Last month the Ninth Circuit issued this rather surprising published opinion, holding that a district court went too far when it reduced a punitive damages award to four times the compensatory damages award. The Ninth Circuit decided that the maximum constitutionally permissible ratio was actually eight to one.
The case involved the well publicized Volkswagen emissions scandal. Plaintiffs bought Volkswagens and Audis and later discovered that the vehicles had been modified so that they would pass emissions testing even though the vehicles actually produced emissions in excess of regulatory standards. It was undisputed that the plaintiffs suffered no physical harm from the increased emissions. But they sought recovery for having been duped into buying a vehicle they thought was eco-friendly but wasn’t.
The district court viewed Volkswagen’s harm as worthy of punitive damages, but found it to be relatively low on the reprehensibility scale. The Ninth Circuit disagreed, finding that Volkswagen’s conduct was “highly reprehensible,” warranting a ratio closer to the high-end of the single digit ratio scale. That conclusion is surprising, because courts ordinarily place economic torts at the low end of the spectrum. Putting this conduct at the high end of the scale does not leave much room between this economic tort and the classic punitive damages case involving someone who acts with malice or puts someone else’s life at risk. Publication of this opinion will make it easy for plaintiffs in the Ninth Circuit to argue that just about every punitive damages case warrants a ratio of eight to one.
In July we reported on the reversal of a $3 million punitive damages award in McNeal v. Whittaker, Clark & Daniels, and commented on the significance of the decision for products liability litigation in California. The Supreme Court this week denied the plaintiffs’ petition for review. But as noted on At the Lectern, Horvitz & Levy’s blog on all things related to the Supreme Court of California, Justice Goodwin Liu voted to grant the petition.
Law36o reports on yesterday’s oral arguments before the Georgia Supreme Court in a case in which the plaintiff is challenging a statutory cap that reduced a jury’s $50 million punitive damages award to $250,000. As we have reported before, such arguments have achieved mixed results, with some courts upholding the constitutionality of statutory caps and some courts striking them down.
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.
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.”
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.
Bloomberg law reports that a jury in Cook County, Illinois has awarded $363 million, including $325 million in punitive damages, to a woman who claimed she developed breast cancer as the result of breathing chemicals emitted by a medical sterilization plant in her neighborhood. The defendant, Sterigenics, says it plans to appeal.
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.
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.
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.