Opinion
NOT TO BE PUBLISHED
Sonoma County Super. Ct. No. SCV-233062
Ruvolo, P. J.
I.
INTRODUCTION
This case arises out the distribution of a flyer about respondent Roger Dale Hughes (Hughes) by the Northern California Carpenters Regional Council, Joe Hart, Aaron Hadzess and Michael Munoz (collectively, appellants). A jury found, inter alia, that appellants’ distribution of the flyer defamed Hughes and caused intentional and negligent emotional distress, invaded his privacy and interfered with his prospective business advantage. The jury awarded Hughes $99,970 in compensatory damage, $1 million in punitive damages, and $250,000 in statutory exemplary damages. We reduce the amount of punitive damages in conformance with constitutional guidelines, and affirm in all other respects.
II.
PROCEDURAL BACKGROUND
Hughes filed a first amended complaint against appellants in which he alleged causes of action for libel, intentional and negligent infliction of emotional distress, intentional interference with economic business advantage, invasion of privacy by means of public disclosure of private facts and placing him in a false light, and violation of Civil Code section 1798.53. The jury trial was bifurcated into liability and punitive damages phases. The jury found by general verdict that Hughes was entitled to damages from appellants in the amount of $2,470 for past economic loss, $75,000 for past non-economic loss, and $22,500 for future non-economic loss. The jury found that $1,000 of the actual damage award was for damage to Hughes’s reputation. The jury also found that “Hughes proved by clear and convincing evidence that [appellants] acted with malice, oppression or fraud[.]” Following the second phase of the trial on exemplary and punitive damages, the jury awarded Hughes $1 million in punitive damages, and $250,000 in exemplary damages for violation of Civil Code section 1789.53. The court denied appellants’ motions for new trial and for judgment notwithstanding the verdict. The court granted Hughes’s motion for attorney’s fees in the amount of $75,772. Appellants filed a notice of appeal on November 17, 2005.
Hughes and his wife Deborah, doing business as R.D. Hughes Drywall (Hughes Drywall), were the original plaintiffs. Deborah Hughes filed a request for dismissal of the complaint as to herself only.
The complaint also named Carpenters 46 Northern California Counties Conference Board as a defendant. It was dismissed with prejudice on May 23, 2005. The jury exonerated defendant United Brotherhood of Carpenters and Joiners of America, Local 751.
III.
FACTUAL BACKGROUND
Hughes is the owner of Hughes Drywall in Santa Rosa. The individual appellants, Joe Hart (Hart), Aaron Hadzess (Hadzess) and Michael Munoz (Munoz) are employed by the Northern California Carpenters Regional Council (the Union). Munoz is the director of organizing, while Hart and Hadzess are both field representatives, and “worked together on the Hughes Drywall [union activity] project.” Hughes and the Union had been involved in a labor dispute since approximately November 2001, when the Union began “area standards picketing” of Hughes Drywall, claiming that Hughes Drywall was paying workers less than an “area standard” figure published by the State of California. The Union was not attempting to organize the workers at Hughes Drywall. Picketers, including some of the individual appellants and others either hired by or associated with the Union, engaged in ongoing picketing outside Hughes Drywall. The Union also picketed outside the businesses or worksites of some of Hughes Drywall’s customers.
Hadzess, the field supervisor for the Union, testified that it was his understanding of the applicable law that the Union could picket regarding “area standards” indefinitely, but could picket for only 30 days in an attempt to unionize a business.
On March 22, 2002, Union picketers, including Hadzess, were outside Hughes Drywall. Hughes arrived in the morning, entered his office, and left shortly thereafter. As he was leaving, he saw that the picketers were wearing shirts with the logo of Hard Drywall, his company’s biggest competitor. This angered and embarrassed Hughes. In an effort to convey a message to the Union, which he described as “piss on you,” he held a union jacket in front of his groin and pretended to urinate on it. Hughes then tossed the jacket to Gubed Ruiz, one of his employees. Ruiz testified that Hughes did not actually expose himself during the incident. Two of his employees, Alvaro Olvero and Sergio Olvero, and his son Ryan Hughes, also testified that Hughes did not expose himself during the incident.
The picketers had a different view. Hadzess testified that he was on the picket line that day, and saw Hughes remove his penis from his pants and rub it on the Union jacket. Stuart Daher, another picketer, saw Hughes partially unzip his pants and rub the Union jacket on his crotch. Daher testified that he looked away because he found it offensive, and did not see Hughes’s genitalia.
Hadzess brought the group of picketers back to the Union hall, where typed statements about the incident were prepared. Hadzess informed Munoz about Hughes’s actions. Munoz advised him to report it to the police, which Hadzess did. Santa Rosa Police Officer Summer D. Black was dispatched to the Union hall, where she took an incident report from Hadzess. Hadzess provided the typed witness statements to Officer Black, though some were unsigned. Hadzess was the sole picketer to testify at trial that he had seen Hughes expose himself.
The picketers returned to Hughes’s business the following day, and the picketing was uneventful until March 27, 2002. On that day, Hughes again attempted to express his views of the Union by lowering his pants and “mooning” the picketers. Hughes admitted that he “dropped [his] pants and exposed [his] butt,” but testified that he only “ben[t] over and show[ed] the crack of my butt and said ‘kiss my ass’ to them . . . .”
In approximately May 2002, Hadzess obtained a copy of the two-page police report from the Santa Rosa Police Department. One page of the report was stamped “Santa Rosa Police Department Controlled Document Do Not Duplicate.” All identifying personal information about Hughes, including his name, address, description and driver’s license number, had been redacted.
Munoz, after consulting an attorney for the Union, prepared a two-sided flyer which was titled: “This Police Report Was Filed Against Roger Hughes-Owner of Hughes Drywall.” One side of the flyer was the redacted copy of the page of the police report without the “controlled document—do not duplicate” notation. The front of the flyer stated: “On the above date and time, suspect (Blanked out) exposed his penis to victim Hadzess and made lewd gestures towards him while in public, violation [of Penal Code section] 314 . . . .” In larger, bold letters, the flyer stated “Ask Keith Christopherson why Christopherson Homes allows Roger Hughes to work near your children. 707-524-8222.” Hughes Drywall was the “only drywall contractor” used by Christopherson Homes since 1996.
