Free Motion for Directed Verdict - District Court of Arizona - Arizona

1 MICHAEL A. CORDIER (AZ #014378) 2 LISA ANNE SMITH (AZ# 16762) 3 4 5 6

SHELTON L. FREEMAN (AZ #009687)

DECONCINI MCDONALD YETWIN & LACY, P.C.
7310 NORTH SIXTEENTH STREET, SUITE 330 PHOENIX, ARIZONA 85020 _____________ Ph: (602) 282-0500 Fax: (602) 282-0520 E-mail: [email protected]
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7 Attorneys for Defendants 8

DECONCINI MCDONALD YETWIN & LACY, P.C.

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UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA Case No. CIV 02 2639 PHX SRB

11 Nicholas Alozie, a single man, 12 13 v. 14 The Mills Corporation, a foreign corporation; Mills Services Corp., a 15 foreign corporation; and Arizona Mills, 16 L.L.C., a foreign corporation, 17 18 Defendants. Plaintiff,

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DEFENDANTS' RENEWED MOTION FOR JUDGMENT AS A MATTER OF LAW ON PUNITIVE DAMAGES AND MOTION FOR NEW TRIAL, TO AMEND THE JUDGMENT OR REMITTITUR, ON PUNITIVE DAMAGES

Defendants The Mills Corporation, Mills Services Corp., and Arizona Mills,

19 L.L.C. (collectively, "Defendants"), by and through undersigned counsel, hereby 20 move, pursuant to Rule 50(b), Federal Rules of Civil Procedure ("Rule"), for 21 direct entry of judgment as a matter of law notwithstanding the jury verdict 22 awarding punitive damages in the amount of $100,000, and pursuant to Rule 23 59(a) and (e) to amend the judgment to delete the punitive damages award, and 24 for new trial or remittitur on such punitive damages award. 25 26

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This Motion is supported by the attached Memorandum of Points and

2 Authorities, the trial testimony in this matter ("Tr. p. _"), admitted trial exhibits 3 ("Ex. _"), and the entire record in this case. 4 MEMORANDUM OF POINTS AND AUTHORITIES 5 I. There is No Evidence to Support an Award of Punitive Damages Under 6 Sections 1981 and 1982 7 To be entitled to an award of punitive damages under 42 U.S.C. §§ 1981 8 and 1982, Plaintiff is required to prove that Defendants acted "with malice or with 9 reckless indifference to [his] federally protected rights". See Kolstad v. American 10 Dental Ass'n, 527 U.S. 526, 534, 119 S. Ct. 2118, 2124, 144 L.Ed.2d 494 (1999); 11 Smith v. Wade, 461 U.S. 30, 56, 103 S. Ct. 1625, 1640, 75 L.Ed.2d 632 12 th 13 (1983); Ngo v. Reno Hilton Resort Corp., 140 F.3d 1299 (9 Cir. 1998). 14 15 A. Improper Instruction to the Jury Led to the Punitive Damages Verdict

DECONCINI MCDONALD YETWIN & LACY, P.C.

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Although the jury in this case returned a verdict for Plaintiff on the issue of

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16 discrimination, it agreed with Defendants that Plaintiff failed to prove any 17 damages and awarded Plaintiff only nominal damages of one dollar. The jury 18 also found in favor of Defendants on the issue of constructive eviction. However, 19 despite these determinations, the jury assessed punitive damages against 20 Defendants in the amount of $100,000. 21 The evidence at trial established that: 22 (1) On February 10, 2002, Plaintiff faxed a letter to Clair Griffith asserting 23 that his store was failing because Painted With Oil was allowed to 24 continue to operate in the Arizona Mills Mall under a temporary 25 26 licensing arrangement. Plaintiff asserted that this situation caused

