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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IN THE UNITED STATES DISTRICT COURT

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FOR THE EASTERN DISTRICT OF CALIFORNIA

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1:09-cv-00906 AWI MJS
ONIONS ETC., INC., et al.,

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ORDER REGARDING PRESENTATION OF
Plaintiffs, PUNITIVE DAMAGES
(ECF No. 931)

v.
Z&S FRESH, INC., et al.,
Defendants.

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Fresno Madera Federal Land Bank (“Land Bank”) filed a brief challenging Aron

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and Carrie Margosians’ (“Margosians”) ability to seek punitive damages against the Land

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Bank. The Court heard oral argument on the issue on December 18, 2015, and on

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December 22, 2015, issued an order finding that the Margosians were not entitled to

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seek punitive damages against the Land Bank in light of In re Sparkman, 703 F.2d 1097

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(9th Cir. 1983). (Order, ECF No. 931.)

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However, in the December 22, 2015 order, the Court requested supplemental

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briefing from the parties regarding proposals for proceeding in a manner that might avoid

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retrial on punitive damages if the Margosians prevail at trial and the Ninth Circuit

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overturns Sparkman on appeal. (ECF No. 931.) The parties filed supplemental briefs on

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January 22, 2016. (ECF Nos. 933-34.)

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The Land Bank denies that any valid claim for punitive damages exists in this

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case. It further argues that even if there were a valid claim, the likelihood of all

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prerequisites to seeking such an award occurring is too small to justify providing for that

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possibility at trial. Further, the Land Bank contends it would be prejudiced by having

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potentially to litigate and resolve that issue when the Court acknowledges that a verdict

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favorable to the Margosians would have to be vacated under controlling Ninth Circuit

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law.

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The Margosians, unsurprisingly, argue that the Court has the authority to, and

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should, allow a jury to hear the punitive damage claim. They claim that it is within the

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Court’s inherent case management powers to so proceed and then enter judgment as a

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matter of law in favor of the Land Bank under Fed. R. Civ. P. 50 should the jury return a

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punitive damage award in the Margosians’ favor.

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Upon review, the Court will allow the Margosians to pursue a punitive damages

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award at trial under the following limited circumstances:

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efficiency, the Court will bifurcate from issues of general damages and other relief the

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Margosian’s claims of liability for and the amount of punitive damages. The latter two

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issues shall be addressed to and by the jury only after the former are resolved. That is

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to say, if and only if the Margosians obtain a verdict for actual damages shall the Court

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proceed to a second phase of trial addressing the propriety, Sparkman aside, and

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amount of punitive damages. By proceeding in this manner, if the Margosians do not

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succeed in proving liability on their counterclaims or if they opt instead for purely

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equitable relief, neither the Court, the jury, or the Land Bank will be burdened with the

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need to address the punitive damage claim. If, on the other hand, the Margosians

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prevail on a legal basis which, but for Sparkman, would give rise to the possibility of an

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award of punitive damages, it would be most efficient for the Court and all the parties to

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have their entitlement to it and the amount thereof determined by the same jury which

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hears the underlying case and to do so immediately after conclusion of the underlying

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case. The Court does not see any meaningful prejudice to the Land Bank in having to
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As a matter of judicial

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spend the additional time addressing the punitive damage issue in the manner specified

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above if the need should arise; any prejudice would be outweighed by the benefit to all

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of not having to reconvene the same or a new jury to try a punitive damage claim in the

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event Sparkman is overruled.

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IT IS SO ORDERED.

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Dated:

February 1, 2016

/s/

Michael J. Seng

UNITED STATES MAGISTRATE JUDGE
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