you were targeted for layoff?" He responded, "No." When asked at trial to explain this deposition testimony, LeFlore stated, "Well, my state of mind at the time was that if—I believed it to be a trick question. I believed that if I answered I was solely targeted for being Black, that would question why there were additional issues in this case. I believed that that was a motivating factor and not the sole factor, and that's why I answered that question in that manner."
MTA moved for a nonsuit against LeFlore's first count for employment discrimination in violation of FEHA on the ground that LeFlore had presented no evidence that his race played any role in the decision to eliminate his position and terminate his employment. It argued that Mitchell's purported statement that there were "too many Blacks in the department" was only a "stray remark" that was insufficient to support an inference of discrimination and could not overcome the evidence that LeFlore was discharged for the legitimate, nondiscriminatory reason of a business reorganization and reduction in force. MTA also argued that LeFlore's deposition testimony that he did not believe that he was targeted for layoff because of his race also showed that race was not a factor.
The trial court granted the motion for nonsuit, stating that LeFlore had failed to establish a prima facie case of employment discrimination based on race.
The evidence that Mitchell expressed a concern about "too many Blacks in the department" in connection with a prior promotion decision suggests a tendency to discriminate against African-Americans in employment decisions. Such evidence is direct evidence of a discriminatory motive and may support a finding that LeFlore's race was a motivating factor in his termination. (See Godwin v. Hunt Wesson, Inc. (9th Cir. 1998) 150 F.3d 1217, 1221 [applying California law]; Cordova v. State Farm Ins. Companies (9th Cir. 1997) 124 F.3d 1145, 1148-1149 [held that a derogatory comment about another employee of the same national origin could support an inference of a discriminatory motive toward the plaintiff].)
The California Supreme Court recently rejected the stray remarks doctrine upon which the trial court here might have relied. The stray remarks doctrine generally holds that discriminatory comments, or ambiguous and potentially discriminatory comments, made by persons who are not decision makers or made by decision makers outside of the decisional process are irrelevant and provide no evidence of discriminatory motive. (Reid v. Google, Inc. (2010) 50 Cal.4th 512, 537.) Reid stated that such evidence "may be relevant, circumstantial evidence of discrimination" and therefore should neither be disregarded nor categorically excluded. (Id. at p. 539.) Reid noted that the United States Supreme Court in Reeves v. Sanderson Plumbing Products, Inc. (2000) 530 U.S. 133 [120 S.Ct. 2097] held that discriminatory comments made by a decision maker unrelated to the adverse employment decision, together with other evidence establishing a prima facie case of discrimination, could support a reasonable inference of intentional discrimination. (Reid, supra, 50 Cal.4th at pp. 539-540.) Reid stated that a court that disregards discriminatory or potentially discriminatory comments as mere stray remarks usurps the function of the jury by weighing the evidence. (Id. at pp. 540-541.) "Determining the weight of discriminatory or ambiguous remarks is a role reserved for the jury. (See Reeves, supra, 530 U.S. at pp. 152-153.) The stray remarks doctrine allows the trial court to remove this role from the jury." (Id. at p. 541.) Instead, the trial court must decide based on the totality of the circumstances whether the evidence can support a reasonable inference of discriminatory intent. (Ibid.) Accordingly, we conclude that the stray remarks doctrine is inapplicable.
The evidence cited by MTA does not compel the conclusion that the decision to discharge LeFlore was nondiscriminatory. The fact that Mitchell is an African-American does not preclude his acting with a discriminatory intent against other African-Americans, whether on his own account or on behalf of others. The evidence of a legitimate, nondiscriminatory reason to discharge LeFlore in connection with a business restructuring does not necessarily compel the conclusion that such a legitimate reason was the sole or determinative factor in his discharge. Instead, the evidence of a discriminatory intent (i.e., Mitchell's purported comment) together with the evidence of a legitimate, nondiscriminatory reason for the discharge present a factual question for the trier of fact to resolve.