Hart was in charge of organizing people to distribute the flyers. In July 2002, Hart, Hadzess, and Union members Trent Schager and Dan Digardi passed out the flyer in neighborhoods where Hughes worked for Christopherson Homes. Flyers were also mailed and faxed to neighbors and construction businesses in Santa Rosa, including Christopherson Homes. Approximately 200 flyers were distributed.
Appellants concede that the Union “approved the picketing and other activities that gave rise to the complaint below.”
After receiving the flyer, Christopherson Homes held a meeting. Christopherson Homes was concerned that customers would not allow Hughes in their homes to perform drywall work. Ron Farino, general superintendent of Christopherson Homes, testified that the flyer “implies that [Hughes is] a child molester of some type. That’s how I look at it. He’s a threat to your children.” Farino explained that “Christopherson Homes has a reputation in the county and throughout the building industry as using quality people. . . . This thing going around was detrimental to Christopherson Homes, just being associated with R.D. Hughes Drywall. Whether it’s true or not, we didn’t want this stuff going around. I mean, who would?”
Following distribution of the flyer, many people contacted Hughes. Bob Sweeney, vice-president of Christopherson Homes, called Hughes asking: “When are you going to learn to keep your dick in your pants?” Hughes “didn’t know what he was talking about,” and immediately went to Sweeney’s office. After Sweeney showed him the flyer, Hughes was “pretty sick to [his] stomach . . . [because] [t]o me, it’s calling me a pedophile.” Sweeney told him that Christopherson Homes “will not have this on our projects. . . . We will be getting rid of you. We will not tolerate any activity like this.” Hughes testified he was so shaken after this discussion that he could not return to work, but went home.
Hughes testified that distribution of the flyer had caused him significant emotional distress and a decrease in business resulting in lost income. Hughes sought psychological treatment from psychologist Albert J. Kastl approximately two years after the incident. Dr. Kastl billed Hughes a total of $3,600, a portion of which was for trial preparation. Hughes testified that after distribution of the flyer, he was devastated, unable to concentrate, and could not work. Though Hughes could not identify specific drywall business he had lost, he introduced his income tax returns, and testified that he believed he lost $700,000 to $800,000 as a result of the flyer’s distribution.
IV.
DISCUSSION
A. Defamation Standard of Proof
Appellants maintain the trial court erred in instructing the jury that the standard of proof for defamation was whether appellants “ ‘failed to use reasonable care to determine the truth or falsity of the statements’ ” in the flyer. Appellants urge that, because the flyer was distributed “in the course of a labor dispute,” Hughes had to prove “actual malice” rather than “failure to use reasonable care.”
Appellants seek legal support for their argument in Linn v. Plant Guard Workers (1966) 383 U.S. 53 (Linn). In that case, the assistant general manager of Pinkerton’s National Detective Agency, Inc. filed a defamation suit against the union, two of its officers and one Pinkerton employee. The suit was based on leaflets circulated among Pinkerton employees, which stated in relevant part: “Now we find out that Pinkerton’s has had a large volume of work in Saginaw they have had it for years. . . . United Plant Guard Workers now has evidence . . . [t]hat Pinkerton has 10 jobs in Saginaw . . . [e]mploying 52 men. . . . Some of these jobs are 10 years old! . . . Make you feel kind [of] sick & foolish. . . . The men in Saginaw were deprived of their right to vote in three [National Labor Relations Board] elections. Their names were not [submitted.] These guards were voted into the Union in 1959! These Pinkerton guards were robbed of pay increases. The Pinkerton [managers] were lying to us—all the time the contract was in effect. No doubt the Saginaw men will file criminal charges. Somebody may go to Jail!” (Id. at p. 56.)
The Linn court held that “where either party to a labor dispute circulates false and defamatory statements during a union organizing campaign, the court does have jurisdiction to apply state remedies if the complainant pleads and proves that the statements were made with malice and injured him.” (Linn, supra, 383 U.S. at p. 55.) Otherwise, the National Labor Relations Board (NLRB) has exclusive jurisdiction. (Id. at p. 54.) “ ‘[S]tate courts must defer to the exclusive competence of the [NLRB] in cases in which the activity that is the subject matter of the litigation is arguably subject to the protections of § 7 or the prohibitions of § 8 of the National Labor Relations Act.’ ” (Id. at p. 60.) Linn had no cause to address the meaning of “labor dispute” or “during a union organizing campaign,” because there was no dispute that the false statements made in the flyer at issue were made during a union organizing campaign. The flyers in Linn were distributed to Pinkerton employees whom the union sought to organize, and were regarding actions of Pinkerton management in relation to the union. (Id. at p. 56.)
29 U.S.C.A. section 167 et seq.
Eight years later, in Letter Carriers v. Austin (1974) 418 U.S. 264 (Letter Carriers), the Supreme Court addressed the meaning of “labor dispute.” The court explained: “[W]hether Linn’s partial pre-emption of state libel remedies is applicable obviously cannot depend on some abstract notion of what constitutes a ‘labor dispute’; rather, application of Linn must turn on whether the defamatory publication is made in a context where the policies of the federal labor laws leading to protection for freedom of speech are significantly implicated. . . . [¶] [O]ne of the primary reasons for the law’s protection of union speech is to ensure that union organizers are free to try peacefully to persuade other employees to join the union without inhibition or restraint. Accordingly, we think that any publication made during the course of union organizing efforts, which is arguably relevant to that organizational activity, is entitled to the protection of Linn. We see no reason to limit this protection to statements made during representation election campaigns. . . . We similarly reject any distinction between union organizing efforts leading to recognition and post-recognition organizing activity.” (Id. at p. 279.)
