Seventh Circuit Court of Appeals Commentary : In Their Opinion : Lawyer & Attorney Michael E. Rigney : Kelley Drye & Warren Law Firm

G.G. v. GRINDLE (November 23, 2011)

Nine female South Berwyn School District 100 students brought suit against their school principal, Karen Grindle, for failing to prevent the students' sexual abuse by their band teacher. Details of the abuse were presented at trial. Each student's story was different. One student, G.G., testified about two incidents of sexual contact when she was 10 years old. One involved the touching of her breast, the other the touching of her thigh. Other students testified of more prolonged and egregious conduct. G.G.'s counselor testified that the experience was very traumatic, that G.G. was diagnosed with post-dramatic stress disorder as a result of the abuse, and that the events caused severe emotional damage. A jury found in plaintiffs' favor and awarded compensatory damages ranging from $100,000-$750,000 per plaintiff. They awarded G.G. $250,000. The jury also awarded a collective $100,000 in punitive damages. After the jury award, all plaintiffs except G.G. settled. Grindle filed a motion for remittitur, arguing that the evidence did not support the verdict. She also asked that the punitive damages be stricken. Judge Hibbler (N.D. Ill.) denied the motion. Grindle appeals.

In their opinion, Seventh Circuit Judges Flaum, Kanne, and Wood affirmed. The Court first addressed the compensatory damage award. The Court applied a three-part test -- whether the verdict is monstrously excessive, whether there is a rational connection between the evidence and the verdict, and whether the amount of the verdict is comparable to other cases. Since neither party submitted circuit cases for comparison and since the monstrously excessive prong of the test is more properly considered within the rational connection prong, the Court focused on that prong. It rejected Grindle's contention that the two "innocuous" events testified to by G.G. did not support the verdict. First, it is not the number or nature of the events but, rather, the impact on the plaintiff that should be considered. G.G. was the youngest victim and suffered severe emotional harm. Second, the fact that the jury distinguished between each of the students and awarded damages amounts along a fairly large spectrum demonstrates their careful consideration of the individual evidence. Third, the Court rejected Grindle's contention that other factors (her drug use, sexual experimentation, attempted suicide) led to G.G.'s troubles. The Court noted the substantial evidence tying G.G.'s troubles back to the abuse. Finally, the Court did note that the damage award was at the lower end of the spectrum for the nine students. The verdict was reasonable in light of the evidence. The Court next considered the punitive damage award and whether it was excessive. It rejected Grindle's argument that the award was excessive because she was not directly involved in the abuse and jury must have been focusing on the abuse. There is evidence in the record that she knew or should have known of the abuse and did nothing. That is enough for a punitive damages award.

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BOYD v. TORNIER, INC. (August 24, 2011)

Tornier, Inc. is a national medical goods manufacturer, particularly in the joint replacement field. In 2003, it entered into exclusive distribution agreements with Boyd Medical in Missouri and Addison Medical in Iowa. The agreements provided that Boyd and Addison had exclusive distribution rights in their respective areas, that they could not sell products that competed with Tornier products, that Tornier could set sales quotas, and that the failure to meet a sales quota was grounds for termination. Even when it entered into these agreements, however, Tornier was developing a plan to convert these distributorships into dedicated Tornier outlets. Tornier told both Boyd and Addison of its plan and represented to both that they would be exclusive distributors of its new and expanded product line. Boyd and Addison began preparing for that opportunity by dropping other product lines. The truth, however, was that Tornier was not satisfied with Boyd and Addison and had already found replacement distributors. When the time came, it increased the sales quotas for both distributors and terminated them when they failed to meet the new quotas. Both Boyd and Addison went out of business and sued Tornier for breach of contract, intentional misrepresentation, and negligent misrepresentation. Magistrate Judge Wilkerson (S.D. Ill.) dismissed the negligent misrepresentation count as to Addison pursuant to Iowa law limitations on such a claim and sent the other claims to the jury. The jury found against Tornier on all claims and awarded $1.4 million in compensatory damages to Boyd, $1.1 million in compensatory damages to Addison, and $2 million in punitive damages for each. The district court set aside the punitive damages but otherwise upheld the verdict. Both parties appealed.

