Court of Appeal holds that trial court cured wildly excessive punitive damages by reducing it, eliminating any need for a new trial (Exteres v. Connections Group)

When a jury awards an excessive amount of punitive damages, the trial court has the authority to order a new trial unless the plaintiff agrees to accept a reduced amount.  That’s a well-established principle of posttrial procedure.

But are there some situations where the jury’s award is so high that the trial court should simply order a new trial, without giving the plaintiff an option of accepting a remittitur to a more reasonable number?  Logic dictates that the answer should be yes.  If an award is so high that it creates a presumption that the jury was acting out of passion and prejudice, then the defendant should be able to get a new trial before a jury that will decide the case based solely on the facts.  In that situation, it is unfair to make the defendant pay the maximum amount that a jury could properly have awarded.  Perhaps a jury that wasn’t influenced by passion and prejudice would have awarded something less than the maximum amount.  This principle finds support in the California Supreme Court’s opinion in Sabella v. Southern Pacific, which assumed there are some situations in which excessive damages resulting from passion or prejudice “cannot be cured by a remittitur.”

The Court of Appeal in this unpublished opinion didn’t buy that argument, and rejected the defendant’s bid for a new trial.  According to the court (Fourth Appellate District, Division Two), the trial court cured any problem with the jury’s $117 million punitive damages award by reducing it to $1.43 million.  The court explained that ” ‘the relevant amount for purposes of our review is not the amount awarded by the jury, but the reduced amount ordered by the remittitur.’ ”  That analysis makes sense where the defendant’s argument on appeal challenges the amount of the punitive damages.  But the court’s analysis is not responsive to the defendant’s argument that the award was so high that it showed the jury was acting out of passion and prejudice, requiring a new trial.  Here, where the jury’s verdict was more than eight times the highest amount that a reasonable jury could have awarded, there seems to be a strong argument that the jury’s verdict was based on passion and prejudice, and that the only way to cure that is to start over with a new jury.

Court of Appeal reverses $1 million punitive damages award as not supported by the evidence (Kazminy v. Dignity Health)

I meant to report on this unpublished decision when it came down in late February, but it fell through the cracks.  Better late than never.

A former Dignity Health pharmacist sued the company for retaliation and wrongful discharge.  A jury awarded her $1 million in compensatory damages and $2.4 million in punitive damages, but the trial court reduced the punitive damages to $1 million. Dignity Health appealed.

On appeal, the Court of Appeal (Third Appellate District) reversed the punitive damages award for lack of substantial evidence.  The court found that, although there was evidence that a Dignity Health employee acted with malice towards the plaintiff, that employee was not a managing agent within the meaning of Civil Code section 3294 because he lacked authority to determine or change corporate policy.  Another Dignity Health employee who actually fired the plaintiff was a managing agent, but there was no evidence that he acted with malice.  Because plaintiff failed to present any evidence of malice on the part of a managing agent, the punitive damages award could not stand.

Court of Appeal affirms $1.5 million in punitive damages based on partial evidence of the defendants’ financial condition (Reliant Life Shares v. Michaels)

This published opinion departs from California’s usual rule that a plaintiff seeking punitive damages must present meaningful evidence of the defendant’s financial condition, including not just evidence of income and assets, but also evidence of liabilities and expenses.

A rather unique feature of California punitive damages law, discussed on this blog many times, is that a plaintiff seeking punitive damages bears the burden of presenting meaningful evidence of the defendant’s financial condition.  Our appellate courts have repeatedly held that evidence of financial condition is not meaningful if it is incomplete.  For example, Baxter v. Peterson explained that “[n]ormally, evidence of liabilities should accompany evidence of assets, and evidence of exposures should accompany evidence of income.” Similarly, Lara v. Cadag stated that where “the evidence is limited to proof of the defendant’s annual income, there is insufficient evidence to support an award of punitive damages.” And Farmers & Merchants Trust Co. v. Vanetik stated that “[w]e may not infer sufficient wealth to pay a punitive damages award from a narrow set of data points, such as ownership of valuable assets or a substantial annual income.”

The Court of Appeal in this case (Second District, Division Eight) cited all of these authorities but declined to follow them.  Instead, the court upheld punitive damages awards of $500,000 and $1 million against two individual defendants based on evidence of their income, without any evidence of their liabilities or expenses.  The court explained that because the defendants earned millions of dollars in revenues from their business, and because they made efforts to funnel these revenues through shell companies without accounting records, the evidence was sufficient to uphold the “relatively modest” awards of punitive damages.

In my opinion, this case is a prime candidate for depublication.  The result of the case is not particularly outrageous, but the court’s departure from well-settled law threatens to create confusion and uncertainty in future litigation.

Jury awards $3 million in punitive damages against Tesla in retrial of case that originally generated $137 million verdict

Courthouse News reports here on the retrial of Diaz v. Tesla, which resulted in a $3 million punitive damages award.