unfair competition with Plaintiff's permanent lease agreement,

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although Plaintiff did not use the word "discrimination" in the letter. Ex. 29. On February 15, 2002, Dan Jones, then-Manager of the Arizona Mills Mall and Pam Posten, then-Tenant Coordinator for the mall, met with Plaintiff to discuss Plaintiff's concerns raised in that February 10 letter. Tr. p. 253, lines 1-10, & p. 1011, lines 1-18. At that February 15, 2002 meeting, Plaintiff restated the unfair competition and concerns raised in his February 10 letter and asserted that he was discriminated against. Tr. p. 935, lines 8-25; Tr. p. 1030, lines 10-17. (4) On March 4, 2002, Dan Jones sent a letter to Plaintiff that discussed the unfair competition and poor business performance issues that Plaintiff had raised as the basis of his assertion of discrimination. Like Plaintiff's February 10th letter, Dan Jones' letter did not use the word "discrimination". Ex. 30. After the jury had deliberated for almost 3 hours, the jury sent this Court the following question: In a meeting with Dan Jones, when Dr. Alozie brought up feeling discriminated against, was there a legal obligation on the part of management to address this issue based on federal law? Should a response have been in writing? This Court first indicated that the "suggested answers are no, and this is not a legal question that I can answer." Tr. p. 1112, lines 9-10. This Court then

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proposed the following formal response to the jury question: Federal law does not require a landlord to address a tenant's complaint of discrimination. Whether there should be a response and whether it should be in writing is not a matter governed by federal law.

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1 Tr. p. 1113, lines 7-11.

Plaintiff objected, arguing that Defendants had an

2 obligation to investigate the allegation of discrimination, noting that the jury's 3 question touched upon the issue of punitive damages as far as reckless 4 indifference to the plaintiff's protected rights. Tr. p. 1113, lines 17-25, p. 1114, 5 lines 1-2. This Court then correctly determined that there was no obligation to 6 investigate, but in response to Plaintiff's argument, the following alternative 7 response to the jury was proposed: 8

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Federal law does not require defendants to investigate Dr. Alozie's complaints of discrimination raised in the meeting with Dan Jones. The jury is not precluded from considering the matters brought up in the [meeting] and any response along with all the other evidence in deciding the discrimination claim.

12 Tr. p. 1115, lines 8-13. Defendants objected to this proposed response, and 13 requested that the Court provide the Court's earlier response to the jury's 14 question. That objection was overruled, and this Court gave the final response to 15 the jury. Tr. p. 1116, lines 1-5. Approximately twenty to twenty-five minutes after 16 receiving this instruction, the jury reached its verdict for $100,000 in punitive 17 damages. 18 In this case, the jury asked a limited question ­ did Defendants have a 19 legal obligation to address feelings of discrimination articulated by Plaintiff, and 20 did that response have to be in writing? The Court told the jury only that no 21 22 "investigation" was required (as opposed to no obligation to address the claim at 23 all). The Court did not instruct the jury that no response (and no written

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24 response) was required by law in response to expressed feelings of 25 discrimination. Thus, the jury was implicitly instructed that landlords have a

26 federal legal obligation to respond to assertions of discrimination. The Court

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1 further instructed the jury that the lack of response to an allegation of 2 discrimination was factual evidence that could constitute discrimination. 3 4 5 6 7 8 question in a prejudicial way. See United States v. Verduzco, 373 F.3d 1022, 1031 (9th Cir. 2004). Based on the erroneous statement of law provided to the jury, the jury reached its punitive damages determination that Defendants acted The Ninth Circuit Court of Appeals has determined that trial courts must respond to jury questions with particular care and acumen, so that courts do not direct the verdict, engage in judicial fact-finding, or exceed the scope of the

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10 with "reckless indifference to the plaintiff's federally protected rights" by failing to
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1 11 respond to feelings of discrimination.

