Richard F. SLATER, Plaintiff and Appellant, v. TEXTRON, INC., et al., Defendants and Appellants.
Defendant Bostitch, Inc., a division of Textron, Inc., hired plaintiff Richard F. Slater in June 1973 as a construction salesman in San Diego. On February 10, 1980, Bostitch discharged Slater. Slater's reaction was that Bostitch had breached its contract with him and that Bostitch management had decided that at 44 he was too old for a company on a “youth kick.” A jury agreed with Slater awarding $145,920 damages for lost wages, $50,000 for emotional distress, and $400,000 punitive damages. In post-trial proceedings the court granted Slater $93,024 statutory attorney's fees (Gov. Code, § 12965, subd. (b)) and granted the defendants'2 new trial motion on punitive damages only. Bostitch appeals from the judgment and the order for attorney's fees. Slater cross-appeals challenging the court's failure to award him prejudgment interest and the limited new trial order.
Because a general verdict will be upheld if there is sufficient evidence to support it on any one cause of action (Henderson v. Harnischfeger Corp. (1974) 12 Cal.3d 663, 673, 117 Cal.Rptr. 1, 527 P.2d 353) we limit our discussion to Slater's cause of action based on age discrimination. As we shall explain we reject Bostitch's contentions that Slater failed to present a prima facie case to support a claim of age discrimination and that there was good cause for Slater's discharge. We hold there were no prejudicial trial errors and there is substantial evidence to support the judgment. We decide, however, the court's failure to apportion the amount of fees attributable to the claim for age discrimination requires reversal so that the amount of such fees can be properly determined.
We also conclude the court erred in granting Bostitch a new trial on the issue of punitive damages because the specification of reasons was inadequate to support the court's conclusion. This error requires that the original judgment in favor of Slater be reinstated. Finally, we decide that Slater is entitled to prejudgment interest pursuant to Civil Code section 3291. We therefore reverse the orders for the new trial and for attorney's fees. On remand the court shall determine reasonable attorney's fees for legal services rendered solely on Slater's cause of action for age discrimination and the amount of prejudgment interest. In all other respects we affirm the judgment.
FACTUAL AND PROCEDURAL BACKGROUND
Bostitch's principal contention is that there is insufficient evidence to support the judgment. We therefore state the facts in some detail.
Slater's interest in going to work for Bostitch was prompted by a newspaper ad which Bostitch had placed for a salesperson in the San Diego territory. Bostitch had not been particularly successful in that area and was “looking for somebody [who] wanted a career.” Slater was desirous of filling that niche and applied for the job. He was interviewed by Abel Gonzalez and another Bostitch management employee, both of whom were “selling [a] career opportunity.” They told Slater Bostitch was “a good company,” both “career ․ [and] family oriented.” Slater successfully completed the interview and was hired to start up the San Diego territory. Bostitch's president promptly sent him a letter welcoming him to “the family” of Bostitch, wishing him well in his “Bostitch career.” From these events Slater concluded, “they were saying to me I had a career as long as I did [the] job and as long as I did that job I would be with the company.”
Bostitch provided Slater with its policies and procedures including the following:
“Job security is important to all of us. Basically job security depends upon how well each of you performs his or her individual job assignment each day.”
Bostitch's policies also stated it “provides its employees with the best possible working conditions to provide steady continuous employment․ The importance of treating each employee fairly․”
In 1978 Bostitch's president Gary Schuler wrote to Slater telling him he “had a successful Bostitch year, but I believe the best is still to come.” From Slater's perspective this letter “verified” his career was going well.
Bostitch gave its employees annual reviews. Slater, however, received only three such reviews. Field sales manager Andy Umsted and regional manager Merlin L. (“Bud”) McGuinn, Slater's supervisor, conducted the first review. McGuinn later became Slater's immediate supervisor from 1975 through the end of 1979 or the early part of 1980.
McGuinn conducted the second review in 1975 in which he graded Slater “outstanding” in ten categories and “needs to improve” in three.
McGuinn and Gonzalez furnished Slater with his 1979 evaluation describing his performance in positive terms. Bostitch never criticized Slater. At no time were deficiencies brought to his attention.
Bostitch's president Schuler testified the most important criterion in evaluating a salesperson was whether annual sales quotas were met. Schuler also said it was company procedure that when an employee between the ages of 40 to 65 was discharged, Bostitch would counsel the employee, recommend constructive action and make a sincere effort to assist the employee's rehabilitation. Schuler also testified Bostitch was concerned with job security. Persons were retained in sales territories if they were able to “get the job done.”
Slater exceeded his sales quotas in 1975, 1976 and 1977. For 1978 Bostitch increased Slater's quota by 80 percent, a percentage substantially in excess of the typical 25 percent increase for other employees. Even though Slater's 1978 sales dipped because of bad weather his sales nonetheless exceeded those achieved the previous year. In September 1978 he was nationally recognized as an “exemplary sales representative” and was “Salesman of the Year” for the Los Angeles sales district.
Slater's sales quota was again increased for 1979. He exceeded that quota by 9 percent in an economy which Bostitch's expert said was declining. Slater had the highest percentage of sales increase for the San Diego office in addition to the highest percentage of increase of dollar sales.
At the slowest time of the year for construction, January, 1980, San Diego County experienced a continuous rain. Construction almost came to a standstill. Slater used this time to obtain new accounts.
On February 10, 1980, Slater's supervisor, Gonzalez, told Slater he was being terminated along with two others, a Black and a woman, both of whom had been with the company for only a short time. Slater told Gonzalez he was confident he could double his sales in spite of the inclement weather. Gonzalez “became nervous,” ended the conversation and told Slater to disregard everything that had been said. He would be in touch with him later.
Near the first of the year, Bostitch management decided to reduce the nationwide salesforce by 12-15 percent as a result of declining economic conditions. On February 12, 1980, Slater received a letter from Bostitch discharging him “due to business conditions and low sales and profit.” Bostitch gave Slater his salary and commissions through February 22, 1980.
Before Gonzalez decided to discharge Slater he had not consulted with an economist, statistician or business forecaster. He had neither sought information about the San Diego economic environment nor evaluated any county construction sales or building permit data. The sole extent of Gonzalez's inquiry into business conditions was his informal discussions with two local residential contractors.
