California Punitives by Horvitz & Levy

  • Pending Appeal Will Affect Punitive Damages Claims in Wage & Hour Class Actions

    The California Court of Appeal may soon resolve a punitive damages issue of critical importance to California employers: whether employees may seek punitive damages when they sue their employers for wage and hour violations.

    In 2003, a California trial court certified a class in Savaglio v. Wal-Mart, reportedly consisting of more than 115,000 hourly Wal-Mart employees, which sought to recover premium payments from Wal-Mart under Labor Code section 226.7 for missed or late meal periods. Subsequently, the class amended their allegations to seek punitive damages in addition to premium payments. In December 2005, following a rare class action trial, an Alameda jury awarded the class more than $66 million in premium payments and $115 million in punitive damages. Wal-Mart appealed and the case is currently pending before the First Appellate District, Division Four. (See the court’s online docket.)

    Among the issues that Wal-Mart has raised on appeal is whether California’s “new right-exclusive remedy” rule bars the punitive damages award in this wage and hour case. Under this rule, “where a statute creates a right that did not exist at common law and provides a comprehensive and detailed remedial scheme for its enforcement, the statutory remedy is exclusive.” (Rojo v. Kliger (1990) 52 Cal.3d 65, 79.) According to Wal-Mart’s opening appellate brief, no California appellate cases have upheld an award of punitive damages for any statutory wage and hour claims, and at least three federal district courts have applied the “new right-exclusive remedy” rule to dismiss claims seeking punitive damages predicated on alleged wage and hour violations.

    California has seen a boom in wage and hour class actions in the last decade and, according to some reports, claims seeking relief for meal period violations have been among the fastest growing areas of employment law over the past few years. Indeed, a recent report issued by Littler Mendelson (which specializes in labor and employment law) indicates that at least 311 wage and hour related class actions were filed in California state courts alone in the nearly six-month period between October 1, 2007, and March 28, 2008. (Hat tip to Wage Law Blog.) Given the dramatic rise in wage and hour class actions, the issue of whether punitive damages are available in wage and hour cases will likely have a significant impact on the potential liability California employers could face in the future.

  • Tual v. Blake: California Court of Appeal Reduces Civil Judgment Against Actor Robert Blake From $30 Million to $15 Million

    Once again we’re reporting on a celebrity punitive damages case. This time, the celebrity is Robert Blake, and the case involves his appeal from a $30 million wrongful death judgment against him in a suit brought by the estate of his deceased wife, Bonny Lee Bakley.

    In this unpublished opinion, the Second Appellate District, Division Three, rejects most of his arguments, including his argument that the trial court improperly refused to instruct the jury not to award punitive damages. The jury did not actually award punitive damages per se, but apparently Blake was arguing that the jury’s $30 million compensatory damages award must have included a punitive damages component, and that the jurors would have awarded a lesser amount if they had been told that punitive damages were off the table. The court rejected that argument because the record did not indicate why the trial court failed to give Blake’s proposed instruction. The record showed that Blake requested the instruction and that the court did not give the instruction, but the Court of Appeal said it was Blake’s burden on appeal to provide a record showing why the court did not give the instruction. Because he failed to meet that burden he did not preserve the issue for appeal.

    Nevertheless, the court did afford Blake some relief. It concluded that the $30 million compensatory damages award was excessive and it gave the plaintiff the option to either accept a reduced sum of $15 million or go back to the trial court for a new trial on damages.

  • Little Company of Mary Hospital v. Superior Court: Court of Appeal Limits Punitive Damages Claims In Elder Abuse Actions Against Religious Org.’s

    The Second Appellate District, Division Seven, has issued a published opinion dealing with punitive damages in Elder Abuse cases against religious organizations.

    The case involves Code of Civil Procedure section 425.14, which provides that no claim for punitive damages may be made against a religious corporation unless the trial court first concludes that the plaintiff will be able to present clear and convincing evidence of malice, oppression, or fraud as required by California’s punitive damages statute.

    That seems pretty straightforward. This case involves a punitive damages claim against a religious corporation, so section 425.14 applies. End of story, right? Not quite. There’s a wrinkle. A similar statute applies to punitive damages claims against health care providers against in any action “arising out of [their] professional negligence.” (See Code of Civ. Proc., section 425.13.) But the California Supreme Court has held that this statute does not apply to professional negligence claims against health care providers if those claims involve elder abuse. (Covenant Care, Inc. v. Superior Court (2004) 32 Cal.4th 771, 777.) The Supreme Court concluded that, since elder abuse claims are are rooted in conduct far more egregious than ordinary professional medical negligence, the special pleading requirements for punitive damages in medical negligence cases don’t apply to elder abuse claims.

    So this case raised the question whether the reasoning of Covenant Care applies to elder abuse claims against religious corporations. In other words, does the egregious nature of elder abuse override the statutory restrictions on claims against religious corporations? The Court of Appeal said “no”:

    The plain language of section 425.14, coupled with its legislative history, reflects an unmistakable intent to afford religious organizations protection against unsubstantiated punitive damage claims without regard to the conduct giving rise to the claim. In this way, section 425.14’s protections are broader than those afforded secular health care providers by section 425.13. Because the trial court erred in concluding the pretrial mechanism provided in section 425.14 does not apply in elder abuse cases seeking exemplary damages against religious organizations, we grant the petition for writ of mandate and direct respondent Los Angeles Superior Court to vacate its order denying Little Company of Mary’s motion to strike the punitive damage claim in the underlying action.

    Kudos to Justice Perluss for resolving this issue in a clear and concise 11 page opinion.

