We have reported many times on cases in which the Court of Appeal reversed a punitive damages award because the plaintiff failed to introduce meaningful evidence of the defendant’s financial condition. That appears to be what happened in this opinion, which was issued on May 13 but published on June 6. But the court’s analysis is a bit unusual.
The case involves a lawsuit for invasion of privacy. After a bench trial, the trial court awarded plaintiffs over $800,000 in compensatory damages. The court further concluded that the defendant acted with malice and should pay an additional $230,000 in punitive damages. The defendant appealed, challenging the punitive damages award as unwarranted and excessive.
The Court of Appeal concluded that the record contained evidence of one asset owned by the defendant (an asset worth $230,000), but no evidence of the defendant’s liabilities or expenses, other than the fact that the defendant owes $800,000 in compensatory damages. Prior cases have held that a plaintiff seeking punitive damages cannot simply introduce evidence of the defendant’s assets and income, without providing any evidence of the defendant’s liabilities and expenses. That information is necessary to meet the plaintiff’s burden of introducing “meaningful” financial condition evidence under Adams v. Murakami.
So it wouldn’t have been surprising if the Court of Appeal had stated that award should be reversed because the plaintiffs here failed to carry their burden under Adams. But what’s unusual about this opinion is that it spends time setting forth the standards for reviewing a punitive damages award for excessiveness. It’s not clear why the court included that discussion, because there is no need to consider whether the amount of a punitive damages award is excessive if the court concludes that the plaintiffs aren’t entitled to any award at all because they failed to carry their burden of presenting meaningful financial condition evidence. The remedy is quite different for those two different issues. If the award is excessive, the appropriate remedy is to reduce the award or order a new trial. But if there’s a failure of proof on the financial condition issue, the appropriate remedy is to vacate the punitive damages award altogether.
Here, after a few pages of discussion about excessiveness, the court ultimately decides to vacate the award altogether due to insufficiency of the evidence. As noted, that result is well supported by existing law. But it remains unclear why the opinion contains the discussion of excessiveness, when the court didn’t actually decide whether the amount was excessive. Perhaps the court just wanted to provide some guidance about how it would have viewed the question of excessiveness if it had decided the case on that basis.
Read here for additional commentary on this opinion from The California Appellate Report.