Opinion
No. X06 CV 03 4020460S
June 11, 2010
MEMORANDUM OF DECISION ON PLAINTIFF'S POST-TRIAL MOTIONS
This action was instituted by the State of Connecticut through its agency, the Department of Information Technology (DOIT), against the defendants Computers Plus Center, Inc. (CPC), and its principal, Gina Malapanis (n/k/a Gina Kolb). The case was tried to a jury and a verdict was rendered on January 29, 2010. The complaint dated April 8, 2004 involved claims arising from contracts for CPC to provide computer technology to the state. This complaint was asserted in fifteen counts. The counts against CPC alleged breach of contract, fraudulent misrepresentation and violation of the Connecticut Unfair Trade Practices Act, General Statutes § 42-110b (CUTPA). The counts against Kolb alleged fraudulent misrepresentation and violation of CUTPA. After the plaintiff rested in presenting its case in chief and the defendants moved for a directed verdict, the plaintiff withdrew the counts of the complaint alleging violations of CUTPA.
In their answer to the complaint, the defendants asserted four counterclaims. In count one, the defendants alleged that DOIT officials made stigmatizing statements damaging their reputation in violation of their rights under article one, § 10 of the Connecticut constitution. In count two, the defendants alleged common law trade libel. In count three, CPC alleged that the plaintiff breached the terms of a personal computer supply contract executed by them. Count four alleged that the plaintiff breached the implied covenant of good faith and fair dealing of the supply contract. On January 14, 2010, during the charge conference, the court granted the state's motion for a directed verdict as to count two of the counterclaim alleging trade libel based on the doctrine of absolute inmlunity.
Article one, § 10 provides the following: "All courts shall be open, and every person, for an injury done to him in his person, property or reputation, shall have remedy by due course of law, and right and justice administered without sale, denial or delay."
The court's order granting the plaintiff's motion for directed verdict on count two of the counterclaim alleging trade libel was premised on an earlier court ruling issued in this case on November 6, 2009. In that ruling addressing an issue of first impression, the court applied the doctrine of absolute immunity to grant the plaintiff's motion in limine precluding the introduction of certain allegedly defamatory statements made by agency heads of the executive branch in the performance of their official duties. This evidence was offered by the defendants in support of their trade libel claim. In granting this motion in limine, the court relied on the Supreme Court's decision in Barr v. Matteo, 360 U.S. 564 (1959), and the Restatement (Second) of Torts § 591. See also Salazar v. Morales, 900 S.W.2d 929 (Tex.App. 1995) (attorney general); Ward Telecommunications v. New York, 42 N.Y.2d 289 (1977) (state comptroller and employees acting on his behalf); Saroyan v. Burkett, 57 Cal.2d 706 (1962) (state superintendent of banks); Adams v. Tatsch, 68 N.M. 446 (1961) (state highway commissioner); and Matson v. Margiotti, 371 Pa. 188 (1952) (attorney general).
After a ten-week trial, the jury found in favor of the plaintiff on count eleven of the complaint against CPC alleging that CPC breached a contract to provide computer servers. The jury found that the plaintiff failed to prove that this breach caused any loss and awarded no damages. The jury found in favor of the defendants on all of the remaining counts of the complaint.
On the defendants' counterclaims, the jury found against CPC on count three alleging breach of the express provisions of the computer supply contract and found in favor of CPC on count four alleging violation of the covenant of good faith and fair dealing. The jury found that CPC failed to prove any loss as a result of this violation and awarded no damages. On the first count of the counterclaim alleging violation of the defendants' due process rights, the jury found against Kolb and in favor of CPC. On the verdict in favor of CPC and against the state on count one, the jury awarded $18.3 million "plus punitive damages."
The state filed numerous post-verdict motions. The motions remaining for disposition are all directed to the jury's verdict in favor of CPC and against the state on count one of the counterclaim and include a motion to dismiss, a motion to set aside the verdict and for judgment notwithstanding the verdict, and a motion to reduce the verdict. The court rules on these motions as follows.
I MOTION TO DISMISS COUNT ONE OF THE COUNTERCLAIM (#388)
The state moves to dismiss count one of the counterclaim on the ground that the court lacks subject matter jurisdiction because sovereign immunity has not been waived. All of the state's arguments, except for the one discussed below, were previously raised in a motion to dismiss denied by Judge Shortall on November 27, 2007. See #180. The state has not moved to reargue or to open that decision and has not shown why this court should revisit it. While the court may independently review the issue of subject matter jurisdiction notwithstanding the law of the case doctrine; see Pinchbeck v. Dept. of Public Health, 65 Conn.App. 201, 782 A.2d 242, cert. denied, 258 Conn. 928, 783 A.2d 1029 (2001); any such consideration is not done in a vacuum and the court may be guided by an earlier determination of the issue in this case just as it may be guided by any other precedent.
Upon review of the jurisdictional question, the court concurs with Judge Shortall's disposition of the state's sovereign immunity argument and finds no meritorious reason to deviate from it. See State v. Kilburn, 81 Conn. 9, 12, 69 A. 1028 (1908) ("[t]his action being an equitable one, the State, by bringing it, opened the door to any defense or cross-complaint germane to the matter in controversy, that the [defendant] might see fit to interpose."); Reilly v. State, 119 Conn. 217, 219, 175 A. 582 (1934), rev'd on other grounds, Cannavo Enterprises v. Burns, 194 Conn. 43, 478 A.2d 601 (1984) ("[t]he rule undoubtedly is that the State cannot be made a party defendant to an action without its consent; but if the State itself invokes the jurisdiction of the court to secure affirmative relief, it subjects itself to any proper cross demand involved in the subject-matter of the action."); University of Connecticut v. Wolf, Superior Court, judicial district of New Haven, Docket No. CV 03 048749 (Oct. 26, 2004; Zoarski, JTR) (same); cf. State v. Hartford Accident Endemnity Co., 136 Conn. 157, 160 n. 1, 70 A.2d 109 (1949) (noting that special authority to sue the state is unnecessary because "if the state itself invokes the jurisdiction of the court to secure affirmative relief, it subjects itself to any proper cross demand involved in the subject-matter of the action.").
