Reed Smith, Tyree P. Jones, Renee C. Feldman and Kim M. Watterson for Defendants and Appellants. Whelan Law Group, Walter W. Whelan, Brian D. Whelan and Lucas C. Whelan for Plaintiffs and Appellants.
(Fresno Super. Ct. No. 12CECG02974) ORDER MODIFYING OPINION
[NO CHANGE IN JUDGMENT]
It is hereby ordered that the opinion filed herein on December 7, 2017, be modified as follows:
1. In the case caption on page 1, correct the clerical error in the Superior Court case number so that it reads as follows: "(Super. Ct. No. 12CECG02974)."
Except for the modification set forth, the opinion previously filed remains unchanged. This modification does not effect a change in the judgment.
HILL, P.J. WE CONCUR: GOMES, J. FRANSON, J.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Super. Ct. No. 12CECG0294)
APPEAL from a judgment of the Superior Court of Fresno County. Mark W. Snauffer, Judge. Reed Smith, Tyree P. Jones, Renee C. Feldman and Kim M. Watterson for Defendants and Appellants. Whelan Law Group, Walter W. Whelan, Brian D. Whelan and Lucas C. Whelan for Plaintiffs and Appellants.
After judgment was entered in favor of plaintiffs in this defamation action, defendants moved for a judgment notwithstanding the verdict and a new trial. The trial court denied the motion for judgment notwithstanding the verdict, but granted the motion for new trial, unless plaintiffs consented to a reduction in the damage awards. Plaintiffs accepted the reduction. Defendants appeal, contending judgment notwithstanding the verdict should have been entered in their favor because there was no substantial evidence supporting either liability or damages. Alternatively, they argue the motion for new trial should have been granted without the remittitur because the verdict was against the weight of the evidence and misconduct of plaintiffs' counsel deprived them of a fair trial. Plaintiffs cross-appeal, challenging the validity of the new trial order.
Substantial evidence supports the judgment on liability, and we find no error in denial of both motions as to liability. As to damages, however, we uphold the trial court's determination that the damages awarded by the jury were excessive. The trial court abused its discretion in attempting to reduce the damages by remittitur, however. The reduced amount of damages was not supported by the evidence, and we therefore strike the remittitur from the order. Consequently, we remand for a new trial on the issue of damages.
FACTUAL AND PROCEDURAL BACKGROUND
In 2011, plaintiffs were employed by defendant, Bank of America (Bank), at its Shaw Westgate branch. Plaintiff Tricia Hennessey was employed as the assistant manager of the branch; plaintiff Youa (Tracy) Her was employed as the teller operations specialist. In May or June 2011, defendant, Danny Villacis, became branch manager at the Shaw Westgate branch. In October 2011, Hennessey announced she was leaving to take an assistant manager job at the Oakhurst branch. Villacis delayed Hennessey's departure until after the new assistant manager, Shamara Garcia, started at the Shaw Westgate branch. Garcia arrived on October 31, 2011.
On November 1, 2011, Garcia was unable to locate the paperwork for a merchant teller's sale of cash to the vault. When the teller returned from lunch, Garcia questioned her about it, learned what procedure she was using, then spoke to Villacis. Garcia and Villacis were concerned the tellers were not handling sales of cash to the vault properly, putting Bank and the tellers at risk of robbery. They investigated by speaking with two merchant tellers and Her, and checking the computer system for evidence of improper buy/sell transactions. Villacis also spoke with Hennessey, but she was taken ill and had to go home before they completed their discussion. She did not return to the Shaw Westgate branch; when she returned to work, it was at the Oakhurst branch. Villacis and Garcia concluded the tellers were improperly processing the buy/sell transactions, and plaintiffs were aware of it and did nothing. They discussed the matter with Brandon Murane, who was Villacis's supervisor at that time; Murane instructed them to contact Advice and Counsel (A & C), Bank's human resources department in North Carolina.
"Buy/sell transaction" was used at trial to refer to a transaction in which the teller sold cash to the vault and the vault received it as buyer.
Villacis called A & C and provided the information he and Garcia had collected; he sought a determination whether the employees were violating Bank's policies and procedures by the manner in which they were processing the buy/sell transactions and advice about what should be done. A & C initially recommended that Hennessey, Her, and the two merchant tellers be disciplined with a written warning. Before delivering the warnings, however, Villacis read in Bank's newsletter, the Daily Huddle, information suggesting the manner in which buy/sell transactions were being conducted was a violation of Bank's Code of Ethics. He brought that to the attention of A & C; a few days later, A & C recommended that Hennessey's and Her's employment be terminated and the merchant tellers receive written warnings. A & C provided templates for plaintiffs' termination letters. Villacis completed and delivered a termination letter to Her; it indicated her employment was being terminated for Code of Ethics violation. Because Hennessey no longer worked at Villacis's branch, Villacis e-mailed the template to Murane to prepare the termination letter for Hennessey; Hennessey's termination letter indicated her employment was being terminated for Code of Ethics violation and failure to follow policy and procedure. Murane delivered the letter to Hennessey.
Plaintiffs sued Bank and Villacis, alleging causes of action for failure to prevent discrimination and harassment in violation of the California Fair Employment and Housing Act (Gov. Code § 12940; FEHA), sexual harassment and retaliation, defamation, and wrongful discharge in violation of public policy. The trial court subsequently granted summary adjudication of all causes of action except defamation. The case went to trial only on the defamation claim. The jury found for plaintiffs on most of the allegedly defamatory statements, and awarded Hennessey damages totaling $1.3 million and Her damages totaling $904,000.
Defendants moved for judgment notwithstanding the verdict and a new trial. The trial court denied the motion for judgment notwithstanding the verdict, but granted the motion for new trial unless plaintiffs accepted reduced awards of $425,000 for Hennessey and $275,000 for Her. Plaintiffs accepted the reduced awards. Defendants appeal from the judgment and from the rulings on the posttrial motions. Plaintiffs cross-appeal from the order granting defendant's motion for new trial.
"Defamation is an invasion of the interest in reputation. The tort involves the intentional publication of a statement of fact that is false, unprivileged, and has a natural tendency to injure or which causes special damage. [Citations.] Publication means communication to some third person who understands the defamatory meaning of the statement and its application to the person to whom reference is made. Publication need not be to the 'public' at large; communication to a single individual is sufficient." (Smith v. Maldonado (1999) 72 Cal.App.4th 637, 645, fn. omitted (Smith); see also, Civ. Code, §§ 44, 45, 46.) "[P]ublication occurs when a statement is communicated to any person other than the party defamed," including a coemployee. (Kelly v. General Telephone Co. (1982) 136 Cal.App.3d 278, 284.) It may include internal company statements. (Ibid.)
"In all cases of alleged defamation, . . . the truth of the offensive statements or communication is a complete defense against civil liability, regardless of bad faith or malicious purpose." (Smith, supra, 72 Cal.App.4th at p. 646.) "[T]he defendant need not justify the literal truth of every word of the allegedly defamatory matter. It is sufficient if the defendant proves true the substance of the charge, irrespective of slight inaccuracy in the details, 'so long as the imputation is substantially true so as to justify the "gist or sting" of the remark.' " (Id. at pp. 646-647, italics omitted.)
B. Privilege and malice
To be actionable as defamation, a statement must be unprivileged. (Smith, supra, 72 Cal.App.4th at p. 645.) Privileged publications include a publication made "[i]n a communication, without malice, to a person interested therein, (1) by one who is also interested, or (2) by one who stands in such a relation to the person interested as to afford a reasonable ground for supposing the motive for the communication to be innocent, or (3) who is requested by the person interested to give the information." (Civ. Code, § 47, subd. (c).) " 'Interested persons' within the meaning of [Civil Code] section 47, subdivision 3 [now subdivision (c)], have been defined as a communicator and a recipient with a common interest, although to be protected the communication must be one 'reasonably calculated to further that interest.' " (Cuenca v. Safeway San Francisco Employees Fed. Credit Union (1986) 180 Cal.App.3d 985, 995 (Cuenca).)
"Communications made in a commercial setting relating to the conduct of an employee have been held to fall squarely within the qualified privilege for communications to interested persons." (Cuenca, supra, 180 Cal.App.3d at p. 995.) "[A]n employer is privileged in pursuing its own economic interests and that of its employees to ascertain whether an employee has breached his responsibilities of employment and if so, to communicate, in good faith, that fact to others within its employ so that (1) appropriate action may be taken against the employee; (2) the danger of such breaches occurring in the future may be minimized; and (3) present employees may not develop misconceptions that affect their employment with respect to certain conduct that was undertaken in the past. Where an employer seeks to protect his own self-interest and that of his employees in good faith and without abusing the privilege afforded him, the privilege obtains even though it is substantially certain that emotional distress will result from uttered statements." (Deaile v. General Telephone Co. of California (1974) 40 Cal.App.3d 841, 849-850 (Deaile).) Additionally, "an employer may publish to his employees the reasons for termination of another employee, the rationale for the publication being the employer's economic interest in clarifying its policies and preventing future abuses of those policies." (Cuenca, at pp. 995-996.)
The common interest privilege is a qualified or conditional privilege, "because it applies only to 'a communication without malice.' " (Roemer v. Retail Credit Co. (1970) 3 Cal.App.3d 368, 370-371 (Roemer).) The privilege is lost if the publication was actuated by malice. (Deaile, supra, 40 Cal.App.3d at p. 847.) Once the defense has demonstrated that the qualified privilege applies, the plaintiff has the burden of defeating it by establishing malice. (Id. at p. 848.)
"[A] statement made with 'actual malice' has been defined as one made 'with knowledge that it was false or with a reckless disregard of whether it was false or not.' " (Roemer, supra, 3 Cal.App.3d at p. 371.) More recently, it has been held that " ' "[t]he malice necessary to defeat a qualified privilege is 'actual malice' which is established by a showing that the publication was motivated by hatred or ill will towards the plaintiff or by a showing that the defendant lacked reasonable grounds for belief in the truth of the publication and therefore acted in reckless disregard of the plaintiff's rights." ' " (Taus v. Loftus (2007) 40 Cal.4th 683, 721.) " 'Inherent in the concept of reckless disregard for truth is the notion that it is the speaker's belief regarding the accuracy of his [or her] statements, rather than the truth of the underlying statements themselves, that is relevant to the malice determination.' " (Noel v. River Hills Wilsons, Inc. (2003) 113 Cal.App.4th 1363, 1371.)
