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Laidlaw Transit, Inc. v. Crouse (8/30/2002) sp-5619
Laidlaw Transit, Inc. v. Crouse (8/30/2002) sp-5619
Notice: This opinion is subject to correction before
publication in the Pacific Reporter. Readers are
requested to bring errors to the attention of the Clerk
of the Appellate Courts, 303 K Street, Anchorage,
Alaska 99501, phone (907) 264-0608, fax (907) 264-0878,
e-mail corrections@appellate.courts.state.ak.us.
THE SUPREME COURT OF THE STATE OF ALASKA
LAIDLAW TRANSIT, INC., )
) Supreme Court No. S-9850/9869
Appellant and )
Cross-Appellee, )
) Superior Court No.
v. ) 3AN-94-10301 CI
)
GAIL CROUSE, for and on behalf of )
her daughter, SHAWN CROUSE, )
a minor, ) O P I N I O N
)
Appellee and )
Cross-Appellant. ) [No. 5619 - August
30, 2002]
)
Appeal from the Superior Court of the State
of Alaska, Third Judicial District,
Anchorage, Sen K. Tan, Judge.
Appearances: Thomas A. Matthews, Thomas L.
Hause, Matthews & Zahare, P.C., Anchorage,
for Appellant/Cross-Appellee. Don C.
Bauermeister, Burke & Bauermeister, P.L.L.C.,
Anchorage, for Appellee/Cross-Appellant.
Before: Fabe, Chief Justice, Matthews,
Eastaugh, Bryner, and Carpeneti, Justices.
BRYNER, Justice.
I. INTRODUCTION
I. A school bus ran off the roadway and rolled over,
injuring passenger Shawn Crouse. Shawns mother sued the bus
driver and the drivers employer, Laidlaw Transit, Inc.; a jury
awarded Crouse $19,259 in compensatory damages and $3.5 million
in punitive damages. The trial court remitted the punitive award
to $500,000 and entered judgment for Crouse. Laidlaw appeals,
challenging the punitive award and disputing several evidentiary
rulings. Crouse cross-appeals, questioning the trial courts
remittitur. We affirm, concluding that the trial court correctly
found Laidlaw vicariously liable for punitive damages, did not
err in its evidentiary rulings, and did not abuse its discretion
in its remittitur.
II. FACTS AND PROCEEDINGS
On November 24, 1992, a school bus driven by Dawn
Finitz, a Laidlaw employee, slid off an icy road and rolled over.
Shawn Crouse, a bus passenger, suffered minor injuries. In
keeping with its drug policy, Laidlaw gave Finitz a post-accident
drug test, which revealed that Finitzs blood contained trace
amounts of marijuana.
Shawns mother, Gail Crouse, filed a complaint on behalf
of her daughter against Finitz and Laidlaw for compensatory and
punitive damages, alleging that Finitz recklessly caused the
accident. Crouse claimed that Laidlaw was both vicariously
liable for Finitzs conduct because the conduct occurred within
the course and scope of Finitzs employment and directly liable
because Laidlaw negligently or recklessly hired and/or supervised
Finitz that it knew or should have known that Finitz was likely
to drive while under the influence of drugs or alcohol.
In its answer, Laidlaw admitted liability for the
accident and confirmed that Finitz tested positive for marijuana.
As a result, the only issues for trial were the amount of
compensatory damages, whether Finitzs or Laidlaws conduct was
sufficiently outrageous to warrant a punitive damages award, and
if so, the amount of that award.
Laidlaw subsequently filed a motion for summary
judgment on its liability for punitive damages. The superior
court concluded that Laidlaw could not be held directly liable
for punitive damages because it had not acted outrageously in
hiring and supervising Finitz. But the court ruled that Laidlaw
could be held vicariously liable for Finitzs conduct because her
actions fell within the course and scope of her employment.
Laidlaw also filed several pretrial motions seeking to
exclude certain evidence, including all reference to Finitzs drug
use; all evidence of Laidlaws financial resources; the testimony
of Crouses expert witness, Forest S. Tennant, Jr., M.D.; and all
evidence of Laidlaws conduct. The trial court partially granted
the motion to exclude evidence of Laidlaws conduct, precluding
evidence of alcohol and controlled substance abuse by Laidlaw
drivers other than Finitz. The court denied Laidlaws other
pretrial motions.
