Hearod v. Denny’s

Hearod v. Denny’s




Filed 6/14/06 Hearod v. Denny’s CA3


NOT TO BE PUBLISHED


California Rules of Court, rule 977(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 977(b). This opinion has not been certified for publication or ordered published for purposes of rule 977.


IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA


THIRD APPELLATE DISTRICT


(Sacramento)








CHRISTOPHER HEAROD,


Plaintiff and Respondent,


v.


DENNY’S,


Defendant and Appellant.


C040082



(Super. Ct. No. 00AS02511)


After placing an order for food to go at a restaurant owned and operated by defendant Denny’s, plaintiff Christopher Hearod examined some plush Dalmatian puppies in a display case. When he returned for the food a short time later, Denny’s employees accused him of stealing two of the puppies. Tensions escalated, words were exchanged, food fell to the floor, and the police were summoned. After viewing the security videotape, Denny’s declined to press charges. Hearod filed suit against Denny’s, alleging racial discrimination, defamation, false imprisonment, slander, assault and battery, intentional infliction of emotional distress, and negligent spoliation of evidence. A jury awarded Hearod $50,000: $41,000 for emotional distress, $3,000 for civil rights violations, and $6,000 in punitive damages. Denny’s appeals, contending: (1) since the jury found Denny’s had probable cause to detain Hearod, the merchant’s privilege bars all causes of action; (2) Denny’s is not vicariously liable for civil rights violations committed by its employees; and (3) the award of general damages is not supported by substantial evidence and is excessive as a matter of law. We find the merchant’s privilege bars Hearod’s defamation claim. Since the jury’s damage award does not distinguish between the defamation and emotional distress causes of action, we reverse the emotional distress award of $41,000. In all other respects, we shall affirm the judgment.


FACTUAL AND PROCEDURAL BACKGROUND


The parties agree on very little as to what happened the night Denny’s accused Hearod of stealing two spotted plush puppies valued at $2.99 each. Denny’s contends its employees properly questioned a patron who acted suspiciously. The patron responded by exploding into profanity. Hearod contends Denny’s personnel accused him of stealing, grabbed the food he had already paid for, and hurled a racial epithet at him. We briefly present the competing versions as they evolved at trial.


Denny’s Version


The area manager responsible for the Denny’s restaurant in question testified regarding the company’s policies on racial discrimination. The area manager stated Denny’s policies require the termination of any employee who makes racial comments to customers.


Allan Main, the server who waited on Hearod that evening, recounted his version of events. Hearod entered the restaurant and ordered some food to go. The toy puppies, which sat in an unlocked cabinet, tended to disappear from time to time. Hearod opened the cabinet and picked up a couple of the puppies. Main kept an eye on Hearod but did not see him take the puppies. After paying, Hearod left the restaurant while his food was being readied; he left quickly but was not running.


Another server, Belinda Stebbins, told Main she thought Hearod took some puppies. Main informed Todd Eiseland, the night shift manager, that he had not seen Hearod take the puppies, but Stebbins believed he had taken them.


When Hearod returned a short time later, Main grabbed his food. According to Main: “I didn’t want him to leave the store with the food until he paid for the puppies.” A tug of war ensued and the food fell to the floor. Hearod, angry, began shouting profanities. Main denied making any racial comments during the confrontation.


Later, when Main reviewed the surveillance tape with police officers, they came to the “collective conclusion” that no theft had occurred. The tapes are erased every 90 days.


Denny’s gives employees a five-hour training seminar that includes the topic of racial discrimination. Under Denny’s policies, racial remarks are the “ultimate sin.”


Eiseland testified Hearod was loud and belligerent when he entered, as was typical of many patrons arriving in the early morning hours. Main and Stebbins reported they believed Hearod had stolen some puppies. Eiseland approached Hearod, raised his voice, and said, “If you don’t leave, I will call the police.” Main and Hearod struggled over the bag, which burst open. Main never raised his voice and never used any racial slurs. However, Eiseland admitted he was not present during the entire incident; he arrived after the altercation began. Eiseland testified it was not his intention to keep Hearod in the restaurant.