Gonzalez testified that in early 1980 he was “optimistic” regarding sales and felt general business conditions “were good.” He was aware Slater had exceeded his sales quota for 1979, but inexplicably had not considered this fact in reaching his decision. In response to a question why he had failed to do so, Gonzalez responded, “I really don't know why.” Gonzalez acknowledged Slater was a satisfactory employee and there was no area in which he had performed unsatisfactorily.
At the time of his discharge Slater was earning $250 weekly plus 10 percent commissions working as part of the Los Angeles sales district. The district retained two recently-hired probationary sales trainees, Kenneth Schrader, age 26, and John Skadel, age 27 who were receiving the same compensation as Slater. In December 1980 Skadel became a construction service center specialist, a position which Bostitch added because of expansion.
Thirty-year Bostitch employee John Emerick testified that from 1966 through 1984 Bostitch always had three salespersons in San Diego County. Other than Slater, Emerick had never heard of Bostitch discharging anyone for anything other than dishonesty and heard nothing about layoffs taking place. After Slater's discharge, Emerick took over Slater's construction sales in addition to his regular duties but quickly discovered that he was unable to satisfactorily perform both jobs. Emerick complained to his sales manager.
Bostitch employee Bill Kendall was responsible for the handling of the orders for products in San Diego County during the periods of time both before and following Slater's termination. Kendall testified there was no decrease in construction sales activities and no decline in sales construction products after Slater's termination.
McGuinn testified that during the latter part of 1979 and early 1980 Bostitch anticipated an increase in the sales of the construction sales division. Slater had been very successful in 1979 at selling construction service centers, a program which has continued to be “quite a success.”
In the Spring of 1980, the start of the building season, Bostitch transferred David Britton, age 37, from its Trussponents Division to a new position as a sales trainee in San Diego for a $490 weekly salary. Britton's compensation was modified on June 4, 1980, to $310 per week plus 16 percent commission. From about December 1979, Gonzalez had been aware Britton wanted to transfer to a Bostitch sales position. By April 1980, just two months after Slater was fired, Gonzalez testified he was “interested in any good salesperson.” Although Gonzalez considered Slater a “good salesperson” Gonzalez made no effort during the months of March through May 1980 to move Slater into the sales position which Britton ultimately received. With the hiring of Britton in May 1980, San Diego was again staffed with three salespersons.
On March 7, 1980, Bostitch wrote to Slater stating:
“The first day you came to work for Bostitch we felt a good career opportunity was beginning for you. We believe you felt the same way. Somewhere in the intervening period something has happened that caused that potential career to go off course.”
At various points in time, Slater spoke with regional sales manager Ted Wright, Bostitch Vice-President Marshal Shogren, and McGuinn with respect to the circumstances surrounding his termination and his wish to become reemployed. McGuinn told Slater reemployment was impossible. He said Bostitch was on a “youth kick” and gave Slater names and ages of several employees. When he was asked about this statement at trial McGuinn testified, “I don't recall it.”
In July 1980, McGuinn and inferentially Bostitch were aware Slater had suffered a heart attack. By August Bostitch knew Slater had filed an age discrimination claim.
On December 4, 1980, Gonzalez wrote to Slater giving him to December 10, 1980, to respond with respect to a possible position as a furniture specialist salesman. Gonzalez said Slater was being seriously considered for the position until the deadline passed, and when Slater did not respond the position was filled by someone else. Gonzalez did not know when the letter, which was signed by his secretary, had been mailed. Slater received this letter “considerably after” the stated deadline. Gonzalez's testimony regarding this potential job opportunity for Slater was impeached through his signed personnel records showing Bostitch hired Robert James Mazaway on December 8, 1980.3
In a January 29, 1981, letter Bostitch offered to consider Slater for a position if they heard from him by February 2, 1981. This letter did not reach Slater until February 4 when he immediately but unsuccessfully attempted to contact Bostitch.
In February 1982, Slater commenced his training to become a financial planner, a position he held at the time of trial. At the time of trial, Slater was earning about the same as he would have been making had he remained with Bostitch. He therefore did not request damages for future wages.
Having rejected Bostitch's several ancillary contentions we reach its major argument that there is insufficient evidence to support the judgment. Included within this argument is Bostitch's assertion that Slater failed to establish a prima facie case of age discrimination.
Our review of this argument is governed by the substantial evidence test. (CNA Casualty of California v. Seaboard Surety Co. (1986) 176 Cal.App.3d 598, 615-616, 222 Cal.Rptr. 276) “This court must examine the record in the light most favorable to the prevailing party, giving it the benefit of every reasonable inference, and resolving all conflicts in support of the judgment.” (Id. at p. 616, 222 Cal.Rptr. 276, citing Board of Education v. Jack M. (1977) 19 Cal.3d 691, 697, 139 Cal.Rptr. 700, 566 P.2d 602.)
We believe Bostitch's emphasis on Slater's failure to make a prima facie case is misplaced. Our review of an age discrimination suit under California's Fair Employment and Housing Act is guided by federal decisions under the federal Age Discrimination in Employment Act and Title VII cases. (Stephens v. Coldwell Banker Commercial Group, Inc., supra, 199 Cal.App.3d 1394, 1399, 245 Cal.Rptr. 606.) The United States Supreme Court in Title VII cases takes the view once a case has proceeded to the jury the issue is no longer whether plaintiff established a prima facie case, but whether there was discrimination. (U.S. Postal Service Bd. of Govs. v. Aikens (1983) 460 U.S. 711, 713-714, 103 S.Ct. 1478, 1480-1481, 75 L.Ed.2d 403.) “Where the defendant has done everything that would be required of him if the plaintiff had properly made out a prima facie case, whether the plaintiff really did so is no longer relevant.” (Id. at p. 715, 103 S.Ct. at p. 1482; Ansonia Board of Education v. Philbrook (1986) 479 U.S. 60, 67-68, 107 S.Ct. 367, 371-372, 93 L.Ed.2d 305.) The sole issue is whether “‘the defendant intentionally discriminated against the plaintiff.”’ (U.S. Postal Service Bd. of Govs. v. Aikens, supra, 460 U.S. 711, 715, 103 S.Ct. 1478, 1482, quoting Texas Dept. of Community Affairs v. Burdine (1981) 450 U.S. 248, 253, 101 S.Ct. 1089, 1093, 67 L.Ed.2d 207.) The Supreme Court's reasoning is when the plaintiff fails to establish a prima facie case the defect will result in a failure to persuade by a preponderance of the evidence on the critical question of intentional discrimination.