The trial consisted of two phases: the first addressed
liability and compensatory damages; the second addressed punitive
damages. In the first phase, the jury awarded Crouse $19,259 in
compensatory damages and found that Finitz acted sufficiently
outrageously to justify an award of punitive damages; in the
second phase it awarded $3.5 million in punitive damages.
Laidlaw filed a motion for remittitur, which the trial
court granted. Analyzing the punitive damages award in light of
the factors in Norcon, Inc. v. Kotowski,1 the trial court
concluded that the maximum justifiable award was only $375,000.
Crouse moved to reconsider; the trial court granted the motion
and increased the punitive damages award to $500,000.
Laidlaw appeals; Crouse cross-appeals.
III. DISCUSSION
A. Standard of Review
A. On appeal, Laidlaw challenges the trial courts summary
judgment ruling that it was vicariously liable for punitive
damages and also disputes a number of the courts evidentiary
rulings. We review grants of summary judgment de novo and will
affirm if there are no genuine issues of material fact . . . .2
A trial courts decision regarding the admissibility of evidence,
including expert testimony, is generally reviewed for abuse of
discretion;3 but when admissibility turns on a question of law,
we apply our independent judgment.4
On cross-appeal, Crouse challenges the trial courts
remittitur of the punitive damages award from $3.5 million to
$500,000. We review a trial courts grant of remittitur for abuse
of discretion. To reverse, we must be left with a definite and
firm conviction that the trial court erred in granting the
remittitur.5
B. Laidlaws Vicarious Liability for Punitive Damages
In partially denying Laidlaws summary judgment motion,
the trial court ruled that Finitz acted within the course and
scope of her employment and, so, if the jury found her conduct
sufficiently outrageous to justify an award of punitive damages
against Finitz, Laidlaw would be vicariously liable. Laidlaw
challenges that ruling.
1. Laidlaw failed to preserve its argument that this
court should adopt the complicity rule.
In Alaskan Village, Inc. v. Smalley, we adopted the so-
called course of employment rule for determining when an employer
is vicariously liable for punitive damages arising out of its
employees conduct.6 Under this rule, an employer is vicariously
liable, regardless of the employees rank, so long as the employee
was acting within the course and scope of employment.7
On appeal, Laidlaw urges us to follow a different
standard, the complicity rule, which requires at least some
degree of employer complicity before vicarious liability attaches
for punitive damages arising from the conduct of a non-
supervisory employee.8 But Laidlaw did not raise this argument
at the trial court level. Because Laidlaw failed to preserve the
argument for appeal, we decline to consider overruling Alaskan
Village or adopting the complicity rule.9
2. The trial court did not err in applying the course
of employment rule.
Laidlaw next argues that the trial court erred in
applying the course of employment rule by deciding as a matter of
law that Finitz had acted within the course and scope of her
employment. Because Finitz did not smoke marijuana to serve
Laidlaw and because Laidlaws drug policy specifically prohibited
drug use, Laidlaw contends, Finitzs conduct could not have been
within the scope of her employment.
But the conduct giving rise to the punitive damages
award was not Finitzs act of smoking marijuana; it was her act of
driving children in a school bus while she was impaired by
marijuana.10 The issue, then, is whether the trial court erred by
concluding that Finitzs act of driving the school bus while under
the influence of marijuana fell within the course and scope of
her employment.
This court does not follow a rigid rule for determining
when tortious conduct occurs within the scope of employment;
rather, we apply a flexible, multi-factored test.11 We have
generally looked to the various factors in the Restatement
(Second) of Agency 228 as relevant considerations, though not
prerequisites, to determine whether an employer should be held
responsible for an employees acts.12 The Restatement (Second) of
Agency 228 provides:
(1) Conduct of a servant is within the scope
of employment if, but only if:
(a) it is of the kind he is employed to
perform;
(b) it occurs substantially within the
authorized time and space limits;
(c) it is actuated, at least in part,
by a purpose to serve the master, and
(d) if force is intentionally used by
the servant against another, the use of force
is not unexpected by the master.
(2) Conduct of a servant is not within the
scope of employment if it is different in
kind from that authorized, far beyond the
authorized time or space limits, or too
little actuated by a purpose to serve the
master.
Applying these factors to this case, we conclude that the trial
court properly found as a matter of law that Finitzs outrageous
conduct occurred in the course and scope of her employment.