When he later reviewed the videotape, Eiseland believed it showed Hearod taking two dogs and putting them in his coat. He viewed the tape, which was of poor quality, several times. When the officer who responded reviewed the tape, the officer recommended Eiseland apologize and compensate Hearod for the meal. After the incident, Eiseland pulled the tape because of questions over the incident. At trial Eiseland still believed Hearod had taken the puppies.


Eiseland stopped the surveillance camera after Hearod left the first time. The tape did not record what happened when Hearod returned to pick up his food. Tapes that are pulled are put back into circulation and recorded over quarterly.


Stebbins testified she never saw the puppies in Hearod’s hand. She saw him play with a puppy and then bolt out the door. Stebbins believed Hearod took the puppy but never said that to Eiseland. Stebbins heard every word of the exchange between Hearod and Main because Hearod was screaming. Hearod used profanity and threatened Main and Eiseland. Hearod said, “You’re only doing this to me because I’m black.”


Hearod’s Version


Two customers who overheard the incident testified. Kathleen Gerber saw the pair struggle over the food. Hearod asked to see the surveillance tape and wanted to call the police. Gerber did not hear any racial epithets, but stated Hearod was treated badly by Denny’s employees.


The other customer, Tamara Brown, testified Main accused Hearod of stealing and said he was going to call the police. Main grabbed the bag of food and began yelling, calling Hearod an “F’ing nigger.” The food went flying. Brown described the scene as “ugly”; both men were swearing and yelling. Eiseland was not present when Main uttered the racial slur. Hearod asked to see the tape and only began swearing after Main grabbed the food.


One of the responding officers testified Hearod agreed to a search of his car after the incident. Officers failed to find any puppies. The officer viewed the tape and saw no theft. He advised Eiseland to go outside, talk to Hearod, “dust him off, apologize profusely, and hope he doesn’t get his ass sued.” Hearod did not mention the racial insult to the officers.


Hearod’s girlfriend, who remained in the car during the altercation, testified. Hearod was very upset, humiliated, and embarrassed because the incident happened in a crowded restaurant. The incident continues to bother him. The girlfriend heard nothing of a racial nature and did not personally witness the incident.


Hearod testified. He ordered the food, picked up and looked at the puppies, put them back, and walked out the door. He did not bolt out the door; he did not abscond with the puppies. When he returned, the manager told him the surveillance camera had caught him stealing the puppies, and they had called the police. Hearod was intimidated and embarrassed. As the other patrons stared at him, he asked to see the tape.


Hearod took his bag of food from the counter and turned to leave. The server grabbed Hearod’s arm and the bag. He told Hearod he couldn’t leave. The server balled up his fist and shouted in Hearod’s face, “‘[Y]ou’re not going anywhere, you fucking nigger.’” Hearod felt intimidated, degraded, and embarrassed. Although Hearod testified he never threatened anyone, he admitted he used profanities in response to the server’s words and actions.


Hearod sought no psychological counseling, and the incident stayed with him. He allowed the officer to search his car.


Following the incident, Hearod filed a complaint for damages against Denny’s, alleging racial discrimination, false imprisonment, slander, assault and battery, intentional infliction of emotional distress, and intentional spoliation of evidence. Prior to trial, Hearod abandoned his false imprisonment and spoliation of evidence claims.


At the close of evidence the court conducted lengthy discussions on proposed jury instructions. The court decided to give an instruction on probable cause (BAJI No. 7.65), based on Penal Code section 490.5, subdivision (f)(7), as to the battery count.


The jury found in favor of Hearod on the defamation, civil rights, and intentional infliction of emotional distress causes of action. However, the jury found no battery and no violation of Civil Code section 51.7. The jury awarded $44,000 for emotional distress, including $3,000 for violation of Hearod’s civil rights, and $6,000 in damages under Civil Code section 52.[1] The trial court awarded attorney fees of $35,000.


