KIMBERLY G. HILL, ET AL. V. KENTUCKY LOTTERY CORPORATION
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MODIFIED : DECEMBER 16, 2010
RENDERED : APRIL 22, 2010
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2006-SC-000748-DG
2008-SC-000380-DG
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KIMBERLY G. HILL, ET AL.
V.
APPELLANTS/ CROSS-APPELAEES
ON REVIEW FROM COURT OF APPEALS
CASE NOS . 2005-CA-000111-MR AND 2005-CA-000183-MR
JEFFERSON CIRCUIT COURT NO . 00-CI-004922
KENTUCKY LOTTERY CORPORATION
APPELLEE/CROSS-APPELLANT
OPINION OF THE COURT BY JUSTICE VENTERS
REVERSING AND REMANDING
The Kentucky Lottery Corporation (KLC) terminated the employment of
Robert W. Hill and Kimberly G. Hill on September 1, 1999 . Several months
later, the Hills filed a lawsuit against KLC in the Jefferson Circuit Court,
asserting three claims : 1) unlawful retaliation in violation of KRS 344 .280,
Kentucky's Civil Rights Act; 2) common law wrongful discharge in violation of
public policy ; and 3) defamation. Thus began a long and tortuous course of
litigation that took the parties through two jury trials in the Jefferson Circuit
Court, and two appeals to the Court of Appeals . It now comes to this Court for
review of a Court of Appeals decision affirming the circuit court judgment
entered after the second trial. Because we believe the trial court erred in
setting aside the judgment entered on the first trial verdict, we reverse the
Court of Appeals and reinstate the jury verdicts from the first trial. We remand
the matter to the Jefferson Circuit Court for further proceedings and entry of
judgment consistent with this opinion .
In reaching this conclusion, we address the following issues :
1) Whether the trial court still had jurisdiction over the case when it
vacated the judgment on the jury verdict of the first trial;
2) Whether the retaliation claims under KRS 344 .280 preempted the
Hills' claims of wrongful discharge in violation of public policy;
3) Whether the KLC was entitled to dismissal of the defamation claim on
the grounds of absolute privilege ;
4) Whether the trial court erred when it vacated the judgment entered on
jury verdict of the first trial on the grounds that the jury had not been
given an instruction on the defense of qualified immunity ;
5) Whether the trial court erred in fixing interest on the Hills' verdict at
less than 12% ; and
6) Whether the trial court erred in the amount of attorneys' fees it
awarded to the Hills .
7) Whether the trial court erred when it denied KLC's objection to the
punitive damage instructions on the ground that punitive damages
are not available under the Kentucky Civil Rights Act, and, if so,
whether that was error was harmless .'
I . FACTUAL BACKGROUND
The parties strongly disagree over the circumstances that led to KLC's
decision to fire Robert and Kim Hill. To fairly present the contested issues of
law we must outline the basics of the factual dispute .
Kim and Robert Hill married in 1994, while both were employed by KLC.
In 1999, the Hills, and others expressed concern about KLC's treatment of
another employee, Edward Gilmore . Gilmore was involved with KLC in a
dispute over unemployment benefits . The Hills opposed what they perceived as
unlawful discrimination against a disabled worker (Gilmore) by KLC . They
claim that KLC tried to pressure Kim to testify untruthfully at Gilmore's
unemployment hearing, by saying that he was not legally blind, despite her
belief that he was. The Hills claim that after Kim's refusal to perjure herself,
KLC began the campaign of harassment and intimidation against them,
culminating with the termination of their employment .
1 KLC also maintains that the damages awarded at the first trial were excessive and
that before that award is reinstated, the excessiveness question should be
remanded to the trial court. KLC's original new-trial motion included an assertion
that the damages were excessive, but having determined that a new trial was
warranted on other grounds, the trial court did not reach that question .
Notwithstanding the trial court's reluctance to address the issue, we are persuaded
that KLC was obliged under CR 52 .04 to request a finding from the trial court on
the excessive damage issue if it intended to preserve the issue for appeal. KLC
having allowed the issue to expire when it was fresh and amenable to appropriate
trial court findings, it cannot now be exhumed, three appeals and some eight years
later.
KLC denies that version of events, and claims that the Hills were guilty of
serious misconduct regarding their work duties, including the falsification of
time sheets and work logs so as to misrepresent the work they actually
performed, and that they had forged other documents relating to their work. It
is not disputed that just before the Hills were fired, KLC prepared a
"termination memorandum" for Robert and a "termination memorandum" for
Kim, detailing the alleged misconduct . KLC planned to deliver the memos to
the Hills and fire them at a scheduled conference . The Hills did not keep the
appointment. The memos were placed in their employment records, and a
notice of the termination of their employment was mailed to them.
Shortly afterwards, a Louisville television station, WLKY, used the
Kentucky Open Records Act to obtain the Hills' employment records, including
the termination memoranda. Gilmore's termination led to a protest
demonstration in front of the KLC offices in Louisville in which the Hills
participated . A WLKY news reporter covering the event publicized Kim's
termination memorandum.
II. PROCEDURAL BACKGROUND
The Hills responded to their termination by filing suit against KLC,
asserting three claims : 1) unlawful retaliation in violation of KRS 344 .280,
based on the Hills' opposition to the alleged mistreatment of Gilmore; 2)
common law wrongful discharge in violation of public policy, based on Kim's
alleged refusal to commit perjury at the behest of KLC ; and 3) defamation,
predicated on the allegedly libelous termination memoranda. During the
pretrial process, KLC moved for summary judgment arguing that under the
doctrine of preemption, the Hills' common law wrongful discharge claims were
subsumed under the doctrine of preemption by their claims of unlawful
retaliation, under the Kentucky Civil Rights Act, KRS Chapter 344 . KLC also
moved for dismissal of the defamation claim on the grounds of absolute
privilege . Those motions were denied, and the case proceeded to the first of
two jury trials . The first trial, which lasted three weeks, resulted in a verdict
for the Hills on all claims, awarding compensatory and punitive damages to
Robert of $2,654,450 .00 and to Kim of $1,697,866 .00 .
On KLC's motion, the trial court set aside the verdicts of the first trial
because the jury instructions on defamation did not provide for the defense of
qualified privilege, and because the trial court believed that it had erred in
failing to apply preemption to the wrongful discharge claim. We describe that
decision in more detail below. The Hills' motion for interlocutory relief at the
Court of Appeals was denied. A second trial was held, resulting in a verdict in
KLC's favor on the defamation claim and a substantially lower damage award
for the civil rights violation.
In the post-trial proceedings, the trial court awarded the Hills' attorney
fees of $212,959 .87, and fixed the rate of interest on the judgment at 6% .
The Hills appealed to the Court of Appeals and KLC cross-appealed . The
Court of Appeals affirmed the trial court's judgment from the second trial: We
granted the Hills' petition for discretionary review and KLC's cross-petition .
The issue lying at the threshold of our review of the case is whether the trial
court lost jurisdiction over the case when it entered its order setting aside the
verdict entered at the first trial. If the Hills prevail on that point, the issues
relating to the doctrine of preemption and defamation instructions are moot.
If, as the Court of Appeals determined, the trial court had jurisdiction to order
a new trial, then we must consider whether its decision to grant the new trial
was correct, and if not, we must consider the ramifications. Finally, we must
consider whether the Court of Appeals correctly affirmed the trial court's award
of attorneys' fees and postjudgment interest .
III . THE TRIAL COURT HAD JURISDICTION
TO ENTER THE ORDER OF AUGUST 8,2003
The Hills argue that the Judgments of May 12, 2003, based on the jury
verdicts of the first trial, must be reinstated because by the time the trial court
entered the "Order and Opinion" of August 8 setting aside the Hills' favorable
jury verdicts and granting KLC a new trial, it no longer had jurisdiction. The
Court of Appeals concluded otherwise. We agree, and accordingly affirm that
portion of the Court of Appeals opinion.