We previously wrote about this case here, here, here, and here. The plaintiff, who claims he was subject to racist epithets and harassment while working for Tesla, originally won a verdict in federal district court for $7 million in compensatory damages and $130 million in punitive damages.  The trial judge, District Court Judge William Orrick III, ordered a new trial unless the plaintiff would agree to a reduced verdict of $15 million.  Plaintiff chose a retrial instead of taking the $15 million.  That decision backfired, as the retrial resulted in a verdict of $175,000 in compensatory damages and $3 million in punitive damages.  While the lower amount of punitive damages is a “win” for Tesla compared to the $15 million (or the $130 million), Tesla may still challenge the award as excessive, noting that the reduced punitive damages are still more than 17 times higher than the reduced compensatory damages.

Court of Appeal upholds $50,000 punitive damages award in employment case (Cordero v. Catwalk to Sidewalk, Inc.)

In this unpublished opinion, the California Court of Appeal (Second District, Division One) upholds a jury’s award of $160,000 in compensatory damages and $50,000 in punitive damages in a case involving claims of disability discrimination, retaliation, and wrongful termination. There’s nothing particularly remarkable about the opinion, except that the amount of punitive damages is modest for a California jury.

Georgia Supreme Court upholds constitutionality of cap on punitive damages

The Georgia Supreme Court issued an opinion this week upholding the constitutionality of a Georgia statute that caps most punitive damages awards at $250,000.  Application of the cap in this case resulted in a reduction from $50 million to $250,000.   One justice dissenting, arguing that the cap violates the right to a jury trial in the Georgia Constitution.

As regular readers of this blog are well aware, no such cap exists in California.

Texas jury awards $500 million in punitive damages to woman who sat down on railroad tracks while intoxicated and was struck by a train

Railway Age reports on a Texas state court verdict that awarded a woman $57 million in compensatory damages and $50o million in punitive damages against Union Pacific railroad.  According to the story, the plaintiff was intoxicated and sat down on the railroad tracks at a crossing that had a functional warning system.  UP’s statement on the verdict says that train crew saw the plaintiff sitting in the tracks, blew the horn on the train, and activated the train’s emergency brakes, but were unable to stop the train in time to avoid hitting the plaintiff.  UP’s statement also says that the punitive damages will be capped at $20 million under Texas law.

North Carolina jury awards $140 million in punitie damages in trademark suit against Vivint Smart Home

Law360 (subscription required) reports that a jury in federal district court in North Carolina has awarded $49.7 million in compensatory damages and $140 million in punitive damages in a lawsuit between rival home security companies.  Plaintiff CPI Security Systems claims that defendant Vivint Smart Home infringed its trademarks and tricked customers into switching security providers.  The Law360 story includes a link to the verdict form. Vivint says it plans to appeal.

Florida Supreme Court holds that $16 million punitive award is excessive where ratio exceeded 160 to 1, rejecting plaintiffs’ argument for higher ratios in wrongful death cases (Coates v. RJ Reynolds)

The Florida Supreme Court issued this opinion yesterday, addressing a question that often arises in California punitive damages litigation.  The case involved a punitive damages award in a wrongful death case.  The $16 million award was more than 106 times greater than the compensatory damages recovered by the plaintiffs, who were the statutory heirs of the decedent.  The Florida intermediate appellate court found the award was excessive, but the plaintiffs sought Supreme Court review, arguing that the award should be compared not to the magnitude of their loss, but to the loss suffered by the decedent, i.e., the value of the decedent’s life.

The Florida Supreme Court rejected the plaintiffs’ argument, agreeing with the intermediate appellate court and ruling that, for purposes of excessiveness analysis, a reviewing court should compare a wrongful death punitive damages award only to the compensatory damages recovered by the plaintiff, not to the harm suffered by the decedent.

Texas court rules that punitive damages award against Alex Jones is not subject to cap

We reported over the summer that the $45.2 million punitive damages award against Alex Jones would be capped at $750,000 under Texas law.  Perhaps we spoke too soon.

According to The New York Times, the judge in that case decided not to apply the cap because the she questioned its constitutionality and viewed the claim as  “a rare case” in which the emotional damage inflicted on the plaintiffs was so severe that “I believe they have no recourse.” That description of the court’s ruling doesn’t make a whole lot of sense, because it mixes up the concepts of compensatory damages (designed to provide recourse for injuries) and punitive damages (designed to punish and deter bad conduct).

In a more typical case, such a ruling would likely lead to an appeal.  But that may never happen here, because NPR reports that Alex Jones has filed for bankruptcy. The bankruptcy filing was prompted not only by the Texas case, but also by a Connecticut case in which a jury awarded $965 million in compensatory damages and a judge later added $473 million in punitive damages.

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