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COURT OF APPEALS
DECISION
DATED AND FILED
May 7, 2009
David
R. Schanker
Clerk of Court of Appeals
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NOTICE
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This opinion is subject to
further editing. If published, the
official version will appear in the bound volume of the Official
Reports.
A party may file with the
Supreme Court a petition to review an adverse decision by the Court of
Appeals. See Wis. Stat. § 808.10 and Rule 809.62.
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Appeal No.
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STATE OF WISCONSIN
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IN COURT OF
APPEALS
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DISTRICT IV
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Western Wisconsin Water, Inc.
d/b/a La Crosse
Premium Water,
Plaintiff-Appellant,
v.
Acuity, a mutual insurance company,
and Crystal
Canyon Bottled Water,
Defendants,
Crystal Canyon, Inc. and Auto Owners
Insurance Company,
Defendants-Respondents,
Pekin Insurance Company,
Intervenor.
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APPEAL
from a judgment of the circuit court for La Crosse County: Elliott
M. Levine, Judge. Reversed and
cause remanded with directions.
Before
Lundsten, Bridge and Hoover,
JJ.
¶1 PER CURIAM. Western Wisconsin Water,
Inc., appeals the judgment of the circuit court after remand from this
court. On remand, the circuit court
concluded that there was insufficient evidence to support the award of punitive
damages. Western argues that the circuit
court erred when it reduced the punitive damages award to zero, and that the
issue on remand was whether the award was excessive, not whether there was
sufficient evidence to support it. Crystal Canyon asserts that the only question before
the circuit court was whether the punitive damages award was supported by
sufficient evidence and that the court, in effect, correctly ruled that it was
not. We conclude that both issues were
properly before the circuit court. We
conclude the circuit court erred when it determined that there was insufficient
evidence to support the punitive damages award and also conclude that the award
was not excessive. Consequently, we
reverse the judgment of the circuit court with directions to reinstate the award
of punitive damages.
¶2 This is a trademark infringement case that is before us for a
third time. Our last decision contains
detailed background facts. Here, we
provide a shorthand version of those facts. Western bottled and sold La Crosse Premium
Water in large containers used in water coolers. It has a registered trademark for “La Crosse
Premium Water.” In 1997, Western sold
its distribution business to J.P. Hering Company and allowed them to use the
logo for La Crosse Premium Water. J.P.
Hering used the logo on, among other things, the uniforms of its truck drivers and
its delivery trucks. The contract also
provided that Western had the right to repurchase the business if J.P. Hering
decided to sell.
¶3 J.P. Hering eventually sold the distributorship to Crystal Canyon, without first offering it to
Western. Crystal Canyon
began using the uniforms and delivery trucks with the La Crosse Premium Water
logo on them to make customer calls.
This went on for six weeks, despite demands by Western that Crystal Canyon stop. Western then decided to start a new
distributorship, and attempted to regain some of its former clients.
¶4 Western sued Crystal
Canyon alleging
several claims. The circuit court
granted summary judgment to Crystal
Canyon and Western appealed,
and we reversed in part and remanded.
¶5 After the remand, a jury trial was held before Judge Michael
Mulroy on the trademark infringement claim.
The jury found Crystal
Canyon had infringed on Western’s
trademark, and awarded Western $336,000 in compensatory damages and $100,000 in
punitive damages. Crystal Canyon
brought a post-verdict motion to remit or, in the alternative, for a new
trial. The circuit court construed this
to be a request to change the jury’s verdict on causation from “yes” to “no,”
and granted the motion. Western again
appealed. We once again reversed,
concluding that there was sufficient evidence of causation. Western Wisconsin Water, Inc. v. Quality
Beverages of Wisconsin, Inc., 2007 WI App 188, ¶¶1, 22, 36, 305 Wis. 2d
217, 738 N.W.2d 114. We remanded “for
the limited purpose of addressing Crystal
Canyon’s motion to
remit damages.” Id., ¶36.
¶6 On remand, the case came before Judge Elliott Levine. Judge Levine considered Crystal Canyon’s
post-verdict motion to “remit” the damages, or in the alternative for a new
trial on damages only.
After hearing the parties’ arguments and
reviewing the trial transcripts, Judge Levine denied the request to reduce the
compensatory damages, but changed the punitive damages award to zero,
concluding that the evidence was insufficient to support such an award. Western again appeals, and, once again, we
reverse and remand with directions.