The issue arises because of a mistake that occurred soon after the return
of the jury verdicts in the first trial. KLC tendered to the trial court a proposed
final judgment which grossly understated, and therefore misrepresented, the
amounts awarded by the jury at trial .2 The trial court mistakenly entered the
faulty judgment . Thus, the Hills found it necessary to move the court to set
aside or amend the defective judgments and enter ones that reflected the true
verdict. KLC moved to vacate the judgment and to grant a new trial, asserting
the substantive grounds mentioned above . Several months later, on May 12,
2003, the trial court entered two orders (one pertaining to Kim's claims, and
one pertaining to Robert's claims) vacating the defective judgment and directing
the entry of new judgments properly reflecting the jury verdicts . The orders
also stated, "It should be noted that these Judgments are not final and
appealable and are subject to further rulings on the motions currently pending
to alter, amend, or vacate ." Entered with each order was a judgment
consistent with the trial verdict; one captioned "Final Judgment in Favor of
Kimberly G. Hill," and one captioned "Final Judgment in Favor of Robert W.
Hill ." Both were signed by the trial judge as entered on May 12, 2003 . Except
for the word "final" in the caption, neither of the two judgments contained
language designating it as a final and appealable order. No further motions
challenging the May 12 Judgments were filed.
On August S, 2003, the trial court entered an order setting aside the jury
verdicts in favor of the Hills and granting the motion KLC had filed for a new
trial following the entry of the erroneous judgment .
2 There is no evidence that the erroneous judgment was intended to perpetrate a fraud
on the court or was otherwise intentionally misleading . We operate under the
assumption that the mistake was innocent human error.
The main thrust of the Hills' argument may be fairly restated as follows.
CR 50 .02, CR 52 .02, and CR 59 all prescribe a ten-day window following the
entry of a judgment within which a party may move to challenge the judgment,
or within which the trial court may, of its own volition, amend or vacate a
judgment . Otherwise, the judgment becomes final. CR 73.02(1) provides that,
in the absence of such a motion, a notice of appeal must be filed within thirty
days after the date of notation of service of the judgment, or it becomes final.
Thus, the only events that delay the finality of a judgment are those described
in CR 50, CR 52, or CR 59, or the filing of a notice of appeal under CR 73 .
Because none of those events occurred after the entry of the May 12
Judgments, the Hills contend they became final well before August 8, 2003,
when the trial court vacated the May 12 Judgments. Under that reasoning, it
follows that the trial court had lost jurisdiction over the case when it voided the
jury verdicts from the first trial and ordered the new trial.
Because we affirm the Court of Appeals on this issue, and agree with its
reasoning, we quote from its opinion verbatim:
[T]he judgments entered on May 12, 2003, were not final because
they were attached to an order which specifically stated that "these
Judgments are not final and appealable and are subject to further
rulings on the motions currently pending to alter, amend or
vacate." The order specifically reserved for future adjudication the
trial court's ruling on KLC's January 31, 2003, "Amended Motion
for JNOV; Motion for New Trial and/or Motion to Alter, Amend or
Vacate.
CR 54 .01 defines a final judgment as follows:
A judgment is a written order of a court adjudicating a
claim or claims in an action or proceeding . A final or
appealable judgment is a final order adjudicating all
the rights of all the parties in an action or proceeding, or
a judgment made final under Rule 54 .02. Where the
context requires, the term "judgment" as used in these
rules shall be construed "final judgment" or "final
order" . (Emphasis added) .
"[I]f an order entered in a cause does not put an end to the action,
but leaves something further to be done before the rights of the
parties are determined, it is interlocutory and not final." Hubbard
v. Hubbard, 303 Ky. 411, 197 S .W.2d 923, 924 (Ky . 1946) . As the
trial court's May 12, 2003, order left something further to be done
(i .e., to rule on KLC's pending motions), the attached judgments
were not final judgments . Simply put, at the time the judgments
were entered, all the rights of all the parties had not been
adjudicated. Accordingly, the principle that a trial court loses its
jurisdiction ten days following the entry of the final judgment is not
applicable . The judgments were not final . Similarly, the 30-day
period for filing an appeal to this Court pursuant to CR 73 .02 did
not begin to run . It follows that the trial court retained jurisdiction
to enter the August 8, 2003, order and that the order was not "null
and void" as asserted by the Hills.
Because the issues raised in those motions were not resolved by the trial
court when it corrected the defect as to the verdict amounts, it was within the
discretion of the trial court to deny finality to the judgment under CR 54 .02,
which in relevant part states :
[T]he court may grant a final judgment upon one or more but less
than all of the claims . . . upon a determination that there is no
just reason for delay.
The judgment shall recite such
determination and shall ' recite that the judgment is final . In the
absence of such recital, any order or other form of decision,
however designated, which adjudicates less than all the claims or
the rights and liabilities of less than all the parties shall not
terminate the action as to any of the claims or parties, and the
order or other form of decision is interlocutory and subject to
revision at any time before the entry of judgment adjudicating all
the claims and the rights and liabilities of all the parties .
We do not overlook the Hills' contention that the motions upon which the
August 8 Order was entered were filed
before
the entry of the May 12
Judgments. We decline to decide whether our Rules of Civil Procedure
authorize the filing of such motions before entry of the judgment, or whether
filing a motion to set aside a judgment prior to the entry of the judgment falls
within the ten-day window our Rules provide, because that is not what
happened here. A judgment, albeit a faulty one, was entered in January 2003
and KLC filed motions to vacate it in a timely manner. The trial court had
discretion to resolve one issue (the error in the amount of the verdict) and
reserve others for further consideration . It was within the trial court's
discretion to consider KLC's pending motions without requiring them to be refiled after entry of the May 12 Judgments . We do not share the Hills' concern
that this ruling destroys the finality of judgments.
Finally, we note the Hills' argument that, "[KLC] . . . should not be
allowed to attack its own judgment" and that the motions KLC filed to set aside
the defective judgment should not be allowed to be "transferred" to the May 12
Judgments . We appreciate the frustration implied in that argument . The
tender of the defective judgment added a very complex dimension to an already
complicated case. But, the defective judgments are not KLC's "own."
Regardless of how or by whom the judgments were tendered, the entry of the
judgment is the trial court's responsibility, and the error contained in the
judgment is an error of the trial court. By tendering the defective judgments,
KLC did not waive its right to seek relief in the form of a motion for a new trial
or a judgment notwithstanding the verdict.
While, as we state below, we disagree with the trial judge's ruling on the
substantive issues presented in KLC's post-trial motions, we do not fault his
effort to resolve the post-trial procedural problems in a fair and reasonable
manner, consistent with the Rules of Civil Procedure .
Having determined that the trial court had not lost jurisdiction when it
entered the August 8, 2003 Order setting aside the trial verdict and judgment
of May 12, 2003, we must now consider whether the Court of Appeals correctly
addressed the merits of the issues raised therein. Two issues presented by
that Order are now before this Court. 3 First, the trial court set aside the jury
verdict and granted a new trial because it concluded that the wrongful
discharge in violation of public policy claims were preempted by the civil rights
claims, and should not have been submitted to the jury. Second, the trial
court held that it had erred when it ruled that KLC was not entitled to a jury
instruction on the defense of "qualified privilege ." We turn now to those issues,
as they have been presented to us.
IV . THE HILLS' COMMON LAW WRONGFUL DISCHARGE
CLAIMS WERE NOT PREEMPTED BY KRS CHAPTER 344.
The Hills argue that the Court of Appeals erred in holding that the
doctrine of preemption required affirming the decision to set aside the jury
3
A third issue ruled on by the trial court is not before us . The trial court did not set
aside the determination that KLC was liable on the civil rights claim, thus that
determination became final. It did set aside the damages awarded on that claim,
and ordered that the issue of damages, both punitive and compensatory, be
subjected to a new trial.
verdict in the first trial. KLC argues that the Hills' claims for common law
wrongful discharge were preempted by their claims for retaliatory discharge
under KRS Chapter 344, Kentucky's Civil Rights Act, that the trial judge
correctly ruled as such, and the Court of Appeals correctly affirmed that
conclusion . We agree with the Hills, and therefore we reverse .
Both sides in this case, and the Court of Appeals, place a heavy
emphasis on our decision in Grzyb v. Evans, 700 S.W.2d 399 (Ky. 1985) .
