FINAL

Appeal Number: 04-55173

Case Number: CV-00-02291 CAS (SHx)

                       IN THE UNITED STATES COURT OF APPEALS

                                             THE NINTH CIRCUIT

PHILLIP S. MOLINA, an individual

Plaintiff and Appellant,

vs.

CITY OF OXNARD; EDMUND SOTELO; and DOES 1-20,

Defendants and Appellee.

__________________________________________________________________

       Appeal from the United States District Court, Central District of California

                                  Honorable Christina A. Snyder, Judge _________________________________________________________________

                                 APPELLANT’S OPENING BRIEF

__________________________________________________________________

INTRODUCTION

          Mr. Molina returns to this court on the same first amendment claim this court revived against the City of Oxnard (“Oxnard”) and Edmund Sotelo (“Sotelo”) on the first appeal.  Notwithstanding this court’s reversal of the district court’s prior ruling that Mr. Molina’s criticism of Oxnard’s use of public funds was not protected, ^[1] and a jury’s factual findings in a trial on the revived claims that ^[2]:

·        Molina’s exercise of his first amendment rights was a substantial and motivating factor in his termination;

·        Sotelo’s conduct had resulted in injury to Molina; and

·        Molina sustained damages in the amount of $595,836.00, (representing four years of lost wages and benefits);

the district court again entered judgment in favor of the defendants. ^[3]

Although the district court conceded that the jury clearly intended to award Mr. Molina damages, it “concluded” that the above findings were inconsistent with one other answer: a response to the court’s ambiguous phrasing of Appellants’ only defense to liability “that Oxnard would have terminated Molina anyway”. ^[4]

Although it was “evident” from a note the jury’s foreperson submitted ^[5] to the court minutes before the foreperson signaled the jury had reached a verdict, and the jury’s responses to the other interrogatories, that the jurors had misunderstood interrogatory number 2, the district court nevertheless discharged the jury before the court could verify the basis of its misunderstanding because the defendants would not agree with the  court’s proposed inquiry, notwithstanding that the district court had already conceded it could not reconcile the jury’s answers,. ^[6]

Subsequently, although the district court had already denied a FRCP ^[7] 50 motion, it “invited” the defendants to move for a second bite at the apple.  The district court then “granted the defendants’ “FRCP 58 Motion” ^[8] on the grounds that all answers after the second interrogatory constituted “surplusage”. ^[9] Yet the verdict form that the defendants approved, contained an express instruction that if the jury answered yes to interrogatory no.1, the jury was to proceed to (a), (b), 2, and 3, and lacked any express instruction not to proceed to the interrogatories after 3, including 6, which requested the jury to award damages. A plain reading of “jury note four” in context of the responses, special instructions 16 and 24, and the entire verdict made it abundantly clear that no inconsistency existed at all in the minds of the jurors since they construed interrogatory #2 to mean that Molina would have survived four more years with Oxnard!  Further, the jury’s responses to interrogatory one, three and six were consistent with each other and with Instructions 16 and 24. In 16 and 24 the court expressly instructed the jury that if it found for the plaintiff, it was to consider several categories of damages which is exactly what the jury did. ^[10]  Inadvertently neither the court nor the parties observed the inherent inconsistency between 1 and 2.)

          As this court may recall, this action against Sotelo and Oxnard arose out of Sotelo’s termination of Mr. Molina as Oxnard’s Financial Officer after Mr. Molina reported that the city's golf course was losing over $350,000 a year, a deficit paid for by the city treasury.  The defendants "shot the messenger" to avoid facing up to the messenger's truthful but difficult message that these losses resulted from a sweetheart deal for the private operator.  Mr. Molina's public disclosure of the golf course's financial condition, and his recommendations for an alternative contract with the developer, displeased those city councilmen, and their allies, who wanted to build a new golf course with a similar arrangement.

          Mr. Molina then aggravated these officials further when he refused to change his report to hide the debt and make the golf course appear profitable.  As a result, Sotelo, pressured by “insiders,” “rewarded” Molina’s honesty in accurately informing the citizens of Oxnard and their elected officials on a matter of public concern with a pink slip. 

Oxnard and Sotelo contended they fired Mr. Molina because he was incompetent and uncooperative although he had received two performance based salary increases, the last just prior to his termination, and Sotelo told him he was “doing a fine job”.

In its first decision in this case, this court found that there was sufficient evidence for a jury to find that “the real reasons for [Molina’s] termination included…‘none of what [Molina] said was what a councilmember wanted to hear’ and that ‘powerful people were going after [him] with big guns for the views he expressed.”  The jury found that there was substantial evidence, (and the district court initially agreed), to support these “contentions” and awarded Mr. Molina damages.

The trial court committed reversible error in ignoring the jury’s legitimate factual findings. In light of the instructions, in context of the jurors’ notes, and the entire “special” verdict, the district court could have reconciled the answers to make them consistent and to support the jury award to Mr. Molina of $595,836.00.  Nevertheless, if the findings truly contained a “fatal inconsistency” the court was precluded from entering judgment for the defendants

          This court must intervene once more and enter judgment awarding Mr. Molina the damages to which he is entitled. Alternatively, it must order a new trial. Justice as the jury concluded must prevail in the battle against corruption Mr. Molina has endured without respite for over six years.

STATEMENT OF SUBJECT MATTER JURISDICTION

AND APPELLATE JURISDICTION

The district court had subject matter jurisdiction over the parties pursuant to 28 U.S.C. § 1331 in that the complaint concerned federal questions arising from the first and fourteenth amendments.

 The district court had pendent jurisdiction over the state claims.

This court has jurisdiction over the appeal pursuant to 28 U.S.C. § 1291, namely that the district court entered a final judgment on December 18, 2003.  The within Appeal, filed on January 14, 2004, is timely under Rule 4 of the Federal Rules of Appellate Procedure.

STATEMENT OF ISSUES PRESENTED FOR REVIEW

I.       The trial court committed reversible error in ignoring the jury’s legitimate factual findings. In light of the instructions, in context of the jurors’ notes, and the entire “special” verdict, the district court could have reconciled the answers to make them consistent and to support the jury award to Mr. Molina of $595,836.00.  Nevertheless, if the findings truly contained a “fatal inconsistency” the court was precluded from entering judgment for the defendants

II.      The district court failed to exercise any discretion under CCP 49(a) or (b). Knowing that the jury had misunderstood the only interrogatory defining a defense to liability, and the instructions on damages, and after conceding that it could not reconcile the jury’s verdict in light of the jury’s clear intent to award damages, the district court nevertheless discharged the jury because the defendants would not agree with the court’s suggested inquiry to determine the basis of the jury’s misunderstanding or the court’s miscommunication.

REVIEWABLITY AND STANDARD OF REVIEW

Appellate courts review de novo a district court’s orders interpreting a statute, viz Federal Rules 49, 50, 58. Appellate courts also review de novo a district court’s interpretation that the jury returned a verdict inconsistent with its answers to special interrogatories. The district court’s actions subsequent to such a decision are reviewed for abuse of discretion.

