Tuesday, January 25, 2011

Howard v. City of Kansas City[1]

Opinion handed down January 25, 2011
Link to Mo. Sup. Ct. Opinion

The Supreme Court of Missouri held that a Kansas City municipal court judge is considered an “employee” under the Missouri Human Rights Act (MHRA). Additionally, as a matter of first impression, the court held that municipalities are liable for punitive damages under the MHRA just like any other employer.

I. Facts and Holding

When selecting municipal circuit judges in Kansas City, the Kansas City Charter mandates that a five-member Municipal Judicial Nominating Commission shall interview potential candidates and submit three names to the mayor and city council who then make the final selection by majority vote.[2] The charter’s specific language states that “‘[t]he Council will act to appoint one of the persons nominated by the Commission within sixty days of receipt of the panel from the Commission unless the Council chooses not to fill a vacancy.’”[3]

Municipal Judge Marsha Walsh retired on August 31, 2006.[4] Melissa Howard, the plaintiff in this case, was one of thirteen applicants to fill the vacancy left by Walsh.[5] The commission nominated and submitted the names of three Caucasian women, one of whom was Howard, to the city council.[6] Although the council acknowledged that each of them were well-qualified, the council rejected all three nominees by a 7 to 6 vote in its meeting on November 9, 2006.[7] Despite a meeting to reconsider its decision, the Council again rejected the nominees on December 14, 2006.[8] After the sixty-day window for filling the position had expired, the commission nominated the same three applicants, but the council rejected them once again.[9]

During this time, several council members had shown dissatisfaction with the commission’s nominees because were minorities.[10] Multiple statements were made at the council meetings expressing concern for the lack of diversity in the nominees.[11] Several council members and the mayor later testified that race was a factor in the decision to reject the nominees.[12]

Howard filed suit against Kansas City (“City”) under the Missouri Human Rights Act, alleging “that the City engaged in an unlawful employment practice during the municipal judge appointment process by refusing to even consider hiring her because of her race.”[13] Howard also alleged that she suffered from emotional distress because of the city’s actions and statements regarding the nomination, which had become public.[14] Specifically, she alleged that she suffered sudden weight loss, inability to sleep, stomach sickness, and distress regarding her career in the future.[15]

A jury awarded Howard $633,333 in compensatory damages and $1.5 million in punitive damages as well as attorney’s fees and interest.[16] On appeal, the Supreme Court of Missouri held that (1) Howard was an ‘employment applicant’ under the MHRA and was entitled to its protection; (2) an attorney’s testimony that he told the council that its actions were illegal was admissible as rebuttable evidence; (3) a blog about Howard’s past was inadmissible; (4) the MHRA provides for punitive damages against municipalities; (5) the evidence of punitive damages in this case was sufficient; (6) the city’s claim for error regarding the jury instructions on punitive damages was not properly preserved; and (7) there was sufficient evidence to support an award of attorney’s fees for Howard’s attorney.[17]

II. Legal Background

A. Applicability of the MHRA

The City argued that the MHRA’s definition of “employees” does not include municipal court judges and, therefore, the decision to reject the applicants was not an employment decision.[18] The court stated that the primary issue is “whether a municipal judge, as defined by the city charter, is an ‘employee’ and, if so, whether Howard was an employment applicant under the protection of the MHRA.”[19]

In pertinent part, section 213.055 of the MHRA states that “it shall be an unlawful employment practice . . . [f]or an employer, because of the race . . . of any individual: (a) To fail or refuse to hire . . . [or] (b) To limit, segregate, or classify . . . his employment applicants in any way which would deprive or tend to deprive any individual of employment opportunities . . . because of such individual’s race, color, religion, national origin, sex, ancestry, age or disability.”[20]

Under section 213.010(7), “the state, or any political subdivision thereof” is an “employer.”[21] However, the MHRA does not include a definition of “employee” or “employment applicants.”[22] The City contended that the applicants in this case are “public officials” rather than “employees” and should thus be treated like independent contractors.[23] The court looked at the plain meaning of the word “employee” as “‘one employed by another, usually in a position below the executive level and usually for wages’” to support its finding that municipal court judges are “employees” of the City.[24]

The City cited Sloan v. Bankers Life and Casualty Co. as support for its assertion that municipal court judges should be viewed as to independent contractors rather than “employees.”[25] In Sloan, an insurance salesman sued his employer under the MHRA, claiming that he had been discriminated against on the basis of his age.[26] The issue was whether Sloan was an independent contractor or an “employee.”[27] The court found Sloan to be an independent contractor for a number or reasons, including: Sloan’s contract with the company specifically stated he was an independent contractor; he was paid only through commissions; the company did not withhold any taxes; he was not provided with an office; he determined his own hours; and he provided his own transportation.[28] The Supreme Court of Missouri held that Sloan was not applicable to Howard because of factual differences.[29]

