Medel v. Oceanic Cos.

1

RUT MEDEL, Plaintiff and Appellant, v. OCEANIC COMPANIES, INC. et al., Defendants and Appellants.

D079551

California Court of Appeals, Fourth District, First Division

February 22, 2024

NOT TO BE PUBLISHED

APPEALS from a judgment and orders of the Superior Court of San Diego County, No. 37-2018-00000593-CU-OE-CTL Joel R Wohlfeil, Judge. Affirmed as modified.

Frost Brown Todd AlvaradoSmith, William M. Hensley; Law Offices of Michael Wright and Michael Wright for Defendants and Appellants.

Tashroudian Law Group, David A. Tashroudian and Mona Tashroudian for Plaintiff and Appellant.

DO, J.

INTRODUCTION

A jury found Rut Medel was the victim of sexual harassment, sexual battery, retaliation for reporting sexual harassment, and wrongful termination in violation of public policy, among other causes of action, during her approximately nine months of employment at Oceanic Companies, Inc. (Oceanic Companies), and Oceanic San Diego, LP (Oceanic San Diego) (sometimes collectively, Oceanic). Manoj Chawla, the president and CEO of Oceanic Companies, repeatedly tried to have sexual intercourse, including group sex, with Medel. Deepak Chokshi, the regional manager of Oceanic Companies was also found personally liable for sexually harassing and sexually battering Medel. Medel was terminated after she complained about Chokshi's sexual battery and retaliation, and rebuffed Chawla's sexual advances.

The jury awarded Medel substantial damages for past and future lost income and past and future noneconomic loss, as well as punitive damages. Chawla, Chokshi, and Oceanic (sometimes collectively, defendants) moved for judgment notwithstanding the verdict (JNOV) and a new trial. Defendants argued in their JNOV motion that the evidence was insufficient to support the awards for past and future lost income and punitive damages. In their new trial motion, defendants asserted myriad grounds to support relief, including damages are excessive (Code Civ. Proc.,^[1] § 657, subd. (5)), evidence is insufficient to justify the verdict and the verdict is against the law (id., subd. (6)).

The trial court denied defendants' JNOV motion, ruling there was sufficient evidence to support the jury's verdicts. Defendants have not appealed this ruling. The court, however granted their new trial motion as to damages, conditioned on Medel's agreement to remittitur of the amount of future lost income and punitive damages. It found the awards for future lost income against each defendant were "excessive in that the awards are not supported by a rational foundation in the evidence" and remitted each of those awards to zero damages.

As to punitive damages, the trial court concluded the reprehensibility of each defendant's conduct was "not so severe" that Medel was undeterred from accepting employment with Oceanic despite knowing of defendants' "unusual co-mingling of personal and business practices" and she had "participated in many of the same practices she criticized at trial." The court also found the ratio of punitive to compensatory damages unreasonable based on its view of the evidence of the defendants' financial condition. As a result, the court reduced the punitive damages awards against Oceanic Companies and Oceanic San Diego from $1 million to $326,360, representing a one-to-one ratio between punitive and compensatory damages. The court also reduced the punitive damages award against Chawla from $2 million to $652,720, a two-to-one ratio of punitive to compensatory damages. Medel accepted the remittitur, and the court entered the amended judgment, from which the parties have appealed.^[2]

On appeal, defendants do not challenge the jury's verdicts on liability. Instead, they contend the trial court erred by not further reducing the punitive damages award against Chawla to a one-to-one ratio of punitive to compensatory damages, arguing his reprehensibility was "low to moderate." They also assert other grounds to support the further reduction, if not elimination, of the punitive damages awards; and claim the jury's awards for past lost income and noneconomic damages were also excessive.

In her cross-appeal, Medel contends the jury's awards for future lost income against all defendants must be reinstated because the trial court failed to supply an adequate specification of reasons or grounds when it eliminated the awards, as required by section 657; and the trial court erred when it remitted the punitive damages awards against Oceanic Companies, Oceanic San Diego, and Chawla. She thus seeks reinstatement of both categories of damages to their original amounts.

Addressing compensatory damages first, we conclude the trial court properly exercised its discretion when it refused to reduce the jury awards for past lost income and noneconomic loss. But we agree with Medel that the court failed to comply with section 657 when it eliminated the future lost income awards. We thus reinstate those awards to their original amounts as to each defendant.