STATEMENT OF FACTS

From 1997 through 1999, Mr. Molina was Oxnard’s Chief Financial Officer responsible for analyzing the City’s finances.

                   The City of Oxnard hired Mr. Molina on December 1, 1997 as Oxnard’s Chief Financial Officer, responsible for all financial reports as required by law, and as requested by the City Manager and the City Council. (TR NOV 4, 35:1-16; TRIAL EXHIBIT 1.)  Mr. Molina’s credentials include over twenty three (23) years as a certified public accountant, a masters in business administration and finance, and multiple government accounting and municipal finance courses.  (TR NOV 4,35:17-28;36:1-12.) As Oxnard’s Chief Financial Officer, Molina was part of the City’s budget team. (TR NOV 4, 44:2-8; 45:21-28; 46:1-12.) As Oxnard’s Chief Financial Officer Mr. Molina’s job included coordinating his team to provide accountings of the City’s finances and financial advice. (TR NOV 4, 38:6-19; TR NOV 4, 44:9-28; 45:1-20.)

Sotelo and Molina investigate the High Tide and Green Grass Contract, the governing document for the City’s golf course.

                   Two months after Mr. Molina’s hiring, Oxnard hired a new city manager, Edmund Sotelo. (TR NOV 4, 39:2-9.) Soon after Sotelo’s hiring, on September 15, 1998, Sotelo asked Mr. Molina to analyze the finances for the City’s owned golf course, River Ridge I, in anticipation of the City’s consideration of plans for a second course, to be operated by the same operator, dubbed River Ridge II. (TR NOV 5, 39:12-25.)  Sotelo, on reviewing the supporting document for the course referred to as the “High Tide and Green Grass contract” was concerned with the profits that the private operators were making. Sotelo also hired an outside consultant to compare the Green Grass contract with other public golf course contracts (TR. NOV 5, 39: 20-25)

          Oxnard's existing golf course was losing over $350,000/year.

            The consultants corroborated that Ridge I was losing money for the City because the contract guaranteed the private operators a profit while it placed all of the risk of loss on the City.  (TR NOV 5, 39: 12-25; 40:1-15; 21-25; 41:1-25.) The consultants concluded that they had “never seen such a contract before which guaranteed the operators a profit and put the City entirely at risk.” —a sweetheart deal. (TR NOV 5, 40:11-25; 41:1-25; 42:1-6.)

          According to the city’s own audited figures, as Mr. Molina later explained to a newspaper reporter, who printed an article in the Oxnard Star on August 18, 1999, the course in 1998 had generated $2.7 million in revenue, $3 million in expenditures, including $947,000 in interest on the construction bonds, resulting in a yearly municipal subsidy of $360,597.  (TR NOV 6, 45:2-24; TRIAL EXHIBIT 172; ER, 542 )

          When Molina reported to City officials that the golf course lost money, they threatened him with loss of his job. Mr. Molina was stepping on powerful toes.

          To avoid such losses on the existing contract and that for the proposed golf course, Ridge II, Mr. Molina and the consultants recommended an alternative operating contract, going to a flat fee method of charging Green Grass. (TR NOV 5, 56:9-18.) He further recommended that the City ensure that annual audits be conducted as required under the contract, ie financial statements prepared by an independent certified public accountant consistent with generally accepted accounting principles (“GAAP”.). He advised that the developer was not complying with this audit requirement. (TR NOV 5, 42:17-25; 43:1-25; 48:17-25; 49:1-6.)

         In November 1998, Sotelo called a meeting between Sotelo, councilman Holden, and Mr. Molina, ostensibly for another purpose.  When Molina came into Sotelo’s office, Holden was already there. After Mr. Molina sat down, Holden, who  remained standing, looked at me (Molina) and said: “You need to understand that in this city we deal with certain consultants and developers, and if you (Molina) don’t like that, get another job."  (TR NOV 5, 48:17-25; 49:1-6.)  Holden then left.

          What Mr. Molina understood Holden to mean was that since “We were dealing with three different issues, the golf course… the BLT, another operating contract, was another I had similar issues with, and there was a downtown center project with a developer.  I anticipated it was one of these three.”  Mr. Molina’s concerns over these other projects also related to accounting concerns. By way of example, Mr. Molina concluded that the value of the funds a developer (David White) and his financier (Paul Keller) would be using to sustain a very large project could not be independently established. (NOV 5, 49: 9-25; 69:9-25; 70:1-10.)

          Subsequently Sotelo told Molina not to talk or bring up his suggestions for changes to the Green Grass contract, the operations or the methods to the Council at the subsequent closed sessions. (TR NOV 5, 50:11-25; 51:1-20.)  Sotelo told Molina not to discuss any alternative solutions including a proposal that the operators pay the City a percentage of the gross revenue. (TR NOV 5, 56:10-18.)

However, in the December 1998 closed session of the City Council, in which the council was discussing the renewal of the existing High Tide and Green Grass contract, Mayor Lopez, asked Molina, in his capacity as City Finance Director, “is there… any other type of contract that we should consider that would be of more benefit to the City?”  (TR NOV 5, 56:19-25, 57:1-18.)  When Mr. Molina attempted to offer his opinion that there were other contracts that would provide more money to the City’s general fund than the one at issue,  “Council Member Holden, who was sitting directly opposite of me ( Molina) , stood up and stopped me from speaking, said I (Molina) don’t know what I am talking about. I don’t have correct numbers, basically to shut up…And I (Molina) shut up.”  Molina was not able to finish his response.  (TR NOV 5, 57:9-25; 58:1-3.)

Given Holden’s direct threat at the ‘surprise’ meeting, Sotelo’s subsequent instructions not to talk about Molina’s recommendations to the Council, Holden’s continued threat at the December meeting, it became clear to Molina that Holden wanted to continue the relationship, at least in those three contracts that the City had. Sotelo in justifying his termination of Molina, stated that Molina alienated consultants.  (TR NOV 7, 29: 23-24; 31:15-25). Yet Mr. Sotelo had no documentation in Mr. Molina’s personnel file supporting this contention. (Id. 31:24-25; 32:1-2.) More importantly Mr. Molina was responding to a direct question by the Mayor concerning his analysis of the financial impact of a government contract which is exactly what Mr. Molina was paid to do.

Molina speaks to the press and Sotelo issues a gag order

          Because the financing of River Ridge I had led to shortfalls, the media had been covering Oxnard’s possible construction of Ridge II. (TR NOV4, 55:12-21, NOV 5, 66: TRIAL EXHIBIT, 172, ER, 542.)   During Mr. Molina's work on the finances for the proposed golf course, River Ridge II, Mayor Pro Tem John Zaragoza asked Molina to give the Oxnard newspaper financial information about River Ridge I. Mr. Zaragoza was comfortable with Mr. Molina’s numbers and the accuracy of his financial information. (TR NOV4, 55:17-25; 56:1-13; TR NOV 5, 66:16-25.) As requested by the Mayor pro tem, Mr. Molina told the local paper about the golf course's finances. (TR NOV 5, 67: 4-14)

          Molina using data from Oxnard’s audited financial statements told the reporter from Oxnard Star that River Ridge I was operating in the red due to the debt on the course's construction bond. The article, published on August 18, 1998, quoted Molina as follows:

          “City Finance Director Phillip Molina said the golf course earned $2.7 million in fiscal year 1998.  But its operating costs, combined with paying $947,000 annual interest on the debt of the course construction bond, came to about $3 million a year, resulting in a $360,597 municipal subsidy.  Without the debt, the golf course would posted a $587,000 profit.”