First, Finitz had specifically been employed to drive a
school bus. That she performed this activity while under the
effects of marijuana does not mean that she acted outside the
scope of her employment; instead, it demonstrates the
recklessness with which she performed her assigned task.13
Moreover, the fact that Laidlaw policy explicitly prohibits
smoking marijuana does not insulate the company from liability:
A wrongful act committed by an employee while acting in his
employers business does not take the employee out of the scope of
employment, even if the employer has expressly forbidden the act.14
Second, the disputed conduct occurred within the time
and space limits of Finitzs employment. Finitz drove under the
influence of marijuana while on her usual morning route.
Finally, even though Finitz acted recklessly in driving
the bus, she nonetheless acted, at least in part, to serve
Laidlaw. In Doe v. Samaritan Counseling Center, we held that
where tortious conduct arises out of and is reasonably incidental
to the employees legitimate work activities, the motivation to
serve test will have been satisfied.15 Here the conduct at issue
driving while impaired by marijuana both arose out of and was
incidental to Finitzs legitimate work activities because it
carried out the very function that Finitz was hired to perform
driving a school bus. We thus affirm the superior courts
decision.
C. Evidentiary Issues
1. The trial court did not err by admitting evidence
regarding Laidlaws failure to locate a driver
named Mike.
During the trials liability phase, Crouse introduced
evidence over Laidlaws objection that Laidlaw had failed to
identify and locate a Laidlaw driver who was known to Finitz only
as Mike. Finitz asserted that she and Mike had previously smoked
marijuana together. On appeal, Laidlaw claims that whether it
ever found Mike was irrelevant to whether Finitzs marijuana use
impaired her driving on the day of the accident. Moreover,
Laidlaw points out, the trial court had previously ruled that
evidence concerning drug and alcohol use by Laidlaw drivers other
than Finitz was irrelevant and thus inadmissable.
Laidlaw adopted the theory at trial that Finitz was
merely an occasional, recreational marijuana user and that the
jury could therefore believe her assertion that she had not
smoked marijuana on the day of the accident. This theory was
based in large part on Finitzs testimony that while she was
working for Laidlaw she smoked marijuana [v]ery irregularly, very
seldom. Given Laidlaws affirmative reliance on the theory that
Finitz was a recreational user, Crouse obviously had a legitimate
interest in locating witnesses who were familiar with Finitzs
drug use and might be able to shed light on the credibility of
her testimony.
During pretrial discovery and at trial, Finitz named
only two people with whom she had smoked marijuana in the past:
Cora, a resident in Finitzs apartment complex, and Mike. She
could not recall either Coras or Mikes last names. As Crouse
points out, [p]laintiff repeatedly sought through discovery
identifying information about Cora and Mike because these were
the only witnesses [Finitz] could even recall the first name of
who had knowledge of her claimed recreational marijuana use.
Because Cora had moved and was no longer in contact with Finitz,
the only way Crouse could verify Finitzs testimony on this point
was through Mike. But Laidlaw failed to locate Mike, claiming
that, despite an extensive inquiry, it had failed to find anyone
named Mike who worked as a Laidlaw driver in Eagle River at the
time of the accident.
By establishing Laidlaws failure to locate Mike and
questioning the reasonableness of Laidlaws efforts, Crouse
legitimately sought to demonstrate not only the absence of anyone
who could corroborate Finitzs claim of merely occasional drug
use, but also that Laidlaw might have been less than diligent in
uncovering evidence that could contradict its recreational user
theory. Because the disputed evidence had at least some
legitimate tendency to refute Laidlaws theory of defense, we
reject Laidlaws claim of irrelevance and conclude that the trial
court did not abuse its discretion in admitting the evidence.
2. The trial court did not err by refusing to give a
cautionary instruction after Crouses closing
argument.
Laidlaw claims that even if we find that the trial
court properly admitted the evidence concerning Mike, it
nonetheless erred by failing to give a cautionary instruction
after Crouse referred to this evidence during closing arguments.
In closing argument, Crouses attorney stated,
But Laidlaw not finding out who Mike was is
detestable. Its one of their drivers, hes
smoking marijuana with this driver.
. . . .
Were going to ask you to say Laidlaw shouldnt
be using drivers like Mike. Now youve never
seen Mike and Ive never seen Mike, and Mike
might still be driving, for all of us know.
If you do nothing in this case, you do
nothing, then tomorrow morning, when that bus
pulls up and those doors open, and a child
looks up those big stairs and climbs into the
bus, Mike may well be behind that steering
wheel. And thats who youre going to leave
there. And if you think this is okay, then
you say no to these questions. But if youre
worried about that child and youre worried
about this type of conduct, then your answers
have to be yes in this action. And thats the
biggest decision youre going to make in this
case.
