Desilets v. Wal-Mart Stores

• Court: Court of Appeals for the First Circuit
• Decided: March 29, 1999
• Docket: 98-1049
• Status: Published

Opinion

USCA1 Opinion

                  United States Court of Appeals

                      For the First Circuit

                       ____________________


No. 98-1049



                     JAMES DESILETS, ET AL.,



                      Plaintiffs, Appellees,



                                v.



                      WAL-MART STORES, INC.,



                      Defendant, Appellant.



                       ____________________



           APPEAL FROM THE UNITED STATES DISTRICT COURT



                FOR THE DISTRICT OF NEW HAMPSHIRE



         [Hon. Shane Devine, Senior U.S. District Judge]



                       ____________________



                              Before



                      Boudin, Circuit Judge,



Keeton and McAuliffe, District Judges.



                      _____________________



     E. Tupper Kinder, with whom Nelson, Kinder, Mosseau & Gordon,

P.C. was on brief, for appellant.

     Charles L. Powell, with whom Shillen & Gray, P.A. was on

brief, for appellees.


____________________



                         March 29, 1999

                      ____________________



          McAULIFFE, District Judge.  The appellant, Wal-Mart

Stores, Inc., used hidden recording devices to tape its employees'

private conversations.  Plaintiffs, four former employees whose

conversations were recorded, sued.  Finding that Wal-Mart violated

Title III of the Omnibus Crime Control and Safe Streets Act of 1968

("Act"), 18 U.S.C.  2520, a jury awarded each plaintiff $20,000. 

In addition, the district judge awarded plaintiffs their reasonable

attorneys' fees and costs.

          Since the central issue is one of statutory construction,

we confine the description of what happened to the barest outline. 

The plaintiffs were night-shift employees of a Wal-Mart store

located in Claremont, New Hampshire.  On at least several different

days in August 1995,some of their conversations were secretly

recorded on voice-activated tape recorders, and interceptions and

playbacks took place on various days.  Without going into detail,

there was enough involvement by store management that Wal-Mart does

not contest its responsibility for what occurred.  When the events

were discovered, the present suit was brought, resulting in the

awards just described.

          On appeal Wal-Mart assigns three errors.  First it says

the judgment below should have been limited, by operation of the

Act, to $10,000 per plaintiff.  Next it argues the trial court

erred by instructing the jury that listening to the recordings

could constitute prohibited "use" of the intercepted conversations

within the meaning of the Act.  Finally, Wal-Mart claims that the

attorneys' fees award was excessive in light of plaintiffs' failure

to secure one of the major objectives of their suit   punitive

damages.

                            DISCUSSION

Statutory Damages

          Section 2520 of Title 18 of the United States Code

creates a civil cause of action entitling any person "whose wire,

oral, or electronic communication is intercepted, disclosed, or

intentionally used in violation of [the Act]" to "recover from the

person or entity which engaged in that violation such relief as may

be appropriate."  18 U.S.C.  2520(a).  Appropriate relief for the

violations at issue here can include actual damages, statutory

damages in lieu of actual damages, punitive damages if warranted,

and recovery of reasonable attorneys' fees and costs.  18 U.S.C.

 2520(b).

          In this case plaintiffs claimed no actual damages but

instead sought liquidated statutory damages, punitive damages, and

attorneys' fees.  Statutory damages consist of:

          . . . whichever is the greater of $100 a day

          for each day of violation or $10,000.



18 U.S.C.  2520(c)(2)(B).

          The jury awarded each plaintiff $10,000 for Wal-Mart's

violation of the Act in unlawfully intercepting their private

conversations (on fewer than 100 days), and an additional $10,000

for Wal-Mart's violating the Act by intentionally using the

intercepted communications (on fewer than 100 days).  Wal-Mart

challenges the total award of $20,000 per plaintiff on grounds that

it represents an impermissible double recovery of the liquidated

damages provided for in Section 2520(c)(2)(B).  We agree.