          (TR NOV 5, 66:5-25: 67:1-18; TRIAL EXHIBIT 172, ER, 542)

          After the Oxnard Star printed the article, Sotelo accompanied by Karen Burnham, the Deputy City Manager reprimanded Mr. Molina. “He (Sotelo) told me (Molina) that because of the article I was not to talk to the press anymore. I was not to give any information to the press, and if the press ever called me for any information, I was to send them to the City Manager’s Office.”  (TR NOV 5, 67:17-25, 68:1-6.)

          In a memorandum sent to Mr. Molina on the day the newspaper article appeared, Sotelo, apparently sensitive to “suppressing speech” wrote:

          Any contacts with the press are to be directed to the City

Manager’s Office for response.  This is not to be considered

a “gag order”; rather this is a coordinated approach to the dissemination of

          information. Thank you. (Emphasis added.)

(TR NOV 5, 68:7-25; 69:1-2; TRIAL EXHIBIT, 173, ER, 543.)

          Mr. Molina considered this to be a gag order and agreed that he would not have any further contacts although he knew that the numbers were accurate. (TR NOV 5, 68: 1-25.)  At the time Sotelo did not indicate that he was dissatisfied with Mr. Molina’s performance. (Id. at 69:5-8.)   

          After the article, city councilmen went "gunning" for Mr. Molina, causing Sotelo to fire him.

          After the news article appeared, Mr. Molina learned that some city officials wanted to force Molina from his post.  At one meeting in September 1999…“Sotelo pointed at me (Molina) and in a very strong harsh voice said: ‘Phil, you better be aware that two council members are gunning for you with big guns.’” Molina felt threatened by the statement since …“At the time ..it was the second time I think he had mentioned that council members are gunning for me within a week or two of this, so I was getting concerned as to what did that mean." …“It (the statement) was so forceful that one of the gentleman sitting to the right of me jumped out of his seat. It was a threatening statement.” “He was pointing his finger when he said it. It was absolutely directed at me.” (TR NOV 5, 73: 16-25; 74:1-11; 75:4-13.)       Molina came to understand that the big guns were two council members, Dean Maulhardt and Tom Holden. At the time Molina was so shocked that he immediately wrote a memo. (Id. at 75: 14-23, TRIAL EXHIBIT 180, ER, 544.) 

          In this memo, dated September 24, 1999, Mr. Molina repeated Sotelo's statement that "two Council members are gunning for me with big guns."  Mr. Molina then asked why this would be so, in light of Mr. Molina's efforts to "keep you and the City Council informed to the best of my ability on the financial condition of the City, the general fund and all the funds of the City."  (TR NOV 5, 74:17-23; 75: 5-23; TRIAL EXHIBIT, 180, ER, 544.)

          Mr. Molina further asked Sotelo these specific questions:  "Why are two Council members `after me'?"  What is causing this reaction from the two Council members?  Should I obtain the services of a lawyer to defend myself?"

          Sotelo never responded to this memo. (Id. at 75: 22-25.) Yet Sotelo concedes that this is a document that “begged out for a response.” (TR NOV 7, 47: 13-21; 48:1-20.) 

          On October 12, 1999, Sotelo “invited’ Mr. Molina to a ‘meeting’ at the Wagon Wheel Restaurant to discuss the finances of the existing golf course , and the proposed golf course, attended by Councilman Maulhardt and Sotelo and others.  At this meeting Maulhardt “directed Molina to take the debt service off the golf course, and then everything would be okay.”  (TR NOV 5, 78:6-25, 79: 1-20) As Mr. Molina subsequently explained, “What this means is that ‘like Enron, if you take the debt off the P & L’s, everything looks good,, but the proper accounting is to allow for the debt service to be in the P&L, and the bottom line is the bottom line.” (Id. at 79:22-25.)

          Mr. Molina told Maulhardt that he (Molina) could not do that because it was not an “acceptable accounting procedure”, but “he offered a method to resolve the problem by changing the accounting from a business type accounting to a government type of accounting like a general fund.  Then there wouldn’t be an issue with the debt.” (Id. at 80.) “But as soon as I said that—I hadn’t even started eating my meal—everyone left.” (Id. at 80:10-25.)

          In Mr. Molina’s opinion, what Maulhardt was asking was improper and would have constituted a “breach of Molina’s professional code of conduct”. As verified at trial by an independent expert, removing the interest expense from the reported net income of the golf course operations would have placed Mr. Molina and the City’s report in violation of GAAP (generally accepted accounting principles).^[11] (TR NOV 5, 80, 15-25; TR, NOV 6, 43: 20-25; 45:2-24.)

          After the “Wagon Wheel” meeting Sotelo told Mr. Molina that "Council member Maulhardt had rejected my solution.” (TR NOV 5, 80:15 –25; 81:1-2) Within 10 days, Sotelo fired Mr. Molina (October 19, 1999), ordering him to leave immediately. (TR NOV 5, 81:1-8; 90:12-22.).

          Sotelo concedes that Molina’s statements to the press was a motivating factor in his termination; his purported reasons for firing Molina appear pretextual

          Sotelo subsequently admitted that Mr. Molina’s statement to the Oxnard Star was a motivating factor in his termination (TR NOV 7, 50-11-51:12; TR NOV 14, 20:2-12) Sotelo also admitted that the two big guns going after Mr. Molina were council members Maulhardt and Holden. (TR NOV 7, 49:5-25.)

          But Sotelo told Mr. Molina during an exit interview, and continues to “contend”, that he also terminated Mr. Molina because Molina provided untrustworthy financial numbers; alienated City consultants and contractors; intimidated employees and co-workers; and “fractionalized” the City Council. (TR NOV 5, 81:15-25; 86:1-7.)

          In fact the City, and Sotelo have contended in defense of Mr. Molina’s wrongful termination claim, for the past six years of litigation that Mr. Molina performed his job poorly. Yet from the time that Sotelo began working for the City in 1998 up through the time that he terminated Mr. Molina in October 1999, neither Sotelo nor anyone at Oxnard, including Lino Corona, in Human Resources Management at the City Manager’s Office, had ever complained to Mr. Molina about any of these issues or counseled Molina for such. (Id. at 81-86.). Neither Sotelo or anyone from the City ever documented these complaints either by a direct memo to Mr. Molina or via one to his personnel file. (Id. at 82: 21-25; 83:20-25; TR NOV 6, 126:2-5.)

          On the contrary, Oxnard had awarded Molina two performance based salary increases, the last just prior to his termination.” (TR NOV 5, 38:4-12.)  Managers who did not perform well did not receive this 4% increase.   (TR Nov 7, 143: 8-13; 18-21; 147:12-21; 148: line 25 through 150.)

