CACI 3944 Punitive Damages Against Employer or Principal for Conduct of a Specific Agent or Employee—Bifurcated Trial (First Phase)

California Civil Jury Instructions CACI

3944 Punitive Damages Against Employer or Principal for Conduct of a Specific Agent or Employee—Bifurcated Trial (First Phase)

If you decide that [name of employee/agent]’s conduct caused [name of plaintiff] harm, you must decide whether that conduct justifies an award of punitive damages against [name of defendant] for [name of employee/agent]’s conduct. At this time, you must decide whether [name of plaintiff] has proved by clear and convincing evidence that [name of employee/agent] engaged in that conduct with malice, oppression, or fraud. The amount of punitive damages, if any, will be decided later.

“Malice” means that [name of employee/agent] acted with intent to cause injury or that [name of employee/agent]’s conduct was despicable and was done with a willful and knowing disregard of the rights or safety of another. A person acts with knowing disregard when the person is aware of the probable dangerous consequences of the person’s conduct and deliberately fails to avoid those consequences.

“Oppression” means that [name of employee/agent]’s conduct was despicable and subjected [name of plaintiff] to cruel and unjust hardship in knowing disregard of [his/her/nonbinary pronoun] rights.

“Despicable conduct” is conduct that is so vile, base, or contemptible that it would be looked down on and despised by reasonable people.

“Fraud” means that [name of employee/agent] intentionally misrepresented or concealed a material fact and did so intending to harm [name of plaintiff].

[Name of plaintiff] must also prove [one of] the following by clear and convincing evidence:

1.[That [name of employee/agent] was an officer, a director, or a managing agent of [name of defendant] who was acting on behalf of [name of defendant]; [or]]

2.[That an officer, a director, or a managing agent of [name of defendant] had advance knowledge of the unfitness of [name of employee/agent] and employed [him/her/nonbinary pronoun] with a knowing disregard of the rights or safety of others; [or]]

3.[That an officer, a director, or a managing agent of [name of defendant] authorized [name of employee/agent]’s conduct; [or]]

4.[That an officer, a director, or a managing agent of [name of defendant] knew of [name of employee/agent]’s wrongful conduct and adopted or approved the conduct after it occurred.]

An employee is a “managing agent” if the employee exercises substantial independent authority and judgment in corporate decisionmaking such that the employee’s decisions ultimately determine corporate policy.

Directions for Use

CACI No. 3942, Punitive Damages—Individual Defendant—Bifurcated Trial (Second Phase) may be used for the second phase of a bifurcated trial.

This instruction is intended for use when the plaintiff is seeking to hold only an employer or principal liable for punitive damages based on the conduct of a specific employee or agent. When the plaintiff is seeking punitive damages from both the employer/principal and the employee/agent, use CACI No. 3948, Punitive Damages—Individual and Corporate Defendants (Corporate Liability Based on Acts of Named Individual)—Bifurcated Trial (First Phase). When punitive damages are sought against a corporation or other entity for the conduct of its directors, officers, and managing agents, use CACI No. 3946, Punitive Damages—Entity Defendant—Bifurcated Trial (First Phase).

For an instruction explaining “clear and convincing evidence,” see CACI No. 201, Highly Probable—Clear and Convincing Proof.

If any of the alternative grounds for seeking punitive damages are inapplicable to the facts of the case, they may be omitted.

In an appropriate case, the jury may be instructed that a false promise or a suggestion of a fact known to be false may constitute a misrepresentation as the word “misrepresentation” is used in the instruction’s definition of “fraud.”

Sources and Authority

When Punitive Damages Permitted. Civil Code section 3294.

Deferral of Financial Condition Evidence to Second Stage. Civil Code section 3295(d).

“[E]vidence of ratification of [agent’s] actions by [defendant], and any other findings made under Civil Code section 3294, subdivision (b), must be made by clear and convincing evidence.” (Barton v. Alexander Hamilton Life Ins. Co. of America (2003) 110 Cal.App.4th 1640, 1644 [3 Cal.Rptr.3d 258].)

“[Section 3295(d)] affects the order of proof at trial, precluding the admission of evidence of defendants’ financial condition until after the jury has returned a verdict for plaintiffs awarding actual damages and found that one or more defendants were guilty of ‘oppression, fraud or malice,’ in accordance with Civil Code section 3294.” (City of El Monte v. Superior Court (1994) 29 Cal.App.4th 272, 274–275 [34 Cal.Rptr.2d 490].)

“Evidence of the defendant’s financial condition is a prerequisite to an award of punitive damages. In order to protect defendants from the premature disclosure of their financial position when punitive damages are sought, the Legislature enacted Civil Code section 3295.” (City of El Monte, supra, 29 Cal.App.4th at p. 276.)

“[C]ourts have held it is reversible error to try the punitive damages issue to a new jury after the jury which found liability has been excused.” (Rivera v. Sassoon (1995) 39 Cal.App.4th 1045, 1048 [46 Cal.Rptr.2d 144].)

“Under the statute, ‘malice does not require actual intent to harm. [Citation.] Conscious disregard for the safety of another may be sufficient where the defendant is aware of the probable dangerous consequences of his or her conduct and he or she willfully fails to avoid such consequences. [Citation.] Malice may be proved either expressly through direct evidence or by implication through indirect evidence from which the jury draws inferences. [Citation.]’ ” (Pfeifer v. John Crane, Inc. (2013) 220 Cal.App.4th 1270, 1299 [164 Cal.Rptr.3d 112].)

