The opinion
UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF LOUISIANA
MONROE DIVISION
ERIE MOORE, JR., ET AL. * CIVIL ACTION NO. 16-1007
VERSUS * JUDGE TERRY A. DOUGHTY
LaSALLE CORRECTIONS, INC., ET * MAG. JUDGE KAREN L. HAYES
AL.
RULING
Pending before the Court is Defendant LaSalle Corrections, Inc.’s (“LaSalle”) Objection
to and Appeal of the Magistrate Judge’s October 31, 2019 Memorandum Order [Doc. No. 179]
insofar as it denied LaSalle’s motion for a protective order to prevent discovery as to LaSalle’s
financial information. [Doc. No. 181]. Plaintiffs have filed an opposition [Doc. No. 183].
LaSalle has filed a reply to the opposition [Doc. No. 185]. For the following reasons, the Court
GRANTS the appeal, and GRANTS LaSalle’s motion for a protective order [Doc. No. 174].
I. FACTS AND PROCEDURAL HISTORY
This action was filed pursuant to 42 U.S.C. § 1981, et seq., by the children of Eric Moore,
Sr., (hereinafter “Plaintiffs”), and alleges that his death was caused by the actions of multiple
defendants employed by LaSalle, a private company that works under contract with local
political subdivisions to provide correction services. On October 12, 2015, Moore was arrested
and taken to Richwood Correctional Center (“RCC”), which is operated by LaSalle. Plaintiffs
allege that one or more RCC guards beat Moore in the head, leading to his death. Plaintiffs allege
RCC and LaSalle failed to adequately supervise the correctional officers, failed to investigate the
cause of death, failed to take remedial actions, failed to train in defensive tactics, and failed to
implement policies to require adequate monitoring of cells and provide required screening of
newly arrested inmates.
Plaintiffs filed a notice of FED. R. CIV. P. Rule 30(b)(6) deposition of LaSalle seeking, in
part, information as to the “[c]urrent financial net worth of LaSalle Management, to include the
net value and profit and balance sheets of LaSalle.” [Doc. No. 174, p.3]. On October 24, 2019,
LaSalle responded with a Motion for Protective Order in which it argued, with regard to the
request for financial information, that it cannot be cast for punitive damages and therefore the
financial information sought by Plaintiffs was irrelevant and disproportionate to the needs of this
case [Id., p. 6-7].
On October 31, 2019, the Magistrate Judge issued a Memorandum Order denying
LaSalle’s Motion for Protective Order with regard to its financial records, on the basis that:
Though LaSalle argues that the Fifth Circuit would hold that
punitive damages are not available against a prison, it does not cite
to, and the undersigned is unaware of, any controlling case law
holding that private corporations are not liable for punitive damages.
Thus, in the absence of a ruling on this underlying legal issue, it is
relevant to know about LaSalle’s financials for purposes of pursuing
a possible award of punitive damages.
[Doc. No. 179, pp. 4-5]
On November 14, 2019, LaSalle filed the pending Objection and Appeal [Doc. No. 181].
It has been fully briefed and the Court is prepared to rule.
II. LAW AND ANALYSIS
A. Standard of Review
Pursuant to FED. R. CIV. P. 72(a), this Court’s review of the Magistrate Judge’s
order denying LaSalle’s motion for a protective order is subject to the clearly erroneous or
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contrary to law standard:
(a) Non-dispositive Matters. When a pretrial matter not dispositive of a party’s
claim or defense is referred to a magistrate judge to hear and decide, the magistrate
judge must promptly conduct the required proceedings, and, when appropriate,
issue a written order stating the decision. A party may serve and file objections
to the order within 14 days after being served with a copy. A party may not
assign as error a defect in the order not timely objected to. The district judge in
the case must consider timely objections and modify or set aside any part of the
order that is clearly erroneous or is contrary to law.
Further, pursuant to 28 U.S.C. § 636(b)(1), “[a] judge of the court may reconsider any pretrial
matter under this subparagraph (A) where it has been shown that the magistrate judge’s order is
clearly erroneous or contrary to law.”
