Scarborough v. Dillard's Inc.

655 S.E.2d 875, 188 N.C. App. 430, 2008 N.C. App. LEXIS 226

• Court: Court of Appeals of North Carolina
• Decided: February 5, 2008
• Docket: COA07-281
• Status: Published

Opinions

WYNN, Judge.

A motion for judgment notwithstanding the verdict should be denied if there is more than a scintilla of evidence to support the plaintiffs prima facie case.¹ Here, the plaintiff argues the trial court erred in granting the defendant’s motion for judgment notwithstanding the verdict as to punitive damages because there was sufficient evidence to support the jury’s punitive damages award. Because we find more than a scintilla of evidence to support the jury’s punitive damages award, we must reverse the trial court’s grant of judgment notwithstanding the verdict as to punitive damages.

The evidence presented at trial tended to show that on 27 October 1997, Plaintiff Bernard Scarborough worked in the ladies’ shoe department of Dillard’s Department Store, where he had been employed part-time for approximately two years. Around 8:00 p.m., Mr. Scarborough waited on two women for approximately thirty-five to forty minutes, showing them about twenty pairs of shoes. When one of the women decided to purchase two pairs of shoes, Mr. Scarborough took the shoes to the register, scanned the shoes, and placed the two pairs in a bag. As Mr. Scarborough completed the transaction, the other woman came to the register and asked him about trying on a pair of shoes. Mr. Scarborough voided the first transaction so that he could check the price of the shoes for the second woman, and so that his employee number would not remain in the register when he went into the stockroom to look for the shoes. Mr. Scarborough was unable to find shoes in the woman’s width and agreed to stretch the shoes for her. The two women stated that they would return for the third pair in a few minutes. The two women then left Dillard’s with two pairs of shoes that were not paid for.

The women later returned and asked Mr. Scarborough if he could hold the third pair of shoes until the next day. Mr. Scarborough agreed, and the woman wanting the shoes wrote her name down on a piece of paper, which Mr. Scarborough attached to the shoe box along with his employee number so he could receive credit for the sale.

After the two women left, two employees who had watched the transaction, Lynette Withers and Selma Brown, looked at the journal tape and confirmed that the women had taken the first two pair of shoes without paying for them.² Ms. Brown told Mr. Scarborough that the sales transaction was missing, so he called Steven Gainsboro,³ the manager on duty that night, to tell him what happened. Mr. Gainsboro told Mr. Scarborough that he would discuss the incident the next day with David Hicklin, the shoe department manager.

When Mr. Scarborough arrived at Dillard’s the next evening, he met with Mr. Hicklin, Kevin McClusky, the store manager, and Officer Cullen Wright, a Dillard’s loss prevention employee, who also worked full time as an officer for the Charlotte-Mecklenburg Police Department. During the two-hour interview, Mr. Scarborough explained that he had made a mistake, took responsibility for the incident, and offered to pay Dillard’s for the shoes. Mr. Scarborough also offered to submit to a polygraph exam. Mr. McClusky accused Mr. Scarborough of knowing the two women and threatened to have him prosecuted for embezzlement and ruin his full-time job at First Union Bank if he did not provide the names of the women. Mr. Scarborough stated that he did not know the women and therefore was unable to provide their names, although he did mention the name “Betty.” Officer Wright also participated in questioning Mr. Scarborough about the incident and took a written statement from him. At the end of the interview, Mr. McClusky terminated Mr. Scarborough for embezzlement.

After Mr. Scarborough’s termination, Officer Ken Schul, another Dillard’s security guard who was employed full time as a sergeant for the Charlotte-Mecklenburg Police Department, took statements from three Dillard’s employees — Ms. Withers, Ms. Brown, and Mr. Gainsboro — about Mr. Scarborough’s failed transaction. On 12 November 1997, Officer Schul met with Assistant District Attorney Nathaniel Proctor to present a case against Mr. Scarborough. Assistant District Attorney Proctor then authorized the prosecution of Mr. Scarborough for embezzlement.

Approximately two weeks after his termination from Dillard’s, Mr. Scarborough was arrested in the atrium of One First Union Center in Charlotte, on his way to his office. Uniformed police officers handcuffed Mr. Scarborough and escorted him outside to a police car. Upon his release from jail, Mr. Scarborough returned to First Union to find that his employment was terminated because of his arrest for embezzlement, and he would only be eligible to return to work if the charges against him were cleared.

On 27-28 May 1998, Mr. Scarborough was tried for embezzlement in Superior Court, Mecklenburg County resulting in a jury verdict of. not guilty.

