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.
We previously reported about an Ohio jury’s award of $33 million in punitive damages against Oberlin College. The trial court later reduced the amount of punitive damages to $18.8 million, after litigation over how Ohio’s cap on punitive damages should apply when compensatory damages are also capped (the court ruled that the two-to-one punitive-to-compensatory damages cap should be based on the uncapped compensatory damages awarded by the jury).
Today, the Ohio Court of Appeals affirmed the award as reduced, rejecting appeals by both sides. Insider Higher Ed has coverage here.
Forbes reports here on a recent Texas jury verdict awarding $70 million, including $40 million in punitive damages, to 10 Black workers who sued their former employer, Glow Networks, for discrimination and retaliation.
Last October we reported about this case in which the Supreme Court asked the Solicitor General to weigh in on whether the existence of a a statutory cap on punitive damages eliminates the need for due process review of punitive damages awards for excessiveness. The SG filed a brief taking the position that the case did not merit certiorari because the petitioner did not preserve its argument below, and because there is no circuit split on the issue. The SG adopted a compromise position on the merits, arguing that caps on punitive damages should “materially inform” a court’s due process analysis, but should not displace the BMW guideposts entirely.
This morning, the Supreme Court denied certiorari. Justice Barrett did not participate in the vote.
Law 360 predicts that a $148 million punitive damages award, given to the widow of a smoker, won’t survive appellate review. That’s a solid prediction, in light of the Florida Supreme Court’s November 2021 decision in Sheffield v. R.J. Reynolds.
Sheffield interpreted a 1999 Florida law that prohibits courts from imposing punitive damages on a defendant who has already been punished for the same conduct. The Supreme Court held that the law barred punitive damages in a case brought by the wife of a smoker who was diagnosed with lung cancer in 1994 and died in 2007. The court held that the plaintiff’s wrongful death claim did not accrue until the smoker’s death, and therefore the 1999 statute applied, prohibiting punitive damages.
The $148 million award at issue in the Law360 story seems destined for reversal on the same grounds.
Reuters reports that a jury in federal court in Florida has awarded $30 million in compensatory damages and $80 million in punitive damages against 3M Co., in a lawsuit alleging that two Army veterans suffered hearing damages as a result of 3M’s defective combat earplugs.
The plaintiffs in this case are among nearly 300,000 veterans who have sued 3M over the earplugs. The verdict in this case is the largest so far, topping the previous record by $22.5 million.
We previously reported on Tesla’s posttrial motions seeking to overturn a $130 million punitive damages award in a hostile work environment case. It appears that the judge is skeptical of Tesla’s bid for a new trial, but may agree that the damages are excessive, according to this Law360 story.