The only contention that appears to be raised for the first time in support of the motion to dismiss is the state's argument based on the "recoupment-counterclaim exception." The state argues that under the "recoupment-counterclaim exception" any judgment on the counterclaim can be applied only to set off the amount of any affirmative award in the state's favor. This argument should have been raised prior to trial and sounds in the nature of a special defense. In any event, the state's argument is misplaced because it relies on inapplicable federal law. In jurisdictions where the initiation of suit does not waive sovereign immunity for the assertion of counterclaims, a "recoupment-counterclaim exception" has been recognized to limit the consequences of this rule by allowing a defendant to assert a "setoff" against any award to the plaintiff. See generally Beecher v. Mohegan Tribe of Indians of Connecticut, 282 Conn. 130, 137, 918 A.2d 880 (2007) (discussing the "recoupment-counterclaim exception" to tribal sovereign immunity). As previously held by Judge Shortall and reaffirmed above, our Supreme Court has concluded that the state's institution of suit does operate to waive sovereign immunity for the assertion of counterclaims arising from the subject matter of the state's complaint. Consequently, the "exception" advanced by the state has no application here.
The state's motion to dismiss is again denied.
II MOTION TO SET ASIDE VERDICT AND FOR JUDGMENT NOTWITHSTANDING THE VERDICT (#389)
The court has the authority to set aside a verdict when the jury could not reasonably and legally have reached its verdict. Bound Brook Associates v. Norwalk, 198 Conn 660, 667, 504 A.2d 1047, cert. denied, 479 U.S. 819 (1986). "A party challenging the validity of the jury's verdict on grounds that there was insufficient evidence to support such a result carries a difficult burden." Pestey v. Cushman, 259 Conn. 345, 369, 788 A.2d 496 (2002). "The basic question which the trial court has to decide is whether upon all the evidence an injustice has been done." (Citations omitted; internal quotation marks omitted.) Burr v. Lichtenheim, 190 Conn. 351, 355, 460 A.2d 1290 (1983). The court "must determine, in the light most favorable to sustaining the verdict, whether the totality of the evidence, including reasonable inferences therefrom, supports the jury's verdict." Gaudio v. Griffin Health Services, 249 Conn. 523, 534, 733 A.2d 197 (1999).
Moreover, the law is well established that the court's consideration of both the motion to set aside the verdict and the motion for remittitur is guided by the defendants' constitutional right to have factual disputes determined by the jury. The constitutional right of a party to have damages decided by the jury "is one obviously immovable limitation on the legal discretion of the court to set aside a verdict, since the constitutional right of trial by jury includes the right to have issues of fact as to which there is room for a reasonable difference of opinion among fair-minded men passed upon by the jury and not by the court . . ." (Citations omitted.) Gladu v. Sousa, 52 Conn.App. 796, 800, 727 A.2d 1286, (1999), aff'd., 252 Conn. 190, 745 A.2d 798 (2000).
When reviewing the sufficiency of the evidence, the court's function is not to sit as a seventh juror. Furthermore, "[t]he existence of conflicting evidence limits the court's authority to overturn a jury verdict. The jury is entrusted with the choice of which evidence is more credible and what effect it is to be given . . ." (Citation omitted.) Skrzypiec v. Noonan, 228 Conn. 1, 11, 633 A.2d 716 (1993). Consequently, in evaluating the adequacy of a jury's verdict, the court cannot substitute its discretion for that of the jury simply because the court would consider or weigh the evidence differently. On the other hand, "it is the court's duty to set aside the verdict when it finds that it does manifest injustice, and is . . . palpably against the evidence . . ." (Citations omitted; internal quotation marks omitted.) Malmberg v. Lopez, 208 Conn. 675, 679-80, 546 A.2d 264 (1988).
Article one, § 10, is the civil due process clause of the Connecticut Constitution. Our Supreme Court has held that the civil due process clause of the Connecticut Constitution has substantially the same meaning as the due process clause of the fourteenth amendment to the constitution of the United States. Proctor v. Sachner, 143 Conn. 9, 17-18, 118 A.2d 621 (1955). In Hunt v. Prior, 236 Conn. 421, 673 A.2d 514 (1996), the Supreme Court explained the following about the due process protection of a person's reputation:
Where a person's good name, reputation, honor, or integrity is at stake because of what the government is doing to him, notice and an opportunity to be heard are essential . . . The remedy mandated by the Due Process Clause of the Fourteenth Amendment is an opportunity to refute the charge . . . The purpose of such notice and hearing is to provide the person an opportunity to clear his name. However . . . government acts defaming an individual implicate a liberty interest only where the individual suffers a related alteration of his legal status or deprivation of a right recognized under state law . . . For instance, a liberty interest is implicated when a plaintiff can show both harm to his reputation and serious damage to his prospects for future employment in his profession . . . or defamation in connection with a termination of public employment . . . Because dismissal from employment for stigmatizing reasons can imperil the opportunity to earn one's living in one's profession, the liberty interest cause of action has most pointedly focused on stigmatizing statements in the context of dismissal . . .
(Citations omitted; internal quotation marks omitted.) Id. 441.
The elements of a claim that a government official violated a person's due process liberty interest in his reputation may be described as follows: 1) a stigmatizing statement; 2) public dissemination or publication of the stigmatizing statement; 3) a tangible loss due to public dissemination; and 4) a temporal connection between the stigmatizing statement and the tangible loss. Doe v. Dept. of Public Safety ex rel. Lee, 271 F.3d 38, 48-56 (2nd Cir. 2001); Bank of Jackson County v. Cherry, 980 F.2d 1354, 1358 (11th Cir. 1992).
