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Labor & Employment News Alert

WV Supreme Court Holds That Statutes Abrogating the “Malice Exception” in Employment Litigation and Capping Punitive Damages Apply Immediately

June 19, 2017

By: Evan R. Kime

    In a 3-2 decision released late Friday, the Supreme Court of Appeals of West Virginia held that West Virginia Code §55-7E-3 and West Virginia Code §55-7-29 became effective in all civil cases that had not been tried as of June 8, 2015, the date that both statutes were enacted.   Helio Martinez v. Asplundh Tree Expert Co., No. 17-0039 (June 16, 2017). The decision is a welcome relief for the many West Virginia employers who were sued in late Spring 2015 by plaintiffs’ counsel hoping to thwart the application of these statutes.

    Consequently, effective now, in all employment lawsuits the plaintiff has a legal duty to seek out substitute employment. All wages that the plaintiff earned or will earn in that substitute employment, or could have earned with reasonable diligence, are subtracted from any award of lost wages.  Also effective now, an award of punitive damages must comply with the strict guidelines of West Virginia’s new punitive damages statute, West Virginia Code §55-7-29. That is, the award (1) must be supported by clear and convincing evidence, which shows that (2) the defendant acted with actual malice or a conscious, reckless, and outrageous indifference to the health, safety and welfare of others, and (3) the award may not exceed four times the amount of compensatory damages or $500,000, whichever is greater. (For a more detailed discussion of these statutory changes, see this blog’s post of February 24, 2015). 

    Both statutes were enacted over two years ago, on June 8, 2015.  However, since the passage of the new laws, plaintiffs have argued to trial courts that the statutes affect vested rights and liabilities, and therefore cannot be applied “retroactively” to cases filed before June 8, 2015. In Martinez, the Court rejected that argument once and for all. 

    The Martinez case came before the Court pursuant to two certified questions from the United States District Court for the Northern District of West Virginia, which asked whether the two statutes could be applied to cases that were filed before the statutes’ effective date, but tried after that date. Writing for the Court, Justice Walker focused on whether the statutes were “remedial” in nature, by asking whether they “improve or facilitate remedies already existing for the enforcement or rights of redress of wrongs.”  The Court held that the statutes were remedial, and observed that both West Virginia Code §55-7E-3 and West Virginia Code §55-7-29 apply to “an award” of damages. Thus, where the plaintiff has received no award of damages before the statutes’ enactment, application of the statutes cannot affect vested rights, and the statutes are remedial in nature.

    Chief Justice Loughry and Justice Ketchum concurred, noting that “[t]he Legislature, in enacting West Virginia Code § 55-7E-3, commendably sought to eradicate West Virginia’s outlier status regarding unmitigated back and front pay in employment claims and thereby eliminate an unjustifiable windfall to plaintiffs,” and adding that the statute “laudably imposes a legislative check on the Court’s prior attempts at ‘judicial legislation.’”   Justices Davis and Workman dissented.

    The Martinez decision is good news for West Virginia employers because it indicates that the current Supreme Court of Appeals of West Virginia is aligned with the West Virginia Legislature in supporting legal reforms that rein in unreasonably inflated damages that hurt West Virginia’s economy.

    This article was authored by Evan R. Kime, Jackson Kelly PLLC.


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