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Smith v. Lewis

Court of Appeals of Kentucky

July 5, 2019

CARL E. SMITH, M.D., F.A.A.P., PLLC AND DR. CARL SMITH, INDIVIDUALLY APPELLANTS
v.
JULIE LEWIS APPELLEE

          APPEAL FROM HARLAN CIRCUIT COURT HONORABLE KENT HENDRICKSON, JUDGE ACTION NO. 16-CI-00052

          BRIEFS FOR APPELLANTS: Sherif Guindi Knoxville, Tennessee

          BRIEF FOR APPELLEE: Cheryl U. Lewis Hyden, Kentucky

          BEFORE: CLAYTON, CHIEF JUDGE; COMBS AND KRAMER, JUDGES.

          OPINION

          KRAMER, JUDGE.

         Carl Smith, individually ("Dr. Smith"), and his medical practice, Carl E. Smith, M.D., F.A.A.P., PLLC ("PLLC"), [1] appeal a jury verdict and post-trial order entered in Harlan Circuit Court in favor of Julie Lewis for retaliatory hostile work environment, the tort of outrage, front pay, and attorney fees and costs. For the reasons discussed below, we affirm in part and reverse in part.

         FACTUAL HISTORY

         Dr. Smith is a pediatrician who opened his PLLC, a solo medical practice, in 1994. He owns the PLLC and employs an office manager and nurses.

         Julie is a registered nurse who started working for Dr. Smith and the PLLC in 1997. Julie made no complaints of sexual harassment until the few years leading up to her resignation in July 2013. In those last years, Dr. Smith acted inappropriately toward Julie, such as asking her to come to his house when his wife was out of town, buying her gifts she did not request or accept, and making sexual comments toward her. Dr. Smith does not dispute many of Julie's allegations.

         PROCEDURAL HISTORY

         Julie sued Dr. Smith and the PLLC alleging: (1) wrongful discharge; (2) sexual harassment hostile work environment; (3) the tort of outrage; (4) retaliation and retaliatory hostile work environment; and (5) invasion of privacy.

         Shortly before trial, Julie voluntarily dismissed her invasion of privacy claim. Upon motion for summary judgment, the trial court dismissed the wrongful discharge claim finding it subsumed by Julie's Kentucky Civil Rights Act ("KCRA") claims.

         Trial lasted four days. At the close of Julie's proof and at the close of all proof, Dr. Smith and the PLLC made motions for directed verdict, which the trial court denied.

         The jury was instructed on the three remaining claims: (1) KRS 344.040 sexual harassment; (2) KRS 344.280 retaliatory hostile work environment; and (3) the tort of outrage. Finding the PLLC had less than eight employees, the jury did not reach the sexual harassment claim. For the second claim, the jury found Dr. Smith and the PLLC subjected Julie to a retaliatory work environment and compensated her $50, 000 in embarrassment and humiliation and $26, 474.43 in lost wages.[2] For the third claim, the jury found Dr. Smith committed the tort of outrage and compensated Julie $75, 000 for severe emotional distress and $0 in punitive damages. The trial court entered judgment consistent with the jury's verdict.

         After the verdict, the parties filed post-trial motions. Dr. Smith and the PLLC filed a motion for judgment notwithstanding the verdict ("JNOV"), and Julie filed a motion for attorney fees and costs, as well as front pay. Subsequently, the trial court denied Dr. Smith and the PLLC's JNOV and entered a supplemental judgment awarding Julie $77, 200 in attorney fees, $4, 917.70 in costs, and $16, 640 in front pay. The total judgment was $250, 232.13. This appeal followed.

         ANALYSIS

         I. Retaliation

         A. Kentucky's Retaliation Statute Permits Individual Liability.

         Dr. Smith and the PLLC argue Julie's retaliation claim should have been dismissed because the PLLC had less than eight employees.[3] Dr. Smith and the PLLC urge this Court to apply the "employer" definition applicable to KRS 344.040, the discrimination statute, to KRS 344.280, the retaliation statute. When interpreting statutes, we use a de novo standard of review. Wheeler & Clevenger Oil Co., Inc. v. Washburn, 127 S.W.3d 609, 612 (Ky. 2004).

         Dr. Smith and the PLLC confuse the requirements for a discrimination claim with a retaliation claim. While both claims are available under the KCRA, only discrimination requires an employer to have eight or more employees to be liable. The retaliation statute, on the other hand, permits liability against a "person" under the KCRA.

To understand the distinction, we must begin with a discussion of discrimination.[4] Kentucky's Civil Rights Act, codified in KRS Chapter 344, is the substantial equivalent of the Federal Civil Rights Act. The basic purpose of KRS Chapter 344 is "[t]o safeguard all individuals within the state from discrimination because of familial status, race, color, religion, national origin, sex, age forty (40) and over, or because of the person's status as a qualified individual with a disability…." KRS 344.020(1)(b). Here, Julie claimed her employer, the PLLC, discriminated against her on the basis of sex, in violation of KRS 344.040.