MTA also argues that LeFlore's deposition testimony is a binding admission that the decision to terminate his employment was not based on his race. A party's deposition testimony is not an incontrovertible judicial admission. (Whitmire v. Ingersoll-Rand Co. (2010) 184 Cal.App.4th 1078, 1089; Scalf v. D. B. Log Homes, Inc. (2005) 128 Cal.App.4th 1510, 1522; but see Mikialian v. City of Los Angeles (1978) 79 Cal.App.3d 150, 162 [stating that prior deposition testimony was akin to an "informal judicial admission[]" that could not be controverted at trial].) As explained in Scalf, the California Supreme Court in D'Amico v. Board of Medical Examiners (1974) 11 Cal.3d 1 stated that party admissions obtained through discovery receive unusual deference in summary judgment proceedings and, absent a credible explanation, prevail over later inconsistent declarations by the same party. (Scalf, supra, 128 Cal.App.4th at p. 1514.) The rule from D'Amico is limited. "Properly applied, D'Amico is limited to instances where `credible [discovery] admissions . . . [are] contradicted only by self-serving declarations of a party.' [Citations.] In a nutshell, the rule bars a party opposing summary judgment from filing a declaration that purports to impeach his or her own prior sworn testimony." (Scalf, supra, 128 Cal.App.4th at pp. 1521-1522.) The rule from D'Amico, however, does not allow a court to exclude or disregard a party's testimony at trial explaining his or her prior deposition testimony. (Scalf, supra, 128 Cal.App.4th at pp. 1524-1525.)
LeFlore's explanation that he answered "No" to the question whether he believed that he was discharged because of his race in order to avoid suggesting that he believed that retaliation for his whistleblowing activities played no part in the decision is not inherently unbelievable and therefore may be considered by the jury together with other evidence in determining whether the defendants acted with discriminatory intent.
Finally, we reject MTA's argument that the finding in its favor on its count for fraudulent inducement precludes any liability on LeFlore's counts for employment discrimination and retaliation in violation of FEHA. The fact that LeFlore knowingly misrepresented his work experience in his employment application does not compel the conclusion that he was unqualified for the job or that his discharge was nondiscriminatory.
LeFlore testified at trial that after learning about the sexual harassment complaints against Davis, he had two discussions with Mitchell on that subject:
LeFlore testified further:
LeFlore testified further still:
LeFlore stated in deposition testimony that was read at trial that the two conversations occurred in early 2002.
Mitchell testified that he was aware of the sexual harassment complaints against Davis, but that he learned of LeFlore's involvement in the complaints only after LeFlore's discharge.
MTA moved for a nonsuit against LeFlore's second count for retaliation in violation of FEHA on the sole ground that LeFlore had failed to establish a causal link between his participation in the sexual harassment investigation and the termination of his employment because he had presented no evidence that Mitchell was aware of his participation in the investigation before his termination. The trial court granted the motion, stating that LeFlore had failed to establish a prima facie case of retaliation.
LeFlore presented no direct evidence that Mitchell was aware of LeFlore's participation in the sexual harassment complaints before his termination.
LeFlore's testimony that he spoke with Mitchell on two occasions about Davis and sexual harassment and that Mitchell told LeFlore in those conversations that he should be more of a "team player," together with Mitchell's testimony that he was aware of the complaints against Davis and evidence that Mitchell and Davis were friends, supports a reasonable inference that Mitchell was aware of LeFlore's participation in the complaints against Davis and that Mitchell's comments to LeFlore were intended to caution him against supporting the complaints. Mitchell's testimony that he first learned of LeFlore's participation in the complaints after his termination contradicts this inference, but does not negate it as a matter of law. Viewing the evidence in the light most favorable to LeFlore, indulging all legitimate inferences and presumptions in his favor, and disregarding any conflicting evidence, as we must in reviewing the nonsuit, we conclude that the evidence is sufficient to support a finding in favor of LeFlore on this point.
MTA's additional arguments on appeal in support of the nonsuit do not address the sole ground on which MTA moved for nonsuit—the absence of evidence that Mitchell was aware of LeFlore's participation in the sexual harassment investigation before his termination—and therefore cannot justify an affirmance.
