Nevada firms win key ruling on liability

Monday, June 2, 2003 | 11:11 a.m.

CARSON CITY -- A sharply divided Nevada Supreme Court has given Nevada corporations further protections from civil lawsuits brought because of the wrongdoing of their employees.

The court ruled Friday that the Gold Coast casino in Las Vegas was not liable for $372,000 in punitive damages awarded in the case of a black man who was severely beaten by security officers and victimized by racial comments while the sergeant-in-charge looked on. The ruling was the result of a 4-3 decision, and three justices who dissented had strong objections to the ruling.

Justice Bob Rose said the ruling was bad law and poor public policy.

In the dissenting opinion, Rose wrote that: "At a time when we have seen many illegal and outrageous acts committed by corporate America, it is not appropriate to reduce corporate responsibility for such egregious action."

The case involved Dedric Holman who was gambling in the casino with his girlfriend Christina Edwards in February 1994 when security guards asked Edwards to leave because she did not have identification to show she was 21 years old.

An argument ensued between Holman and the guards. Holman and one of the guards, John Nittinger, began fighting. Nittinger and another guard, Robert Martinez, then held Holman on the ground, punched, kicked and beat him with nightsticks while Michael Malloy, the security shift supervisor, watched, according to the opinion.

Holman was tied and carried in a truck to the hotel office. Martinez told Holman, "If you think we beat your black ass now, wait until we get you around to the back," according to the court opinion.

When he arrived at the office, Holman said he was beaten again, his money was stolen and he was called racial epithets. He testified Malloy was present.

A district court jury awarded Holman $178,000 in compensatory damages to be paid by Nittinger, Martinez and the Gold Coast, $1,500 in punitive damages to be paid by Nittinger, $1,200 in punitive damages to be paid by Martinez and $279,000 in punitive damages to be paid by the Gold Coast.

Edwards, the girlfriend, was awarded $20,000 in compensatory damages to be paid by casino security guard Dale Roeker and the Gold Coast, $1,000 in punitive damages to be paid by Roeker and $93,000 in punitive damages to be paid by the Gold Coast.

Roeker subdued Edwards and frisked her. She testified Roeker patted down her entire body, including her breasts and crotch. Edwards, who is white, testified Roeker made derogatory comments about her dating Holman.

There was testimony at the trial that the hotel-casino has a progressive-force policy and that Malloy was charged with implementing this policy and ensuring the guards followed it.

The court upheld all the judgments except the punitive damages assessed the Gold Coast, saying Malloy had supervisory responsibilities but not policy making authority.

Supreme Court Justice Miriam Shearing, wrote: "There is no evidence that Malloy had the authority to deviate from the established policy or that he had any discretion or could exercise his independent judgment." She said Malloy was a supervisor but not a managerial agent. "Therefore, he (Malloy) would not be classified as a managerial agent so as to subject the Gold Coast to liability for punitive damages for his actions or inactions on the night in question," said Shearing.

Agreeing with Shearing were Chief Justice Deborah Agosti and Justices Nancy Becker and Mark Gibbons.

Justice Rose, in the dissenting opinion, said there was ample evidence to establish Malloy approved "the heinous acts by simply standing by and permitting the violent conduct by the employees he was supervising." He said there is nothing that says a managerial agent must have policy making authority or discretion to make ad hoc policy or corporate decisions.

He said the majority decision narrowly construes the term "managerial agent" as someone who makes policies, corporate rules and decisions.

"The practical effect of the majority decision will be to insulate corporations from punitive damages for the vast majority of acts of malice or outrageous behavior committed by their supervisors and managers," said Rose.

Justice Myron Leavitt and Bill Maupin joined with Rose in the dissent.