Under McDonnell Douglas, plaintiff must first establish a prima facie case. Once doing so, the burden shifts to defendant to articulate a reason for the termination. Plaintiff can then rebut the stated reason. Under this three step scheme, plaintiff always has the ultimate burden of proving discrimination. (Burdine, supra, at p. 253, 101 S.Ct. at p. 1093.)
It is important to note, however, that once the case moves past the first stage and the defendant neglects to challenge plaintiff's showing of a prima facie case, that issue disappears. The only issue on appeal is whether substantial evidence supports the jury verdict. Whether plaintiff presented sufficient evidence to establish a prima facie case is only of historical, not legal, significance.
In light of the foregoing principle of law it becomes unnecessary to discuss Bostitch's contention relating to the inadequacy of the evidence to support Slater's prima facie case. We direct our attention to whether substantial evidence supports the jury's findings of discrimination.
Government Code section 12941, subdivision (a) recognizes a protected class of persons over the age of 40. Here Slater was 44 years old at the time Bostitch fired him.
As our earlier statement of facts reflects, there is ample evidence to establish that Slater's performance was at least satisfactory. Slater exceeded his sales quota. He was honored as “salesman of the year.” He actually performed at a much higher level than satisfactory.
Bostitch's claimed excuse was that the termination was “due to business conditions and low sales and profits.” However, the jury could reasonably infer from the evidence that Bostitch's hiring of 37 year old David Britton with no prior sales experience, was part of its program to have younger personnel.
Bostitch claims it proved it was operating under an austerity plan and that Slater could be discharged on the basis of a review of sales figures for the last three months. Slater, however, successfully rebutted Bostitch's explanation. He demonstrated that at the time of the “austerity program” Bostitch hired new trainees for the Los Angeles sales office who were later retained. The three months evaluation was distorted because it reflected the slow season of construction sales. Moreover Gonzalez failed to make a reasonable examination of the San Diego sales market with an eye toward future sales. The pretext of firing Slater because of an “austerity program” was also manifest by Bostitch's seeking additional salespeople as soon as April 1980. The jury had ample evidence to find Slater was fired because of age discrimination and to reject Bostitch's justification for such action.
Bostitch claims the damage awards were incorrect for a number of reasons.
There is Sufficient Evidence to Support the Award of Compensatory Damages
Bostitch says that the jury's award of $145,920 in lost wages and benefits was improper because Slater failed to mitigate his damages. Slater's obligation to mitigate damages was explained to the jury. Based on the evidence presented the jury decided this question adversely to Bostitch. As the earlier factual narrative explains, the jury concluded Bostitch was engaged in game-playing when it gave Slater a deadline to accept an already-filled job, particularly when Slater received the letter after the deadline had passed. There is a sufficient factual basis for the jury to have decided that Slater acted reasonably in his post termination efforts to mitigate damages.
There is Sufficient Evidence to Support the Award of General Damages
Bostitch also argues the $50,000 damages for pain and anxiety and mental distress is factually unsupported. The elements of the tort of intentional infliction of emotional distress need not be proved to recover compensatory damages for mental anguish and humiliation. (Stephens v. Coldwell Banker Commercial Group, Inc. (1988) 199 Cal.App.3d 1394, 1403, 245 Cal.Rptr. 606.) Emotional distress may include ““‘all highly unpleasant mental reactions, such as fright, horror, grief, shame, humiliation, embarrassment, anger, chagrin, disappointment, worry and nausea.””’ (Id. at p. 1402, 245 Cal.Rptr. 606, quoting Young v. Bank of America (1983) 141 Cal.App.3d 108, 114, 190 Cal.Rptr. 122.) Mental distress constitutes an aggravation of damages when it naturally ensues from the defendant's conduct. (Crisci v. Security Ins. Co. (1967) 66 Cal.2d 425, 433, 58 Cal.Rptr. 13, 426 P.2d 173.)
We must affirm a jury award of damages for emotional distress where the jury has acted reasonably and intelligently in their decision making process. (Capelouto v. Kaiser Foundation Hospitals (1972) 7 Cal.3d 889, 893, 103 Cal.Rptr. 856, 500 P.2d 880.)
Here the jury was instructed that they could award damages for “pain, discomfort, fears, anxiety, or emotional and mental distress suffered by the plaintiff and proximately caused by the termination, ․” The jury was also told to use “calm and reasonable judgment” and that the damages should be assessed “in light of the evidence.”
Slater testified that after he was terminated he experienced “a feeling of hopelessness, maybe despairity.” He moved into a “room” within a home stating he “went from middle class to no class. I didn't have any money. I couldn't socialize, I didn't have any money. I had a heart problem. [¶] Probably the most difficult time in my life.” He described how he was “despondent ․ depressed.” Having to “borrow money from family and relatives and friends.” “I was getting older and I felt that it was more difficult to find work because of my age.” His feeling of despair, depression and shock lasted for about two years.
His despondency was further exacerbated by Bostitch's false offers of employment. There is substantial evidence to support the jury award of $50,000.
There is Sufficient Evidence to Support the Award of Punitive Damages
Bostitch asserts that the $400,000 punitive damage award is improper because there was no evidence that its conduct was oppressive, fraudulent or malicious.
Civil Code section 3294 provides:
“In an action for the breach of an obligation not arising from contract, where it is proven by clear and convincing evidence that the defendant has been guilty of oppression, fraud, or malice, the plaintiff, in addition to the actual damages, may recover damages for the sake of example and by way of punishing the defendant.”