LeFlore contends the evidence does not support the award of $19,000 in damages for misappropriation. We review factual findings by the trier of fact under the substantial evidence standard. Substantial evidence is evidence that a rational trier of fact could find to be reasonable, credible, and of solid value. We view the evidence in the light most favorable to the judgment and accept as true all evidence tending to support the judgment, including all facts that reasonably can be deduced from the evidence. We must affirm the judgment if an examination of the entire record viewed in this light discloses substantial evidence to support the judgment. (Crawford v. Southern Pacific Co. (1935) 3 Cal.2d 427, 429; Kuhn v. Department of General Services (1994) 22 Cal.App.4th 1627, 1633.)
LeFlore challenges the award of $19,000 in damages for misappropriation on the ground that the jury found that he retained only copies of confidential MTA documents and there is no evidence that MTA suffered any injury as a result.
MTA argued in its closing argument that it was harmed because LeFlore caused it to breach its duty to maintain the confidentiality of information regarding its contractors, but failed to articulate a cognizable basis for an award of damages:
MTA argued in its opening closing argument that LeFlore's disclosure of confidential information enhanced the value of his consulting services, for which he was compensated. Although MTA sought "damages" on these grounds, this was an argument for unjust enrichment rather than damages. MTA also argued that damages for misappropriation could be based on its costs to prepare the audit reports and other documents that LeFlore retained. There is no evidence, however, that LeFlore's use or disclosure of copies of the documents deprived MTA of the value of the documents or caused MTA to incur the costs to prepare the documents.
Later, in its rebuttal closing argument, MTA argued that LeFlore was unjustly enriched in the amount of $124,600, representing the costs to prepare the audit reports and other documents and compensation paid to LeFlore by third parties for his consulting services. MTA also argued that it had suffered damages in the amount of $125,000, but offered no basis for that figure. On this record, we can discern no basis for the award of damages for misappropriation, so the judgment must be reversed as to that part of the damages award.
We conclude further that LeFlore is entitled to judgment notwithstanding the verdict as to the award of damages for misappropriation. LeFlore argued in his motion for judgment notwithstanding the verdict that there was no evidence of any damages resulting from the misappropriation.
"A party is entitled to a judgment notwithstanding the verdict only if there is no substantial evidence to support the verdict and the evidence compels a judgment for the moving party as a matter of law. (Code Civ. Proc., § 629; Clemmer v. Hartford Insurance Co. (1978) 22 Cal.3d 865, 877-878 [151 Cal.Rptr. 285, 587 P.2d 1098].) A party is entitled to a partial judgment notwithstanding the verdict if there is no substantial evidence to support the verdict on a particular issue and the evidence compels a judgment for the moving party on that issue as a matter of law. (Beavers v. Allstate Ins. Co. (1990) 225 Cal.App.3d 310, 323-324 [274 Cal.Rptr. 766].) The trial court must view the evidence in the light most favorable to the verdict, disregard conflicting evidence, and indulge in every legitimate inference to support the verdict. (Clemmer, supra, at pp. 877-878.) On appeal, we independently determine whether there is substantial evidence to support the verdict and whether the moving party is entitled to judgment in its favor as a matter of law. (Shapiro v. Prudential Property & Casualty Co. (1997) 52 Cal.App.4th 722, 730 [60 Cal.Rptr.2d 698].) If an appellate court determines that the trial court denied a motion for judgment notwithstanding the verdict that should have been granted, the appellate court must order the entry of judgment in favor of the moving party. (Code Civ. Proc., § 629.)" (Fassberg Construction Co. v. Housing Authority of City of Los Angeles (2007) 152 Cal.App.4th 720, 746.)
We conclude that, absent evidence of any damages resulting from the misappropriation, the denial of LeFlore's motion for judgment notwithstanding the verdict was error. LeFlore is entitled to a judgment awarding no damages for misappropriation. In light of our conclusion, we need not address LeFlore's other contentions challenging the award of damages for misappropriation.
