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Wichansky v. Zowine

United States District Court, D. Arizona

October 11, 2016

Marc A Wichansky, Plaintiff,
v.
David T Zowine, et al., Defendants.

          ORDER

          David G. Campbell United States District Judge

         This is the second order addressing Defendants' renewed motion for judgment as a matter of law and motion for a new trial. Docs. 568. The Court previously ruled on the motion with respect to Defendants Charles Johnson, Pat Shanahan, Martha Leon, and Mike Ilardo. Doc. 591. Although the Court addressed issues involving Defendant David Zowine, it did not rule on the liability and damages against David Zowine and his wife because they had filed for bankruptcy. Doc. 590. Because the bankruptcy stay has been lifted, the Court now resolves the remaining issues as to the Zowines. Because the trial concerned the conduct of David Zowine, and his spouse was named only for community property purposes, the remainder of this order will refer to Zowine in the singular.

         I. Incorporation by Reference.

         The Court incorporates by reference much of its prior order (Doc. 591) as to Zowine, including the following sections: Section I (background), Section II (legal standard), Section III (statute of limitations), Section IV (causation), Section V (fiduciary duty jury instructions), and Section VIII (compensatory damages). The Court will address the punitive damages issues that pertain to Zowine.

         II. Punitive Damages under Rules 50 and 59.

         Zowine argues that punitive damages are not appropriate because Plaintiff failed to adduce sufficient evidence that his conduct was “aggravated, outrageous, and performed with an ‘evil mind.'” Doc. 568 at 9. Zowine seeks relief under both Rules 50(b) and 59(a).

         Under Rule 50, a court can overturn a jury verdict only if there is no legally sufficient basis for the verdict. Costa v. Desert Palace, Inc., 299 F.3d 838, 859 (9th Cir. 2002). Under Rule 59(a), a court may appropriately consider a party's claim of excessive damages, Molski v. M.J. Cable, Inc., 481 F.3d 724, 729 (9th Cir. 2007), and order a new trial if the award is contrary to the clear weight of the evidence, Passantino v. Johnson & Johnson Consumer Prods., 212 F.3d 493, 510 n.15 (9th Cir. 2000).

         The Court cannot conclude that the jury's assessment of punitive damages against Zowine lacked a legally sufficient basis or was contrary to the clear weight of evidence. As described in Doc. 591, there was sufficient evidence to allow the jury to conclude that Zowine's conduct was aggravated, outrageous, and performed with an evil mind. Zowine was responsible for Zoel's medical billing division. Zowine supervised Defendants Charles Johnson and Martha Leon, the two individuals who were chiefly implicated in the medical billing fraud and whom the jury found culpable. There was evidence that Zowine was involved in covering up the medical billing fraud, and that he attempted to frame other individuals, including Plaintiff and Richard Eden.

         While Plaintiff was investigating the medical billing fraud, Zowine orchestrated and carried out a campaign to drive Plaintiff from the business. Zowine engaged in repeated hostile, demeaning, and profane actions toward Plaintiff, often in the presence of others. Zowine, who is large and imposing, physically assaulted Plaintiff, who is much smaller. Zowine recruited Charles Johnson to organize and execute a surreptitious office move. Zowine directed individuals to remove computers from Zoel's office.

         Examining the evidence in the light most favorable to Plaintiff, the jury reasonably could have concluded that Zowine's conduct was aggravated, outrageous, and performed with an evil mind. Plaintiff and Zowine were close friends and business associates, and Zowine was even Plaintiff's best man at his wedding. Zowine nonetheless plotted and executed a campaign of intimidation and harassment intended to drive Plaintiff from the business he co-owned with Zowine. This is more than mere “deadlock and infighting.” Doc. 568 at 9. This is sufficient to support an award of punitive damages.

         III. Constitutionality of the Punitive Damages.

         Zowine argues that the punitive damages award is constitutionally excessive. Doc. 568 at 10-12. Zowine seeks remittitur or a new trial for the punitive damages assessed against him.

         A. Legal Standard.

         “The purpose of punitive damages is not to compensate the plaintiff, but to express society's disapproval of outrageous conduct and to deter such conduct by the defendant and others in the future.” Hawkins v. Allstate Ins. Co., 733 P.2d 1073, 1080 (Ariz. 1987) (citations omitted). The Due Process Clause of the Fourteenth Amendment “imposes a substantive limit on the size of punitive damages awards.” Honda Motor Co., Ltd. v. Oberg, 512 U.S. 415, 420 (1994) (citations omitted). The Supreme Court has provided three guideposts for courts to use when reviewing punitive damages awards, only two of which are relevant here: “(1) the degree of reprehensibility of the defendant's misconduct; [and] (2) the disparity between the actual or ...


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