That improper legal instruction also

12 affected the jury's determination that there was discrimination due to the judicial 13 fact-finding in excess of the scope of the jury's question. Since the jury was not 14 properly instructed that Defendants did not have any obligation to address or 15 respond to Plaintiff's assertions of discrimination, the latter part of the instruction 16 improperly directed them to facts that were beyond Defendants' legal duty. The 17 impact of this Court's directive on a finding of discrimination is revealed by the 18 jury's concurrent determination that no acts of Defendants caused any 19 compensable loss to Plaintiff, not even emotional damages. This Court's 20 response to the jury exceeded the scope of the question in a prejudicial way, 21 22 provided an inaccurate legal standard to the jury, and made implicit factual 23 determinations that led directly to the punitive damages verdict. 24 25 26
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There was no evidence of any conduct accompanied by malice: ill will, spite, or an intent to injure. See Smith v. Wade, 461 U.S. at 37, 103 S. Ct. at 1630. 5
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B.

There is Insufficient Evidence to Award Punitive Damages

As a matter of law to recover punitive damages, Plaintiff was required to

DECONCINI MCDONALD YETWIN & LACY, P.C.

3 prove that Defendants acted with reckless disregard, i.e., discriminated "in the 4 face of a perceived risk that its actions will violate federal law." See Kolstad v. 5 American Dental Ass'n, 527 U.S. 526, 536, 119 S. Ct. 2118, 2125, 144 L.Ed.2d 6 494 (1999). Especially in light of the limited facts that could possibly have 7 formed the basis of the jury's verdict, there was simply no evidence at trial to 8 support a finding that the Defendants acted with reckless disregard of Plaintiff's 9 10 rights. Specifically, the jury's verdict could not have been based upon any
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11 conduct that occurred prior to December, 2000, as the Court directed a verdict 12 for defendants with relation to Plaintiff's claims that he was moved more often 13 than other temporary tenants. The Plaintiff did not allege any other wrongful 14 conduct prior to December, 2000. The award could not have been based on a 15 finding that Defendants "forced" Plaintiff out of the mall, since the jury found for 16 Defendants on the constructive eviction claim. Finally, the award could not have 17 been based on Plaintiff's contention that he was "forced" into a permanent lease 18 while others were "permitted" to remain as temporary merchants. Not only did 19 the evidence conclusively establish that the Plaintiff himself sought a permanent 20 lease, the Plaintiff put on evidence regarding the damages he allegedly suffered 21 22 because he was "forced" into a permanent lease, and the jury declined to award 23 him those damages. 24 Given these rulings, the only allegations upon which the award of punitive

25 damages could possibly have been based are the following: (1) Plaintiff's claim 26 that security harassed his employee, Camille Johnson; (2) Plaintiff's claim that he was not given a temporary space between January and June, 2001, because of

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1 his race; (3) Plaintiff's claim that competition by Painted With Oil and others 2 constituted discrimination; and (4) Plaintiff's claim that Defendants did not 3 respond appropriately to his letter alleging discrimination. There was not 4 sufficient evidence to establish that any of these acts could support an award of 5 punitive damages. 6 All of the alleged acts by the security guards were done without knowledge 7 or direction by management, and there was no evidence that individual security 8 guards were acting in a "managerial capacity." See Kolstad v. American Dental 9 10 Ass'n, 527 U.S. at 546, 119 S. Ct. at 2130 (noting requirement that employee be
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DECONCINI MCDONALD YETWIN & LACY, P.C.

