Pensacola Motor Sales, Inc. v. Daphne Automotive, LLC
2013 WL 6360967, 155 So. 3d 930 (2013)
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Rule of Law:
In a case of slander per se, damages for harm to reputation and mental anguish are presumed by law, and a substantial punitive damages award is constitutionally permissible where the defendant's conduct is part of a prolonged, intentional, and highly reprehensible campaign of defamation.
Facts:
- In December 2007, Shawn Esfahani, a United States citizen of Iranian birth, opened Daphne Automotive, LLC, d/b/a Eastern Shore Toyota ('EST').
- EST was a direct competitor of Pensacola Motor Sales, Inc., d/b/a Bob Tyler Toyota ('BTT'), whose owner had previously competed with Esfahani for the new dealership location.
- From at least 2007 through March 2010, BTT employees, including sales manager Fred Keener, systematically told potential customers that Esfahani was a terrorist and that EST, referred to as 'Taliban Toyota,' was funding terrorism against American soldiers.
- Witnesses testified that these defamatory statements were a 'common practice' encouraged by BTT management to discourage customers from visiting EST, and that Keener made them on a 'daily basis.'
- On July 31, 2009, EST and Esfahani sent BTT a cease-and-desist letter demanding a retraction of the slanderous statements.
- After receiving the letter, BTT issued a warning to one employee but took no further meaningful action, and the defamatory statements continued to be made by BTT employees.
Procedural Posture:
- Daphne Automotive, LLC ('EST') and Shawn Esfahani sued Pensacola Motor Sales, Inc. ('BTT') and Fred Keener in the Mobile Circuit Court, a state trial court.
- The complaint alleged slander per se, slander per quod, and intentional interference with business relationships.
- During trial, the plaintiffs voluntarily withdrew the intentional interference claim.
- The case proceeded to a jury trial on the slander claims.
- The jury found for the plaintiffs, awarding Esfahani $1.25 million in compensatory and $2 million in punitive damages, and awarding EST $1.25 million in compensatory and $3 million in punitive damages.
- The trial court entered judgment on the jury's verdict.
- BTT and Keener filed post-judgment motions for a new trial or, alternatively, for a remittitur of the damages.
- The trial court denied the post-judgment motions in a lengthy order.
- BTT and Keener, as appellants, appealed the trial court's judgment to the Supreme Court of Alabama.
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Issue:
Does a jury's award of substantial compensatory and punitive damages for slander per se, where the defendant engaged in a prolonged and malicious campaign of defamatory statements, constitute an excessive award requiring remittitur or a new trial?
Opinions:
Majority - Shaw, Justice
No, the jury's award does not constitute an excessive award requiring remittitur or a new trial. For slander per se, actual damages are presumed by law, and the jury's punitive damages award was justified by the extreme reprehensibility of the defendants' conduct. The court affirmed the trial court's judgment, finding no reversible error in its evidentiary rulings and concluding that both the compensatory and punitive damages awards were supported by the evidence and applicable law. The compensatory damages for Esfahani were proper because in a slander per se action, harm to reputation and mental anguish are presumed. The award to EST was supported by expert testimony calculating lost profits with reasonable certainty. The court upheld the punitive damages after a de novo review using the Gore guideposts and Hammond-Green Oil factors, finding the defendants' conduct to be exceptionally reprehensible. The court emphasized that accusing an American businessman of Iranian origin of funding terrorism to kill U.S. soldiers, as part of a systematic company policy, deserved the 'most severe condemnation' and justified the significant punitive award.
Analysis:
This decision strongly reaffirms the legal principle that damages are presumed in cases of slander per se, thereby lowering the plaintiff's evidentiary burden for recovery. It establishes a significant precedent for upholding substantial punitive damages awards when the defendant's conduct is deemed exceptionally malicious and reprehensible, particularly when it involves a sustained pattern of behavior rather than an isolated incident. The court's application of the Gore analysis demonstrates that the reprehensibility factor can serve not just as a limit on damages, but as a powerful justification for a high award intended to punish and deter egregious misconduct in a commercial context.