Hadzess conceded at trial that the Union was not attempting to organize the workers at Hughes Drywall, but was instead engaged in “area standards” picketing. Munoz testified that he was not trying to organize Hughes Drywall. Accordingly, distribution of the flyer was not “made during the course of union organizing efforts [nor was] arguably relevant to that organizational activity . . . .” (Letter Carriers, supra, 418 U.S. at p. 279.)
While some cases have held that Linn applies even in situations which do not involve union organizing activity, they have still required the protected speech to involve a “labor dispute.” (Raffensberger v. Moran (Pa. 1984) 485 A.2d 447, 451 [Linn’s application “turns on the scope of judicial definition of a ‘labor dispute’ . . . [a]s defined by Congress in the [National Labor Relations Act (NLRA)].”) “Where the union acts for some arguably job-related reason and not out of pure social or political concerns, a ‘labor dispute’ exists. [Citation.]” (Hasbrouck v. Sheet Metal Workers Local 232 (9th Cir. 1978) 586 F.2d 691, 694, fn. 3.)
The parties agree that, in broad terms, a “labor dispute” existed at the time the flyer was distributed. The question is, however, whether the defamatory flyer was regarding a “pure social . . . concern[]” with no “job-related reason,” or was “arguably subject” to the protections or prohibitions of the NLRA. (See Linn, supra, 383 U.S. at p. 56; Letter Carriers, supra, 418 U.S. at p. 279.)
Here, there was no indication on the flyer that it was authored or distributed by the Union. The flyer did not refer to labor conditions in general or at Hughes Drywall in particular. Hadzess admitted there was “[n]othing written” on the flyer about area standards. None of the individual appellants testified that the flyer had any job-related purpose. Hadzess and Hart testified that the purpose of the flyer was to inform the public of Hughes’s “offensive” behavior, and give the public the “option” to call Keith Christopherson. Hart testified that he had a “moral obligation” to inform the public about Hughes. Munoz testified that the purpose of distributing the flyer was to “inform the public that [Hughes] pulled his penis out in public.” He testified that “I’m a citizen. I have a right to tell the public when someone does something like that. Everyone would want to know that.”
The fact that the redacted copy of the police report reproduced on one side of the flyer mentions the picketing at Hughes Drywall and the “ongoing dispute” involving “the Labor Union which Hadzess [was] a member of” does not somehow bring the flyer within the protections of the NLRA, especially when the Union representatives disavowed any labor dispute-related purpose.
At oral argument, counsel for the Union asserted that a legitimate labor dispute-related purpose of the flyer was to discourage people from doing business with Hughes Drywall. Munoz was specifically asked at trial if the purpose of distributing the flyer was to get Hughes Drywall to join the union or to get “Christopherson to fire [Hughes] from his jobs?” Munoz responded in the negative, stating “I wanted Keith Christopherson to know what this guy was doing. . . . It has everything to do with being a good person. It has everything to do with acting properly in public, and being a businessman and acting like a businessman would act.”
The flyer was a personal attack on Hughes himself, seeking to portray him as someone who engaged in sex crimes and posed a sexual danger to children. It was not relevant to the Union’s area standards picketing or any labor dispute, nor was it regarding an issue conceivably “ ‘subject to the protections of § 7 or the prohibitions of § 8 of the [NLRA].’ ” (Linn, supra, 383 U.S. at p. 60; Letter Carriers, supra, 418 U.S. at p. 279.) There was no testimony or other evidence that the flyer at issue had any job-related purpose, and counsel for the Union was unable to identify any such evidence at oral argument. Under these circumstances, the flyer was not “made in a context where the policies of the federal labor laws leading to protection for freedom of speech are significantly implicated.” (Letter Carriers, supra, at p. 279.) Accordingly, the court did not err in refusing to instruct the jury that Hughes had to prove “actual malice.”
B. Exclusion of Evidence Under Evidence Code section 352
Appellants argue that the trial court erred in excluding certain testimony of Stuart Daher, one of the picketers, regarding an encounter he had with Hughes in approximately 1992. We review the court’s ruling under Evidence Code section 352 (section 352) for abuse of discretion.
Hughes made a motion in limine to exclude any evidence regarding an interaction Daher had with Hughes at his home 15 years earlier. Daher, then a teenager, had a personal relationship with Hughes’s stepdaughter. Hughes’s attorney represented that Hughes found “Daher in his daughter’s bedroom, and they had a little encounter . . . and Mr. Daher was, in effect, run out of the house.” The Union’s counsel made an offer of proof at the section 352 hearing, reading from Daher’s written statement that, while visiting Hughes’s stepdaughter at her home, Hughes unzipped his pants and attempted to rub his crotch on Daher’s head. The trial court held that the incident was too remote in time, involved a personal matter in the family home, and too prejudicial.
Appellants claim that evidence of this incident is “relevant to and highly probative of Hughes’[s] propensity to engage in questionable and inappropriate conduct as a harassing technique.” To the contrary, Evidence Code section 1101 bars introduction of “propensity evidence.” (Evid. Code, § 1101, subds. (a), (b).) “It has long been the rule, of course, that evidence of uncharged misconduct is inadmissible to establish a defendant’s propensity to commit the offense charged. The bar on the use of such ‘propensity evidence’ is not that it lacks relevance. Rather, it is the concern that such evidence may be regarded by the trier of fact as too relevant, ‘provoking’ . . . ‘an overstrong tendency to believe defendant guilty’ based on the commission of the prior act[]. . . .” (People v. Ortiz (2003) 109 Cal.App.4th 104, 111, citing 1A Wigmore on Evidence (Tillers rev. 1983) § 194, p. 1859, italics omitted.) Evidence of a prior act may, however, be admissible “to prove some fact (such as motive, opportunity, intent, preparation, plan, knowledge, identity, [or] absence of mistake or accident . . . other than his or her disposition to commit such an act.” (Evid. Code, § 1101, subd. (b), italics added.) Contrary to appellants’ contention, this evidence was not admissible to prove Hughes had a propensity to engage in “inappropriate behavior.”
