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$5.7 Million Jury Verdict for Intentional Infliction of Emotional Distress

May 1, 2015 –

Court of Appeal Affirm’s Ted Mathew’s $5.7 Million Jury Verdict For Intentional Infliction of Emotional Distress

Today, the California Court of Appeal reversed a trial court ruling and reinstated a $5.7 Million jury verdict that Charles “Ted” Mathews obtained on behalf Dr. Michael W. Fitzgibbons. Commenting about this victory, Andrew H. Friedman of Helmer Friedman LLP, said “Ted’s victory today exemplifies why we wanted him to join our law firm. We think that Ted is one of the premier trial attorneys on the West Coast and we could not be happier that he is working with us.”

Mr. Mathews’ client, Dr. Fitzgibbons, sued his former employer, Integrated Healthcare Holdings, Inc. (“IHHI”), for intentional infliction of emotional distress based on the conduct of IHHI’s chief executive officer (“CEO”). At trial, the jury impliedly found that IHHI’s CEO carried out his threat to “humble” Dr. Fitzgibbons by having him arrested after arranging for a loaded handgun to be planted in his car. The jury also impliedly found the CEO caused Dr. Fitzgibbons’s daughter to be in a serious auto accident after one of her tires was slashed. The CEO retaliated against Dr. Fitzgibbons to punish him for his outspoken opposition to IHHI’s acquisition of the hospital where Dr. Fitzgibbons had just completed a term as chief of staff, and also Dr. Fitzgibbons’s success in an earlier lawsuit that resulted in a $150,000 attorneys fee award against IHHI. Accordingly, the jury found in favor of Dr. Fitzgibbons and awarded him $5.7 million in compensatory and punitive damages on his intentional infliction of emotional distress claim against IHHI.

Following the trial, the trial court granted IHHI’s motion for a judgment notwithstanding the verdict because it found IHHI was not vicariously liable for its CEO’s misconduct under the respondeat superior doctrine. According to the trial court, the CEO acted outside the scope of his employment because he held a personal grudge against Fitzgibbons and therefore his conduct was not reasonably foreseeable.

The Court of Appeal reversed and reinstated the jury’s verdict because foreseeability of the CEO’s conduct is not the exclusive test for determining the employer’s vicarious liability for an employee’s torts. An employee also acts within the scope of employment when his or her tort is engendered by or arises from a dispute that relates to the employer’s business. Substantial evidence supports the jury’s implied finding the CEO retaliated against Dr. Fitzgibbons based on a dispute relating to IHHI’s acquisition and operation of the hospital, and the trial court’s finding the CEO acted out of a personal grudge impermissibly supplants the jury’s determination on the weight and credibility of the evidence.

The Court of Appeal decision can be found here.

Staff2018-04-12T13:45:55-08:00May 1st, 2015|Case Update, employment law, Front Page News, retaliation|Comments Off

Court of Appeal Rules That Fannie Mae’s Arbitration Agreement Is Unlawful
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Court of Appeal Rules That Fannie Mae’s Arbitration Agreement Is Unlawful

Andrew Friedman, Case Update, discrimination, Front Page News, race discrimination, retaliation, wrongful termination

Court of Appeal Rules That Fannie Mae’s Arbitration Agreement Is Unlawful

Helmer Friedman LLP, announced today that the California Court of Appeal, Fourth Appellate District, has held that Fannie Mae’s arbitration agreement is substantively unconscionable and unenforceable. In this lawsuit, Los Angeles-based Helmer Friedman LLP and Washington, D.C-based co-counsel Bernabei & Wachtel, PLLC, represent Cecelia Carter with respect to her claims of wrongful termination, race discrimination and retaliation. See Carter v. Fannie Mae, No. 30-2013-00647896-CU-WT-CJC (Orange County Sup. Ct., filed May 3, 2013). According to the Complaint, Ms. Carter reported her concern that several Fannie Mae REO Foreclosure Specialists in the Irvine, California office had allegedly solicited illegal kickbacks from brokers in exchange for assigning Fannie Mae REO listings to those brokers. Shortly after, Fannie Mae initiated an investigation into Ms. Carter’s performance and then, on May 4, 2011, terminated her without explanation. On March 26, 2013, a federal grand jury charged Armando Granillo, one of the REO Foreclosure Specialists from the Irvine office, with three counts of “honest services” wire fraud for allegedly soliciting kickbacks from a real estate broker in Tucson, Arizona, in exchange for providing him with foreclosed properties to sell on behalf of Fannie Mae. On August 4, 2014, Mr. Granillo was sentenced to 15 months in federal prison for his role in the kickback scheme. For more information about Mr. Granillo’s conviction, see http://www.latimes.com/business/money/la-fi-fannie-kickbacks-sentencing-20140804-story.html

After Ms. Carter filed her Complaint, Fannie Mae moved to compel arbitration. The Superior Court denied Fannie Mae’s motion, holding that defendant failed to satisfy its burden of establishing that Ms. Carter and Fannie Mae entered into an arbitration agreement. The Superior Court found that, although the Offer Letter referenced the arbitration policy, Fannie Mae did not include the arbitration agreement with its Offer Letter and did not tell her where to find it; Fannie Mae then revoked the Offer letter; and Fannie Mae’s subsequent offer of employment did not contain or reference an arbitration provision. Fannie Mae appealed the decision to the Court of Appeal, Fourth District, Division Three.

The Court of Appeal upheld the lower court’s decision on other grounds, holding that Fannie Mae’s arbitration agreement was substantively unconscionable because it was inherently one-sided in that it exempted the types of claims likely to be filed by Fannie Mae, but included the types of claims likely to be filed by the employee. See Carter v. Fannie Mae, No. G049112, 2014 WL 4212622 (Cal. App. 4th Dist. Aug. 26, 2014). The arbitration agreement covered “all” claims an employee might make involving a legally protected right relating directly or indirectly to the employee’s employment, but exempted “any claim made in connection with workers’ compensation benefits, unemployment compensation benefits, or under any of Fannie Mae’s employee welfare benefits, ERISA, or pension plans, or to any claim of unfair competition, disclosure of trade secrets, or breach of trust or fiduciary duty.” During oral argument, Fannie Mae’s counsel emphasized the aspects of the agreement it claimed were beneficial to the employee. However, the Court of Appeal held that “

[i]t makes no difference that, arguably, the dispute resolution policy isn’t entirely one-sided” and found that the allegedly positive aspects of the agreement do not “save the agreement as a whole when it contains other provisions that have been clearly held to be unconscionable in the case law.”

“We are very pleased that the Court of Appeal rejected Fannie Mae’s attempt to force Ms. Carter into arbitration,” commented Ms. Loveless. “For years, employers have attempted to destroy one of our Country’s greatest institution – the jury trial – by forcing employees and consumers into secret tribunals that favor large corporations over individuals. The founders of our Country enshrined the right to a jury trial in our Constitution and corporations should not be allowed to take that right away.” The Court of Appeal’s decision may also significantly affect the ability of other Fannie Mae employees to bring their claims in court, rather than be forced into arbitration.

For a PDF copy of the Court of Appeal decision, click here.

For additional information or to report unlawful conduct on the part of Fannie Mae, contact:

Andrew H. Friedman