United States District Court
EASTERN DISTRICT OF TEXAS
SUSAN JUNG v. 24 HOUR FITNESS USA, INC.
§ § § § §
Civil Action No. 4:17-CV-787 Judge Mazzant
MEMORANDUM OPINION AND ORDER Renewed Motion for Judgment as a Matter of Law (Dkt. #73) and, alternatively, Motion for New Trial (Dkt. #74). 1 Having considered the motions and the relevant pleadings, the Court finds that renewed motion for judgment as a matter of law should be granted in part and denied in part and
BACKGROUND I. Factual Background
Defendant is a corporation that operates gyms. Plaintiff Susan Jung was a member of . On May 3, 2017, Plaintiff arrived at the gym and placed her belongings in a locker. In the locker, Plaintiff discovered and removed a set of keys. Plaintiff sealed her belongings in the locker with a lock and returned the key employee Zach Turner at the front desk. Plaintiff then exercised in the gym.
searching for the keys left inside Plai . Although Plaintiff previously returned the keys to the front desk, Zach Turner directed another employee to locker to
1. Neither party ordered a transcript of the trial. The parties instead rely on their recollection of the trial. Therefore,
search for the keys. After failing to find the keys inside the locker employees left
(Dkt. #4 ¶ 8; Dkt. #24-5 at p. 14). When Plaintiff returned to her locker and discovered the cut lock, she went to the front
her belongings from the locker and discovered that her wallet containing debit and credit cards, and other items was missing. Plaintiff called the police who generated a report on the incident. II. Procedural History
Plaintiff filed suit against Defendant on October 4, 2017 (Dkt. #4). Plaintiff alleged invasion of privacy, negligence, and gross negligence claims against Defendant, and Plaintiff sought actual, mental anguish, emotional distress, and exemplary damages (Dkt. #4 ¶¶12 13). Defendant removed the case to this Court on November 3, 2017 (Dkt. #1). On October 17, 2018, the Court granted in part and denied in part a motion for summary judgment filed by Defendant (Dkt. #28). Specifically, the Court granted Case 4:17-cv-00787-ALM Document 78 Filed 07/11/19 Page 2 of 18 PageID #: 618 pursuant to a valid and enforceable negligence release found in agreement (Dkt. #28 at pp. 5 12, 16). The Court for summary
remaining claims (Dkt. #28 at p. 16). III. Jury Trial and Verdict On March 18 and 19, 2019, the parties tried the remaining claims to a jury (Dkt. #62; Dkt. #63). At the end of the trial, the jury returned a verdict finding: Invasion of Privacy Questions
(1) Defendant litude, seclusion, or private affairs in
a manner that would be highly offensive to a reasonable person (Dkt. #68, Question 1). (2) Defendant did not act with malice giving rise to exemplary damages when it
intruded on Question 2).
Negligence/Gross Negligence Questions (1) gym locker (Dkt. #68, Question 3). 2
(2) Defendant (Dkt. #68, Question 4).
Damages (1) The jury awarded Plaintiff $200.00 for the (Dkt. #68, Question 5).
(2) The jury awarded no damages for the alleged mental anguish suffered by Plaintiff due
to (Dkt. #68, Question 6). (3) The jury awarded Plaintiff $35,000.00 in exemplary damages resulting from
(Dkt. #68, Question 8).
2. See Dkt. #28 at pp. 5 12). However, the Court submitted the negligence question as a predicate for the gross negligence question.
IV. Post-trial Motions
(Dkt. #72). On May 3, 2019, Defendant filed the motions at issue (Dkt. #73; Dkt. #74). On May 14, 2019, Plaintiff #75). On May 21, 2019, Defendant filed replies in support of its motions (Dkt. #76; Dkt. #77). Consequently ripe for review.