Malice is statutorily defined as
“[C]onduct which is intended by the defendant to cause injury to the plaintiff or despicable conduct which is carried on by the defendant with a willful and conscious disregard of the rights or safety of others.” (Civ.Code, § 3294, subd. (c)(1).)
Oppression is “despicable conduct that subjects a person to cruel and unjust hardship in conscious disregard of that person's rights.” (Civ.Code, § 3294, subd. (c)(2).)
Conscious disregard can be established by “evidence indicating that the defendant was aware of the probable consequences of his or her acts and willfully and deliberately failed to avoid those consequences.” (Travelers Ins. Co. v. Lesher (1986) 187 Cal.App.3d 169, 200, 231 Cal.Rptr. 791.) The defendant must act with the “intent to vex, injure, or annoy, or with a conscious disregard of the plaintiff's rights.” (Silberg v. California Life Ins. Co. (1974) 11 Cal.3d 452, 462, 113 Cal.Rptr. 711, 521 P.2d 1103.) The common element necessary to find both malice and oppression is the “evil motive” of the defendant. (Monge v. Superior Court (1986) 176 Cal.App.3d 503, 510, 222 Cal.Rptr. 64; Kendall Yacht Corp. v. United California Bank (1975) 50 Cal.App.3d 949, 958, 123 Cal.Rptr. 848.) Actual malice necessary for an award of punitive damages may be inferred from the circumstances of the case. (Richardson v. Employers Liab. Assur. Corp. (1972) 25 Cal.App.3d 232, 245, 102 Cal.Rptr. 547; Walton v. Anderson (1970) 6 Cal.App.3d 1003, 1009, 86 Cal.Rptr. 345.)
Discrimination, in and of itself, infers malice. By definition discrimination means to make a difference in treatment or favor on a class or categorical basis in disregard of individual merit (Webster's New Internat. Dict. (3d ed. 1981) p. 648). Discrimination in a wrongful termination context is to consciously disregard an individual's rights and to cause injury and unjust hardship to that person mentally, financially, and socially. Society has deemed discrimination as a deplorable and egregious wrong. “California law long has recognized that discharges in violation of public policy may be actionable torts for which punitive damages can be recovered under Civil Code section 3294.” (Commodore Home Systems Inc. v. Superior Court (1982) 32 Cal.3d 211, 220, 185 Cal.Rptr. 270, 649 P.2d 912.)
The purpose and function of punitive damages is to punish wrongdoers and thereby deter the commission of future wrongful acts. (Neal v. Farmers Ins. Exchange (1978) 21 Cal.3d 910, 928, n. 13, 148 Cal.Rptr. 389, 582 P.2d 980.) The duty of the jury is to reflect the shock and outrage of society in its verdict when assessing the defendant's conduct. (Nicolaisen, Jay, Punitive damages in California: The Integrity of Jury Verdicts (1983) 17 U.S.F.L.Rev. 147, 168.)
The various factors which a jury considers when assessing the amount of damages include “the particular nature of the defendant's acts in light of the whole record; clearly, different acts may be of varying degrees of reprehensibility, and the more reprehensible the act, the greater the appropriate punishment, assuming all other factors are equal. [Citations.] Another relevant yardstick is the amount of compensatory damages awarded; ․ Also to be considered is the wealth of the particular defendant; obviously, the function of deterrence will not be served if the wealth of the defendant allows him to absorb the award with little or no discomfort.” (Neal v. Farmers Ins. Exchange, supra, 21 Cal.3d at p. 928, 148 Cal.Rptr. 389, 582 P.2d 980.) Thus, the degree of reprehensibility, a proportional comparison against the compensatory damages awarded, and the wealth of the defendant are factors which might guide the jury in its determination.
In Stephens v. Coldwell Banker Commercial Group, Inc., supra, 199 Cal.App.3d 1394, 245 Cal.Rptr. 606, a 63-year old employee was subjected to unwarranted criticism because of his age, which eventually led to a demotion. This oppressive behavior not only led to the employee's embarrassment but also to a reduction in salary. In upholding the award for punitive damages the court noted that “‘powerlessness is one of the most debilitating kinds of human oppression”’ (quoting Rulon-Miller v. International Business Machines Corp. (1984) 162 Cal.App.3d 241, 255, 208 Cal.Rptr. 524), and held that the demotion “exhibited a conscious disregard of plaintiff's right to be considered on his own merits without regard to age and a willingness to injure plaintiff which was both intentional and malicious.” (Id. 199 Cal.App.3d at p. 1404, 245 Cal.Rptr. 606.)
Here, the jury had sufficient evidence to conclude that when Bostitch fired Slater despite his exceptional work record and hired younger, less experienced people at the same salary, it consciously disregarded Slater's right to be considered on his own merits despite his age, thereby intentionally and maliciously injuring him.
The jury also properly considered Bostitch's post-termination conduct. (Parrott v. Bank of America (1950) 97 Cal.App.2d 14, 24-25, 217 P.2d 89.) After Slater was terminated, a letter sent to him can be read to question his performance as a salesperson. In a later letter, Bostitch inquired what “happened that caused [your] potential career to go off course,” suggesting that something other than Bostitch business conditions was responsible. Given their conclusion that Slater was fired for discriminatory reasons, the jury could have considered these letters as reflecting intentional maliciousness. In addition the jury was also entitled to evaluate Bostitch's conduct of offering him various sales positions without any intention of employing him. Bostitch's conduct could reasonably be interpreted as reflecting a conscious disregard of Slater's rights.
Discrimination by its very nature manifests an attitude of disregard of consequential injuries to the victims. Slater suffered those injuries here by feeling humiliated during a period in which he was unable to obtain productive employment.
Based on the jury instructions the jury was authorized to award Slater damages only if it were satisfied that Bostitch was guilty of oppression, fraud or malice. The jury was expressly told not to base its decision on passion or prejudice but to evaluate the blameworthiness, if any, of Bostitch's conduct and to make sure that the punitive damages had a proportional relationship to money damages already assessed. The court also correctly told the jury punitive damages should be awarded only if in their determination the facts called for an assessment of such damages. We conclude there was sufficient evidence before this correctly instructed jury to support an award of $400,000 punitive damages.