C. Defamatory statements alleged by plaintiffs
The jury verdict forms identified four statements by Villacis and similar statements by Garcia and Murane, made internally within Bank, as the defamatory statements on which their action was based. The jury found Villacis published four defamatory statements about Hennessey: (1) that she violated Bank's Code of Ethics, (2) that she failed to follow Bank's policies and procedures, (3) that she falsified or inappropriately destroyed company records or documents, and (4) that she was dishonest. It found Villacis published three defamatory statements about Her: (1) that she violated Bank's Code of Ethics, (2) that she failed to follow Bank's policies and procedures, and (3) that she falsified or inappropriately destroyed company records or documents. The jury also found Garcia falsely stated that each plaintiff failed to follow Bank's policies and procedures and Murane falsely stated Hennessey violated Bank's Code of Ethics. As to each statement the jury found was made, it specifically found the statement was not true and the speaker made the statement "with hatred or ill will toward [plaintiff], showing his [or her] willingness to vex, annoy, or injure her."
The jury was given one verdict form for each plaintiff.
Because the finding of malice overcame the qualified privilege, judgment was entered in favor of plaintiffs against both defendants. II. Judgment Notwithstanding the Verdict on Liability
"A motion for judgment notwithstanding the verdict may properly be granted by the trial court only when, disregarding conflicting evidence and permitting every reasonable inference from plaintiff's evidence, the court determines there is no substantial evidence in support of the verdict in favor of the plaintiff." (Elisalda v. Welch's Sand & Gravel Co. (1968) 260 Cal.App.2d 46, 54; Code Civ. Proc., § 629.) Denial of a motion for judgment notwithstanding the verdict is an appealable order. (Code Civ. Proc., § 904.1, subd. (a)(4).) " ' "The scope of appellate review of a trial court's denial of a motion for judgment notwithstanding the verdict is to determine whether there is any substantial evidence, contradicted or uncontradicted, supporting the jury's conclusion and where so found, to uphold the trial court's denial of the motion." ' " (Shapiro v. Prudential Property & Casualty Co. (1997) 52 Cal.App.4th 722, 730.)
"When an appellant claims a factual finding is not supported by substantial evidence, our power ' "begins and ends with the determination as to whether there is any substantial evidence contradicted or uncontradicted which will support" ' the finding. [Citation.] We presume that the record contains evidence sufficient to support the judgment; it is the appellant's burden to demonstrate otherwise. [Citation.] We do not reweigh evidence or assess the credibility of witnesses on review for substantial evidence. [Citation.] Evidence is substantial if it is of 'ponderable legal significance . . . reasonable, credible and of solid value.' [Citation.] . . . While inferences may support a judgment, 'the inference must be a reasonable conclusion from the evidence and cannot be based upon suspicion, imagination, speculation, surmise, conjecture or guesswork.' " (San Diego Gas & Electric Co. v. Schmidt (2014) 228 Cal.App.4th 1280, 1292 (San Diego Gas).)
The trial court denied the motion for judgment notwithstanding the verdict on the issue of liability, finding there was substantial evidence to support the jury's verdict. It found sufficient evidence that Villacis's characterization of plaintiffs as dishonest was false. Further, defendants' witnesses, including Murane, who authorized plaintiffs' termination, could not identify any provision of Bank's Code of Ethics that plaintiffs violated. Thus, the trial court impliedly found sufficient evidence that the statements in plaintiffs' termination letters concerning violation of the Code of Ethics were false. It also impliedly found sufficient evidence of malice on the part of Villacis. As we will explain, we find no error in the trial court's determination that there was sufficient evidence to support the jury verdict on liability.
A. Whether the statement regarding falsified documents was absolutely privileged
A statement made in a judicial proceeding by a litigant or other participant authorized by law, to achieve the objects of the litigation, and that has some connection or logical relation to the action, is absolutely privileged. (Civ. Code, § 47, subd. (b)(2); Silberg v. Anderson (1990) 50 Cal.3d 205, 212.) When the absolute privilege applies, it applies regardless whether the communication was made with malice or the intent to harm. (Kashian v. Harriman (2002) 98 Cal.App.4th 892, 913.)
Defendants contend Villacis's statement that plaintiffs "falsified or inappropriately destroyed company records or documents" was made only during his deposition, and therefore fell within the absolute privilege. At trial, plaintiffs' counsel read the following testimony from Villacis's deposition:
" 'QUESTION. Who did you tell that Tricia Hennessey was falsifying or inappropriately destroying company records or documents, if anyone?
" '[ANSWER.] Advice and Counsel, Brandon. [¶] . . . [¶]
" 'QUESTION. Who did you tell that Tracy Her was falsifying or inappropriately destroying company records or documents, if anyone?
" 'ANSWER. Advice and Counsel and Brandon.
" 'QUESTION. When you say Brandon, that's Brandon Murane, your boss?
" 'ANSWER. Yes.' "
In his trial testimony, Villacis subsequently explained that, when asked those questions at his deposition, he was shown a printout with a bullet point circled and some wording underlined, and he was confused. Defense counsel read from the Villacis's deposition transcript:
"Question by [plaintiffs' counsel]: [¶] 'Looking at the second bullet point that's circled with some interlineations there on Bates EY000017, it states, quote, "falsifying or inappropriately destroying company records or documents," close quote. Do you see that?'
"Answer by Mr. Villacis: [¶] 'Yes.' [¶] . . . [¶]
"Next question by [plaintiffs' counsel]: [¶] 'Were you claiming that either Tricia Hennessey or Tracy Her had falsified or inappropriately destroyed company records or documents?'
"Answer by Mr. Villacis: [¶] 'Well, with the evidence that we showed, I mean, that we forward [sic] and we went over with Advice and Counsel, we did have buy/sells showing that there were deleted or fake buy/sells.' "
The deposition questions identifying whom he told that plaintiffs were falsifying or inappropriately destroying company records or documents immediately followed that testimony. In his trial testimony, Villacis then denied telling anyone that plaintiffs falsified or destroyed any documents.
Defendants assert that the only statement made prior to trial about plaintiffs falsifying or destroying records was in Villacis's deposition testimony; the statement was made in the course of a judicial proceeding. Therefore, they conclude, it was absolutely privileged and cannot be the basis of a finding of liability for defamation.
The jury reasonably could have inferred from Villacis's deposition testimony that he placed "deleted or fake buy/sells" in the category of falsified or inappropriately destroyed company records. Immediately after so indicating, Villacis testified in his deposition that he told A & C and Murane that plaintiffs were falsifying or inappropriately destroying company records or documents. Thus, his deposition testimony was evidence that, at some earlier time, he had made statements about "deleted or fake buy/sells" or "falsifying or inappropriately destroying company records or documents" to A & C and Murane. Notes of Villacis's conversation with A & C personnel indicated: he told A & C that the tellers said they would get their cash ready, but plaintiffs would fail to retrieve it and take it to the vault; plaintiffs would then tell the tellers to delete the incomplete buy/sells and do one buy/sell with all the cash at the end; the tellers then deleted the buy/sell history; they said they did this because plaintiffs told them to and that was what they normally did. The jury could reasonably have inferred from this evidence that Villacis told A & C and Murane that plaintiffs instructed the tellers to delete incomplete or "fake" buy/sells and the buy/sell history, which Villacis referred to at his deposition as "falsifying or inappropriately destroying company records or documents."
Thus, the finding that Villacis stated plaintiffs had falsified or inappropriately destroyed company records or documents was not based solely on the privileged statement made during his deposition. It was based on evidence of statements Villacis made to A & C and Murane on an earlier occasion. The jury was not required to believe Villacis's testimony at trial that he was confused by the deposition question and did not mean to agree that he told anyone that plaintiffs had falsified or inappropriately destroyed company records or documents. Defendants have not demonstrated error in the jury's finding concerning this defamatory statement.
B. Whether there was substantial evidence of malice to overcome the conditional privilege
The jury found Villacis and Garcia made defamatory statements about plaintiffs with malice, that is, with ill will toward plaintiffs, and Murane made a defamatory statement about Hennessey with malice. Defendants contend there was insufficient evidence to support a finding of malice. We find substantial evidence supported the jury's conclusion Villacis made defamatory statements with malice, thereby overcoming the conditional privilege. Accordingly, there were unprivileged defamatory statements supporting the judgment in plaintiffs' favor against both Villacis and Bank, and we need not consider whether there was also sufficient evidence to support the finding of malice, and therefore of unprivileged defamatory statements, by Garcia and Murane.
Defendants contend the evidence showed Villacis denied having negative feelings toward plaintiffs, praised their performance to the staff multiple times, relied on Garcia's report of improper processing of buy/sells, joined Garcia in investigating how plaintiffs and the tellers processed buy/sells, and believed the tellers' statements that plaintiffs knew how they processed buy/sells, which Her did not deny. Defendants also assert it was A & C, not Villacis, who made the decision that plaintiffs' employment should be terminated. Defendants ignore the evidence supporting the jury's decision.
Hennessey and Her worked at the Shaw Westgate branch when Villacis became branch manager. Within days of his arrival, he began criticizing Her without observing her performance; he told Hennessey he thought Tanna Glassier Tucker, one of the merchant tellers, would make a better teller operations specialist. Villacis took away Her's desk and put it in the corner, where it was to be used by everyone. He told Hennessey he wanted Her to stand, not sit. Villacis rewired a portion of the bank in order to relocate Her's computer to the top of a file cabinet, where it was too high for Her to comfortably use it. He told Her he wanted her to have a better view of the teller line, but she could not see it over the computer.
In October 2011, there was a form missing for an ATM card application. Villacis told Hennessey to investigate, find out who issued the card, and write that person up. Hennessey investigated, determined Villacis had issued the card himself, filled out a written warning form for his signature, and gave it to him. He refused to sign it, even after Hennessey showed him the log proving he had issued the card.
When Hennessey applied for an assistant manager position at the Oakhurst branch, Villacis was upset because he had to find a new assistant manager. He tried to stop Hennessey's transfer, telling her Garcia should be assigned to the Oakhurst branch instead.