However, KLC's argument (as well as the Court of Appeals' holding) that the
civil rights claims preempt the common law discharge claims because "both
claims arose out of the same set of facts" and are "predicated on the same
conduct by KLC,"4 indicates a misunderstanding of Grzyb as it relates to the
doctrine of preemption. Grzyb does not hold that preemption is triggered when
the same set of facts that establishes a common law wrongful discharge claim
also constitutes a claim under KRS Chapter 344. Further explanation of our
holding in Grzyb is in order, but first we undertake a brief overview of the
development of the tort of wrongful discharge in violation of public policy .
The tort of wrongful discharge of a "terminable-at-will" employee is a
relatively recent development, having arisen out of carefully crafted exceptions
to the common law doctrine that "an employer may discharge his at-will
employee for good cause, no cause, or for a cause that some might view as
morally indefensible ." See Firestone Textile Co. Div. v. Meadows, 666 S.W .2d
4 The "same set of facts" referred to is, specifically, the alleged insistence by KLC that
Kim commit perjury at the unemployment compensation hearing of Gilmore.
730, 731 (Ky. 1984) (citing Production Oil Co. v. Johnson, 313 S.W .2d 411 (Ky.
1958) and Scroghan v. Kraftco Corp., 551 S .W.2d 811 (Ky. App. 1977)) .
In Pari-Mutuel Clerks' Union v. Kentucky Jockey Club, 551 S.W .2d 801
(Ky. 1977), this Court recognized an exception to the "terminable-at-will"
doctrine, and provided a cause of action for wrongful discharge to a worker who
claimed he was discharged for engaging in lawful union activity under KRS
Chapter 336 . Firestone provided a similar exception where the termination was
motivated by a desire to punish an employee for "seeking benefits to which he
is entitled by law," specifically, workers' compensation . Firestone, 666 S.W.2d
at 734 .
We recognized in Firestone that, although the "terminable-at-will"
doctrine should be retained, "a narrow public policy exception should be
adopted" when the firing of an employee undermined a "most important public
policy ." Id. To insure that the tort of wrongful discharge developed in a
"clearly defined and suitably controlled" manner, we adopted the rule described
in Brockmeyer v. Dun & Bradstreet, 335 N .W.2d 834, 840 (Wis. 1983), and
established for Kentucky the following limitations on conditions under which
exceptions to the "terminable-at-will" doctrine would give rise to a wrongful
discharge claim :
1) The discharge must be contrary to a fundamental and welldefined public policy as evidenced by existing law.
2) That policy must be evidenced by a constitutional or statutory
provision.
3) The decision of whether the public policy asserted meets these
criteria is a question of law for the, court to decide, not a question
of fact .
Firestone, 666 S .W.2d at 731 .
Sensing "that there was some misunderstanding of the meaning of our
decision" in Firestone, we granted discretionary review in Grzyb. Our decision
in Grzyb made two important points. First, it refined the parameters set out in
Firestone for recognizing new public policy exceptions to the "terminable-at-
will" doctrine . Second, it explained the circumstances in which the doctrine of
preemption would block the creation of a common law claim for wrongful
discharge in violation of public policy.
In Grzyb, an employee named Evans alleged that he had been discharged
from his employment for fraternizing with a female employee . Evans brought
suit against his corporate employer and his individual supervisors, asserting a
claim for common law wrongful discharge in violation of public policy and for
violation of his civil rights under KRS 344 .040, both based on sexual
discrimination . The employer successfully argued that Evans's common law
wrongful discharge claim was preempted by the statutory remedies afforded
under KRS Chapter 344 for civil rights violations. The reason for the
preemption, however, was not that Evans's sex discrimination claim under KRS
344 .040 was based on the same conduct as his common law wrongful
discharge claim. Preemption was based on the fact that his sex discrimination
claim was based on the same law as his wrongful discharge claim. Grzyb, 700
S .W .2d at 401-402 . The only "fundamental and well-defined public policy" that
Evans could articulate to meet the requirement for a wrongful discharge claim
was the very same public policy embodied in the civil rights statutes of KRS
Chapter 344 . We held in Gryzb that Evans' had no wrongful discharge claim
because :
[T]he claim, of sex discrimination would not qualify as providing the
necessary underpinning for a wrongful discharge suit because the
same statute [KRS 344 .040] that enunciates the public policy
prohibiting employment discrimination because of `sex' also
provides the structure for pursuing a claim for discriminatory acts
in contravention of its terms. See KRS Chapter 344, Civil Rights .
[ . . . ] Thus, the same statute which would provide the necessary
underpinning for a wrongful discharge suit where there is
sufficient evidence to prove sex discrimination in employment
practices also structures the remedy. The statute not only creates
the public policy but preempts the field of its application .
Grzyb, 700 S .W.2d at 401 (emphasis added) .
"Where the statute both declares the unlawful act and specifies the civil
remedies available to the aggrieved party, the aggrieved party is limited to the
remedy provided by the statute ." Id. (internal citations omitted) . Thus,
preemption is not caused exclusively by the similarity of the facts that underlie
the respective causes of action . In the context of a wrongful discharge case,
preemption occurs when the statutes that establish the "well-defined public
policy" violation which supports the wrongful discharge pleading are the same
statutes that establish a statutory cause of action for, and structure the
remedy for, violations of that public policy.
As an additional aid to the further development of the law of wrongful
discharge, we identified in Grzyb the only situations in which discharging an
at-will employee would be so contrary to public policy as to be actionable
despite the absence of "explicit legislative statements prohibiting the
discharge." Id. at 402 (quoting Suchodolski v. Michigan Consolidated Gas Co.,
316 N .W.2d 710,711 (Mich. 1982)) .
Those situations are:
1) Where the alleged reason for the discharge of the employee was
the employee's failure or refusal to violate a law in the course of
employment ; or
2) When the reason for the discharge was the employee's exercise
of a right conferred by well-established legislative enactment.
Id. at 402 .
The Hills assert in their pleadings that they were fired from their jobs at
KLC because of "Kim Hill's refusal to offer false testimony during a legal
proceeding." Thus, the "fundamental and well-defined public policy" 5 invoked
by the Hills as the underpinning of their wrongful discharge claims is the
public policy against false testimony in a legal proceeding . We need not cite
every constitutional or statutory provision embracing that public policy as it
suffices to note as a matter of law that KRS Chapter 523, Perjury and Related
Offenses, provides a clear, strong legislative expression of public policy against
perjury. 6 We note further that discharging the employee for refusal to violate a
law is one of the two situations we cited in Grzyb as being so contrary to public
policy as to be actionable as wrongful discharge . On the other hand, the
The first prong of the Firestone test is that the termination of employment conflicted
with a fundamental and well-defined public policy. Firestone, 666 S.W .2d at 731 .
6 The second prong of the Firestone test is that the public policy be evidenced by a
statutory or constitutional provision . Firestone, 666 S .W.2d at 731 .
5
underpinning of the Hills' civil rights claim was retaliation for testifying in
support of a civil rights complaint by a co-worker - not violation of the perjury
statutes . Thus, the Hills asserted an appropriate claim for wrongful discharge
based on the laws against perjury .
And in fact, our Court of Appeals has already determined that a wrongful
discharge claim will lie under such circumstances . Northeast Health
Management, Inc. v. Cotton, 56 S .W.3d 440 (Ky . App. 2001)(holding that
discharging an employee for refusing employer's request to commit perjury
satisfied the first of the two situations described in Grzyb, and therefore
qualified as an exception to the terminable-at-will doctrine) . In Cotton, no
claim under KRS Chapter 344 was asserted . Cotton, therefore, is significant to
our analysis here because it clearly demonstrates that a claim of wrongful
discharge for refusing to commit perjury does not depend upon the same
public policy embodied in KRS Chapter 344 for its "necessary underpinning ."
In other words, unlike the sex discrimination based claims asserted in Grzyb,
the Hills' claims for wrongful discharge do not arise from and do not depend
upon the same statutes as their civil rights claims :?
