THE KMART "STOLEN POTATO CHIPS" CASE

Why Was Kmart So "Mean-spirited" and "Outrageous" To a Loyal Employee?

What Actually Happened in "The Stolen Potato Chips Case"

Patricia Rue, a loyal Kmart employee for more than 12 years, worked in the company's product distribution center in Morrisville, Pennsylvania. Patricia had a spotless record with the company, never once being cited for misconduct or disciplinary action.

One day while she was working, a Kmart manager came up to Patricia and told her that a security guard had allegedly seen her take a bag of potato chips and that she therefore was fired. News of this termination spread quickly, allegedly causing a slowdown in production as people discussed the incident. To address this situation, a Kmart manager called a meeting of Patricia's co-workers and told them that she had been fired for concealing and eating a bag of potato chips.

Following her termination, Patricia applied for and received unemployment benefits, with the unemployment compensation referee ruling that she did not steal nor eat a bag of potato chips on the day in question. Angered by Kmart's reckless disregard for the truth, Patricia instituted a civil defamation action over the manager's statement to her co-workers concerning the incident.

At trial, the jury heard testimony from two Kmart employees who were with Patricia at the time of the alleged incident. At the risk of losing their jobs, these employees swore that Patricia did not steal any potato chips. Kmart attempted to brand these witnesses as liars, but why would they put their employment in jeopardy by lying like this?

The jury learned that the security officer's identification of Patricia was not based on any personal recognition of her. There also was evidence that Kmart did not follow its own guidelines in investigating the alleged incident and completely disregarded Patricia's right to confidentiality by broadcasting such personal information. Moreover, the jury discovered that this firing caused Patricia much anxiety, depression and humiliation. She was unable to find another job for six months because she had to repeatedly state the reason she was fired to prospective employees.

Hearing all of the facts, the jury found Kmart liable for defamation and awarded Patricia $1.4 million in punitive damages and $90,000 in compensatory damages. After the verdict, the presiding judge commented that he found "the defendant's conduct [to be] mean-spirited" and that Kmart's treatment of Patricia was "outrageous." In giving this punitive damages award, Patricia's attorney, Stephen Bolden, believed the jury wanted to send a powerful message to Kmart, which appeared unrepentant about its behavior. He observed that "[t]o a large extent, the courtroom behavior of the defense witnesses appeared to demonstrate an arrogance and willingness to repeat this kind of conduct."

Kmart's appeal of this verdict was rejected by three-judge panel of the state's Superior Court in June 1996, which found there was sufficient evidence for the jury to conclude that Kmart failed to exercise due care in verifying the truth of the allegations against Patricia before talking to co-workers. Still refusing to accept its responsibility, Kmart has yet again appealed. The full Superior Court will hear the case later this year. This case is about what it will take to punish and deter an immense, uncaring company that deliberately and intentionally defames a loyal, trustworthy employee. Punitive damages are particularly appropriate where a defendant, such as Kmart in this case, unjustifiably destroys a person's career and violates her right to confidentiality regarding personal information.