Free Reply to Response to Motion - District Court of Arizona - Arizona

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LITTLER MENDELSON
A PROFESSIONAL CORPORATION Camelback Esplanade 2425 East Camelback Road Suite 900 Phoenix, AZ 85016 602.474.3600

J. Mark Ogden, AZ Bar No. 017018 J. Greg Coulter; AZ Bar No. 016890 Kristin R. Culbertson; AZ Bar No. 020801 LITTLER MENDELSON A Professional Corporation Camelback Esplanade 2425 East Camelback Road, Suite 900 Phoenix, AZ 85016 Telephone: 602.474.3600 Facsimile: 602.957.1801 E-Mail: [email protected] [email protected] [email protected] Attorneys for Defendant Connecticut General Life Insurance Company UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA Equal Employment Opportunity Commission, Plaintiff, v. Connecticut General Life Insurance Company, Defendant. DEFENDANT'S REPLY IN SUPPORT OF ITS MOTION TO BIFURCATE PUNITIVE DAMAGES Case No. CIV'04 0627 PHX JAT

I.

INTRODUCTION Defendant Connecticut General Life Insurance Company ("CGLIC"), files its Reply

in Support of its Motion to Bifurcate Punitive Damages.

Contrary to the EEOC's

suggestion, separately trying the issue of punitive damages is not a waste of judicial resources. Allowing the EEOC to introduce evidence of CGLIC's financial condition ­ before there is any determination from the Court or a jury that Ms. Santa Cruz is entitled to consider an award of punitive damages ­ would unfairly prejudice CGLIC. Similarly, while evidence regarding CGLIC's efforts to comply with Title VII is relevant to the issue of punitive damages, this evidence is wholly irrelevant to the issue of liability. In contrast to

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LITTLER MENDELSON
A PROFESSIONAL CORPORATION Camelback Esplanade 2425 East Camelback Road Suite 900 Phoenix, AZ 85016 602.474.3600

CGLIC, the EEOC will not suffer any prejudice if the issue of liability and punitive damages is bifurcated during the trial of this case. Therefore, the Court should exercise its discretion and bifurcate the issue of punitive damages. II. LEGAL ANALYSIS A. Failure to Bifurcate Will Result in Unfair Prejudice to CGLIC.

The EEOC is correct when it states that "[a]ny evidence of Defendant's finances are likely to comprise only a very small portion of the evidence submitted to the jury at trial." That is, the primary question before the jury will be whether, during one of two telephone conversations CGLIC withdrew its offer of employment. As to this discrete issue, there are only a few relevant documents. Similarly, the relevant witnesses are limited and include Heather Casey, Sandra Gasche, and Ms. Santa Cruz. CGLIC believes, however, that once all of the evidence is considered, the jury will conclude that the offer of employment was not withdrawn because of Ms. Santa Cruz's pregnancy, or for any other reason. However, rather than simply addressing this issue in a straight-forward manner, the EEOC intends to introduce additional, irrelevant evidence in an effort to unfairly prejudice the jury during the trial. For example, the EEOC will seek to elicit testimony and admit documents regarding CGLIC's net worth. The EEOC has not articulated ­ and CGLIC is unable to fathom ­ how evidence of its financial condition is relevant for any purpose except the determination of punitive damages. While the mere allegation of conduct justifying a punitive damage award may permit the plaintiff to discover a defendant's financial condition before trial, courts have acknowledged the implicit danger in such broad discovery. In view of the citizen's right to privacy and the general desire of people not to divulge their wealth, on the one hand, and on the other hand, the ease with which a plausible claim for punitive damages may be made in many actions (including actions for double and treble damages authorized by various statutes), it is readily seen that a rule permitting unlimited examination before trial of a defendant as to his wealth in a punitive damage action could have unfortunate results. It could constitute undue pressure on defendants in such actions to compromise unwarranted claims. Nonetheless, an examination of the authorities in general across the nation reveals that the great majority of the States permit disclosure of a defendant's wealth in such actions and admit such evidence upon the trial.
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LITTLER MENDELSON
A PROFESSIONAL CORPORATION Camelback Esplanade 2425 East Camelback Road Suite 900 Phoenix, AZ 85016 602.474.3600