Bostitch argues the court erred in awarding Slater $93,024 attorney's fees under Government Code section 12965, subdivision (b) which permits an award of fees to the prevailing party in an age discrimination case. Bostitch's two-pronged attack questions the manner in which the fees were computed and the inclusion of fees for legal services unrelated to Slater's claim for age discrimination.
In requesting the award of attorney's fees, Slater's counsel documented the expenditure of 464 hours at a claimed rate of $125 per hour.6 He then requested a multiplier of 1.5 to account for the difficulty of the case and the contingent nature of the fee. In a hearing before the trial court, defense counsel objected to the multiplier but the trial court dismissed the objection:
“THE COURT: ․ I do not want to hear any further argument on that.
“Let me just say that I do not think the Supreme Court has barred trial judges from considering the traditional factors of the success or lack of success in the litigation in evaluating the attorneys fees, for one thing.
“And for another thing, the tenacity and skill of opposing counsel is and always has been a factor in determining the value of the services of prevailing counsel.
“MS. ROTENBERG [Defense Counsel]: Well, I may be mistaken, your Honor, but I think those factors go into determining the lode star figure. Then--
“THE COURT: Well, I find it difficult to talk in terms of lode stars when I am evaluating the reasonable value of attorneys fees. I think that, suffice it to say that there are a number of factors to be considered, and I do not see that it makes too much difference whether you consider them before determining the basic rate or after determining the basic rate.
“In this case the final fee requested I think is well justified by the applicable criteria.”
Pointing to the trial court's statement regarding the “lodestar,” Bostitch argues the award of fees must be reversed because the trial court failed to apply the proper principles in arriving at the amount of the award. Bostitch cites Press v. Lucky Stores, Inc. (1983) 34 Cal.3d 311, 322, 193 Cal.Rptr. 900, 667 P.2d 704 for the proposition that calculation of fees by the lodestar method is mandatory in California court-awarded non-negotiated fee cases. (Compare Cazares v. Saenz (1989) 208 Cal.App.3d 279, 287-289, 256 Cal.Rptr. 209.) It now contends the court erred in failing to apply the lodestar method.
Bostitch's argument fails to grasp that the lodestar procedure is not some mystical ceremony in which magical words must be intoned in a prescribed order. Slater's request for attorney's fees applied the lodestar method by documenting the number of attorney hours spent and attaching a reasonable hourly fee to those hours. (See Press, supra, 34 Cal.3d at p. 322, 193 Cal.Rptr. 900, 667 P.2d 704.) The trial court properly accepted the “lodestar” thus calculated as reasonable.
In agreeing with the 1.5 multiplier requested by Slater, the trial court relied on one of the factors specifically articulated by the Supreme Court as supporting an enhanced fee: the contingent nature of the recovery. (See Serrano v. Priest (1977) 20 Cal.3d 25, 49, 141 Cal.Rptr. 315, 569 P.2d 1303.) This factor, in itself, would be sufficient to support the multiplier requested.7 Before trial the trial judge expressed skepticism on the record regarding Slater's chances of winning the case. As we explained recently in Cazares v. Saenz, supra, 208 Cal.App.3d at page 288, 256 Cal.Rptr. 209, “[I]n theory, a contingent fee in a case with a 50 percent chance of success should be twice the amount of a noncontingent fee for the same case.”
In the final analysis, this case is a good example of a situation in which the “‘experienced trial judge [was] the best judge of the value of professional services rendered in his court․”’ (Serrano v. Priest, supra, 20 Cal.3d at p. 49, 141 Cal.Rptr. 315, 569 P.2d 1303, quoting Harrison v. Bloomfield Building Industries, Inc. (6th Cir. 1970) 435 F.2d 1192, 1196.) Here, a veteran judicial officer was quite obviously impressed with the quality of advocacy which had succeeded in winning a difficult case. We see no basis for disturbing his judgment call that such advocacy should be appropriately compensated by the award of a modestly enhanced fee.
Bostitch correctly points out, however, the evidence presented by Slater's counsel relating to the time expended did not segregate the time and/or legal services among the several causes of action, particularly between the causes of action for breach of contract and age discrimination.8 In cases where the legal services are inextricably intertwined, apportionment is not required. (See Reynolds Metals Co. v. Alperson (1979) 25 Cal.3d 124, 129-130, 158 Cal.Rptr. 1, 599 P.2d 83.) Here, however, some of the services rendered by Slater's counsel were unrelated to his claim for age discrimination. For example, it appears considerable pre-trial and trial time was devoted to evidence relating to the existence of an employment agreement, either implied or express, which precluded Slater's discharge for anything other than cause. Because the legal services rendered on that issue are not compensable, they cannot be included in the award. Slater is only entitled to attorney's fees as they relate to his cause of action for age discrimination. Accordingly we must reverse the order for attorney's fees so that they may be properly apportioned.
Slater contends the court erred in denying him prejudgment interest under Civil Code section 3291 explaining that the claim for age discrimination should be treated as a personal injury action for purposes of prejudgment interest.
Civil Code section 3291 permits the recovery of prejudgment interest in actions “to recover damages for personal injury sustained by any person resulting from or occasioned by the tort of any other person․” The court's authority to make such an award is predicated on the plaintiff having made an offer under Code of Civil Procedure section 998 to settle the case which the defendant had not accepted before trial or within 30 days, whichever first occurs, and the plaintiff then obtaining a more favorable judgment. Here Slater made a statutory settlement demand substantially less than the judgment.
The issue presented is whether Slater's tort action for age discrimination is one “to recover damages for personal injury.” Slater contends that because he sought and recovered compensation for emotional distress, he is entitled to prejudgment interest on the entire judgment. He argues that “personal injury” means anything other than property damage. In contrast, Bostitch asserts that the Legislature intended “personal injury” to mean physical or bodily injury, not including actions to recover damages for emotional distress and/or injury to the plaintiff's character, reputation and sensibilities.9
Unfortunately, we approach our task of statutory interpretation with a dearth of directly relevant legislative history. Section 3291 was proposed as part of Senate Bill 203 introduced during the 1981-1982 legislative session. Before its amendment in the Assembly on August 10, 1981, the major effect of the bill was to implement the amendment to the California Constitution approved by voters in 1978 allowing for an interest rate on judgments of up to 10 percent. (See Cal. Const., art. 15, § 1.) The August 10 amendment significantly changed the bill by adding the language of section 3291.