FED. R. CIV. P. 50(b); see also Am. Home Assurance Co. v. United Space All., 378 F.3d 482, 487 (5th Cir. 2004). The decision to grant such a motion lies not within a court's discretion a conclusion of law based upon a finding that there is insufficient evidence to create a fact question for the jury. Conkling v. Turner, 18 F.3d 1285, 1300 (5th Cir. 1994) (quoting In re Letterman Bros. Energy Sec. Litig., 799 F.2d 967, 972 (5th Cir. 1986). Under Fifth Circuit law, a court should be substantial evidence does not support the findings. , 693 F.3d
weight that reasonable and fair-minded men in the exercise of impartial judgment might reach
Threlkeld v. Total Petroleum, Inc., 211 F.3d 887, 891 (5th Cir. 2000). A Baisden, Case 4:17-cv-00787-ALM Document 78 Filed 07/11/19 Page 4 of 18 PageID #: 620 more than a mere scintilla of evidence in the record to prevent judgment as a matter of law in Arismendez v. Nightingale Home Health Care, Inc., 493 F.3d 602, 606 (5th Cir. 2007).
inferences in the light most favorable to the verdict and cannot substitute other inferences that
E.E.O.C. v. Boh Bros. Constr. Co., 731 F.3d 444,
evidence, and the drawing of legitimate inferences from the facts are jury functions, not those of Reeves v. Sanderson Plumbing Prods., Inc. supporting the moving party that is uncontradicted and unimpeached, at least to the extent that
the evidence comes Id. at 151 (citation omitted).
Defendant moves for judgment as a matter of law asking the Court to set aside the exemplary and actual damages awards contending: (a) Texas Civil Practice and Remedies Code § 41.005(a) precludes an award of exemplary damages; (b) the gross negligence found by the jury cannot be imputed on Defendant; (c) Plaintiff did not prove the objective or subjective components of her gross negligence claim; and precludes the award of actual damages (Dkt. #73 pp. 1 2). The Court addresses each argument in turn.
A. Texas Civil Practice and Remedies Code § 41.005(a) Defendant first contends that Texas Civil Practice and Remedies Code § 41.005(a) prevents the Court from awarding exemplary damages (Dkt. #73 at pp. 2 8). 3
Section 41.005(a) provides court may not award exemplary damages against a defendant because of the criminal act of
i. Section 41.005(a) Applies to Plaintiff s Claims first dispute whether Section 41.005(a) applies in this case. Defendant contends Section 41.005(a) requires the Court to set aside the exemplary damages award. It is difficult for the Court to interpret Plaintiff response (Dkt. #75 at pp. 8 9). On the one hand, Plaintiff appears to argue that there is no criminal act implicated in this case. On the other hand, conduct to avoid Section 41.005(a).
a) A Criminal Act? Plaintiff first appears to argue that Section 41.005(a) does not apply because Plaintiff did not implicate a criminal act in her pleadings or during trial:
But to what criminal act does Defendant refer? The act about which Plaintiff complained was the opening of her locker which grossly negligent act under the circumstances and without taking precautions to safeguard her property. (Dkt. #75 at p. 8). The Court cannot agree with Plaintiff for two reasons.
First, Plaintiff pleaded more than simply In her Second Amended Complaint, Plaintiff alleged s 3. Defendant raised a similar argument at summary judgment. The Court did not grant summary judgment pursuant
to Section 41.005(a) #28 at pp. 14 15).
personal property was stolen and she suffered actual damages, as well as mental anguish and emotional damages. (Dkt. #4 ¶ 13). Moreover, in the Final Pretrial Order, Plaintiff alleged:
When Ms. Jung returned to her locker, several items had been taken, including her expensive wallet, credit cards, a cross necklace, and her I.D. Ms. Jung suffered emotional distress, fear, and embarrassment besides her loss of property. (Dkt. #56 at p. 2) (See also Dkt. #73 at pp. 3 4). Accordingly, Plaintiff directly implicated a criminal act in her pleadings. Second, Plaintiff recovered damages resulting from the criminal act. Plaintiff sought actual and mental anguish damages resulting from the theft of her property (Dkt. #4 ¶¶ 11 13). At trial, Plaintiff testified to the value of her stolen property and that the theft of her wallet caused her mental anguish as she worried
that the thief might steal her identity. The jury awarded Plaintiff $200.00 representing the market value of the property Plaintiff . . . lost from the gym locker (Dkt. #68, Questions 3 and 5). As Plaintiff sought and recovered damages resulting from the theft of her personal property, Plaintiff cannot now argue that she did not implicate a criminal act in this case.
b) Concurrent Cause Plaintiff next seems to contend that the Court can separate the criminal theft from conduct and award exemplary damages . Other cases suggests the Court cannot do so. Multiple courts have held that Section 41.005(a) precludes exemplary damages awards harm to a plaintiff. See Miles v. Jerry Kidd Oil Co., 363 S.W.3d 823, 826 (Tex. App. Tyler
2012, no pet.) .005 to preclude punishing a defendant for harm resulting from a criminal act of a third party when that defendant s actions are a concurrent cause accord , 4:15-CV-03512, 2018 WL 375393, at *2 (S.D.