7 KLC cites Wilson v. Lowe's Home Center, 75 S .W.3d 229 (Ky. App. 2001), Kroger v.
Buckley, 113 S .W.3d 644 (Ky. App. 2003), and McBrearty v. Kentucky Community
and Technical College System, 262 S.W.3d 205 (Ky. App . 2008) as cases in which a
common law claim was preempted because it was based on the "same facts" as a
civil rights claim. Although none of those cases involved wrongful discharge claims,
each is Grzyb-type preemption because the only statutory or constitutional law
proscribing the offensive conduct sustaining the common law claim was KRS
Chapter 344, the civil rights statutes . It is the common legal underpinning, not the
common conduct that triggers preemption .
Because, the statutes that declare the unlawful act of perjury are not the
same statutes that declare and remedy civil rights violations, the Hills' claims
under KRS Chapter 344 does not preempt the Hills' common law claims for
wrongful discharge based on the public policy against perjured testimony. To
further illustrate the distinct legal nature of the two claims, this Court notes
that if KLC had requested Kim Hill to testify falsely regarding her co-worker,
Gilmore, and she had refused but also did not affirmatively testify on Gilmore's
behalf, any subsequent termination would potentially give rise to a common
law wrongful discharge claim but not an action under KRS Chapter 344 .
Similarly, had KLC never approached Kim Hill about her testimony in the
Gilmore matter and the only conduct at issue was her eventual testimony on
his behalf, a KRS Chapter 344 claim could be stated upon termination but
there would be no basis for a common law .wrongful discharge claim, i.e. no
request for perjured testimony. In this case, the jury apparently found that
both things occurred: KLC requested perjured testimony and Kim Hill
affirmatively exercised her right to testify in support of a co-worker's
discrimination claim. Thus, the conduct at issue here gave rise to two distinct
causes of action.
The trial court erred in its order of August 8, 2003, and misapplied
Grzyb, when it held otherwise.8 The Court of Appeals erred when it applied the
doctrine of preemption to eliminate the Hills' wrongful discharge claim . The
jury was properly instructed on each claim . We therefore reverse the opinion of
the Court of Appeals to the extent that it affirmed the trial court's August 8,
2003 Order setting aside the jury verdict on the Hills' claims for wrongful
discharge in violation of public policy, and direct that the original verdicts on
those claims be reinstated .
V. THE TRIAL COURT ERRED IN SETTING ASIDE
THE JURY'S VERDICT WITH RESPECT TO THE DEFAMATION CLAIM
In its August 8, 2003 Order, the trial court sustained KLC's motion for a
new trial on the defamation claims, concluding that it had "erred in ruling that
[KLC] did not have a qualified privilege under the circumstances of this case."
The jury instructions on defamation given at the second trial included the
defense of qualified privilege, and the jury returned a verdict in favor of KLC.
Both parties have raised issues relating to the defense of privilege, both
absolute and qualified . KLC argues in its cross appeal, as it did in its motion
at the first trial for a directed verdict, that its conduct in relation to the
termination memo is subject to
absolute
privilege for two reasons : 1) the
document was disclosed pursuant to a requirement of the law; and 2) the
8 The trial court erred further in that order when it stated that the wrongful discharge
claim should have been submitted to the jury "only as alternative claims to be
considered" only if the jury found in favor of KLC on the civil rights claim. When
preemption is properly applied, the common law claim is subsumed and eliminated
by the overriding statutory scheme, and the remedy, if there is to be one, may only
be found under the statute.
document was a communication of a government official performing his
statutory duties. The Hills argue that absolute privilege does not apply here,
and that setting aside the first trial verdict was error because KLC had not
properly raised and preserved the defense of qualified immunity . The Court of
Appeals found that "KLC was entitled to a qualified privilege instruction, and
the trial court did not abuse its discretion by granting KLC a new trial on the
issue." It declined to address KLC's argument that its privilege was absolutey
We now consider the issues regarding privilege.
A . KLC's Claim of Absolute Privilege
The existence of an absolute privilege is a question of law, to be
determined by the trial judge, not the jury. Rogers v. Luttrell, 144 S.W . 3d 841,
844 (Ky . App . 2004) . In Compton v. Romans, 869 S.W.2d 24, 26 (Ky. 1993),
this Court recognized that historically "the class of absolutely privileged
communications are [sic] comparatively few, and that the courts have evinced a
purpose not to extend that class." See also McAlister 8a Co. v. Jenkins, 284
S .W. 88, 90 (Ky. 1926) . Specifically, it was noted in McAlister.
If in the discharge of a duty imposed by law a public official clothed
with quasi judicial powers may have suspended over his head
continually the threat of libel suits, it is apparent that his official
conduct would be tempered by and tainted with the fear that he
might be unjustly subjected to such actions. The policy of the law
is therefore, and the reason of the rule is ., that, although upon rare
occasions judges and other public officials upon whom are
imposed by law judicial or quasi judicial duties may maliciously
9 The Court of Appeals declined to address KLC's claim of absolute privilege, deeming
it moot, but since the existence of an absolute privilege would bar retrial on the
issue altogether, its opinion that the retrial was required necessarily implies the
rejection of an absolute privilege .
slander or calumniate in the exercise of their authority, it is better
that they should be protected upon such occasions by this
absolute privilege than that the great body of such officials in the
conscientious exercise of their duties should be hampered
continually by the threat of such civil actions .
Id. at 90-91 .
McAlister
then extended the doctrine of absolute immunity to
include libelous communications of certain "heads of executive departments,
provided the libelous communication is pertinent to the inquiry under
investigation at the time," and where the administrative body was "charged
with the exercise of quasi judicial powers and the duty imposed upon its
membership to take certain action after exercising those quasi judicial
functions." Id. at 91 . In Compton, we stated, "[t]o determine the extent to
which a public official shall have protection of the doctrine of absolute
immunity, it is necessary to examine the lawful authority including such
discretionary authority as may be reasonably implied, and the action taken
which gives rise to the defamation claim." Compton, 869 S.W.2d at 27 . We
then decided that the Chairman of the State Racing Commission, for
statements made in the performance of his duties, should enjoy an absolute
privilege from defamation suits, because, "[t]o facilitate implementation and
fulfillment of the statutory purpose, the State Racing Commission was given
broad rule-making, enforcement and adjudicatory authority." to
to Under KRS 230.215(2), the State Racing Commission was granted "forceful control
of thoroughbred racing" and "plenary power to prescribe rules, regulations and
conditions" for such racing and wagering thereon, and was directed to regulate
thoroughbred race meetings "free of any corrupt, incompetent, dishonest or
unprincipled" practices and to regulate such racing "so as to dissipate any cloud of
association with the undesirable and maintain the appearance as well as the fact of
complete honesty and integrity" of thoroughbred racing in Kentucky.
In McAlister and Compton, we recognized that the defense of absolute
privilege extends to executive officers of administrative agencies exercising
quasi-judicial and regulatory authority. KLC contends that its officers should
fall within that extension, reminding us that in Matthews v. Holland, 912
S.W .2d 459 (Ky. App . 1995), the Court of Appeals held that the absolute
privilege for executive officers extended to a county school superintendent. The
Court in Matthews offered no explanation as to how school superintendents'
duties and responsibilities compared with the kind of quasi judicial authority
identified in Compton and McAlister, and we therefore decline to endorse it
here. The record before this Court does not establish that the KLC employees
responsible for the termination memo were "heads of executive departments"
charged with quasijudicial authority, and the kind of broad rule-making,
enforcement and adjudicatory authority needed to overcome our historical
reluctance to expand the sphere of absolute privilege . We do not regard them
as having absolute privilege or immunity from defamation claims . We also
note, as described below in our discussion of postjudgment interest, the
legislature expressly distanced KLC from the offices of state government by
designating it as "an independent, de jure municipal corporation ." KRS
154A .020.
KLC next argues that its conduct with respect to the termination memo
is absolutely privileged because it was required by the Open Records Act to
release the memo when WLKY requested it. "One who is required by law to
publish defamatory matters is absolutely privileged to publish it." Restatement
(Second) of Torts, ยง 592A (1977) . It is conceded that KRS 154A.020(1) renders
KLC subject to the Open Records Act, KRS 61 .870 et. seq. We have been
directed to no prior decisions respecting the degree of privilege to be accorded
defamatory matters disclosed pursuant to an open record request . Palmers v.
