Our readers are well aware that California has a unique procedural rule that puts the burden on plaintiffs to introduce meaningful evidence of the defendant’s financial condition in order to obtain punitive damages.  A plaintiff who fails to introduce such evidence forfeits any claim for punitive damages. 

As far as I know, no other state has such a rule. In 1992, the Mississippi Supreme Court expressly rejected our rule and held that neither party is required to introduce financial condition evidence, but if no such evidence is presented, neither party can challenge the amount of the punitive damages award on appeal.  (See C & C Trucking Co. v. Smith (Miss. 1992) 612 So. 2d 1092, 1105.) 
 
This recent opinion (Coleman & Coleman v. Waller Funeral Home) from the same court puts a surprising twist on that rule.  In Coleman & Coleman, a jury awarded $25,000 in punitive damages against the defendant.  The defendant challenged the award in a posttrial motion by submitting evidence of its negative net worth.  Based on that evidence, the trial court vacated the punitive damages award.  The plaintiff appealed, citing C & C Trucking and arguing that the defendant waived its right to challenge the amount of the punitive damages by failing to present its financial condition evidence at trial.  The Supreme Court agreed that C & C Trucking is the controlling authority, but it found a waiver by the plaintiff rather than the defendant.  The Supreme Court said that the plaintiff, by failing to introduce the defendant’s financial condition at trial, waived its right to challenge the trial court’s posttrial ruling.

Even from my perspective as a defense lawyer, that seems unfair to the plaintiff.  I could understand a court saying that a party has to present financial condition evidence to the jury in the first instance before that party can raise the issue on appeal.  But I don’t understand how a court can allow one party to present such evidence after the verdict and then preclude the other party from challenging the post-verdict ruling based on that evidence. 

Absent a waiver, the court in this case might have reached the opposite result, based on a decision it issued just three months ago holding that a defendant with a negative net worth is not immune from punitive damages.  (See Canadian Nat’l Ry. Co. v. Waltman (Miss 2012) 94 So.3d 1111.)