Denny’s filed a motion for judgment notwithstanding the verdict and a motion for a new trial. The court denied both motions. Denny’s filed a timely notice of appeal.


DISCUSSION


I


Denny’s argues Hearod’s causes of action for defamation, intentional infliction of emotional distress, and violation of civil rights are barred by the merchant’s privilege codified in Penal Code section 490.5, subdivision (f)(7).


Penal Code section 490.5, subdivision (f)(1) sets forth a merchant’s right to detain a customer suspected of theft and states, in part: “A merchant may detain a person for a reasonable time for the purpose of conducting an investigation in a reasonable manner whenever the merchant has probable cause to believe the person to be detained is attempting to unlawfully take or has unlawfully taken merchandise from the merchant’s premises.”


Penal Code section 490.5, subdivision (f)(7) provides merchants the following privilege: “In any civil action brought by any person resulting from a detention or arrest by a merchant, it shall be a defense to such action that the merchant detaining or arresting such person had probable cause to believe that the person had stolen or attempted to steal merchandise and that the merchant acted reasonably under all the circumstances.”


Based on these statutory provisions, the trial court instructed the jury pursuant to BAJI No. 7.65, as follows: “The owner of property may, for the purpose of protecting it, detain, for a reasonable time and for the purpose of investigation, one whom [he][she] has probable cause to believe is [stealing][or] [damaging] it. [¶] [In making the detention a merchant may use a reasonable amount of nondeadly force for self-protection or to prevent escape of the person detained or loss of property].”


The jury rendered the following special verdicts as to battery and the merchant’s privilege: “Claim of Battery. [¶] Question No. 1: Did Defendant commit battery on the Plaintiff Christopher Hearod? [¶] Answer: No. [¶] . . . [¶] Question No. 1(a): Did you find that there was no battery on the Plaintiff because there was a right to detain him? [¶] Answer: Yes.”


In effect, the jury found Denny’s, in the guise of its employee Allan Main, had probable cause to detain Hearod. This finding is central to the claims Denny’s makes on appeal. The court’s instructions limited the merchant’s privilege to the battery cause of action. Denny’s insists the Legislature’s evident purpose was to provide broad protection to merchants who act reasonably to protect their property. Consequently, according to Denny’s, since the jury found the restaurant had probable cause to detain Hearod, the merchant’s privilege provides a complete defense to all of Hearod’s claims; the trial court erred in determining the privilege barred only the cause of action for battery.


Penal Code section 490.5 protects a merchant who, based on probable cause, engages in actions reasonably necessary to detain a suspected thief. “Reasonable” is a critical qualifier: it must be demonstrated that “the merchant acted reasonably under all the circumstances.” (§ 490.5, subd. (f)(7).) Probable cause does not grant the merchant license to engage in any conduct, no matter how abusive, outrageous, or unnecessary. There is no privilege to engage in speech or conduct disconnected from the facts constituting probable cause or the acts necessary to effect a detention.


With these limitations in mind, we conclude the jury properly determined that Denny’s is not liable for battery. Since Denny’s had probable cause to detain, the merchant’s privilege could also provide a defense to Main’s accusations of theft against Hearod, which directly arose out of the detention. Even if these accusations ultimately proved false, they clearly arose from Hearod’s detention and are not actionable unless Main failed to act “reasonably under all the circumstances.”


Hearod argues the accusations of theft alone show Denny’s failed to act reasonably as required under the merchant’s privilege. We disagree. To hold that a merchant, possessing probable cause to believe a theft has taken place, cannot inform the suspect of the very reason for his or her detention makes no sense. Although potentially humiliating and embarrassing, accusations of theft made in this context are not unreasonable and cannot give rise to a cause of action for defamation where the merchant possesses probable cause to believe a theft has occurred.


Accusations of theft appear to be the only defamatory statements underlying the defamation claim. While the parties proceeded to trial on the theory that the merchant’s privilege did not apply to the defamation claim, both sides presented a complete accounting of the facts. There is no basis for concluding that the time, place, or manner in which the theft accusation was made rendered the conduct of the Denny’s employees unreasonable under the circumstances. Accordingly, we must reverse the jury’s verdict in favor of Hearod on the defamation cause of action.


