United States District Court, S.D. Mississippi, Northern Division
T. WINGATE UNITED STATES DISTRICT COURT JUDGE
THIS COURT is the defendant JBS Carriers, Inc.'s Motion
to Remit Amount of Punitive Damages [Docket no.
224]. This motion stems from a years-long, extremely
contentious litigation between the parties. After a careful
review of the submissions of the parties, the relevant legal
precedent, and the oral arguments of the parties, this court
is convinced that JBS carrier Inc.'s Motion to Remit
Amount of Punitive Damages [Docket no. 224]
should not be granted for the reasons set forth below.
case revolves around the termination of a
“dedicated” hauling contract and the breach of
a settlement agreement. The salient background facts are as
2008, KLLM Transport Services, LLC (hereinafter referred to
as “KLLM”), an over-the-road trucking company
based in Mississippi, entered into a dedicated hauling
contract with Pilgrim's Pride Corporation (hereinafter
referred to as “PPC”), a chicken processing
company. In 2010, PPC allowed its sister company, JBS
Carriers Inc. (hereinafter referred to as “JBS”),
to perform the dedicated hauling services for the PPC/KLLM
contract. JBS, though, also allegedly began poaching some of
the KLLM employees who had worked on the PPC dedicated
hauling contract. Afterwards, an aggrieved KLLM sued JBS.
KLLM contended that JBS had tortuously interfered with
KLLM's business relationships, converted its proprietary
trade secrets, and converted its customers. KLLM filed this
lawsuit in this court, the United States District Court for
the Southern District of Mississippi in case number
the court's help and encouragement, the two parties
ultimately settled their differences out of court on December
1, 2010. [Docket no. 1-2]. In the settlement agreement, JBS
agreed as follows:
The current contract between KLLM and Pilgrim's Pride
shall be honored and continued for its stated duration and no
early opt-out or termination of such contract will occur.
KLLM will continue to provide services and pricing levels as
stated in such contract.
[Docket no. 1-2, ¶ 5]. JBS further agreed that
“JBS Carriers will not circumvent this Agreement or its
obligations as set forth herein through any of its parent or
affiliated companies.” [Docket no. 1-2, ¶ 8].
this settlement agreement, on December 13, 2011, PPC informed
KLLM that it was terminating its dedicated hauling contract
with KLLM. On February 17, 2012, KLLM filed this lawsuit in
this federal court against JBS, contending that JBS had
breached the settlement agreement in permitting PPC to
terminate the dedicating hauling contract. [Docket no. 1]. In
addition to compensatory damages, KLLM also requested
matter was brought to trial on August 19, 2015, before a jury
of eight persons. After nine (9) days of trial, on September
1, 2015, the jury began its deliberation and returned a
verdict in favor of KLLM. The jury awarded KLLM $36, 950.00
in contractual damages for JBS Carrier's breach of the
settlement agreement. [Docket no. 216].
next day, on September 2, 2015, that same jury heard the
punitive damages phase of trial. During its closing argument
in the punitive damages phase of the trial, KLLM argued that
JBS had violated the settlement agreement that it had entered
into voluntarily just eleven months prior. KLLM also
reiterated to the jury that JBS's counsel who penned the
settlement agreement was the same attorney who terminated the
KLLM-JBS contract less than a year later. JBS, said KLLM,
terminated the contract to benefit itself because JBS's
business was suffering and the PPC contract JBS took from
KLLM doubled JBS's business. Just as KLLM had emphasized
during the trial, KLLM characterized JBS' conduct as
“reckless disregard for KLLM's rights.”
[Docket no. 223, P. 7].
presented to the jury that PPC had decided to terminate
KLLM's contract before they knew about the prior
settlement agreement and that no JBS employees were involved
in the decision to terminate KLLM's contract with PPC.
The jury was not persuaded by JBS's arguments.
also presented what it purported to be its balance sheet.
According to this balance sheet, JBS had only $38, 019.00 in
cash-on-hand and a negative net worth of $71, 702, 835.00.
[Docket no. 229, P. 27]. KLLM did not object to this document
being admitted into evidence. KLLM, though, did question the
veracity of this balance sheet, emphasizing in closing
argument that JBS was “working for these other
companies in the family that are huge companies. They've
got money coming in. I submit that if you make the award,
which I trust you to do with proper and sound judgment as the
court instructed you, they will find a way pretty easily to
pay it.” [Docket no. 223].
jury, after due deliberation, awarded KLLM $900, 000.00 in
punitive damages. [Docket no. 218].
court earlier confirmed that it possesses diversity of
citizenship subject-matter jurisdiction over this dispute in
its orders dated July 26, 2013 [Docket no. 137], and August
17, 2015 [Docket no. 204]. Inasmuch as diversity of
citizenship is the subject matter jurisdictional trigger,
this court, sitting in Mississippi, will apply Mississippi
law to the substantive issues in accordance with the
Erie Doctrine. Erie v. Tompkins, 304 U.S.