          On March 25, 1999, Mr. Molina approached Sotelo and requested a performance evaluation. Sotelo informed Mr. Molina that he was ‘doing a fine job’, and never expressed any dissatisfaction with any of his assignments to Molina. (TR NOV 7, 51:13-16; TR NOV 4, 47:19-25; 48:1-6.)

          Other officials and employees at Oxnard corroborated Mr. Molina’s competence and professionalism, contradicting Sotelo’s purported complaints. Orlando Capulong has worked for the city’s finance department since 1988, and continues to work for Oxnard as the City’s comptroller, has a bachelor’s degree in accounting and a CPA, and worked closely with Mr. Molina in preparing the City’s monthly financial statements. Mr. Capulong confirmed that Mr. Molina was competent in his job, and fulfilled his obligations as Finance Director. He also confirmed that the monthly reports Molina provided to the council were reliable and accurate. In fact, he assisted Molina in preparing the reports and they retrieved the raw data from Oxnard’s accounting system. (TR NOV 4, 82: 1-25; 83:1-25; 84:1-8; 92:4.)  The State required these reports from its municipalities. (Id. at 85: 21-25.)          Mr. Capulong also confirmed that he never saw Mr. Molina rude or dismissive of anyone on his staff or to women. He also stated that Mr. Molina worked very professionally with consultants that he also saw, including outside auditors. (TR NOV 4. at 85:1-19.)

          It was Mr. Capulong’s job to implement GAAP (general accounting principles) with which Oxnard was required to comply and he confirmed that Mr. Molina always followed GAAP. (Id. at 86:1-25; 87:1-23.)  No one ever complained to Mr. Capulong of Mr. Molina’s management style. Id.  The only resistance Capulong observed was when Molina implemented the City’s conversion from an old accounting system.( Id. 88:1-25.) This conversion originated with Mr. Molina and it resulted in a more efficient process of accumulating the costs of projects. The City was very happy with the conversion and even after Molina’s departure the City continues with the system. (Id. at 89:2-14).

          In the weekly meetings with Molina’s staff, Molina praised employees, had an open door policy, and resolved differences between employees including two women, one of whom ‘complained’ about Mr. Molina after his termination. (TR NOV 4 at 84: 18-23; 87:14-22; 89:16-25. ) As far as Mr. Capulong observed Molina had made the employees effective.

          Mayor Lopez is presently Oxnard’s mayor and has been for over 10 years; having been elected to six two-year terms. He believed that Molina was a competent finance director for Oxnard.  He observed Molina making presentations to the City Council; he would ask him questions and received answers that were adequate, sufficient and that he could understand (TR NOV 5, 96:1-25; 97:1-15). Although he presently cannot recall Holden’s directive to Molina at the closed session in which they discussed the High Tides Green Grass contract, it would not have been out of character for Holden to be short-tempered and to cut Molina off. (Id. at 98:1-7.) Lopez believed that the High Tides and Green Grass contract required audits, and expected Molina as Finance Director to assure that auditing requirements were met. (TR NOV 5, 100:8-25.)  He did not see Mr. Molina’s request for audits as a sign of incompetence but a function of his job. (Id. at 98:8-25; 100:19-25;101:1-4.) Mayor Lopez never observed Mr. Molina as acting inappropriately with the staff or consultants or council members; never saw him acting rudely or dismissive of women. (Id. at 101:1-25; 102:-103.)

           Former Mayor Pro Tem Zaragoza trusted that Molina’s figures were accurate. (TR NOV 4, 55:2-7) Zaragoza expected Mr. Molina to ensure that audit requirements be complied with including that of the golf courses. (TR NOV 4, 58:9-23.) His experiences were inconsistent with Sotelo’s complaints of irregularities. (TR NOV 4, 54:12-25; 55:1-25; 56:1-25; 57:1-6.)

          James Fabian who had worked for Mr. Molina as Risk Manager stated that he never felt intimidated by Mr. Molina ( TR NOV 5, 121:13-17, TR NOV 5, 123: 3-4).  Capulong and Fabian also corroborated that Mr. Molina never limited access to the Fourth Floor which housed the offices of the City Manager and his staff ( TR NOV 4, 91: 11-92:1, TR NOV 5, 126: 18-20). Other employees who testified that they had never seen Molina rude, intimidating or alienating consultants included Benjamin Wong, engineer and past City Water Department Manager for Oxnard, (TR NOV 18, 151:6-7, TR NOV 18, 151:2-3) Henry Lenhart, former Oxnard Fire Chief, ( TR NOV 5, 191: 6-11),  Michael Solomon, Finance Director for United Water District, (TR NOV 4, 71: 21-23), and John McCarthy, engineer and past City Manager for the City of Paso Robles, where Molina worked for nearly seven years  (TR NOV 14, 184:19-24, TR NOV 14, 185: 6-11, TR NOV 185: 21- 186:25).

Among the irregularities of which Sotelo complained concerned a purported $4 million deficit he contends Molina ‘reported’ (TR Nov 7, 7:24-8:2). Sotelo also contends that he immediately instructed Karen Burnham, Assistant City Manager, to meet with Mr. Capulong and Mr. Molina to resolve the matter.  But Sotelo’s assistants have never consistently confirmed this number or the meeting. (TR Nov 13,83:18-25; 94:1; 23-25; 95:3-8). And Mr. Capulong denies that the meeting ever occurred or that he was ever informed about any deficit (TR Nov 4, 90:1-25).  A subsequent professional review of Mr. Molina’s monthly reports failed to show the purported $4 million deficit or any other financial irregularities of which Sotelo complained.  (TR Nov 6, 54:2-7; TRIAL EXHIBIT 206, ER, 547 ). ^[12]

Molina’s statements to the Oxnard Star were accurate and his requests for audits consistent with his obligations as Finance Director.

 Mr. Molina's statement to the Oxnard Star regarding the historical financial results of the golf course operations for fiscal year ending June 30, 1998 accurately portrayed the financial condition of the golf course. (TR NOV 6, 43:16-25; 44-46:4-23; 47:1-12)^[13]  Molina was taking audited financial information from the City’s own report, which KPMG had audited. (Id. at 47: 1-12.)

Sotelo never disputed Molina’s figures on River Ridge I, but simply stated that he wanted the public to know that … ‘when the transaction was struck to develop River Ridge I, that there were expectations of a revenue being generated by the project.  Those revenues never materialized, for a number of reasons.” (paraphrased, TR, NOV 7, 42: 2-10)        

One of the main issues of contention concerned what Mr. Molina knew to be, and what Sotelo, Holden and Maulhardt believed to be the audit requirement identified in the High Tides & Green Grass operating contract. Mr. Molina insisted the contract required a complete and thorough audit of the revenue, expenditures, assets and the debt. ^[14]  Sotelo, Holden and Maulhardt stated that the contract simply required a financial statement of the revenue. ^[15] (TR, NOV 7, 25: 11-25; 26:1-25; 27: 1-25; 74:15-25; 75:1-25; 76: 1-25.)

