What’s On Their Minds: Are Damages to Reputational Harm Capped in Defamation Cases? Ann Wayt v. DHSC, LLC.

Update: On December 7, 2018, the Supreme Court of Ohio handed down a merit decision in this case.  Read the analysis here.

On August 1, 2018, the Supreme Court of Ohio heard oral argument in the case Ann Wayt v. DHSC, LLC2017-1548. At issue is whether R.C. 2315.18 caps non-economic compensatory damages in defamation actions.

Case Background

In 1987, Ann Wayt (“Wayt”) began working as a nurse at DHSC, LLC, which does business as Affinity Medical Center (“Affinity”). Her employment evaluations had always been excellent. In 2012, Wayt, along with several other nurses, began a campaign to unionize the nurses at Affinity. Wayt was viewed by some as the leader of the unionization effort. Ultimately, the effort to unionize was successful, although the issue of unionization was divisive at the hospital. Almost immediately after the unionization went into effect, Wayt was accused of misconduct and falsifying hospital records to reflect patient care she did not administer. The hospital conducted an investigation and suspended Wayt for falsification of hospital documents. During the subsequent investigation, Wayt’s supervisors recommended that she be terminated.

After Wayt’s termination, Affinity’s Chief Nursing Officer sent a complaint about Wayt to the Ohio Board of Nursing (“OBN”) so that the OBN could decide whether to suspend or revoke Wayt’s nursing license. Affinity supplied the OBN with allegedly selective pieces of information and allegedly left out documents supporting Wayt’s performance. As a result, Wayt had little success in her subsequent job search. Wayt applied to fifty-seven openings, received an interview from two of them, and was not hired.

The National Nurses Organization Committee filed a charge with the National Labor Relations Board (“NLRB”) alleging Affinity engaged in unfair labor practices in terminating Wayt. The NLRB found for Wayt. The NLRB’s ruling was affirmed by the U.S. District Court for the Northern District of Ohio. Affinity was ordered to reinstate Wayt in her previous job with the same pay and benefits.

After returning to work at Affinity, Wayt filed a civil complaint against Affinity for, in part, defamation of her character. Claims other than defamation were later dismissed.  The punitive damages portion of the trial was bifurcated. The jury found for Wayt on her defamation claim, and awarded her $800,000 in noneconomic compensatory damages and $750,000 in punitive damages. Affinity moved that the damages be limited to $250,000 and $500,000 respectively in accordance with the damages caps set forth in R.C. 2315.18 and R.C. 2315.21. The trial court overruled Affinity’s motion and found that R.C. 2315.18 does not apply to defamation claims.

On appeal, the Fifth District, in a unanimous opinion written by Judge Delaney, joined by Judges Gwin and Wise, affirmed the decision of the lower court. On the damages cap issue, the Fifth District substantially incorporated by reference the trial court’s finding and analysis that the damages cap does not apply to defamation claims. Affinity now appeals this aspect of the ruling of the Fifth District.

Read the oral argument preview of this case here.

Key Precedent

Ohio Constitution Article I, Section 16 (All courts shall be open, and every person, for an injury done him in his land, goods, person, or reputation shall have remedy by due course of law . . .)

R.C. 2315.18 (Compensatory Damages in Tort Actions)

(A)(4) “Noneconomic loss” is categorized as any nonpecuniary harm to a person or property. Statute lists specific types of recoverable damages.

(A)(7) “Tort action” means a civil action for damages for injury or loss to person or property. “Tort action” includes a civil action upon a product liability claim or an asbestos claim. “Tort action” does not include a civil action upon a medical claim, dental claim, optometric claim, or chiropractic claim or a civil action for damages for a breach of contract or another agreement between persons.)                                                                          (B)(2) (specifies caps to be applied in tort actions for compensatory noneconomic damages.)

R.C. 2315.21 (Punitive or Exemplary Damages)                                                                                (D)(2)(a) Punitive damages shall not be awarded in excess of two times the compensatory damages awarded to the plaintiff.)

Smith v. Buck, 119 Ohio St. 101 (1928) (The term “injury to person” is commonly used and generally afforded its common usage which extends to reputational injuries unless additional language is present to indicate otherwise.)

Lawyer’s Coop. Pub. Co. v. Muething, 65 Ohio St.3d 273 (1992) (A negligence claim asserting emotional distress, pain and suffering, humiliation, and loss of reputation is a claim for personal injuries and is governed by the statute of limitations set forth in R.C. 2305.10. Syllabus)

Arbino v. Johnson & Johnson, 2007-Ohio-6948 (Ohio’s statutory scheme concerning caps on compensatory and punitive damages—R.C. 2315.18 and 2315.21—are facially constitutional.)