64, 78-79, 58 S.Ct. 817, 82 L.Ed. 1188 (1938). Under the
Erie Doctrine, federal courts sitting in diversity
must apply state substantive law and federal procedural law.
Foradori v. Harris, 523 F.3d 477, 486 (5th Cir.
2008) (citing Gasperini v. Ctr. for Humanities,
Inc., 518 U.S. 415, 426-427 (1996)).
MOTION TO REMIT AMOUNT OF PUNITIVE DAMAGES [Docket No.
Mississippi Punitive Damages Law
JBS first asks this court to remit the amount of damages the
jury awarded to KLLM to zero ($0.00), allegedly in accordance
with Mississippi law. JBS travels under Miss. Code Ann.
§ 11-1-65(3)(a), which authorizes the reduction of a
plaintiff's punitive damages award depending on the net
worth of the defendant. Section 11-1-65 (2004) recites:
In any civil action where an entitlement to punitive damages
shall have been established under applicable laws, no award
of punitive damages shall exceed the following:
(vi) Two percent (2%) of the defendant's net worth for a
defendant with a net worth of Fifty Million Dollars ($50,
000, 000.00) or less.
limitation on punitive damages “shall not be disclosed
to the trier of fact.” Miss. Code Ann. §
11-1-65(3)(c). In other words, the jury deliberates in the
blind relative to the possibility that, under the law, the
court may be required to reduce the award dependent on the
net worth of the defendant.
statute further mandates that “[f]or the purposes of
determining the defendant's net worth in paragraph (a),
the amount of the net worth shall be determined in accordance
with Generally Accepted Accounting Principles.” Miss.
Code Ann. § 11-1-65(3)(b). Generally Accepted Accounting
Principles are acceptably defined as “the official
standards adopted by the American Institute of Certified
Public Accountants (the “AICPA”), a private
professional association, through three successor groups that
it established, the Committee on Accounting Procedure, the
Accounting Principles Board (the “APB”), and the
Financial Accounting Standards Board (the
“FASB”).'” In re Enron Corp. Sec.,
Derivative & ERISA Litig., 235 F.Supp.2d 549, 573,
fn. 11 (S.D. Tex. 2002)(citing In re K-tel Intern., Inc.
Securities Litigation, 300 F.3d 881, 889 (8th Cir.2002),
quoting Ganino v. Citizens Utils. Co., 228 F.3d 154,
160 n. 4 (2d Cir.2000)).
contends that KLLM now may not present any argument or
evidence contradicting JBS' balance sheet, especially the
negative net worth, because KLLM did not present challenging
evidence at trial before the jury. In support of this
argument, JBS cites two cases: C & C Trucking Co. v.
Smith, 612 So.2d 1092 (Miss. 1992) (“Smith”)
and Coleman & Coleman Enter., Inc. v. Waller Funeral
Home, 106 So.3d 309 (Miss. 2012)
(“Coleman”). This court, though, is not persuaded
that these two cases bemuscle JBS' position.
is a 1992 case that was decided before the Mississippi
Legislature adopted the punitive damages scheme described in
Miss Code Ann. § 11-1-65. In Smith, the
plaintiff appealed the trial court's decision to remit
the jury's punitive damages award from $50, 000.00 to
$0.00. Id. The trial court based its remittitur on
the defendant's argument that the jury had not been
informed of the defendant's net worth, which was $0.00.
Smith, 612 So.2d at 1105.
Mississippi Supreme Court reversed the trial court's
We hold that it is not legally necessary for either plaintiff
or defendant to introduce evidence of the net worth of the
defendant during the trial to support an award of punitive
damages. If, however, no such evidence is presented, neither
party may challenge on appeal either the inadequacy or the
excessiveness of a punitive damages award. If a party wishes
to preserve the question for appeal, evidence of net worth
must be presented at trial, or error in the amount of
punitive damages is waived.
Id. at 1105.
Smith, Coleman, a 2012 case, was decided
after the Mississippi Legislature adopted the punitive
damages scheme described in Miss. Code Ann. § 11-1-65.
During the punitive phase in Coleman, the
counter-defendant, Coleman, speculated that it “had
little or no net worth” and that it “had some
measure of outstanding debt.” Coleman further
represented that it had no equity in the funeral home. The
counter-plaintiff, Waller, conducted no cross-examination on
this point. ...