Rupert v. Sellers, 48 A.D.2d 265, 368 N.Y.S.2d 904, 911 (4th Dep't 1975). During trial, however, the danger of unfair prejudice becomes even more pronounced. The Rupert court acknowledged that evidence of a defendant's wealth during trial could induce the jury to find the defendant liable for punitive damages. Id. The Wyoming Supreme Court noted that "[e]vidence of wealth is irrelevant and prejudicial in most instances . . . ." Campen v. Stone, 635 P.2d 1121, 1128 (Wyo. 1981). In response to the problems of harassment, prejudice, and invasion into a defendant's privacy implicated by such broad discovery, several courts have established a bifurcated procedure for punitive damages. Rupert, 48 A.D. 265, 368 N.Y.S.2d at 911; Hodges v. S.C. Tool & Co., 833 S.W.2d 896 (Tenn. 1992) (in trial where punitive damages are sought, the court must bifurcate trial on motion of defendant). During the first phase, the fact-finder must determine liability for, and, amount of compensatory damages and liability for punitive damages. If defendant is found liable for punitive damages, the amount of such damages must be determined in the second phase. Transportation Ins. Co. v. Moriel, 879 S.W.2d 10, 30 (Tex. 1994). Several other states have enacted statutes allowing for a bifurcated trial if punitive damages are involved. See, e.g., Mo. Rev. Stat. § 510.263(1) (1987) (Missouri); Mont. Code Ann. § 27-1-221(7)(a) (1987) (Montana); Cal. Civ. Code. § 3295 (1987) (California); Ohio Rev. Code Ann. § 2307.80 (1988) (Ohio); Utah Code Ann. § 78-18-1(2) (1989) (Utah); Okla. Stat. Ann. Tit. 23 § 9.1 (1995) (Oklahoma); and Kan. Stat. Ann. 1992 Supp. § 60-3701 (Kansas). Generally under these various approaches, the jury first hears evidence relevant to liability for actual damages, the amount of actual damages, and liability for punitive damages, and then returns a verdict on these issues. If the jury answers the punitive damages liability question in the plaintiff's favor, the same jury is then presented evidence relevant only to the amount of punitive damages, and determines the proper amount of punitive damages. Moriel, 879 S.W.2d 10, 30.1 The Texas Supreme Court has determined that by CGLIC does not seek to bifurcate liability from all damages; only punitive damages. The punitive damages phase of the trial, if necessary, should immediately follow and be decided by the same jury.
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LITTLER MENDELSON
A PROFESSIONAL CORPORATION Camelback Esplanade 2425 East Camelback Road Suite 900 Phoenix, AZ 85016 602.474.3600

bifurcating only the amount of punitive damages, the risk of prejudice is eliminated, while the confusion and inefficiency that can result from a bifurcated trial is minimized. Id. In the present case, CGLIC faces a real possibility of unfair prejudice if the EEOC is allowed to introduce evidence of its financial condition before liability for punitive damages has been established. Indeed, CGLIC disputes whether a punitive damages instruction is appropriate. Punitive damages under Title VII can only be awarded "if the complaining party demonstrates that the respondent engaged in a discriminatory practice . . . with malice or with reckless indifference to the federally protected rights of an aggrieved individual." 42 U.S.C. § 1981a(b)(1). To award punitive damages, the individual's conduct must have been more than just intentional discrimination ­ instead they must have known they were acting in violation of federal law. Kolstad v. Am. Dental Ass'n, 527 U.S. 526, 535-36 (1999); Ngo v. Reno Hilton Resort Corp., 140 F.3d 1299, 1304 (9th Cir. 1998) ("Punitive damages may not be awarded . . . where a defendant's discriminatory conduct is merely `negligent in respect to the existence of a federally protected right.'" (quoting Hernandez-Tirado v. Artau, 874 F.2d 866, 870 (1st Cir.1989)). In the present case, the EEOC did not develop facts that would entitle Ms. Santa Cruz to punitive damages; therefore, no evidence related to CGLIC's financial condition is relevant or warranted. In addition to CGLIC's net worth, the EEOC will attempt to introduce other evidence that is only relevant to the issue of punitive damages. For example, the EEOC intends to elicit testimony regarding CGLIC's training efforts. However, the EEOC concedes that the extent of this testimony training is relevant only to the issue of punitive damages ­ not liability. How, when, where, and to what extent, CGLIC's provided training is irrelevant to the liability issue that will be presented to the jury. B. Bifurcation Will Promote Efficiency and Judicial Economy.