"In an action based on a termination from government employment, a plaintiff must satisfy three elements in order to demonstrate a deprivation of the stigma component of a stigma-plus claim. First, the plaintiff must show that the government made stigmatizing statements about [the plaintiff] — statements that call into question the plaintiff's `good name, practice his or her profession' will satisfy the stigma requirement. Second, a plaintiff must prove these stigmatizing statements were made public. Third, the plaintiff must show that the stigmatizing statements were made concurrently with, or in close temporal relationship to, the plaintiff's dismissal from government employment . . ." (Citations omitted; internal quotation marks omitted.) Segal v. New York, 459 F.2d 207, 21-13 (2nd Cir. 2006).
In the present case, the jury found that DOIT made false statements damaging CPC's reputation in violation of its due process rights protected under article one, § 10. The state contends that as a matter of law its institution of this litigation operated as a "post-deprivation name-clearing hearing" providing CPC with all the relief to which it is entitled for any violation of its due process rights. Specifically, the state contends that "[i]f CPC has a liberty interest here, it received all of the process it was due by virtue of this very litigation, which, under the law, constitutes an adequate post-deprivation hearing." Memorandum in Support of DOIT's Motion to Set Aside Verdict dated February 8, 2010, p. 11. On the other hand, CPC insists that as a matter of law a pre-deprivation hearing is required unless such a hearing is made impractical by the "random and unauthorized" nature of the government's unconstitutional conduct. See generally DiBlasio v. Novello, 344 F.3rd 292, 302 (2nd Cir. 2003). The court finds both arguments unpersuasive.
In its instructions to the jury, the court described the defendants' due process claims as follows in relevant part: "According to the defendants, DOIT made these false statements damaging their good name and reputation, made a determination that CPC was a "non-responsible bidder," and publicized that determination to state agencies all in order to "effectively [disqualify] CPC from bidding on or being considered for contracts with the state of Connecticut." See Counterclaim, First Count, ¶ 65. Stated differently, the defendants claim that CPC was blacklisted from bidding on government contracts and was thereby subjected to a de facto disqualification from bidding on government contracts without an opportunity for a hearing before such disqualification was made as required by state law." This characterization of the defendants' due process claim was premised on the defendants' allegations in count one of the counterclaim and the court's (Shortall, J.) characterization of these allegations in its September 16, 2008 denial of the state's motion to strike the counterclaim (#218). The court's instructions to the jury on count one of the defendants' counterclaim alleging violation of article one, § 10 is provided in the appendix of this decision.
As a general rule, violation of an individual's right against unconstitutional defamation may be remedied by a "name-clearing hearing." "Generally, due process requires that a state afford persons `some kind of hearing' prior to depriving them of a liberty or property interest." DiBlasio v. Novello, supra, 344 F.3rd 302, citing Hodel v. Va. Surface Mining Reclamation Ass'n., 452 U.S. 264, 299 (1981). However, the court rejects CPC's contention that due process invariably requires a "pre-deprivation" hearing unless such a hearing is made impractical by the circumstances of the government's conduct. See Patterson v. City of Utica, 370 F.3d 322, 336-37 (2nd Cir. 2004). "The fundamental requirement of the Due Process Clause is that an individual be given the opportunity to be heard at a meaningful time and in a meaningful manner . . ." (Citation omitted; internal quotation marks omitted.) Id. 336. Whether a pre-deprivation hearing or a post-deprivation hearing satisfies due process depends on the facts of the particular case. Segal v. New York, 459 F.2d 207, 213-19 (2nd Cir. 2006); see generally Mathews v. Eldridge, 424 U.S. 319, 334 (1976) (explaining that "due process is flexible and calls for such procedural protections as the particular situation demands"). Moreover, damages are recoverable when the specific manner or nature of any hearing provided is insufficient or inadequate. Patterson v. City of Utica, supra, 370 F.3d 337-38 (when the hearing process is inadequate a plaintiff may be "entitled to collect compensatory damages, if he can prove that he suffered actual injury as a result of the denial of due process.").
What procedures satisfy due process depend on the specific circumstances and are guided by the three-factor test articulated in Mathews v. Eldridge, supra, 424 U.S. 335: 1) the nature of the private interest affected by the official action; 2) the government's interest; and 3) the risk of error and the effect, if any, of additional safeguards.
In this particular case, the court rejects the state's contention that as a matter of law its institution of this action provided a sufficient or adequate "name-clearing hearing." The state concedes, as it must, that a contractor cannot be disqualified from bidding on state contracts in the absence of the hearing procedures set out at General Statutes § 4a-63. Furthermore, there is no dispute that CPC did not receive any of the procedures afforded by General Statutes § 4a-63. CPC claims that DOIT defamed its reputation by charging that it had committed fraud in the procurement and performance of government contracts and decided on the basis of these allegations to blacklist CPC from receiving information technology contracts. In essence, CPC claims that it suffered a de facto disqualification without receiving the procedures required by General Statutes § 4a-63.
Contrary to the state's understanding, the court did not charge the jury that due process required it to follow the procedures of § 4a-63; rather, the court explained CPC's claim in relation to § 4a-63. Specifically, the jury was charged that "the defendants claim a protected liberty interest from being precluded from being considered for government contracts based on stigmatizing statements made by DOIT officials without being afforded the disqualification procedures required by state statute."
Assuming arguendo that some type of reasonably prompt or efficacious post-deprivation "name-clearing hearing" would satisfy the due process concerns implicated here, it is quite obvious that the state's institution of this lawsuit was inadequate to serve that purpose. This issue does not turn so much on the adequacy of the procedures of a civil trial, but on the length of time the party is exposed to the alleged deprivation prior to the "name-clearing" determination. The requirement that due process be provided within a meaningful time and in a meaningful manner may be undermined by a substantial delay in the disposition of post-deprivation procedures. A post-deprivation "name-clearing hearing" that is not reasonably prompt in its process may in effect not provide any adequate, substantive relief. Cf. Patterson v. City of Utica, supra, 370 F.3d 337-38 (when four years passed since the due process violation "[it] is unlikely that a proper name-clearing hearing would . . . reverse any ill effects suffered by plaintiff . . ."). For example, the defaming conduct here took place in or about 2002 and 2003; this action was instituted in 2003, and a verdict was rendered in 2010. The state's position is that even though CPC has a statutory entitlement to pre-disqualification procedures under § 4a-63, CPC must experience or suffer from any unconstitutional deprivation resulting from disqualification for years before receiving a final "name clearing" determination. The court finds this position untenable. The court's disposition of this issue is not to say that the procedures of § 4a-63 are required by due process or that a civil action may never suffice as a name-clearing hearing. The court merely agrees with CPC that as a matter of law, under these particular circumstances, the institution of this lawsuit did not provide an adequate or meaningful post-deprivation "name-clearing" process, and as a consequence, a remedy of compensatory damages is available. See generally Patterson v. City of Utica, supra, 370 F.3d 322.