Even if this character evidence was admissible, Hughes argues that it had no probative value, noting that the trial court held it was extremely remote in time, and occurred in the family home. Evidence of reputation or character, otherwise admissible, “[a]t some point . . . becomes too remote [in time] to have any probative value,” and is thus irrelevant. (People v. Shoemaker (1982) 135 Cal.App.3d 442, 448, fn. 4.) In People v. Gonzales (1967) 66 Cal.2d 482, the court held that the trial court did not abuse its discretion in excluding evidence of an individual’s reputation seven years before the acts in question. (Id. at p. 500.) Here, the alleged incident occurred 15 years prior, and was in the context of a stressful family situation. Evidence of Hughes’s actions in that situation was not sufficiently probative to have any relevance to this case. Moreover, admission of evidence of the alleged incident would create a “substantial danger of undue prejudice.” (§ 352.) We cannot say on these facts that the trial court abused its discretion in excluding evidence of Hughes’ remote conduct under section 352.
C. Exclusion of Evidence Regarding Other Incidents During the Picketing
Appellants also claim that the court erred in excluding, under section 352, “evidence regarding the labor dispute,” specifically evidence of “an assault on one of the picketers, . . . of Ryan Hughes [(Hughes’s son)] causing the arrest of a picketer . . . [and] [t]he NLRB’s Decision and Order on the very issues involved in this case. . . .”
The two incidents specified by appellants lead to an action by the Union before the NLRB. The Union alleged that Hughes Drywall engaged in unfair labor practices because Ryan Hughes physically assaulted picketers, threatened to cause the arrest of a picketer, and actually caused the arrest of a picketer for public urination. The NLRB issued a “Decision and Order” on March 31, 2005, in which it found the allegations were true. In its decision, the NLRB noted that “a fair inference can be drawn that [Hughes] was actually attempting to interfere with the Union’s lawful picketing. . . . [T]hat inference is buttressed by the evidence of both Roger and Ryan Hughes’ animosity towards the Union’s picketing, including Roger Hughes’[s] swearing at and engaging in lewd conduct in front of the pickets.” The decision noted that the administrative law judge cited “Hadzess’[s] uncontradicted testimony” that Hughes swore at picketers and “engaged in an ‘act of lewd and lascivious conduct’ in full view of the pickets in March.”
Appellants argue that it was error to exclude this evidence under the doctrine of collateral estoppel. They maintain that “[a]t the very least, the trial court should have found Hughes was collaterally estopped from relitigating the issues of area standards picketing and whether Hughes actually exposed himself on March 22.”
Collateral estoppel bars relitigation of an issue decided at a previous proceeding “ ‘ “if (1) the issue necessarily decided at the previous [proceeding] is identical to the one which is sought to be relitigated; (2) the previous [proceeding] resulted in a final judgment on the merits; and (3) the party against whom collateral estoppel is asserted was a party or in privity with a party at the prior [proceeding].” [¶] It is implicit in this three-prong test that only issues actually litigated in the initial action may be precluded from the second proceeding under the collateral estoppel doctrine. [Citation.] An issue is actually litigated “[w]hen [it] is properly raised, by the pleadings or otherwise, and is submitted for determination, and is determined . . . .” ’ (People v. Sims (1982) 32 Cal.3d 468, 484, . . ., fn. omitted[, superseded by statute on an unrelated ground as noted in Gikas v. Zolin (1993) 6 Cal.4th 841, 851-852].)” (People v. Carter (2005) 36 Cal.4th 1215, 1240, italics in original.)
Here, the administrative law judge’s statement that Hughes did not dispute Hadzess’s testimony that Hughes exposed himself was not a determination “on the merits.” Whether or not Hughes exposed himself was not an issue in that proceeding, and consequently, was not “submitted for determination.”
Appellants also urge that the court erred in not admitting evidence of the incidents alleged in the NLRB proceeding because they demonstrate “Hughes’[s] animosity toward the picketers . . . .” The other incidents involved actions taken by Hughes’s son, Ryan. Assuming arguendo that Hughes’s animosity was relevant, and evidence of the other incidents demonstrated that, a review of the trial testimony reveals ample evidence of that animosity. Hughes testified that, by exposing his backside and pretending to urinate on a Union jacket, he intended to convey a graphic message to the Union, which he described as “kiss my ass” and “piss on you.” More evidence of Hughes’s animosity towards the Union would have been, at minimum, duplicative. We cannot say that the trial court abused its discretion in this regard.
D. Judgment Against the Individual Appellants
Appellants Hadzess, Hart and Munoz argue that the court erred in allowing judgment to be entered against them as individuals, because 29 U.S.C.A § 185(b) (section 185(b)) and Labor Code section 1138 prevent judgment from being entered against individual union members.
Section 185(b) provides in part that “Any labor organization which represents employees in an industry affecting commerce as defined in this Act and any employer whose activities affect commerce as defined in this Act shall be bound by the acts of its agents. Any such labor organization may sue or be sued as an entity and in behalf of the employees whom it represents in the courts of the United States. Any money judgment against a labor organization in a district court of the United States shall be enforceable only against the organization as an entity and against its assets, and shall not be enforceable against any individual member or his assets.”
By its own terms, section 185(b) is inapplicable to this action, as it governs lawsuits “for violation of contracts between an employer and a labor organization representing employees . . . .” (29 U.S.C.A. § 185(a).) Moreover, it prohibits a judgment entered against a labor organization from being enforced against its individual members or their assets.
Labor Code section 1138 provides: “No officer or member of any association or organization, and no association or organization, participating or interested in a labor dispute, shall be held responsible or liable in any court of this state for the unlawful acts of individual officers, members, or agents, except upon clear proof of actual participation in, or actual authorization of those acts.” This section is likewise inapplicable. In this case there was “clear proof” of the individual appellants’ “actual participation in, or actual authorization of” distribution of the defamatory flyer, and appellants do not claim otherwise.