Driggers, 60 S.W .3d 591 (Ky . App. 2001) supports KLC's argument that
personnel records of employees of public agencies are subject to disclosure
under a formal open record request, and that those responsible for complying
with the Open Records Act may be compelled to release information that proves
embarrassing or humiliating to public employees. As noted in Palmers, the Act
provides several exemptions which the affected individuals may invoke to
protect their privacy interests, and a process for determining on a case-by-case
basis whether the public interest in the disclosure, reflected in the Act
outweighs the personal, privacy interest embodied in the various exemptions .
We agree that an officer required by law to make a disclosure should not be
held liable for having done so. But, the Hills' complaints allege more than the
simple disclosure of documents prepared in the regular course of business, and
placed in their personnel files . They presented evidence to show that their KLC
supervisors maliciously created the defamatory memoranda so that they would
be subject to an open records disclosure, and concealed the existence of the
documents to impede the Hills' ability to invoke an exemption to the Open
Records Act .
While we agree with the
Restatement
that "one who is required by law to
publish defamatory matter is absolutely privileged to publish it," we also agree
that the absolute privilege does not extend so far as to cloak with immunity one
who, with a malicious purpose and under no legal compulsion to do so, creates
defamatory material with the expectation that it would be published. Under
the circumstances alleged by the Hills, KLC would have no more than a
qualified privilege, to be considered by the jury based on evidence presented at
trial. We conclude that the trial court correctly rejected KLC's claim of absolute
privilege.
B . KLC'S Claim of Qualified Privilege
In his August 8, 2003 Order, the trial judge decided that he erred by
failing to instruct the jury on qualified privilege, and that a new trial on the
issue of defamation was required . We disagree . The judge did not err in failing
to so instruct the jury because KLC did not adequately or properly raise the
issue . CR 51(3) provides:
[n]o party may assign as error the giving or the failure to give an
instruction unless he has fairly and adequately presented his
position by an offered instruction or by motion, or unless he makes
objection before the court instructs the jury, stating specifically the
matter to which he objects and the ground or grounds of his
objection.
In its pretrial motion for summary judgment and its motion for a directed
verdict, KLC argued for dismissal of the defamation claim on the grounds of
absolute
privilege, which as noted previously, does not allow for a jury
instruction .
Rogers, 144
S .W.3d at 844. As noted in the preceding section of
this opinion, the trial judge correctly and consistently ruled that no absolute
privilege applied here. In seeking an instruction on qualified privilege, it was
incumbent upon KLC to fairly and adequately present the matter to the court.
It is equally important that the issue be fairly and adequately presented to the
opposing parties, whose interest in avoiding reversible error is paramount. Our
review of the record persuades us that KLC did not fairly and adequately
present its position on qualified privilege to the trial court's attention by
tendering an appropriate jury instruction, or otherwise, and therefore, KLC was
not entitled to a new trial .
We addressed virtually the same issue in Meyers v. Chapman Printing
Co., Inc., 840 S .W.2d 814 (Ky. 1992) . There, a party objected to a jury
instruction that used the words "but for" as the causal link between the alleged
wrongful conduct and the injury claimed . We stated:
[a]lthough Meyers objected to the "but for" language, Meyers
tendered no instruction fully describing her view of how to properly
frame the same issue. She contends that once she objected and
asked that "substantial or motivating" factor language be used
instead of "but for," the burden was on her opponent, the
employer, to complete the record by submitting a further
instruction advising the jury that it should nevertheless find for
the employer if they believed the employee would have been
discharged even if no improper motive existed. The requirements of
CR 51(3) are such that before a party may complain of error in the
instructions, the party must accompany the objection with a fully
correct instruction, or, at the least, must advise the court sufficiently
so that the court can understand both the nature of the objection and
what needs to be done to correct it.
Id. at 823-824 (emphasis added) .
In Sand Hill Energy, Inc. v. Smith, 142 S .W.3d 153,163 (Ky. 2004) we
provided a clear rule to determine compliance with CR 51(3), stating:
Kentucky appellate courts have explained that a tendered
instruction will not fairly and adequately present the party's
position as to an allegation of instructional error when :
(1) the omitted language or instruction was not contained in
the instruction tendered to the trial court; i.e ., when the allegation
of error was not presented to the trial court at all;
(2) the minor differences between the language of the
tendered instruction and the instruction given by the trial court
would not call the trial court's attention to the alleged error;
(3) the tendered instruction itself was otherwise erroneous or
incomplete .
Id. at 163-164 (internal citations omitted) .
The specific issue in Sand Hill was whether the one party, Ford Motor
Company, had preserved its claim that the punitive damage instructions given
to the jury failed to satisfy the extra-territorial limitation on punitive damages
imposed by the United States Supreme Court in State Farm Mutual Auto Ins.
Co. v. Campbell, 538 U.S . 408 (2003) . We concluded that, while it would have
been improper to give Ford's entire four-page punitive damage instruction, one
paragraph did contain the language essential to a correct instruction. We
concluded that the tendered instruction satisfied all the elements set out in
Sand Hill. The instruction on privilege tendered by KLC11 satisfied none of
Sand Hill's three factors for CR 51(3) compliance, and stands in marked
contrast to the one it tendered at the second trial. 12 KLC failed the Meyers test
because it did not "accompany the objection [as to the privilege instruction]
with a fully correct instruction," nor did it "advise the court sufficiently so that
the court [could] understand both the nature of the objection and what
need[ed] to be done to correct it ."
We conclude that KLC did not comply with CR 51(3), and therefore was
not entitled to demand a new trial on alleged errors that it failed to bring to the
11
The instruction tendered by KLC at the first trial read, in pertinent part:
In order for the Hills to recover on their claim of defamation against the Lottery, they
must prove by a preponderance of the evidence that:
One: That the accusations against the Hills in the termination memorandum were
false;
Two : That the termination memorandum produced to the television station would
tend to expose the Hills to public hatred, ridicule, contempt, disgrace, or induce an
evil opinion of the Hills to the community;
Three : That the Lottery did not exercise ordinary care to determine whether or not
the statements contained in the termination memorandum were true;
Four : That as a direct result of such statements the Plaintiffs' reputations were
damaged; and
Five: That the Lottery was not privileged in producing the memorandum.
12
At the second trial, KLC tendered this instruction :
The Lottery had a privilege to produce the termination memorandum to WLKY
pursuant to the Kentucky Open Records Act. Therefore, in order to find in favor of
Kimberly Hill, you must also find the following:
a) The Lottery was not acting in good faith and in reliance upon what it believed to
be true and was not acting in furtherance of its business and confidentiality as
circumstances permitted, and
b) The Lottery acted with malice in that it (i) specifically intended to subject
Kimberly Hill to cruel and unjust hardship, (ii) specifically intended to cause
tangible or intangible injury to Kimberly Hill.
trial court's attention in an adequate and timely manner. Instead of properly
demanding an instruction on qualified privilege, KLC continued to assert the
defense of absolute privilege . KLC's compliance with CR 51(3) at the end of a
three-week jury trial would have not only allowed the trial court to fairly
evaluate the matter, it would have enabled the Hills to protect their interest in
avoiding the need for a second trial. By granting KLC a new trial despite its
violation of CR 51(3), the trial court abused its discretion . We therefore reverse
the judgment of the second trial, and reinstate the verdicts reflected in the
Judgment of May 12, 2003 .
VI. POST- JUDGMENT INTEREST
KRS 360 .040 directs that a judgment "shall bear twelve percent (12%)
interest compounded annually from its date ." However, it also allows the trial
court to set a lesser rate of interest on judgments for unliquidated damages, if
"after a hearing on that question" the trial court "is satisfied that the rate of
interest should be less." The trial court fixed the rate of interest on the
judgment at 6% .