More significantly a grand jury has been investigating Oxnard’s reporting practices since fiscal year 2002-2003.  The Ventura County Grand Jury report on the Oxnard River Ridge Golf Course confirmed Mr. Molina’s interpretation that the High Tides & Green Grass contract required a full and complete audit of the revenue and debt. ^[16]

Notwithstanding the Grand Jury’s report, Sotelo and Holden continued to insist that the Green Grass contract did not require a full audit, that Mr. Molina was incompetent for demanding a full audit; that a statement of annual revenues, without any identification of the debt, satisfied the City’s, and developers’, obligations under the contract and to the public. (TR NOV 7, 25:5-19; 26:7-19; 75:1-25; 76: 1-25; 77:15-21)

Although conceding that the Grand Jury took advice from knowledgeable persons familiar with public entity accounting practices (TR Nov 7, 79:3-8), Holden opined that: “I don’t think they (Grand Jury) had a clear understanding of what the High Tides & Green Grass’ relationship with the City of Oxnard was. (TR NOV 7, 76:18-77:3).

          At the time of his termination Mr. Molina’s complete pay package with benefits and salary was $148,959.00. (TR NOV 7, 117 through 123:15; 117:23-25; 118:1-3.)  Mr. Molina expected to work another 15 years at Oxnard. (Id. at 120:16-17.)

STATEMENT OF THE CASE

                Mr. Molina filed suit against the City of Oxnard and Sotelo arising out of his termination on October 22, 1999. CR, 1. ^[17]  Mr. Molina contended, inter alia, that Oxnard and Sotelo fired him in retaliation for statements he made to the City Council and to the media on the finances of River Ridge I and II, in violation of his first amendment rights. The district court granted summary judgment on all counts but defamation on May 9, 2001. ^[18] CR,40.

          Mr. Molina appealed the summary judgment order as to those counts relating to Molina’s first amendment and emotional distress claims on November 14, 2001. CR,127. This court reversed the summary judgment on February 12, 2003.  CR,137. This court specifically held that:

“1. The district court erred in concluding that Molina’s speech was not constitutionally protected…Molina’s statements were not mere ‘employee grievance[s]’ related to ‘personnel and internal affairs’…Rather they raised the possibility that some council members engineered a “sweetheart deal” with favored contractors at taxpayers’ expense.  The statements addressed ‘matters of public concern’ and were thus entitled to “special protection”… that Molina might have been speaking at times as an at-will employee during closed council meetings does not alter our conclusion.”^[19]

2.  City manager Sotelo’s subjective beliefs alone are not enough to prove disruption…^[20]

3.   There was sufficient evidence for a jury to find that “the real reasons for [Molina’s] termination including comments by Sotelo and council member Holden that Molina should keep quiet, that…‘none of what [Molina] said was what a [c]ouncilmember wanted to hear’ and that ‘powerful people were going after [him] with big guns’ for the views he had expressed.”  …Big or not, these are definitely smoking guns.” ^[21]

           Notwithstanding this court’s very specific outline of the “law of the case” on Mr. Molina’s first amended claims, as late as one week prior to trial the defendants contended that Mr. Molina still had a burden to prove that his speech was protected, that Sotelo could prevail as long as he had a good faith belief that he could terminate Molina for protected speech and a contradictory definition of the defendants’ burden that impermissibly limited Oxnard’s liability. ^[22] In response, Mr. Molina filed an “Opposition to the Defendants’ Contentions of Fact and Law”, a “Supplement to his Memorandum of Contentions of Fact and Law” and “Objections to the defendants’ proposed instructions and verdict” alleging, inter alia, that this court had already ruled as a matter of law that Mr. Molina’s statements to the press and to the City Council on the golf course debt were protected, could not constitute a legitimate basis for terminating an at-will employee, and Sotelo’s good faith belief that Molina was disruptive could not prevail as a defense. ^[23] Subsequently the parties resolved some of the issues of proof, including defendants’ concession that this court had pre-determined the first prong of Mr. Molina’s burden, and that Mr. Molina’s initial burden would be limited to showing “protected speech” was a motivating factor in his termination.  However, they continued to differ on the defendants’ burden.^[24]

          Trial commenced on the revived claims on November 4, 2003.  CR, 227.

          On November 13, 2003, the district court dismissed the jury before the completion of the afternoon session to discuss potential jury instructions.  The court like the defendants appeared perplexed by what constituted the burden of proof for each party and the role of the court and the jury. (TR, NOV 13, 9: 14-21; 99: 1-25; 100:1-15, ER, 105,108,109) The court admitted that preparing jury instructions understandable to the jury was “certainly not simple” and that the court was not “fully clear on the issues”. (Id. 100:1-15.)  The court had not yet considered the competing verdict proposals, the parties’ objections and “hadn’t even begun to do anything with the special verdict form”  and though the trial was drawing to a close stated that “…we’ll just have to look at that and see how we unfold.” (Id. at 100:15-25.)

The court than shared its draft of proposed instructions to be read to the jury with the counsel for the parties. (Id. at 100:18-25.)  Mr. Molina filed his objections the next day, objecting inter alia, that the court was creating a greater burden on the plaintiff than that set forth in Allen v. Iranon (1999) 283 F.3d 1070, 1074 (citing to Mt. Healthy v. Doyle (1977) 429 U.S. 274, 287.); and was permitting the jury to release the defendants from liability with a confusing instruction on at will employment.^[25]  On November 17, 2003 the district court held a status conference to finalize the jury instructions.  At that time the court introduced another draft of instructions and the court’s proposed verdict form. (TR NOV 17, 4:11-25, ER,144) The parties had not seen the verdict form prior to the hearing. Id. 8:12-20.  Mr. Molina objected to the court’s dismissal of his state claim for wrongful termination in violation of public policy. (TR NOV 17, 7:13-25.) Mr. Molina also objected to the court’s rejection of his proposed instruction defining motivating factor. (Id. 8:21-25; 9:1-22.) Mr. Molina also objected to the court’s refusal to include additional language concerning the defendants’ burden of proof. Mr. Molina had proposed that the court permit the jury to consider that ‘if they found the defendants’ reasons for termination were pretextual’ the defendants lost. (TR NOV 17, 13:6-25.) ^[26]  Molina was concerned that the instruction as proposed would confuse the jury into believing that the defendants could prevail by simply showing any reason at all to terminate Molina, because he was an at-will employee, and wanted the jury to be instructed on the significance of pre-textual.  Id. at 13:9-22. Molina had suggested the following language: “If you conclude that the reasons given by the Defendants were pretextual, then you must find for Phil Molina. Pretextual is taken from the word pretext: meaning false reason or motive put forth for hiding a real reason or excuse; a cover-up. However, you need not find that the reasons given by the Defendants were pretextual in order for Mr. Molina to prevail. You may find that the Defendants’ reasons for termination were legal. However you must find for Mr. Molina if you determine that his protected speech and conduct were a motivating factor for the termination.” ^[27]

After other discussions concerning the remaining disputes on the instructions including the at will instruction to which Molina had objected, the court introduced for the first time its proposed special verdict form “recognizing that this is like none of us has had probably adequate time”. (TR NOV 17, 28:13-20.) Mr. Molina objected to the form as confusing particularly as to the court’s breaking the  first amendment claims into multiple subparts. (Id. at 29-32; 31:11-12; 13-20.) In discussing the wording to interrogatory two, of the verdict form, the court and the parties became distracted by the multiple re-wordings of one, skipped two to discuss three and failed to re-consider two. (Id. at 31:21-25; 32:1-25; 33:1-25.)