On 4 April 2001, Mr. Scarborough initiated this action for malicious prosecution. Following a trial in January 2005, the jury returned a verdict in Mr. Scarborough’s favor, awarding him $30,000 in compensatory damages and $77,000 in punitive damages for malicious prosecution. On 24 February 2005, the trial court granted Dillard’s motion for judgment notwithstanding the verdict and entered an order setting aside the punitive damages award. Mr. Scarborough appealed, and on 1 August 2006, this Court remanded the case because, contrary to N.C. Gen. Stat. § 1D-50, the trial court’s 24 February 2005 order contained no reasons as to why the trial court set aside the jury verdict. Scarborough v. Dillard’s, Inc., 179 N.C. App. 127, 130, 632 S.E.2d 800, 803 (2006). Upon remand, the trial court filed an order on 8 January 2007 indicating the basis for its judgment not withstanding the verdict. Mr. Scarborough appealed from' that order.

On appeal, Mr. Scarborough contends the trial court erred by granting the judgment not withstanding the verdict because there was sufficient evidence to support the jury’s punitive damages award. We must agree.⁴

We review the trial court’s grant of a judgment notwithstanding the verdict de novo, and the standard of review is well established:

On appeal the standard of review for a judgment notwithstanding the verdict is the same as that for a directed verdict, whereby this Court determines whether the evidence was sufficient to go to the jury. The standard is high for the moving party, as the motion should be denied if there is more than a scintilla of evidence to support the plaintiffs prima facie case. The evidence supporting the plaintiffs claims must be taken as true, and all contradictions, conflicts, and inconsistencies must be resolved in the plaintiffs favor, giving the plaintiff the benefit of every reasonable inference.

Id. at 132, 632 S.E.2d at 803-04 (internal citations omitted). Our Supreme Court has defined “scintilla of evidence” as “very slight evidence.” State v. Lawrence, 196 N.C. 562, 582, 146 S.E. 395, 405 (1929).

Punitive damages may only be awarded where the claimant proves the defendant is liable for compensatory damages and proves the existence of fraud, malice, or willful or wanton conduct by clear and convincing evidence. N.C. Gen. Stat. § 1D-15. A party need only show one of the aggravating factors to recover punitive damages. Scarborough, 179 N.C. App. at 132, 632 S.E.2d at 804 (citing Williams v. Boylan-Pearce, Inc., 69 N.C. App. 315, 320, 317 S.E.2d 17, 20 (1984), aff'd per curiam, 313 N.C. 321, 327 S.E.2d 870 (1985)). Under our General Statutes, punitive damages may be awarded against a corporation only if “the officers, directors, or managers of the corporation participated in or condoned the conduct constituting the aggravating factor giving rise to punitive damages.” N.C. Gen. Stat. § 1D-15(c).

Mr. Scarborough first argues that the judgment notwithstanding the verdict was in error because there was sufficient evidence of willful or wanton conduct. We agree.

As defined in our punitive damages statute, willful or wanton means “the conscious and intentional disregard of and indifference to the rights and safety of others, which the defendant knows or should know is reasonably likely to result in injury, damage, or other harm.” N.C. Gen. Stat. § 1D-5(7) (2005). Willful or wanton conduct is “more than gross negligence.” Id. An employer’s failure to fully investigate an incident before causing an employee to be prosecuted for embezzlement is sufficient for a finding of reckless and wanton disregard of the employee’s rights. See Jones v. Gwynne, 312 N.C. 393, 409-10, 323 S.E.2d 9, 19 (1984) (holding that the jury could have found the employer’s superficial and cursory investigation of an employee’s alleged embezzlement to be a “reckless and wanton disregard of the plaintiff’s rights”); Williams, 69 N.C. App. at 320, 317 S.E.2d at 20-21 (holding that the jury could find the plaintiff-employee was prosecuted in a reckless and wanton manner, where the employee who had plaintiff arrested failed to take an inventory, did not check plaintiffs sales book, and did not check with anyone regarding plaintiff’s personnel record or character).

Mr. Scarborough argues that Dillard’s acted willfully and wantonly by quickly procuring his prosecution for embezzlement, despite evidence that Mr. Scarborough made a mistake due to forgetfulness, and knowing that it would cause him to lose his full-time job at First Union Bank. Mr. Scarborough testified that during the meeting the day after the failed transaction, Mr. McClusky accused him of knowing the two women and repeatedly threatened to “mess up” his job at First Union if Mr. Scarborough did not tell him who the customers were. Mr. Scarborough testified that he told Mr. McClusky that he did not know the women, but he believed one of them was named Betty. At the time of the meeting, Dillard’s was already in possession of the piece of paper with the name Betty Jordan on it, as Mr. Scarborough had placed it on the shoe box he had put on hold for one of the women. Officer Wright testified that although he did not personally find the paper with “Betty Jordan” written on it, a document was found in a pair of shoes that was in Dillard’s possession.