Nadra v. Mbah, 2008-Ohio-3918 (“Bodily injury” covers all actions whose purpose is to recover for an injury to the person whether based in tort, contract, or statute.)

Simpkins v. Grace Brethren Church of Del. Ohio, 2016-Ohio-8118 (Upholding caps on catastrophic nonphysical noneconomic damages as applied to minors who are victims of sexual assault, arising out of negligent hiring and supervision by church.)

At Oral Argument

Arguing Counsel

Michael O. Fawaz, Howard & Howard, Attorneys, Royal Oak Michigan, Admitted Pro Hac Vice, for Appellant Affinity Medical Center.

Brian L. Zimmerman, B Zimmerman Law, Canton, for Appellee Ann Wayt. Sitting with Zimmerman at counsel table, but not arguing, was retired Justice Andy Douglas.

Affinity’s Argument

Based on the unambiguous language of R.C. 2315.18, the statutory cap on noneconomic damages clearly applies to the tort of defamation. Since the statute is unambiguous it need not be interpreted; only applied.

The statute defines a tort action as “a civil action for damages for injury or loss to person or property.” “Civil action” is a broad term. Recognizing that, the legislature tried to limit the scope of a tort action by excluding certain claims from that definition, such as medical malpractice claims, and even breach of contract claims, so those claims would not get swept up in this very broad definition. But defamation is not excluded from this definition. Since 1928, in Smith v Buck, this court has characterized slander and defamation as a form of personal injury. The exact language from that decision was, “the security of a person’s good name and reputation is within his personal rights as a citizen, and slander thereof is an injury to his person.”

Defamation is unquestionably a tort action. The damages available for defamation are the exact intangible noneconomic losses defined by statute—mental anguish, suffering, and humiliation. While Ms. Wayt submitted evidence that she had applied for jobs and could not get them, there was no lost wage claim presented. The damages sought were for noneconomic loss.

Despite the language in the Ohio Constitution segregating out injury to reputation, this court has characterized loss of reputation as another form of injury to a person. It may not be bodily injury, which is narrower, and requires physical harm, but injury to reputation is still a non-physical injury to the person. It is fair to assume that the legislature is aware of this court’s precedent. It could certainly have legislated around that. It could have excluded reputation specifically. It was clearly the intent of the legislature to cap noneconomic damages and the only exception it provided for was for catastrophic permanent physical injuries. There was no other exception for nonphysical injuries even when they are catastrophic. Simpkins is the perfect example of that.

The court should reject Ms. Wayt’s argument that that this statute only applies to physical bodily injury, or claims sounding in negligence only. The statute does not distinguish between negligent and intentional conduct.  Both kinds of conduct cause bodily injury. The statute caps any injury or loss to person or property unless it is a catastrophic permanent injury.

The other issue-whether there were separate occurrences of defamation—was waived in this case. If the court does consider it, there was only a single occurrence. All the separate events came together and caused a single indivisible injury.

This case should be reversed and remanded.

Wayt’s Argument

Affinity is asking this court to ignore the express language and the express intent of the legislature, and to re-write R.C. 2315.18. The legislature indicated that its intent was to create “a predictable system of civil justice that preserves the rights of those who have been harmed by negligent behavior.”

This case has nothing to do with negligent behavior. It only has to do with malicious, intentional behavior to destroy a woman’s reputation, to get her fired, and to have her license stripped before the Ohio Board of Nursing. R.C. 2315.18, the damage cap statute, only applies to negligence cases.

Affinity is asking this court to immunize intentional bad behavior.  This court did not do that in Simpkins. The noneconomic damages capped in that case related to the claim of negligent hiring and supervision. And punitive damages cannot be recovered in negligence actions.

Article I Section 16 of the Ohio Constitution reads, “All courts shall be open, and every person, for an injury done him in his land, goods, person, or reputation shall have remedy by due course of law.” There is an “or” before the word reputation for a reason. The framers of the Constitution certainly recognized that there are differences between injury to property, to person, and to our reputation. Our reputation is what defines us—it is separate and distinct.  No one could read the Constitution and say that injury to person is the same as injury to reputation when there is an “or” in between them. In 11 separate sections of R.C. 2318.15 it says the statute only applies to cases involving injury or loss to person or property. “Injury to person” is speaking about a bodily injury. So personal injury is a broader term.

It is presumed that the General Assembly knew that people in Ohio can suffer three types of injuries—to person, property, or reputation. R.C. 2315.18 specifically defines what a tort action is, and it is defined as injury to person or property, not injury to reputation. Reputation is nowhere in there.  Affinity wants the court to re-write that statute.

