Massachusetts jury awards $1 billion in punitive damages to smoker’s family

Courtroom View News reports on a verdict in Massachusetts state court awarding $8 million in compensatory damages and $1 billion in punitive damages.  As described in the story, the plaintiffs argued that Philip Morris should have switched to ultra-low nicotine versions of its cigarettes.  Philip Morris argued that it tried to market those types of products, but consumers rejected them.

Philip Morris will undoubtedly challenge the award through posttrial motions and, if necessary, an appeal. Given the disparity between the compensatory damages and the punitive damages, the verdict is not likely to survive judicial review.

Court of Appeal strikes punitive damages award from default judgment due to insufficient evidence of defendant’s financial condition (Brahms v. Wilk)

This unpublished opinion provides guidance about the evidentiary showing that a plaintiff must make when seeking punitive damages as part of a default judgment.

As often discussed on this blog, plaintiffs seeking punitive damages in California must present meaningful evidence of the defendant’s financial condition, so that the court can ensure that the amount of punitive damages is not disproportionate to the defendant’s ability to pay.  In this case, the plaintiff obtained a judgment by default, including an award of punitive damages.  To meet his burden of presenting evidence of the defendant’s financial condition, he submitted a declaration stating that the defendant owns revenue-generating websites, owns two Porsches, and lives in a house owned by his parents and therefore has no housing expenses.  However, the plaintiff’s declaration did not explain how he knew any of these facts.

On appeal, the Court of Appeal (Fourth District, Division Three) struck the amount of punitive damages on the ground that the plaintiff’s declaration was not based on personal knowledge, as required by Code of Civil Procedure section 585, subdivision (d).  Ordinarily, when a court reverses a punitive damages award due to insufficient evidence of the defendant’s financial condition, the court simply vacates the award and does not allow the plaintiff to try again.  But in this case, because judgment was entered by default and the plaintiff did not have an opportunity to conduct discovery on the defendant’s financial condition, the court remanded the case to permit the plaintiff to conduct such discovery “should he chose to expend the fees necessary to acquire this information.”

Plaintiffs in Texas case agree to reduce $7 billion punitive damages award to $750 million

We previously reported on the $7 billion punitive damages award against Charter Communications (dba Spectrum) in Texas state court.  The plaintiffs are the family members of an 83-year-old woman who was stabbed to death by a Spectrum employee while was off duty.   This Reuters story explains the plaintiffs’ theory:  a spectrum technician went back to the victim’s house the day after he visited for a service call, using a company vehicle both times, and stabbed her after she found him stealing credit cards from her wallet. The plaintiffs claimed Charter was responsible for the actions of its employee during off-duty hours because the company ignored “red flags” about him, including pleas to upper management about his severe financial distress.

On Monday the trial court entered judgment for $337.5 million in compensatory damages and $750 million in punitive damages.  The judgment states that the plaintiffs agreed to a voluntary reduction of the punitive damages from $7 billion to $750 billion.  Reuters reports that Charter plans to appeal.

Ford hit with $1.7 billion in punitive damages in Georgia case where liability established by sanctions order

CNN is reporting on a $1.7 billion punitive damages award against Ford in a case involving a fatal crash of a Ford F-150 truck.  Although the CNN story doesn’t mention it, liability in the case was established by a sanctions order.  As this Law360 story explains, a prior trial in this case ended in a mistrial and after the mistrial, the court sanctioned Ford for violating court orders about witness testimony.  The court sanctioned Ford by instructing the jury in the second trial that Ford’s design was defective and that Ford acted willfully and recklessly.  The second jury then awarded $1.7 billion in punitive damages based on the court’s description of Ford’s conduct.  Both articles report that Ford plans to appeal.

$45.2 million punitive damages award against Alex Jones will be reduced to $750,000 under state law cap

NPR reports here on the Texas jury verdict awarding $4.1 million in compensatory damages and $45.2 million in punitive damages against InfoWars founder Alex Jones, for defaming families of children killed in the Sandy Hook school shooting.

Texas’s cap on punitive damages will apparently reduce the award here to $750,000 (see section 41.008(b)(1)(b)), but counsel for the plaintiffs told Bloomberg Law he intends to challenge the constitutionality of the cap.  That will be an uphill battle, as at least one Texas appellate court has already upheld the constitutionality of the cap (see Rivera v. United States, 2007 WL 1113034), but as we have previously reported courts in other jurisdictions have overturned caps as unconstitutional.

Texas jury awards $7 billion in punitive damages against Spectrum cable

Law360 is reporting that a jury in Texas has awarded $7B billion in punitive damages against Charter Communications, which does business as Spectrum.

The plaintiffs are family members of an 83-year-old woman who was stabbed to death by a Spectrum employee.  The jury awarded 10 percent fault to the attacker and 90 percent fault to Spectrum.  The Law360 article doesn’t explain the plaintiffs’ rationale for holding Spectrum more responsible than the assailant.

Texas has a statutory cap on punitive damages but the cap does not apply when the defendant’s conduct falls within a list of enumerated felonies.  One of listed felonies is forgery.  The jury in this case found that Spectrum intentionally forged an arbitration agreement, and the plaintiffs are relying on that finding to argue that the cap doesn’t apply.

