California Punitives by Horvitz & Levy

  • LeFlore v. MTA: $150,000 in punitive damages vacated due to lack of meaningful financial condition evidence

    Here’s yet another California appellate opinion reversing a punitive damages award because the plaintiff failed to introduce meaningful evidence of the defendant’s financial condition.

    The trial proceedings in this case began as an employment discrimination lawsuit against the Los Angeles County Metropolitan Transit Agency by a former employee.  The trial ended with a damages award against the ex-employee, as a result of the MTA’s cross-complaint for misappropriation and fraudulent inducement.  The MTA’s cross-complaint alleged that the ex-exmployee misrepresented his employment history in his employment application and retained confidential documents belonging to MTA after he was fired.  A jury agreed and awarded the MTA $600,000 in compensatory damages and $150,000 in punitive damages.

    On appeal, the California Court of Appeal (Second Appellate District, Division Three) issued an unpublished opinion affirming the liability findings but reversing the punitive damages because the record contained no meaningful evidence of the ex-employee’s financial condition.  The record contained evidence of his income after he was fired, but no evidence of his assets or liabilities.

    The MTA tried to get around that problem by arguing that the ex-employee provided evasive and inadequate responses to questions regarding his financial condition in discovery and at trial, and thereby waived his right to complain that the record lacked information about his finances.  The Court of Appeal rejected this argument on two grounds.  First, it observed that unlike other cases where a waiver was found (e.g., Mike Davidov v. Issod), this case did not involve a defendant’s failure to comply with a court order; the MTA did not request any such order and the trial court never issued one.  Second, the MTA had only requested information about income and tax returns, which even if produced would not have sufficent to establish the ex-employee’s financial condition and ability to pay.

  • Holmes v. Burke: punitive damages affirmed against defendant with negative net worth

    This blog has reported on many decisions in which the California Court of Appeal reversed a punitive damages award because the plaintiff failed to introduce meaningful evidence of the defendant’s financial condition.  The appellant in this unpublished opinion from the Fourth Appellate District, Division Three, was hoping to add another decision to that list, but the court concluded that the plaintiff’s evidence, although imperfect, was enough to constitute “meaningful” evidence.   

    The interesting twist here is that the defendant had a negative net worth, but the court affirmed anyway.  The record showed that the defendant had $120,000 in net annual income, but had no significant assets (his home is underwater and proceeding to foreclosure) and a tax liability approaching $2 million.  Nevertheless, the court affirmed the punitive damages award because the defendant waived any argument that the punitive damages were excessive.  It seems that the defendant argued only that the record lacked meaningful financial condition evidence, but did not argue that the award was excessive in relation to the defendant’s financial condition evidence. 

    UPDATE:  Odds are good that, if the defendant had raised an excessiveness argument, the court would have reversed the punitive damages, based on what the same court did in another case last year.

  • Martinucci v. So. Cal. Permanente: Trial court properly vacated a $7.5 million punitive damages award

    This unpublished opinion from the California Court of Appeal (Second Appellate District, Division Two) affirms a trial court order tossing out a $7.5 million punitive damages award in an employment case. 

    The plaintiff, a doctor of radiology, claimed he was fired from a Kaiser medical facility because he insisted on the highest standards of patient care, causing resentment among other personnel and staff.  He sued for retaliatory termination in violation of public policy and various other claims.  After a three-week trial, a jury awarded $3.9 million in compensatory damages and $7.5 million in punitive damages.

    The defendant moved for a new trial and for judgment notwithstanding the verdict (JNOV).  The trial court granted a complete new trial on various grounds, including instructional error.  The court also took the issue of punitive damages off the table for the retrial by granting a JNOV on that issue.  The court found that the plaintiff failed to meet his burden of proving malice, oppression, or fraud, the prerequisites to punitive damages under Civil Code section 3294.

    The Court of Appeal affirmed both the new trial order and the JNOV on punitive damages, agreeing that the plaintiff presented no evidence of malice.  The court also rejected the plaintiff’s argument that his allegations of retaliatory discharge amounted to “per se malice and/or oppression.” The court said he waived that argument by not raising it when the trial court asked him to identify all evidence of malice, fraud or oppression.  Instead of finding waiver, the court could have just said that “per se malice and/or oppression” does not exist under California law.

  • Johnson & Johnson asks California Supreme Court to review case allowing punitive damages for ibuprofen warnings

    Johnson & Johnson has filed a petition for review with the California Supreme Court in Johnson & Johnson v. Superior Court, the case in which the California Court of Appeal (Second Appellate District, Division Four) held that punitive damages could be imposed on Johnson & Johnson for failing to include enough details in its warning labels for ibuprofen.  The labels warned about the possibility of severe allergic reactions, but didn’t specifically warn about skin reddening, blisters, or rash.  You can view the Supreme Court’s on-line docket to track the status of the petition.  As I said in earlier posts, the Court of Appeal’s opinion allowing plaintiffs to proceed with a punitive damages claim, in a case that seems marginal at best on the issue of liability, is inconsistent with California’s stringent requirements for the proof necessary to recover punitive damages.

    Related posts:

    Court of Appeal publishes opinion on punitive damages against Johnson & Johnson for ibuprofen warnings

    Johnson & Johnson v. Superior Court; plaintiffs can seek punitive damages for incomplete ibuprofen warnings

  • Behr v. Redmond: Court of Appeal publishes previously unpublished opinion, creates split of authority

    A week ago we reported on the unpublished opinion in Behr v. Redmond, in which the Court of Appeal reduced a jury’s award of compensatory damages from $4 million to $1.6 million, without disturbing the jury’s award of $2.8 million in punitive damages.  As we noted at the time, the opinion’s treatment of the punitive damages conflicts with published cases, making the court’s decision not to publish its opinion rather surprising.