We disagree with the assertion Denny’s makes that the merchant’s privilege also bars Hearod’s claim for intentional infliction of emotional distress. Initially, we note that as a matter of law a claim for the intentional infliction of emotional distress requires a showing that the defendant’s conduct was outrageous. (Janken v. GM Hughes Electronics (1996) 46 Cal.App.4th 55, 80.) A showing that the defendant acted outrageously is not compatible with the requirement of the Penal Code that the defendant acted “reasonably under all the circumstances.”


In any event, the facts surrounding the claim of intentional infliction of emotional distress would not support a finding that the Denny’s employees acted reasonably. The jury heard evidence that after confronting Hearod, Main yelled a racial epithet at him and grabbed the bag of food, which Hearod had paid for, scattering the bag’s contents. The incident then escalated into a shouting match. The totality of circumstances surrounding the incident, including the use of the epithet, would not support a finding of reasonableness. Rather, these circumstances support the jury’s conclusion that Denny’s was liable for intentional infliction of emotional distress, notwithstanding the merchant’s privilege.


II


The jury rejected Hearod’s claim that Denny’s violated his right to be free from violence or the threat of violence under Civil Code section 51.7, but found Denny’s violated Civil Code sections 51 and 51.5.[2] Section 51 provides, in part: “All persons within the jurisdiction of this state are free and equal, and no matter what their sex, race, color, religion, ancestry, national origin, or disability are entitled to the full and equal accommodations, advantages, facilities, privileges, or services in all business establishments of every kind whatsoever.”


Section 51.5 provides, in part: “No business establishment of any kind whatsoever shall discriminate against, boycott or blacklist, or refuse to buy from, contract with, sell to, or trade with any person in this state because of the race, creed, religion, color, national origin, sex, or disability of the person . . . .”


Denny’s interposes various challenges to the jury’s verdict, all of which lack merit. In addition to its insistence that the conduct of its employees was privileged, Denny’s denies that race was a motivating factor in any actions taken by them. Suggesting that the jury’s award rests on evidence of a single racial epithet uttered by an employee, Denny’s asserts that racial epithets are constitutionally protected when offered up during the course of a two-sided argument. In any event, according to Denny’s, there are no cases imposing liability on an employer for an employee’s indiscrete utterance. These arguments misperceive the basis for Denny’s liability and mischaracterize the cases on vicarious liability for acts of employees.


According to Denny’s: “Here there is no evidence Main used the ‘N word’ to deny public accommodation or to discriminate in provision of services –- he hurled it . . . in response to a shower of profanity during his non-violent, probable cause detention of an African American for shoplifting.”


Herein lies the problem. Throughout its discussion of the applicability of sections 51 and 51.5, Denny’s strives to present the most innocuous portrait of the events leading up to Hearod’s suit. Although Denny’s acknowledges we must review the evidence in the light most favorable to Hearod, Denny’s cites only testimony casting aspersions on Hearod’s words and actions and testimony exonerating Main. Denny’s fails to consider the testimony before the jury by other customers that corroborated Hearod’s version of events.


We consider all the evidence before the jury to determine whether Denny’s violated Hearod’s civil rights under sections 51 and 51.5. Properly viewed, the evidence in support of the jury’s verdict is not confined to a single racial epithet uttered by a beleaguered Denny’s employee. The jury heard testimony that during the altercation over the missing puppy, Main grabbed the bag of food and hurled a racial epithet at Hearod.[3] Main refused to allow Hearod to take possession of his food order unless Hearod paid for the stuffed toys. Though Hearod asked to see the surveillance tape and told the shift manager, Eiseland, to call the police, Eiseland demanded that Hearod leave the restaurant immediately. Even accepting the existence of probable cause to detain, Hearod could plausibly assert that the actions of the Denny’s employees were not reasonably calculated to ascertain the truth of their suspicions. From evidence of the racial epithet and the employees’ actions, the jury could conclude that Hearod was expelled from the restaurant based on his race.