In a buy/sell transaction, the teller sells cash from his or her cash can to the vault. There is a limit to how much cash the teller can keep in the cash can; when the cash can is over the limit, a notification appears on the computer screen. The teller must sell cash to the vault to bring the cash below the limit and remove the notice. The teller fills out a form indicating the amount of cash being sold; then, because Bank uses a dual control system, the teller calls over a second person (usually a manager, but sometimes another teller) to verify the amount of cash being sold. There are two keys to the vault, a teller side key and an officer side key; the second person must have a complementary key. After the two verify the information, the teller inputs the information in the MerlinTeller computer system. The teller and the second person then physically take the money to the vault and use their keys to open the vault and place the money in it; they validate the transaction by signing and date stamping the buy/sell form, and give the form to the person who is logged on to the vault at the time. The person logged on to the vault enters the transaction in the computer, and validates the transaction by time stamping the buy/sell form. The buy/sell is then complete.
When Garcia and Villacis began investigating the buy/sell transactions, they spoke with only two of Bank's merchant tellers, Tucker and Ashley Papikian; they did not speak to the other merchant tellers or to the nonmerchant tellers. They spoke with Her, who said she had seen only one outstanding buy/sell, which occurred when Tucker was logged onto the vault. When Her asked Tucker about it, Tucker said she needed to fix it to add more money; Her testified there was nothing wrong with reversing a transaction to correct a mistake. Villacis talked with Hennessey, until she fainted and had to go home. He did not continue that conversation later, even when Hennessey called him to finish the discussion. Villacis did not show Hennessey or Her the computer printouts that allegedly showed fake buy/sell transactions. He also did not provide them to Murane or A & C.
There was evidence that, when Garcia checked the computer records, at the request of Villacis, to determine whether "fake buy/sells" really had occurred, she gave him printouts from only one day: September 1, 2011, a very busy day that was the first of the month and right before the Labor Day weekend. They reflected four transactions. Garcia did not provide a printout from the November 1, 2011, transaction that brought the situation to her attention.
Villacis communicated with A & C about disciplining plaintiffs for the way they processed buy/sells, without informing A & C that Hennessey had moved to another branch and no longer worked under his supervision. Although A & C initially recommended giving plaintiffs and the tellers written warnings, Villacis contacted A & C again, to bring the Daily Huddle information to A & C's attention, which resulted in a recommendation for termination of plaintiffs' employment. Although Villacis testified A & C made the decision to terminate plaintiffs, Vanessa Moran, who handled the matter on behalf of A & C, testified it was ultimately the manager's decision whether to terminate an employee. Moran may have discussed with Villacis that he could give plaintiffs the option of resigning, but Villacis did not offer plaintiffs that option.
Defendants introduced the printouts of the four buy/sell transactions to illustrate that there were time periods when the cash was unaccounted for. The printouts reflected time gaps between the time stamp for the sale of cash to the vault and the time stamp for completion of the buy by the vault. Defendants argued that Bank's policies required that the cash be exchanged when the transaction occurred, that is, that the sell not be entered into the computer system until the cash was exchanged. During the interval in between the time stamps, the cash was unaccounted for; it remained in the teller's cash can, but the computer entry indicated it had already been transferred to the vault. Hennessey, however, testified there was no way to tell from the printouts at what point in the process the delay occurred; it could have occurred after deposit in the vault, but before the person logged onto the vault entered the information from the buy/sell form into the computer and time stamped the buy/sell form the second time. Once the dual control persons placed the money in the vault and signed the buy/sell form validating the transaction, the money was accounted for: their signatures verified it was in the vault.
A representative of Bank, who was designated during discovery as the person most knowledgeable about properly entering buy/sell transactions in the MerlinTeller system, testified that he could not conclude, from looking at the printouts presented at trial, that plaintiffs violated the Code of Ethics, engaged in fake buy/sell transactions, or performed a buy/sell transaction without moving the cash to the vault. He also confirmed that Bank had no written policy placing a time limit on completing a buy/sell transaction.
This evidence constituted substantial evidence from which the jury could have inferred Villacis was motivated by hatred or ill will toward plaintiffs, showing a willingness to vex, annoy, or injure them, when he made the defamatory statements about them. There was sufficient evidence of malice to overcome the conditional privilege. Because the statements attributable to Villacis are sufficient to support the verdict against both defendants, we need not determine whether there was also sufficient evidence of malice on the part of Garcia or Murane to support the verdict against Bank.
C. Whether all of the alleged defamatory statements were true, nonactionable opinion, or not made
Defendants first contend the statement that plaintiffs violated Bank's Code of Ethics was not an actionable statement of fact; it was Moran's opinion, formed after she reviewed the information supplied by Villacis. Defendants cite no legal authority, and very little evidence, in support of this argument.
" 'The sine qua non of recovery for defamation . . . is the existence of falsehood.' " (McGarry v. University of San Diego (2007) 154 Cal.App.4th 97, 112.) Statements of fact are actionable as defamation, but statements of opinion are constitutionally protected. (Ibid.) Opinions do not enjoy blanket constitutional protection, however; even when a statement is couched in terms of an opinion, it may be actionable if it implies a knowledge of facts that lead to the defamatory conclusion. (Ibid.) "[E]xpressions of opinion may imply an assertion of objective fact, and a statement that implies a false assertion of fact, even if couched as an opinion, can be actionable." (Ibid.)
" '[T]he question is not strictly whether the published statement is fact or opinion. Rather, the dispositive question is whether a reasonable fact finder could conclude the published statement declares or implies a provably false assertion of fact.' " (Overhill Farms, Inc. v. Lopez (2010) 190 Cal.App.4th 1248, 1260 (Overhill).) "In determining whether a statement declares or implies a provably false assertion of fact, courts apply the totality of the circumstances test. [Citation.] 'Under the totality of the circumstances test, "[f]irst, the language of the statement is examined. For words to be defamatory, they must be understood in a defamatory sense . . . . [¶] Next, the context in which the statement was made must be considered." ' [Citations.] Whether a challenged statement 'declares or implies a provable false assertion of fact is a question of law for the court to decide [citations], unless the statement is susceptible of both an innocent and a libelous meaning, in which case the jury must decide how the statement was understood.' " (Id. at p. 1261.)
The trial court submitted the defamation case to the jury as if all of the alleged defamatory statements were statements of fact that did not require a preliminary determination by the trial court that they were statements of fact rather than nonactionable opinions. Defendants have not pointed us to anything in the record indicating they raised the fact versus opinion issue in the trial court, or requested a ruling on it.
Further, plaintiffs did not sue on statements of Moran's opinions. Their claim concerning the statement that plaintiffs violated Bank's Code of Ethics was based on the termination letters given to plaintiffs, which were signed and delivered by Villacis and Murane. Each letter, after advising that plaintiff's employment was being terminated, stated: "Your conduct, including . . . Code of Ethics violation, is not acceptable and has caused us to lose trust and confidence in you as a Bank associate." The language of the statements was not couched in terms of an opinion. It implied there was a basis in fact for the expressed conclusion. The statements were made in the context of employment termination letters, as the reason justifying the terminations. They were not made in a context in which humor, satire, rhetorical hyperbole, or use of language in a loose, figurative sense would be expected. (Overhill, supra, 190 Cal.App.4th at p. 1260.) Thus, a reasonable fact finder could conclude the statements declared or implied a provably false assertion of fact: that plaintiffs engaged in conduct that violated Bank's Code of Ethics. Defendants have not demonstrated the statements were nonactionable opinion.
Defendants contend the statements that plaintiffs violated Bank's Code of Ethics and failed to follow Bank's policies and procedures were true, and therefore did not constitute defamation. The jury's findings that those statements were not substantially true are factual findings that must be upheld if they are supported by substantial evidence. (Donovan v. Poway Unified School Dist. (2008) 167 Cal.App.4th 567, 581.) "If the record demonstrates substantial evidence in support of the judgment, we must affirm even if there is substantial contrary evidence." (Id. at p. 582.)
Defendants contend "the uncontroverted evidence established conclusively the truth of the information Garcia and Villacis reported, which led Moran to conclude they violated the Code of Ethics. The tellers' uncontroverted testimony established that their buy/sell processing violated procedures; that Plaintiffs knew, but did nothing about it; that the tellers told Garcia and Villacis what they had done and what Plaintiffs knew; and that Villacis accurately conveyed what he learned to Advice & Counsel." The evidence was far from "uncontroverted."
Papikian, one of the merchant tellers, testified she told Villacis and Garcia in November 2011 that, when the over-limit notification went off, she sometimes entered the sell into the MerlinTeller system before the cash count was verified by a second associate, then she continued to serve customers. She did this because that was the way plaintiffs had told her to do it, and all the tellers did it that way. If the notification went off again, she would ask Hennessey or Her whether she should sell cash then, or sell then and reverse it later; she would follow their instructions. Additionally, plaintiffs would, from time to time, tell Papikian to reverse a sell on the system with the cash still in the drawer. Villacis told her the way she was processing buy/sells did not comply with Bank's policy, because the buy/sell should not be sold on the system until after a second associate verified it. After receiving a final written warning from Villacis, Papikian changed the way she processed buy/sells.
On cross-examination, Papikian denied doing "fake buy/sells" and reversing buy/sells to postpone selling the cash until late in the day. She denied plaintiffs instructed her to delete buy/sells and then sell the cash at the end of the day.
Tucker, another merchant teller, testified that, in November 2011, Garcia asked her about an outstanding buy/sell that was in the system; she told Garcia the money was in her cash can. She told Garcia she didn't know there was anything wrong with processing the transaction that way, because she had been processing buy/sells that way all along at the Shaw Westgate branch and plaintiffs knew how she processed them. She admitted she did not know there was a bank policy regarding the buy/sell process.
Garcia testified that, on November 1, 2011, she found an outstanding buy/sell in the system; the buy/sell in the system was not offset by cash in the vault and a ticket or form showing its receipt. When she asked Tucker about it, Tucker said it was not an actual buy/sell; she had entered it to get rid of the over-limit notification. Otherwise, the notification would have appeared after every transaction, requiring acknowledgement before she could serve another customer. Tucker complained there was never enough time to sell down her cash to stay under the limit.
After speaking to Tucker, Garcia spoke to Her; Garcia testified Her said she was aware the merchant tellers did fake buy/sells to appear within their cash can limits. Garcia also testified Hennessey admitted knowing about the tellers making fake buy/sell transactions, where they entered the sell into the system but did not transfer the cash to the vault, and Hennessey told them to stop.
