California Punitives by Horvitz & Levy

  • Court of Appeal affirms $15 million punitive damages award against senior care facility (Mosley v. Pacifica Bakersfield)

    In this unpublished opinion, the California Court of Appeal (Fifth District) affirmed a $15 million punitive damages award and held that the defendant forfeited some of its arguments by failing to respond to the plaintiff’s demands for financial information.

    The underlying facts of the case involve a patient in a memory care facility. A staffer at the facility escorted the patient to the dining area and discovered about 90 minutes later that the patient was missing from the facility. He was found lying outside the facility with injuries to knees and elbow. He ultimately underwent multiple surgeries for his injuries and died about five months after the incident.

    His heirs sued the facility for negligence and elder abuse and obtained a jury verdict for $149,000 in economic damages, $8 million in noneconomic damages, and $15 million in punitive damages. Half of the noneconomic damages—$4 million—represented the decedent’s own pain and suffering. The trial court reduced that amount to $250,000 under the applicable MICRA cap, Civil Code section 3333.2, subdivision (b).

    The defendant appealed and argued, among other things, that the punitive damages award should be vacated because the plaintiffs failed to introduce meaningful evidence of the defendant’s financial condition, as required under California law. The Court of Appeal rejected this argument, finding that the defendant forfeited its right to raise this issue because the defendant failed to respond adequately to the plaintiff’s request for financial information.

    Prior to trial, the plaintiff served two notices on the defendant under Code of Civil Procedure section 1987, requesting that a corporate representative appear at trial and produce financial records. The defendant objected to the first notice but did not object to the second. If the defendant had objected, then the defendant would have been excused from complying with the notice unless the plaintiff filed a motion to compel and obtained a court order for the production of the records. But because the defendant failed to object, the defendant was obligated to produce the documents at trial and, having failed to make an adequate production, forfeited its right to complain that the financial condition evidence was insufficient, or that the award was excessive in relation to the evidence presented.

    The defendant also argued that the $15 million award was excessive. The defendant argued that the award was 37.6 times greater than the compensatory damages as reduced by the trial court. The Court of Appeal rejected this argument too, concluding that the award should be compared to the jury’s verdict, not to the net compensatory damages award after application of the MICRA cap, because the jury’s award represented the actual harm caused by the defendant’s conduct, even if some of that harm is legally noncompensable.

  • Catching up on unpublished 2024 California Court of Appeal decisions

    I’ve been catching up on some unpublished punitive damages opinions that were issued earlier this year. Here’s a brief rundown:

    Matthes v. Rodgers (May 13, 2024, Second District, Division Four):

    Upholding $1.95 million in punitive damages; defendant failed to respond to subpoenas requesting financial information, and therefore waived its right to complain that trial court erred when it modified the standard CACI instructions to delete the language telling the jury to consider the defendant’s ability to pay

    Soria v. Compass Group (April 16, 2024, Second District, Division Two):

    Holding that trial court properly granted nonsuit on punitive damages because plaintiff failed to present evidence that two employees of defendant hospital were managing agents

    Medel v. Oceanic Companies (February 22, 2024, Fourth District, Division One):

    Holding that trial court properly reduced $2 million and $1 million punitive damages awards to $652,000 and $326,000 (ratios of two-to-one and one-to-one) for conduct that was “moderately to highly reprehensible”

    Rudnicki v. Farmers Insurance Exchange (January 2, 2024, Second District, Division Two)

    Declining to further reduce punitive damages that trial court cut from $150 million to $18.5 million (3.5-to-one ratio) in retaliation case involving “moderately reprehensible” conduct

  • Court of Appeal affirms directed verdict on punitive damages (Shenoi v. Maya)

    This unpublished opinion affirms the grant of nonsuit on a plaintiff’s claim for punitive damages in a defamation case.  The opinion contains a paragraph explaining the differences between the definitions of “malice” in punitive damages law versus defamation law:

    With respect to “malice,” Shenoi has confused constitutional malice, or
    New York Times malice – the malice a public figure plaintiff must plead and prove to
    establish liability for defamation – with the malice required for punitive damages. New
    York Times malice is actual falsity or reckless disregard of truth or falsity (New York
    Times Co. v. Sullivan (1964) 376 U.S. 254, 279-280.) He has also confused punitive
    damages malice with the malice necessary to defeat the conditional privilege of Civil
    Code section 47, which is ill-will or lack of reasonable grounds for belief in the truth of
    the publication. (See Sanborn v. Chronicle Publishing Co. (1976) 18 Cal.3d 406, 413.)

    The opinion goes on to explain that the plaintiff identified no clear and convincing evidence to meet the definition of malice for purposes of punitive damages.

    Disclosure: Horvitz & Levy represents the defendants in this matter.

  • California Court of Appeal reverses nonsuit of punitive damages claim (Air Combat v. City of Fullerton)

    This unpublished opinion reverses a trial court’s ruling that a plaintiff failed to present sufficient evidence to warrant a jury instruction on punitive damages.

    A tenant at the municipal airport in Fullerton got into a dispute with the city over the extension of its lease.  The tenant vacated the premises and, in the process, removed not only furniture but also cabinetry, windows, walls, sliding glass doors, a staircase, and plumbing fixtures. The city sued for conversion and sought punitive damages, but the trial court refused to instruct the jury on the issue of punitive damages, concluding that the city had failed to present any evidence of malice.

    The Court of Appeal (Fourth District, Division Three) reversed, holding that even without any direct evidence of malice, a jury could infer malice from the tenant’s conduct.  The court acknowledged that a jury might conclude that the tenant’s actions were the result of mere negligence or an honest mistake about the lease’s requirement to return the premises to their pre-lease condition.  But the court said a jury might also infer that the tenant intentionally removed or destroyed the property with malice in retaliation for the City’s refusal to extend the lease.

    The court’s analysis is in tension with published cases holding that punitive damages, because they are subject to the clear and convincing standard of proof, require evidence that is inconsistent with the possibility of mere negligence or honest mistake.  See, for example, Food Pro v. Farmers Insurance Exchange.  This opinion does not mention or attempt to distinguish that line of authority.

  • 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.

  • 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.

  • Court of Appeal strikes punitive damages award from default judgment due to insufficient evidence of defendant’s financial condition (Brahms v. Wilk)

    This unpublished opinion provides guidance about the evidentiary showing that a plaintiff must make when seeking punitive damages as part of a default judgment.

    As often discussed on this blog, plaintiffs seeking punitive damages in California must present meaningful evidence of the defendant’s financial condition, so that the court can ensure that the amount of punitive damages is not disproportionate to the defendant’s ability to pay.  In this case, the plaintiff obtained a judgment by default, including an award of punitive damages.  To meet his burden of presenting evidence of the defendant’s financial condition, he submitted a declaration stating that the defendant owns revenue-generating websites, owns two Porsches, and lives in a house owned by his parents and therefore has no housing expenses.  However, the plaintiff’s declaration did not explain how he knew any of these facts.

    On appeal, the Court of Appeal (Fourth District, Division Three) struck the amount of punitive damages on the ground that the plaintiff’s declaration was not based on personal knowledge, as required by Code of Civil Procedure section 585, subdivision (d).  Ordinarily, when a court reverses a punitive damages award due to insufficient evidence of the defendant’s financial condition, the court simply vacates the award and does not allow the plaintiff to try again.  But in this case, because judgment was entered by default and the plaintiff did not have an opportunity to conduct discovery on the defendant’s financial condition, the court remanded the case to permit the plaintiff to conduct such discovery “should he chose to expend the fees necessary to acquire this information.”

  • Court of Appeal: plaintiff in Elder Abuse case cannot obtain pretrial right to attach order based on claim for punitive damages (Royals v. Lu)

    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.