Words are not sacrosanct when employed to violate the law. “[T]he Unruh Act . . . can be violated in a number of ways by words alone. If the speech is meant to, and does, offend the law, utterance of the words themselves may be protected; but the speaker is subject to the consequences. This state’s version of the First Amendment, which is even more liberally construed [citation], literally says just that: ‘Every person may freely speak, write and publish his or her sentiments on all subjects, being responsible for the abuse of this right. A law may not restrain or abridge liberty of speech or press.’ (Cal. Const., art. I, § 2, subd. (a), italics added.)” (Long v. Valentino (1989) 216 Cal.App.3d 1287, 1297 (Long).)


Denny’s also contends “[t]he jury found that Hearod was detained because Main reasonably believed he had shoplifted [citation] - necessarily meaning he was not detained because of his race.” According to Denny’s, since the jury found no force or violence on Denny’s part, “the nonviolent accusation deprived Hearod of no civil right on the basis of his race.” However, as we have discussed, the jury’s finding of probable cause to detain does not end our inquiry. We consider all the circumstances surrounding the incident, not just the existence of probable cause to detain, in determining whether the evidence supports the jury’s verdict.


Denny’s contends it is not strictly liable for its employee’s isolated utterance. According to Denny’s, courts impose liability for an “isolated epithet” only in cases involving ratification or action by supervisors or employees acting in a managerial capacity. Since Main and Eiseland were not managerial employees, Denny’s contends it cannot be held liable for Main’s outburst.


We again note Denny’s liability is not premised on a single isolated epithet, disconnected from the context in which the epithet was uttered. Moreover, as Hearod points out, cases construing section 51 and related civil rights statutes have imposed liability on an employer for the acts of his or her employees. In Prowd v. Gore (1922) 57 Cal.App. 458 (Prowd), employees of a movie theatre refused to seat an African-American patron. (Id. at p. 459.) The theatre owners argued the penal nature of sections 51 and 52 precludes liability for an act committed by an employee that they neither directed nor participated in. (Prowd, at p. 461.)


The appellate court affirmed the trial court’s award of damages to the excluded patron under sections 51 and 52. The court rejected the owners’ argument that they could not be held liable for a wrong committed by their employees. The court cited section 2338: “‘Unless required by or under the authority of law to employ that particular agent, a principal is responsible to third persons for the . . . wrongful acts committed by such agent in and as a part of the transaction of such business.’” (Prowd, supra, 57 Cal.App. at p. 461.)


Similarly, in Winarto v. Toshiba America Electronics Components (9th Cir. 2001) 274 F.3d 1276, 1290, footnote 16, the court found, as a matter of law, that section 52, subdivision (b) imposed vicarious liability on an employer for the acts of an employee in violation of section 51.7.


Denny’s argues these cases merely present a “truism” but do not “answer the question whether utterance of a racial epithet is by itself actionable in tort or as a violation of the Unruh Act or whether by itself it renders otherwise privileged conduct actionable.” Instead, Denny’s references several cases in which employers were found liable for employees’ actions and proceeds to distinguish them from the present case. The most prevalent distinguishing characteristic Denny’s points to is the “absolutely privileged accusation of theft” it asserts in the present case. However, as we noted earlier, the merchant’s privilege must be related to the underlying justification for the detention. Hearod’s civil rights claim arose from his treatment by the Denny’s employees, notwithstanding the existence of probable cause to detain him for shoplifting.


Denny’s also argues the Supreme Court has held section 52.1 does not permit a customer to sue for aggressive search and seizure in connection with a mistaken charge of shoplifting. In support, Denny’s cites Jones v. Kmart Corp. (1998) 17 Cal.4th 329 (Jones). In Jones, store employees detained and handcuffed an African-American customer based on their mistaken belief that he had shoplifted. (Id. at pp. 331-332.) The jury returned a verdict for the customer on his claims of false imprisonment, battery, interference with his constitutional rights “‘by using excessive force against him [and] by the illegal search of his person,’” and negligence. (Id. at p. 331.) However, the jury also explicitly found that the defendants did not discriminate against him or subject him to violence or intimidation because of his race. (Ibid.)