B. Analysis
1. Right to Punitive Damages
The parties agree that the Fifth Circuit has not directly addressed whether punitive
damages can be awarded against a private company working under contract with a local political
subdivision to provide correction services. The Magistrate Judge based her decision denying the
protective order on the absence of case-law on the underlying legal issue of whether private
prison management companies are (or are not) immune from punitive damages. [Doc. No. 179,
p. 4]. LaSalle, however, argues that the existence or non-existence of a case on point cannot be
the dispositive standard here, as such would present an unsolvable dilemma to parties and courts
seeking to address res nova issues. LaSalle contends that courts must be able to rule on new
issues without prior case law or else jurisprudence will stagnate. The Court finds that LaSalle’s
argument has merit and will, therefore, address this res nova issue.
To support its contention that it is entitled to a protective order barring discovery of
information relative to its financial circumstances, LaSalle asserts that the totality of Fifth Circuit
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jurisprudence concerning §1983 actions against private entities shows the likelihood of allowing
punitive damages against LaSalle is so low as to be non-existent. LaSalle further asserts that,
where punitive damages are not available, the net worth of a party is irrelevant. Therefore,
according to LaSalle, the Magistrate Judge’s decision failing to grant the requested protective
order is clear error and should be reversed.
Plaintiffs respond that the only established limitation upon Section 1983 punitive
damages is that they may not be sought against a public body. City of Newport v. Fact Concerts,
Inc., 453 U.S.247, 271, (1981). Since LaSalle is a private corporation, Plaintiffs argue that this
limitation does not apply, and, therefore, LaSalle can be liable for Section 1983 punitive
damages. Thus, LaSalle is not entitled to a protective order, according to Plaintiffs.
LaSalle replies that it is likely that, when presented with the issue, the Fifth Circuit would
rule that private prison management companies are immune from punitive damages, based on the
Fifth Circuit’s consistent application of other, similar §1983 rulings to private prison
management companies.
The Court agrees with LaSalle. A review of 42 U.S.C. §1981, et seq., shows that the
punitive damages at issue are not statutory. The governing civil rights statutes do not detail the
circumstances under which punitive damages may be awarded. Instead, punitive damages in civil
rights cases are a product of a jurisprudential gloss on the common law. See Smith v. Wade, 461
U.S. 30 (1983); Carey v. Piphus, 435 U.S. 247 (1978). A part of that gloss is that punitive
damages may not be awarded against a municipality. City of Newport v. Fact Concerts, Inc., 453
U.S. 247 (1981).
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In City of Newport, the Supreme Court discussed several reasons why punitive damages
should not be awarded against a municipality. First, punitive damages allowed against a
municipality would serve to harm innocent taxpayers who would likely bear the brunt of any
damages which would be paid out of the public fisc. On that matter, the Supreme Court found,
“in general, courts viewed punitive damages as contrary to sound public policy, because such
awards would burden the very taxpayers and citizens for whose benefit the wrongdoer was being
chastised.” Id. at 263. Second, punitive damages typically seek, “to punish the tortfeasor whose
wrongful action was intentional or malicious, and to deter him and others from similar extreme
conduct.” Id. at 266-267. However, this purpose breaks down when punitive damages are sought
against an entity rather than an individual. “If a government official acts knowingly and
maliciously to deprive others of their civil rights, he may become the appropriate object of the
community’s vindictive sentiments . . . A municipality, however, can have no malice
independent of the malice of its officials. Damages awarded for punitive purposes, therefore, are
not sensibly assessed against the governmental entity itself.” Id. at 267. Finally, the deterrent
purpose of §1983 would not be advanced by assessing punitive damages against a municipality,
where that purpose could be satisfied fully by assessing those damages against the individuals
who may have committed the constitutional violations at issue.
The Court’s reasoning in City of Newport easily extends to a private entity which has
assumed a traditionally governmental role or function via contract with a governmental entity.
Considering the reality of the private prison industry, LaSalle’s contractual relationship with the
Town of Richwood ensures that a punitive damage award against LaSalle would harm the public
fisc and citizens of the Town. The Town entered into an agreement with LaSalle to provide a
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governmental function that the Town, or another governmental entity, would have provided
otherwise. If a punitive damage award is granted against LaSalle, that award, and the threat of
future punitive damage awards, necessarily increases the costs of maintaining that agreement. If
LaSalle continues the agreement, economic pressure will compel it to seek more favorable
contractual terms. Put another way: the risk of punitive damages will necessarily be considered
in the contract terms of any future agreement to provide governmental services. No matter who
operates RCC after a punitive damage award, it will certainly cost more to do so. If the Town
itself operates the facility, the public will be harmed economically in the same fashion that the
City of Newport would have been in the City of Newport case. If LaSalle or another similar
company operates the facility, its price to do so will have increased because of the added risk of
exposure to punitive damage awards, and where the price to the Town increases, the policy
issues in City of Newport are also present. A punitive damage award in this matter will directly
affect the, “local treasuries and therefore. . . services available to the public at large,” in the area
surrounding RCC, as well as all other LaSalle locations. Id. at 270-271.
