Onions Etc., Inc. et al v. Z & S Fresh, Inc. et al

Filing 938

Order Regarding Presentation Of Punitive Damages ECF No. 931 , signed by Magistrate Judge Michael J. Seng on 2/1/2016. (Yu, L)

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1 2 3 4 5 6 7 IN THE UNITED STATES DISTRICT COURT 8 FOR THE EASTERN DISTRICT OF CALIFORNIA 9 10 11 1:09-cv-00906 AWI MJS ONIONS ETC., INC., et al., 12 13 14 15 ORDER REGARDING PRESENTATION OF Plaintiffs, PUNITIVE DAMAGES (ECF No. 931) v. Z&S FRESH, INC., et al., Defendants. 16 17 Fresno Madera Federal Land Bank (“Land Bank”) filed a brief challenging Aron 18 and Carrie Margosians’ (“Margosians”) ability to seek punitive damages against the Land 19 Bank. The Court heard oral argument on the issue on December 18, 2015, and on 20 December 22, 2015, issued an order finding that the Margosians were not entitled to 21 seek punitive damages against the Land Bank in light of In re Sparkman, 703 F.2d 1097 22 (9th Cir. 1983). (Order, ECF No. 931.) 23 However, in the December 22, 2015 order, the Court requested supplemental 24 briefing from the parties regarding proposals for proceeding in a manner that might avoid 25 retrial on punitive damages if the Margosians prevail at trial and the Ninth Circuit 26 overturns Sparkman on appeal. (ECF No. 931.) The parties filed supplemental briefs on 27 January 22, 2016. (ECF Nos. 933-34.) 28 1 1 The Land Bank denies that any valid claim for punitive damages exists in this 2 case. It further argues that even if there were a valid claim, the likelihood of all 3 prerequisites to seeking such an award occurring is too small to justify providing for that 4 possibility at trial. Further, the Land Bank contends it would be prejudiced by having 5 potentially to litigate and resolve that issue when the Court acknowledges that a verdict 6 favorable to the Margosians would have to be vacated under controlling Ninth Circuit 7 law. 8 The Margosians, unsurprisingly, argue that the Court has the authority to, and 9 should, allow a jury to hear the punitive damage claim. They claim that it is within the 10 Court’s inherent case management powers to so proceed and then enter judgment as a 11 matter of law in favor of the Land Bank under Fed. R. Civ. P. 50 should the jury return a 12 punitive damage award in the Margosians’ favor. 13 Upon review, the Court will allow the Margosians to pursue a punitive damages 14 award at trial under the following limited circumstances: 15 efficiency, the Court will bifurcate from issues of general damages and other relief the 16 Margosian’s claims of liability for and the amount of punitive damages. The latter two 17 issues shall be addressed to and by the jury only after the former are resolved. That is 18 to say, if and only if the Margosians obtain a verdict for actual damages shall the Court 19 proceed to a second phase of trial addressing the propriety, Sparkman aside, and 20 amount of punitive damages. By proceeding in this manner, if the Margosians do not 21 succeed in proving liability on their counterclaims or if they opt instead for purely 22 equitable relief, neither the Court, the jury, or the Land Bank will be burdened with the 23 need to address the punitive damage claim. If, on the other hand, the Margosians 24 prevail on a legal basis which, but for Sparkman, would give rise to the possibility of an 25 award of punitive damages, it would be most efficient for the Court and all the parties to 26 have their entitlement to it and the amount thereof determined by the same jury which 27 hears the underlying case and to do so immediately after conclusion of the underlying 28 case. The Court does not see any meaningful prejudice to the Land Bank in having to 2 As a matter of judicial 1 spend the additional time addressing the punitive damage issue in the manner specified 2 above if the need should arise; any prejudice would be outweighed by the benefit to all 3 of not having to reconvene the same or a new jury to try a punitive damage claim in the 4 event Sparkman is overruled. 5 6 IT IS SO ORDERED. 7 8 Dated: February 1, 2016 /s/ Michael J. Seng UNITED STATES MAGISTRATE JUDGE 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 3

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