Appellants also rely on Sackett v. Wyatt (1973) 32 Cal.App.3d 592 for their assertion that “ ‘when a union representative acts as a union official there is no personal liability.’ ” Sackett does not authorize such a broad exemption from liability. In Sackett, “defendant Wyatt was acting as a union representative in entering into and then allegedly breaching the oral agreement. Plaintiff’s cause of action against Wyatt individually for breach of contract necessarily charged union violation of the contract. That being the case, by virtue of section 301[,] Wyatt may not be held personally liable for breach of the alleged agreement.” (Id. at p. 600.) The court also addressed the issue of whether Wyatt could be held liable for the tort of fraudulent representation, and held he could not because that alleged tort was “more than a ‘peripheral concern’ to the proper administration of the [Labor Management Relations Act].” (Id. at p. 602, citing San Diego Unions v. Garmon (1959) 359 U.S. 236.) Accordingly, we find no error in entering the judgments against the individual defendants.
However, in so concluding we reject Hughes’s argument that “there is sufficient evidence in the record that the judgment could and would be satisfied by the [Union],” and therefore any error was not prejudicial. In the trial court, Hughes stipulated that, if judgment were entered against the individual defendants, “[w]e can’t execute against [the individual defendants.] I stipulate to that,” and later in the trial confirmed to the court “I told you I’m not interested in pursuing them . . . [i]ndividually.” (Italics added.) Consequently, while we find no error in entering judgment against the individual defendants, Hughes cannot, pursuant to his own stipulation, execute the judgment against the individual defendants.
We note that after the testimony in the punitive damages phase of the trial, Hughes’s counsel sought to revisit the issue, arguing that the individual defendants should be held personally liable for the damages and named in the punitive damages verdict form. The court denied this request, noting that “I think at this stage of the trial . . . assuming your position were correct, . . . we’ve gone through seven days of trial with the assumption that there was no individual liability, that the union was on the hook for whatever damages . . . were incurred by [appellants] for any punitive or actual damages. That concerns me in terms of changing any ruling.”
E. The Police Report and Civil Code Section 1798.53
Appellants next claim that the jury’s finding that they violated Civil Code section 1798.53 must be reversed because, as a matter of law, distributing copies of a police report already released to the crime victim is not a violation of section 1798.53. The trial court ruled to the contrary. We review this question of law de novo.
All further undesignated statutory references are to the Civil Code, unless otherwise noted.
Section 1798.53 provides: “Any person, other than an employee of the state or of a local government agency acting solely in his or her official capacity, who intentionally discloses information, not otherwise public, which they know or should reasonably know was obtained from personal information maintained by a state agency . . ., shall be subject to a civil action, for invasion of privacy, by the individual to whom the information pertains. [¶] In any successful action brought under this section, the complainant, in addition to any special or general damages awarded, shall be awarded a minimum of two thousand five hundred dollars ($2,500) in exemplary damages as well as attorney[] fees and other litigation costs reasonably incurred in the suit. [¶] The right, remedy, and cause of action set forth in this section shall be nonexclusive and is in addition to all other rights, remedies, and causes of action for invasion of privacy, inherent in Section 1 of Article I of the California Constitution.”
Appellants maintain that Hadzess had an “absolute right” to a copy of the police report because he was the “victim[],” and “when it was released to Hadzess it lost its exempt status and became a public record.” Thus, they argue that, under California law, records are either “ ‘completely public or completely confidential,’ ” citing Black Panther Party v. Kehoe (1974) 42 Cal.App.3d 645, 656 (Black Panther Party). In Black Panther Party, plaintiffs sought disclosure of citizen complaints regarding certain collection agencies made to the Bureau of Collection and Investigative Services. They claimed that, because the Bureau disclosed the citizen complaints to the collection agencies, it must also allow public inspection. (Id. at p. 655.) Although section 6254 provides that these complaints are in a category of “disclosure-exempt” information, the statute also provides that an agency may open its records to public inspection if not prohibited by another statute. (Id. at p. 656.) The court held that, because agencies have discretion to allow disclosure, once that discretion is exercised, it must be for “public disclosure,” not “selective disclosure.” (Ibid.)
The parties do not dispute that Hadzess, as the individual who made the police report, was entitled to a copy. Section 1798.34 provides that a state agency must permit an individual to inspect all the personal information about him or herself in any record containing personal information, and is entitled to a copy of the personal information. (§ 1798.34, subds. (a), (b).) If records pertaining to one individual include information about another, the state agency is prohibited from “disclos[ing] any personal information relating to another individual which may be contained in the record. To comply . . . an agency shall, in disclosing information, delete from disclosure such information as may be necessary.” (§ 1798.42.)
Black Panther Party does not aid appellants. The police department here was prohibited by a different statute, section 1798.42, from disclosing the portions of the police report containing personal information about Hughes to anyone other than Hughes or his designee. (§ 1798.34, subd. (b).) The fact that the police department disclosed the police report, which also contained personal information about Hadzess, to him is not “selective disclosure” as it was in Black Panther Party. The police department was required by law to disclose the report to Hadzess. (§§ 1798.32, 1798.34.) The police department was also required to delete the personal information about Hughes contained therein before disclosing it to Hadzess. (§ 1798.42.)
This statute was not in effect at the time Black Panther Party was decided.
Moreover, even if appellants were correct in their assertion that once a police report is given to a person about whom it contains personal information, it becomes public for all purposes, the copy of the police report given to Hadzess had been redacted so that personal information regarding Hughes was not disclosed by the police department. By distributing the flyer, which identified Hughes as the person whose name had been redacted in the police report, appellants made public the non-public information of Hughes’s identity. They did not simply distribute copies of the police report in its redacted form—the flyer pointed out the redacted portions and revealed that the report had been filed against Hughes. Based on this evidence, appellants “intentionally disclose[d] information, not otherwise public, which they know or should reasonably know was obtained from personal information maintained by a state agency.” (§ 1798.53.)
F. Damages
1. Compensatory Damages
Appellants argue that no substantial evidence supports the $99,970 award of compensatory damages. They claim that two portions of the damages award were speculative: the $2,470 awarded for past economic losses, and the $22,500 awarded for future non-economic losses.
