Vermont Teddy Bear v. Gawrys, No. S1392-01 (Katz, J., Apr. 15, 2004)



[The text of this Vermont trial court opinion is unofficial. It has been
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STATE OF VERMONT
Chittenden County, ss.:



VERMONT TEDDY BEAR CORP.

v.

GAWRYS



                                  ENTRY

        Defendant Gawrys was an employee of the Vermont Teddy Bear
Corporation where he helped develop new systems to improve shipping. In
1999 Gawrys was terminated. To assert control over the systems Gawrys
had helped developed, the company filed for declaratory relief for its patent
rights. In response, Gawrys counter-claimed for stock options that he
claimed were wrongfully denied. As part of his relief, Gawrys also asked
for punitive damages. Following some initial discovery, the company has
filed for summary judgment on the issue of punitive damages.
       The purpose of punitive damages is to punish morally culpable
behavior and deter the perpetrator and others from repeating such mistakes.
Coty v. Ramsey Assocs., 149 Vt. 451, 467 (1988) (quoting Davis v.
Williams, 402 N.Y.S.2d 92, 94 (Civ. Ct. 1977)). By invoking moral
culpability, punitive damages depend in part on the defendant’s mental
state. D.Dobbs, Remedies § 3.9, at 205 (1973). But by the same token, the
actions involved must be extreme and invoke the type of outrage that is
consistent with criminal activity. Brueckner v. Norwich Univ., 169 Vt.
118, 129 (1999) (quoting W. Keeton, et al., Prosser and Keeton on the Law
of Torts § 2, at 9 (5th ed. 1984)). Thus the test for punitive damages
requires outrageous acts and evidence of intentional and deliberate
wrongdoing. Id.

        Gawrys urges punitive damages for his claims of conversion,
implied contract, unjust enrichment, and constructive trust based on
incidents surrounding his termination. Gawrys argues that these facts are
so intertwined with his claims that they must be considered. To support
this argument, Gawrys cites to Crump v. P & C Food Markets, Inc., 154 Vt.
284, 296 (1990). In that decision, the Vermont Supreme Court mentioned
that the manner of termination if oppressive and abusive could provide
grounds for the tort action and punitive damages. Id. The underlying tort
in that case was intentional infliction of emotional distress. Gawrys does
not allege a similar tort. Instead, his claims are premised on the wrongful
withholding of his stock options. Setting aside the lack of an underlying
tort for the moment, Gawrys’ theory is essentially that the company’s
withholding of his stock options was part of a larger, sinister series of
actions that were intentional, vindictive, and malicious. That is, the other
incidents surrounding his firing work together to form a pattern of
outrageous activities that should be punished to discourage the company or
any other company from behaving in a similar manner towards employees.
Such a charge requires that we examine the underlying incidents to see if
they so cohere.

       Gawrys bases his claim for punitive damages on roughly eight
incidents by the company including:
       1) Arranging to have Shelburne police present when he was
terminated with a notice of trespass;
       2) Having police watch the plant for 60 hours following his
termination;
       3) Terminating him when he expected to receive a raise;
       4) Having Spencer Putnam, a vice-president of the company, escort
him off the grounds following his termination;
       5) Refusing to allow him to collect his personal belongings
following his termination;
       6) Not offering him COBRA insurance benefits;
       7) Disputing his unemployment claim; and
       8) Allowing company founder Elisabeth Robert to talk with
employees before their depositions.

       Assuming for the purposes of summary judgment that these
allegations are true, Fritzeen v. Trudell Consulting Eng'rs, Inc., 170 Vt.
632, 633 (2000) (mem.), the question is whether or not they amount to
malice. The first two incidents involving the Shelburne police were done
because the company feared retaliation or a violent outburst from Gawrys
following his termination. The two officers present at the company when
he was fired did not escort him from the building and took no actions
against Gawrys. To his credit, Gawrys was peaceable when he learned of
his termination and has since not attempted or demonstrated any intent to
harm the company. In retrospect, the police involvement may have been
unnecessary. But that does not make it malicious. The company had every
right to call the police and ask for post-termination surveillance of the
factory. Doing so does not necessarily demonstrate an animus toward
Gawrys. Furthermore, the notice of trespass served by the police is a mere
predicate to any later charge of trespassing. See 13 V.S.A. § 3705(a)(1);
Maarawi v. Parenteau, No. 2001-230 (Vt. Dec. 2001) (unpublished mem.).
Since Gawrys was no longer an employee, his continued presence or re-
entry onto the company property could be called trespassing. Since Gawrys
has honored the notice and not returned to the company’s property, this
action has not affected him.