    Today, the Court of Appeal ordered publication of its opinion.  It appears from the court’s online docket that neither of the parties requested publication; the court ordered publication on its own motion.

    Now that there is a split in California case law about the proper treatment of a punitive damages award following a large reduction in compensatory damages, this case may end up in the California Supreme Court.

  • Behr v. Redmond: $2.8M punitive award affirmed, despite reduction of compensatory damages from $4M to $1.6M

    Here’s a somewhat surprising unpublished opinion from the California Court of Appeal (Fourth Appellate District, Division Two).

    The plaintiff, who claimed the defendant gave her genital herpes, won a verdict of $4 million in compensatory damages and $2.8 million in punitive damages.  That compensatory award included $2.5 million for future medical expenses.

    On appeal, the defendant argued (among other things) that no substantial evidence supported the award of future medical expenses.  The Court of Appeal agreed and reduced the compensatory damages from $4 million to $1.6 million.

    After reading that part of the opinion, I was expecting the Court of Appeal to do one of two things: (1) reduce the amount of punitive damages to preserve the punitive-to-compensatory ratio awarded by the jury, as the Court of Appeal did in Las Palmas Associates v. Las Palmas Center Associates (1991) 235 Cal.App.3d 1220, 1254, or (2) send the case back to the trial court to re-evaluate the amount of punitive damages in light of the reduced compensatory damages award, as the Court of Appeal did in SEIU v. Colcord (2008) 160 Cal.App.4th362.

    Surprisingly, the court followed neither approach, and instead affirmed the punitive damages award based on its conclusion that the ratio of compensatory damages, as reduced, was not excessive.  In my view, that approach overlooks the fact that juries are instructed to make their punitive award proportionate to the actual harm to the plaintiff.  The jury in this case performed this task based on an extremely inaccurate assessment of the actual harm.  It seems very unlikely that the jurors would have awarded exactly the same amount of punitive damages if they had known that the correct amount of “actual harm” was $2.5 million less than they thought.

    More surprisingly, the court did not publish its opinion, even though it departs from the approach taken in published cases on this issue.  I guess I shouldn’t be too surprised, because this has happened before.  As I said at that time, I expect this issue will eventually make its way to the California Supreme Court.

  • Ballester v. Ecolab: plaintiff cannot use punitive damages claim to circumvent workers’ comp exclusivity

    The plaintiff in this case brought a claim against his employer for intentional infliction of emotional distress, arguing his supervisor “fraudulently” criticized his job performance.  Unfortunately for him, it is well established in California that the Workers’ Compensation Act provides the exclusively remedy for infliction of emotional distress resulting from alleged personnel actions.  To avoid that rule, the plaintiff included in his complaint a cause of action for punitive damages, and argued that the punitive damages claim took the case outside the realm of workers’ compensation exclusivity.  The trial court disagreed, sustained the employer’s demurrer to the complaint, and entered judgment for the defense.

    The California Court of Appeal (First Appellate District, Division Three) affirmed in this unpublished opinion, citing the well-established rule that “[t]here is no cause of action for punitive damages. . . . ‘Punitive damages are merely incident to a cause of action, and can never constitute the basis thereof.’”  Accordingly, because the plaintiff had no cause of action that was not subject to workers’ compensation exclusivity, the trial court correctly dismissed his claims.

  • Shaw v. Long Drug Stores: retail chain’s regional manager qualifies as “managing agent”

    In this unpublished opinion, the California Court of Appeal (Second Appellate District, Division Five) permits a plaintiff in an employment case to seek punitive damages from her employer.

    The plaintiff, a drug store employee, accused her supervisor of sexual harassment.  She sued her employer for compensatory and punitive damages, but the trial court granted the defendant’s motion for summary adjudication on the issue of punitive damages.  The court ruled that the plaintiff presented no evidence that her supervisor’s misconduct was was approved by a corporate “managing agent,” as required to obtain punitive damages against a corporation under California Civil Code section 3294.

    The Court of Appeal disagreed.  It said the plaintiff presented evidence that she complained to the defendant’s regional manager, who was responsible for managing every aspect of the day-to-day operations at approximately 25 stores.  The court said this evidence demonstrated a sufficient level of independent discretionary authority to support a finding that the regional manager was a managing agent.  Curiously, the court did not cite Roby v. McKesson, the California Supreme Court’s latest decision on the requirements for establishing managing agent status.

  • Court of Appeal publishes opinion on punitive damages against Johnson & Johnson for ibuprofen warnings

    The California Court of Appeal (Second Appellate District, Division Four) has ordered publication of this previously unpublished opinion we blogged about a few weeks ago.  The Court of Appeal’s online docket says publication was requested by the plaintiff and by “Non-parties Brakefield.”  I’m not sure who or what Brakefield is, but presumably they’re seeking punitive damages in some other action and they sought publication of this opinion to chip away at the usual strict standards for punitive damages claims in California.

  • Green v. Laibco: $1.2 million in punitive damages affirmed

    In this published opinion, the California Court of Appeal (Second Appellate District, Division Eight), affirms a punitive damages award of $1.2 million. There was only one appellate issue regarding the punitive damages award: whether the plaintiff met her burden of presenting meaningful evidence of the defendant’s financial condition. The plaintiff presented evidence that the defendant earned a profit of $670,000 in the most recent 12-month period, and was “in the black” (although the actual amount of net worth was unspecified). The court said this evidence was sufficient to sustain the award, considering that the defendant had delayed in responding to discovery requests for financial information, and the defendant’s CEO was unable to personally calculate the defendant’s actual net worth.

    Full disclosure: Horvitz & Levy represents the defendant in this appeal, and we will not comment on the opinion because the litigation is ongoing.