Following these statements, Laidlaw requested a
cautionary instruction to explain that Laidlaws conduct was
irrelevant. The trial court denied this request, reasoning that
the argument was relevant to the issue of deterrence. We agree
with the trial courts conclusion. Jury instruction 18 stated:
The Plaintiff has also requested that you find Defendant, Dawn
Finitz, liable for punitive damages in order to punish her and to
deter her and others from repeating similar acts. Laidlaw did
not object to this instruction. As we have stated on other
occasions, the purpose of punitive damages is to punish the
wrongdoer and prevent similar conduct in the future.16 The
argument at issue was based on evidence presented at trial,
conformed to the jury instructions, and was aimed at convincing
the jury of the need to deter other drivers and employers who
were similarly situated to Finitz and Laidlaw. We conclude that
the trial court did not err in refusing Laidlaws request for a
cautionary instruction.
3. The trial court did not err by admitting evidence
of Laidlaws wealth.
The trial court denied Laidlaws pretrial motion to
exclude all evidence of the companys financial resources,
reasoning that Laidlaws financial wealth was relevant to the
punitive damages question. Laidlaw challenges this ruling,
arguing that evidence of corporate wealth is irrelevant when, as
here, a company commits no direct wrong but is subject to
punitive damages solely on the theory that it is vicariously
liable for acts of a non-managerial employee. Except perhaps in
situations involving managerial employees, Laidlaw reasons, a
vicariously liable employer is not a wrongdoer, and financial
evidence therefore must be limited to the employees resources.
We have previously recognized that a defendants wealth
is usually relevant to the issue of punitive damages.17 But we
have not yet considered the narrower issue raised here: whether a
corporate employers financial resources are relevant to punitive
damages when the employer is only vicariously liable for an
employees conduct. The rationale behind the course of employment
rule we adopted in Alaskan Village v. Smalley requires an
affirmative answer.18
The course of employment rule holds corporate employers
vicariously liable for punitive damages on the theory that
corporations can act only through their employees and agents;
hence, when employees act in the course of employment, their acts
are indistinguishable from corporate actions. An early opinion
of the Maine Supreme Court exemplifies this theory:
A corporation is an imaginary being. It has
no mind but the mind of its servants; it has
no voice but the voice of its servants; and
it has no hands with which to act but the
hands of its servants. All its schemes of
mischief, as well as its schemes of public
enterprise, are conceived by human minds and
executed by human hands; and these minds and
hands are its servants minds and hands. All
attempts, therefore, to distinguish between
the guilt of the servant and the guilt of the
corporation; or the malice of the servant and
the malice of the corporation; or the
punishment of the servant and the punishment
of the corporation, is sheer nonsense.[19]
Under the course of employment rule, then, an employee
acting within the course and scope of employment essentially is a
corporate actor; and when the employee acts wrongfully, the
corporation becomes the wrongdoer: [T]he tortious act of the
servant done in the course of his employment is ordinarily the
legal act of the master, and in this sense, the employer is not
free of fault. 20 Because the law treats the employer and
employee alike as wrongdoers, it is proper for the jury to
consider what amount of punitive damages will suffice to punish
and motivate the vicariously liable employer; as other
jurisdictions have held in applying the course of employment
rule, evidence of the employers financial wealth is relevant and
admissible in these circumstances.21 The trial court did not
abuse its discretion in admitting evidence of Laidlaws financial
wealth.
4. The trial court did not err by admitting the
testimony of Dr. Tennant.
Laidlaw next contends that the trial court erred in
allowing Crouses medical expert witness, Dr. Forest Tennant, to
state his opinion that, at the time of the accident, Finitz was
under the influence of marijuana she had smoked earlier the same
morning. But Laidlaw did not object to the challenged testimony
and therefore failed to preserve this issue for appeal.22
Laidlaw did file a pretrial motion to prevent Dr.
Tennant from expressing his expert opinion concerning a different
theory of impairment: that Finitz was a long-term, heavy user of
marijuana; that such use can cause residual physiological
effects; and that Finitzs driving was probably impaired by these
residual effects on the morning of the accident. But despite the
trial courts pretrial ruling allowing testimony on this theory of
impairment, Dr. Tennant did not rely on the theory at trial. He
testified instead that, in his opinion, Finitz had likely smoked
marijuana on the morning of the accident and was impaired by the
effects of that mornings consumption.