KLC argues, as it did in the trial court and the Court of Appeals, that
because KRS 154A.020 created KLC as a "political subdivision of the
Commonwealth," it may not be held to pay interest on judgments, citing Powell
v. Board of Educ. of Harrodsburg, 829 S .W.2d 940, 941 (Ky . App . 1991) :
[i]t is a well-settled principle that neither a state nor public agency
is liable for interest on public debts unless there is statutory
authority or a contractual provision authorizing the payment of
interest . . . . Authority for this view comes from ยง 231 of our
Kentucky Constitution which reads, "The General Assembly may,
by law, direct in what manner and in what courts suits may be
brought against the Commonwealth ."
(Internal citations omitted) .
Based upon the premise that KRS 154A.020 also establishes KLC as "an
independent, de jure municipal corporation," the Court of Appeals held that
KLC was liable for interest on judgments entered against it. It noted the
equally well-established principle, reiterated in Kentucky Center for the Arts
Corp. v. Berns, 801 S.W.2d 327 (Ky. 1990), that municipal corporations do not
enjoy sovereign immunity and reasoned that the General Assembly's
designation of KLC as a municipal corporation clearly indicates that the
legislature did not intend to cloak KLC with immunity from suit, or from
interest on judgments. We read further verification of that reasoning in the
language of KRS 154A.020 stating, "The General Assembly hereby recognizes
that the operations of a lottery are unique activities for state government and
that a corporate structure will best enable the lottery to be managed in an
entrepreneurial and business-like manner." Accordingly, we affirm the Court
of Appeals' opinion that as a municipal corporation, KLC has no sovereign
immunity to exempt it from the assessment of interest under KRS 360 .040.
The Hills contend that the trial court failed to hold the "hearing" referred
to in KRS 360.040 before it reduced the applicable rate of interest to 6%. We
do not construe the statute's requirement for a "hearing" to mean more than
the basic notion that before the Court undertakes to consider the question, an
opportunity will be provided to present one's position on the matter, and an
opportunity will be provided to refute the opponent's position. Our review of
the record discloses that, following the second trial, KLC made a CR 59 motion
which included an objection to the assessment of interest and in the
alternative, a request to set an amount lower than 12% . The Hills had an
ample opportunity to respond, and in fact, did submit a written response . We
are satisfied that the trial court complied .with KRS 360 .040, and that he did
not abuse his discretion in fixing the rate of interest on the judgment at 6% .
VII . ATTORNEY FEES
Both parties acknowledge that KRS 344 .450 entitles the Hills to recover
reasonable attorney fees for their claims under KRS Chapter 344 . Following
the second trial, the Hills submitted a motion for attorney fees in the sum of
$451,529 .74 . The request was based upon time sheets showing that a total of
2598 .95 hours was spent on the case, and multiplying those hours by an
hourly rate assigned to the attorneys and their staff assistants who worked on
the case. Hourly rates of the attorneys varied between $175 and $200 per
hour. The Hills agreed later that their request should be reduced by $1507 .50,
resulting in a demand of $450,022 .24. Because the jury at the second trial
found against the Hills on the defamation claims and awarded damages only
for the civil rights retaliation claims, the trial court reasoned that it should
award attorney fees of one-half of the requested amount, or $225,011 .12. The
judge also concluded that an additional $12,051 .25 of the request was not
justifiably attributable to KLC, so the final amount awarded was $212,959 .87 .
The trial judge recognized that in Meyers, 840 S.W .2d 814, we recognized
the "lodestar" method prescribed in Hensley v. Eckerhart, 461 U.S . 424 (1983)
as the approved means of determining a reasonable attorney fee award in civil
rights cases. As shown by his reference to Meyers, the trial judge knew that
"the court should not undertake to adopt some arbitrary proportionate
relationship between the amount of the attorney fees and the amount
awarded ." Meyers, 8.40 S .W.2d at 825.
We understand the difficult challenge trial judges face in balancing the
myriad of complex factors involved in awarding attorney fees in a civil rights
case. There is no mathematically precise answer, but that is exactly what the
trial judge tried to find when he divided the requested fee in half, to allocate
one-half to the attorneys' efforts in the defamation claims and the other half to
the civil rights claims . However, that was done with no consideration of the
actual time and effort expended on the different claims, or consideration of the
time and effort common to all the claims . It is inconceivable that proper
representation of the Hills for one cause of action required only one-half of the
time, talent, and effort expended to represent them on both the civil rights
claims and the defamation claims .
The fact that all the claims were, as the trial judge stated, "somewhat
interrelated" militates against his award because it suggests that much of what
was done in support of the defamation claims had to be done anyway if only
the civil rights claims were involved. Splitting the fee equally between the two
causes of action ignores that reality, and does not represent a true effort to
place a value on the services rendered by the attorneys to vindicate the civil
rights violations. It undervalues the financial burden of pursuing a civil rights
violation by allocating a part of that burden to other claims that may be joined
with the civil rights violation in a common law suit.
We therefore . remand the issue of attorney fees to the trial court, with
directions to award a fee that reasonably values the legal services expended to
prevail on the civil rights claims, regardless of the other claims with which the
civil rights claims were joined .
VIII . THE PUNITIVE DAMAGE INSTRUCTION
Finally, we address KLC's contention that the award of punitive damages
must be vacated and the issue remanded for retrial because the punitive
damage instruction authorized an award of punitive damages for Retaliatory
Discharge under the Kentucky Civil Rights Act (KRS Chapter 344) . We agree
that the punitive damage instruction was erroneous. However, because we
further believe that the error did not affect the substantial rights of the parties,
we conclude the error was harmless and we therefore affirm the original
judgment's award of punitive damages.
The trial court instructed the jury that it could return a single award of
punitive damages to each plaintiff if it found for that plaintiff under any of the
three theories of liability,l3 and if it further believed that KLC acted toward that
13
As noted previously, the jury found liability and awarded compensatory damages
under all three theories : Wrongful Discharge in violation of public policy,
Retaliatory Termination under the civil rights act, and Defamation .
plaintiff "with oppression and malice ." Although KLC did not oppose the
consolidation of multiple theories into a single punitive damage instruction, it
objected to the inclusion of the civil rights claim on the ground that punitive
damages could not be awarded for civil rights violations. At the time, we had
no case directly addressing the point. Referring to the statute and to the
Palmore's "Kentucky Instructions to Juries," the trial court overruled KLC's
objection. Since then, we decided Kentucky Dept. of Corrections v. McCullough,
123 S.W.3d 130 (Ky. 2043), and held that KRS Chapter 344 did not authorize
punitive damages for a civil rights violation. Therefore, the inclusion of the civil
rights claim in the punitive damage instruction was error.
The issue having been properly preserved, our next inquiry is whether that
error was harmless . Civil Rule 61 .01 provides that judgments should not be
disturbed for errors that do not affect a party's substantial rights. Because all
of the conduct for which the jury might have awarded punitive damages for the
civil rights violation was the same conduct for which such damages were
properly awarded under the common law wrongful discharge claim, the
instructional error was harmless .
KLC relies on Stringer v. Wal-Mart Stores, Inc., 151 S.W.3d 781 (Ky. 2004),
where jury verdicts for invasion of privacy, intentional infliction of emotional
distress (IIED), and defamation were consolidated into a single damage award .
On appeal, it was determined that the trial court should have dismissed the
invasion of privacy and IIED claims . The only proper compensatory and
punitive damages were those resulting from defamation . Damages awarded for
conduct constituting invasion of privacy or IIED would have to be set aside.
However, because the three claims involving separate and distinct acts of
tortious conduct had been combined into a single damage instruction, we
found it "impossible to determine what portion, if any, of the jury's
compensatory and punitive damage verdicts was attributable to actions on the
part of Appellees for which they had no liability to Appellants." Id. at 801 .
KLC argues that the punitive damages awarded herein must be vacated
for the same reason. We disagree . Unlike Stringer, where the claims for which
Wal-Mart had no liability (IIED and invasion of privacy) were distinctly different
in character and effect from the surviving claim (defamation), the action on the
part of KLC underlying the civil rights claim is exactly the same conduct that
established the common law wrongful discharge claim. Because punitive
damages were proper under the common law wrongful discharge claim, it is
immaterial that the same conduct was also subject to punitive damages as a
civil rights violation.