Her testified that, when Garcia asked her about outstanding buy/sells, she related one incident when Tucker was logged on to the vault. Her asked about the buy/sell and Tucker said she needed to fix it because she needed to add more money to it. Her told Tucker to let her know when the buy/sell was ready. Her testified there was nothing wrong with reversing a mistake and fixing it; it was not a policy violation. She denied instructing or permitting tellers to violate any banking policies. She denied telling any teller to delete buy/sells and do one buy/sell when the teller sold the cash at the end. She denied telling Villacis or Garcia that she was aware the tellers were doing fake buy/sells or that the tellers were doing buy/sells but intentionally not moving the cash to the vault. Her testified she never told a teller, when the bank was busy and the teller's over-limit notification went off, to enter a sell in the system and reverse it later.
Hennessey testified that, when she spoke with Villacis on November 3, 2011, he asked if she knew of any tellers that were reversing buy/sells, and she said "no." He said Garcia had found fake buy/sells and tellers reversing sells, and Hennessey said she did not know anything about it. She denied it was a practice of the tellers. She described one instance in which she went to pick up Tucker's cash, but Tucker needed to reverse a prior sell and add money to it; Hennessey saw a bag of coins and thought Tucker just needed to add the coins to the transaction. Hennessey understood Tucker was reversing the transaction to correct a mistake, which was consistent with bank policy. When Murane advised Hennessey her employment was being terminated for violation of the Code of Ethics, she told him she knew nothing about it. Hennessey testified she did not knowingly allow tellers to make fake buy/sells. She did not instruct them to continue serving customers when she knew their over-limit notification had gone off and they needed to sell down their cash.
The Code of Ethics provision defendants contended plaintiffs violated stated, under the heading "Special obligations of managers":
"We are all responsible for abiding by the Code; requesting advice from appropriate resources; reporting known or suspected violations of the Code, rules, standards, policies or procedures; questioning business practices that may contradict or violate our Code; and cooperating in investigations of potential violations."
Defendants contended plaintiffs violated the code by failing to question or report known or suspected violations of Bank's policies and procedures. The violation of procedure in issue was the merchant tellers' method of processing buy/sell transactions. Bank's policy and procedure for processing buy/sell transactions included the following:
"If you reverse a Buy or Sell, ask your supervisor to check for outstanding transfers and delete if necessary."
"Associates must complete Buy/Sell transactions when they occur, not later, and always on the same calendar and business day to avoid problems and delays at Next Business Day and End of Day; ensure both transactions clear (seller and buyer).
"The buy and sell transactions must not be processed until the cash has been exchanged."
Thus, reversal of buy/sell transactions was contemplated by the procedure and was not a violation of it when done to correct a mistake. Although the policy stated buy/sell transactions were to be completed "when they occur, not later," testimony indicated there was no time limit on completing a transaction, other than by the end of the day; plaintiffs testified the tellers were supposed to complete buy/sell transactions as soon as possible. Regarding the provision that "[t]he buy and sell transactions must not be processed until the cash has been exchanged," Hennessey testified the sell transaction was processed on the teller side by putting the sell in the MerlinTeller system. This could occur as soon as the dual control person came over to verify and collect the cash from the teller. On the vault side, the buy could be processed after the cash was secured in the vault.
Moran testified that, in order for there to be a violation of the Code of Ethics, there must be intentional conduct. Garcia explained that one transaction by a merchant teller could put the teller over the limit, so entering a sell in the computer system without immediately completing the transaction by moving the cash to the vault was the merchant tellers' way of managing the system. She did not see the practice as an act of dishonesty or as reflecting malice or an intent to deceive. It was an attempt to be efficient, but it was the wrong solution. In Garcia's opinion, plaintiffs' conduct was not intentional or unethical. Murane also testified he did not believe Hennessey intentionally engaged in unethical conduct.
The evidence regarding whether plaintiffs violated Bank's Code of Ethics or its policies and procedures was conflicting. "When an appellant claims a factual finding is not supported by substantial evidence, our power ' "begins and ends with the determination as to whether there is any substantial evidence contradicted or uncontradicted which will support" ' the finding." (San Diego Gas, supra, 228 Cal.App.4th at p. 1292.) Substantial evidence supports the jury's finding that defendants' statements that plaintiffs violated Bank's Code of Ethics and its policies and procedures were false. Defendants have failed to demonstrate the insufficiency of the supporting evidence.
3. Never made
Defendants contend there was no evidence Villacis ever said plaintiffs were dishonest, or they falsified or inappropriately destroyed company records or documents. Therefore, the findings of the jury that defendants made those statements are unsupported.
Defendants contend Villacis denied saying plaintiffs were dishonest. They assert the only reference to dishonesty was made in Moran's internal notes of a conversation with Villacis, which were never published to anyone. Moran's notes stated that Villacis told her he reviewed the situation with Murane "who supports term[ination] for dishonesty." Although Moran testified at trial that Villacis did not say Murane supported termination for dishonesty, but for violation of the Code of Ethics, she was impeached with her deposition testimony in which she stated that she recalled Villacis telling her that Murane supported termination for dishonesty, as her notes reflected. Murane testified he did not know if he or Villacis used the word "dishonesty" about plaintiffs' conduct; he subsequently denied telling Villacis he supported the termination of plaintiffs for dishonesty. Villacis testified he could not remember the conversation with Moran in which Moran's notes indicated he said Murane supported termination for dishonesty; when asked if he denied making the statement, he stated he could not deny something he could not remember. When asked whether he told A & C that he supported termination of plaintiffs for dishonesty, he stated he could not answer the question; when pressed for an answer, he stated he did not deny making that statement. Defendants have not met their burden of demonstrating that there was insufficient evidence to support the jury's findings that Villacis stated Hennessey and Her were dishonest.
Defendants also claim the jury's findings that Villacis stated plaintiffs falsified documents were not supported by substantial evidence. They contend the reference to falsification of documents was made in a deposition question by plaintiffs' counsel, and it was a term counsel, not Villacis, used to label and summarize the tellers' actions. Defendants then conclude counsel's questions are not evidence, and, inferentially, cannot support the jury's findings.
In Villacis's deposition testimony, which was read at trial, Villacis was asked about a document, not included in the record on appeal, which used the phrase "falsifying or inappropriately destroying company records or documents." Villacis then testified:
"Next question by [plaintiffs' counsel]: [¶] 'Were you claiming that either Tricia Hennessey or Tracy Her had falsified or inappropriately destroyed company records or documents?'
"Answer by Mr. Villacis: [¶] 'Well, with the evidence that we showed, I mean, that we forward and we went over with Advice and Counsel, we did have buy/sells showing that there were deleted or fake buy/sells.' "
The inference could be drawn from this evidence that Villacis had made that claim, based on the "deleted or fake buy/sells." The deposition testimony continued:
"Next question . . . : [¶] 'Who did you tell that Tricia Hennessey was falsifying or inappropriately destroying company records or documents, if anyone?'
" 'ANSWER. Advice and Counsel, Brandon. [¶] . . . [¶]
"[QUESTION.] [¶] 'Who did you tell that Tracy Her was falsifying or inappropriately destroying company records or documents, if any[one]?'
" 'ANSWER. Advice and Counsel and Brandon.' "
Villacis acknowledged that, although he had been advised at the outset of his deposition that he had the option of correcting any deposition answer that was wrong, he did not correct this testimony.
The jury was not obligated to accept Villacis's explanation that he misunderstood or was confused by the deposition questions, and the answers were therefore incorrect. Nor was the jury obligated to accept his trial testimony denying he had told anyone that plaintiffs falsified or inappropriately destroyed company records or documents. (McNulty v. Copp (1949) 91 Cal.App.2d 484, 490 [jurors are the exclusive judges of the credibility of witnesses and the weight to be given their testimony].) Defendants have not demonstrated that the jury's finding that Villacis told someone, other than plaintiffs, that plaintiffs falsified or inappropriately destroyed company records or documents was not supported by substantial evidence.
D. Whether substantial evidence supports the finding of causation of injury
Defendants contend there was no evidence of a causal connection between the alleged defamatory statements and plaintiffs' claimed injuries. They argue plaintiffs were required to prove they suffered special damage as a proximate result of the defamation; plaintiffs alleged two types of injuries resulting in special damages: (1) the loss of plaintiffs' employment with Bank and (2) the inability to secure alternative employment in the banking industry due to the damage to their reputations. Defendants assert plaintiffs failed to show proximate cause as to either injury, so they failed to prove their defamation claims.
Defamation is effected by either libel or slander. (Civ. Code, § 44.) "Slander is a false and unprivileged publication, orally uttered, . . . which: [¶] . . . [¶] 3. Tends directly to injure him in respect to his office, profession, trade or business, either by imputing to him general disqualification in those respects which the office or other occupation peculiarly requires, or by imputing something with reference to his office, profession, trade, or business that has a natural tendency to lessen its profits" or "5. Which, by natural consequence, causes actual damage." (Civ. Code, § 46.) Under the statute, the first four categories, which set out specific types of statements, are slanderous per se and actionable without proof of special damage. (Regalia v. The Nethercutt Collection (2009) 172 Cal.App.4th 361, 367 (Regalia).) Only the fifth category requires proof of special damage. (Ibid.)
"Libel is a false and unprivileged publication by writing, . . . or other fixed representation to the eye, which exposes any person to hatred, contempt, ridicule, or obloquy, . . . or which has a tendency to injure him in his occupation." (Civ. Code, § 45.) "A libel which is defamatory of the plaintiff without the necessity of explanatory matter . . . is said to be a libel on its face. Defamatory language not libelous on its face is not actionable unless the plaintiff alleges and proves that he has suffered special damage as a proximate result thereof." (Civ. Code, § 45a.) The term " '[s]pecial damages' means all damages that plaintiff alleges and proves that he or she has suffered in respect to his or her property, business, trade, profession, or occupation, including the amounts of money the plaintiff alleges and proves he or she has expended as a result of the alleged libel, and no other." (Civ. Code, §§ 48a, subd. (d)(2), 45 a.)