Laidlaw voiced no objection to this testimony, instead
choosing to cross-examine Dr. Tennant about his reasons for
failing to mention this theory earlier. The doctor had
acknowledged that he had just reached his conclusion the night
before testifying, after examining emergency room records that he
had not previously reviewed and that disclosed Finitzs post-
accident pulse rate and blood pressure. According to Dr.
Tennant, this information enabled him to form his new opinion;
before seeing the emergency room records, he had relied on
information indicating that Finitzs most recent marijuana use had
occurred at least several days before the accident.
As can be seen, Dr. Tennants trial testimony addressed
a different theory than the theory he developed during pretrial
discovery, and the new testimony obviously fell outside the scope
of both Laidlaws pretrial motion to preclude Dr. Tennants expert
testimony concerning residual effects and the superior courts
pretrial order denying that motion.23 The record provides no
basis, then, for concluding that the court had already ruled the
new line of testimony admissible or that a contemporaneous
objection would have been futile. Given these circumstances,
Laidlaw cannot reasonably rely on its pretrial motion as a timely
objection; nor can it plausibly invoke the superior courts
pretrial ruling as an excuse for failing to make a
contemporaneous objection.
5. The trial court did not err by admitting evidence
of Finitzs general drug habit.
Laidlaw argues that the trial court erred in admitting
evidence of Finitzs general drug use, particularly certain post-
accident treatment records from the Alaska Womens Resource Center
indicating that Finitz had used marijuana on a daily basis.
Laidlaw insists that evidence of Finitzs general drug use was
inadmissible because Crouse presented no admissible evidence
tending to prove that Finitz was actually impaired by drugs at
the time of the accident.24
But as explained above, Dr. Tennant testified that
Finitz was impaired by marijuana when the accident occurred. The
challenged treatment records directly supported this testimony:
they reflected Finitzs own admissions that she engaged in daily
marijuana use around the time the accident occurred. The Centers
client intake form states that Finitz had been taking 6 hits of
marijuana twice a day. Because Finitzs admission of daily use
had case-specific relevance by discrediting her claim of
occasional recreational use and by indicating that she smoked
marijuana on the day she drove the school bus off the road, we
find no error in failing to exclude the records as general
propensity evidence.
D. The Trial Court Did Not Abuse Its Discretion by
Ordering a Remittitur of the Punitive Damages Award.
On cross-appeal, Crouse challenges the trial courts
remittitur of the punitive damages award from $3.5 million to
$500,000. A trial court may remit a jurys punitive damages award
as excessive when the court determines that the award is
manifestly unreasonable; factors relevant to this determination
include the compensatory damage amount, magnitude of the offense,
importance of the policy violated, and the defendants wealth.25
Also relevant are the nine factors listed in the Model Punitive
Damages Act:26
(1) the nature of the defendants wrongful
conduct and its effect on the claimant and
others;
(2) the amount of compensatory damages;
(3) any fines, penalties, damages, or
restitution paid or to be paid by the
defendant arising from the wrongful conduct;
(4) the defendants present and future
financial condition and the effect of an
award on each condition;
(5) any profit or gain, obtained by the
defendant through the wrongful conduct, in
excess of that likely to be divested by this
and any other actions against the defendant
for compensatory damages or restitution;
(6) any adverse effect of the award on
innocent persons;
(7) any remedial measures taken or not taken
by the defendant since the wrongful conduct;
(8) compliance or noncompliance with any
applicable standard promulgated by a
governmental or other generally recognized
agency or organization whose function is to
establish standards; and
(9) any other aggravating or mitigating
factors relevant to the amount of the
award.[27]
When a trial court applies these factors and concludes that an
award is excessive, the amount remitted should reflect the
maximum that the jury could have awarded without being excessive.28
The offensive conduct in this case was Finitzs act of
driving a school bus off the road while Finitz was impaired by
marijuana. In its original order of remittitur, the trial court
focused on several relevant factors: (1) the relationship between
the punitive and compensatory damages awards; (2) the offenses
magnitude; (3) the importance of the policy violated; (4) the
defendants wealth; and (5) any fines, penalties, damages, or
restitution paid or to be paid by Laidlaw. While recognizing
that Laidlaw had over $1 billion in annual revenues nationwide,
the court emphasized that the jurys award of punitive damages
exceeded its award of compensatory damages by 182 times;
moreover, the court noted, although Finitz violated a serious
policy by driving under the influence of a controlled substance,
her wrongful conduct was not especially egregious, consisting of
an isolated act that caused only minor injuries. This analysis
initially led the court to reduce the jurys $3.5 million punitive
damages award to $375,000, a figure that, in the courts view,
represented the maximum punitive damages award supported by the
evidence.