“ ‘ “The determination of damages is primarily a factual matter on which the inevitable wide differences of opinion do not call for the intervention of appellate courts. . . . An appellate court, in reviewing the amount of damages, must determine every conflict in the evidence in respondent’s favor and give him the benefit of every reasonable inference. . . . An appellate court may not interfere with an award unless ‘the verdict is so large that, at first blush, it shocks the conscience and suggests passion, prejudice or corruption on the part of the jury.” ’. . . ” (Weller v. American Broadcasting Companies, Inc. (1991) 232 Cal.App.3d 991, 1011-1012, citing Rodriguez v. McDonnell Douglas Corp. (1978) 87 Cal.App.3d 626, 655.)
The record contains evidence that Hughes was billed a total of $3,600 by Dr. Albert J. Kastl for psychological counseling and trial preparation. Appellants claim that Dr. Kastl’s invoice was only marked for identification, not admitted in evidence. The record before us reflects that Exhibit 13 was admitted in evidence. The invoice indicates that, of the $3,600, Dr. Kastl billed $1,100 for litigation-related services. The invoice also indicates a charge of $300 for “[i]nitial interview and note preparation.” The jury reasonably could have found that a portion of this was for services related to trial preparation, and subtracted all or part of these amounts from the total amount billed. Substantial evidence supports the jury’s award of $2,470 for Hughes’s past economic losses.
Likewise, the record contains evidence of future non-economic losses in the form of Hughes’s testimony regarding his ongoing emotional distress about the flyer and its effects. While appellants suggest Hughes’s testimony regarding his emotional distress is improbable, there was substantial evidence from which a jury could find that $22,500 was appropriate compensation for his future non-economic losses.
2. Punitive Damages
Appellants argue that the awards of $1 million in punitive damages and $250,000 in exemplary damages are constitutionally excessive. They maintain that the ratio of punitive to actual damages of greater than ten to one presumptively violates their due process rights.
California law permits the recovery of punitive damages “for the sake of example and by way of punishing the defendant.” (§ 3294, subd. (a).) We review the punitive damage awards de novo, “making an independent assessment of the reprehensibility of the defendant’s conduct, the relationship between the award and the harm done to the plaintiff, and the relationship between the award and civil penalties authorized for comparable conduct. [Citations.]” (Simon v. Sao Paolo U.S. Holding Co., Inc. (2005) 35 Cal.4th 1159, 1172 (Simon).)
The United States Supreme Court set forth three guideposts against which to measure the constitutionality of a punitive damage award in State Farm Mut. Auto Ins. Co. v. Campbell (2003) 538 U.S. 408 (State Farm), and as analyzed by the California Supreme Court in Simon, supra, 35 Cal.4th 1159 and Johnson v. Ford Motor Co. (2005) 35 Cal.4th 1191 (Johnson). Those three constitutional “guideposts” for reviewing courts are: “ ‘(1) the degree of reprehensibility of the defendant’s misconduct; (2) the disparity between the actual or potential harm suffered by the plaintiff and the punitive damages award; and (3) the difference between the punitive damages awarded by the jury and the civil penalties authorized or imposed in comparable cases.’ (State Farm, supra, 538 U.S. at p. 418; see BMW [of North America v. Gore (1996)] 517 U.S. 559,] 575 [(BMW)].)” (Simon, supra, 35 Cal.4th at pp. 1171-1172.) We consider these three guideposts as applied to the factual record before us.
a. Degree of reprehensibility
The degree of reprehensibility of the defendant’s conduct is the most important guidepost in our analysis. (State Farm, supra, 538 U.S. at p. 419; BMW, supra, 517 U.S. at p. 575; Simon, supra, 35 Cal.4th at p. 1180.) In assessing the degree of reprehensibility, we are guided by State Farm’s summary of subsidiary factual circumstances it determined were particularly relevant: whether the harm caused was physical as opposed to economic; whether the tortious conduct evinced an indifference to or a reckless disregard of the health or safety of others; whether the target of the misconduct was financially vulnerable; whether the conduct involved repeated actions or was an isolated incident; whether the harm was the result of intentional malice, trickery, or deceit, or mere accident. (State Farm, supra, at p. 419; Simon, supra, at p. 1180.)
We first consider the “nature of the harm” and “disregard of the health or safety of others” sub-factors. Hughes suffered harm to his personal and business reputation, causing economic and emotional damages. The jury found that the bulk of Hughes’s compensatory damages were for non-economic loss. Although Hughes suffered no substantial physical harm, his emotional distress, which was manifested by worry, nightmares, loss of confidence, and an inability to “hustle” business, did have a physical component which could be said to have impacted his health and well-being. (See Century Surety Co. v. Polisso (2006) 139 Cal.App.4th 922, 965 (Century Surety Co.) [bad faith denial of policy benefits for approximately five years caused emotional distress and indifference to plaintiffs’ health and “peace of mind”].) Appellants’ conduct, however, did not demonstrate a reckless disregard for Hughes’s health or safety. In “the universe of cases warranting punitive damages under California law,” we find these two sub-factors as applied here slightly less than average or “neutral.” (See Simon, supra, 35 Cal.4th at p. 1181.)
Hughes, as appellants concede, “could be viewed as financially vulnerable.” Appellants maintain, however, that “substantial evidence establishes that [he suffered] no economic harm . . . .” We have rejected appellants’ argument that there was no substantial evidence of economic harm in the previous section. Moreover, the design of the flyer demonstrated an intent to cause financial damage to Hughes. The flyer encouraged recipients to call Keith Christopherson, who the Union knew to be one of Hughes’s largest clients, and question him about why he allowed Hughes to work “around children.”