LeFlore contends the evidence does not support the award of $72,067 in damages for conversion because there is no evidence of the fair market value of the retained documents. We disagree.
We review factual findings by the trier of fact under the substantial evidence standard, as stated ante. The trial court instructed the jury that the measure of damages for conversion was the fair market value of the documents at the time of the conversion. LeFlore does not challenge this instruction.
Holden testified that the value of 41 audit reports retained by LeFlore was $50,000, based on their replacement cost. Another witness testified that the value of a consultant's proposal to review staffing within the procurement department was either $1,600, based on the cost to prepare the proposal, or $60,000, based on the value of the work set forth in the proposal. Other testimony stated that MTA templates used by LeFlore in consulting for another client would have taken him 24 hours to prepare, at his hourly rate of $85.
The amount of damages need not be proven with absolute certainty if the fact of damage is established and there is a reasonable basis to calculate the amount. (GHK Associates v. Mayer Group, Inc. (1990) 224 Cal.App.3d 856, 873.) Although there was no testimony expressly evaluating the "fair market value" of the converted documents, we conclude that the jury reasonably concluded based on the evidence of the value of only some of the converted documents, noted above, that the fair market value of the converted documents was $72,067.
LeFlore contends the evidence does not support the award of $296,800 in damages for fraudulent inducement.
We review factual findings by the trier of fact under the substantial evidence standard, as stated ante. A plaintiff must prove the amount of damages suffered as a result of the defendant's misconduct with a degree of certainty that is reasonable under the circumstances. (Clemente v. State of California (1985) 40 Cal.3d 202, 219; see Rest.2d Torts, § 912.) The amount of damages need not be proved with certainty if the fact of damage is established, but the amount of damages cannot be based on speculation or conjecture. Instead, there must be a reasonable basis for calculating the amount of damages. (GHK Associates v. Mayer Group, Inc., supra, 224 Cal.App.3d at p. 873.)
MTA sought to recover damages for fraudulent inducement based on the theory that the compliance unit under LeFlore's direction was wasteful and inefficient, that but for the misrepresentations in his employment application MTA would not have hired him, and that some part of the total cost of operating the unit was a loss for which LeFlore should be held responsible. Alternatively, MTA argued that LeFlore's salary was excessive in light of his misrepresentations and job performance.
MTA presented evidence that the number of employees working in the compliance unit grew considerably during LeFlore's tenure as director and that MTA's senior management eventually decided to restructure the procurement department and reduce the number of employees in the compliance unit. MTA also presented expert testimony by Robert Equals, an accountant, who stated that the total cost of operating the compliance unit for the approximately four years that LeFlore directed the unit was approximately $3.6 million. Equals also calculated interest on that amount through July 2008 as approximately $1 million. He expressly offered no opinion as to what part of the total cost of operating the unit constituted a loss to MTA and stated that the amount of damages for fraudulent inducement was a question for the jury to decide.
MTA argued in its opening argument that the jury should award as damages for fraudulent inducement an amount of anywhere between $4.5 million, representing the total cost of operating the compliance unit for approximately four years plus interest through July 2008, and $539,600, representing the total amount of LeFlore's salary and benefits for the same period of time. Later, in its closing argument, MTA argued that the jury should award $4.6 million as damages for fraudulent concealment, representing the total cost of operating the compliance unit for approximately four years plus interest, plus an additional $667,619 for unjust enrichment, representing LeFlore's salary and benefits for four and one-half years.
The jury found that MTA suffered damages in the amount of $296,800 as a result of the fraudulent inducement and that LeFlore was unjustly enriched in the amount of $22,500. The damages award approximates one-half of LeFlore's total salary earned during his period of MTA employment.
The jury awarded substantially less than the amount of damages sought by MTA. We conclude that the evidence of inefficiencies in the compliance unit under LeFlore's direction provides a reasonable basis for the jury to conclude that his salary was excessive in light of his actual job performance. We conclude further that this evidence provides a reasonable basis for the jury to calculate the amount of damages as a percentage of his salary, approximately one-half. Accordingly, LeFlore has shown no error in the amount of damages awarded for conversion.