Regarding punitive damages, we conclude the trial court erred in relying on the asserted conduct of the plaintiff, Medel, in assessing the degree of each defendant's reprehensibility for punitive damages. It is well established that a defendant's reprehensibility is to be determined on the basis of his tortious conduct, not the victim plaintiff. This principle applies with equal force as to the victim's asserted conduct in a sexual harassment action.

We nonetheless deny Medel's cross-appeal to reinstate the jury's original punitive damages awards, as the remitted awards appear reasonable based on the reprehensibility of the defendants' conduct and their financial condition. However, because we are reinstating the $60,000 compensatory awards for future lost income against Oceanic Companies, Oceanic San Diego, and Chawla, we will exercise our authority to increase the punitive damage awards against these three defendants as necessary to reestablish the trial court's one-to-one ratio of compensatory to punitive damages against Oceanic Companies and Oceanic San Diego, and the two-to-one ratio against Chawla.^[3]

FACTUAL AND PROCEDURAL BACKGROUND^[4]

I. Trial Evidence

A. The Parties

Chawla is president and CEO of Oceanic Companies, which managed hotels he separately owned either wholly or partially. At the time of trial, Oceanic Companies managed about 13 such properties.

Chokshi was regional manager of Oceanic Companies up until October 2016. He reported directly to Chawla and supervised Medel. Rubi Briceno worked for Chawla and Oceanic Companies, eventually becoming its vice president. She recruited a majority of the employees for the various Oceanic properties, including Medel.

Medel worked for Oceanic^[5] from June 5, 2016 to February 28, 2017, when she was terminated.

B. Medel's Testimony

Medel met Briceno in 2010, when she was 15 years old. They became "best friends." In May 2016, at age 21, Medel was working as a bank teller in Santa Barbara County when Briceno and Chawla offered her a job at Oceanic. A month later, Medel moved to San Diego and started employment with Oceanic as a front desk agent at its El Cajon hotel.

1. Events before the start of Medel's employment with Oceanic.

Through her friendship with Briceno, Medel had known Chawla and Chokshi nearly a year and a half before her employment with Oceanic.

Medel first met Chawla in January 2015 when she visited Briceno in San Diego. Briceno was unemployed and attending college full time. Briceno told Medel that Chawla was her boyfriend, they dated "unofficially[ ] because he's married," and that he allowed her to live rent-free in a room at the El Cajon hotel. According to Medel, Chawla was Briceno's "sugar daddy, where she gets paid . . . to provide whatever he wants sexually."

In October 2015, Medel accompanied Chawla, Chokshi, and Briceno on a trip to Las Vegas to celebrate Briceno's 21st birthday. Medel was not yet 21. All four of them slept in one hotel room with a single bed. During the trip, Medel, along with Chawla, Chokshi, and Briceno, consumed alcohol and used cocaine. Medel was not "surprised" by their partying and drug use when she started at Oceanic. Chawla's and Briceno's motto was to" 'work hard, play hard.'" But for Medel, "partying" did not include sex.

In April 2016, Chawla invited Medel and Briceno to his home, while his wife was out of town, to celebrate Briceno's acceptance into a study abroad program. Chawla and Chokshi were both there when Medel and Briceno arrived. That evening, Chawla, Chokshi, Briceno, Medel and others got drunk. Briceno took off all her clothes and got into a hot tub with Chawla. The two repeatedly asked Medel to join them. Although uncomfortable, Medel eventually agreed but refused to remove her bra and underwear.

In May 2016, Briceno and Chawla told Medel "they had just let some girls go" and they thought Medel would be "a good fit" for the company. It was not the first time they offered her a job but this time it was, "you're either taking it or not." Medel accepted the offer and moved to San Diego where, she explained, she had no one else other than Briceno.

2. Events during Medel's employment with Oceanic.

On June 5, 2016, Medel started employment with Oceanic. Once hired, she moved into Briceno's room at the hotel in El Cajon where they shared a bed and received free rent. At the same hotel, Medel started work as the front desk agent. Chokshi, as regional manager, supervised Medel.

In her first week on the job, Chokshi offered Medel beers, on work premises and during working hours, to "celebrat[e]" her hiring. She declined.

During her second week, Chawla invited Medel and Briceno to a business meeting in Laguna. They met Chawla and his business associate at a...