Tex. Jan. 11, 2018) (citing Miles, 363 S.W.3d at 823); Bhatti v. Concepts Am. Inc., 3:14-CV- 3445-L, 2016 WL 3880747, at *17 (N.D. Tex. July 18, 2016) (citing Miles, 363 S.W.3d at 824). The concurrent causes found in cases applying Section 41.005(a) are similar to the concurrent causes found in this case.
- Miles, 363 S.W.3d at 824: the d
store) exposed its employee to danger (walking across a busy roadway to obtain change) that resulted in harm to the employee (being struck and killed by a drunk driver). - Bhatti, 2016 WL 3880747, at *2, 16: the d a
patron and watching as the patron became increasingly aggressive toward the plaintiff) exposed the plaintiff to danger (the danger of a fight) that resulted in harm to the plaintiff (the patron causing injury to the plaintiff by throwing drinking glass at the plaintiff). See also In re Islamorada Fish Co. Tex., L.L.C., 319 S.W.3d 908, 910 (Tex. App. Dallas 2010, no pet.) (similar Dram Shop Act case); Wilson v. K.W.G., Inc., 11-03-00084-CV, 2004 WL 1925599, at *2 (Tex. App. Eastland Aug. 31, 2004, no pet.) (same). - Healthcare Centers of Tex., Inc. v. Rigby, 97 S.W.3d 610, 620 (Tex. App. Houston
[14th Dist.] 2002, pet. denied), overruled on other grounds by Diversicare Gen. Partner, Inc. v. Rubio, 185 S.W.3d 842 (Tex. 2005): the d resident who the defendant knew was a sexual threat to others to remain at the d nursing home) exposed another resident to danger (the danger of sexual assault) that resulted in harm to the other resident (sexual assault). danger (potential theft) that resulted in the harm Plaintiff suffered and recovered for at trial (the
theft of her property from the locker). Accordingly, the Court may not award exemplary damages pursuant to Section 41.005(a), unless a valid exception applies. 4
ii. Exception to Section 41.005(a) After determining that the Section 41.005(a) exemption applies, the parties next dispute whether an exception to the exemption enables the Court to award exemplary damages. Section The exemption provided by Subsection (a) does not apply 4 s act had she pursued this case differently. trial strategy, Plaintiff rendered this case similar to Rigby by creating an indivisible injury. See Rigby, 97 S.W.3d at 618.
if: (1) the criminal act was committed by an employee of the defendant . . expands on this exception:
(c) In an action arising out of a criminal act committed by an employee, the employer may be liable for punitive damages but only if:
(1) the principal authorized the doing and the manner of the
act; (2) the agent was unfit and the principal acted with malice in
employing or retaining him; (3) the agent was employed in a managerial capacity and was
acting in the scope of employment; or (4) the employer or a manager of the employer ratified or
approved the act. Unfortunately, the identity of the thief personal property remains unknown. Therefore, as might be expected, the parties dispute who bears the burden of proving the Subsection (b)(1) exception (Dkt. #73 at pp. 6 7; Dkt. #75 at pp. 8 9; Dkt. #76 at p. 2). Without specifically addressing the issue, at least two courts have placed the burden to prove the exception on the plaintiff. See Kinney, 2018 WL 375393, at *3; Bhatti, 2016 WL 3880747, at *17; but see Croxton v. Washington Mut. Bank, 05-07-00585-CV, 2008 WL 3984048, at *4 (Tex. App. Dallas Aug. 29, 2008, no pet.) (placing burden on defendants). Kinney and Bhatti
avoid that b Phila. Indem. Ins. Co. v. White, 490 S.W.3d 468, 494 (Tex. 2016) (quoting Better Bus. Bureau of Metro. Dall., Inc. v. BH DFW, INC., 402 S.W.3d 299, 309 (Tex. App. Dallas 2013, pet. denied)). Here, Plaintiff would benefit from establishing the exception as
doing so would enable Plaintiff to recover exemplary damages against Defendant. Considering
the cited cases, the Court agrees with Kinney and Bhatti, and finds that Plaintiff bore the burden of proving the Subsection (b)(1) exception at trial. As neither party provided more than mere speculation as to the at trial, Plaintiff did meet her burden of proving that Subsection (b)(1) applies. As the exception does not apply, the Court is bound by the Subsection (a) exemption and cannot award exemplary damages in this case. Accordingly, the Court must set aside the exemplary damages award pursuant to Section 41.005(a). 5
B. Imputing Gross Negligence on Defendant Even if application of Section 41.005(a) is incorrect, the Court would still set aside the exemplary damages award, as the gross negligence s cannot be imputed on Defendant. At trial, Plaintiff sought to impute the gross negligence of s on Defendant (See Dkt. #75 at pp. 1 2, 8 9). the jury :
employees rises to the level of gross negligence. . . .