In support of its position that damages are not recoverable on count one of the counterclaim, the state makes three additional arguments that were not asserted during the trial. First, the state contends that the only relief available to CPC for any violation of its due process rights under article one, § 10, is a "name-clearing hearing." This argument is meritless because, as previously discussed, damages are available to CPC as a result of the absence of any adequate "name-clearing hearing." See Patterson v. City of Utica, supra, 370 F.3d 322. The state supports its argument by relying on Connecticut Supreme Court decisions that have declined in certain cases to recognize a private right of action against government officials in their personal capacities for allegedly violating a person's due process rights under the Connecticut Constitution. See Ramos v. Town of Vernon, 254 Conn. 799, 761 A.2d 705 (2000); ATC Partnership v. Town of Windham, 251 Conn. 597, 741 A.2d 305 (1999); Kelley Property Development, Inc. v. Lebanon, 226 Conn. 314, 627 A.2d 909 (1993). The state's reliance on these cases is misplaced, and therefore, its argument based on them is inapposite because CPC's counterclaim does not seek damages against any state official in his personal capacity.
The state's next argument is that CPC's claim for loss of the value of its business is not recoverable because it was not demanded as part of count one of its counterclaim. This argument was not raised during the trial. Moreover, the state does not claim either surprise or prejudice, and the court does not find any. As a general rule, objections that the evidence does not conform to the pleadings must be asserted during the trial. Tedesco v. Stamford, 215 Conn. 450, 461, 576 A.2d 1273 (1990) ("[t]he proper way to attack a variance between pleadings and proof is by objection at the trial to the admissibility of that evidence which varies from the pleadings, and failure to do so at the trial constitutes a waiver of any objection to such variance . . .").
Additionally, the court does not find any material variance between the pleadings and the proof. In count one of its counterclaim, CPC claimed that the state's conduct "deprived" CPC of its liberty interest "to pursue [its] profession, occupation and/or business." Counterclaim, First Count, ¶ 72. In its prayer for relief, CPC sought to recover "damages" as to this count (and the other counts of the complaint). The evidence that the state's wrongful conduct caused a loss in the value of its business is consistent with the counterclaim seeking damages for the state depriving CPC of its interest in pursuing its business. The pleadings must be construed liberally and reasonably. The state's argument must be rejected because it proceeds on a narrow and technical construction of the counterclaim. "The modern trend, which is followed in Connecticut, is to construe pleadings broadly and realistically, rather than narrowly and technically. Although essential allegations may not be supplied by conjecture or remote implication, the complaint must be read in its entirety in such a way as to give effect to the pleading with reference to the general theory upon which it proceeded, and do substantial justice between the parties. As long as the pleadings provide sufficient notice of the facts claimed and the issues to be tried and do not surprise or prejudice the opposing party, we will not conclude that the complaint is insufficient to allow recovery." (Citations omitted; internal quotation marks omitted.) Parsons v. United Technologies Corp., 243 Conn. 66, 83, 700 A.2d 655 (1997).
Another argument asserted as a special defense to the counterclaim, but not squarely raised by the state in any pre-trial motion, is that CPC is collaterally estopped from asserting its state constitutional liberty claim as a result of the federal case instituted by it, namely, Malapanis v. Regan, 340 F.Sup.2d 184, (D.Conn. 2004), aff'd, 2005 U.S. App. LEXIS 23214 (2nd Cir. 2005). "[C]ollateral estoppel precludes a party from relitigating issues and facts actually and necessarily determined in an earlier proceeding between the same parties or those in privity with them." DeLaurentis v. New Haven, 220 Conn. 225, 239, 597 A.2d 807 (1991).
In Malapanis v. Regan, supra, 340 F.Sup.2d 184, the defendants asserted a stigma-plus liberty interest due process claim under the federal constitution (and presumably under the state constitution) predicated on the same facts involved in this case. The District Court dismissed the federal claims of the action under Federal Rule of Civil Procedure 12(b)(6) for failing to state a claim. The state emphasizes the federal court's conclusion that the termination of the computer supply contract "cannot form a basis for [the defendants'] `stigma-plus' claim, because it lacks a temporal nexus with the August 2002 labeling of plaintiffs as a `non-responsible bidder' and with allegedly defamatory statements made by [state officials] during the March 2003 press conference." Id., 194. The District Court also noted that the defendant's complaint did not expressly "challenge the falsity of the core charges claimed to have formed the basis of the non-responsible designation." Id., 196. After deciding to dismiss the federal claims, the District Court declined to exercise supplemental jurisdiction over the defendants' claims based on state law.
The court agrees with the plaintiff that the parameters of CPC's state due process claims are guided substantially by those governing federal due process claims. See generally Proctor v. Sachner, supra, 143 Conn. 17-18. However, the court disagrees with the plaintiff that the federal action collaterally estops CPC's present due process claims under the state constitution. Similar to state practice on a motion to strike, a federal court's dismissal of a complaint under Federal Rule 12(b)(6) for failing to state a claim requires the court to accept as true all facts pleaded in the complaint. Consequently, "[b]y definition, there can be no collateral estoppel `fact preclusion' based on a successful 12(b)(6) motion, for no `facts' are either litigated or found." DeLaurentis v. New Haven, supra, 220 Conn. 240.
