Florida’s Second District Court of Appeal Reverses a $15 Million Punitive Damages Judgment—Concluding that Direct Corporate Liability is only Applicable for Conduct of Corporate Officers or Other Officials Who Represent the Corporation as a Whole.
On October 25, 2019, the Second District issued its opinion in Florida Power & Light v. Dominguez. Fla. Power & Light Co. v. Dominguez, No. 2D18-2363, 2019 Fla. App. LEXIS 16114 (2d DCA Oct. 25, 2019).
The facts are straightforward. Fifteen-year-old Justin Dominguez was killed by electrocution when he climbed a bamboo stalk that contacted an energized line maintained by Florida Power & Light (FPL). Prior to his death, FPL’s auditing contractor warned FPL to remove the bamboo at the accident site. FPL failed to do so. In addition, FPL’s own guidelines recognize the danger caused by bamboo growing near its power lines and identifies bamboo as a “critical removal” species that should be removed outright rather than merely trimmed.
Justin’s mother filed a wrongful death action against FPL. In seeking punitive damages against FPL, she argued that FPL was directly liable for punitive damages because its “head of vegetation management” was willfully ignorant about the circumstances and hazards surrounding Justin’s death. The head of vegetation management did not visit the accident site, had no opinion on whether the vegetation at the site was properly maintained, and lacked familiarity with the language of FPL’s guidelines concerning the dangers of electrocution from foliage growing near power lines. Based on this evidence—the jury awarded $15 Million in punitive damages.
In reversing, the Second District noted that because a corporation cannot act on its own—there must be a showing of willful and malicious conduct on the part of a “managing agent” of the corporation to establish direct punitive damage liability. Thus, the question is whether the “head of vegetation management” is a “managing agent” of FPL. The Second District concluded that the term “managing agent” (for the purposes of punitive damages) is more than just a manager or mid-level employee. Rather, it is an individual like a president or primary owner of the corporation who holds a position with the corporation which might result in his or her acts being deemed the acts of the corporation. Thus, a “managing agent” for the purposes of imposing direct punitive liability is a corporate officer or official who represents the corporation as a whole—not simply a regional manager overseeing a specific geographic area.
The significance of Dominguez is two-fold. First, it clarifies that only upper-level management, i.e., corporate officers or officials who represent the corporation as a whole, qualify as managing agents for the purposes of imposing direct punitive liability. Second, it correctly categorizes section 768.72(3)(c) as direct (as opposed to vicarious) liability.
Section 768.72 is Florida’s punitive damages statue. Section 768.72(3) identifies the three situations where a corporation can be held liable for punitive damages. But section 768.72(3) does not expressly differentiate between direct corporate liability and vicarious liability. Instead, section 768.72(3) simply states:
(3) In the case of an employer, principal, corporation, or other legal entity, punitive damages may be imposed for the conduct of an employee or agent only if the conduct of the employee or agent meets the criteria specified in subsection (2) and:
a) The employer, principal, corporation, or other legal entity actively and knowingly participated in such conduct;
b) The officers, directors, or managers of the employer, principal, corporation, or other legal entity knowingly condoned, ratified, or consented to such conduct; or
c) The employer, principal, corporation, or other legal entity engaged in conduct that constituted gross negligence and that contributed to the loss, damages, or injury suffered by the claimant.
The Dominguez Court helped clarify section 768.72 by explaining: “[u]nder the direct theory, liability for gross negligence is established if the corporation itself engaged in conduct that was so reckless or wanting in care that it constituted a conscious disregard or indifference to the life, safety, or rights of persons exposed to such conduct, and that conduct contributed to the loss of the injured party.” Dominguez, citing, § 768.72(2)(b), (3)(c), Fla. Stat. (2013). By citing section 768.72(3)(c) the Dominguez Court established that subsection 3(c) is a direct liability theory. Moreover, the Court limited its application to instances when an officer or other official capable of representing the company engages in the grossly negligent conduct. This same direct liability analysis would be equally applicable to section 768.72(3)(a). Thus, under subsection 3(a) or 3(c) a corporation is not liable for punitive damages unless an officer or other senior official “actively and knowingly” participates or “engage[s]” in conduct that rises to the level of gross negligence.
What’s more, under subsection (3)(b) a corporation is vicariously liable for the conduct of it mid-level managers or lower level agents only if its officers, directors or mangers “knowingly condoned, ratified, or consented to such [intentional or grossly negligent] conduct.”
Therefore, a corporation is not liable for punitive damages under either direct or vicarious liability unless an officer or other senior official (a) “actively and knowingly” participates in; (b) knowingly condone[s], ratifie[s], or consent[s] to;” or (3) “engage[s] in conduct that constitute[s] gross negligence and that contribute[s] to the loss damages, or injury suffered by the claimant.”
The Dominguez opinion is significant because plaintiffs rarely present evidence that officers or senior officials, i.e., those who represent the corporation as a whole—actively and knowingly participated in or condoned conduct that constituted gross negligence. If the other District’s follow the Second District’s lead—punitive damage judgments against corporations will become a rarity in Florida.