The court and the parties proceeded to revise the form focusing on interrogatory one.^[28]

On November 19,2003 after counsel for the parties made closing arguments; the court instructed the jurors. (CR, 238, TR, NOV 19, 75-91; NOTICE OF ERRATA, ER 597.). The court also instructed that the jurors would be completing a verdict form but did not explain how the form related to the instructions or note “the legal significance of any of the interrogatories”, including two. (TR, NOV 19 at 91:19-24.)

          Ms. Kinaga requested that prior to the juror’s deliberations that on behalf of the defendants she be permitted to move for judgment as a matter of law. (TR, NOV 19, 10:16-20, ER, 202) The district court advised that it would reserve judgment on the motion until the jury returned with a verdict but suggested that the defendants file a brief. (TR, NOV 19, 10:21-25). No motion nor brief was ever filed.

          During the deliberations the jurors submitted five notes. Juror notes 2 and 3 submitted concurrently inquired as follows:

Jury note two:

(3) What do you mean Sotelo’s conduct. Are there any specifics?

Jury note three inquired:

“Please rephrase Item B in question No. 1.”

The parties agreed that the language in item B in question 1 should contain the interlineation: “  at the December 1998 closed session”.

After conferring with the parties the court interlineated: “in terminating Plaintiff” in question No. 3. (TR NOV 19

Then the jury submitted note four which inquired:

Instruction #24 concerning measure of damages. Item #1 states that we must decide the amount that plaintiff would have earned up to today. Why must we award damages up to today? Item #2 allows us to determine the length of time he [Molina] was likely to be employed. (CR, 243, ER,307; TR NOV 19, 97:6-25)

          The defendants contended that the jury seemed to be asking if it was acceptable to award damages for a period less than four years.  However Mr. Molina (Attorney Lear) and the court suggested that the jury was interpreting item no. 2 as restricting them from awarding damages beyond the date of deliberation.  Mr. Lear wanted to clarify to the jury that they were to “Add” item one and two. NOV 19, 97:10-23, NOTICE OF ERRATA . The court disagreed with the defendants’ contention (Attorney Kinaga)

The court: “I would agree if you didn’t have Item 2, allow us to determine the length of time.” (Id. at 98:4-8; NOTICE OF ERRATA, ER, 620)

Before the court and the parties could answer the note the jury indicated that it had reached a verdict. Ms. Kinaga objected to the court’s proposed response to jury note four because it would be “tampering” (TR, NOV 19, 99:1-15; NOTICE OF ERRATA, ER, 621)

The court read the following: (TR, NOV 19, 100:5-25; :1-15; NOTICE OF ERRATA, ER, 622)

The verdict reads: [Emphasis added.]

“We the jury in the above entitled action, find the following special verdict:

1.     Has the Plaintiff proved by a preponderance of the evidence that the exercise of his First Amendment rights was a substantial or motivating factor in the decision to terminate plaintiff’s employment?  If your answer, is no, do not answer a, b, 2, or 3 below. Yes_x_   No____

a. If your answer to question 1 was “yes” was it yes or no as to plaintiff’s statements to the Oxnard Star newspaper regarding the finances of the golf course?   Yes_x_   No___

b. If your answer to question 1 was “yes” was it yes or no as to statements made [*at the December 1998 closed session*] to the councilmembers regarding the financial status of the River Ridge Golf course?  Yes__    No_x__.

*[at the December 1998 closed session] ADDED AFTER JUROR NOTE TWO

    2.   Have defendants proved by a preponderance of the evidence that plaintiff’s employment would have been terminated even in the absence of plaintiff’s protected speech?  If the answer is yes, do not answer 3.

Yes_x_   No___

    3.   Has plaintiff proved that he suffered injury as a result of Sotelo’s conduct in terminating Molina in violation of plaintiff’s First Amendment rights?

                                                Yes_x_   No___

    4.    Has plaintiff proved by a preponderance of the evidence his claim for intentional infliction of emotional distress?

                                                                             Yes__     No_x__

   5.    Has plaintiff proved by a preponderance of the evidence his claim for negligent infliction of emotional distress?

                                                                             Yes__     No_x__

   6.  What damages, if any, do you award plaintiff to fairly compensate him for:

(a) lost salary:       $409,343.00

(b) lost fringe benefits: $186,492.84

          (c)  lost future earnings:____0___

          (d)  emotional distress: ____0___

    7. Do you find by clear and convincing evidence that Sotelo was guilty of oppression, fraud, or malice in the conduct upon which you base your findings?

                                                                                      Yes__     No_x__

          The court then requested that the jury return to the jury room to permit it to confer with the parties. It noted:

“Here is our problem. Quite plainly they didn’t read the verdict form. They answered 2 yes, …but they went on and answered No. 3, which in light of their answers to 4 and 5, no, it would appear to me that they should not have gotten to damages. …What I’d like to do when I poll them is to ask them particularly about the answer…if it’s all their verdicts, but also particularly confirm with them that it was that person’s verdict that the plaintiff proved by a preponderance of the evidence that plaintiff’s employment would have been terminated even in the absence of plaintiff’s protected speech because obviously we’re going to have many motions and disputes and we may all be back together if I have to construe this verdict form.” (TR, NOV 19, 102:6-22, NOTICE OF ERRATA, ER,624)

When Mr. Lear objected that the jury clearly intended to award damages the court responded that the problem was interrogatory two and “unless they answered two wrongly and clearly intended to give damages.  That’s what we need to confirm.”  (Id. at 103:2-3; NOTICE OF ERRATA, ER, 623)

The court then suggested sending the jury to reconsider the verdict form but would not do unless the parties agreed. The court agreed with Mr. Lear that the “jury intended to award damages.” (Id. at 104:16-18; 106: 5-9.).

          The court also conceded that it was not fully clear what the intent was. (Id. at 105:17-25.)  The court then suggested an inquiry for the jury to explore the basis of the jury’s miscommunication or misunderstanding by advising the jury that their answers appeared inconsistent. (Id. at 106:13-25.) But the defendants opposed any inquiry at all.  Because the defendants would not agree the court refused to make further inquiry and excused the jury. (TR, NOV 19, 107:1-7, ER, 629)

          The court then denied what it believed to be a pending FCRP 50 motion, and requested that the parties consider settlement. (TR, NOV 19, 19-25.)

          The defendants then filed a Motion to Enter Judgment Pursuant to Rule 58, and Mr. Molina responded.  The defendants relied on Floyd v. Laws and City of Sherwood, 929 F.2d 1390, 1395 (9^th Cir.1991).  The court also relying on Floyd enter judgment in favor of the defendants and rejected the verdict. (CR, 248, 251, 252, 253, 254, ER, 334, 378, 387, 393, 400.