In Gober v. Ralphs Grocery Co. (2006) 137 Cal.App.4th 204, 220 (Gober), the court considered the financial vulnerability of grocery store employees who had been sexually harassed by their employer and were dependent on their jobs to support themselves. The court assessed only a “modest degree of reprehensibility,” despite finding that Ralphs knew of the manager’s previous misconduct but transferred him to store where the victims worked, and the employees “relied upon their jobs with Ralphs for their livelihoods.” (Id. at p. 220). In Century Surety Co., the insurance company conceded the plaintiffs were financially vulnerable where their business was family-owned with limited resources to fund litigation, and the insurance company’s actions contributed to the plaintiffs’ decision to file for bankruptcy. (Century Surety Co., supra, 139 Cal.App.4th at p. 965.) Compared to other punitive damages cases, we find the financial vulnerability sub-factor to be modest, but slightly higher than neutral.
Appellants next argue that the conduct here was not frequent or part of an extended course of conduct, warranting a low level reprehensibility. They assert that the conduct was “an isolated incident, the distribution of the flyer on a Saturday morning in July 2002.” In Johnson, supra, 135 Cal.App.4th 137, the court found Ford’s conduct to be “highly reprehensible” where the evidence showed “the design and implementation by a very large national corporation of a company-wide program that permitted and encouraged efforts to circumvent the lemon law in California” with the “potential for great harm to the buying public . . . .” (Id. at p. 147.) However, the appellate court also concluded that the case did “not establish an extraordinary degree of reprehensibility.” (Ibid.) Lacking such “ ‘special justification,’ ” the award exceeding the single-digit range was not constitutional. (Id. at p. 148.)
The United States Supreme Court recently addressed the issue of “whether the Constitution’s Due Process Clause permits a jury to base [a punitive damages] award in part upon its desire to punish the defendant for harming persons who are not before the court.” (Philip Morris USA v. Williams (2007 WL 505781) ___U.S.___, 127 S.Ct. 1057, 1061.) It held that the due process clause forbids a punitive damages award on that basis. (Ibid.) The court clarified, however, that “a plaintiff may show harm to others in order to demonstrate reprehensibility. . . . [A] jury may not go further than this and use a punitive damages verdict to punish a defendant directly on account of harms it is alleged to have visited on nonparties.” (Id. at p. 1064.)
The evidence at trial demonstrated that, contrary to appellants’ assertion, distribution of the flyer was not a single event; appellants distributed approximately 200 flyers by hand, mail or facsimile. Nevertheless, there was no evidence that distributing defamatory flyers was an ongoing practice, program, or course of conduct. Indeed, there was evidence that this was a unique event, and the Union had never before distributed a flyer accusing anyone of a crime. Accordingly, we find that this sub-factor does not increase the reprehensibility of appellants’ actions.
Finally, we consider whether the evidence showed that appellants engaged in conduct evincing “intentional malice, trickery, or deceit . . . .” (Simon, supra, 35 Cal.4th at p. 1180, quoting State Farm, supra, 538 U.S. at p. 419.) The design of the flyers demonstrated an intent to lead others to believe that Hughes was a child molester and that it was not safe to allow him around children. The evidence showed, however, that the individual appellants believed that the statements on the flyer were true, and that Munoz consulted an attorney for the Union before authorizing distribution of the flyer. On balance, we conclude that this sub-factor also falls in the middle of the scale, and is essentially neutral.
While we find appellants’ conduct in distributing the flyer to be reprehensible, our summation of the relevant sub-factors persuade us that the degree of reprehensibility of appellants’ conduct was not extraordinary for cases in which punitive damages are imposed.
b. Relationship between the actual harm suffered by Hughes and the punitive damages award
Appellants argue there is no reasonable relationship between the actual damages and the punitive damages awarded. The jury awarded Hughes $99,970 in compensatory damages, and $1 million in punitive damages, a ratio of greater than 10 to 1.
The Simon court recognized that although the United States Supreme Court in State Farm, supra, 538 U.S. at page 425, continued to decline “ ‘to impose a bright-line ratio which a punitive damages award cannot exceed,’ the court went on to hold that ‘few awards exceeding a single-digit ratio between punitive and compensatory damages, to a significant degree, will satisfy due process.’ [Citation.] The court also explained that past decisions and statutory penalties approving ratios of 3 or 4 to 1 were ‘instructive’ as to the due process norm, and that while relatively high ratios could be justified when ‘ “a particularly egregious act has resulted in only a small amount of economic damages” [citation] . . . [t]he converse is also true . . . . When compensatory damages are substantial, then a lesser ratio, perhaps only equal to compensatory damages, can reach the outermost limit of the due process guarantee.’ (Ibid.)” (Simon, 35 Cal.4th at p. 1182, italics added.) Simon understood the court’s statement in State Farm “to establish a type of presumption: ratios between the punitive damages award and the plaintiff’s actual or potential compensatory damages significantly greater than nine or 10 to one are suspect and, absent special justification (by, for example, extreme reprehensibility or unusually small, hard-to-detect or hard-to-measure compensatory damages), cannot survive appellate scrutiny under the due process clause.” (Id. at p. 1182, fn. omitted.) At the same time, the Simon court recognized that “[m]ultipliers less than nine or 10 are not, however, presumptively valid under State Farm. Especially when the compensatory damages are substantial or already contain a punitive element, lesser ratios ‘can reach the outermost limit of the due process guarantee.’ (State Farm, supra, 538 U.S. at p. 425.)” (Id. at pp. 1182-1183.)
Here, the jury awarded Hughes compensatory damages of almost $100,000. These damages are not unusually small or hard to measure, but were in fact “substantial.” Accordingly, for purposes of this reasonable relationship assessment, the multiplier of greater than ten-time compensatory damages resulted in constitutionally excessive punitive damages. (Simon, supra, 35 Cal.4th at p. 1182.)
c. Comparable civil penalties
Simon recognized that the guidepost of civil penalties in comparable civil cases is “less useful in a case like this one, where plaintiff prevailed only on a cause of action involving ‘common law tort duties that do not lend themselves to a comparison with statutory penalties’ . . . than in a case where the tort duty closely parallels a statutory duty for breach of which a penalty is provided.” (Simon, supra, 35 Cal.4th at pp. 1183-1184.)