Further, just like a municipality, a private entity like LaSalle is incapable of malicious
action outside of its employees. Like a municipality, a limited liability company such as LaSalle
is a juridical entity that participates in the legal process by virtue of legal fiction. Unlike an
individual, a city or a company lacks the mind to form a scienter requirement such as malice. As
the Supreme Court detailed in City of Newport, a juridical entity, lacking a mind, is not capable
of having a state of mind.
Both a city and a company only operate through their employees and/or officials, and
§1983 already allows punitive damages against those individuals. Allowing punitive damages
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against LaSalle would be to hold it liable for the actions of its employees (i.e. under a vicarious
liability theory), despite the clear jurisprudence against the application of vicarious liability
against a private prison management company. See Porter v. Williams, 2010 WL3325709, at *3
(W.D. La.8/3/10), report and recommendation adopted, 2010 WL 3327934 (W.D. La. 8/23/10)
(“Plaintiff seeks to hold CCA liable under 42 U.S.C. §1983 for the acts of its employees.
However, just as a municipal corporation is not vicariously liable for the constitutional torts of its
employees, a private corporation is not vicariously liable under §1983 for its employees’
deprivations of others’ civil rights.”).
Such a backdoor to vicarious liability is not allowed in §1983 litigation. Just like a
municipality, a company has employees against whom the deterrent purpose of §1983 may be
actually effective. In this instance, the Plaintiffs have already brought suit against numerous
LaSalle employees against whom punitive damages are already sought.
When the policy issues surrounding the application of punitive damages to a municipality
are applied to a company which has contractually taken over a governmental role or function, it
is clear that those issues are not mitigated by the company’s private status. Here, the public fisc
will be affected by punitive damages against LaSalle in much the same way they would be if
they were sought against the Town of Richwood. In fact, such damages would likely have a
ripple effect placing the potential economic burden of those damages on municipalities beyond
the factual scope of this matter. Nor would punitive damages awarded against LaSalle serve as
punishment for malice which cannot exist in a company outside of its employees who have
already been made parties to this matter individually.
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The Fifth Circuit’s, as well as its district court’s, application of §1983 jurisprudence to
private prison management companies has been consistent. Generally, the courts of this circuit
have found that §1983 is applicable to private prison management companies as they operate
under the color of state law. Rosborough v. Management &Training Corporation, 350 F.3d 459
(5th Cir.2003); Flores v. GEO Group, Inc., 2011 WL1100491, at *1 (W.D. La. 3/3/11), report
and recommendation adopted, 2011 WL1078493 (W.D. La. 3/23/11) (“[T]he test to determine
liability for a private prison-management corporation under §1983 is more or less identical to the
test employed to determine municipal or local government liability.”).
The precepts of §1983 litigation against a municipality has been applied in cases involving
private prison management companies in a variety of contexts such as:
(1) supervisory liability claims as in Phillips v. Corrections Corp. of
America, 2006 WL1308142 (W.D. La. 5/10/06) (applying
supervisory liability under §1983 to private prison management-
company);
(2) applying the prohibition against vicarious liability as in Porter
v. Williams, 2010 WL3325709, at *3 (W.D. La. 8/3/10), report and
recommendation adopted, 2010 WL3327934 (W.D. La. 8/23/10)
(“Plaintiff seeks to hold CCA liable under 42 U.S.C. §1983 for the
acts of its employees. However, just as a municipal corporation is
not vicariously liable for the constitutional torts of its employees, a
private corporation is not vicariously liable under §1983 for its
employees’ deprivations of others’ civil rights.”), Alfred v. Winn
Correctional Center, 2009 WL2307486 (W.D. La. 7/28/09)
(applying vicarious liability prohibition in case concerning
allegations of inadequate medical treatment), and Rodgers on Behalf
of CJTJ v. Gusman, 2019 WL1903550 (E.D. La. 4/29/19)
(reiterating that corporations, like municipalities, cannot be held
liable under a respondeat superior theory);
(3) where general condition of confinement claims have been
brought, such as in Coleman v. LaSalle Correctional Center, 2008
WL2465989 (W.D. La.5/29/08) (general conditions of confinement
case detailing that the same standard for liability of a municipality
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under §1983 is applied to a corporation performing a governmental
function);
(4) in the context of claims for inadequate medical treatment as in
Robichauxv. Lafourche Par. Det. Ctr., 2017 WL5495791, (E.D. La.