Defendant may be responsible for the gross negligence of one of its employees if:
1. Defendant authorized the doing and the manner of the
act, or 2. The employee was unfit and Defendant was reckless in
employing the employee, or
5 employee was employed in a managerial capacity and was acting in the scope of employment; or a manager of the (Dkt. #75 at pp. 8 9). Plaintiff did not prove apply.
manager for the purposes of proving gross negligence. As a result, even if Subsection (c) applies, Plaintiff did not provide sufficient evidence to meet the elements of Subsection (c).
3. The employee was employed in a managerial capacity
and was acting in the scope of employment, or 4. Defendant or a manager of Defendant ratified or
approved the act. A person is a manager or is employed in a managerial capacity if:
1. that person has authority to employ, direct, and
discharge an employee of Defendant; or 2. Defendant has confided to that person the management
of the whole or a department or division of the business of Defendant. (Dkt. #64 at pp. 6 7) (emphasis added). 6 The pleadings and evidence at trial established that Zach Turner directed another one of s (Dkt. #73 at pp. 14 16). Plaintiff claims that Mr. because (1) Defendant employed Mr.
stipulated that Mr. Turner was acting in the course and scope of his employment when he cut (Dkt. #75 at pp. 1 2, 8 9). The Court cannot agree with Plaintiff for two reasons. First, s title as Operation Manage purposes of proving gross negligence under Texas law. See U-Haul , Inc. v. Waldrip, 380
Waldrip presented no evidence that Coffee [(Director of Repair Analysis & Support)] was
6 d 115.39, and reflects Texas case law. See Merritt Hawkins & Assocs., L.L.C. v. Gresham, 861 F.3d 143, 152 (5th Cir. 2017) (quoting Fisher v. Carrousel Motor Hotel, Inc., 424 S.W.2d 627, 630 (Tex. 1967)); Durand v. Moore, 879 S.W.2d 196, 203 (Tex. App. Houston [14th Dist.] 1994), , B14-92-01160-CV, 1994 WL 276678 (Tex. App. Houston [14th Dist.] June 23, 1994, no writ). Plaintiff did not object to the submission of this instruction.
employed by UHI in a managerial capacity.
Second, although Defendant stipulated that Mr. Turner was acting in the course and to any . Early in this case, Plaintiff sought to join Mr. Turner by filing a motion for leave to amend complaint (Dkt. #17). Plaintiff argued:
Plaintiff had not served Zach Turner initially because at this stage in the litigation, it is unclear whether Defendant will argue that Zach Turner was acting outside the scope of his employment when he injured Plaintiff, or whether he was following the policy of Defendant. However, should it be determined that any of Zach against Zach Turner. If this were to occur and the case were to proceed in federal court without Zach Turner, Plaintiff would have to relitigate the case to achieve a full recovery. (Dkt. #16 at pp. 2 3). In response, Defendant stipulated:
Even if the events in question took place exactly as Plaintiff claims, Zach Turner was still clearly acting within the course and scope of his employment. But to avoid any doubt on this subject, 24 Hour Fitness hereby agrees and stipulates that Zach Turner was acting within the course and scope of his employment in connection with the conduct of which Plaintiff complains. This
(Dkt. #20 at pp. 1 Plaintiff leave to add Mr. Turner:
acted within the course and scope of his employment with 24 Hour Fitness. Because 24 Hour Fitness, in its response, stipulates that Turner acted within the course and scope of his employment,
(Dkt. #21 at pp. 2 3). 7
7. Plaintiff did not seek to join Mr. Turner to establish that he was a manger for Defendant (See Dkt. #16).
satisfied one facet of the ss negligence instruction Mr.
