Mitchell Morris of Butler Snow published this piece in Law360, discussing recent decisions in Delaware and Colorado that emphasize the importance of courts ensuring that punitive damages are not imposed without fair notice.
In 2019 we reported on the $8 million punitive damages award against entrepreneur Alki David in this case, one of several lawsuits against him that resulted in punitive damages.
The California Court of Appeal (Second District, Division Four) affirmed the award in an unpublished opinion. David argued that the Court of Appeal should reverse the punitive damages because the plaintiff failed to introduce sufficient evidence of David’s financial condition. The court ruled that David forfeited that argument by disobeying the trial court’s order to appear as a witness in the punitive damages phase of trial.
The court further ruled that, forfeiture aside, the evidence was sufficient to support the award. The plaintiff did not present evidence of David’s net worth, and instead presented evidence only of his income (which was negative) and certain assets. Other courts have held that such evidence is insufficient, and that the plaintiff must present evidence of the complete financial picture, including the defendant’s expenses and liabilities. But the court here concluded that the partial evidence was good enough, because it showed that David was a wealthy man who could afford to pay a large sum of punitive damages. Although this analysis conflicts with the holdings of other cases, the chances of Supreme Court review seem low, due to the forfeiture problem and the fact that the opinion is unpublished.
Law 360 reports that a jury in Los Angeles County superior court has awarded $5.4 million in compensatory damages and $155 million in punitive damages to the former head of Farmers Insurance’s in-house legal services department. He sued the company for age discrimination, disability determination, and retaliation. The jury rejected his discrimination claims, but found in his favor on retaliation. He alleged that he was fired in retaliation for his role as a witness or potential witness in a sex bias suit. The 30-to-1 ratio of punitive damages to compensatory damages seems unlikely to withstand posttrial and appellate scrutiny.
USA today reports that a Nevada state court jury has awarded $2.65 million in compensatory damages and $60 million in punitive damages to three companies that provide emergency healthcare services. The plaintiff companies sued United Healthcare for allegedly underpaying out-of-network emergency medical providers. This award is not likely to survive post-trial and appellate review, given the the punitive-to-compensatory ratio in excess of 20-to-1.
Florida passed a law in 1999 that prevents courts from imposing punitive damages on a defendant who has already been subjected to punitive damages for the same conduct. The Supreme Court addressed whether that law applied to a situation in which a smoker filed a lawsuit before 1999, and then his heirs filed a new lawsuit for wrongful death after 1999. The court ruled that wrongful death actions are distinct from personal injury actions, and the wrongful death action did not arise until the smoker died in 2007, was was therefore governed by the 1999 law.
Bloomberg legal reports on Tesla’s posttrial motions in the Northern District of California challenging a $137 million verdict, including a $130 million in punitive damages, in an employment case involving allegations of a hostile work environment. The plaintiff, a Black man who worked in Tesla’s factory in 2015-2016, claims Tesla employees used racial slurs in his presence and Tesla did not do enough to stop it. Given the huge disparity between the punitive damages and the compensatory award, it seems almost certain that the punitive damages will be reduced, either through posttrial motions or appeal.
Reuters reports that a jury in federal district court on Florida has awarded $800,000 in compensatory damages and $12.25 million in punitive damages to a serviceman who said he suffered hearing loss after using military issue earplugs made by 3M. This is the seventh bellwether trial in this multidistrict litigation in which 3M faces more than 270,000 claims. 3M has prevailed in three trials and the plaintiffs have prevailed in four. 3M says it plans to appeal this result.
A few years ago I reported on a $700 million punitive damages award by a Wisconsin jury against an Indian company in a trade secrets case. The district court ended up reducing the punitive damages to $280 million, double the $140 million compensatory damages award. On appeal, the Seventh Circuit reduced the award further, concluding that a ratio in excess of one-to-one would violate due process.
The plaintiff, Epic Systems Corp., filed a cert. petition asking the Supreme Court to decide whether, when a statute caps punitive damages at a two-to-one ratio, the cap eliminates any due process concerns for awards falling within the cap.
Today the Supreme Court issued an order inviting the Solicitor General to file a brief in the case expressing the views of the federal government.
SCOTUSblog’s coverage of the case is available here.
The Supreme Court’s docket can be viewed here.
Reuters reports here on the Massachusetts Supreme Judicial Court’s decision in Laramie v. Philip Morris, which upheld a $10 million punitive damages award, rejecting Philip Morris’s argument that the award was barred by a 1990 settlement between the major tobacco companies and these states. As the story reports, states have split on this issue. New York and Georgia have ruled that the settlements precludes punitive damages claims in those states.