The Jones court affirmed the appellate court’s reversal of the jury’s damage award for interference with the customer’s constitutional rights. The court found the customer not entitled to damages under section 52.1, since the constitutional proscription against unreasonable search and seizure applies only to the government and its agents. The customer produced no evidence the defendants interfered with his ability to assert such rights. (Jones, supra, 17 Cal.4th at pp. 334-335.)


Despite Denny’s claims to the contrary, Jones is inapplicable to the case at bar. Here, Hearod did not assert a constitutional claim of excessive force or unreasonable search under section 52.1. Moreover, unlike the jury in Jones, there was no finding by the jury in the present case that Denny’s did not discriminate against Hearod based on his race. To the contrary, the jury found Denny’s liable under sections 51 and 51.5.


III


Denny’s argues any imposition of liability based on Main’s use of a racial epithet runs afoul of the First Amendment. Rather confusingly, Denny’s contends that finding it liable based on Main’s use of an epithet would be inconsistent with the “fighting words” doctrine. According to Denny’s, since the jury found no violence or threat of violence against Hearod, a finding of liability is contrary to the First Amendment protections against content-based restrictions on speech.


Denny’s claims: “To find that bare use of the epithet negates the statutory merchant’s privilege would be unconstitutional. To construe the Unruh Civil Rights Act to permit imposition of liability based on bare use of this racial epithet would be unconstitutional and inconsistent with Civil Code section 52.1(j).” However, as we have noted, the totality of the circumstances surrounding the incident, not just the use of the racial epithet, support the jury’s finding that Denny’s was liable under sections 51 and 51.5.


IV


Finally, Denny’s urges this court to strike the statutory damages and attorney fees awarded under the Unruh Civil Rights Act. The jury awarded more than $71,000 in fees and costs, including $35,000 in statutory attorney fees. In effect, Denny’s renews its previous arguments that the evidence cannot sustain a finding of liability under sections 51 and 52.


In support, Denny’s again relies on Jones, supra, 17 Cal.4th 329. However, the plaintiff in Jones based his civil rights claim on excessive force and illegal search pursuant to his detention on a mistaken shoplifting charge. The Supreme Court found store employees did not discriminate against the plaintiff based on race and eliminated the statutory attorney fees award. (Id. at pp. 331-332.) Here, Hearod bases his claim on derogatory remarks and actions made during an altercation over fast food. Again, we find the present case distinguishable from Jones.


CONCLUSION AND DISPOSITION


As we have concluded that Hearod’s defamation claim is barred by the merchant’s privilege, it follows that any award of damages for defamation must fall. Hearod claimed damages for emotional distress arising from the defamation and also asserted emotional distress as a distinct cause of action. Regrettably, the jury awarded $41,000 in damages for emotional distress without allocating between the two separate causes of action. Consequently, we must reverse both the judgment for defamation and the award of damages for emotional distress and remand for


retrial of damages for emotional distress. In all other respects, the judgment is affirmed. Parties shall share costs.


RAYE , J.


We concur:


NICHOLSON , Acting P.J.


MORRISON , J.


Publication courtesy of San Diego pro bono legal advice.


Analysis and review provided by Poway Apartment Manager Lawyers.


[1] We granted the motion by Denny’s to augment the record pursuant to California Rules of Court, rule 12(a) on May 20, 2002.


[2] All further statutory references are to the Civil Code unless otherwise indicated.


[3] Denny’s asserts: “The court should have rejected plaintiff’s theory that grabbing the food back after it had been paid for was a refusal of service [citation] under the civil rights act and should have refused the requested civil rights instructions.” However, Denny’s provides no analysis or discussion to support this naked assertion.



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