However, as Defendant did not stipulate to any facts concerning Mr. , Plaintiff was still required to prove the second facet Mr. Turner was a manager or Defendant employed Mr. Tuner in a managerial capacity. Mr. Turner could only be a manager or be employed in a managerial capacity if Plaintiff proved that Mr. Turner (1) had the authority to employ, direct, and discharge employees or (2) that Defendant confided in s. At trial, Plaintiff testified that Mr. admitted a police report stating the same (Dkt. #75 at p. 1; Dkt. #75-2 at p. 2). Moreover, the evidence showed that Mr. Turner directed one o (Dkt. #73 at pp. 14 16). This evidence is insufficient as a matter of law to show that Mr. Turner was a manager or Defendant employed Mr. Turner in a managerial capacity because it does not demonstrate that Mr. Turner (1) possessed the authority to employ and discharge employees or (2) that Defendant confided in Turner the management of the whole or a department or division Consequently, even if Section 41.005(a) did not require the Court to set aside the exemplary damages award, the Court could would still set aside the award as the gross negligence finding cannot be imputed on Defendant.
C. Even if the Court is incorrect on all the above, the Court would set aside the exemplary damages award because Plaintiff did prove, as a matter of law, the objective or subjective elements of her gross negligence claim. which would raise the belief that the act or omission complained of was the result of a conscious
indifference to the Elbar, Inc. v. Claussen, 774 S.W.2d 45, 48 (Tex. App. Dallas 1989, writ ) (quoting Williams v. Steves Indus., Inc., 699 S.W.2d 570, 572 (Tex. 1985); Burk Royalty Co. v. Walls, 616 S.W.2d 911 (Tex. Waldrip, 380 S.W.3d at 137 (citing Lee Lewis Constr., Inc. v. Harrison, 70 S.W.3d 778, 785 (Tex. 2001)). In must prove by clear and convincing evidence
or omission involved an extreme degree of risk, considering the probability and magnitude of the potential harm to others and (2) the defendant had actual, subjective awareness of the risk involved, but nevertheless proceeded with conscious indifference to the rights, safety, or welfare Id. (citing TEX. CIV. PRAC. & REM. CODE § 41.001(11); State v. Shumake, 199 Id. (citing Mobil Oil Corp. v. Ellender, 968 S.W.2d 917, 921 (Tex. 1998);
Harrison, 70 S.W.3d at 785). Many courts have described the serious injury under the objective , grievous physical injury, or financial ruin. Tex. Bank & Tr. Co. v. Zucker, 6:18-CV-525-JDK, 2019 WL 1922044, at *8 (E.D. Tex. Apr. 8, 2019) (quoting IP Petroleum Co., Inc. v. Wevanco Energy, L.L.C., 116 S.W.3d 888, 897 (Tex. App. Houston [1st Dist.] 2003, pet. denied)). defendant kne Waldrip, 380 S.W.3d at 137 38. (citing La.-Pac.
Corp. v. Andrade, 19 S.W.3d 245, 246 47 (Tex. 1999); Wal Mart Stores, Inc. v. Alexander, 868 S.W.2d 322, 326 (Tex. 1993)). Case 4:17-cv-00787-ALM Document 78 Filed 07/11/19 Page 14 of 18 PageID #: 630 Medina v. Zuniga, -- S.W.3d --, 17-0498, 2019 WL 1868012, at *5 (Tex. Apr. 26, 2019) (citing Waldrip, 380 S.W.3d at 139). 8
Plaintiff maintains that when viewed objectively locker and leaving her wallet vulnerable to theft created an extreme probability of serious injury to Plaintiff:
Defend her bank account, her credit cards, and other personal information.
n policies suggest. The potential that someone could stalk or attack Plaintiff with this information was also present. Of course, Plaintiff had a job, but that does not mean that she was therefore not vulnerable, both financially and physically. (Dkt. #75 at p. 6). Although the Court believes that the theft of a wallet creates at least some risk of identity theft or stalking. The theft of a wallet does not objectively create a high probability of identity theft or stalking.