SUMMARY OF ARGUMENT

A fair reading of the jury’s note to the court’s jury instructions 16 and 24, and the juror’s responses to the interrogatories contained in the verdict, including the jury’s award to Mr. Molina of $595,836.00, leads to the only conclusions the jury made:

·        Oxnard and Sotelo terminated Mr. Molina for the statements he made to the newspaper in violation of the first amendment.

·        Mr. Molina would have “survived” in his job for another four years.

·        Mr. Molina was damaged in the amount of $595,836.00.

The district court conceded that it was evident that the jury misunderstood the verdict form and that it intended to award damages to Mr. Molina. Instructions 16 and 24 clearly advised the jury that it could not award damages unless it found in favor of the plaintiff. The verdict form that the defendants approved contained an express instruction that if the jury answered yes to interrogatory no.1, the jury was to proceed to (a), (b) 2, or 3, and lacked any express instruction not to proceed to the interrogatories after 3, including 6, which requested the jury to award damages. The district court committed reversible error in ignoring the jury’s legitimate findings. The responses to interrogatories 1, 3 and 6 were not surplusage.  In light of the jury instructions, in context of the jurors’ notes, and the entire “special” verdict, the district court could have reconciled the answers to make them consistent. Nevertheless, the court was precluded from entering judgment for the defendants.

ARGUMENT

I.    In Evaluating A Court’s Determination That A Verdict Is Inconsistent With Answers To Interrogatories The Applicable Standard Of Review Is De Novo

The Appellate Court reviews a district court’s determination that a verdict is inconsistent de novo. Wilks v. Reyes, 5 F. 3d 412, 415. (9^th Cir.1993).  Although the district court here did not refer to either FRCP 49, or to FRCP 58, the rule on which the defendants proceeded, in its decision the district court relied on cases construing FRCP 49. Whether the district court correctly applied this rule (and the relevant case law) requires de novo review. Id. at 415. (ER, Decision, at 393)

The first inquiry is whether Rule 49(a) or (b) is applicable. Although the district court referred to the verdict form as a “special verdict”, its decision did not

rely upon distinguishing the form from a “general verdict with interrogatories”. As this court has held, as a practical matter, the forms are indistinguishable. Floyd v. Laws and City of Sherwood, 929 F.2d 1390, 1395 (9^th Cir.1991).

          The heart of the issue for this court is whether the district court could have construed the jury’s answers in light of the jury’s notes and the special instructions to make them consistent with its award of $595,836.00 to Mr. Molina, or whether the verdict contained a “fatal inconsistency” requiring a new trial.  Id. at 1396; Gallick v. Baltimore & O.R.R. Co., 372 U.S. 108, 119 (1963); FRCP 49(b).

II.  The Court Has The Duty Under The Seventh Amendment To Harmonize Seemingly Inconsistent Answers To The Interrogatories Of A Special Verdict; the Court committed reversible error by entering judgment for the defendants; the court could have reconciled the answers

When confronted by seemingly inconsistent answers to the interrogatories of a special verdict, a court has a duty under the seventh amendment to harmonize those answers, if such be possible under a fair reading of them.  Gallick at 110 (1963).  A court is also obligated to try to reconcile the jury’s findings by exegesis if necessary.  Id. at 119.  If the inconsistency cannot be harmonized, the court must then order a new trial.  Id. at 119-20.  Thus, “where there is a view of the case that makes the jury’s answers to special interrogatories consistent, they must be resolved that way.”  Gallick, 372 U.S. at 119.  In Gallick, the Court held that the jury’s seemingly inconsistent findings of fact were consistent in light of the jury instructions and in the context of the entire special verdict  Id. at 121.  [One acceptable means of reconciling the special verdict was to assume that the jury interpreted questions 19-21 and 20-22 as addressing two different kinds of foreseeable occurrences.  Another permissible means of harmonizing the jury’s special verdict was to assume that the jury’s lay understanding of a particular legal concept differed from the court’s, ie. the jury could have applied an overly narrow concept of foreseeable harm.  Id.]

                Such is the case here.  Under Gallick and Floyd the district court may hypothesize that the jury misunderstood a question. Floyd, at 1399. The district court knew that the jury in the instant case had misunderstood instruction 24, and interrogatory two in that the two are interrelated.  The district court did not need to  make any assumptions at all. When the jury submitted its question in note number four it was signaling to the court that, like the Gallick jury, it had a lay understanding of a particular legal concept different from what the court intended.

In jury note four the foreperson inquired: “Instruction #24 concerning measure of damages. Item #1 states that we must decide the amount that plaintiff would have earned up to today. Why must we award damages up to today? Item #2 allows us to determine the length of time he [Molina] was likely to be employed.

The court’s special instruction number 24, ^[29] expressly stated: “If you find for the plaintiff, you must determine damages. Damages means the amount of money which will reasonably and fairly compensate the plaintiff for any injury you find was caused by the defendant.  You should consider the following:

1.                           Decide the amount that the plaintiff would have earned up today, including any benefits and pay increases; and

2.                          Add the present cash value of any future wages and benefits that he would have earned for the length of time the employment with the City of Oxnard was reasonably certain to continue.

In determining the period that plaintiff’s employment was reasonably certain to have continued, you should consider:

          (a) Plaintiff’s age, work performance, and intent regarding continuing employment with the City of Oxnard;

          (b) Any other factor that bears on how long plaintiff would have continued to work.

A plain reading of “jury note four” in context of  the responses, special instructions 16, ^[30] and 24, and the entire verdict made it abundantly clear that no inconsistency existed at all in the minds of the jurors. They obviously construed interrogatory #2 to mean that Molina would have survived four more years with Oxnard! 

One could “interpret” that when the court did not appear to be responding to the jury’s note, the jury proceeded to “answer” item 2 on instruction 24 with “four years” based upon  what they perceived to be a limit set forth by item no. 1.  Mr. Molina presented evidence on lost wages and benefits that included a total figure of $148,959.  The jury simply took this sum and multiplied it by 4 times to arrive at $595,836.00. (TR Nov 7, 118:3.)

Based upon juror’s note four it is apparent that the jury took a very literal, and non-legal interpretation of interrogatory number 2 on the verdict form, and the damage instruction in 24. The jury apparently believed the court was asking the jury to calculate, in light of the substantial evidence of the hostility of the “big guns” at Oxnard, how many years Molina would have survived and they concluded four years! Since the jury was confused as to how to reconcile Item #1 and item #2 on instruction #24, the jury most likely reconciled these items 1 with 2 with interrogatory 2 by concluding that 4 years was the most they could award since the court appeared to be limiting the number of future years to the first day of trial. Oxnard and Sotelo fired Molina on October 19, 1999 and trial commenced on November 4, 2003, representing exactly a four year span.

In fact the district court recognized this as a possible interpretation when first confronting the note, but appeared to forget the “warning” this note sent out when considering what inquiries it should make of the jury.(CR, 243, ER, TR NOV 19, 97:6-25)  The district court in considering the jury’s inquiry in note four concluded that the jury interpreted item 1 as a limit on damages, thus limiting the jury’s ability to award damages for a period that exceeded four years.