         For Julie to pursue a sex discrimination claim, however, she had to prove that the PLLC qualified as an "employer." "Employer" is defined as "a person who has eight (8) or more employees within the state in each of twenty (20) or more calendar weeks in the current or preceding calendar year…." KRS 344.030(2).

         While the parties stipulated the PLLC had at least six employees, Julie argued two more individuals, Brenda Back (housekeeper/janitor) and Caleb Kohnle (who worked on the floors), were "employees" of the PLLC. In their verdict, the jury decided these individuals were not employees. Thus, the jury correctly skipped the instruction on discrimination, and Julie was unable to recover under this claim.

         Dr. Smith and the PLLC argued otherwise, but the trial court correctly held Julie did not need to prove Dr. Smith and the PLLC had eight or more employees for the jury to decide the retaliation claim. Retaliation is not confined by the "employer" definition. Rather, that statute permits a "person" to be individually liable for retaliation.

         Kentucky courts, as well as our federal brethren, have repeatedly addressed whether an individual can be held liable under the KCRA. The confusion supposedly lies in the fact that the KCRA is based on Title VII of the Federal Civil Rights Act of 1974. Under Title VII, an individual cannot qualify as an "employer" and, therefore, cannot be liable for claims arising under Title VII. However, the Kentucky Supreme Court and the Sixth Circuit have limited this general proposition. Under the KCRA, an individual can be liable for retaliation. See Morris v. Oldham County Fiscal Court, 201 F.3d 784, 793-94 (6th Cir. 2000); Brooks v. Lexington-Fayette Urban County Housing Authority, 132 S.W.3d 790, 808 (Ky. 2004).

         Simply put, Kentucky's retaliation statute is not the same as the federal retaliation statute. While Kentucky's Civil Rights Act was based on the Federal Civil Rights Act (Title VII), it does not mirror it. Morris, 201 F.3d at 794. Title VII forbids retaliation by an "employer," while Kentucky law forbids retaliation by a "person." 42 U.S.C. § 2000-e-3(a); KRS 344.280.

         The retaliation provision of the KCRA states "it shall be an unlawful practice for a person, or for two (2) or more persons to . . . retaliate . . . ." KRS 344.280. "Person" is defined in the KCRA to include "one (1) or more individuals, labor organizations, joint apprenticeship committees, partnerships, associations, corporations . . . ." KRS 344.010(1). Accordingly, Dr. Smith is a "person," as is the PLLC because a corporation is included within the definition of a "person." And, therefore, Kentucky permits "persons," like Dr. Smith and the PLLC, to be held liable for retaliation. Morris, 201 F.3d at 793-94.

         Dr. Smith and the PLLC rely on two cases, Pucke v. J.A. Stevens Mower Co., Inc., 237 S.W.3d 564 (Ky. App. 2007), and Owens v. Ward, 2009 WL 482097 (E.D. Ky. February 25, 2009), to support their argument that retaliation can only be found against an "employer" of eight or more employees. However, both cases are distinguishable, as explained below.

         In Pucke, Cynthia Pucke sued her former employer, J.A. Stevens, and its two sole shareholders, Ronald Garnett and Dana Lambelz, for (1) gender discrimination; (2) sexual harassment; (3) retaliation; (4) wrongful discharge; and (5) intentional infliction of emotional distress. Shortly after being hired by this small company with seven employees, Pucke began a sexual relationship with Lambelz, who was her immediate supervisor. Lambelz often threatened to fire Pucke during turbulent times in their relationship, and Pucke knew her future employment depended upon her continued participation in the sexual relationship. After Lambelz ended the relationship, he fired Pucke.

         In their summary judgment motion, defendants argued Pucke's first three claims were based on alleged violation of KRS Chapter 344 and should be dismissed because defendants did not meet the definition of an "employer." Defendants further argued in their motion that the remaining common law claims should be dismissed as being preempted by KRS Chapter 344. The trial court granted defendants' motion, and Pucke appealed.

         On appeal, for unexplained reasons, Pucke conceded that defendants did not meet the definition of "employer" and, therefore, did not challenge the dismissal of her discrimination, harassment, and retaliation claims. Pucke only challenged the dismissal of the wrongful discharge and IIED claims. While unclear, the court assumes Pucke filed a notice of appeal regarding the dismissal of her entire case, but later conceded the dismissal of her three KCRA claims in the briefs. Accordingly, the only issues for the court to decide that day were the dismissal of Pucke's wrongful discharge and IIED claims. Without any argument on appeal regarding the KCRA claims, this court affirmed the uncontested dismissal of those claims.

         The Pucke case does not stand for the proposition that no KCRA claims are available when an employer has less than eight employees. That was not the issue before the Pucke court, ...


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