Clearly the primary purpose of Civil Code section 3291 was to encourage prompt settlements by increasing the price of delay. (See Woodard v. Southern Cal. Permanente Medical Group (1985) 171 Cal.App.3d 656, 666, 217 Cal.Rptr. 514; see also Moradi-Shalal v. Fireman's Fund Ins. Companies (1988) 46 Cal.3d 287, 305, 250 Cal.Rptr. 116, 758 P.2d 58.) That purpose, however, sheds little light on the reasons why the statute would be limited to actions seeking recovery of personal injury damages. In any action seeking recovery of monetary damages, a defendant may find it economically advantageous to delay payment of the claim as long as possible because of favorable investment opportunities. We have reviewed extensive amounts of legislative history material furnished by the Legislative Intent Service (see Commodore Home Systems, Inc. v. Superior Court, supra, 32 Cal.3d 211, 219, 185 Cal.Rptr. 270, 649 P.2d 912) relative to SB 203 without finding substantial discussion or commentary on what the Legislature had in mind when it referred to an “action brought to recover damages for personal injury.”10
We therefore turn to alternative sources. Several states have enacted prejudgment interest statutes which, like California, in some way limit the award of interest to cases involving personal injuries. The courts of two of those states have had occasion to analyze whether their statutes were intended to apply to actions seeking recovery of nonphysical injuries such as emotional distress. In both cases, the courts concluded that prejudgment interest was recoverable notwithstanding that the injury sustained was not of a bodily nature.
The language of Colorado's prejudgment interest statute is quite similar to the text of Civil Code section 3291.11 In Miller v. Carnation Co. (1977) 39 Colo.App. 1, 564 P.2d 127, the court rejected a defense argument identical to that raised by Bostitch here. “An injury is personal when it impairs the well-being or the mental or physical health of the victim․ In contrast, an injury is not personal when inflicted on property. Therefore, interest on the award for annoyance and discomfort is recoverable from the date of the filing of the Millers' complaint.” (Id. 564 P.2d at p. 132.) Significantly, the Miller decision precedes the adoption of section 3291 in California by five years.
The Oklahoma prejudgment interest statute was not drafted using the Colorado and California models. Nonetheless, in Timmons v. Royal Globe Ins. Co. (Okla.1985) 713 P.2d 589, the Oklahoma Supreme Court was asked to decide “whether an award, characterized by the settled law of the case as one for ‘embarrassment and mental suffering,’ qualifies for prejudgment interest because it is for ‘damages by reason of personal injuries”’ within the meaning of the Oklahoma statute. The court answered in the affirmative. “When recovery for mental harm is achieved by a tort case verdict, ․ there exists no legal impediment to viewing the award as one for ‘personal injury.’ In short, a jury's fixed-sum award for embarrassment and mental suffering does qualify for prejudgment interest authorized by § 727(2), because it is for detriment to the person.” (Id. at p. 593.)
While an age discrimination claim does not attempt to obtain compensation for physical injury, it nonetheless seeks to vindicate decidedly personal interests. As such, discrimination is a personal injury within the meaning of section 3291. Addressing the analogous issue of deciding the proper statute of limitations for a federal civil rights claim under 42 United States Code section 1983, the United States Supreme Court in Wilson v. Garcia (1985) 471 U.S. 261, 105 S.Ct. 1938, 85 L.Ed.2d 254 concluded civil rights violations were “personal injuries”. Quoting Almond v. Kent (4th Cir.1972) 459 F.2d 200, 204, the Court explained:
“In essence, § 1983 creates a cause of action where there has been injury, under color of state law, to the person or to the constitutional or federal statutory rights which emanate from or are guaranteed to the person. In the broad sense, every cause of action under § 1983 which is well-founded results from ‘personal injuries.”’ (471 U.S. at p. 278, 105 S.Ct. at p. 1948.)
Arguably in Government Code section 12941, the California Legislature has expanded the personal civil rights described in Wilson to include freedom from employment discrimination based on age. (See generally Commodore Home Systems, Inc. v. Superior Court, supra, 32 Cal.3d at p. 220, 185 Cal.Rptr. 270, 649 P.2d 912.)
To rebut these conclusions, Bostitch points to language in a footnote of an opinion of this court (Morin v. ABA Recovery Service, Inc. (1987) 195 Cal.App.3d 200, 240 Cal.Rptr. 509) in which we stated in regard to section 3291: “The Legislature intended different treatment of personal injury actions because of the manifest greater prejudice of delay in recovering personal injury damages as compared to contractual or business-tort losses given the probability personal injury plaintiffs are likely to be physically as well as monetarily impaired.” (Id. at pp. 206-207, fn. 1, 240 Cal.Rptr. 509.) Bostitch suggests this footnote reflects our understanding that personal injury means physical injury, necessarily excluding actions seeking recovery solely for emotional distress and other psychological damage.
To the contrary, however, we read Morin as firmly supporting Slater's position. Morin involved the wrongful repossession of a trailer. The plaintiff sought compensation for loss of use of the trailer, replacement of items of personal property and emotional distress. There were no allegations of physical injury. In addressing the defendant's contention that the judgment did not specify what if any portion represented damages for personal injury, we specifically characterized compensation for emotional distress as “personal injury damages.” (Id. at p. 208, 240 Cal.Rptr. 509.) Clearly we did not view bodily injury as a necessary predicate for an award of prejudgment interest under section 3291.
Bostitch, however, places additional reliance on Morin. It argues that even if Slater's age discrimination claim is an “action brought to recover damages for personal injury” within the meaning of section 3291, Slater is only entitled to recover interest on that portion of the judgment which represents personal injury damages. Thus, it suggests, prejudgment interest should be limited to the $50,000 awarded for emotional distress rather than the entire judgment of nearly $600,000 which includes compensation for lost wages and punitive damages.