     Appellate review of issues involving statutory

interpretation is de novo.  See Matter of MetLife Capital Corp.,

132 F.3d 818, 820 (1st Cir. 1997), cert. denied sub nom. Bunker

Group v. United States, 118 S. Ct. 2367 (1998).  Our approach to

statutory construction begins with the actual language of the

provision; we give the text its ordinary meaning.  In re Bajgar,

104 F.3d 495, 497 (1st Cir. 1997).  When the text's meaning is

plain, courts are obligated to enforce the provision as written. 

United States v. Rivera, 131 F.3d 222, 224 (1st Cir. 1997); see

also Landreth Timber Co. v. Landreth, 471 U.S. 681, 685 (1985);

Caminetti v. United States, 242 U.S. 470, 485 (1917).

     While recognizing that disparate results are revealed in

published decisions, we interpret the language chosen by Congress

to describe recoverable statutory damages, available when no actual

damages are suffered or claimed, as straightforward and clear. 

First, the phrase "$100 a day for each day of violation," plainly

reveals Congress' intent to link liquidated damages not to the

number of discrete violations that might occur on a given day, but

to the number of days on which the Act is violated.  So, it is

irrelevant in calculating statutory damages that 100 violations of

the Act might occur on one day, 50 on a second, and only 2 on a

third day.  For each day on which any violation occurs, or multiple

violations occur, the liquidated sum of $100 must be paid by the

violator.  See, e.g., Shaver v. Shaver, 799 F. Supp. 576 (E.D.N.C.

1992); Spetalieri v. Kavanaugh, No. 96-CV-1650, 1998 WL 901836

(N.D.N.Y. Dec. 22, 1998).

     No doubt the provision anticipates a range of possible

circumstances, extending from one violation on one day to scores of

distinct violations on another day, and even a multitude of days on

which violations occur, perhaps extending over many months. 

Whatever the circumstances, however, if violations occur on 100

days or less, then the minimum statutory award of $10,000 must be

paid.  If, on the other hand, violations occur on more than 100

days, then of course the higher statutory award of $100 per day

must be paid.

     Neither the number of discrete violations of the Act

committed by the "person or entity engaged in that violation" on

any one day, nor, in our view, the different types of violations

committed on any one day (interception, or disclosure, or

intentional use), are relevant in calculating the liquidated

damages to be awarded under Section 2520(c)(2)(B).  While each type

of violation "amounts to a separate injury prohibited by statute,"

Williams v. Poulos, 11 F.3d 271, 290 (1st Cir. 1993), the statute

makes no apparent distinction among the types of separate injuries

at issue here for purposes of assessing liquidated damages. 

Certainly, each interception separately injures a victim, as does

each disclosure, and each intentional use of intercepted

conversations.  But the liquidated damages provision describes only

one inclusive method for calculating damages.  So, whether multiple

violations occurring on a particular day involve, say, ten similar

interceptions, or five interceptions and five disclosures, or some

other mix of type or number, the facts pertinent to calculating

statutory damages in lieu of actual damages under Section

2520(c)(2)(B) remain the same:  the number of days on which any

violation occurred, and whether that number is equal to or less

than, or greater than, 100.

     The same approach was taken by the Eighth Circuit in Bessv. Bess, 929 F.2d 1332 (8th Cir. 1991).  In that case, the

plaintiff sued her estranged husband under the Act for unlawfully

intercepting, disclosing, and using the contents of her private

telephone conversations, which he obtained by attaching a hidden

tape recorder to the basement telephone line in her house.  At

trial plaintiff introduced twelve separate tapes of her intercepted

calls.  Each tape contained an average of two and one-half

intercepted conversations, and each tape represented one day of

interception.  Plaintiff also proved that her estranged husband

intentionally used the content of her intercepted conversations

during their subsequent divorce proceeding.  The trial court

awarded $100 for each day on which a violation occurred (on

average, two and one-half distinct interception violations occurred

on each of the twelve days) for a total of $1,200.  (The statutory

minimum was $1,000 at the time; it was increased to $10,000 by

Congress in 1986.)