10/10/17), report and recommendation adopted, 2017 WL 5483780
(E.D.La.11/15/17) (applying §1983 law on alleged inadequate
medical treatment to private prison management-company);
(5) in cases claiming failure to protect against another inmate as in
Jones v. Emerald Corr. Mgmt., 2014 WL1682022, (W.D. La.
4/28/14) (involving a claim of failure to protect against a third-party
inmate); and
(6) where the plaintiff alleges violation of his right of access to the
courts as in Hill v. Walker, 718 F. App'x243, 245 (5th Cir. 2018).
In each of these contexts, a private prison management company was treated exactly as a
municipality. Each of those courts took §1983 law as applied to municipalities and applied it to
private prison management companies like LaSalle. Where, as here, the courts of a circuit have
applied every other aspect of §1983 law regarding municipalities to entities like LaSalle, it
follows that the law on a res nova issue, such as punitive damages here, will be applied in the
same way.
Plaintiffs argue that the considerations for granting immunity to municipalities for
punitive damages do not apply to a private company where the owners or operators receive profit
from the corrections business; therefore, it is justified that they bear the burden of punitive
damages. Plaintiffs do not appear to disagree with the City of Newport Court but assert that here,
because LaSalle is a private, family owned company, “[p]unishing this corporation will punish
those responsible for the laissez faire, deliberately indifferent policies and practices of LaSalle
Management Company, LLC, which condoned conditions causing the beating death of Mr.
Moore.”[Doc. No. 183, p. 15].
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The primary difficulty with this argument is that none of these family members or owners
are parties to this suit nor have the Plaintiffs alleged any individual action on their part which
might be deliberately indifferent. If the Plaintiffs wish to show a fact about an individual’s
potential liability, or any liability that might arise from that person’s actions, at trial, they must
first allege it in their pleadings. They have not done so here.
Just like a municipality, a private entity which fulfills a traditionally governmental role
cannot independently form the malicious state of mind necessary for an award of punitive
damages. It may only do so through its employees, and in this circuit, it cannot be held
responsible for the acts of those employees in §1983 actions. Just as with a municipality, the
Plaintiffs must show that individual LaSalle employees committed individually tortious acts,
and, in fact, Plaintiffs have named individual LaSalle employees as Defendants here. If they have
any facts or evidence that anyone else allegedly responsible for LaSalle’s decision making acted
maliciously, they always had the ability to allege those facts against that individual as a named
party.
As the deterrent purpose of punitive damages would not be fulfilled if allowed against
LaSalle, just as it would not be fulfilled if awarded against a municipality, policy weighs in favor
of continuing to treat LaSalle and other entities like it, just as the Court would a municipality, as
courts of this Circuit have done repeatedly in every other instance.
Plaintiffs further argue that a private, closely-held corporation, like LaSalle, is much
different than a municipality in that a municipality has many jobs to do other than operate a
correctional facility; it will typically build and maintain roads, provide police and fire protection,
collect taxes, provide for clean water and collect sewage, collect trash, provides parks and so on;
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and a municipal employee, even supervisory ones, would not “feel” the bite of punitive damages.
On the other hand, accordingly to Plaintiffs, the only function of LaSalle is to operate the
correctional facility. Thus, those who are at the reins of LaSalle Management, its owners and
operators, will feel the pinch of punitive damages, and, since profits are income to the owners
and operators, they are directly affected and punished accordingly.
Plaintiffs’ arguments disregard the fact that the operations of an entity may have fiscal
impact on a municipality. LaSalle operates a prison in Richwood. If LaSalle did not fulfill this
governmental role, the government would. If LaSalle is cast with punitive damages, any
increased costs will be passed along to its consumers: the governmental entities in whose stead it
operates prisons. Those increased costs to governmental entities have the same economic impact
which the City of Newport Court feared punitive damages awarded against the governmental
entity itself would have.