Bostitch's view of personal injury damages is unnecessarily narrow. The lost wages claimed in this case were caused by age discrimination, which we have explained is a personal injury within the meaning of section 3291. As to the punitive damage award, an identical contention was rejected by the court in Greenfield v. Spectrum Investment Corp. (1985) 174 Cal.App.3d 111, 219 Cal.Rptr. 805 which explained: “In light of the utilization of the term ‘judgment’ in section 3291, both compensatory and punitive damages are encompassed therein and prejudgment interest on the punitive damages should be allowed.” (Id. at p. 125, 219 Cal.Rptr. 805.)
Our decision in Morin does not compel a different result. There, the plaintiff alleged separate causes of action for intentional infliction of emotional distress and possession of personal property. (195 Cal.App.3d at p. 203, 240 Cal.Rptr. 509.) The opinion assumed prejudgment interest under section 3291 was not proper to the extent damages were awarded based on “claims other than those for personal injury.” (Id. at pp. 207-208, 240 Cal.Rptr. 509.) Under the facts of the case, it was possible some or even all of the damages awarded the plaintiff were attributable to the cause of action for possession of personal property. In contrast, all damages awarded by the jury here are based on a single age discrimination claim seeking to recover damages for personal injury. Accordingly, Slater is entitled to interest measured as a percentage of the entire judgment.
Slater also argues the court erred in granting a new trial on the issue of punitive damages because the court (1) failed to state with specificity and/or with evidentiary support the basis for its ruling and (2) the order is jurisdictionally defective because it was drafted by Bostitch's counsel.
During the hearing on the new trial motion the court denied Bostitch's motion for judgment notwithstanding the verdict, stating:
“I do not think it can be said that the evidence could not reasonably support the verdict ․ And although this is far from the strongest case I've ever seen for the Plaintiff, I do not think it is by any means totally without merit.”
In denying Bostitch's motion for new trial the court also explained,
“I do not have the feeling that the jury's verdict was totally out of the ballpark. I believe the evidence supports the view as to both age discrimination and the breach of implied in fact contract that the plaintiff asked the jury to adopt.”
Of particular importance for our purposes is the court's statement as follows:
“I think the evidence was legally sufficient, and I do not feel that it is an outrageous miscarriage of justice, by any means, that the jury should have found in favor of the plaintiff on this evidence.
“As to the punitive damages, I find that the evidence of conscious disregard of plaintiff's rights was flimsy, at best; that the punitive damages, if allowed at all, even if there was conscious disregard, the punitive damages should not have been more than nominal, on evidence of this kind, and the defendants are entitled to a new trial on that issue. A new trial will be granted for insufficiency of the evidence on the issue of fraud, malice, or oppression, and specifically conscious disregard.”
After making the foregoing statement the court asked defense counsel to submit “a draft of a proposed statement and order partially granting the new trial,” stating that its “statement of reasons is simple enough so that if you are going to prepare the order, I think you just might as well do the statement of reasons at the same time. [¶] In effect, you will be paraphrasing and perhaps amplifying what I have said here in open court․ [¶] [A]s long as I have stated my reasons in fact, I realize that this is a sensitive area, but I see nothing wrong with asking the defense counsel to do a preliminary draft of it and let the Court work from that.”
In a letter accompanying the proposed order, Bostitch's counsel reminded the court that the language of Code of Civil Procedure section 657 states in part: “The court shall not direct the attorney for a party to prepare either or both said order and said specifications of reasons.” The court used the proposed order as the basis for its final order, which was filed after the court made several editing changes.12
A day later, the court drafted and filed its own specification of reasons:
“The evidence in this case was barely sufficient to support the jury's finding of age discrimination. Evidence of fraud, malice, or oppression was non-existent, or at best flimsy. I do not think there was any substantial evidence of willful overreaching or conscious disregard for the plaintiff's rights. The impermissible motive for plaintiff's discharge was accompanied and supported at all relevant times by proper business reasons. [¶] Moreover in view of plaintiff's short history as employee of defendant, punitive damages, if allowable at all, should only be in a nominal amount.”
Slater's quarrel with the new trial order centers on both the manner in which the order was prepared and the paucity of its reasons, referring us to the well-established principles discussed in Mercer v. Perez (1968) 68 Cal.2d 104, 115-116, 65 Cal.Rptr. 315, 436 P.2d 315, which explain the requirements of Code of Civil Procedure section 657. The mandatory provisions of that section require that on the granting of a new trial upon the ground of the insufficiency of the evidence “․ it shall be conclusively presumed that said order as to such ground was made only for the reasons specified in said order or said specification of reasons, ․” “A specification of reasons, phrased in terms of ‘ultimate fact,’ fails to comply with section 657 of the Code of Civil Procedure․” (Widener v. Pacific Gas & Elec. Co. (1977) 75 Cal.App.3d 415, 438, 142 Cal.Rptr. 304, citing Scala v. Jerry Witt & Sons, Inc. (1970) 3 Cal.3d 359, 370, 90 Cal.Rptr. 592, 475 P.2d 864; see also Clemmer v. Hartford Insurance Co. (1978) 22 Cal.3d 865, 888, 151 Cal.Rptr. 285, 587 P.2d 1098; Miller v. Los Angeles County Flood Control Dist. (1973) 8 Cal.3d 689, 698, 106 Cal.Rptr. 1, 505 P.2d 193.)
In the interests of brevity we will not belabor our concern with the trial court's delegation of the preparation of the order to Bostitch's counsel. (See generally La Manna v. Stewart (1975) 13 Cal.3d 413, 424-425, 118 Cal.Rptr. 761, 530 P.2d 1073; Oberstein v. Bisset (1976) 55 Cal.App.3d 184, 188-189, 127 Cal.Rptr. 413.) Even if the involvement of Bostitch's counsel is not fatal to the order, the specification of reasons filed by the court is inadequate to support the granting of a new trial. After the first introductory sentence, the second and third sentences of the specification do no more than recite the “ultimate fact” that, in the court's view, there was insufficient evidence of fraud, malice, oppression or conscious disregard of the plaintiff's rights to support an award of punitive damages. Accordingly, the adequacy of the specification depends entirely on the fourth and fifth sentences.
