Moniodis v. Cook

WEANT, Judge. The appellees, Marguerite Cook, Dorothy Ebner, Diane Ruggiero Leicht, and Iris Torres, brought this action in the Circuit Court for Baltimore City against their former employer, appellant Rite-Aid of Maryland, Inc. (Rite-Aid), and certain Rite-Aid officers, including appellants Anthony Moniodis and James H. Spevock. The appellees alleged that Rite-Aid required groups of employees to submit to polygraph examinations regarding inventory shortages or “shrinkage” at certain Rite-Aid Stores, thereby violating Md.Ann.Code art. 100, § 95 (1979). 1 They further claimed ⁷ that Rite-Aid enforced this policy, acting through Spevock and Moniodis, among others, by firing recalcitrant employees outright or by creating working conditions calculated to force these employees to resign. The appellees sought compensatory and punitive damages under two theories, “abusive” or wrongful discharge and intentional infliction of emotional distress.

Following trial in January, 1984, a jury found in favor of the appellee employees on both theories and awarded compensatory and punitive damages. The docket entries indicate that judgments were entered as follows: 6 March 1984 Judgment on verdicts absolute in favor of the plaintiff (Diane Ruggiero Leicht) for the sum of $100,000.00 compensatory damages as against all defendants; punitive damages in the amount of $1,000,000 (One Million) as against Defendant (Rite Aid of Maryland); $750.00 as against Defendant James Spevock; and $500.00 as against Defendant, Anthony Moniodis. In the case of Plaintiff, Marguerite Cook for the sum of $300,000.00 Compensatory damages as against all Defendants, punitive damages in the amount of $1,000,000 (One Million) as against Defendant, Rite Aid of Maryland; $750.00 as against Defendant, James ⁸ Spevock; and $500.00 as against Defendant, Anthony Moniodis. In the case of Plaintiff, Iris Torres for the sum of $200,-000 Compensatory damages as against all Defendants; punitive damages in the amount of $1,000,000 (One Million) as against Defendant, Rite Aid of Maryland; $750.00 as against Defendant, James Spevock; and $500.00 as against Defendant, Anthony Moniodis.

In the case of Plaintiff, Dorothy Ebner for the sum of $300,-000 Compensatory damages as against all Defendants, punitive damages in the amount of $1,000,000 (One Million) as against Defendant, Rite Aid of Maryland; $750.00 as against Defendant, James Spevock; and $500.00 as against Defendant Anthony Moniodis, all with interest from date and costs of suit. pn appeal, Rite-Aid and Moniodis present the following myriad of questions for our review: 1. Did the trial court err in submitting to the jury the issue of punitive damages based on “abusive discharges” which occurred in 1979 and 1980 when the Maryland courts did not acknowledge a cause of action for abusive discharge until July 16, 1981? 2. Did the trial court err in submitting the abusive discharge counts to the jury? 3. Did the trial court err in failing to grant a directed verdict for Defendant^] Moniodis [and Spevock] as to the abusive discharge counts? 4.

Did the trial court err in denying Appellants’ motion for directed verdict on the intentional infliction of emotional distress counts because there was insufficient evidence of severe emotional distress and extreme and outrageous conduct? 5. Did the trial court err when it denied Appellants’ motion for directed verdicts as to Appellees’ claims for ⁹ punitive damages because there was insufficient evidence of malicious conduct? 6. Was it reversible error for the trial court to allow the jury to consider against Appellant Rite Aid a former Assistant Attorney General’s hearsay account of a former Rite Aid employee’s alleged admissions? 7. Did the trial court commit reversible error in its evidentiary rulings allowing, but limiting, evidence of the prior Attorney General’s investigation and suit? 8.

Did the trial court err when it: (a) instructed the jury that an award could include damages for “future loss of wages and benefits” when there was no evidence of such loss; (b) instructed the jury that an award of compensatory damages “must include” damages for mental anguish, fright and other matters; (c) refused to instruct that Appellees, in order to recover for intentional infliction of emotional distress, had to prove that each of them had a severely disabling emotional response to the tortious conduct; and (d) refused to instruct that Maryland’s polygraph statute did not prohibit a transfer of, or reduction in hours for, an employee who refused to take a polygraph test? 9. Did the lower court abuse its discretion when it failed to set aside verdicts which it acknowledged to have been influenced by passion? Appellant Spevock puts forth the following additional question; others that restate the above issues are omitted. Did the Court err in denying Spevock’s Motion in Limine to exclude evidence of Spevock’s communications with Assistant Attorney General Redmond? 1. and 2.

