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possibility in a retrial of having to pay punitive damages in the libel suit,
and, if IBP won the libel suit, IBP would have to pay $250,000 in punitive
damages under the tortious interference with future employment judgment, and
possibly $1.5 million as punitive damages on the invasion of privacy claim.
The record is also clear here that IBP's primary concern was that it pay as
little as possible to dispose of all claims of petitioner, while providing for
the return of the Bagley documents, and that the settlement remain
confidential. The evidence here shows that both parties worked on the wording
of the settlement document and were aware that even if petitioner lost on the
retrial of the libel claim the tortious interference with future employment
judgment of $100,000 compensatory damages, and $250,000 punitive damages, and
possibly the invasion of privacy award would be reinstated. The parties in
coming to their agreement were aware that the jury had previously awarded
compensatory damages in the libel suit of $1 million and punitive damages of
$5 million. Although the record supports the fact that counsel for IBP did
not want to show an allocation to punitive damages, the record as a whole,
including the discussions and give-and-take between the parties as to the
amount to be paid to petitioner, shows that both parties considered the clear
possibility of petitioner recovering punitive damages. In fact, the testimony
of the attorneys shows that this was in the minds of the attorneys when the
negotiations were going on. Furthermore, it was clearly in the interest of
both parties not to show an amount allocated to punitive damages.
Petitioner's counsel testified that in the beginning of the negotiations he
was not aware of whether it might make a difference if a portion were
allocated to compensatory damages and a portion to punitive damages, but that
between the time of agreement to the total payment of $1.5 million and the
completion of drafting the settlement agreement petitioner had consulted a tax
attorney and was aware that there could possibly be a difference, since an
amount of compensatory damages would clearly be excludable from income.
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