In other arguably similar contexts, statutes provide for penalties three times the actual damages. To the extent the libel could be viewed as a deceit upon readers of the flyers, we consider Civil Code sections providing for treble fines or damages for fraudulent acts, albeit in markedly different contexts. Section 3345 authorizes treble fines or damages for deceptive practices causing economic injury to disabled or senior persons and section 1947.10 authorizes treble fines or damages for fraudulent evictions in municipalities with rent controls. To the extent distribution of the flyer violated Hughes’s personal right to privacy, a somewhat similar interest is protected by the anti-discrimination provisions of the Unruh Civil Rights Act. Section 52, subdivision (a) authorizes treble damages for discrimination. As Simon observed, however, the civil penalties guidepost is not very helpful in cases such as this, insofar as there is no comparable statutory penalty for libel or invasion of privacy, and section 1798.53 authorizes only a “minimum” amount of exemplary damages. (See Simon, supra, 35 Cal.4th at pp. 1183-1184.)
Appellants have cited penalties in certain criminal statutes, which were not recognized as useful guidelines in Simon.
Section 1798.53 provides for “a minimum of two thousand five hundred dollars ($2,500) in exemplary damages as well as attorney fees and other litigation costs reasonably incurred in the suit.” It sets no maximum.
d. Appellants’ financial condition
“[T]he defendant’s financial condition is an essential factor in fixing an amount that is sufficient to serve these goals without exceeding the necessary level of punishment.” (Simon, supra, 35 Cal.4th at p. 1185.) However, the defendant’s wealth “cannot substitute for the high court’s guideposts in limiting awards, and cannot alone justify a high award . . . .” (Id. at p. 1186.) By way of illustration, Simon cited Las Palmas Associates v. Las Palmas Center Associates (1991) 235 Cal.App.3d 1220, 1255 “[$2 million award ‘sends a forceful message’ even to defendants worth $500 million]).” (Simon, supra, at p. 1189.) In Simon, the California Supreme Court held $50,000 in punitive damages to be the maximum amount recoverable where the defendant’s reprehensibility was low, even though the $5,000 compensatory damages for purely economic harm was “quite small” and there was evidence that the defendant’s wealth at the time of the tortious acts was $46 million. (Id. at pp. 1167, 1189.)
In awarding $1 million in punitive damages to Hughes, it appears that the jury took into consideration the financial condition of the Union. The evidence at the punitive damages portion of the trial demonstrated that the Union’s net value was $46,800,736 in June 2003 and $43,070,065 in June 2004. As we have observed, however, the Union’s net worth cannot support an award exceeding that otherwise justified by application of the “guideposts.” (Simon, supra, 35 Cal.4th at p. 1186.) Despite this relatively high net worth, a punitive damages award of three times the substantial compensatory damages awarded here would nevertheless provide a sufficient “sting” to the Union, and suffice to both punish and to deter. (See id. at p. 1189.)
Applying the foregoing constitutional guideposts, we conclude that a three-to-one ratio of punitive damages to actual damages is sufficient to punish the Union and deter it from similar conduct in the future. We are mindful of the statement in State Farm, supra, 538 U.S. at page 425, reiterated in Simon, finding cases and statutory penalties “approving ratios of 3 or 4 to 1 . . . ‘instructive’ as to the due process norm” (Simon, supra, 35 Cal.4th at p. 1182), and Simon’s caution that an award of four times compensatory damages did not necessarily provide an “ ‘outer constitutional limit’ ” in the “ ‘usual case.’ ” (Id. at pp. 1182-1183.) However, the size of the compensatory damages awarded to Hughes in this case was not insubstantial, and compensated fully for the actual losses he suffered, as well as for future losses. We find that the jury’s punitive damage award exceeded constitutional limits, and that an award of three times compensatory damages is the constitutional maximum that may be awarded in the circumstances of this case.
3. Section 1798.53 Exemplary Damages
Appellants also urge that the jury’s award of $250,000 in exemplary damages under section 1798.53, 100 times the statutory minimum, is constitutionally excessive for the same reasons asserted in connection with the award of $1 million punitive damages. Hughes maintains that the award is justified because there is no statutory maximum, and the jury reasonably awarded the statutory minimum for each of the “at least 100 flyers distributed.”
Section 1798.53 provides for a mandatory award of exemplary damages and sets a minimum amount. It provides that a successful complainant under section 1798.53 “shall be awarded a minimum of . . . []$2,500[] in exemplary damages” “in addition to any special or general damages awarded . . . .” (§ 1798.53, italics added.) Additionally, the “right, remedy, and cause of action” provided are nonexclusive. (§ 1798.53.)
It is unclear whether the same constitutional principles and analysis which apply to the award of punitive damages also apply to these statutory exemplary damages. Assuming they do, the jury’s award of $250,000 for the separate statutory wrong of invasion of privacy by disclosure of non-public information does not run afoul of these standards.
For instance, no “oppression, fraud, or malice” is required in order to violate section 1798.53 or be awarded exemplary damages under that section, suggesting that the analysis which applies to punitive damage awards under section 3294 may not apply.
The primary difference between the two awards is that the section 1798.53 award does not represent a double-digit ratio of actual to punitive damages. We note that the total damages awarded under section 1798.53 were less than a three-to-one ratio, when compared to the compensatory damages awarded to Hughes. Moreover, the jury apparently reasonably concluded that the minimum section 1798.53 exemplary damages ($2,500) should be imposed for each of the 100 flyers distributed. Under the circumstances, we cannot say that the statutory award of $250,000 is excessive.
The evidence at trial demonstrated that between 100 to 200 flyers were distributed. Neither party disputes that at least 100 flyers were distributed.
V.
DISPOSITION
We remand the case with directions to the trial court that it enter judgment reducing the punitive damage award of $1 million to the constitutional maximum of three times the compensatory damages. In all other respects, the judgment is affirmed. The parties are each to bear their own costs on appeal.
We concur: Sepulveda, J., Rivera, J.