In their opinion, Seventh Circuit Judges Bauer, Wood, and Sykes affirmed in part, vacated in part, and remanded. The Court first addressed the breach of contract claim, which was governed by Texas law under a choice of law clause. It found that the contract specifically excluded lost profits relief after termination. Texas law, however, provides that contractual limitations on damages are not enforced when there is a bargaining disparity between the parties. The district court allowed the jury to decide whether there was a disparity as a matter of fact. The Court disagreed and vacated the compensatory damage awards. Although Boyd and Addison were dependent on Tornier, they were so by choice. They were both sophisticated businesses and could have rejected Tornier's contract demands. The Court turned to the intentional misrepresentation claims, the elements of which are: a) a false, material representation, b) that the speaker knew was false, c) spoken with the intent to deceive, d) which was justifiably relied on, and e) causing damages. Tornier challenged both the justifiable reliance and the knowledge of falsity elements. The Court affirmed the district court, finding sufficient evidence of those two elements in the record to support the jury's verdict. On Boyd's negligent misrepresentation claim, Tornier argued that the same limitation that Iowa law imposed on Addison's claim (limiting it to professionals whose business is to give advice) should be imposed on Boyd's (which was governed by Missouri law). The Court found no Missouri case that imposed such a limitation and declined the invitation to expand state law. The Court turned to tort damages. The jury's actual damage award was based on six years of lost profits assuming a 20% annual growth rate. The Court had no difficulty with the six years of lost profits, even though the distributorship contracts were of a one-year duration. Both Missouri and Iowa allow tort damages beyond a contract term if there is an ongoing relationship. There was sufficient evidence of that relationship in the record for the jury's finding. On the other hand, the assumed 20% growth rate was not supported by anything other than conjecture and hope. The Court remanded for further damage calculation. Finally, the Court addressed the punitive damage award. An award of punitive damages requires a showing of actual or legal malice. It found that Tornier's behavior, although tortious, was not vindictive or so outrageous as to meet the punitive damages standard.

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PICKETT v. SHERIDAN HEALTH CARE CENTER (June 25, 2010)

Danielle Pickett was employed as a housekeeper at the Sheridan Health Care Center in Zion, Illinois. In 2005 and 2006, she was the victim of several incidences of inappropriate remarks and touching by nursing home residents. Although the Center responded to her complaints, the promised response never quite succeeded. In a June 2006 meeting with several Center staff members, the Center agreed to reassign Pickett from cleaning residents' rooms, although, according to Pickett, the Center's VP of Operations suggested that Pickett invited the inappropriate conduct. The next morning, Pickett had a very emotional conversation with the Center's Administrator. According to Pickett, the Administrator said some things that indicated that her job may be in jeopardy. The meeting ended with Pickett still upset and in tears. Instead of resuming her assigned tasks, she left the Center. She called the Administrator the next day to ask if she still was employed. He consulted with the VP of Operations and advised Pickett that she no longer had a job. Beginning about a month later, after Picket filed an EEOC claim, the Center offered on several occasions to reinstate Pickett. She refused several such offers but eventually returned to the Center in January of 2007. She brought suit against the Center for sexual harassment and for retaliatory firing under Title VII. Judge Pallmeyer (N.D. Ill) granted summary judgment to the Center on the harassment claim. The retaliation claim went to trial. The jury found for Pickett and awarded $15,000 in compensatory and $50,000 in punitive damages. The court awarded back pay and injunctive relief. The Center appeals.

In their opinion, Judges Flaum, Kanne, and Evans affirmed. The Court first rejected the Center's argument that Pickett could not prevail on the retaliation claim because she could not prevail on the harassment claim. In order to prevail on retaliation, a plaintiff need only show statutorily protected conduct, adverse action, and a causal link. The Court found that there was sufficient evidence of each of those elements in the record -- the jury was entitled to find in Pickett's favor. Each of the Center's other arguments was also rejected: a) counsel’s "send some message" language in closing argument was not improper, b) the compensatory damage award was not excessive and did not require corroborating evidence from a third party, and c) the court did not abuse its discretion in allowing the punitive award to stand in light of the evidence that supported a conclusion that the Center knew it might be retaliating when it terminated Pickett's employment.

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