 Although the court appeared baffled by why the jury would be confused by the questions on instruction 24, the court failed to even address this instruction and  note four in its decision.  (TR NOV 19, 97: 15-19; CR, 253, ER, 393.)

The district court recognized that the jurors were confused when it observed that “the jury hadn’t read the verdict”.  (TR, NOV 19, 102: 6-13, ER 624.)  And yet the court had conceded how much it had struggled to draft appropriate instructions and the verdict form, and apologized for presenting its proposed verdict form so late. Supra. And the court and the attorneys, accomplished and experienced legal professionals not only struggled with drafting appropriate instructions, after all the wrangling they wound up with instructions and a verdict form that contained an inherent inconsistency. Actually, the jury had read and answered the verdict using a common sense approach in light of the express instruction in 24.  Because item 1 appeared to place a limit on the number of years that they could conclude Mr. Molina would have lasted at Oxnard, and given the substantial evidence of hostile work conditions, the 4 year limit ‘made sense.’

The district court conceded that the jury clearly intended to award Mr. Molina damages. (Order Construing Verdict, CR, 253, ER, 398:3; TR, NOV 19, 104:16-23.) And by denying the defendants’ “pending motion 50” the court was clearly expressing its opinion that there was substantial evidence to support the verdict for damages. (Id. at 108:18-20.)

Thus, this court can and must reconcile the jury’s verdict under the Gallick analysis and enter judgment for damages in the amount of $595,836.00, in Plaintiff’s favor and as awarded by the Jury.

III.   The Trial Court Committed Reversible Error In Ignoring The Jury’s Legitimate Factual Findings.

Under FRCP Rule 49(a), the trial court cannot simply choose to ignore a

legitimate finding that is part of the special verdict.  The special verdict reflects the

jury’s findings of fact. By ignoring the jury’s legitimate findings of fact the district court  violated Mr. Molina’s Seventh Amendment right to jury trial.  Floyd v. Laws and City of Sherwood, 929 F.2d 1390, 1397 (9^th Cir., 1991).

In light of the instructions, in context of the jurors’ notes, and the entire “special” verdict, the district court could have reconciled the answers to make them consistent and to support the jury award to Mr. Molina of $595,836.00.  Nevertheless, if the findings truly contained a “fatal inconsistency” the court was precluded from entering judgment for the defendants.

          The district court inaccurately relied on Floyd in ruling that the jury’s damages award should be stricken as surplusage.   In Floyd, the following verdict questions and answers were posed to the jury, revealing an apparent inconsistency:

“Question 13 read: ‘Was plaintiff … damaged as a result of any of the actions of defendant … found in questions 9, 10, 11, or 12’ [i.e., assault, battery, false imprisonment, or intentional infliction of emotional distress] To which the jury replied: ‘No.’

After question 13, appeared the following instruction: ‘If your answer to question 13 is ‘No,’ do not answer any further questions, but proceed to the end of this form and sign the verdict.  If you answered ‘Yes’ to question 13, proceed to question 14.’

Question 14 read: ‘What amount of money will reasonably compensate plaintiff … for any of the actions of defendant … found in questions 9, 10, 11, or 12?’  To which the jury responded: ‘$7,500.00.’” Id. at 1392-1393 (emphasis added).

     The court held that the answer to Question 14 was surplusage because, after

replying “No” to Question 13, the jury disobeyed the express instructions of the verdict form and answered Question 14.  Id.

Here the jury was not expressly prohibited from answering Question No. 6 which asked,

“What damages, if any, do you award plaintiff to fairly compensate him for: (a) lost salary:

(b) lost fringe benefits:

(c) lost future earnings:

(d) emotional distress”). 

More importantly the verdict form contained an inherent inconsistency. Although the jury was instructed not to answer Question 3 if the answer to Question 2 was “yes”,  interrogatory no. 1 contained an express instruction that if the jury answered yes to interrogatory no.1, the jury was to proceed to (a), (b), 2, or 3. (Inadvertently neither the court nor the parties observed the inherent inconsistency between 1 and 2.)

Thus, the jury’s special findings as to Question 1, 3, and 6 were not “issued in violation of the trial court’s express instructions” and can therefore not be stricken as surplusage.  Id. at 1397. In addition, there was no express directive as in Floyd after interrogatory two that instructed the jury not to proceed further but to go to the end of the form and sign the verdict. In fact after interrogatory three in the instant case there were three additional interrogatories with no directives at all. This further caused ambiguity in the questions posed.

Thus, as the jury was not expressly instructed not to answer interrogatory No. 6 if it answered yes to No. 2, and interrogatory No. 1 prohibited the jurors from answering 3 only if they answered no to 1, the responses to Nos. 3, and 6 cannot as a matter of law be stricken as surplusage.  The court must either reconcile the apparently inconsistent responses under the Gallick parameters, or order a new trial. 

IV.  The District Court Abused Its Discretion In Discharging The Jury And Requesting Permission From The Defendants To Make Inquiry Of The Jury To Explore Their Misunderstanding

Although it was “evident” from a note the jury’s foreman submitted to the court minutes before the foreman signaled the jury had reached a verdict, and the jury’s responses to the other interrogatories, that the jurors had misunderstood interrogatory number 2, and the district court conceded it could not reconcile the jury’s answers, the district court nevertheless discharged the jury before  the court could verify the basis of its misinterpretation because the defendants would not agree with the  court’s proposed inquiry. ^[31]

The court further abused its discretion in granting defendants’ Rule 58 motion. FRCP 58, which merely provides that a court may issue judgment pursuant to a jury verdict, does not authorize court to issue judgment contrary to a jury verdict. Gaia Techs., Inc. v Recycled Prods. Corp. (1999, CA5 Tex) 175 F3d 365, 50 USPQ2d 1830, 43 FR Serv 3d 946.

The defendants’ complaint that an inquiry would constitute tampering with the verdict is incorrect.  When faced with an apparent inconsistency the court has a duty to inquire as to the basis of the miscommunication or misunderstanding. This is not an improper attempt to delve into the mental processes behind the verdict but a logical attempt to construe a verdict by exploring the basis of the misunderstanding. Trans-World International, Inc. v. Smith-Hemion Productions, Inc., (1996) 952 F.Supp 667 (C.D.Ca.)  Since it was obvious that the jury intended to award damages it was improper for the court to ask permission of the losing parties as to the proper jury inquiry.  It permitted the defendants a chance to expunge the verdict on a technicality.  The court in doing so failed to exercise any discretion at all.

CONCLUSION

          The district court erred in entering judgment pursuant to FRCP 58 for the defendants on a verdict that favored the Plaintiff. This court can reconcile the answers on the special verdict to permit the Plaintiff the verdict the jury found for him in the amount of

DATED:  August 9, 2004         

                                                                   Karen A. Larson

Plaintiff/ Appellant, Phillip Molina

STATEMENT OF RELATED CASES IN COMPLANCE

WITH CIRCUIT RULE 28-2.6

There are no known pending cases related to this action or to this appeal.

DATED:  August 9, 2004

                                                                   Karen A. Larson