Moreover, the only evidence cited by Plaintiff to show the subjective prong of her gross negligence claim evidence alone does not show by clear and convincing evidence that employees
8. The Court finds Medina instructive as it demonstrates the high bar that Texas courts require gross negligence claims to meet. Zuniga, 2019 WL 1868012. In the case, Medina a driver drove to his high school on Sunday. Id. at *1, 6. Medina then drove off the public street and onto an entrance drive of the Id. at *1. Another driver honked at Medina because he blocked the entrance to the parking lot. Id. at *1. Medina reversed his vehicle toward the honking drive Id. at *1. Medina then rapidly Id. at *1, 6 8. As he approached the parking lot exit, Medina decreased his speed slightly. Id. at *1. However, while exiting the parking lot, Medina did not stop, only looked left, and likely drove on part of the sidewalk. Id. at *1. Reviewing this evidence, the Texas Supreme Court found no evidence supporting the objective component of gross negligence. Id. at *6 8.
D. Award of Actual Damages Seeking to avoid all consequences , Defendant next argues that the -judgment order (Dkt. #73 at pp. 17 18). In this order, the Court found that the membership agreement between Plaintiff and Defendant contained a valid and enforceable negligence release (Dkt. #28 at pp. 5 12, 16). Consequently, the Court granted summary judgment for Defendant on for which the jury awarded actual damages, relates cannot recover the actual damages awarded by the jury. The Court disagrees as Plaintiff can
recover her actual damages under her invasion of privacy claim.
Defendant first contends that Plaintiff did not seek to recover actual damages under her invasion of privacy claim. However, in her First Amended Petition, Plaintiff specifically sought actual damages under her invasion of privacy claim (Dkt. #4 ¶ 12). 9
Plaintiff also claimed actual damages under all three of her claims in the First Amended Joint Final Pre-Trial Order:
privacy and that some items were then stolen from the locker. Plaintiff has sued 24 Hour Fitness for alleged negligence, gross negligence, and invasion of privacy. She is claiming actual and exemplary damages. (Dkt. #56 at p. 2). r her invasion of privacy claim, Plaintiff clearly sought to recover her lost property as actual
9 Dkt. #75 at p. 17). As explained previously, the Court Dkt. operative pleading at the time of trial was her First Amended Petition (Dkt. #4). Even so, Plaintiff also sought actual damages under her invasion of privacy claim in her proposed Second Amended Complaint (Dkt. #16 ¶ 12).
damages under both her invasion of privacy and negligence claims. Accordingly, summary judgment order does not bar Plaintiff from recovering her actual damages because
Plaintiff sought to recover her lost property through her invasion of privacy claim.
actual damages awarded can only relate to negligence claim:
The focus of the invasion-of- staff accessed her locker. For example, if [ ] staff had
cut the lock to Pl to the front for safekeeping, the invasion-of-privacy claim would remain unaffected. . . . Thus, the actual damages found by the jury for cause of action.
(Dkt. #73 at pp. 17 18) (citations omitted).
invading her privacy. Second, Defendant mistakenly assumes that damages cannot result from
more than one act. In this case, Plaintiff recovered $200.00 representing the market value of the property stolen from the locker. The property could not have been stolen from the locker had (1) invaded Plaintif and (2) failed to first tortious act, there would be no second tortious act or actual damages in this case. Therefore,
as both acts, Plaintiff may recover actual damages under her invasion of privacy claim.
Defendant argues in its motion for new trial that if the Court denies its motion for judgment as a matter of law, the Court should order a new trial on exemplary damages and for remittitur (Dkt. #74 at p. 1). -
(Dkt. #74). As the Court ad should be denied as moot (Dkt. #74).
CONCLUSION It is therefore ORDERED that Renewed Motion for Judgment as a Matter of Law is GRANTED IN PART and DENIED IN PART (Dkt. #73). Specifically, the Court sets aside the $35,000.00 exemplary damages award in the Judgment on Jury Verdict pursuant to Section 41.005(a) of the Texas Civil Practice and Remedies Code and Federal Rule of Civil Procedure 59 (Dkt. #72). The Court does not set aside the $200.00 actual damages award. It is further ORDERED DENIED as MOOT (Dkt. #74). IT IS SO ORDERED.