¶7 The focus of this appeal is the punitive damages award, but
the parties dispute the context in which we should address that award. Western, in its brief-in-chief, argues that
the punitive damages award was not excessive and, therefore, should not have
been reduced to zero. As to Judge
Levine’s conclusion that the evidence was insufficient to support any punitive
damages award, Western argues that this issue was decided by Judge Mulroy when
he allowed the question to go to the jury and, hence, Judge Levine was bound by
this determination based on the doctrine of law of the case.
¶8 Crystal
Canyon argues in its
responsive brief that Judge Levine correctly concluded that Western presented
insufficient evidence to support an award of punitive damages. Further, Crystal Canyon
contends that Judge Levine was not bound by law of the case doctrine and that
Western’s failure to address the merits of the sufficiency issue constitutes
waiver.
¶9 In its reply brief, Western continues to maintain that the
issue is whether the punitive damages were excessive and it asserts that Crystal Canyon
did not challenge the sufficiency of the evidence before the circuit
court. Further, Western argues that our
last decision remanded the matter solely to address Crystal Canyon’s
“motion to remit,” which Western equates solely with the excessiveness
issue. Thus, according to Western, the
only issue before us is whether the punitive damages award should have been
reduced because it was excessive.
¶10 We begin our analysis by disagreeing with Western’s assertion
that Crystal Canyon’s trial court motion did not
challenge the sufficiency of the evidence supporting a punitive damages award. The trail to this conclusion begins with
inartful language in Crystal
Canyon’s post-trial motion.
¶11 Shortly after the trial in 2006, Crystal Canyon
filed a motion that included a request to reduce punitive damages. Although intertwined, Crystal Canyon’s
motion argued both that the punitive damages were excessive and should be
reduced and that those damages were not supported by sufficient evidence. Rather than separate out these distinct
arguments, Crystal
Canyon presented, in a
blended fashion, reasons why the award should be reduced and why it should be
eliminated because it was not supported by sufficient evidence. Crystal
Canyon lumped these
two arguments under its lead-in request “to remit ... the $100,000 in punitive
damages to $0.” This is confusing
phrasing because remit language, when used in conjunction with damages, is
usually a reference to reducing, not eliminating, excessive damages. Reducing an award to zero, however, is the
equivalent of holding that there is insufficient evidence to support any award. Nonetheless, it is readily apparent from the
arguments actually made that Crystal
Canyon was indeed making
both arguments.
¶12 Judge Mulroy did not address this request because he reversed
the awards on a different basis. Judge
Mulroy concluded that the trial evidence was insufficient to support a finding
of causation with respect to the underlying trademark infringement claim. Western appealed that ruling and, in our
prior decision, we disagreed with the judge’s causation analysis. We concluded that the evidence of causation
was sufficient. Western Wisconsin Water,
305 Wis. 2d
217, ¶¶22, 36. At that point, it made
sense to remand to the circuit court so that it could address Crystal Canyon’s
motion to reduce the damages awards.
¶13 Understandably, we paid little attention to exactly what Crystal Canyon
was arguing in that regard and simply repeated language in Crystal Canyon’s
motion. We remanded “for the limited
purpose of addressing Crystal
Canyon’s motion to
remit damages.” Id., ¶ 36. Earlier in that opinion we stated, in
pertinent part, that Crystal
Canyon “moved the court
to remit ... the punitive damages from $100,000 to zero.” Id.,
¶9. On remand, Judge Levine correctly
understood that we remanded the matter so that he could address Crystal Canyon’s
motion without commenting on exactly what Crystal Canyon
was arguing in that motion.
¶14 Consequently, when the case returned to Judge Levine, he was in
the same position with respect to this motion as Judge Mulroy was when it came
before him. And, as we have explained, Crystal Canyon’s motion includes the argument
that the evidence was insufficient to support punitive damages. It follows that Judge Levine properly
addressed the sufficiency issue.
¶15 We do not, however, agree with Judge Levine’s conclusion that
the evidence was insufficient. An award
of punitive damages requires proof of “(1) evil intent deserving of
punishment or of something in the nature of special ill-will; or (2) wanton
disregard of duty; or (3) gross or outrageous conduct.” Trinity Evangelical Lutheran Church &
School-Freistadt v. Tower Ins. Co., 2003 WI 46, ¶45, 261 Wis. 2d 333,
661 N.W.2d 789. The question of “whether
the evidence establishes a proper case for the allowance of punitive damages
and for the submission of the issue to the jury” is decided by the trial
court. Wangen v. Ford Motor Co.,
97 Wis. 2d
260, 298, 294 N.W.2d 437 (1980). “Section
805.14, Stats., makes clear that motions challenging the sufficiency of
evidence to support a verdict or an answer in a verdict are only to be granted
if no credible evidence supports the verdict.”