Claims that involve only negligent behavior are governed by R.C. 2315.18; the jury specifies economic and noneconomic damages, and the latter are capped. That follows the legislative intent, which was to cap certain damages for negligent behavior. However, a case like this one, which involves intentional conduct and allows punitive damages, is governed by R.C. 2315.21, not R.C. 2315.18.  The case was bifurcated into two phases, the first for compensatory, the second for punitive damages. That statute specifically says, without any reference to R.C.2315.18, that in a case where a plaintiff makes a claim for both compensatory and punitive damages, the jury is to return a general verdict with an interrogatory that specifies the total compensatory damages. The jury is not to divide the economic from the noneconomic damages in cases that involve punitive damages. But the legislature does offer some relief because after the compensatory damages are made, punitive damages are then capped.

Damages are presumed with intentional torts like defamation. It is entirely up to the jury to decide the amount to be awarded. No aggregate number was suggested to the jury. The verdict was not excessive. A motion for remitter was made and denied.

What Was On Their Minds

Ohio Constitutional Language

Injury to reputation is separately categorized in the Ohio Constitution, commented Justice O’Donnell. So wasn’t reputation excluded by the General Assembly?

Evidence of Economic Loss

What is the state of the record with respect to evidence of economic damages, such as job loss, loss of income, loss of economic advantage, asked Justice French? Was any evidence of lost wages presented? About how much the plaintiff might have earned had she been able to get another job?

Damages

Where did the amount of damages requested come from, asked Justice French? Was there a specific suggestion to the jury about what the award should be? If the court were to agree with Affinity about the cap, what would happen to the punitive damages? She noted that there was not a separate proposition of law about the punitive damage award.

Did the plaintiff argue a number to the jury, asked Justice O’Donnell? An aggregate number? (answer: no). Was there a motion for a remittitur? What was the award of punitive damages from the jury? Was that capped?

If compensatory damages are capped, wouldn’t that also reduce the potential for punitive damages, asked Chief Justice O’Connor?

Smith v. Buck

In this opinion, in reaching its conclusion, the Court looks to earlier cases in which it quotes as saying “at common law libel and slander were classified as injuries to the person,” commented Justice DeWine.  It seems pretty clear that in Smith v. Buck, the Court is not making a distinction between personal injuries and injuries to the person, but is saying these are injuries to the person. How can we avoid that language?

Legislative Intent

“Bodily injury” is not the phrase we are talking about, is it, asked Justice DeWine.  It’s used in the damage cap statute, but it’s not used in the operative part of the statute that we have to construe here, he noted. Should the court just change everything to bodily injury in the statute?

If it makes no difference whether the conduct involved is intentional or negligent, how to explain the negligence reference in the legislative notes, asked Chief Justice O’Connor? Was the legislature really concerned about intentional bad acts?  Wasn’t the chief concern at the time medical malpractice?

How it Looks from the Bleachers

To Professor Emerita Bettman

My student contributor Paul Taske and I disagree on this one, and I may be speaking more from the heart than the head here. My notorious plaintiff’s heart was outraged by what happened to Ann Wayt. Good thing I wasn’t on the jury.

While I think this should be a win for Wayt, the bench was so cold it is hard to say that it will be. I think damage to reputation, as set forth in its own category in Article I Section 16 the Ohio Constitution, is different, and not subject to the damages cap of injuries to person or property set forth in R.C. 2318.15. I find that a very powerful argument. Justice O’Donnell seemed to be buying that argument, as did the Chief. Justice DeWine, on the other hand, did not seem to be. No hints from the others, although Justice French, asked a few questions about the state of the record on economic loss.

I just don’t think R.C. 2318.15 applies to intentional torts, and I think the statement of findings and intent in Section 3 of SB 80 support that interpretation. This was a defamation per se case, in which damages are presumed, which further complicates the matter.  It doesn’t seem right to apply a cap to undifferentiated damages, especially for an intentional tort. The very essence of defamation is an intangible injury to one’s self worth, which to me, is very different from noneconomic damages in a negligence action. Defamation must also be proven by clear and convincing evidence, and with proof of actual malice—far more than is required in a negligence action.

To Student Contributor Paul Taske

I think this one looks like a win for Affinity.

Initially, it was extremely difficult to determine how the justices were thinking and what they were thinking about. The bench started off cold, but eventually the Court found its voice. Several questions were aimed at addressing the impact of the Court’s own precedent on the understanding of the statute. Some justices appeared to be severely skeptical about the idea of re-evaluating an established and workable precedent–paying particular attention to the fact that its cases have been cited in other jurisdictions. The question of precedent also tied into the reading of the statute itself and whether the Court has already decided whether personal injuries are separate from injuries to reputation. While I doubt the Court’s decision will be unanimous, I think it will ultimately determine that injuries to reputation are a subsection of personal injuries and hold that the damages at issue are subject to the statutory cap.

 

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