" 'A defendant is liable for what is insinuated, as well as for what is stated explicitly. [Citation.]' [Citation.] Thus, as noted, a writing can be libelous if it implies a false assertion of fact." (Wong v. Jing (2010) 189 Cal.App.4th 1354, 1372.) " ' "If no reasonable reader would perceive in a false and unprivileged publication a meaning which tended to injure the subject's reputation in any of the enumerated respects, then there is no libel at all. If such a reader would perceive a defamatory meaning without extrinsic aid beyond his or her own intelligence and common sense, then . . . there is a libel per se. But if the reader would be able to recognize a defamatory meaning only by virtue of his or her knowledge of specific facts and circumstances, extrinsic to the publication, which are not matters of common knowledge rationally attributable to all reasonable persons, then . . . the libel cannot be libel per se but will be libel per quod," requiring pleading and proof of special damages.' " (Barker v. Fox & Associates (2015) 240 Cal.App.4th 333, 351-352.)
Either libel or slander is defamation per se, and does not require pleading and proof of special damage, if the defamatory statement tends to directly injure the plaintiff in his or her occupation. (Regalia, supra, 172 Cal.App.4th at pp. 367-368; Correia v. Santos (1961) 191 Cal.App.2d 844, 850-851.) The letters terminating plaintiffs' employment, in explaining the reason for termination, stated that plaintiffs' conduct, including "Code of Ethics violation," was unacceptable to Bank. A reasonable person, hearing or reading that statement, would perceive the defamatory meaning without extrinsic aid: that plaintiffs committed some unethical conduct that rendered them unfit for the type of employment they held with Bank. Thus, the statements were defamatory per se and did not require allegation and proof of special damages. (See Warfield v. McGraw-Hill, Inc. (1973) 32 Cal.App.3d 1041, 1045 [concluding the defendants' statement that the plaintiff violated industry ethics was slanderous per se under Civil Code § 46, subd. (3)].)
" 'It is a question of law, for the court to determine, whether a communication is libelous or slanderous per se.' " (Regalia, supra, 172 Cal.App.4th at p. 368.)
Where a statement is defamatory per se, general damages are presumed. (Clay v. Lagiss (1956) 143 Cal.App.2d 441, 448.) " 'General damages' means damages for loss of reputation, shame, mortification, or hurt feelings." (Civ. Code, § 48a, subd. (d)(1).) Because it is presumed that a defamation plaintiff sustained general damages as a result of a defamation per se, causation of at least general damages is established by proof of defamation per se. Defendant has not addressed general damages or shown any failure of proof of causation of general damages. Accordingly, defendants have failed to demonstrate they were entitled to judgment notwithstanding the verdict on the issue of liability, on the ground plaintiffs failed to prove causation of damages. III. Judgment Notwithstanding the Verdict on Damages
Defendants alternatively assert their motion for judgment notwithstanding the verdict should have been partially granted as to the award of economic damages. They argue plaintiffs' economic damages—those awarded by the jury for harm to their "profession or occupation, including any past or future lost earnings"—included damages for the loss of their employment with Bank and for their claimed inability to obtain, or difficulty obtaining, new employment. Defendants contend plaintiffs were at-will employees of Bank, whose employment could be terminated at any time, for any reason or for no reason, except for a reason that violates public policy; plaintiffs' claims of wrongful termination were disposed of prior to trial, so there was no basis for plaintiffs' recovery of damages for loss of employment with Bank; and plaintiffs presented insufficient evidence that any inability or difficulty securing subsequent employment was caused by the defamation.
A. Damages for termination of employment with Bank
" 'Whether a plaintiff "is entitled to a particular measure of damages is a question of law subject to de novo review. [Citations.] The amount of damages, on the other hand, is a fact question . . . [and] an award of damages will not be disturbed if it is supported by substantial evidence." ' " (Bermudez v. Ciolek (2015) 237 Cal.App.4th 1311, 1324.)
"Labor Code section 2922 provides in relevant part, 'An employment, having no specified term, may be terminated at the will of either party on notice to the other. . . .' This presumption may be superseded by a contract, express or implied, limiting the employer's right to discharge the employee. [Citations.] Absent any contract, however, the employment is 'at will,' and the employee can be fired with or without good cause." (Foley v. Interactive Data Corp. (1988) 47 Cal.3d 654, 665, fn. omitted (Foley).) " ' "[T]he privilege [to terminate] is absolute, and the presence of ill will or improper motive will not destroy it." ' " (Guz v. Bechtel National Inc. (2000) 24 Cal.4th 317, 335, fn. 8 (Guz).) "But the employer's right to discharge an 'at will' employee is still subject to limits imposed by public policy, since otherwise the threat of discharge could be used to coerce employees into committing crimes, concealing wrongdoing, or taking other action harmful to the public weal." (Foley at p. 665, fn. omitted.)
An employee who lacks a contract containing a provision that the employee may be discharged only for good cause can recover tort damages for wrongful termination only if he or she was discharged in violation of public policy. (Summers v. City of Cathedral City (1990) 225 Cal.App.3d 1047, 1059.) The employee can recover only if the employee's claim is "predicated on a fundamental, well-established, substantial policy that concerns society at large rather than the individual interests of the employer or employee [citation], and that is delineated in some constitutional or statutory provision." (Hunter v. Up-Right, Inc. (1993) 6 Cal.4th 1174, 1180, 1186 (Hunter).) "This limitation recognizes an employer's general discretion to discharge an at-will employee without cause under [Labor Code] section 2922, and best serves the Legislature's goal to give law-abiding employers broad discretion in making managerial decisions." (Green v. Ralee Engineering Co. (1998) 19 Cal.4th 66, 79-80 (Green).) An employee cannot recover damages for wrongful termination by recasting the employee's claim as one for some other tort. (Hunter, at pp. 1182-1185; Soules v. Cadam, Inc. (1991) 2 Cal.App.4th 390, 404 (Soules).) Common law torts, such as fraud and defamation, do not satisfy the requirement of a substantial public policy because, "[a]t root, [they] affect only the individual interests of the employer and employee." (Hunter, at p. 1186.) They present "essentially a private dispute seeking a monetary remedy, not an action to vindicate a broader public interest." (Ibid.)
Disapproved on another ground in Turner v. Anheuser-Busch, Inc. (1994) 7 Cal.4th 1238, 1251 (Turner).
An at-will employee may not recover from his or her employer for defamation when the only result is the loss of that employment. In Hunter, the plaintiff alleged his supervisor misrepresented to him that his position was being eliminated, and if he did not resign he would be terminated; in response, he resigned. (Hunter, supra, 6 Cal.4th at p. 1179.) The court concluded he could not state a cause of action for fraud because he suffered no injury independent of his termination. The court noted that, in Soules, the plaintiff was unable to state a tort cause of action—for defamation, negligence, prima facie tort, or conspiracy—in addition to his contractual causes of action for wrongful termination. Tort damages were not available for wrongful termination in the absence of a violation of public policy, and "the employee's tort claims were all founded on the employer's conduct that formed the basis of the causes of action for wrongful constructive termination—i.e., evaluating the employee's performance and demoting her." (Hunter, at pp. 1182-1183.) Similarly, in Hunter, the result of the employer's alleged misrepresentation was indistinguishable from an ordinary wrongful termination. (Id. at p. 1184.) The Hunter court concluded: "Tort recovery is available only if the plaintiff can establish all of the elements of fraud with respect to a misrepresentation that is separate from the termination of the employment contract, i.e., when the plaintiff's fraud damages cannot be said to result from termination itself." (Id. at p. 1178.)
In Gould v. Maryland Sound Industries, Inc. (1995) 31 Cal.App.4th 1137, the plaintiff sued his former employer and two managers, alleging his employment was terminated to avoid paying him commissions earned and to retaliate against him for reporting overtime wage violations to management. (Id. at p. 1143.) He also alleged a cause of action for defamation, asserting one of the managers informed persons employed by another company that the plaintiff had made a $100,000 error in preparing a bid for the defendant. (Id. at p. 1153.) The court reversed the trial court's judgment sustaining the defendants' demurrer to the defamation cause of action, stating: "The present case is distinguishable from Soules . . . in which we held damages for defamation are not recoverable in a wrongful discharge case where the defamation claim is founded on the same conduct alleged to constitute breach of the covenant of good faith and fair dealing. [Citation.] Here, Gould alleges [the manager's] defamation as an independent tort." (Id. at p. 1154.) The defamation claim was not based on the same facts as the wrongful termination claim; further, because the alleged defamatory statement was made to persons outside the defendant's organization, the defendant could be held liable for damages other than those arising out of the termination of the plaintiff's employment with the defendant.
In Lazar v. Superior Court (1996) 12 Cal.4th 631 (Lazar), the plaintiff alleged the defendant recruited him to come from New York to California to work for the defendant by making misrepresentations that the company was financially strong and the plaintiff would have long term employment. (Id. at pp. 635-636.) The plaintiff accepted the job and relocated, but was terminated approximately two years later. (Id. at pp. 636-637.) The court concluded the plaintiff's complaint stated a cause of action for fraud in the inducement of the contract, and the defendant's demurrer to that cause of action should have been overruled. (Id. at p. 649.)
The court distinguished Hunter. Hunter "expressly left open . . . the possibility 'that a misrepresentation not aimed at effecting termination of employment, but instead designed to induce the employee to alter detrimentally his or her position in some other respect, might form a basis for a valid fraud claim even in the context of a wrongful termination.' [Citation.] The misrepresentations Lazar alleges were not aimed at effecting his termination, but, rather, at inducing him to accept [the defendant's] offer of employment." (Lazar, supra, 12 Cal.4th at p. 640.) Further, the damages the plaintiff alleged did not result from the termination itself, but from the defendant's misrepresentations, which were made before, during and after termination. (Id. at pp. 644, 648.) The court concluded that, on his fraud claim, the plaintiff could "properly seek damages for the costs of uprooting his family, expenses incurred in relocation, and the loss of security and income associated with his former employment in New York." (Id. at pp. 648-649.) It stated, however, that the plaintiff was required to "rely on his contract claim for recovery of any loss of income allegedly caused by wrongful termination of his employment with" the defendant. (Id. at p. 649.)
In light of these cases, we conclude plaintiffs cannot recover from Bank, on a defamation theory, damages based on plaintiffs' loss of their employment with Bank. Their remedy, if any, for the loss of their employment was through claims of breach of the employment contract, breach of the covenant of good faith and fair dealing arising out of the employment contract, or wrongful termination in violation of public policy. (Turner, supra, 7 Cal.4th at pp. 1251-1252.) Plaintiffs do not dispute that they were at-will employees of Bank. They did not sue for breach of an employment contract. Their claim of wrongful discharge in violation of public policy was disposed of in defendants' favor prior to trial. The only remaining basis for any recovery was plaintiffs' defamation claim, but they were not entitled to recover damages for termination of their employment with Bank based on that claim.