        As for his termination, Gawrys does not allege that the company
offered him a raise or lured him into the meeting with any kind of promises.
His belief that was eligible for a raise appears to come from his own
perception. Therefore, the company did not breach any promise when they
fired him. Looking at the submitted evaluation reports does allow the
inference that Gawrys may have been a good employee and that the
company was pleased with parts of his performance, but the nature of at-
will employment is that a company may terminate its relationship with an
employee at any time for any reason, good, bad, or otherwise. Dulude v.
Fletcher Allen Health Care, 174 Vt. 74, 82 (2002). Terminating
employment, however, does not in and of itself demonstrate malice. As for
allowing him to collect his personal belongings, many companies do not
allow employees to re-enter the workplace after termination. Reasons for
doing so range from fears that employees will take company property to
concerns that they will create a scene and disrupt the workplace. While the
validity of this action may be questioned in hindsight, it is not in and of
itself an offensive, illegal, or uncommon work practice.

      Gawrys next two claims concern the company’s efforts to limit his
post-employment benefits. The first, refusing COBRA insurance benefits,
was done because the company believed Gawrys committed gross
negligence. Gawrys claims this accusation was unsubstantiated, but he
does not deny that the underlying accusation was made against him. The
question, however, is not what level of proof does a company need before
they can rightfully deny COBRA, but rather did the company have a good
faith reason or a malicious reason for making that denial. The evidence is
less than conclusive for malice since there was at least a facial reason for
denying this benefit. Gawrys offers no proof or reason to conclude that the
claim was false or more importantly that the company knew it was false
which might call into question their withholding. Likewise, the company’s
dispute over unemployment benefits appears to have been informed by
similar information. Gawrys takes offense at the company’s challenge to
his benefits, especially the use of the facts surrounding his termination. By
mentioning the role of the police and the company’s reasoning for calling
them, Gawrys argues, the company crossed a line and maliciously attacked
him in his unemployment hearing. As his former employer, the company
had a statutory right to challenge Gawrys’ unemployment compensation.
21 V.S.A. § 1344; Strong v. Dep’t of Emp. & Training, 144 Vt. 128, 130
(1984). The fact that it presented evidence against Gawrys was also within
its proper function. See, e.g., Mazut v. Dep’t of Emp. & Training, 151 Vt.
539, 541–42 (1989) (rejecting former employers challenge for lack of
evidence). Despite Gawrys’ disagreement with some of the facts and the
conclusions the company urged from them, he presents no evidence that
they were irrelevant to the company’s claim to the Department or that the
company used false facts or used them while knowing them to be untrue.

      That leaves only Gawrys’ claim that Elisabeth Robert talked with
employees prior to their depositions. The fact that she had such a
conversation with the witnesses may go to their credibility or their
reliability under V.R.E. 607, but short of any evidence of coercion or undue
influence, there is little to go on. Gawrys offers no evidence beyond the
fact that Robert talked with the witnesses the morning of the deposition.
All of the witnesses described the conversation as innocuous and gave no
evidence of being coerced or coaxed to remember anything outside of their
personal experience. While such a conversation may affect the witnesses’
credibility to a fact finder, this incident does not strike us as outrageous or
malicious.

       Individually, these incidents do not appear outrageous or evince a
malicious mental state. Indeed, there is no apparent morally culpability in
any of these acts, and they are on the whole, legal. Together, they illustrate
some disdain toward Gawrys but not any particular ill will. The company’s
actions are also easily distinguishable from other incidents where punitive
damages were found. See, e.g., Denton v. Chittenden Bank, 163 Vt. 62,
63–66 (1994) (recounting employee’s humiliation and suffering at the
hands of an supervisor who hounded and harassed him at work, home, and
at special occasions with probing, embarrassing questions); Crump, 154 Vt.
at 288–89 (describing public accusations by supervisors and representatives
of the company accusing employee of being a thief in front of his co-
workers and noting that he was subjected to an intense three-hour, non-stop
interrogation where his employer pressured him repeatedly to sign self-
incriminating confessions and was summarily fired); Coty v. Ramsey
Assoc. Inc., 149 Vt. 451, 453–57 (1988) (describing the extensive lengths
owners went to in turning their Stowe property into an animal-carcass-
covered, manure-ridden wasteland in retribution for neighbors opposing
their development permit).

       In contrast to Crump, Denton, and Coty, Gawrys has presented
several incidents but none that shock, offend, or demonstrate a reckless
disregard of his rights. Schanabel v. Toyota, Inc., 168 Vt. 354, 362 (1998).
There is simply no evidence that the company acted as it did to maliciously
deprive Gawrys of his stock options and personal belongings. Not every
step that the company took may have been necessary, but every step was
legal. Individually or together, there is no act that is worthy of punishment.
Without such requisite wrongful conduct and malice, Brueckner, 169 Vt. at
129–30, there can be no punitive damages.

     Therefore, Vermont Teddy Bear Corporation’s motion for summary
judgment is granted and the request for punitive damages is dismissed.

       Dated at Burlington, Vermont________________, 2004.




                                          ________________________
                                          Judge