The appellants argue that the trial court should not have submitted the wrongful discharge counts to the jury. In the alternative, they contend that the trial court should not ¹⁰ have permitted the jury to consider punitive damages under the wrongful discharge counts. In a case of first impression, the Court of Appeals recognized an employee’s cause of action for wrongful discharge as an exception to the general rule that an employment contract of indefinite duration may legally be terminated at any time and for any reason. Adler v. American Standard Corp., 291 Md. 81 , 432 A.2d 464 (1981).

The Adler Court stated that an “at will” employee may recover damages in tort or contract provided that the discharge violated some “clear mandate of public policy.” 291 Md. at 43, 432 A.2d at 471 . The Court also noted that such a mandate may come in many forms, including “legislative enactments, prior judicial decisions or administrative regulations.” 291 Md. at 45, 432 A.2d at 472 . There was testimony at trial regarding the termination of each of the appellees which, if believed by the jury, demonstrated that Rite-Aid and its officers violated Md.Ann.Code art. 100, § 95. For example, appellee Leicht testified that Moniodis told her that he fired her because she refused to submit to a polygraph examination.

There can be no question that the express legislative prohibition of this type of discharge satisfied the “clear mandate” requirement. Indeed, as noted in Adler, 291 Md. at 38-40 , 432 A.2d at 468-70 , other courts have recognized wrongful discharge actions where the discharge did not violate a criminal statute, but was in retaliation for the employee’s refusal to participate in an illegal scheme. E.g., Tameny v. Atlantic Richfield Co., 27 Cal.3d 167 , 610 P.2d 1330 , 164 Cal.Rptr. 839 (1980). The statute here is more explicit, condemning the very conduct upon which the appellees’ cause of action is based.

The appellants maintain that the polygraph law was not violated in the cases of appellees Cook, Ebner, and Torres. According to appellants, they were not fired but were simply given changes in established working hours, and/or transfers to distant stores, or other changes in ¹¹ working conditions. 2 We recently held that a constructive discharge may form the basis for a wrongful discharge action. Beye v. Bureau of National Affairs, 59 Md.App. 642, 653 , 477 A.2d 1197, 1203 , cert. denied, 301 Md. 639 , 484 A.2d 274 (1984). Under Beye , the proper approach is “discard form for substance” and consider whether the terminations, though perhaps formally effected by resignations, were in fact coerced by the employer.

Id., 59 Md.App. at 649 , 477 A.2d at 1201 . Appellants emphasize the absence of any express reference to constructive discharge in the polygraph law, but in our view this does not warrant abandonment of the analysis in Beye . The Beye court explained that “the applicable standard to determine if the resignation is, in effect, a constructive discharge, is whether the employer has deliberately caused or allowed the employee’s working conditions to become so intolerable that a reasonable person in the employee’s place would have felt compelled to resign.” 59 Md.App. at 653 , 477 A.2d at 1203 . Thus, constructive discharge is evaluated under both objective and subjective standards.

In the case at hand, former supervisory employees of Rite-Aid described a general company policy to impose such hour and location conditions as would make continued employment simply fruitless for those who refused polygraphs. One former manager said he was told, with regard to an employee other than the appellees, “[wjell, we can’t fire her outright, but what I want to do is cut her hours back until there is no longer any value for her to work here. She will become frustrated.” It is precisely this subterfuge the constructive discharge doctrine is intended to thwart. There was ample evidence that Rite-Aid intended to cause Cook, Ebner, and Torres to resign or to refuse to accept their new working conditions, so that the jury may quite properly have concluded that the subjective element in Beye ¹² was satisfied.

See 59 Md.App. at 651-52 , 477 A.2d at 1202 . Further, Rite-Aid actually imposed in each case such measures as would reasonably ensure its goal was achieved. Next, appellants argue that the polygraph statute should be interpreted to preclude this common law action because the statute includes a civil remedy for certain persons whose rights have been violated. 3 We disagree. The cases cited by the appellants in this regard are inapposite.

See Dillon v. Great Atlantic and Pacific Tea Co., 43 Md.App. 161 , 403 A.2d 406 (1979); Chekey v. BTR Realty, Inc., 575 F.Supp. 715 (D.Md.1983). In Chekey , the U.S. District Court dismissed the plaintiff employee’s common law claim under Adler on the ground that there was an available statutory civil remedy. 575 F.Supp. at 717 . See White v. Prince George’s County, 282 Md. 641 , 387 A.2d 260 (1978). We seriously doubt that a statutory remedy was indeed available to the appellees in the case at hand.