California law permits the recovery of punitive damages "for the sake of example and by way of punishing the defendant." (Civ. Code, § 3294, subd. (a).) In determining whether a punitive damages award is excessive under California law, a court must consider (1) the reprehensibility of the defendant's conduct; (2) the amount of compensatory damages or actual harm suffered by the plaintiff; and (3) the defendant's financial condition. (Adams v. Murakami (1991) 54 Cal.3d 105, 110; Neal v. Farmers Ins. Exchange (1978) 21 Cal.3d 910, 928.)
"Even if an award is entirely reasonable in light of the other two factors . . ., the award can be so disproportionate to the defendant's ability to pay that the award is excessive for that reason alone." (Adams v. Murakami, supra, 54 Cal.3d at p. 111.) Absent meaningful evidence of a defendant's financial condition, a reviewing court cannot determine whether a punitive damages award is excessive. (Id. at pp. 113-114.) Accordingly, evidence of the defendant's financial condition at the time of trial is a prerequisite to an award of punitive damages. (Id. at pp. 108-109, 116; Kelly v. Haag (2006) 145 Cal.App.4th 910, 915.)
The plaintiff in Adams v. Murakami presented no financial evidence of any kind. (Adams v. Murakami, supra, 54 Cal.3d at p. 116, fn. 7.) The California Supreme Court held that the award of punitive damages must be set aside and declined to decide the appropriate measure of a defendant's "ability to pay." (Id. at pp. 116, fn. 7 & 123.) Courts of Appeal in other cases have held that evidence of the defendant's net worth is required (Dumas v. Stocker (1989) 213 Cal.App.3d 1262, 1267-1269); that evidence of income without evidence of assets and liabilities or "something more" than income alone is insufficient (Lara v. Cadag (1993) 13 Cal.App.4th 1061, 1064-1065 & fn. 3); and that evidence of profits gained from the misconduct without evidence of net worth or assets and liabilities ordinarily is insufficient (Robert L. Cloud & Associates, Inc. v. Mikesell (1999) 69 Cal.App.4th 1141, 1152; Kenly v. Ukegawa (1993) 16 Cal.App.4th 49, 56-58; but see Cummings Medical Corp. v. Occupational Medical Corp. (1992) 10 Cal.App.4th 1291, 1298-1300 [held that profits gained through defrauding the plaintiff were an appropriate measure of punitive damages and there was no need to consider the defendant's net worth]). The court in Devlin v. Kearny Mesa AMC/Jeep/Renault, Inc. (1984) 155 Cal.App.3d 381, 391, stated, "Net worth generally is considered the best measure of a defendant's `wealth' for purposes of assessing punitive damages." (Accord, Downey Savings & Loan Assn. v. Ohio Casualty Ins. Co. (1987) 189 Cal.App.3d 1072, 1100; Little v. Stuyvesant Life Ins. Co. (1977) 67 Cal.App.3d 451, 469 & fn. 5.) Some courts have cautioned that net worth is subject to manipulation and should not be the sole measure of a defendant's ability to pay. (Zaxis Wireless Communications, Inc. v. Motor Sound Corp. (2001) 89 Cal.App.4th 577, 582-583; Rufo v. Simpson (2001) 86 Cal.App.4th 573, 625 [affirmed a punitive damages award in excess of the defendant's net worth, noting that the defendant had considerable future earning potential and that some of his assets were exempt from execution]; Lara v. Cadag, supra, 13 Cal.App.4th at p. 1065, fn. 3).
MTA presented no meaningful evidence of LeFlore's financial condition at the time of trial. The evidence of LeFlore's income earned from consulting in the years after his discharge and, for a period of time, as an employee of another public agency alone is insufficient to establish his financial condition and ability to pay at the time of trial.
