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.
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.
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.
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.
Just two days ago we noted that California appellate courts often reverse punitive damages awards because the plaintiff failed to introduce meaningful evidence of the defendant’s financial condition. Here’s a case in which the trial court vacated a jury’s punitive damages award on the same ground, and the Court of Appeal affirmed.
In this defamation case, the jury ruled for the plaintiffs and awarded $44,500 in compensatory damages and $55,000 in punitive damages. The trial court vacated the punitive damages award because the plaintiff failed to present evidence of the defendants’ financial condition.
The plaintiffs appealed, arguing their evidence of financial condition was sufficient. The Court of Appeal (Fourth District, Division Three) disagreed. It noted that plaintiffs presented evidence that one defendant was a Mercedes-Benz dealership, and the other defendant was a salesman who sold 9,000 vehicles a year. But the plaintiffs presented no evidence of the defendants’ expenses or liabilities: ” ‘we 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.’ “
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.
As you may have noticed, we’ve been having some technical difficulties, which resulted in some garbled text being posted. Those posts were removed, but I’ve been unable to add any new posts for a while. I think we’ve got everything sorted now and I’ll be posting again to catch up on developments I missed while we were down.
When we first reported on this $130 million punitive damages award against Tesla, we commented that the award was not likely to survive judicial review. As expected, Judge Orrick in the Northern District of California has reduced the total award from $137 million to $15 million. Reuters has a report here.
Judge Orrick cut the compensatory damages to $1.5 million (from $6.9 million) and cut the punitive damages down to $13.5 million. That’s still a big payday for the plaintiff and his lawyers, and far in excess of the $300,000 damages caps that apply to employment cases brought under Title VII.