     The Court of Appeals affirmed the award, but only after

increasing it to account for defendant's intentional use of the

intercepted information during the couple's divorce proceeding:

          [Plaintiff] raises one meritorious claim

     with respect to the number of violations.  The

     record reveals that on July 24, 1985, during

     the Bess' divorce proceeding, [defendant]

     recited facts obtained from the intercepted

     conversations in an attempt to establish

     marital misconduct by [plaintiff].  This use

     of the intercepted contents represents

     additional prohibited conduct in violation of

     18 U.S.C.  2511.  Cf. Rodgers v. Wood, 910

     F.2d 444, 446, 449 n.3 (7th Cir. 1990)

     (plaintiffs sought damages based on disclosure

     of intercepted conversations).  We therefore

     determine that [plaintiff] is entitled to an

     additional $100 in statutory damages.1



     1  [Plaintiff] makes no argument that the

     statute entitled her to more than the $100 per

     day figure.



Bess, 929 F.2d at 1334; see also Campiti v. Walonis, 467 F. Supp.

464 (D. Mass. 1979) (double recovery for interception and

disclosure not permitted).

     We are aware of cases in which multiple recovery of the

minimum statutory amount has been allowed, on grounds that the Act

was violated on different days in different ways   e.g.,

interception and disclosure.  In Menda Biton v. Menda, 812 F. Supp.

283 (D.P.R. 1993), for example, the district court determined that

plaintiff was entitled to recover from defendants $10,000 for the

unlawful recording of his conversations and an additional $10,000

for their disclosure.  In the same vein, in Romano v. Terdik, 939

F. Supp. 144, 150 (D. Conn. 1996), a district court observed, in

dicta, that "[i]t is well established that . . . $10,000 may be

awarded for interception and $10,000 may be awarded for disclosure

because they are considered two separate violations of Section

2511." (citations omitted).  And, it appears at least implicit in

Rodgers v. Wood, 910 F.2d 444, 446 (7th Cir. 1990), that a district

court may have allowed double recovery of the statutory amount

based on the fact that different types of violations occurred.  See

also Dorris v. Absher, 959 F. Supp. 813, 819 n.9 (M.D. Tenn. 1997).

     Menda Biton, and courts expressing similar views, seem to

rely primarily, and we think wrongly, on Bess v. Bess, supra, as

supporting multiple recovery.  The Bess court did not hold that

interception and disclosure by the same person warrants multiple

liquidated awards under the Act.  If the opinion in Bess supports

any view, it supports a view consistent with our own interpretation

of the damages provision:  that the number of days of violation

determines the amount of a liquidated damages award, and not the

number of discrete violations on any given day, nor the different

types of violations that might occur.  While the appellant in Bessapparently did not argue that the statute entitled her to more than

an additional $100 for the additional day of violation (disclosure

rather than interception), the Eighth Circuit nevertheless deemed

it appropriate under the statute to award only an additional $100,

and not an additional $1,000 minimum amount, even though the

violation on that additional day was of a different kind.

     The Act does protect different values by prohibiting not

only interception, but intentional use and disclosure of

intercepted conversations as well.  And while a plausible argument

can be made that providing separate minimum damage awards for each

type of violation would better serve the Act's purposes, that is an

argument that must be presented to Congress.  In deciding this

case, we are satisfied that Congress considered and struck a

balance among important but countervailing policies when it chose

to fix liquidated damages according to the number of days on which

the Act is violated, rather than on some other basis.  The statute,

as written, does not explicitly, or implicitly for that matter,

permit recovery of multiple minimum statutory damages awards based

on different types of violation.  Had Congress so intended it could

easily have described recoverable liquidated damages differently,

e.g., "for each distinct type of violation (interception,

disclosure, or use), the greater of $100 a day for each day of

violation or $10,000."

     In any event, because we think the text of the statute is

reasonably clear, we cannot graft upon it a remedy that to some

might seem to be good policy, but to others might seem a

disproportionate and burdensome civil sanction for violations that

result in no actual damage.  Because we conclude that multiple

recovery of the liquidated damage amount, based on different

violation types, is not available, we need not address Wal-Mart's

argument that merely listening to tapes of unlawfully intercepted

conversations does not constitute an "intentional use" within the

meaning of the Act.  See, e.g., Thompson v. Dulaney, 838 F. Supp.