Because the collateral estoppel doctrine is inapplicable, CPC was not precluded from reasserting and qualifying its state due process claims. Moreover, the present review of those claims is not limited to the pleadings, but is based on the evidence viewed in a light to sustain the jury's verdict. The record here indicates a distinct difference in the pleading and proof in this case as compared to the pleading in the federal case in that while both cases involved a claim that CPC was wrongfully identified as a "non-responsible bidder," an emphasis in the present case was that CPC was subjected to a "de facto" disqualification. In denying the state's motion to strike the complaint, Judge Shortall characterized CPCs' due process claim as follows:
A determination that a contractor is a "non-responsible bidder" is a decision for which a state agency exercises broad discretion and is a designation ordinarily made as to a specific contract. See General Statutes § 4a-59. A "disqualified bidder" is precluded from submitting bids for any state contracts and is a designation controlled by the procedures of General Statutes § 4a-63.
What Computers Plus alleges in the [counterclaim] is that it was blacklisted from government contracts with no opportunity to clear its name. While Computers Plus certainly has no right to be awarded a state contract, the court finds that it has a protected liberty interest in not being effectively disqualified from even being considered for a contract as a result of stigmatizing statements made by a government agency, without being afforded some process for challenging those statements.
Memorandum of Decision On Motion to Strike dated September 16, 2008 (#218).
The state insists that the evidence fails to support any disqualification of CPC. However, despite the obvious difficulty of proving a "de facto" disqualification, the jury's verdict indicates a finding that this burden was met. The extent to which DOIT's conduct caused harm to CPC's business will be discussed below when the court considers the plaintiff's motion for remittitur. On the issue of liability, the court cannot conclude that the jury's decision on CPC's "de facto" disqualification claim is without any evidentiary support. The evidence indicates that in the 2002-2003 time frame, DOIT officials viewed and treated Kolb and CPC with hostility based on a perception that they had engaged in fraudulent and deceptive acts regarding state contracts; this hostility and distrust was not only evidenced by official statements, but also in conduct evincing avoidance and non-responsiveness to legitimate requests and inquiries.
A closer and even more difficult question raised by the plaintiff is whether CPC met its burden of proving a temporal nexus between any publically disseminated stigmatizing statement and a "tangible loss." To prevail on its "stigma-plus" due process claim, CPC must prove more than just a stigmatizing public statement harmful to its reputation; it must prove that there also exists a temporal link between this statement and a "tangible loss." As it argued during the trial, the plaintiff again insists that there must be a precise contemporaneous connection or nexus between the stigmatizing statement and the tangible loss. The court reiterates its rejection of this position. "There is no rigid requirement . . . that both the `stigma' and the `plus' must issue from the same government actor or at the same time." Velez v. Levy, 401 F.3d 75, 89 (2nd Cir. 2005). "[I]n ascertaining whether a complaint alleges the deprivation of a stigma-plus liberty interest, we need only determine that both `stigma' and `plus' are claimed to be sufficiently proximate. This requirement will be satisfied where (1) the stigma and plus would, to a reasonable observer, appear connected for example, due to their order of occurrence, . . . or their origin . . . and (2) the actor imposing the plus adopted (explicitly or implicitly) those statements in doing so." (Citations omitted.) Id.
The evidence indicates that the stigmatizing statements alleged by CPC were made and publicized by or through DOIT officials in the 2002-2003 time frame and the jury's verdict reflects a finding that between 2003 and 2005 CPC suffered a lost market value of $18.3 million. The court cannot conclude that the evidence is insufficient to infer a sufficient proximate connection between the statements and this loss. Furthermore, although the court, as discussed below, questions the size of the monetary award, lost market value of millions of dollars does indeed appear to represent a "tangible" loss sufficient to satisfy this element of a "stigma-plus" cause of action.
The state's remaining arguments contest the adequacy of the charge or the adequacy of the evidence to support a verdict in CPC's favor on count one of the complaint. These arguments require little additional discussion. The state's contentions concerning the sufficiency of the evidence either were previously addressed by the court during the trial, particularly during the charge conference, or involve factual issues within the province of the jury's determination as discussed above.
Similarly, the state's arguments regarding the jury charge either have been previously addressed by the court or are premised on the state's misconceptions about the court's instructions to the jury. For example, the state erroneously contends that the court instructed the jury that CPC had a due process right to receive the procedures provided in General Statutes § 4a-63. See n. 6. The state also insists that CPC's position in this case is that it had a constitutional right to be a government contractor and that this issue was improperly presented to the jury. As previously discussed, the counterclaim did not assert this claim. Indeed, the court's charge expressly informed the jury that CPC had no such right. Similar to the situation of an at-will employee, CPC had no right to government employment, but it did have a constitutionally protected liberty interest that is implicated when a government official makes statements or takes actions that harm its reputation and cause a proximately related alteration of its legal status or tangible interests. See Segal v. New York, supra, 459 F.2d 207; Patterson v. City of Utica, supra, 370 F.3d 322; accord Hunt v. Prior, supra, 236 Conn. 442-42.
The relevant part of the charge stated the following: "A vendor such as CPC has no constitutionally protected right to be a government contractor. On the other hand, under the Connecticut constitution, when `a person's good name, reputation, honor, or integrity is at stake because of government [action taken against the person], notice and opportunity to be heard are essential.' Hunt v. Prior, 236 Conn. 421, 441, 673 A.2d 514 (1996)."
In summary, the evidence viewed favorably to support the jury's verdict indicates that CPC satisfied the elements of a "stigma-plus" due process claim. The evidence supports findings that DOIT made stigmatizing statements so impugning CPC's reputation that significant roadblocks would be presented in its ability to pursue its business; these stigmatizing statements were publicized in a manner that would discourage potential customers and were acted upon by DOIT to effectively disqualify and discourage CPC from contract bidding; this conduct caused CPC to suffer a tangible loss through a significant and substantial diminution of its market value; and the stigmatizing statements and this tangible loss had a sufficient temporal connection. The court appreciates that these findings are premised on very hotly contested and disputed facts, involving the jury's evaluation of the weight and credibility of the evidence, some of which is circumstantial. The court, however, also appreciates that its task in ruling on the state's post-trial motions is not to substitute its discretion for that of the jury and to respect the jury's function as the trier of fact.