That Mr. McClusky threatened to “mess up” Mr. Scarborough’s full-time job is also evidence that he knew prosecuting him for embezzlement would harm Mr. Scarborough. Giving Mr. Scarborough the benefit of every reasonable inference, Dillard’s possession of the paper with the name “Betty Jordan,” its failure to attempt to find or contact Ms. Jordan, and Mr. McClusky’s threats to “mess up” Mr. Scarborough’s full-time job at First Union, present more than a scintilla of evidence that Dillard’s showed a conscious and intentional disregard for Mr. Scarborough’s rights. See N.C. Gen. Stat. § 1D-5(7).

Mr. Scarborough next argues that the judgment notwithstanding the verdict was in error because there was sufficient evidence of malice. We agree.

As defined by the punitive damages statute, malice means “a sense of personal ill will toward the claimant that activated or incited the defendant to perform the act or undertake the conduct that resulted in harm to the claimant.” N.C. Gen. Stat. § 1D-5(5).

Here, Mr. Scarborough argues that the jury could have inferred ill will from evidence of a prior difficulty between Mr. Scarborough and Mr. McClusky and from evidence that Dillard’s considered him to be inept. Mr. Scarborough testified that when he met with Dillard’s management the day after his failed transaction, the first thing Mr. McClusky said to him was, “I cannot believe you’re in my office again.” Mr. McClusky was referring to Mr. Scarborough’s recent written reprimand for referring a customer to another store for tennis shoes. Taking the evidence supporting Mr. Scarborough’s claims as true and resolving any inconsistencies in his favor, we find that Mr. McClusky’s mention of a prior difficulty with Mr. Scarborough is more than a scintilla of evidence of his personal ill will toward Mr. Scarborough.

Although we conclude there is sufficient evidence of malice and willful and wanton conduct, for punitive damages to be awarded against Dillard’s, we must also determine whether Dillard’s officers, directors, or managers participated in or condoned the conduct giving rise to punitive damages.⁵ N.C. Gen. Stat. § 1D-15. We have defined “manager” as “one who conducts, directs, or supervises something.” Miller v. B.H.B. Enterprises, Inc., 152 N.C. App. 532, 540, 568 S.E.2d 219, 225 (2002).

Here, the record shows that Mr. McClusky was the store manager of Dillard’s at the time Mr. Scarborough was terminated and prosecuted. Mr. Scarborough testified that during his meeting with Mr. McClusky, Mr. Hicklin, and Officer Wright, Mr. McClusky repeatedly threatened to charge him with embezzlement and “mess up” his full-time job at First Union if he did not tell him the names of the customers. Mr. Scarborough also testified that Mr. McClusky stated to him, “I cannot believe you’re in my office again.” Because Mr. McClusky participated in the conduct constituting the aggravating factors of willful and wanton conduct and malice, we find that section 1D-15(c) is satisfied, thereby subjecting Dillard’s to punitive damages. N.C. Gen. Stat. § 1D-15(c).

In sum, because we find sufficient evidence of malice, willful and wanton conduct, and manager participation to support the jury’s punitive damages award, we must reverse the trial court’s grant of judgment notwithstanding the verdict as to punitive damages.

Reversed.

Judge JACKSON concurs. Judge HUNTER dissents in a separate opinion.

1 . Scarborough v. Dillard’s, Inc., 179 N.C. App. 127, 132, 632 S.E.2d 800, 803 (2006); N.C. Gen. Stat. § 1D-15 (2005).

2 . The register journal tape showed that the transaction for the first two pairs of shoes had been voided but not re-rung. The tape also showed that the transaction for the third pair of shoes had not included sales tax, which would support the contention that it was a price check.

3 . We note that Gainsboro is also spelled “Gainesborough” in the transcript.

4 . We deny Dillard’s motion to dismiss because Mr. Scarborough correctly appeals from the trial court’s 8 January 2007 order. As we stated in the previous Scarborough case, the 24 February 2005 order was in error because “[cjontrary to the requirements of section ID-50 . .. [it] contains no reasons as to why the trial court set aside the jury’s verdict on the punitive damages claim.” Scarborough, 179 N.C. App. at 130, 632 S.E.2d at 803.

5 . The trial court’s 8 January 2007 order concluded “[t]here was no clear and convincing evidence that Dillard’s (the corporation) instituted a malicious prosecution of the plaintiff,” but it is not clear whether the order was based on insufficient evidence of malice, of willful and wanton conduct, or of management involvement.