In its Response, the EEOC argues that bifurcating the liability and punitive damages phase of this trial will result in judicial inefficiency because some witnesses may have to testify twice and, therefore, they will be "inconvenienced." Contrary to the EEOC's

argument, bifurcation will not result in delay, additional expense, or prejudice to the EEOC.
Document 1344

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LITTLER MENDELSON
A PROFESSIONAL CORPORATION Camelback Esplanade 2425 East Camelback Road Suite 900 Phoenix, AZ 85016 602.474.3600

Rather, bifurcation has the potential for saving significant judicial resources and prevent unnecessary prejudice. First, the EEOC assumes that there will be a need for testimony regarding punitive damages, even before a jury has decided whether punitive damages are appropriate. Contrary to the EEOC's assumption, the jury or the Court may determine that the EEOC has failed to present sufficient evidence warranting punitive damages. If that is the case, then no witnesses will be required to testify about the issue of punitive damages, saving the Court and the jury significant time. Courts have lauded bifurcation for this reason. Union Carbide Corp. v. Montell, 28 F. Supp.2d 833, 837 (S.D.N.Y. 1998); Colon ex rel. Molina v. BIC USA, Inc., 199 F. Supp.2d 53, 98 (S.D.N.Y. 2001) ("a separate trial for liability may obviate a damages trial, thus conserving judicial resources"). If, however, the Court determines that the EEOC has presented sufficient evidence to allow the jury to consider the issue of punitive damages, then CGLIC anticipates putting on substantial evidence in support of its affirmative defense. Indeed, CGLIC believes that the prospect of punitive damages is the driving force in this litigation. While the EEOC argues that CGLIC's relationship with CIGNA itself suggests "deep pockets," the EEOC effectively concedes that it will focus its efforts on attempting to punish CGLIC by proving that Ms. Santa Cruz is entitled to punitive damages. The reason for this is clear: Ms. Santa Cruz's claim for back pay is minimal. Essentially, the EEOC has little in actual damages ­ except for a punitive damages windfall. If the EEOC is allowed to elicit testimony relevant only to the issue of punitive damages, then CGLIC will have no choice but to put on extensive evidence of its good faith efforts to comply with Title VII, increasing the length of the liability phase of the trial. In fact, the EEOC suggests that only Ms. Casey, Ms. Gasche and Ms. Wroten will testify regarding punitive damages. This, however, fails to take into

account the evidence CGLIC intends to produce regarding its affirmative defense. All of this evidence, however, may be obviated if bifurcation is granted. Indeed, one way in which bifurcation can "further convenience" is by parsing out the issues for examination by the fact-finder.
Document 1345

This purpose is served where, as here, the

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LITTLER MENDELSON
A PROFESSIONAL CORPORATION Camelback Esplanade 2425 East Camelback Road Suite 900 Phoenix, AZ 85016 602.474.3600

evidence regarding the liability and punitive damages issues in a given case does not significantly overlap. Where the two phases of the trial involve different types of evidence, bifurcation is preferable. Lagudi v. Long Island R.R., 775 F. Supp. 73, 74 (E.D.N.Y. 1991). As outlined above, the evidence on the issues of liability and punitive damages is not inextricably interwoven. III. CONCLUSION Unlike a typical trial, the issues surrounding Ms. Santa Cruz's discrimination claim are relatively straight-forward and uncomplicated. The witnesses who have relevant

knowledge regarding the telephone conversation allegedly withdrawing the offer of employment, as well as the potential exhibits, are limited. In contrast, the issues of whether Ms. Santa Cruz is entitled to punitive damages, whether CGLIC acted in good faith to comply with Title VII, and CGLIC's financial condition are more complicated and require additional witnesses and documents. CGLIC reasonably believes that testimony regarding the issue of punitive damages could easily eclipse the liability phase of the trial. These issues should be bifurcated to avoid unfair prejudice to CGLIC, to avoid juror confusion, and to preserve judicial resources. In contrast, bifurcation will not result in any prejudice to the EEOC. CGLIC respectfully requests that the Court grant its motion to bifurcate the liability and punitive damages phase of this trial. RESPECTFULLY SUBMITTED this 18th day of July, 2006.

s/ Kristin R. Culbertson J. Mark Ogden J. Greg Coulter Kristin R. Culbertson LITTLER MENDELSON, P.C. Attorneys for Defendant Connecticut General Life Insurance Company

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LITTLER MENDELSON
A PROFESSIONAL CORPORATION Camelback Esplanade 2425 East Camelback Road Suite 900 Phoenix, AZ 85016 602.474.3600

I hereby certify that I electronically transmitted the attached document to the Clerk's Office using the CM/ECF System for filing on this 18th day of July, 2006. I hereby certify that I mailed a copy of same to the following, this 18th day of July, 2006: Mary Jo O'Neill C. Emanuel Smith Katherine J. Kruse Equal Employment Opportunity Commission Phoenix District Office 3300 North Central Avenue, Suite 690 Phoenix, AZ 85012-9688 Attorneys for Plaintiff s/ Sharon Cooper
Firmwide:81306521.1 042081.1007

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