In the fourth sentence, the court explains that “[t]he impermissible motive for plaintiff's discharge was accompanied and supported at all relevant times by proper business reasons.” If this statement were accurate, however, it would be grounds for granting a new trial as to liability, not simply as to punitive damages. The court specifically instructed the jury it could not return a verdict for Slater unless it was convinced that age discrimination was the determining factor in his dismissal. Obviously if there were proper business reasons for the discharge, age discrimination was not the determining factor.
As a final factor, the court in the fifth sentence suggests that the amount of punitive damages awarded was too high because of Slater's “short history as an employee of defendant․” While such a factor might conceivably affect the amount of compensatory damages, we are at a loss to understand how it could legitimately lessen the size of the punitive award, which is generally based on the reprehensibility of the defendant's conduct, the wealth of the defendant and, to a lesser extent, the amount of compensatory damages. (See Neal v. Farmers Ins. Exchange, supra, 21 Cal.3d 910, 928, 148 Cal.Rptr. 389, 582 P.2d 980; Devlin v. Kearny Mesa AMC/Jeep/Renault, Inc. (1984) 155 Cal.App.3d 381, 389-390, 202 Cal.Rptr. 204.) Approval of such reasoning would suggest that the more quickly discrimination is manifest, the less it will be punished. Even viewing the reasoning more benignly, it is difficult to see how facts unique to the plaintiff may legitimately affect how much the defendant should be punished.
We recognize that, in contrast to new trial orders based on excessive compensatory damages, “somewhat different considerations apply when ․ it is the amount of punitive damages awarded which is the primary concern. In such a case ․ the specification is adequate when ․ it makes reference to those aspects of the trial proceedings which, in the trial court's view, improperly led the jury to inflate its award.” (Neal v. Farmers Ins. Exchange, supra, 21 Cal.3d at p. 932, 148 Cal.Rptr. 389, 582 P.2d 980.) Here as we have explained, however, the only fact cited by the court is an improper reason for reducing the amount of the punitive award.
Where the specification of reasons on which it is based is inadequate, the order granting a new trial must be reversed. (Miller v. Los Angeles County Flood Control Dist., supra, 8 Cal.3d at p. 699, 106 Cal.Rptr. 1, 505 P.2d 193.) Accordingly, the underlying judgment in favor of Slater is automatically reinstated.
The orders granting attorney's fees and a limited new trial are reversed. In all other respects the judgment is affirmed. The case is remanded for further proceedings consistent with this opinion. Plaintiff to recover all costs on appeal.
2. For stylistic convenience we refer solely to Bostitch. Defendant Textron, Inc. also appeals from the judgment.
3. On December 16, another Bostitch letter inquired whether Slater wished to be “considered” for an unspecified sales territory. When Slater phoned Bostitch to obtain additional information, the Bostitch representative “hemmed and hawed [and] avoided.” Later, on the advice of his lawyer, Slater wrote to Bostitch noting that because Bostitch's overture was not an offer of employment, was unspecific and did not refer to his pending complaint with the federal Equal Employment Opportunity Commission, he had “no basis for response.”
FOOTNOTE. See footnote 1, ante.
6. The $93,024 requested also included $6,024 representing fees paid by Slater to prior counsel.
7. We share Bostitch's concern with the trial court's separate consideration of “the tenacity and skill of opposing counsel” as a factor supporting the multiplier. On one level, the skill of defense counsel should reflect itself in an increased number of hours reasonably expended by Slater's counsel in prosecuting the action, which would therefore be part of the lodestar figure. Alternatively, the trial court may have been referencing the view that a well-managed opposition makes ultimate success in the lawsuit less likely. If this was the intent, that fact may be properly considered in determining the multiplier but only in conjunction with the overall evaluation of the extent to which the ultimate payment of an attorney's fee is contingent.
8. We have previously explained that a defendant waives any claim of error in this regard where it attempts to raise the apportionment issue for the first time on appeal. (Imperial Cattle Co. v. Imperial Irrigation Dist. (1985) 167 Cal.App.3d 263, 277-278, 213 Cal.Rptr. 622.) Our review of the record suggests that Bostitch did not raise the question of apportionment in the trial court. Slater, however, has not argued waiver in opposing Bostitch's contention. Accordingly, we prefer to resolve the case within the parameters established by the parties, especially since the trial court can consider the apportionment issue at the same time it decides the amount of attorney's fees to which Slater is entitled as a result of this appeal.
9. Although Bostitch cites cases interpreting a venue statute (Code Civ.Proc., § 395) which hold that “injury to person” means physical or bodily injury (see Carruth v. Superior Court (1978) 80 Cal.App.3d 215, 219-220, 145 Cal.Rptr. 344; Cubic Corp. v. Superior Court (1986) 186 Cal.App.3d 622, 625, 231 Cal.Rptr. 18), we find them less than persuasive because they arise in a context markedly different from that which we confront here.
10. Of some significance, perhaps, is a brief reference in the “Enrolled Bill Report” by the Governor's Office of Legal Affairs which describes an opponent's argument against the bill as based on the fact that it allows for the award of interest on general damages, including inter alia damages for emotional distress.
11. Colorado Revised Statutes section 13-21-101 was enacted in 1973. Subsection (1) provides in relevant part as follows: “In all actions brought to recover damages for personal injuries sustained by any person resulting from or occasioned by the tort of any other person ․ it is lawful for the plaintiff in the complaint to claim interest on the damages claimed from the date the action accrued.”
12. The proposed order prepared by Bostitch's counsel simply stated that a new trial was “granted on the issue of punitive damages only.” A separate one-sentence “Specification of Reasons” stated that there was “insufficient evidence that Defendants acted in conscious disregard of Plaintiff's rights.” The order signed and filed by the trial court used the “Specification of Reasons” as one of the grounds for the new trial order: “Defendants' Motion for a New Trial shall be granted on the issue of punitive damages only on the grounds that there is insufficient evidence that Defendants acted in conscious disregard of Plaintiff's rights or that they were guilty of fraud, oppression, or malice.”
WIENER, Acting Presiding Justice.
BENKE and NARES, JJ., concur.