11 serving in a "managerial capacity"). Furthermore, none of those alleged acts 12 were directed at Plaintiff and could not support an award of any damages to him 13 personally. There was no evidence that Plaintiff's failure to obtain a temporary 14 lease between January and June, 2001, was based on anything other than 15 legitimate, non-discriminatory business reasons. There was no evidence that 16 Defendants had any control over whether other stores in the mall competed with 17 Plaintiff, as he alleged. None of the facts brought out to prove these allegations 18 can legally support an award of punitive damages. 19 The only remaining allegation that could possibly have formed the basis for 20 the punitive damage award is the allegation, addressed in the jury question 21 22 discussed above, that Defendants failed properly to respond to Plaintiff's 23 complaint of discrimination. As this Court correctly noted in its first proposed 24 instruction to the jury, federal law does not require a landlord to address a 25 tenant's complaint of discrimination. The evidence showed that Defendants did 26 respond to the concerns raised in Plaintiff's February 10 letter. Defendants held a meeting with Plaintiff to discuss his concerns. At the meeting, Plaintiff voiced

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1 the issues raised in his February 10 letter, contending that these actions had 2 resulted in discriminatory treatment. After the meeting, Defendants sent a letter 3 to Plaintiff addressing his specific concerns regarding the economic differences 4 and unfair competition that formed the basis of his assertions of discrimination. 5 Even if Defendants had not responded, however, such failure could not have 6 constituted reckless indifference to Plaintiff's rights as a matter of law, because 7 there was no risk of violating federal law where Plaintiff had no right to such 8 response. 9 A defendant is not liable for punitive damages where the defendant could 10
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DECONCINI MCDONALD YETWIN & LACY, P.C.

11 reasonably believe that its action was legal even though discriminatory. See 12 Kolstad v. American Dental Ass'n, 527 U.S. at 536-537, 119 S. Ct. at 2125. 13 Defendants understood Plaintiff's assertions of alleged discrimination to really be 14 about business or economic issues, such as unfair competition, that are not 15 addressed by federal civil rights laws. See, e.g., Tr. p. 939, lines 7-12; p. 1035, 16 lines 15-17. The evidence at trial was that Defendants reasonably believed that 17 all of the actions they took with regard to Plaintiff were supported by legitimate, 18 business reasons. There was no evidence to the contrary. Thus, there was not 19 any evidence to support the jury's inference that Defendants did not reasonably 20 believe their actions were legal. 21 The Award of Punitive Damages Violates Defendants' Constitutional 22 III. 23 Rights 24 The Due Process Clause of the Fourteenth Amendment prohibits grossly

25 excessive punitive damages awards because punitive damages pose an acute 26 danger of arbitrary deprivation of property. See State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408, 416-7, 123 S. Ct. 1513, 1520-1521, 155 L.Ed.2d 585

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1 (2003).

The United States Supreme Court has instructed courts reviewing

2 punitive damages to consider three guideposts: (1) the degree of reprehensibility 3 of the defendant's misconduct; (2) the disparity between the actual or potential 4 harm suffered by the plaintiff and the punitive damages award; and (3) the 5 difference between the punitive damages awarded by the jury and the civil 6 penalties authorized or imposed in comparable cases. State Farm Mut. Auto. 7 Ins. Co. v. Campbell, 538 U.S. at 418, 123 S. Ct. at 1520; BMW of North 8 America, Inc. v. Gore, 517 U.S. 559, 575, 116 S. Ct. 1589, 1599, 134 L.Ed.2d 9 10 809 (1996).
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DECONCINI MCDONALD YETWIN & LACY, P.C.

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In this case, there is little or no evidence of any action that could be

12 considered "reprehensible". There was no evidence of discriminatory animus. 13 There was no evidence that any acts of Defendants' management were 14 motivated by race. Plaintiff could only point to inferences of what he alleged as 15 disparate treatment in leasing decisions. The evidence showed these decisions 16 were made based on complex factors involved in retail leasing in a shopping 17 center that contains over 150-175 specialty tenants, Defendants' reliance on the 18 voluntary actions of Plaintiff, and Defendants' routine enforcement of lease 19 terms. Punitive damages should only be awarded if the defendant's culpability is 20 so reprehensible as to warrant the imposition of further sanctions to achieve 21 22 punishment or deterrence. 538 U.S. at 419, 123 S. Ct. at 1521. Here, there is 23 no evidence of "reprehensible" conduct requiring punishment or deterrence. 24 The jury awarded only nominal damages of $1.00. It did not award any