Plaintiffs rely on Agarwal v. Johnson (1979) 25 Cal.3d 932 for the proposition that damages for loss of employment are recoverable on a defamation cause of action. In Agarwal, the only issue raised and discussed regarding the defamation cause of action was whether there was substantial evidence to support the finding of malice. (Id. at pp. 944-945.) There was no discussion of the damages awardable on that cause of action. The Agarwal court also concluded the jury instruction allowing the jury to award special damages, including "loss of income from employment," on the plaintiff's intentional infliction of emotional distress cause of action, was proper. (Id. at pp. 952-953.) It noted that, although the tort of intentional infliction of emotional distress is not chiefly aimed at redressing economic losses, compensation for economic loss that results from the intentionally caused emotional distress is proper. (Id. at pp. 952-953.)
Disapproved on another ground in White v. Ultramar (1999) 21 Cal.4th 563, 574, footnote 4.
The opinion in Agarwal did not discuss the effect that at-will employment or the limits on wrongful termination actions might have on a cause of action for defamation or intentional infliction of emotional distress by an employee against his or her former employer. " '[C]ases are not authority for propositions not considered.' " (Baeza v. Superior Court (2011) 201 Cal.App.4th 1214, 1228.) We note also that the Agarwal decision preceded such cases as Foley, supra, 47 Cal.3d 654, Gantt v. Sentry Insurance (1992) 1 Cal.4th 1083, and Guz, supra, 24 Cal.4th 317, which clarified the scope and availability of causes of action for wrongful termination, based on breach of contract, breach of the covenant of good faith and fair dealing, or violation of public policy.
Disapproved on another ground in Green, supra, 19 Cal.4th at page 80, footnote 6.
The other cases plaintiffs rely on are also distinguishable. In Washer v. Bank of America (1943) 21 Cal.2d 822, the court reversed a judgment entered after the trial court sustained the demurrer to the plaintiff's complaint. (Id. at pp. 824, 833.) The plaintiff, a former employee of the defendant, alleged the defendant made a defamatory statement about him to newspaper reporters, intending it to be published in newspapers, and it was so published. (Id. at pp. 824-825.) The plaintiff alleged that, because of the statement, he was refused employment at various banks and would be unable to secure employment in his profession at any bank. (Id. at p. 825.) Nothing in the opinion indicates the plaintiff sought damages for loss of employment with the defendant.
Disapproved on another ground in MacLeod v. Tribune Publishing Co. (1959) 52 Cal.2d 536, 551. --------
In Pridonoff v. Balokovich (1951) 36 Cal.2d 788, which was also an appeal from the dismissal of the plaintiff's action after the sustaining of the defendants' demurrer, the plaintiff alleged that defendants caused defamatory statements about him to be published in a newspaper, as a result of which he lost his employment with Parsons Aerojet Company. (Id. at p. 789.) The plaintiff's action was against the authors of the newspaper article, not against his former employer.
In this case, the defamatory statements were made in connection with the termination of plaintiffs' employment and formed the basis for plaintiffs' termination. Thus, to the extent plaintiffs' defamation cause of action was founded on the same conduct of the employer that formed the basis for their claim of wrongful termination, and sought the same damages, it was not separately actionable. (Hunter, supra, 6 Cal.4th at p. 1178.) Plaintiffs cannot recover wrongful termination damages, i.e., damages for loss of their employment with Bank, based on the defamatory statements claimed in this case.
B. Damages for inability to obtain other employment
Plaintiffs contend the award of economic damages was based on two premises: "because of the damage done to their reputations, it is highly unlikely that Plaintiffs will ever be able to resume their banking careers" and the defendants' defamation resulted in a "permanent gap between the income Plaintiffs would have enjoyed at Bank of America and/or with other banks in the banking industry versus what they will be able to earn post-termination because of damage to their reputations."
The statements the jury found were defamatory were published by defendants only internally, within Bank. There was no evidence anyone at Bank published them outside of Bank. Plaintiffs claimed no special damages from the internal publication, other than the loss of their employment with Bank. As discussed above, they cannot recover for that loss of employment in this defamation action. Plaintiffs also claimed, however, that they were required to republish to prospective employers the reason given them for their termination—that they violated Bank's Code of Ethics—when those prospective employers inquired about the reason for termination of their prior employment. Any award of damages for their claimed inability to obtain other employment must be based on their republication of that defamatory statement.
Ordinarily, a plaintiff cannot manufacture a defamation cause of action by publishing the defendant's statements to third persons. (Live Oak Publishing Co. v. Cohagan (1991) 234 Cal.App.3d 1277, 1284.) There is an exception, however, when the plaintiff republishes the defamatory statement under strong compulsion; the republication may be actionable when " 'the originator of the defamatory statement has reason to believe that the person defamed will be under a strong compulsion to disclose the contents of the defamatory statement to a third person after he has read it or been informed of its contents.' " (Ibid.)
Each plaintiff presented a list of numerous prospective employers to whom she sent applications for employment. Her testified that she had three interviews with prospective employers; in each case, when the interviewer asked why she left her last job, she responded she was terminated for Code of Ethics violation. She received no job offers from those interviews. Hennessey testified she had first and second interviews with two banks; when asked about her last job, she said she could not tell them why her last employment ended. When they pressed her for an answer, she stated she was terminated for a Code of Ethics violation, but it was not true. Although the interviews had been going very well up to that point, she was not hired for either job. One of the banks informed her by letter or e-mail that it had hired another candidate. Hennessey also interviewed for a nonbanking position, but when she indicated she did not want to say why she left her last position, they ended the interview and did not hire her.
There was no evidence that plaintiffs disclosed the reason for their termination by Bank to the employers to whom they simply sent applications, and with whom they did not interview. Her disclosed the reason for her termination to three prospective employers; Hennessey disclosed it to two prospective employers and refused to disclose it to a third. There was no evidence from any of the prospective employers regarding the reason for not hiring plaintiffs, other than the information from one prospective employer to Hennessey that another applicant had been selected. Thus, there was no direct evidence that the defamation was the reason plaintiffs were not hired for any position.
Murane conceded in his testimony that it could make it harder to obtain employment in the banking industry if the prospective employer learned the job applicant had lost his or her previous job for a Code of Ethics violation. Villacis, through his deposition testimony read at trial, testified that he would not recommend Her for hiring at Citibank, where he then worked, because of the situation with the buy/sell transactions.
Over defendants' objection, plaintiffs presented the expert testimony of Dr. Charles Mahla, an economist working for an economic consulting firm. He testified his task was to estimate the economic impact on plaintiffs of "their departure from Bank of America." He was asked to assume defamation led to their termination; he was not asked to, and did not, opine whether the damages he described in his testimony were caused by the defamation.
Mahla presented charts showing plaintiffs' projected earnings until retirement, and their projected retirement income, if their employment with Bank had continued until retirement, with adjustments to their salaries for cost of living increases. He also charted plaintiffs' projected incomes from their current employment at the time of trial. He testified their economic harm was the difference between the two. Mahla admitted the charts represented plaintiffs' damages only "[i]n a conceptual way." They presented a framework, but did not "depict exactly how the damage is going to shake out in this particular case." Mahla referred to plaintiffs' actual current earnings as "mitigating earnings," and presented two scenarios: one in which the current or alternative employment was comparable to plaintiffs' employment at Bank and mitigated their loss, and one in which the alternative employment was not comparable and did not mitigate or reduce their loss. Based on these charts, Mahla opined that Hennessey's total losses with noncomparable alternative employment were $1,405,139 and with comparable alternative employment were $650,597. He opined Her's total losses with noncomparable alternative employment were $926,924 and with comparable alternative employment were $563,420.
Mahla testified he used Department of Labor data on expected work life to determine the length of time plaintiffs' employment could be expected to continue. He admitted he assumed plaintiffs would have continued to work at Bank for the rest of their work lives because plaintiffs' counsel told him to. He did not take into account the at-will nature of plaintiffs' employment, because there was no reasonable way to estimate when plaintiffs might have chosen to leave their employment or when Bank might have let them go.
"An expert's opinion must not be based upon speculative or conjectural data. If the expert's opinion is not based upon facts otherwise proved or assumes facts contrary to the only proof, it cannot rise to the dignity of substantial evidence." (Toscano v. Greene Music (2004) 124 Cal.App.4th 685, 696.) Where an expert calculates the plaintiff's lost wages for the rest of the plaintiff's anticipated career by simply doing the arithmetic, without any evidence that the plaintiff had a realistic expectation of continued employment with the employer for any particular period of time, the expert's opinion is speculative and conjectural. (Ibid.) The intention of an at-will employee to remain with the employer does not establish with any reasonable certainty that the employer would have continued to employ him until the end of his career, since the employer had the right to terminate his employment at any time for any reason. (Ibid.)
The primary problem with Mahla's testimony, as defendants repeatedly pointed out, was that it was based on concepts of wrongful termination. His testimony and calculations assumed that, if plaintiffs proved their allegations of defamation, they were entitled to recover damages for the loss of their employment with Bank. Mahla assumed plaintiffs were entitled to recover the earnings they would have received from employment with Bank for the rest of their work lives (and retirement income thereafter), reduced only by the income from "mitigating" subsequent employment, and only if the subsequent employment was "comparable." Plaintiffs' action was not based on wrongful termination, however. Plaintiffs were entitled to recover only the damages reasonably certain to result from the defamation. (Civ. Code, § 3283; Cooksey v. Atchison, Topeka etc. Ry. Co. (1947) 78 Cal.App.2d 504, 508.)