Sievert v. American Fam. Mut. Ins. Co., 180 Wis.
2d 426, 433, 509 N.W.2d 75 (Ct. App. 1993) (footnote omitted), aff’d, 190 Wis. 2d 623, 528 N.W.2d 413 (1995). Once submitted to the jury, the award of
punitive damages “is within the discretion of the jury, and ‘[w]e are reluctant
to set aside an award merely because it is large or we would have awarded
less.’” Trinity Evangelical, 261 Wis. 2d 333, ¶46
(citation omitted). “[T]he evidence must
be viewed in the light most favorable to the plaintiff, and a jury’s punitive
damages award will not be disturbed, unless the verdict is so clearly excessive
as to indicate passion and prejudice.” Id., ¶56.
¶16 The jury could have viewed Crystal Canyon’s conduct in continuing
to use the La Crosse Premium Water logo after it bought J.P. Hering’s business,
and after it was told by Western to stop, as an intentional disregard of
Western’s rights, done with malicious intent to deceive Western’s former
customers. The evidence supported a
finding that Crystal Canyon knew it was not authorized to use the logo, that it
could have avoided using the logo, and that officers at Crystal Canyon did not
care about any rights Western had in that regard. Moreover, there was evidence that one Crystal Canyon officer said that he wanted to “bring
Brian Elder [a Western officer] and La Crosse Premium Water [a reference to Western]
to their knees.” This is sufficient
evidence to support a jury finding that Crystal Canyon
had “evil intent,” acted with “wanton disregard of duty,” or engaged in “gross
or outrageous conduct.” Consequently, we
conclude that Judge Levine erred when he concluded that the evidence was
insufficient to support the punitive damages award.
¶17 Western also argues that Judge Levine was barred by the law of the
case doctrine from considering this sufficiency question because Judge Mulroy
had previously ruled on the topic when he gave the issue to the jury. However, law of the case doctrine holds that
the decision of an appellate court binds that court and the circuit court in
the same proceeding. State
v. Stuart, 2003 WI 73, ¶23, 262 Wis.
2d 620, 664 N.W.2d 82. The doctrine does
not prohibit a trial court on remand from reconsidering a prior ruling. See id.,
¶26.
¶18 We turn to the question whether the punitive damages award was excessive. We review this question de novo. Trinity
Evangelical, 261 Wis.
2d 333, ¶48. “An award is excessive, and
therefore violates due process, if it is more than necessary to serve the
purposes of punitive damages, or inflicts a penalty or burden on the defendant
that is disproportionate to the wrongdoing.”
Id.,
¶50. The purpose of punitive damages is
to punish unlawful conduct and to deter its repetition. Id.,
¶46. To determine whether an award is
excessive, Wisconsin courts consider three guideposts established by the United
States Supreme Court: “(1) the degree of
egregiousness or reprehensibility of the conduct; (2) the disparity between the
harm or the potential harm suffered and the punitive damages award; and (3) the
difference between the punitive damages and the possible civil or criminal penalties
imposed for the conduct.” Id., ¶52. Wisconsin
courts have been encouraged to consider the following six factors:
1.
The grievousness of the acts;
2.
The degree of malicious intent;
3.
Whether the award bears a reasonable relationship to
the award of compensatory damages;
4.
The potential damage that might have been caused by the
acts;
5.
The ratio of the award to civil or criminal penalties
that could be imposed for comparable misconduct, and
6.
The wealth of the wrongdoer.
Id., ¶53. Finally, courts should be reluctant to interfere
with the jury’s discretion “merely because [the award] is large or we would
have awarded less.” Id., ¶46.
¶19 Applying the factors as set forth in Trinity Evangelical, and
viewing the evidence in the light most favorable to Western, we conclude that
the punitive damages award was not excessive.
¶20 As noted above, there was evidence from which the jury could
conclude that Crystal
Canyon acted with
malice, particularly the “bring [them] to their knees” comment. This and other evidence does not show a high
degree of maliciousness, but it is significant that the jury did not award high
punitive damages; the award was approximately one-third of the compensatory
damages award. Finally, we are mindful
that we should defer to the jury’s discretion.
Consequently, we conclude that the punitive damages award “bears a
reasonable relationship to the award of compensatory damages.” See id.,
¶63.
¶21 We remand to the circuit court with instructions that it
reinstate the jury’s award of $100,000 in punitive damages.
By the Court.—Judgment reversed and cause
remanded with directions.
This
opinion will not be published. See Wis.
Stat. Rule 809.23(1)(b)5.
(2007-08).