KLC repeatedly confirms in the brief it filed with this Court that the
Hills's common law wrongful discharge claim was "[b]ased upon the same facts
supporting their [civil rights] claim ." The record discloses that the civil rights
claim was based on the allegation that KLC terminated the Hills's employment
in retaliation for Kim's truthful testimony in support of Ed Gilmore at Gilmore's
unemployment hearing, and that the common law wrongful discharge claim
was based on the allegation that KLC terminated the Hills's employment
because Kim Hill refused KLC's request that she testify falsely at that hearing.
Regardless of how it is parsed, whether KLC acted as it did because Kim
Hill refused to give false testimony against Mr. Gilmore, or because she gave
truthful testimony in support of Mr. Gilmore, KLC's conductfiring the Hills -was the same . 14 And, the motivation for that conduct under either claim was
also exactly the same - KLC's disapproval of Kim Hill's testimony. Thus, there
is no possibility any part of the punitive damage award was attributable to
actions on the part of KLC for which it had no punitive damage liability. 15 In
this case, the retaliatory termination civil rights claim and the common law
wrongful discharge claim are factually synonymous, and therefore, all of the
actions of KLC covered by the punitive damage instruction were properly
subject to punitive damages .
The inclusion of the civil rights claim in the punitive damage instruction
was error, but it could not have affected the punitive damage verdict and,
therefore, it amounted to no more than harmless, excess verbiage.
Both the trial court and the Court of Appeals found that the two claims were based
upon the same conduct. KLC argued in the trial court that the damages arising
from that conduct are, under either theory of liability, the same. The trial judge
noted, "[the Hills'] damages are the same, whether they were terminated for public
policy reasons or whether they were terminated for [KRS Chapter] 344 reasons, the
evidence of -- the damages are the same ." To this Court, KLC stated, "the
[compensatory] damages for both claims were the same and [the jury] should award
only one set of [compensatory] damages."
is It is not contested that the defamation claim was the proper subject of the punitive
damage instruction, and so its inclusion in the combined damage instruction has
no effect on the issue of whether the inclusion of the civil rights claim affected the
verdict.
14
Accordingly, we affirm the judgment with respect to the award of punitive
damages .
CONCLUSION
Based upon the analysis of the issues set forth above, we reverse the
opinion of the Court of Appeals and we remand this matter to the Jefferson
Circuit Court with directions to enter judgment reinstating the jury verdicts of
the first trial, and to reconsider the amount of attorney fees awarded pursuant
to KRS 344 .450. We affirm the decision of the Court of Appeals as to the
interest rate to be applied to the judgment .
Abramson, Scott, Schroder, JJ . and Special Justice Earl Franklin Martin,
Jr. and Special Justice Mark C. Whitlow, concur, except as to Part VIII . Noble,
J ., concurs in result only by separate opinion. As to Part VIII, Scott, J . and
Special Justice Earl Franklin Martin, Jr., concur, Noble, J ., concurs in result
only, and Abramson, J ., dissents by separate opinion in which Schroder, J .
and Special Justice Mark C . Whitlow, join. Minton, C.J. and Cunningham, J .,
not sitting.
ABRAMSON, JUSTICE, CONCURRING IN PART AND DISSENTING IN
PART: I concur in all parts of the majority opinion with the exception of Part
VIII, regarding punitive damages, from which I respectfully dissent.
Instruction No . 8, for each of the Hills, provided as follows :
INSTRUCTION NO. 8:
PUNITIVE DAMAGES
If you find for Kim [Bob] Hill under Interrogatory
No . 1 and /or No. 2 and /or 3, and awarded her [him]
a sum of money in damages under either Instruction
5, 6, or 7, and if you are satisfied from the evidence
that the Kentucky Lottery acted toward Kim [Bob] Hill
with oppression or malice, you may in your discretion,
award punitive damages against the Kentucky Lottery
in addition to the damages awarded under Instruction
No . 5, 6, or 7 .
As used in this Instruction oppression means conduct
that was specifically intended by the Kentucky Lottery
to subject Kim [Bob]Hill to cruel and unjust hardship;
and malice means conduct that was specifically
intended by the Kentucky Lottery to cause tangible or
intangible injury to Kim [Bob]Hill.
If you award punitive damages, in determining the
amount thereof, you should consider the following
factors: a) the likelihood at the time of such
misconduct by the Kentucky Lottery that serious harm
would arise from it; b) the degree of the Kentucky
Lottery's awareness of that likelihood ; c) the
profitability of the misconduct to the Kentucky Lottery;
d) the duration of the misconduct and any
concealment of it by the Kentucky Lottery; and e) the
actions by the Kentucky Lottery to remedy the
misconduct once it became known to it .
If you award punitive damages, you will state the
amount separately from the sum or sums awarded
under Instruction No . 5, 6, or 7 . The award shall not
exceed $1,000,000 (the amount claimed) .
This instruction focuses, as Kentucky law requires, on the conduct of the
defendant, KLC . According to the preceding jury instructions, KLC's conduct
underlying the common law wrongful discharge claim was its "urging" that
Kim Hill "give false testimony . . . at an unemployment hearing. . . ." As for
the retaliatory discharge claim, the jury instructions required the jury to
consider the Hills' opposition to what they "believed to be the Kentucky
Lottery's violation of Ed Gilmore's civil rights . . . ." This statutory claim
focused on Kim Hill's affirmative testimony in support of Gilmore's
unemployment claim. While the majority's preemption analysis recognizes
the independent nature of these two claims, its punitive damages analysis
conflates the two as "factually synonymous ." I disagree. While all of the
conduct related to the Gilmore matter, there was nonetheless different
conduct at different points in time. The request for perjury was weeks before
the actual unemployment hearing. The retaliation occurred following Kim
Hill's decision to testify affirmatively on Ed Gilmore's behalf in response to
what she viewed as unlawful discrimination against Gilmore, who was
allegedly disabled .
After Kentucky Dept. of Corrections v. McCullough, 123 S .W:3d 130 (Ky.
2003), it is black letter law that punitive damages are not recoverable for a
violation of the Kentucky Civil Rights Act (KCRA) . Thus, the retaliatory
discharge claim and the conduct underlying that claim were not properly part
of the jury's consideration as to the award of punitive damages. Furthermore,
it is impossible to know that the award was not in some measure affected by
the improper inclusion of the KCRA claim and, consequently, the error is not
harmless . While the majority insists the combined damage instructions
criticized in Stringer v. Wal-Mart Stores, Inc., 151 S .W .3d 781 (Ky. 2004), are
distinguishable, and it was perhaps easier to identify specific distinct acts
underlying the three tort claims in that case, the principle remains pertinent
and, in my view, precludes upholding an award pursuant to the erroneous
combined instruction . Accordingly, I would remand for a new trial solely on
punitive damages.
Schroder, J., and Special Justice Mark C. Whitlow join .
NOBLE, JUSTICE, CONCURRING IN RESULT ONLY BY SEPARATE
OPINION : The appellants, Robert and Kim Hill, filed suit against Appellee, the
Kentucky Lottery Corporation (KLC), claiming retaliatory termination in
violation of the Kentucky Civil Rights Act (KRS 344), common law wrongful
discharge, and defamation. KLC sought summary judgment, , claiming that the
Chapter 344 retaliation claim preempted the common law claim for wrongful
discharge, and asserting absolute privilege . The trial court denied summary
judgment, and the case proceeded to a three-week jury trial which resulted in a
verdict for Appellants on December 18, 2002 . Robert was awarded ~2,b45,450
in compensatory and punitive damages, and Kim was awarded ~ 1,697,866.
KLC filed a bare motion under CR 50 .02, 59 .01 and 59 .05 on December 26,
2002 . At the same time, KLC submitted a judgment purportedly reflecting the
jury verdict, which the trial court entered on January 23, 2003.
