635 P.2d 1121 (Wyo. 1981)
Edward Campen was employed by Schlumberger Well Services on April 15, 1980, when he prepared to drive a company car from his home in Billings, Montana, to Casper, Wyoming, to address the Wyoming Geological Society.1 During the morning he took a prescribed valium tablet and an Allerest tablet, then consumed three martinis at lunch before departing around 1:20 p.m.2
Between 4:00 p.m. and 4:30 p.m., Campen's vehicle collided with the rear end of Charles Stone's 1979 Chevrolet pickup truck on Interstate 90 outside Sheridan, Wyoming.3 Stone's pickup was totaled, and he sustained two compressed vertebrae resulting in $503 in medical bills and a ten percent permanent partial physical impairment.4
After the collision, Campen refused a police officer's request for a blood alcohol test and later pled guilty to driving too fast for conditions.5 Stone filed suit against Campen and Schlumberger on June 17, 1980, and amended the complaint on October 9, 1980, to allege that Campen, acting within the scope of his employment, drove recklessly with willful, wanton, and gross negligence, seeking both compensatory and punitive damages from both defendants.6
The parties stipulated before trial that Campen had been negligent.7 Trial commenced on December 15, 1980, during which evidence of Schlumberger's wealth was admitted over objection.8 On December 17, 1980, the jury returned a special verdict.9 Judgment was entered on December 22, 1980, from which Campen and Schlumberger appealed.10
Whether punitive damages may be awarded against an employer for an employee's willful and wanton misconduct absent independent fault by the employer?11
The court adopts the test set forth in the Restatement (Second) of Torts § 909 and Restatement (Second) of Agency § 217C. This test determines when an employer may be held liable for punitive damages as a result of the misconduct of an employee. Under this rule, punitive damages can properly be awarded against a master or other principal because of an act by an agent if, but only if, the principal or a managerial agent authorized the doing and the manner of the act.12 The agent was unfit and the principal or a managerial agent was reckless in employing or retaining him.13 The agent was employed in a managerial capacity and was acting in the scope of employment.14 The principal or a managerial agent of the principal ratified or approved the act.15
No. The established facts demonstrate that Campen was employed by Schlumberger and acting within the scope of his employment at the time of the collision.16 Yet no evidence shows that Schlumberger authorized the manner in which Campen drove after consuming valium, Allerest, and three martinis.17 The facts further establish that after the accident Schlumberger took no disciplinary action against Campen.18 But the mere failure to dismiss an employee unaccompanied by conduct indicating approval of the wrongful conduct is insufficient to impose punitive damages.19 Campen possessed an excellent safety record over twenty-three years of employment with only three speeding tickets noted in Montana.20 This record does not support a legal conclusion that Schlumberger was reckless in employing or retaining him.21 Finally the evidence that Campen performed sales and supervisory work is too skimpy to establish that he was employed in a managerial capacity.22
Because none of the four required circumstances were present as a matter of law, the jury instruction that permitted an award of punitive damages against Schlumberger solely upon a finding that Campen acted willfully and wantonly was improper.23
The award of punitive damages against Schlumberger must be reversed and the case remanded for a new trial on that issue.24
Related opinions on this issue
Chief Justice Rose dissents from the adoption of the Restatement rule. He maintains that the majority of courts extend the doctrine of vicarious liability to punitive damages as well as compensatory damages especially in the case of corporations that can only act through their agents.25 Rose argues that the distinction drawn by the Restatement between managerial and non-managerial employees is anomalous.26 The act of any corporate employee done in furtherance of the corporation's business is the act of the corporation regardless of the actor's status within the hierarchy.27
He contends that the purpose of punitive damages to punish and deter similar conduct in the future is not served by limiting liability to acts committed by managerial employees or authorized by management.28 The majority rule of vicarious liability should have been applied to affirm the judgment.29
Whether evidence of an employer's wealth is admissible at trial when claims for both compensatory and punitive damages are presented to the jury?30
Evidence of a defendant's wealth is admissible when punitive damages are requested because it is one of the three factors that should be considered by the jury when making an award of punitive damages.31 At the same time, evidence of financial status remains irrelevant and prejudicial to the determination of negligence or compensatory damages.32 It must be presented in a manner that does not interfere with the jury's deliberations on whether willful and wanton conduct is present.33
No. The established facts show that evidence of Schlumberger's wealth was admitted during a single trial in which the jury was asked to determine both compensatory damages and punitive damages.34 Because the evidence of vast corporate resources was before the jury throughout its consideration of all damage claims, it is impossible to conclude that the compensatory award was unaffected by knowledge that Schlumberger possessed a deep pocket from which any judgment would be satisfied.35
The admission of evidence of Schlumberger's wealth without procedural safeguards constituted reversible error requiring a new trial on both compensatory and punitive damages.36
Whether a bifurcated trial procedure must be used before evidence of a defendant's wealth may be submitted to the jury in cases seeking punitive damages?37
When punitive damages are sought the plaintiff may claim a right to such damages in the complaint and seek pretrial discovery of a defendant's wealth.38 If the defendant moves for a protective order the plaintiff must make a prima facie showing to the trial court that a viable issue exists for punitive damages before discovery proceeds.39 At trial, if evidence makes a prima facie case for punitive damages the verdict form asks the jury whether punitive damages should be awarded but makes no provision for determining the amount until after the jury has first decided that punitive damages are appropriate.40 Only then does the jury hear evidence of the defendant's financial status and return a separate verdict setting the award.41
Yes. The established facts reveal that the trial court permitted evidence of Schlumberger's wealth to be introduced during the liability and compensatory damages phase of a single unified trial.42 The jury therefore evaluated the extent of Stone's injuries and the amount of his compensatory damages while simultaneously aware of the employer's substantial resources.43 Adoption of the bifurcated procedure ensures that the defendant's conduct is judged in a prejudice-free atmosphere before any inquiry into financial status occurs.44
It thereby prevents the wealth evidence from improperly influencing either the finding of willful and wanton misconduct or the calculation of compensatory damages.45
A bifurcated trial procedure must be employed in future cases and the failure to use it here requires reversal of the entire verdict.46
Related opinions on this issue
Chief Justice Rose also dissents from the adoption of the bifurcated trial procedure.47 He notes that Wyoming precedent has long permitted admission of a defendant's pecuniary wealth when punitive damages are claimed.48 The rationale for such evidence is to provide the jury with a guideline for determining the amount necessary to punish the wrongdoer.49 Rose argues that the assumption underlying bifurcation that juries always misuse evidence of wealth is unwarranted.50 Existing standards already require that punitive awards be overturned if they are so disproportionate to actual damages as to indicate passion or prejudice.51
He concludes that the historically accepted procedure followed by the trial judge was adequate and that the judgment should have been affirmed.52