The polygraph statute authorized the Attorney General to prosecute cases referred by the Commissioner of Labor and Industry, who was in turn authorized to institute proceedings only on behalf of “any aggrieved applicant for employment,” rather than an established employee. 4 § 95(e) (emphasis added). Therefore, we conclude that section 95 does not preclude the appellees’ common law action. Rather, wrongful discharge is an appropriate means for enforcing the policy of this statute. We turn now to the appellants’ claim that punitive damages are inappropriate because the terminations of the appellees preceded the Adler decision, so that the appellants ¹³ lacked notice that their conduct was actionable under Maryland law.

There was evidence that Rite-Aid’s officers acted with actual malice. See infra Part 5. Uncontradicted testimony demonstrated that Rite-Aid was well aware of the prohibition in section 95 but consciously elected to disregard it. Rite-Aid’s claim of unfair surprise therefore seems very hollow indeed.

In contrast to the circumstances presented in the cases cited by appellants, e.g., Hansen v. Harrah’s, 675 P.2d 394, 397 (Nev.1984), the awards in this case, we believe, beneficially served the punitive and deterrent purposes of exemplary damages. 3. We shall now consider whether the trial court properly denied the additional motions of the individual appellants, Moniodis and Spevock, for directed verdicts on the wrongful discharge counts. In particular, Moniodis and Spevock argue that, as officers of the corporate employer, they cannot be liable for wrongful discharge and, in the alternative, the polygraph statute does not provide the requisite articulation of public policy because it refers only to violations by employers rather than by fellow employees. We believe the Adler court did not intend to create an additional cause of action for wrongfully discharged employees against an individual officer of a corporation, at least where the evidence does not show that the officer was clothed with the essential attributes of an employer.

The appellees point to the rule of agency law that an agent who commits “an act otherwise a tort is not relieved from liability by the fact that he acted at the command of the principal or on account of the principal.” Restatement (Second) of Agency § 343 (1958). This sheds no light on whether the conduct of Spevock and Moniodis was “otherwise a tort.” The Adler opinion indicates that the wrongful discharge may be brought under either tort or contract theories, 291 Md. at 42, 432 A.2d at 470-71 , so that the principle of privity of contract would not necessarily apply to restrict ¹⁴ liability to the employer. Nevertheless, Adler clearly indicates that wrongful discharge actions, whether in contract or otherwise, are recognized only in the context of an exception to the doctrine that a terminable at will contract may be ended by the parties for any reason. 291 Md. at 42-43, 432 A.2d at 470-71 . Admittedly, the terminable at will doctrine itself does not preclude actions between fellow employees; it regulates only the relationship between employer and employee.

The wrongful discharge exception to this doctrine should be defined and limited accordingly. In our view the Court of Appeals in Adler did not paint with so broad a brush as to create a cause of action against every fellow employee. This is not to say that an “officer” of a corporation or other business entity who plays a dominant role in the affairs of the corporate employer and who primarily formulates the corporation’s decision to fire a particular employee or group of employees should be permitted to take refuge behind the corporate veil in order to insulate himself from liability for his own wrongful conduct. An employee’s recourse against such an executive officer should not be limited to the executive’s stake in the business.

There is no evidence in this case that Spevock or Moniodis played such key positions. Spevock was Divisional Manager in charge of Rite-Aid’s Maryland stores and had some role in developing the polygraph policy at issue, but uncontradicted evidence reflects that a number of officers senior to Spevock also participated in this process and held the ultimate veto power over the policy. Moniodis actually put the policy into action against the appellees. He had little or no policy-making authority, and as a District Supervisor, had managerial control of only seven to twelve stores.

Therefore, the wrongful discharge verdicts against these individuals must be overturned. 4. In addition to wrongful discharge, the jury found the appellants liable for intentional infliction of emotional dis ¹⁵ tress. In first recognizing such a tort, the Court of Appeals identified four elements which a plaintiff must prove: (1) The conduct must be intentional or reckless; (2) The conduct must be extreme and outrageous; (3) There must be a causal connection between the wrongful conduct and the emotional distress; (4) The emotional distress must be severe. Harris v. Jones, 281 Md. 560, 566 , 380 A.2d 611, 614 (1977).