1535, 1547 (D. Utah 1993) (listening to tapes of intercepted

conversations does constitute illegal use.)

     Accordingly, the judgment below must be vacated and the

damages award reduced to $10,000, the statutory minimum, for each

plaintiff.

Attorneys' Fees

     Wal-Mart's remaining contention on appeal is that the

district court erred when it declined to reduce the award of

attorneys' fees and costs to account for plaintiffs' lack of

success in recovering punitive damages.  We review a fee award with

deference, reversing only where a mistake of law or abuse of

discretion has occurred.  See Coutin v. Young & Rubicam Puerto

Rico, 124 F.3d 331, 336 (1st Cir. 1997).  We do, however, require

the trial court to provide an explanation sufficient to permit

appellate review.  Id.  "The explanation need not be painstaking,

and, sometimes, it may even appear by implication, but at a bare

minimum, the order awarding fees, read against the backdrop of the

record as a whole, must expose the district court's thought process

and show the method and manner underlying its decisional calculus." 

Id. at 337.

     Plaintiffs moved, pursuant to 18 U.S.C.  2520(b)(3) and

N.H. Rev. Stat.  570-A:11(c), for awards of attorneys' fees and

costs, which the trial judge granted (after making modest

adjustments).  The court rejected Wal-Mart's request to reduce the

entire fee award by 50% to reflect plaintiffs' unsuccessful

punitive damages claim, or plaintiff Desilets' unsuccessful claim

for constructive discharge, and Wal-Mart objects.

     We have previously recognized that the result obtained in

a lawsuit is a preeminent consideration in the fee-adjustment

process.  Coutin, 124 F.3d at 338.  We have also noted that the

process is made more difficult when the plaintiff's lack of success

was not in the failure of a severable claim but in the nature of "a

scanty damage award or a shortfall in other relief."  Id.  In that

regard, we have stated that the failure to recover punitive damages

is not a "failed claim," but a "categor[y] of relief" denied by the

jury.  Id. at 340.

     Wal-Mart acknowledges the difference, but nevertheless

urges us not only to treat the unsuccessful punitive damages

request as a failed claim, but to treat it as the only claim.  Wal-

Mart says plaintiffs could have recovered the minimum statutory

damages on summary judgment, without the necessity of trial,

because it admitted in its answer that the unlawful interceptions

occurred.  So, the argument goes, plaintiffs necessarily proceeded

to trial solely to recover punitive damages.  We are not persuaded.

     In its pretrial statement, Wal-Mart declared its position

to be that the employees who taped the conversations were not

authorized to do so, that plaintiffs did not have a reasonable

expectation of privacy in the intercepted conversations, and that

plaintiffs were not entitled to any damages at all.  Plaintiffs

proceeded to trial to establish more than their claim for punitive

damages.

     We note that the trial judge seems to have treated the

punitive damages issue as a failed claim, but still declined to

reduce the award, reasoning that:

     the doctrine of interrelatedness, which holds

     that where losing claims include a common core

     of facts or were based on related legal

     theories linking them to the successful claim

     recovery may be had for all claims [citations

     omitted], here serves to require rejection of

     defendant's contention that there should be a

     fifty percent reduction for plaintiffs' lack

     of success on the punitive damage and/or

     constructive discharge claims.



The record supports the district judge's assessment, and his

reasoning is equally pertinent if the lack of success on punitive

damages is more correctly viewed as a category of relief denied,

rather than as a failed claim.  Of course "the decision as to how

to separate the wheat from the chaff in a fees contest, within

broad limits, is a matter for the district court's discretion.'" 

Lipsett v. Blanco, 975 F.2d 934, 941 (1st Cir. 1992) (quoting

United States v. Metropolitan Dist. Comm'n, 847 F.2d 12, 17 (1st

Cir. 1988)).  We find no abuse of discretion here.

     On remand the judgment shall be amended to reduce the

liquidated damage award to each plaintiff to $10,000.  The award of

attorneys' fees and costs is affirmed.

     Affirmed in part, reversed in part and remanded.