Plaintiffs do not suggest that punitive damages will not make the cost of doing business
with LaSalle rise. Nor do they address the market implications of imposing the punitive damages
they seek. While a punitive damage award will harm LaSalle, it will certainly be factored into the
cost of any future prison management contract between LaSalle and any municipality as well as
other prison management firms and other municipalities in the Fifth Circuit.
For these reasons, the Court agrees with LaSalle that it cannot be cast for punitive
damages.
2. Right to Protective Order
Federal Rule of Civil Procedure 26(b)(1) provides:
Unless otherwise limited by court order, the scope of discovery is as
follows: Parties may obtain discovery regarding any nonprivileged
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matter that is relevant to any party’s claim or defense and
proportional to the needs of the case, considering the importance of
the issues at stake in the action, the amount in controversy, the
parties’ relative access to relevant information, the parties’
resources, the importance of the discovery in resolving the issues,
and whether the burden or expense of the proposed discovery
outweighs its benefit. Information within this scope of discovery
need not be admissible to be discoverable.
Rule 26(c) of the Federal Rules of Civil Procedure governs protective orders. It provides
that a court may issue a protective order when, for good cause shown, the order is required to
protect a party from annoyance, embarrassment, oppression, or undue burden or expense. FED.
R. CIV. P. 26(c). Rule 26(c) confers broad discretion on the trial court to decide when a
protective order is appropriate and what degree of protection is required. Seattle Times Co. v.
Rhinehart, 467 U.S. 20, 36 (1984). Rule 26(c)’s requirement of a showing of good cause to
support the issuance of a protective order indicates “the burden is upon the movant to show the
necessity of its issuance, which contemplates a particular and specific demonstration of fact as
distinguished from stereotyped and conclusory statements.” In re Terra International, 134 F.3d
302, 306 (5th Cir. 1998) (citation omitted).
Under federal law, evidence of a defendant's financial worth and ability to pay may be
admissible for the purpose of evaluating the amount of punitive damages that should be awarded.
United States v. Big D Enters., 184 F.3d 924, 932 (8th Cir.1999) (citing City of Newport, 453
U.S. at 270; Mathie v. Fries, 121 F.3d 808, 816 (2d Cir.1997); Hutchinson v. Stuckey, 952 F.2d
1418, 1422 n. 4 (D .C.Cir.1992).
Here, having found that LaSalle cannot be cast for punitive damages, the Court finds that
the financial information sought by Plaintiffs is irrelevant and disproportionate to the needs of
this case [Id., p. 6-7].
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As a last consideration, Plaintiffs offer an alternative reason that the financial information
should be disclosed: the suggestion that it provides evidence of the control and decision making
of LaSalle. LaSalle responds that evidence of the impact of finances on decision-making does
not require detailed financial records, and that if Plaintiffs believe that money factored into
decision-making, that was an area that could have been explored in a deposition of the owners
and officers. The Court agrees with LaSalle that Plaintiffs could have obtained that information,
without the gross breach of LaSalle’s privacy interest in its financial information which the
disclosure Plaintiffs seek would require.
The Court finds that LaSalle has carried its burden of showing good cause for the
issuance of the order to protect itself from annoyance, embarrassment, oppression, or undue
burden or expense
Accordingly, the Court finds that LaSalle’s request for a protective order should be
GRANTED.
III. CONCLUSION
The Magistrate Judge’s ruling was clear error. The Memorandum Order is overruled to
the extent that it found that punitive damages are available against LaSalle and/or based its
denial of the requested protective order on the relevance of said financial information.
Accordingly,
IT IS ORDERED that LaSalle’s Objection to and Appeal [Doc. No. 181] of the
Magistrate Judge’s October 31, 2019 Memorandum Order [Doc. No. 179] insofar as it denied
LaSalle’s motion for a protective order to prevent discovery as to LaSalle’s financial information
is GRANTED.
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IT IS FURTHER ORDERED that LaSalle’s Motion for Protective Order [Doc. No.
174] is hereby GRANTED. The deposition of LaSalle pursuant to Rule 30(b)(6), is limited to
the extent that no information, facts, or evidence concerning LaSalle's net worth or other
financial matters may be discovered.
MONROE, LOUISIANA, this 19" day of December, 2019.
Derry A. Doughty )
nit States District Fuxige
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