In determining whether someone is an independent contractor, the court stated that “independent contractors are typically hired to complete a specific task, use their own tools in completing their work, are paid a fixed sum on a by-the-job basis, and are not provided with benefits” and is “‘contract[] to perform work according to his own methods without being subject to the control of his employer except as to the result of his work.’”[30]

In contrast, Kansas City municipal judges work full time, are provided with supplies and an office, are paid a regular salary, must follow the law, show up when scheduled, and are subject to termination.[31] Therefore, the court determined, these judges are not “independent contractors.”[32] The court took note that municipal court judges are repeatedly referred to as “employees” on employment forms, which further supports a finding that municipal court judges are “employees” of the City rather than “independent contractors.”[33]

Finally, the court examined conflicting precedent from three other states regarding whether or not a municipal court judge should be considered an “employee” or “independent contractor.”[34] A Texas court and a Tennessee court held that as a public officials, judges are not “employees,” while a Kentucky court held that public officials are “employees.”[35] The Supreme Court of Missouri rejected the rationale used by the Texas and Tennessee courts because their state legislatures had expressly intended for their state civil rights acts to embody the federal civil rights act, which excludes certain “public officials” from its definition of “employees.”[36] However, since Missouri’s act expressed no intention to embody Title VII and excluded Title VII’s definition of “employee,” the court held that the Missouri legislature sought to omit the “public official” exception found in the federal act.[37] Following this analysis, the Supreme Court of Missouri held that a Kansas City municipal judge is an “employee” or an “employment applicant” under MHRA.[38]

B. Admissibility of McLarney’s Testimony

During the trial, Patrick McLarney, an attorney, testified that he had given the City Counsel his professional opinion that it would be an act of discrimination to reject the nominees solely because none of them were minorities.[39] On appeal, the City argued that the trial court erred when it allowed the testimony because it was improper opinion testimony, specifically, that it was evidence regarding an issue of law.[40] However, the Supreme Court of Missouri stated that the trial court had not admitted this evidence as opinion testimony but instead as rebuttal testimony of an earlier witness.[41] The earlier witness, the mayor, had testified that she had been “unaware it was unlawful to consider race when making an employment decision.”[42] Therefore, it was not an abuse of the trial court’s discretion to allow this rebuttal testimony.[43]

C. Admissibility of Evidence Regarding Howard’s Background

The City also argued that the trial court erred by refusing to admit certain evidence, specifically, an unsubstantiated internet blog which contained a story about Howard’s past, which some council members claimed raised concerns for them and was a reason that they voted to reject the nominees.[44] In other words, this evidence might have provided a race-neutral reason for the rejection. The Supreme Court of Missouri rejected this argument, stating that the trial court has broad discretion in admitting or denying prejudicial evidence that is unconfirmed hearsay, and since this evidence was only about Howard, it would still not justify the rejection of all three judicial nominees.[45]

D. Punitive Damages

The City argued that punitive damages should not have been imposed because the rule is that, in the absence of a statute authorizing them, punitive damages are not recoverable against a municipality.[46] Howard argued that the punitive damages rule, section 213.111.2, covers all employers and section 213.010(7) indicates that “employer” includes municipalities.[47]

The court first pointed out that the Missouri Courts of Appeals have uniformly held that municipalities are liable for punitive damages under the MHRA.[48] The City, however, cites to a case decided by the Court of Appeals for the Eighth Circuit, Kline v. City of Kansas City.[49] The Kline court, while acknowledging that the MHRA’s language provided for punitive damages when the various statutes were read in conjunction, held that because the imposition of punitive damages against a municipality was not contained in a single section, the presumption against punitive damages when a municipality is a defendant could not be overcome.[50]

The Supreme Court of Missouri stated that, after the appellate court decisions, the legislature could have altered the phrase “the state, or any political or civil subdivision” in section 213.010’s definition of “employer” if it did not want to continue to treat the state and its subdivisions, including municipalities, as it treats other “employers” for purposes of the MHRA.[51]

The court then reviewed the record and found that the council had made many statements about rejecting the nominees because they were not diverse.[52] The court found that this evidence was sufficient to allow for the jury to have considered punitive damages.[53]

E. Jury Instructions as to Future Damages

The City argued that the trial court’s instruction to the jury regarding future damages was in error because there was no evidence that Howard would suffer damages in the future.[54] The court’s instruction stated, “If you find in favor of plaintiff, then you must award plaintiff such sum as you believe will fairly and justly compensate plaintiff for any damages you believe plaintiff sustained and is reasonably certain to sustain in the future as a direct result of the occurrence mentioned in the evidence.”[55]

The court held that the City had not objected to the instruction before the jury had retired to consider its verdict.[56] Additionally, the City’s motion for a directed verdict contained no language regarding the sufficiency of the evidence of future damages.[57] Therefore, this point was not properly preserved for appellate review.[58]

