The opinion of the court was delivered by: WATSON
James L. Watson, Judge United States Court of International Trade, sitting in by designation.
This matter comes before the Court upon certain remaining prejudgment issues, specifically plaintiffs' claims in Counts 1 and 2 for statutory punitive damages, pursuant to Section 706(b) of the Equal Credit Opportunity Act, 15 U.S.C. § 1691e(b) (1982), and the motion of defendant Key Bancshares of Maine, Inc. for directed verdict on plaintiff Joseph Ricci's claim in Count 10 for exemplary damages under Maine common law.
This case proceeded to trial on nine separate counts, arising from the decision of the defendant banks to terminate their lending relationship with the plaintiffs. The plaintiffs were Joseph J. Ricci, Gerald E. Davidson and their various wholly-owned corporations (see post, note 6). The defendants were Key Bank of Southern Maine, Inc. f/k/a Depositors Trust Company of Southern Maine, Inc. ("Depositors-Southern"); Key Bank of Central Maine, Inc. f/k/a Depositors Trust Company of Augusta, Inc.; and Key Bancshares of Maine, Inc. ("Key Bancshares") f/k/a Depositors Corporation, the holding company of the other two defendant banks. Five counts alleged violations of federal statutory provisions, and four counts alleged pendent claims under the common law of the State of Maine. Different plaintiffs and defendants were named in the various counts. At the close of their case, the plaintiffs voluntarily dismissed one of the federal counts, brought pursuant to 42 U.S.C. § 1981 (1982) (Count 12), and the defendants jointly moved for a directed verdict on all remaining counts. The Court initially reserved decision and later granted the defendants' motion on two of the federal counts, brought under the Fair Credit Reporting Act, 15 U.S.C. §§ 1681-1681t (1982) (Counts 3 and 4).
The remaining six counts were thereafter submitted to the jury.
The plaintiffs' two remaining federal counts, Counts 1 and 2, alleged violations of distinct provisions of the Equal Credit Opportunity Act, 15 U.S.C. § 1691-1691f (1982). Count 1 alleged that the defendants discriminated against the plaintiffs on the basis of Joseph Ricci's national origin, in violation of § 1691(a). Count 2 alleged that defendant Depositors-Southern took adverse action against the plaintiffs but failed to provide a timely, written "statement of reasons", in violation of § 1691(d). In each of these counts, plaintiffs sought an award of statutory "punitive" damages, in addition to actual damages. Under § 1691e(b), an award of punitive damages for a violation of the Act is limited to $ 10,000. Courts generally have held that such punitive damages may not be awarded unless a plaintiff demonstrates by a preponderance of the evidence that the defendant's violation was "wanton, malicious or oppressive," or that the defendant at least acted with "reckless disregard of the requirements of the law." See Fischl v. General Motors Acceptance Corp., 708 F.2d 143, 148 (5th Cir. 1983); Anderson v. United Finance Co., 666 F.2d 1274, 1278 (9th Cir. 1982); Sayers v. General Motors Acceptance Corp., 522 F. Supp. 835, 841-42 (W.D.Mo. 1981); Shuman v. Standard Oil Co., 453 F. Supp. 1150, 1154-55 (N.D. Cal. 1978). Accordingly, in submitting Counts 1 and 2 to the jury, the Court instructed the jury to determine whether any defendant whose conduct it found to violate the requirements of the Equal Credit Opportunity Act, acted maliciously, wantonly, oppressively, or with reckless disregard of the law in committing the violation. The parties agreed that the amount of any award of punitive damages should be reserved for determination by the Court.
In two of their pendent state law claims, those for defamation (Count 9) and intentional infliction of emotional distress (Count 10),
plaintiffs sought an award of punitive, or exemplary, damages.