After Crouse moved for reconsideration, the trial court
increased the remitted award to $500,000 based on a reevaluation
of two factors: the offenses magnitude and Laidlaws wealth. In
reassessing these factors, the court found Finitzs conduct to be
more serious than it originally believed, noting that, despite
Shawn Crouses relatively minor injuries, an out of control school
bus, full of school children on an icy road, with an impaired
driver posed a very high degree of hazard to the occupants of the
school bus and to the public. At the same time, however, the
court tempered its original estimate of Laidlaws corporate
wealth, pointing out that, although the companys nationwide
annual revenues exceeded $1 billion, its annual revenues in
Alaska totaled only $5 million. Finding statewide revenues
relevant, the court reasoned that a $3.5 million award might seem
de minimis compared to Laidlaws nationwide revenues but was
obviously excessive in relation to the companys Alaska revenues.
Because this second factor largely offset the first, the court
decided on reconsideration to raise the original remitted award
by only a modest amount, to $500,000.
In challenging the remittitur, Crouses cross-appeal
advances three arguments. First, Crouse argues, the remittitur
is inconsistent with the trial courts finding on reconsideration
that the jurys punitive damages award is de minimis compared to
Laidlaws nationwide revenues. But this argument misreads the
courts reconsideration decision, which acknowledged Laidlaws
nationwide earnings but essentially found the companys much
smaller Alaska revenues to be a more realistic point of
reference for assessing the excessiveness of the punitive damages
verdict. Punitive damages are meant to punish the wrongdoer and
to deter similar conduct.29 Given the localized nature of the
misconduct at issue, the limited scope of the resulting harm, and
the absence of any direct liability, the trial court did not
abuse its discretion in selecting Laidlaws statewide operations
as the most appropriate measure to use in determining the need
for deterrence and punishment.
Second, Crouse argues that, given the courts findings
on reconsideration concerning the magnitude of Finitzs
misconduct, its ultimate decision overemphasized the mathematical
ratio of punitive damages to compensatory damages a measure
that should not alone be dispositive. But again, Crouse misreads
the trial courts order on reconsideration. Although the trial
courts findings on reconsideration acknowledged that Finitzs
misconduct was more serious than the court originally thought,
these findings neither said nor suggested that the misconduct was
so serious as to support the original $3.5 million punitive
damages verdict. Instead, the courts reconsideration decision
simply recognized that the enhanced seriousness of the misconduct
supported an award larger than the $375,000 total that the court
had awarded in its original remittitur order. As the trial court
specifically noted, even though it originally underestimated the
potential hazard posed by Finitzs conduct, the overall
seriousness of the misconduct continued to be mitigated by
several significant considerations: to a large extent the
potential harm from Finitzs conduct did not materialize; Shawn
Crouse suffered only minor injuries; and Laidlaw itself neither
contributed to Finitzs misconduct nor directly engaged in any
other wrongdoing. Moreover, Crouses argument on this point
mistakenly posits that the trial courts order on reconsideration
found the ratio of punitive to compensatory damages to be the
only mitigating factor calling for a remittitur. As already
indicated, the court independently emphasized that the income and
size of [Laidlaws] Alaska operations must temper [the amount
awarded].
Last, Crouse attempts to establish the appropriateness
of the jurys punitive damages verdict through a detailed
discussion of economic efficiency theory. But Crouse failed to
present any evidence at trial supporting this theory, failed to
argue the point to the jury or to request supporting
instructions, and failed to argue this point before the superior
court either in its opposition to Laidlaws motion for remittitur
or in its motion for reconsideration. Because a party may not
present new issues or advance new theories to secure a reversal
of a trial court decision, we decline to consider Crouses
economic efficiency theory.30
We thus reject Crouses principal claim on cross-appeal,
holding that the trial court did not abuse its discretion in
ordering a remittitur of the punitive damages award from $3.5
million to $500,000.31
IV. CONCLUSION
We AFFIRM the superior courts final judgment.
_______________________________
1 971 P.2d 158 (Alaska 1999).
2 Municipality of Anchorage v. Repasky, 34 P.3d 302, 305
(Alaska 2001).