However, the judgment prepared by KLC contained substantially
erroneous amounts for the damages awards . This forced the Hills to file a
motion to vacate the erroneous judgment on January 23, 2003 . On January
31, 2003, KLC filed an "Amended Motion for Judgment Notwithstanding the
Verdict, Motion for New Trial and Motion to Alter, Vacate or Amend the
Judgment." On May 12, 2003, the trial court granted the Hills' motion to
vacate and entered "final" judgments for each which were consistent with the
verdict. They were accompanied by a separate order which included the
following language : "It should be noted that these Judgments are not final and
appealable and are subject to further rulings on the motions currently pending
to alter, amend, or vacate ." KLC did not, file a new motion to alter, vacate or
amend, nor did it file a notice of appeal within the thirty days following the
entry of the May 12 judgment. At that point, the Hills had no reason to appeal,
having prevailed on all their claims .
On August 8, 2003, the trial court ruled on the "pending" motions,
denying the JNOV motion, but nevertheless ruling in favor of KLC on three
grounds : the defamation jury instructions erroneously did not include the
defense of qualified privilege; KLC was entitled to preemption on the wrongful
discharge claim; and KLC was entitled to a retrial of the damages award on
retaliation and punitive damages . Both parties appealed this ruling, but the
Court of Appeals dismissed the appeals as interlocutory.
At the second trial, KLC prevailed on the defamation claim, and the
damages award for the Hills was much lower. Post-trial, the trial court
awarded attorneys' fees to the Hills in the amount of $212, 959 .87, and fixed
postjudgment interest at 6% . Both parties appealed to the Court of Appeals,
which affirmed the trial court's judgment in the second trial. We granted
discretionary review to consider the question of whether the trial court had lost
jurisdiction of the case after it entered an amended judgment from which no
appeal was taken, when the grant of the new trial did not come until 88 days
after entry of the amended judgment or, if it had jurisdiction, whether it was
correct on the merits .
The majority has decided that the trial court was acting with jurisdiction
when it entered the order for a new trial on August 8, 2003 . I disagree . The
majority also concludes that the motion to vacate, which was filed in relation to
the judgment that was set aside, somehow survived the voiding of that
judgment, and thus declines to address the procedural question of whether
such motions filed prior to- entry of a judgment are authorized or timely under
our Rules of Civil Procedure. I believe this question is crucial,, because the
majority holding creates a "relation forward" doctrine that effectively nullifies
the time limits set forth in the Civil Rules, and promotes the premature filing of
motions that will lead to procedural messes such as the one in this case.
The majority view is that KLC had the right to rely on the judge's
statement in his order attached to the "Final Judgment" for each of the Hills
that its motions were "pending" and that the judgments were not final and
appealable . At first glance, this is an appealing argument, but it does not
outweigh the potential damage as to how the Civil Rules are applied. Oddly
enough, both parties did think it appropriate to appeal the trial court's ruling
granting a new trial, which could be nothing but interlocutory if the trial court
had jurisdiction, which in turn explains why the Court of Appeals dismissed
the appeals . (The proper avenue for relief if the trial court had no jurisdiction
in issuing its new-trial order would have been a writ action .) In fact, regardless
of the judge's statement, the May 12 judgments were final and thus appealable
because there were no "pending" motions that would stop the running of time
to file post-trial motions or the notice of appeal.
When a judgment is set aside and a new judgment is entered, all time
periods begin to run from the date of entry of the new judgment by the clerk .
CR 58. CR 59 .02 requires that a motion for a new trial be served "not later
than 10 days after entry of the judgment ." CR 59 .04 includes the same
language-"[n]ot later than 10 days after entry of judgment"-with regard to a
trial court granting a new trial sua sponte. Similarly, CR 59 .05 requires a
motion to alter, vacate or amend to be served "not later than 10 days after
entry .of the final judgment ."
Each rule refers to "the judgment"--not a
judgment but the specific one the motion relates to .
The question then is whether the language "not later than" allows for
such motions to be served before entry of the judgment . I believe that use of
the language "after entry of the judgment" indicates that such motions must be
filed after entry of the judgment, but before or on the tenth day after entry .
That simply did not happen here . KLC's motions to vacate the judgment or for
a JNOV were pending until the judgment they followed was set aside .
Thereafter, they were void . KLC did not file such motions in regard to the May
12 judgment . Ten days after entry of that judgment, KLC was foreclosed from
filing them. Thirty days thereafter, they forfeited their right to appeal by not
filing a timely notice of appeal.
I concur in result, because under my reasoning I reach the same result
as the majority : the verdict from the first trial stands and must be reinstated as
the judgment in this case because no motion or appeal related to the May 12
judgment was timely filed. But I cannot concur that a trial court has discretion
to ignore the Civil Rules, which is also the net effect of the majority ruling. If
we allow the premature filing of substantive post-trial motions, we invite
confusion. If we allow them to relate forward after entry of a new judgment, we
compound the problem. What if the basis for the "pending" motion was on
grounds that had no bearing on the new judgment? Would the trial court be
allowed to relate the motion forward to defeat the time limits, and then allow
amendments to conform to the new judgment? What does this do to the
purpose of the Civil Rules, which are, after all, this Court's own rules? The
enacted Civil Rules are presumably made for a reason, and they are not rules
at all if they are subject to being ignored at the judge's discretion ; they would
become mere guidelines .
I do agree that there are times when equity allows a trial court some
discretion when there would otherwise be none, but this is not one of those
times . The two parties are not in unequal positions, and the number of
appeals our appellate courts review tells me that attorneys are not so
intimidated by the judge's position that they will fail in their duty to raise
appropriate issues . The judge was wrong in this case, and KLC had to act
accordingly to ensure that its rights to post-trial motion and appeal were
preserved . The Hills had no reason to appeal the first verdict, and did attempt
to appeal the trial court's order for a new trial. They did all they could do
(except, perhaps, seeking a writ) .
Consequently, I believe the trial court did lose jurisdiction over this case
after ten days from entry of the May 12 judgments . I would therefore reverse
the Court of Appeals and remand for reinstatement of the May 12 judgments
that were in accordance with the jury verdict in the first trial . I concur with the
majority view regarding the award of postjudgment interest and attorneys'
fees .
COUNSEL FOR APPELLANTS/ CROSS-APPELAEES:
Laurence John Zielke
Keith B . Hunter
Janice 'M. Theriot
Zielke Law Firm, PLLC
1250 Meidinger Tower
462 S. 4th Street
Louisville, Kentucky 40202-2555
James Hays Lawson
Assistant Attorney General
Office Of Criminal Appeals
Office Of The Attorney General
1024 Capital Center Drive
Frankfort, Kentucky 40601
COUNSEL FOR APPELLEE/ CROSS-APPELLANT:
Brent Robert Baughman
Melissa Norman Bork
Greenbaum, Doll and McDonald, PLLC
3500 National City Tower
101 S . Fifth Street
Louisville, Kentucky 40202-3197
Jan Michele West
Goldberg Simpson, PSC
9301 Dayflower Steet
Louisville, Kentucky 40059
,vuyrrmr . (~vurf of ~irufurhv
2006-SC-000748-DG
2008-SC-000380-DG
KIMBERLY G. HILL, ET AL.
V.
APPELLANTS/ CROSS-APPELLEES
ON REVIEW FROM COURT OF APPEALS
CASE NOS. 2005-CA-000111-MR AND 2005-CA-000183-MR
JEFFERSON CIRCUIT COURT NO. 00-CI-004922
KENTUCKY LOTTERY CORPORATION
APPELLEE/CROSS-APPELLANT
ORDER DENYING PETITION FOR REHEARING
The Appellee / Cross-Appellant having filed a Petition for Rehearing of
the Opinion of the Court by Justice Venters, rendered April 22, 2010; and
the Court being otherwise fully and sufficiently advised;
The Court ORDERS that the Petition for Rehearing is DENIED . The
Court, on its own motion, modifies the Opinion of the Court by Justice
Venters, rendered April 22, 2010. The attached opinion is SUBSTITUTED
in lieu of the original . Said modification does not affect the holding.
Abramson, Noble, Schroder, Scott, Venters, JJ ., and Special Justice
Mark C. Whitlow and Special Justice Earl Franklin Martin, Jr., concur .
Minton, C.J. and Cunningham, J ., not sitting.
ENTERED : December 16, 2010.
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