Therefore, for these reasons, the state's motion to set aside the verdict and for judgment notwithstanding the verdict is denied.
III MOTION TO REDUCE VERDICT (#390)
The law governing a trial court's consideration of the adequacy of a jury's award of damages is well established.
Although the trial court has a broad legal discretion in this area, it is not without its limits. Litigants have a constitutional right to have factual issues resolved by the jury. This right embraces the determination of damages when there is room for a reasonable difference of opinion among fair-minded persons as to the amount that should be awarded. The amount of a damage award is a matter peculiarly within the province of the trier of fact, in this case, the jury. Similarly, the credibility of witnesses and the weight to be accorded to their testimony lie within the province of the jury.
Furthermore, the size of the verdict alone does not determine whether it is excessive. The only practical test to apply to a verdict is whether the award falls somewhere within the necessarily uncertain limits of just damages or whether the size of the verdict so shocks the sense of justice as to compel the conclusion that the jury was influenced by partiality, prejudice, mistake or corruption.
Thus, in ruling on the motion for remittitur, the trial court was obliged to view the evidence in the light most favorable to the plaintiff in determining whether the verdict returned was reasonably supported thereby. A conclusion that the jury exercised merely poor judgment is an insufficient basis for ordering a remittitur . . . The plaintiff need not prove damages with mathematical exactitude; rather, the plaintiff must provide sufficient evidence for the trier to make a fair and reasonable estimate. A generous award of . . . damages should be sustained if it does not shock the sense of justice.
The fact that the jury returns a verdict in excess of what the trial judge would have awarded does not alone establish that the verdict was excessive. The court should not act as the seventh juror with absolute veto power. Whether the court would have reached a different result is not in itself decisive. The court's proper function is to determine whether the evidence, reviewed in a light most favorable to the prevailing party, reasonably supports the jury's verdict.
Johnson v. Chaves, 78 Conn.App. 342, 826 A.2d 1286 (2003), cert. denied, 266 Conn. 911, 832 A.2d 70 (2003).
As previously discussed, the court concludes that the evidence was sufficient for the jury to infer that DOIT's actions adversely affected CPC's business and that CPC proved the elements of a violation of its liberty interests in its reputation. The court, however, agrees with the state that the evidence does not support the jury's award of $18.3 million. More specifically, the evidence may support an inference that DOIT's actions adversely affected CPC's business, but the evidence fails to show that DOIT's conduct proximately caused damages of $18.3 million representing a total loss of the value of CPC's market value.
There is no dispute that the record establishes that the jury award was based on CPC's claim of lost market value, which was the claim or measure of damages advanced by CPC at the close of the evidence. Thus, the court need not address whether the evidence supports a recovery based on loss of income or earnings.
As CPC's counsel essentially conceded during oral argument, there is no direct evidence supporting a finding that the state's conduct proximately caused a $18.3 million total loss of CPC's market value — none whatsoever. There is no evidence that CPC had contracts with the state that were terminated by DOIT and that the value of such terminated contracts evidenced or were associated with a total loss of CPC's market value. The evidence indicated that DOIT terminated the computer supply contract, but the jury found against CPC and in favor of the state on count three of CPC's counterclaim alleging that this termination breached the terms of the contract. Although CPC claimed that DOIT's conduct sullied its reputation, and that this sullied reputation adversely affected its customer base, no customer testified that its business with CPC was either discontinued or redirected because of DOIT's conduct. CPC did not offer any expert testimony on the issue of causation.
The jury found that DOIT breached the implied covenant of good faith and fair dealing of the computer supply contract, but awarded nothing in compensatory damages.
In the absence of any direct evidence, the award for the lost market value of CPC's business must be premised on circumstantial evidence. The law is established that a jury's findings may be based on either direct or circumstantial evidence and that the jury is charged with the responsibility of weighing all the evidence whether it is direct or circumstantial. Nevertheless, while a jury may make inferences from the evidence, such inferences must be reasonable and rational. A jury cannot make factual findings based on surmise or speculation. As previously explained, although the court cannot substitute its discretion for that of the jury in evaluating or weighing the evidence, the court is required to reject a jury award if the evidentiary record, when viewed favorably to sustain the award, cannot reasonably or legally support the jury's determination.
CPC offered expert testimony that prior to the transactions underlying this controversy, the market value of its business was $18.3 million. As previously indicated, however, this expert did not testify that DOIT's conduct caused the loss of any of this value. As the principal owner of CPC, Kolb also testified that the value of the business in December 2002, when the computer supply contract was terminated, was between $18 and $19 million. She also testified that when the company closed in 2005, CPC had essentially lost its customers and its value.
Kolb testified that after December 2002, CPC submitted several bids for contracts to DOIT that were ignored or not responded to. There is no evidence, however, indicating exactly how many government (or non-government) contracts were sought by CPC in the 2003-2005 time frame, how many of these applications were rejected, or what reasons were given for any such rejections.
The defendant offered evidence that within approximately a year after the computer supply contract was terminated, DOIT issued numerous invitations to bid for contracts involving millions of dollars on which CPC could have bid. Kolb testified that CPC responded to some of these bids and was the lowest bidder, but the contracts were awarded to other companies. There is no evidence, however, indicating whether CPC was the lowest "responsible qualified bidder" (which is the statutory criteria for receiving the contract award under General Statutes § 4a-59) or any other information about the specifics of these contracts.