Appellants maintain that the above elements were not proven in the circuit court, requiring directed verdicts on the counts brought under Harris . We shall first consider whether the appellees produced evidence to support a finding that they suffered extreme emotional distress. In the words of the Harris court, there must be a “severely disabling emotional response,” so acute that ‘ “no reasonable man could be expected to endure it.’ ” 281 Md. at 570, 571 , 380 A.2d at 616 (emphasis in original) (quoting in part Restatement (Second) of Torts § 46 comment j (1965)). Such severity is measured by factors including the intensity of the response as well as its duration. 281 Md. at 571 , 380 A.2d at 616 .

Where extreme and outrageous conduct by the defendant is proven, this may be “important evidence that the distress existed.” Id. Finally, the distress must be a reasonable response. A plaintiff’s pre-existing susceptibility to emotional distress will not always preclude recovery. Where the plaintiff suffers “exaggerated and unreasonable” distress, however, the requirement is not satisfied, unless the defendant was aware of a particular sensitivity that caused the reaction.

Id., 281 Md. at 570 n. 2, 571, 380 A.2d at 616 & n. 2. There was no evidence at trial from which the jury could properly have concluded that Ebner, Leicht, and Torres suffered the sort of emotional disablement described in Harris . Though each testified that she was upset after the terminations, and suffered symptoms such as increased smoking, lost sleep, and “hives,” none indicated that she was emotionally unable, even temporarily, to carry on to ¹⁶ some degree with the daily routine of her life. They produced no expert testimony to that effect.

To the contrary, Ms. Torres, for example, said in letters to her husband that she was going through the worst times of her life during the period when Rite-Aid was forcing her out. She added that she was “disgusted.” She revealed, however, that she was managing by herself an entire household including several children and her father-in-law, as well as tending to renovations to the family home. Similarly, Ebner and Leicht by their testimony disclosed that they were depressed and unhappy during the period in question but seemed quite capable of tending to necessary matters. Therefore, their claims should not have been submitted to the jury.

The reaction of Ms. Cook is another matter altogether. It appears that Cook took her duties at Rite-Aid quite seriously. When Moniodis told her she would be transferred, her hours diminished, and her store keys taken, she was deeply disturbed. Her husband found her at home crying and wringing her hands.

There was evidence that she did suffer from a pre-existing nervous condition; her emotional state, however, deteriorated significantly after her termination. She took greater amounts of medication and began to sleep most of the time. She became a recluse, her husband testified, and did not “come out of it” for a year. Relatives came to the home to tend to household chores which Ms. Cook could no longer perform.

She took pains to avoid contact with neighbors who might ask her why she no longer worked at Rite-Aid. In our view, this evidence was more than enough to permit a jury finding that Ms. Cook was severely distressed. Even though there was evidence of some degree of pre-existing sensitivity on Ms. Cook’s part, we do not believe her reaction was necessarily unreasonable. Her response was in part attributable to her laudable (though in retrospect misplaced) devotion to Rite-Aid.

Further, the jury may properly have inferred that Moniodis was aware ¹⁷ of her dedication when he chose the working conditions that would cause her to leave. In addition to proving that she suffered severe distress, Ms. Cook was required to show that the appellants’ actions were “extreme and outrageous.” Harris, 281 Md. at 566 , 380 A.2d at 614 . The conduct must be “ ‘so outrageous in character, and so extreme in degree, as to go beyond all possible bounds of decency, and to be regarded as atrocious, and utterly intolerable in a civilized community’ liability does not extend “ ‘to mere insults, indignities, threats, annoyances, petty oppressions, or other trivialities.’ ” Id., 281 Md. at 567 , 380 A.2d at 614 (quoting Restatement (Second) of Torts § 46 comment d). Finally, in determining whether a defendant’s conduct amounted to “major outrage,” factors to be considered include (a) “ ‘the actor’s knowledge that the other is peculiarly susceptible to emotional distress,’ ” (b) the setting of the conduct, especially where an actor (such as an employer) is in a “peculiar position to harass the plaintiff,” and (c) the “personality of the individual to whom the misconduct is directed.” 281 Md. at 567-69 , 380 A.2d at 615 -16 (quoting in part Restatement, supra, § 46 comment f).

The circumstances surrounding Ms. Cook’s departure from Rite-Aid present a veritable witches’ brew of the factors described in Harris , so much so that the jury may quite justifiably have concluded that the conduct of Moniodis on Rite-Aid’s behalf was extreme and outrageous. The actors in this case were an employer and a supervisor, and as such their conduct must be “carefully scrutinized.” 281 Md. at 569 , 380 A.2d at 615 .