“Used in its ordinary sense, the adjective ‘despicable’ is a powerful term that refers to circumstances that are ‘base,’ ‘vile,’ or ‘contemptible.’ As amended to include this word, the statute plainly indicates that absent an intent to injure the plaintiff, ‘malice’ requires more than a ‘willful and conscious’ disregard of the plaintiffs’ interests. The additional component of ‘despicable conduct’ must be found.” (College Hospital, Inc. v. Superior Court (1994) 8 Cal.4th 704, 725 [34 Cal.Rptr.2d 898, 882 P.2d 894], internal citations omitted.)

“Section 3294 is no longer silent on who may be responsible for imputing punitive damages to a corporate employer. For corporate punitive damages liability, section 3294, subdivision (b), requires that the wrongful act giving rise to the exemplary damages be committed by an ‘officer, director, or managing agent.’ ” (White v. Ultramar, Inc. (1999) 21 Cal.4th 563, 572 [88 Cal.Rptr.2d 19, 981 P.2d 944].)

“[I]n performing, ratifying, or approving the malicious conduct, the agent must be acting as the organization’s representative, not in some other capacity.” (College Hospital, Inc., supra, 8 Cal.4th at p. 723.)

“[T]he concept [of managing agent] assumes that such individual was acting in a corporate or employment capacity when the conduct giving rise to the punitive damages claim against the employer occurred.” (College Hospital, Inc., supra, 8 Cal.4th at p. 723.)

“No purpose would be served by punishing the employer for an employee’s conduct that is wholly unrelated to its business or to the employee’s duties therein.” (College Hospital, Inc., supra, 8 Cal.4th at pp. 723–724.)

“[T]he determination of whether certain employees are managing agents ‘ “does not necessarily hinge on their ‘level’ in the corporate hierarchy. Rather, the critical inquiry is the degree of discretion the employees possess in making decisions … .” ’ ” (Powerhouse Motorsports Group, Inc. v. Yamaha Motor Corp., U.S.A. (2013) 221 Cal.App.4th 867, 886 [164 Cal.Rptr.3d 811].)

“Although it is generally true … that an employee’s hierarchy in a corporation is not necessarily determinative of his or her status as a managing agent of a corporation, evidence showing an employee’s hierarchy and job duties, responsibilities, and authority may be sufficient, absent conclusive proof to the contrary, to support a reasonable inference by a trier of fact that the employee is a managing agent of a corporation.” (Davis v. Kiewit Pacific Co. (2013) 220 Cal.App.4th 358, 370 [162 Cal.Rptr.3d 805].)

“[W]e conclude the Legislature intended the term ‘managing agent’ to include only those corporate employees who exercise substantial independent authority and judgment in their corporate decisionmaking so that their decisions ultimately determine corporate policy. The scope of a corporate employee’s discretion and authority under our test is therefore a question of fact for decision on a case-by-case basis.” (White, supra, 21 Cal.4th at pp. 566–567.)

“In order to demonstrate that an employee is a true managing agent under section 3294, subdivision (b), a plaintiff seeking punitive damages would have to show that the employee exercised substantial discretionary authority over significant aspects of a corporation’s business.” (White, supra, 21 Cal.4th at p. 577.)

“ ‘[C]orporate policy’ is the general principles which guide a corporation, or rules intended to be followed consistently over time in corporate operations. A ‘managing agent’ is one with substantial authority over decisions that set these general principles and rules.” (Cruz v. Homebase (2000) 83 Cal.App.4th 160, 167–168 [99 Cal.Rptr.2d 435].)

“The key inquiry thus concerns the employee’s authority to change or establish corporate policy. The fact that an employee has a supervisory position with the power to terminate employees under his or her control does not, by itself, render the employee a managing agent. Nor does the fact that an employee supervises a large number of employees necessarily establish that status.” (CRST, Inc. v. Superior Court (2017) 11 Cal.App.5th 1255, 1273 [218 Cal.Rptr.3d 664].)

“ ‘[R]atification’ is the ‘[c]onfirmation and acceptance of a previous act.’ A corporation cannot confirm and accept that which it does not actually know about.” (Cruz, supra, 83 Cal.App.4th at p. 168.)

“For purposes of determining an employer’s liability for punitive damages, ratification generally occurs where, under the particular circumstances, the employer demonstrates an intent to adopt or approve oppressive, fraudulent, or malicious behavior by an employee in the performance of his job duties.” (College Hospital, Inc., supra, 8 Cal.4th at p. 726.)

“Corporate ratification in the punitive damages context requires actual knowledge of the conduct and its outrageous nature.” (College Hospital, Inc., supra, 8 Cal.4th at p. 726.)

Secondary Sources

6 Witkin, Summary of California Law (11th ed. 2017) Torts, §§ 1752–1756
California Tort Damages (Cont.Ed.Bar 1988) Punitive Damages, §§ 14.13–14.14, 14.23
4 Levy et al., California Torts, Ch. 54, Punitive Damages, §§ 54.07, 54.24[4][d] (Matthew Bender)
15 California Forms of Pleading and Practice, Ch. 177, Damages, § 177.51 (Matthew Bender)
6 California Points and Authorities, Ch. 64, Damages: Tort, § 64.24 et seq. (Matthew Bender)