Kolb testified that for most of the invitations to bid issued by DOIT in or about 2003, CPC did not submit any bids seeking to be awarded these contracts because her understanding was that CPC was "disqualified." This understanding was based on a statement made by Regan in April 2003. Thus, although there is no evidence about exactly how many contracts were sought by CPC between 2003 and 2005, this evidence suggests that sometime in 2003, CPC simply stopped seeking any contracts with DOIT. In summary, there is no evidence that CPC submitted any bids for government contracts to DOIT (or any other government agency), that these bids were rejected and that the value or number of these rejected bids evidenced or were associated with a total loss of the business's value. The state emphasizes that between the termination of the computer supply contract in 2002 and CPC's close of business in 2005, CPC had gross receipts of approximately $3.6 million. The state also emphasizes the testimony of the defendants' expert that only approximately 50% of CPC's business was from governmental entities. Most but not all of this government business would have been through DOIT.
Although Kolb and Regan testified for approximately four days, neither party provided any evidence explaining the exact context or basis of the statement attributed to Regan that CPC had been "disqualified."
Considering the evidence on this issue in its entirety, and giving due deference to the role and province of the jury, the court cannot find a reasonable or logical basis to support a finding that the actions of DOIT proximately caused a total loss of CPC's market value. The apparent thrust of CPC's position is that because DOIT made a decision that it did not want to do business with CPC, it therefore may be "assumed" that it would never again do any business with CPC. More specifically, as articulated by counsel during oral argument, CPC would not be expected to submit offers in response to invitations to bid issued by DOIT, because a party should not be required to engage in futile acts. However, the law requires CPC to prove that the act was futile with evidence that is more than mere conjecture and speculation. Findings of fact in civil proceedings may not be based on assumptions, but must be supported by a preponderance of the evidence, both direct and circumstantial.
In summary, based on a consideration of the evidence even with a view to sustain the verdict, the court concludes that a finding that DOIT's conduct caused a total loss of the market value of CPC's business manifests a shocking injustice indicating that the jury's award of damages was influenced by partiality or mistake. The sense that the jury was moved by an erroneous or inflamed view in regard to its determination of damages is further evidenced by the jury's conclusion that punitive damages should be imposed in addition to the $18.3 million compensatory award. The jury was instructed about punitive damages only in regard to the counts of DOIT's complaint alleging fraud against the defendants. CPC concedes, as it must, that it made no claim for punitive damages and is not entitled to any such recovery. Cf Sheiman v. Sheiman, 143 Conn. 222, 225, 121 A.2d 285 (1956) ("[a] verdict may be excessive if it includes an award for an element of damages not proven."). The court agrees with DOIT that the award is excessive, not supported by the evidence or the law, and must be remitted or set aside.
As a general rule, a verdict will not be set aside for being excessive unless the prevailing party is first given the opportunity to accept a remittitur. See General Statutes §§ 52-216a and 52-228b. In ordering a remittitur, the court exercises broad discretion. "[A] fair appraisal of compensatory damages, and not the limit of legitimate generosity, is the rule, but in no event can the court set the figure lower than that at which a jury could reasonably fix it." Brower v. Perkins, 135 Conn. 675, 682, 68 A.2d 146 (1949). Based on these considerations, the court grants the motion to reduce the jury's verdict and orders an award in favor of CPC and against the state in the amount of $1.83 million. In the absence of a filing from CPC within ten days indicating its acceptance of this remittitur and reduced award, the verdict shall be set aside and a new trial shall be ordered on the issue of damages.
So ordered this 11th day of June 2010.
APPENDIX THE COURT'S INSTRUCTIONS TO THE JURY ON THE FIRST COUNT OF THE DEFENDANTS' COUNTERCLAIM ALLEGING VIOLATION OF ARTICLE FIRST, § 10 OF THE CONNECTICUT CONSTITUTIONUnder the first count of the counterclaim, CPC and Ms. Kolb claim that DOIT violated their constitutional rights. The Connecticut Constitution guarantees certain rights to Connecticut citizens and protects citizens from certain government actions that violate these rights without due process of law. A vendor such as CPC has no constitutionally protected right to be a government contractor. On the other hand, under the Connecticut constitution, when "a person's good name, reputation, honor, or integrity is at stake because of government [action taken against the person], notice and an opportunity to be heard are essential." Hunt v. Prior, 236 Conn. 421, 441 (1996). The remedy mandated by the constitution is an opportunity to refute the charge. Constitutionally protected liberty interests are implicated when a government official makes statements or takes actions that harm a person's reputation and cause a related alteration of the person's legal status or tangible interests. The false statement and the harm inflicted must occur proximately in time. See Hunt v. Prior, supra, 236 Conn. 441-42.
Although both CPC and Ms. Kolb claim a violation of their constitutional rights in the first count, and the instructions I am now giving you cover both of their claims, I again emphasize that CPC and Ms. Kolb are two separate parties. During your deliberations, you must consider the claims asserted by these defendants separately and independently in order to determine whether each one has met their burden of proof as to the elements of their claims according to these instructions.
In support of their claim that DOIT violated their constitutionally protected liberty interests, the defendants allege that DOIT officials made false claims against them:
• on December 17, 2002 in letters to the state auditor, comptroller and the state police;
• in March 2003 in its memoranda and in its WIN newsletter circulated to state agencies and others;
• from December 2002 through March 2003 in communications to the state police and the Attorney General's office, including the press release issued in March 2003.
According to the defendants, DOIT made these false statements damaging their good name and reputation, made a determination that CPC was a "non-responsible bidder," and publicized that determination to state agencies all in order to "effectively [disqualify] CPC from bidding on or being considered for contracts with the state of Connecticut." See Counterclaim, First Count, ¶ 65. Stated differently, the defendants claim that CPC was blacklisted from bidding on government contracts and was thereby subjected to a de facto disqualification from bidding on government contracts without an opportunity for a hearing before such disqualification was made as required by state law.
As I previously explained, a-determination that a vendor is a "non-responsible bidder" is a decision that is made as to a specific contract. As a matter of law, CPC has no right to a hearing about this determination, and Gregg Regan, as the agency head, has broad discretion to make a finding that CPC was a "non-responsible bidder" regarding a contract. As a general rule, a vendor such as CPC does not even have standing to contest a finding that it is a nonresponsible bidder unless "fraud, corruption or favoritism has influenced the conduct of the bidding officials or when the very object and integrity of the competitive bidding process is defeated by the conduct of officials." Ardmare Construction Co. v. Freedman, 191 Conn. 497, 501 (1983).