A second problem with Mahla's testimony was that his assumptions were not based on any supporting evidence. Plaintiffs failed to present substantial evidence that defendants' defamation caused the loss of any job opportunities. They presented no evidence any prospective employer, other than the five with whom they interviewed, was aware of any of the defamatory statements, including the statement regarding Code of Ethics violation. As to the five with whom plaintiffs interviewed, there was evidence plaintiffs were not hired for the positions for which they interviewed, but there was little or no evidence that the prospective employers' decisions were the result of the defamation. Even if the jury could reasonably infer from the interviewers' reactions to plaintiffs' disclosure of the reason for their termination that some or all of the five interviewers declined to hire plaintiffs because of the defamatory statement, there was no evidence from which to calculate any resulting loss. There was no evidence of what salary or benefits were offered for any of the positions. There was no evidence of salary ranges for positions for which plaintiffs were qualified, in the banking industry in general or in the industry relevant to the particular nonbanking positions plaintiffs interviewed for. There was no evidence of the length of time any such employment was likely to last. There was no evidence of the length of time the alleged detrimental effect of the defamation on plaintiffs' ability to obtain employment was likely to last. There was no evidence to support Mahla's assumption the defamation would affect plaintiffs' entire remaining work lives; he simply assumed it would because plaintiffs' counsel asked him to. Consequently, no substantial evidence supported an award of damages for plaintiffs' claim that the defamation interfered with their ability to obtain other employment in the banking industry or elsewhere.
The question, then, is the appropriate remedy. In Licudine v. Cedars-Sinai Medical Center (2016) 3 Cal.App.5th 881 (Licudine), the plaintiff sued for medical malpractice and obtained a judgment that included an award of damages for diminution in her earning capacity. (Id. at p. 887.) The trial court granted defendants' motion for new trial on the ground of insufficiency of the evidence to support the award of economic damages and denied their motion for judgment notwithstanding the verdict. (Id. at pp. 889-890.) The award of damages for lost earning capacity was based on the plaintiff's anticipated future income as a lawyer. The plaintiff presented evidence she had been accepted to law school. (Id. at p. 888.) There was no evidence, however, of her likelihood of graduating from law school, passing the Bar exam, or obtaining employment as a lawyer; there also was no evidence of how much lawyers earned. (Id. at p. 899.) The plaintiff had asked the trial court to take judicial notice of information from the United States Bureau of Labor Statistics regarding attorney salaries and availability of jobs, but the trial court had not denied the request until the close of evidence. (Id. at pp. 889, 901.)
The court rejected the defendants' argument that, because the award of economic damages was unsupported by the evidence, the trial court was obligated to grant their motion for judgment notwithstanding the verdict and deny the motion for new trial. (Licudine, supra, 3 Cal.App.5th at p. 899.) "A party faced with an adverse result may move for judgment notwithstanding the verdict when, among other things, the 'verdict' is 'not supported by the facts.' [Citations.] What is more, when the facts are insufficient and '[w]hen the [nonmoving party] has had full and fair opportunity to present [her] case, . . . a judgment for [the moving party] is required and no new trial is ordinarily allowed.' " (Id. at p. 899.) There are exceptions, however: "the general rule favoring entry of judgment will give way to a court's discretion to grant a new trial in cases (1) where newly discovered evidence may be introduced at the new trial [citations], or, more generally, (2) where a retrial would serve some further purpose beyond giving the nonmoving party a second opportunity to try her case." (Id. at p. 900.) The court found the latter exception applied for two reasons: (1) "the jury's woefully inadequate award for pain and suffering damages and its wholly unsupported award for economic damages suggest the possibility that the jury may have incorrectly filled in the blanks for damages on the special verdict form" and, (2) because the trial court did not rule on the plaintiff's request for judicial notice of salary information until the close of evidence, it was too late for the plaintiff to marshal other evidence, and too late for the defendant to marshal contrary evidence. (Id. at pp. 900-901.) These factors made "it fair for the court to have granted [the] plaintiff a second opportunity to prove all of her damages. This interest in fairness takes the unusual circumstances of this case outside of the general rule mandating entry of judgment and places the trial court's grant of a new trial within its discretion." (Id. at p. 901.)
Here, the trial court denied the motion for judgment notwithstanding the verdict, but granted a new trial on the ground of excessive damages. (Code Civ. Proc., § 657, subd. (5).) It found the jury based its award of economic damages "on a wrongful termination theory, and not . . . upon the actual defamation claim." (Fn. omitted.) It believed the jury assumed plaintiffs would have continued their employment with Bank until the end of their work lives, which was an improper assumption for at-will employees. Additionally, "the jury's modest noneconomic damage award" gave "credence to the notion that the economic damage calculation was based on something other than a specific defamation claim." The trial court also concluded the award of lifetime salary and benefits was the result of passion and prejudice, and compensated plaintiffs for loss of their jobs, rather than for the effects of the actual defamation.
Defendants brought a motion in limine to exclude evidence related to any of plaintiffs' dismissed claims, including wrongful termination. The trial court recognized that some evidence supporting the dismissed claims might be relevant to the issue of malice, but it strongly stated that it would not allow plaintiffs to revive claims that had already been disposed of by summary judgment. It granted the motion in limine "as it relates to reviving claims that have already been dismissed," but reserved ruling on specific evidence that might relate to issues in the defamation case.
Defendants also brought a motion in limine to exclude the testimony of plaintiffs' expert, Mahla, on the issue of damages. They argued Mahla's opinions related to wrongful termination damages, rather than defamation damages. Further, Mahla's calculations assumed plaintiffs had an expectation of lifetime employment with Bank, which was improper because plaintiffs were at-will employees. The trial court initially reserved ruling on the motion, then later "tentatively" ruled the expert could testify. It believed the evidence might show the dissemination of the defamatory statements prevented plaintiffs from obtaining comparable employment in the banking industry, so the expert's testimony might relate to tort damages for defamation. Defendants, however, could present evidence that plaintiffs were at-will employees, so there was no guarantee of continued employment. It would be for the jury to "sort all that out."
Mahla subsequently testified to the damages he believed resulted from the termination of plaintiffs' employment; he expressed no opinions regarding what damages resulted from the defamation.
As in Licudine, we believe in this case "a retrial would serve some further purpose beyond giving the nonmoving party a second opportunity to try her case." (Licudine, supra, 3 Cal.App.5th at p. 900.) The jury was led astray in its damage award by expert testimony about wrongful termination damages, which did not apply to the defamation claim the jury was charged with deciding. The trial court admitted the expert evidence in the apparent belief Mahla would tie the damages for future loss of earnings about which he testified to the defamation claimed by plaintiffs. Mahla did not testify, however, that any future loss of earnings would result from the defamation; his testimony addressed only the loss of earnings resulting from the loss of employment with Bank. Because the trial court admitted the evidence, despite defendants' objections that it was improper in the defamation case, plaintiffs were not alerted to the need for other evidence of their economic losses. The trial court recognized that the excessive award of economic damages was improperly based on wrongful termination damages and was the result of passion and prejudice. On that basis it exercised its discretion to grant defendants' motion for new trial.
Under these circumstances, we conclude it was fair for the trial court to grant plaintiffs another opportunity to prove their economic damages by granting their motion for new trial and denying the motion for judgment notwithstanding the verdict. (See Licudine, supra, 3 Cal.App.5th at pp. 899-901.) The trial court did not abuse its discretion by denying the motion for judgment notwithstanding the verdict in favor of granting the motion for new trial.
When an order granting a new trial limited to the issue of damages would be proper, and a new trial is granted on the ground of excessive damages, the trial court may, in its discretion, issue a conditional order granting a new trial unless the party who received the award of damages consents to a reduction of that award. (Code Civ. Proc., § 662.5, subd. (a).) Such an order, referred to as a remittitur, allows a trial judge who disagrees with the jury's determination of damages to order a conditional new trial unless the plaintiff agrees to a reduction. (Thompson v. Friendly Hills Regional Medical Center (1999) 71 Cal.App.4th 544, 548.) The plaintiff, by consenting to the reduction, transforms the order into an order denying the motion for new trial. (Neal v. Farmers Ins. Exchange (1978) 21 Cal.3d 910, 931.)
"As a general rule, when a motion for new trial is granted on the ground of excessive damages, or where the trial court requires a reduction in the amount of damages as a condition of denying the motion, the order will not be reversed unless it plainly appears the court has abused its discretion, ' "and the cases teach that when there is a material conflict of evidence regarding the extent of damage the imputation of such abuse is repelled." ' " (Dell'Oca v. Bank of New York Trust Co., N.A. (2008) 159 Cal.App.4th 531, 547.) " '[T]he question on appeal from an order conditionally granting a new trial on the basis of excessiveness of damages is simply "whether a verdict for an amount considerably less than that awarded [by the jury] would have had reasonable and substantial support in the evidence." ' " (Ibid.) "We defer to the trial court's resolution of conflicts in the evidence if the decision is supported by substantial evidence and reverse only if there is no reasonable basis for the court's decision or the decision is based on a legal error." (Bell v. Bayerische Moteren Werke Aktiengesellschaft (2010) 181 Cal.App.4th 1108, 1122.)
The trial court abused its discretion by conditionally granting a new trial, without remedying the defect in the jury's verdict. The trial court found the jury's award of damages was excessive. It concluded "the jury did base the award of . . . economic damages on a wrongful termination theory, and not based upon the actual defamation claim." It found the jury's award was based on an assumption of plaintiffs' continued employment with Bank for the rest of their work lives, despite their at-will status. It also concluded the damage award was the product of passion and prejudice, because the jury compensated plaintiffs for losing their jobs, rather than for the effect of the defamation. Nonetheless, when the trial court reduced the damages awarded, it noted that the reduced amounts were "based, in part, on the testimony of Plaintiffs' economist," Mahla. Mahla, however, only testified to the damages resulting from plaintiffs' loss of employment with Bank. He did not testify to any damages resulting from defamation; he did not testify, for example, to the effect the defamation had on plaintiffs' future employment prospects or income. There was no basis in the evidence presented at trial for a reduction of damages to any particular amount. Substantial evidence did not support the reduced damages. Consequently, the unsupported reduction of damages should be stricken from the new trial order. The trial court's order granting a new trial on damages should remain, without the remittitur. IV. Motion for New Trial on Liability
A motion for new trial may be granted on the grounds of "[i]rregularity in the proceedings of the court, jury or adverse party," or "[i]nsufficiency of the evidence to justify the verdict." (Code Civ. Proc., § 657, subds. (1), (6).) Defendants maintain a new trial should have been ordered on liability. They contend: (1) assuming there was substantial evidence to support the jury's verdict, the verdict was nevertheless against the weight of the evidence, and (2) misconduct of counsel in injecting wrongful termination concepts into this defamation action constituted an irregularity in the proceedings, which was compounded by (3) an error in the jury instructions on mitigation of damages that confused the jury.