F. Jury’s Verdict as to Compensatory Damages

The City argued that the trial court erred in upholding the verdict because it was not supported by the evidence.[59] Specifically, the City asserted that Howard was not entitled to front or back pay, but did not object when Howard’s counsel addressed this during closing argument.[60] The City also argued that the trial court should have ordered remittitur.[61] The court held that since the City did not object at the time the point was not properly preserved for appeal.[62] Additionally, the point was not preserved, nor was it addressed properly in the City’s brief, and therefore, the City had not established that the damage award was manifestly unjust in order to require remittitur.[63]

G. Attorney’s Fees Award

The City argued that the trial court erred in awarding certain attorney’s fees because those fees were incurred by Howard’s attorney in a different case against the City.[64] The court noted that this argument had already been presented to the trial court, at which point Howard’s attorney requested that any fees which solely related to the other case be excluded.[65] The trial court then based its decision to award attorney’s fees on this amended request for fees.[66] The Supreme Court of Missouri held that the City failed to show that the trial court abused its discretion in awarding these attorney’s fees.[67]

H. Dissent

Chief Justice William Ray Price, Jr. dissented in part.[68] The Chief Justice took issue with the punitive damages award.[69] He argued that, since punishment is supposed to be the objective of punitive damages, this idea is contrary to public policy when applied to a municipality.[70] This is because those who would bear the burden of the punishment, the taxpayers, are the people who are supposed to be benefitting from the public example that is supposed to be made of the wrongdoer.[71]

The Chief Justice argued that reading sections 213.111.2 and 213.010(7) in conjunction does not satisfy the longstanding rule that the statute must “specifically” provide for the imposition of punitive damages.[72] The Chief Justice agreed with the rationale of the Eighth Circuit in the Kline case and would have held that, “[f]or a statute to specifically provide for the imposition of punitive damages against a municipality or other governmental entity it must do so clearly and expressly in a single section, uninterrupted by other statutory provisions.”[73]

III. Comment

In Howard, the Supreme Court of Missouri made it clear that judges are considered “employees” under the MHRA.[74] In holding this way, the court specifically acknowledged the Missouri legislature’s intent to extend the definition of “employees” to public officials, in contrast to Title VII of the federal civil rights act, which excepts public officials from the definition of “employees.” Also, by rejecting the idea that a judge should be seen as an independent contractor, the court provided insight into how to determine whether an individual is an employee or an independent contractor. Finally, in this case of first impression, the court established clear precedent that punitive damages are available against municipalities under the MHRA.

Municipalities must be mindful of how they conduct all hiring processes for their various public officials, making sure to grant all applicants the equal protection ensured to them by the law. If municipalities violate the law regarding this issue in the future, the court has shown that the judiciary is able and willing to impose punitive damages to remedy this discriminatory behavior.

-Adam J. Wallach

[1] No. SC 90762, 2011 WL 265309 (Mo. 2011) (en banc).
[2] Id. at *1.
[3] Id. (quoting Charter of Kansas City, Missouri § 310 (2006)).
[4] Id.
[5] Id.
[6] Id.
[7] Id.
[8] Id.
[9] Id.
[10] Id.
[11] Id.
[12] Id. at *2.
[13] Id. at *3.
[14] Id.
[15] Id.
[16] Id.
[17] Id. at *8-16.
[18] Id. at *3.
[19] Id.
[20] Id. at *4 (quoting Mo. Rev. Stat. § 213.055.1) (emphasis added in original).
[21] Id. (quoting Mo. Rev. Stat. § 213.010(7)).
[22] Id.
[23] Id.
[24] Id. (quoting Webster’s Third New International Dictionary 743 (1993).
[25] Id. at *5 (citing Sloan v. Bankers Life & Casualty Co. 1 S.W.3d 555 (Mo. App. W.D. 1999).
[26] Id.
[27] Id.
[28] Id.
[29] Id.
[30] Id. (quoting State ex rel. MW Builders, Inc. v. Midkiff, 222 S.W.3d 267, 270 (Mo. 2007) (en banc).
[31] Id.
[32] Id. at *6.
[33] Id. at *7.
[34] Id.
[35] Id. (citing Thompson v. City of Austin, 979 S.W.2d 676 (Tex. App. 1998); Bredesen v. Tenn. Judicial Selection Comm’n, 214 S.W.3d 419 (Tenn. 2007)).
[36] Id. at *8.
[37] Id.
[38] Id.
[39] Id. at *9.
[40] Id.
[41] Id.
[42] Id.
[43] Id.
[44] Id. at *10.
[45] Id.
[46] Id. at *11.
[47] Id.
[48] Id.
[49] Id. (citing Kline v. City of Kansas City, 175 F.3d 660 (8th Cir. 1999)).
[50] Id.
[51] Id. at *12.
[52] Id. at *13.
[53] Id. at *14.
[54] Id.
[55] Id.
[56] Id.
[57] Id. at *15.
[58] Id.
[59] Id. at *16.
[60] Id.
[61] Id.
[62] Id.
[63] Id.
[64] Id.
[65] Id.
[66] Id.
[67] Id.
[68] Id. at *17.
[69] Id.
[70] Id.
[71] Id.
[72] Id.
[73] Id. at *17-18.
[74] Id. at *8.