Court of Appeal: plaintiff in Elder Abuse case cannot obtain pretrial right to attach order based on claim for punitive damages (Royals v. Lu)

This published opinion addresses an issue of first impression: can an Elder Abuse plaintiff obtain a pretrial right to attach order (RTAO) based on a claim for punitive damages?  The answer is no.

The Attachment Law (Code of Civil Procedure sections 481.010-493.060) is a set of statutes that allows plaintiffs, under certain narrow circumstances, to seize a defendant’s property in advance of trial and judgment.  The law is generally limited to contract claims, but the remedy of pretrial attachment is also available for enforcement of certain statutes, including the Elder Abuse Act (Welfare & Institutions Code section 15600 et seq.)

The Court of Appeal held here that, although the Elder Abuse Act permits recovery of punitive damages, a plaintiff in such an action cannot obtain a pretrial RTAO based on an anticipated punitive damages award.  The court explained that an RTAO must be based on a claim for “indebtedness,” which cannot include punitive damages because they are meant to punish and deter, not to satisfy a debt.  The court also noted that the Attachment Law expressly contemplates the application of the preponderance of the evidence standard of proof, whereas punitive damages are governed by the higher clear and convincing evidence standard.  Finally, the court noted that punitive damages always present a risk of arbitrary deprivation of property, and given the “less than fully developed record” presented in attachment proceedings, attachment orders based on claims for punitive damages would present too great a due process risk.

Court of Appeal reverses $3 million punitive damages award in talc case (McNeal v. Whittaker, Clark & Daniels)

Yesterday, the Court of Appeal issued this published opinion reversing a $3 million punitive damages award against a talc supplier, on the ground that the plaintiff failed to introduce sufficient evidence of malice, oppression, or fraud as required by California Civil Code section 3294.

The plaintiff claimed he developed mesothelioma from exposure to various asbestos-containing products.  He claimed that one source of exposure was Old Spice talcum powder, which included talc supplied by defendant Whittaker, Clark & Daniels.  Plaintiff claimed Whittaker’s talc was contaminated with trace amounts of asbestos.

The case proceeded to trial with Whittaker as the sole defendant.  A jury awarded $1.75 million in compensatory damages, allocated 42 percent fault to Whittaker, and added an additional $3 million in punitive damages.  Whittaker appealed, challenging only the punitive damages award.

The Court of Appeal (Second District, Division Eight) agreed with Whittaker that plaintiff’s evidence was insufficient to establish that Whittaker acted with malice, oppression, or fraud.  The 52-page opinion recites the plaintiff’s evidence in great detail but ultimately concludes that none of that evidence, even construed in the light most favorable to the plaintiff, could support the conclusion that the defendant’s executives knew, during the relevant time period, that trace levels of asbestos contamination in talc created a risk of “probable dangerous consequences,” as required for an award of punitive damages.  This passage captures the essence of the court’s reasoning:

Yes, defendant knew asbestos was an “unsafe ingredient” if there were enough of it in the talc—meaning amounts experts would consider “significant enough to, over time, produce  injury or illness.” But no one knew exposure to talcum powder could cause mesothelioma until 1994—years after plaintiff’s exposure to talc ended in 1980. Medical or scientific developments years after plaintiff’s injury cannot establish defendant’s executives knew of “probable dangerous consequences” of contaminated talc before plaintiff’s injury.

The opinion rests on well-established law, but it is nevertheless very significant for California products liability and toxic torts litigation.  Plaintiffs in such cases often argue that, if a defendant is aware that a substance in its product represents a possible health hazard at some level of exposure, that shows the defendant acted with malice by including that substance in its product.  That shouldn’t be enough, because as this opinion points out, California law requires an awareness of “probable dangerous consequences.”  A defendant might be aware that high levels of exposure to a substance are potential harmful, and yet be unaware of any probable dangerous consequences from lower levels of exposure.  Many, many substances can be toxic if the dose is high enough.

We see this issue often in California products liability litigation, and many courts are willing to let plaintiffs seek punitive damages based on the sort of evidence presented here.  This opinion may help to remind trial courts that punitive damages should be imposed only when the evidence shows the defendant was aware of probable dangerous consequences associated with its product and  deliberately did nothing to avoid those consequences.

Justice Wiley issued a dissenting opinion.  In his view, the jury’s award of punitive damages was supported by evidence that Whittaker knew about the presence of trace amounts of asbestos in its talc in 1972, and knew by 1976 that asbestos was dangerous.  The dissenting opinion also argues that punitive damages are necessary to promote consumer safety.  But the dissenting opinion doesn’t confront the point made by the majority opinion—that Whittaker might have known in the 1970s that high levels of asbestos exposure could be dangerous, but Whittaker had no knowledge that trace amounts of asbestos in talc presented any similar risk.

Plaintiff in Tesla lawsuit chooses a retrial instead of reduced damages

The plaintiff who won a jury award for $137 million against Tesla has decided to take the case back to trial, rather than accepting the trial court’s reduction of the damages to a total of $15 million ($13.5 million in punitive damages and $1.5 million in compensatory damages).  Law360 has the story (subscription required).

It’s rare for a plaintiff to reject a remittitur that still provides such a large recovery.  For this gamble to pay off,  the plaintiff and his lawyers need to try the case again, win a verdict in excess of $15 million, and then defend that award against another set of post-trial motions and possibly an appeal.  It will be interesting to see how this turns out.

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