A. Whether the verdict was against the weight of the evidence
"A new trial shall not be granted upon the ground of insufficiency of the evidence to justify the verdict . . . unless after weighing the evidence the court is convinced from the entire record, including reasonable inferences therefrom, that the court or jury clearly should have reached a different verdict." (Code Civ. Proc., § 657.) "[T]he trial court, in ruling on a motion for new trial, has the power 'to disbelieve witnesses, reweigh the evidence, and draw reasonable inferences therefrom contrary to those of the trier of fact.' " (Barrese v. Murray (2011) 198 Cal.App.4th 494, 503.) It "sits as 'an independent trier of fact' " and "must 'independently assess the evidence supporting the verdict.' " (Ibid.)
The trial court's ruling conditionally granting the motion for new trial on the ground of excessive damages, along with plaintiffs' acceptance of the remittitur, effectively denied the motion on the ground of insufficiency of the evidence of liability. Denial of a motion for new trial based on insufficiency of the evidence "will not be disturbed on appeal unless it is manifest that said ruling was an abuse of discretion." (Locksley v. Ungureanu (1986) 178 Cal.App.3d 457, 463.) "In reviewing the trial court's exercise of its discretion, this court, unlike the trial court, does not weigh the evidence; our power begins and ends with a determination as to whether there is any substantial evidence, contradicted or uncontradicted, which will support the jury's verdict." (Ibid.)
Defendants contend the liability verdict was against the weight of the evidence, and the trial court's opinion on the new trial motion "does not reflect the close scrutiny required when there is a challenge to the weight or sufficiency of the evidence"; they argue the trial court failed to independently weigh the evidence as required by such a motion. "When a new trial is granted, on all or part of the issues, the court shall specify the ground or grounds upon which it is granted and the court's reason or reasons for granting the new trial upon each ground stated." (Code Civ. Proc., § 657.) The statute governing new trial orders requires an explanation of the grounds and reasons when the motion is granted; it does not require that the order explain why the motion was denied or why it was not granted on other grounds. Nonetheless, at the hearing of the motion and in its order, the trial court discussed the facts it believed supported the verdict on liability. We find nothing in the record to support defendants' claim that the trial court failed to properly weigh the evidence and consider whether it supported the jury's verdict.
B. Whether misconduct of counsel confused the jury and deprived defendants of a fair trial
"Attorney misconduct is a ground for a new trial (Code Civ. Proc., § 657, subd. 1). [Citation.] Attorney misconduct can justify a new trial only if it is reasonably probable that the party moving for a new trial would have obtained a more favorable result absent the misconduct." (Rayii v. Gattica (2013) 218 Cal.App.4th 1402, 1411.) " ' "It is only when the conduct of counsel consists of a willful or persistent effort to place before a jury clearly incompetent evidence, or the statements or remarks of counsel are of such a character as to manifest a design on his part to awake the resentment of the jury, to excite their prejudices or passions against the opposite party, or to enlist their sympathies in favor of his client or against the cause of his adversary, and the instructions of the court to the jury to disregard such offered evidence or objectionable remarks of counsel could not serve to remove the effect or cure the evil, that prejudicial error is committed. It is only in extreme cases that the court, when acting promptly and speaking clearly and directly on the subject, cannot, by instructing the jury to disregard such matters, correct the impropriety of the act of counsel and remove any effect his conduct or remarks would otherwise have." ' " (Dominguez v. Pantalone (1989) 212 Cal.App.3d 201, 210-211.)
"Misconduct of counsel as a ground for new trial presents a matter primarily committed to the trial court. [Citation.] The judge who presides over the trial, who hears the testimony and the arguments, and whose own experience gives him a fine sense of the general atmosphere of trial proceedings, is in a far better position than appellate judges to evaluate the effect of disputed argument. Thus where, as here, an able and experienced trial judge has denied a party's motion for a new trial, made in part at least on the ground that opposing counsel was guilty of misconduct which denied the moving party a fair trial, the trial judge's determination of that issue will not be set aside on appeal unless it is unquestionably wrong." (Henninger v. Southern Pacific Co. (1967) 250 Cal.App.2d 872, 881 (Henninger).) Here, the trial court effectively denied the motion for new trial on the ground of misconduct of plaintiffs' counsel.
Defendants contend plaintiffs' counsel engaged in misconduct by repeatedly questioning witnesses about, or commenting on, matters relevant only to plaintiffs' wrongful termination and harassment claims, which were disposed of in defendants' favor prior to trial. They assert the large damage award reflected the jury's confusion about the scope of plaintiffs' claims.
During voir dire and during examination of Murane, plaintiffs' counsel asked about progressive discipline; defendants objected and the trial court sustained the objections. The questions were irrelevant to the issues in a defamation action and would have been relevant only if plaintiffs were pursuing wrongful termination claims. The trial court properly instructed the jurors to disregard them, and we must presume the jurors followed that admonition. (People v. Houston (2005) 130 Cal.App.4th 279, 312.)
During opening statement, the trial court sustained defendants' objections when plaintiffs' counsel mentioned employees at the Shaw Westgate branch whose employment Villacis had terminated, and when he stated that Villacis told Hennessey and Her he thought Garcia was "fat, lazy and smelled like a wet dog." The objection to the latter statement was based on the trial court's ruling on a motion in limine; plaintiffs' counsel explained that he did not understand the scope of the ruling on that motion to include the statement.
Defendants objected to plaintiff counsel's question to Garcia about her termination by Bank; the trial court sustained the objection. They also objected to questioning Villacis about Garcia having received warnings about policy violations; the trial court sustained some of the objections. Information about prior disciplinary actions against Garcia was arguably relevant to whether Villacis in good faith believed Garcia's information about the buy/sell transactions to be accurate.
Plaintiff's counsel also questioned Hennessey about her expectation that her employment with Bank would continue, even though it was undisputed she was an at-will employee, who could be terminated at any time without cause. While the testimony was not relevant to the determination of defendants' liability on plaintiffs' defamation claims, the testimony was brief, it pertained only to Hennessey, and the jury was properly instructed concerning what was required in order to find defendants liable for defamation. The nature of plaintiffs' at-will employment was not mentioned in those instructions.
Viewed in the context of the 11-day trial, these isolated incidents of mentioning matters not within the scope of the issues were not severe or persistent enough to amount to misconduct of counsel. Further, to the extent they were not proper matters to address at the trial, the error was corrected immediately by the trial court's rulings on the objections. The trial court maintained firm and fair control over the proceedings, and responded appropriately to each objection. The claimed instances of misconduct also did not result in prejudice to defendants; we do not find it reasonably probable that defendants would have obtained a more favorable result on the issue of liability absent these incidents. Accordingly, we cannot say the trial court was "unquestionably wrong" in declining to grant the motion for new trial on the ground of misconduct of counsel. (Henninger, supra, 250 Cal.App.2d at p. 881.)
C. Whether an error in the jury instructions on mitigation of damages confused the jury
Defendants assert the trial court gave an erroneous instruction on mitigation of damages, which was based on wrongful termination law. The instruction advised that only earnings from subsequent employment "substantially similar" to plaintiffs' employment at Bank could be deducted from their lost earnings in mitigation of their damages. We believe this argument is adequately addressed by our determinations that plaintiffs are not entitled to recover damages for the loss of their employment with Bank, and that the trial court's new trial order requires retrial of the damages issue, rather than a reduction in the award. On retrial, the jury will be required to determine the damages resulting from the defamation. Loss of earnings from plaintiffs' employment with Bank, and mitigation of that loss, will not be an issue. V. New Trial Order
In their cross-appeal, plaintiffs contend the new trial order is invalid because it incorporated by reference defense counsel's argument from defendants' moving papers. "When a new trial is granted, on all or part of the issues, the court shall specify the ground or grounds upon which it is granted and the court's reason or reasons for granting the new trial upon each ground stated. . . . [¶] . . . [¶] . . . The court shall not direct the attorney for a party to prepare either or both said order and said specification of reasons." (Code Civ. Proc., § 657.) In its order, after rejecting defendants' contention that they should be granted a new trial on liability, the trial court stated: "In contrast, the Court in large part accepts the argument set forth by Defendants in their Memorandum in support of the motion for JNOV." The trial court went on to explain its reasons for granting the motion for new trial on the ground of excessive damages, stating in part that the jury appeared to have awarded excessive economic damages based on a wrongful termination theory, rather than on defamation.
Plaintiffs do not contend the trial court directed defense counsel to prepare the new trial order or the specification of reasons for granting it. Their assertion that the order incorporated by reference defense counsel's argument is without merit. The trial court did not incorporate counsel's argument into the order; it merely referred to the argument, before explaining why it agreed with it. The trial court set out the ground on which it was ordering a new trial and its reasons for doing so. As stated in Lane v. Hughes Aircraft Co. (2000) 22 Cal.4th 405:
"Plaintiffs argue the new trial order is invalid because it borrows extensively from briefs filed by defendant. [Code of Civil Procedure s]ection 657 provides that the court 'shall not direct the attorney for a party to prepare either or both [the new trial] order and . . . specification of reasons' supporting it. We give the statute 'a reasonable and practical construction' [citation], bearing in mind its dual purposes—'to promote judicial deliberation before judicial action,' and make appellate review more manageable. [Citation.] Section 657 bars a trial court from imposing upon counsel preparation of new trial orders; it does not prohibit a court from adopting material in a party's brief. Indeed, if a court could not rely on the reasons advanced in the briefs, their utility would be undermined and they would serve little purpose. The 'critical factor . . . is whose mental processes are being used, not whose language is being employed.' " (Id., at p. 415.)
Plaintiffs have not pointed out any shortcomings in the trial court's reasoning or the expression of its specification of reasons for the new trial order. The order indicates the trial court deliberated over the issues and made its own determination of the propriety of granting the motion. The mere mention of the argument in defendants' briefs did not render the new trial order invalid.
The order on defendants' motion for new trial is modified to provide that a new trial is granted on the issue of damages, and to delete the remittitur, which provides that the new trial motion will be denied if plaintiffs consent to a reduced award of damages. As so modified, the order is affirmed and the matter is remanded for a new trial on the issue of damages. The judgment is otherwise affirmed. The parties shall bear their own costs on appeal.
HILL, P.J. WE CONCUR: /s/_________
GOMES, J. /s/_________