Although the Court permitted the jury to consider those claims, a bifurcated procedure was employed in which the jury was initially asked, on a special verdict form, to determine whether plaintiffs were entitled to an award of exemplary damages, but not to determine the amount of such damages; only if the jury answered affirmatively would plaintiffs then be permitted to introduce evidence of the defendants' net worth for the jury to consider in deciding the amount of exemplary damages to be imposed. This procedure was followed because the Court had some doubts as to whether the plaintiffs' showing with respect to the defendants' conduct was sufficient to sustain an award of exemplary damages, and the Court felt that disclosure of the defendants' net worth might prejudicially influence the jury's other determinations.
The special verdict form returned by the jury included the following findings:
Under Count 1, the jury found that defendant Key Bancshares of Maine, Inc. acted "maliciously, wantonly, oppressively, or with reckless disregard for the law" in discriminating against plaintiffs Joseph Ricci, Gerald Davidson and Golden Ark Enterprises.
(Answers to Count 1, questions 3, 6 and 9). Under Count 2, the jury found that the failure of defendant Key Bank of Southern Maine to provide a required statement of reasons to plaintiffs Ricci, Davidson and Golden Ark Enterprises was likewise committed "maliciously, wantonly, oppressively, or with reckless disregard for the law." (Answer to Count 2, question 4). Under Count 10, the jury indicated that it found by "clear and convincing evidence" that defendant Key Bancshares acted with "malice" in intentionally inflicting severe emotional distress upon plaintiff Joseph Ricci. (Answer to Part IV, question 10).
On the following day, the net worth of defendant Key Bancshares, was disclosed to the jury,
after which counsel presented closing arguments specifically addressed to the award of exemplary damages under Count 10. The Court then instructed the jury on factors to be considered in determining an appropriate award of exemplary damages and submitted the question to the jury. The jury returned a verdict of $ 12,500,000 in exemplary damages for the plaintiff,
after which defendant Key Bancshares renewed it motion for a directed verdict on the issue of exemplary damages.
The Court then announced on the record that the motion of Key Bancshares would be granted and that a reasoned opinion to that effect would follow.
Exemplary Damages under Count 10
The Court first turns to the question of whether an award of exemplary damages under Count 10 was proper under Maine law. In the recent case of Tuttle v. Raymond, 494 A.2d 1353 (Me. 1985), the Supreme Judicial Court of Maine adopted a stringent test to govern claims for exemplary damages.
Under this test, a plaintiff may recover exemplary damages based upon tortious conduct "only if he can prove by clear and convincing evidence that the defendant acted with malice." Id. at 1363.
"Clear and convincing evidence" requires the party with the burden of proof to "place in the ultimate factfinder an abiding conviction that the truth of his factual contentions are highly probable." Id. (quoting Taylor v. Commissioner of Mental Health, 481 A.2d 139, 153 (Me. 1984). The "clear and convincing evidence" standard is thus stricter than the "preponderance of the evidence" standard usually applied in a civil case, which requires proof only that a particular contention is more probable than not.
A plaintiff may establish the malice requirement by a showing of actual or implied malice. "Actual" malice exists when "the defendant's conduct is motivated by ill will toward the plaintiff." Tuttle, 494 A. 2d at 1361. "Implied" malice arises when deliberate conduct by the defendant is so outrageous that malice can be assumed. Id.
In considering defendant's motion for a directed verdict, the Court is guided by the general policy of Maine law that disfavors directed verdicts. See, e.g., Portland Valve, Inc. v. Rockwood Systems Corp., 460 A. 2d 1383, 1386 (Me. 1983). Nevertheless, the Supreme Judicial Court of Maine has made clear that factual findings for which the law requires support by "clear and convincing evidence" are subject to a greater degree of judicial scrutiny than findings which need only be established by a preponderance of the evidence. Taylor v. Commissioner of Mental Health, 481 A.2d at 153 (modifying Horner v. Flynn, 334 A.2d 194 (Me. 1975)).
This Court's review of the jury's finding of liability for punitive damages under Count 10 is governed by essentially the same standard that would apply to a review of that finding on appeal. See Butler v. Poulin, 500 A.2d 257, 260 & n.5 (Me. 1985). That standard is "whether the [jury] could reasonably have been persuaded that the required factual finding was or was not proved to be ...