3 Dobos v. Ingersoll, 9 P.3d 1020, 1023 (Alaska 2000)
(admissibility of evidence); State v. Coon, 974 P.2d 386, 398
(Alaska 1999) (expert testimony).
4 See Landers v. Municipality of Anchorage, 915 P.2d 614,
616 n.1 (Alaska 1996).
5 Intl Bhd. of Elec. Workers, Local 1547 v. Alaska Util.
Constr., Inc., 976 P.2d 852, 857 (Alaska 1999).
6 720 P.2d 945, 948-49 (Alaska 1986) ([I]f a tort by an
employee renders the employer liable for compensatory damages and
the employees actions justify a punitive damage award, then the
employer is liable for punitive damages, whether or not the
employer authorized or ratified the tortious conduct.) (citing
with approval the rule adopted by the Oregon Supreme Court in
Stroud v. Dennys Rest., Inc., 532 P.2d 790, 793 (Or. 1975)); see
also VECO, Inc. v. Rosebrock, 970 P.2d 906, 911 (Alaska 1999)
(noting that Alaska case law generally follows the Restatement
(Second) of Agency but has eliminated the requirement in
subsection (c) that the employee be managerial).
7 See Stroud v. Dennys Rest., Inc., 532 P.2d 790, 792-93
(Or. 1975).
8 The complicity rule is expressed by the Restatement
(Second) of Torts 909 (1979) and the nearly identical
Restatement (Second) of Agency 217C (1958), which states:
Punitive damages can properly be awarded
against a master or other principal because
of an act by an agent if, but only if:
(a) the principal authorized the doing and
the manner of the act, or
(b) the agent was unfit and the principal
was reckless in employing him, or
(c) the agent was employed in a managerial
capacity and was acting within the scope of
employment, or
(d) the principal or a managerial agent of
the principal ratified or approved the act.
9 See, e.g., Nenana City Sch. Dist. v. Coghill, 898 P.2d
929, 934 (Alaska 1995) (declining to consider an argument raised
for the first time on appeal). Laidlaw suggests that this court
recently adopted the complicity rule in VECO, Inc. v. Rosebrock,
970 P.2d 906 (Alaska 1999) a case decided after trial ended in
the present case and that the newly created conflict between
VECO and Alaskan Village must be resolved. But Laidlaw misreads
VECO, which expressly reaffirmed Alaskan Village as establishing
the appropriate vicarious liability test for cases involving
conduct within the course and scope of employment but adopted the
complicity rule for cases involving employee conduct outside the
course and scope of employment. VECO, 970 P.2d at 923 & n.34.
After our decision in Alaskan Village, the legislature undertook
to regulate and narrow the circumstances in which punitive
damages may be awarded and to limit the amount of such awards.
See AS 09.17.020. Further, the Supreme Court of the United
States has indicated that punitive damages are subject to review
for excessiveness under the due process clause of the fourteenth
amendment to the United States Constitution. Cooper Indus., Inc.
v. Leatherman Tool Group, Inc., 532 U.S. 424 (2001). In light of
these developments, the Alaskan Village rule may be
anachronistic. If and when the point is properly preserved and
raised, this court may consider adopting the narrower complicity
rule.
10 See Stephenson v. United States, 771 F.2d 1105, 1107
(7th Cir. 1985) (relying on Wisconsin law to say that it is the
employees conduct at the time of the accident that determines
whether he is acting within the scope of his employment).
11 Doe v. Samaritan Counseling Ctr., 791 P.2d 344, 346
(Alaska 1990).
12 Id. at 347; accord Williams v. Alyeska Pipeline Serv.
Co., 650 P.2d 343, 349 (Alaska 1982); Luth v. Rogers & Babler
Constr. Co., 507 P.2d 761, 764 & n.14 (Alaska 1973) (rejecting
proposition that must satisfy each factor).
13 See Gutierrez de Martinez v. Drug Enforcement Admin.,
111 F.3d 1148, 1158 (4th Cir. 1997) (applying Virginia law and
concluding that drinking alcohol by itself does not remove the
employee from the scope of his employment); Stephenson, 771 F.2d
at 1107-08 ([T]he fact that [the employee] was intoxicated when
driving does not mean that he was acting outside the scope of his
employment, but only that he failed to use reasonable care under
the circumstances.).