MTA contends LeFlore provided evasive and inadequate responses to questions regarding his financial condition in discovery and at trial and therefore is estopped from objecting to the absence of evidence of his financial condition. A defendant who fails to comply with a court order to produce records of his or her financial condition may be estopped from challenging a punitive damages award on the grounds of the absence of evidence of financial condition. (Mike Davidov Co. v. Issod (2000) 78 Cal.App.4th 597, 608-609 (Mike Davidov).) Having found that the defendant was liable for fraud in a nonjury trial, the trial court in Mike Davidov ordered the defendant to produce all records of his financial condition for the purpose of determining the amount of punitive damages. The defendant failed to comply with the order. (Id. at pp. 603-604.) Noting that the defendant's records were the only source of information available to the plaintiff regarding the defendant's financial condition and that the defendant's disobedience of the court order had prevented the plaintiff from obtaining that information, we held that the defendant was estopped from challenging the punitive damages award on the grounds of the absence of evidence of his financial condition. (Id. at pp. 600, 609.)
The trial court here, in contrast, never ordered LeFlore to produce evidence of his financial condition for the purpose of determining the amount of a punitive damages award. MTA cites orders compelling further responses to discovery requests seeking information about LeFlore's income and tax returns in connection with his claims for lost income, and imposing monetary and evidence sanctions against him. MTA also cites LeFlore's evasive deposition and trial testimony concerning his income. Evidence of LeFlore's income and tax returns alone would be insufficient to establish his financial condition and ability to pay at the time of trial, and there is no indication that MTA sought or the trial court ordered pretrial discovery of evidence of LeFlore's financial condition more generally, such as evidence of his net worth, or that LeFlore disobeyed such an order. (See Civ. Code, § 3295, subd. (c).) Moreover, there is no indication that MTA sought or the trial court ordered the production at trial of evidence of LeFlore's net worth or other pertinent information concerning his financial condition at the time of trial, or that LeFlore disobeyed such an order. Accordingly, we conclude that Mike Davidov, supra, 78 Cal.App.4th 597, is inapposite and that LeFlore is not estopped from challenging the punitive damages award on these grounds.
County of San Bernardino v. Walsh (2007) 158 Cal.App.4th 533, also cited by MTA, is not on point. Despite the defendants' efforts to conceal their net worth, the trial court in Walsh made specific findings concerning the defendants' assets and net worth, and the Court of Appeal held that those findings were supported by evidence in the record. (Id. at pp. 546-547.) Here, in contrast, there were no such findings and no such evidence.
We conclude that the absence of any meaningful evidence of LeFlore's financial condition and ability to pay at the time of trial precludes an award of punitive damages. We conclude further that the denial of LeFlore's motion for judgment notwithstanding the verdict as to the punitive damages award was error and that he is entitled to a judgment awarding no punitive damages.
The judgment of nonsuit against LeFlore's first count for employment discrimination in violation of FEHA and second count for retaliation in violation in FEHA was error. Apart from this, LeFlore has shown no prejudicial error in the judgment on his complaint.
On the cross-complaint, the denial of LeFlore's motion for judgment notwithstanding the verdict was error as to the damages awarded for misappropriation ($19,000) and the punitive damages award ($150,000). The award in favor of MTA must be reduced by the total of these amounts ($169,000), from $606,767 to $437,767. Apart from this, LeFlore has shown no prejudicial error in the judgment on the cross-complaint.
The judgment of nonsuit against LeFlore's first count for employment discrimination in violation of FEHA and second count for retaliation in violation of FEHA is reversed, with directions to the trial court to conduct further proceedings on those two counts. The judgment and order denying LeFlore's motion for judgment notwithstanding the verdict are reversed as to the award of $606,767 in favor of MTA, with directions to the trial court to enter a judgment at the conclusion of these proceedings awarding MTA a total of $437,767. The judgment and order denying the motion for judgment notwithstanding the verdict are affirmed in all other particulars. Each party must bear its own costs on appeal.
WE CONCUR:
KITCHING, J.
ALDRICH, J.
