GREGG P. REGAN et al. v. COMPUTERS PLUS CENTER, INC., et al.,

SC 19029/19030/19031

Judicial District of Waterbury

 Sovereign Immunity; Due Process; Whether Counterclaim for Damages Against State Violated Doctrine of Sovereign Immunity; Whether Damages may be Awarded for State Due Process Violations.  The plaintiffs, the state department of information technology and its chief information officer, brought this action, claiming that the defendants, Computers Plus Center, Inc. (CPC), and its president, failed to provide personal computers that conformed to the technical specifications that were contained in a contract that the state had entered into with CPC.  In response, the defendants filed a counterclaim, alleging that the plaintiffs violated their state due process rights by making stigmatizing statements that damaged their business.  The plaintiffs filed a motion to dismiss the counterclaim, arguing that it was barred by the doctrine of sovereign immunity.  Citing to State v. Kilburn, 81 Conn. 9 (1908), the trial court denied the motion, holding that, for nearly a century, it has been the law of Connecticut that when the state files a lawsuit, it opens the door to the assertion of any counterclaim that is related to the controversy.  The court further determined that, although Kilburn involved an equitable action, there was no reason why the holding of that case should not be applied where, as here, a defendant seeks an award of damages.  Thereafter, the jury declined to award the plaintiffs any damages as to their claims, but, as to the counterclaim, the jury awarded CPC damages in the amount of $18.3 million.  The plaintiffs moved to set aside the verdict, arguing that the jury's award of damages was improper as a matter of law because such a remedy is not available for state due process violations.  The plaintiffs further maintained that CPC failed to meet its burden of proving the existence of a temporal nexus between the stigmatizing statements and the tangible loss that it allegedly suffered.  They also filed a motion for a remittitur, claiming that the award of $18.3 million was excessive.  The trial court denied the motion to set aside the verdict, concluding that although the Supreme Court has declined in some due process cases to recognize a private right of action against a government official who is sued in a personal capacity, those cases do not apply where, as here, damages are sought from a state official who has been sued in an official capacity.  The court further opined that damages were available to CPC as a result of the plaintiffs' failure to afford it a sufficient "name-clearing hearing" to remedy the damage that the plaintiffs caused to CPC's reputation.  The court also rejected the plaintiffs' claim that there was no temporal link between the stigmatizing statements and CPC's tangible loss, reasoning that the stigmatizing statements were made between 2002 and 2003 and that CPC suffered a reduction in its market value between 2003 and 2005.  The court further determined, however, that the evidence failed to show that the plaintiffs' conduct proximately caused CPC to suffer damages in the amount of $18.3 million, which represented a total loss of CPC's market value.  Accordingly, the court reduced the award to $1.83 million.  In these appeals, the Supreme Court will determine whether the trial court's rulings were proper.