14 Ortiz v. Clinton, 928 P.2d 718, 723 (Ariz. App. 1996);
accord Stephenson, 771 F.2d at 1108 (The [employer] cannot
insulate itself from liability . . . by promulgating regulations
prohibiting employees from drinking and driving.); Pyne v.
Witmer, 512 N.E.2d 993, 999 (Ill. App. 1987) (holding that
employees violation of his employers policy against drinking on
the job does not preclude liability under respondeat superior).
15 791 P.2d 344, 348 (Alaska 1990), clarified by VECO,
Inc. v. Rosebrock, 970 P.2d 906, 924 n.36 (Alaska 1999)
(disapproving of possible broad interpretation and requiring
employees act to have at least some motivation to serve
corporation).
16 Alaskan Village, Inc. v. Smalley, 720 P.2d 945, 948
(Alaska 1986).
17 Norcon, Inc. v. Kotowski, 971 P.2d 158, 175 (Alaska
1999).
18 720 P.2d at 948-49.
19 Goddard v. Grand Trunk Rwy., 575 Me. 202, 222-23
(1869), as quoted in Embrey v. Holly, 442 A.2d 966, 970 (Md.
1982) (quoting this language as justification for following the
course of employment approach); see also Miller v. Blanton, 210
S.W.2d 293, 297 (Ark. 1948) (Having, by the constitution of their
being, to act solely by agents or servants, [corporations] must,
as matter of sound public policy, be held liable for all the acts
of their agents and servants who commit wrongs while performing
the masters business, and in the scope of their employment; and
this to the extent of liability for punitive damages in proper
cases.).
20 Embrey, 442 A.2d at 970; see also, e.g., Goddard, 575
Me. at 222-23; Thorne v. Contee, 565 A.2d 102, 110 (Md. Spec.
App. 1989) ([T]he tortious act of the servant done in the course
of his employment is ordinarily the legal act of the master.);
Gifford v. Evans, 192 N.W.2d 525, 529 (Mich. App. 1971)
(Respondeat superior provides in essence that the act of an
employee during the course of his employment is legally the act
of the employer.).
21 See Embrey, 442 A.2d at 973 (holding that it was
appropriate for trial court to award separate punitive damages
awards against an employee and his vicariously liable employer
because this would enable each award to be based on the two
defendants differing financial status); see also Hyatt Regency
Phoenix Hotel Co. v. Winston & Strawn, 907 P.2d 506, 521 (Ariz.
App. 1995) (holding that punitive damages award against
vicariously liable law firm was not excessive in part because
[t]he award is proportionate to [the law firms] financial
position).
22 See Alaska Evidence Rule 103(a)(1); see also Norcon,
Inc., 971 P.2d at 170 (holding that employer waived issue on
appeal of whether employees testimony was unduly prejudicial by
failing to object when testimony was offered at trial).
23 At trial Laidlaw did not object to Dr. Tennants new
theory as beyond the scope of the expert disclosures or report
and Laidlaw does not complain of such a discovery violation on
appeal.
24 Laidlaw cites other courts for support. See, e.g.,
Coleman v. Williams, 356 N.E.2d 394, 397 (Ill. App. 1976)
(denying reference to partys alcohol consumption earlier in day
when no evidence existed that at time of accident party was
actually intoxicated); Gustavson v. Gaynor, 503 A.2d 340, 342-43
(N.J. Super. 1985) (same).
25 ve Damages Act (U.L.A.) 7(a), quoted in Norcon, Inc
., 971 P.2d at 176.Norcon, Inc., 971 P.2d at 175.20 P.2d 945,
949 (Alaska 1986)).
26 Id. at 176.
27 Model Punitive Damages Act (U.L.A.) 7(a), quoted in
Norcon, Inc., 971 P.2d at 176.
28 Norcon, Inc., 971 P.2d at 175.
29 Alaskan Village, 720 P.2d at 948.
30 See Nenana City Sch. Dist. v. Coghill, 898 P.2d 929,
934 (Alaska 1995) ([A]n argument not raised in a suit before the
trial court will not be considered on appeal.); see also Zeman v.
Lufthansa German Airlines, 699 P.2d 1274, 1280 (Alaska 1985)
(noting that court may review an issue if new argument is closely
related to trial court arguments so that they could have been
gleaned from the pleadings).
31 Crouse also raises several other cross-appeal issues
for consideration only if we grant Laidlaws request for a new
trial. Our decision rejecting Laidlaws arguments on appeal makes
it unnecessary to consider Crouses contingent cross-appeal
issues.