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25 economic damages, and did not even award any emotional distress damages. 26 The $100,000 in punitive damages awarded to Plaintiff is 100,000 times the

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1 amount of his actual harm as determined by the jury. The ratio of the punitive 2 damages award to the amount of nominal damages in this case is 100,000:1. 3 4 5 6 7 8 1603 [citing TXO Production Corporation v. Alliance Resources Corporation, 509 U.S. 443, 481, 113 S. Ct. 2711, 125 L.Ed.2d 366 (1993)]. While the Supreme Court has determined that single-digit multipliers are more likely to comport with The United States Supreme Court has recognized that when "the ratio is a breathtaking 500 to 1", the award must surely "raise a suspicious judicial eyebrow." BMW of North America, Inc. v. Gore, 517 U.S. at 583, 116 S. Ct. at

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10 due process, it has recognized that greater ratios may comport with due process
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11 where "a particularly egregious act has resulted in only a small amount of 12 economic damages." State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. at 13 425, 123 S. Ct. at 1524. Nevertheless, the Supreme Court has noted that, "in 14 practice, few awards exceeding a single digit ratio between punitive and 15 compensatory damages ... will satisfy due process." Id. (emphasis added). 16 In this case, there was no evidence of any "particularly egregious" act, so 17 there is nothing to justify the enormous disparity between the nominal damages 18 and the punitive damage award. Furthermore, although nominal damages of one 19 dollar certainly constitute a small amount of damages, both elements must exist 20 to allow an excessive ratio between compensatory and punitive damages. In 21 th 22 Rubinstein v. Administrators of the Tulane Educational Fund, 218 F.3d 392 (5 23 Cir. 2000), the court found that even in a "small damages" case where the 24 economic damages awarded were $2,500, a multiplier of 30 was unreasonable 25 on the facts of the case. In that case, the Dean had acted illegally in denying the 26 plaintiff a portion of his raise, but the court reduced the punitive damages award to a ratio of 10 to 1.

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The final guidepost is the difference between the punitive damages

2 awarded by the jury and the civil penalties authorized or imposed in comparable 3 cases. Defendants are not aware of any comparable cases where a landlord 4 was punished for not acknowledging feelings of discrimination in writing, or for 5 making complex leasing decisions in a large retail mall setting that may have 6 resulted in different treatment of different tenants (each of whom had different 7 circumstances), or for routinely enforcing lease terms. 8 Under all three guideposts, "the grossly excessive award imposed in this 9 10 case transcends the constitutional limit." BMW of North America, Inc., 517 U.S. at
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11 585-586, 116 S. Ct. at 1604. Defendants are entitled to have the judgment 12 amended to remove the punitive damages award, have a new trial on the 13 punitive damages issue, or at a minimum, to have the amount of the award 14 reduced. 15 IV. 16 17 18 19 20 21 for punitive damages, notwithstanding the jury verdict awarding punitive damages, and amend the judgment to delete the punitive damages award. Alternatively, Defendants request that this Court reduce the amount of punitive Conclusion For the reasons set forth above, Defendants request that this Court

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immediately grant judgment as a matter of law to Defendants on Plaintiff's claim

22 damages. 23 24 25 26

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DATED this 6th day of September, 2005. DeCONCINI McDONALD YETWIN & LACY, P.C.

By /s/ Shelton L. Freeman ________________ Shelton L. Freeman Michael A. Cordier Lisa Anne Smith Attorneys for Defendants

DECONCINI MCDONALD YETWIN & LACY, P.C.

9 COPY of the foregoing mailed 10 this 6th day of September, 2005, to:
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11 12 Sabinus A. Megwa 13 The Megwa Law Office 6811 South Central Avenue 14 Phoenix, AZ 85042 15 16 17 18 19 20 21 22 23 24 25 26 /s/ Fonda Moore_______________

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