On the other hand, a vendor cannot be disqualified from bidding on all government contracts because it has been found to be a non-responsible bidder unless certain statutory procedures are followed. Under General Statutes § 4a-63, a vendor cannot be precluded from bidding on government contracts without receiving a disqualification hearing in accordance with the provisions of that statute. There is no dispute that DOIT did not institute disqualification proceedings against CPC under this state statute.
In summary, the defendants claim a protected liberty interest from being precluded from being considered for government contracts based on stigmatizing statements made by DOIT officials without being afforded the disqualification procedures required by state statute.
DOIT denies and disputes the defendants' allegations. DOIT claims that CPC was never precluded or disqualified from bidding on any government contract. DOIT claims that it did not make any false statements about CPC or Ms. Kolb, and that no statements, false or otherwise, were communicated to anyone in a manner causing any injury or loss to the defendants. DOIT also claims that none of the alleged defamatory statements claimed by the defendants are in fact temporally related to any actual loss or injury claimed by the defendants.
In order to prevail on their claim that DOIT officials deprived them of a liberty interest in reputation, the defendants must prove by a preponderance of the evidence: 1) a stigmatizing statement; 2) public dissemination or publication of the stigmatizing statement; 3) a tangible loss due to public dissemination; and 4) a temporal connection between the stigmatizing statement and the tangible loss. Doe v. Dept. of Public Safety ex rel. Lee, 271 F.3d 38, 48-56 (2nd Cir. 2001); Bank of Jackson County v. Cherry, 980 F.2d 1354, 1358 (11th Cir. 1992).
A stigma is a "mark of shame or discredit." A stigmatizing statement involves a false statement that exposes the person charged to serious damage to the person's standing in the community, in her profession, or among her peers; it is a false statement that is sufficiently derogatory to injure the person's reputation. To satisfy the stigma element of this claim, the defendants must show that the stigmatizing statement "is capable of being proved true or false. [The defendants] only [have] to allege, not prove, that the statement is false in order to establish a due process right to a hearing." Doe v. Dept. of Public Safety ex rel. Lee, supra, 271 F.3d 48.
Dissemination or publication requires a public communication of the false statement. This public communication must be sufficiently broad to impose a tangible injury or loss. Dobosz v. Walsh, 892 F.2d 1135, 1358-59 (2nd Cir. 1989).
In addition to proving dissemination of a stigmatizing statement, the defendants also must prove an associated tangible loss. This requirement is called the "stigma plus" rule. Under the "stigma plus" rule, government acts defaming a person implicate a liberty interest only when the person also suffers a related alteration of some legal status or loss of a tangible interest. A false statement damaging a person's reputation alone in the absence of any tangible loss does not deprive the person of any liberty interest. Dobosz v. Walsh, supra, 892 F.2d 1140. A tangible loss or injury means an alteration of a person's legal status, such as a loss of employment, an inability to pursue one's profession, or an actual loss of any prospect for future employment. See Siegert v. Gilley, 500 U.S. 226, 234 (1991); Hunt v. Prior, supra, 236 Conn. 441-42.
The fourth element of this cause of action requires the defendants to prove a "concurrent temporal link" between the separate stigmatizing statements and the tangible losses. Doe v. Dept. of Public Safety ex rel. Lee, supra, 271 F.3d 59; accord Siegert v. Gilley, supra, 500 U.S. 234; Malapanis v. Regan, 340 F.Sup.2d 184 (D.Conn. 2004). Temporal refers to timing. Thus, this "temporal link" or "temporal nexus" requirement means that the defendants must prove that the defamatory or stigmatizing conduct occurred so closely in time to the alleged tangible loss that the stigmatizing conduct was done incident to and in conjunction with the loss. ( Siegert, supra.) Stated differently, the defamation and the injury must be "sufficiently proximate." There is no rigid requirement that the stigma and the injury issue from the same government actor or exactly at the same time. The "temporal nexus" requirement is satisfied when the defamation and the loss are shown to be connected (for example due to their order of occurrence or their origin) and when the government actor imposing the loss or injury adopted the defamatory statements. Velez v. Levy, 401 F.3d 75, 89 (2nd Cir. 2005).
Consequently, the "temporal nexus" requirement does not require that the stigmatizing conduct and the tangible loss occur at the same time. If they do not occur simultaneously, and, for example, are weeks or months apart, these are facts that you may consider in determining whether the "temporal nexus" requirement has been met.
Again, as previously stated, the defendants must prove all the elements of their claim that DOIT violated their constitutional liberty interests by a preponderance of the evidence.
If you find that the defendants have NOT met their burden of proving that DOIT violated their liberty interests as alleged in the first count of their counterclaim, then you must find in favor of DOIT.
If you find that the defendants have met their burden of proving that DOIT violated their liberty interests as alleged in the first count of their counterclaim, then you must proceed to consider the issues of causation and damages.
DAMAGES — VIOLATION OF ARTICLE FIRST, § 10 OF THE CONNECTICUT CONSTITUTION
You should apply my earlier, general instructions concerning damages in order to evaluate the amount of any damages to award if you find that DOIT violated the constitutional rights of either of the defendants. Again, insofar as money can do it, damages are to represent fair, just and reasonable compensation for the injuries and losses which are proximately caused by the proven violations of a defendant's constitutional rights. The purpose of an award of damages is not to punish or penalize DOIT for its conduct, but to provide compensation for injuries and losses proximately caused by the wrongful actions. You must attempt to put the defendant in the same position, as far as money can do it, that the defendant would have been in had DOIT not committed the constitutional violation.
The defendants have the burden of proving the claimed damages by a fair preponderance of the evidence. To that end, there must be proof about both the nature and extent of each particular loss or injury for which damages are sought and that the loss or injury in question was proximately caused by the DOIT's conduct. As previously stated, your determination of damages may not be based on guess or speculation. Your decision must be based on reasonable probabilities in light of the evidence presented at trial.