  • Harvey v. Sybase: California Court of Appeal Reinstates Punitive Damages Award

    Last Friday, the California Court of Appeal (First District, Division Five) issued this partially published opinion reinstating a plaintiff’s claim for punitive damages in an employment discrimination case.

    The jury awarded $1.3 million in compensatory damages and $500,000 in punitive damages. The trial court granted JNOV in favor of the defendant on punitive damages, finding that no evidence supported a jury’s award. The Court of Appeal, in the unpublished part of its opinion, reversed the JNOV. For the most part, the court’s analysis is not particularly noteworthy. The court simply disagrees with the trial court’s conclusion that the plaintiff presented no substantial evidence that the defendant acted with “malice, oppression, or fraud,” the prerequisites for punitive damages under California law.

    But one small aspect of the court’s opinion caught my eye. The court acknowledges that plaintiffs must prove malice, oppression, or fraud by clear and convincing evidence, but the court then states, “Despite this more stringent burden of proof at the trial level, we nevertheless confine our review to determining whether the record contains evidence of circumstances warranting the imposition of punitive damages.” Maybe I’m misreading this, but it sounds as if the court believes that the clear and convincing evidence standard applies only at the trial court level and not on appeal. But a published California case expressly states that the clear and convincing evidence standard applies on appeal as well as in the trial court. (See Shade Foods, Inc. v. Innovative Products Sales & Marketing, Inc. (2000) 78 Cal.App.4th 847 [“since the jury’s findings were subject to a heightened burden of proof, [this court] must review the record . . . in light of that burden. In other words, [this court] must inquire whether the record contains ‘substantial evidence to support a determination by clear and convincing evidence’”].) Of course, Division Five is free to disagree with this opinion by their colleagues in Division One, but if they were going to disagree with a published opinion, they probably should have published that part of their analysis.

    As an interesting side note, the plaintiff in this case was represented by our fellow blogger Bruce Nye at Cal Biz Lit. Congratulations Bruce, for getting that punitive damages award reinstated.

  • Court of Appeal May Have Been Too Quick on the Trigger in Buell-Wilson Post-Opinion Order

    We’ve been following the twist and turns in Buell-Wilson v. Ford, in which the Court of Appeal reaffirmed a $55 million punitive damages award even after the US Supreme Court vacated their prior opinion affirming that same award.

    Last week we blogged about a rather harsh order from the court denying Ford’s petition for rehearing. The order said “Ford asserts that our opinion erroneously states that counsel conceded at oral argument that Ford failed to raise instructional error in the first appeal.” The court then proceeded to quote from the transcript of the oral argument to show that Ford’s counsel had in fact conceded that very point at oral argument. The court next took the rather unusual step of modifying its opinion to add this discussion, which seems to serve no other purpose than to embarrass Ford’s counsel, Gibson Dunn.

    A number of attorneys in our firm wondered why Gibson’s experienced appellate team would make such an easily refuted argument? Why would they contend they didn’t concede something at oral argument, when the portions of the transcript quoted by the court clearly show that they did in fact concede this point? Surely they must have requested a copy of the recording of the oral argument, and if they did, why would they claim they didn’t concede something when the transcript clearly shows they did?
    We figured there had to be more to the story, so we took a look at Ford’s petition for rehearing. As it turns out, there is indeed more to the story. As far as we can tell, Ford did not even make that argument that the court ascribes to it. Ford didn’t argue, “We never conceded at oral argument that we failed to raise instructional error in the prior appeal.” They argued, “We never conceded that our failure to raise the instructional error in the prior appeal amounted to a forfeiture.” That’s a big difference. The transcript excerpts quoted by the court don’t indicate that Ford’s counsel conceded a forfeiture; he only conceded that the issue wasn’t raised in the first appeal. But then he went on to say: “I think we fully preserved the issue fully by making our proposal [in the trial court] . . . now that there has been a vacating of the judgment, the issues are fresh before the court, we fully briefed them, they are important issues of public policy so we think it’s fully appropriate for this court to address the jury instruction issue . . .” (You don’t need to take our word for it – – you can view the rehearing petition here.)
    Perhaps the court simply misunderstood the distinction between (a) conceding that the issue wasn’t raised and (b) conceding that the failure to raise the issue amounted to a forfeiture. Admittedly it’s a somewhat subtle distinction buried among a lot of other issues on appeal. But the court should have given this issue a very careful look before modifying its opinion in a way that impugns the reputation of counsel. As the late Bernard Witkin observed, the criticism of an attorney in a published judicial opinion is a severe sanction. (See 1 Witkin, Cal. Procedure (4th ed. 1996) Attorneys, § 621, p. 732.)

  • Parties in Bullock v. Philip Morris File Reply Briefs Supporting Petitions for Review

    For those of you following the ongoing saga of the $28 billion punitive damages award in Bullock v. Philip Morris (reduced to $28 million by the trial court, affirmed on appeal, later vacated by the Supreme Court and remanded for reconsideration, and reversed and remanded for a new trial by the Court of Appeal after reconsideration), you can view the latest California Supreme Court filings here:

    Philip Morris’s reply in support of its petition for review

    Bullock’s reply in support of her petition for review

  • USAA Responds to Blog Posts About Punitive Damages Award

    Apparently, a lot of folks were upset after reading media reports about a $3.5 million punitive damages verdict against insurer USAA for unreasonably denying coverage to a Marine stationed in Iraq. So upset that they posted over 90 comments on a blog. In a rather unusual move, USAA has responded to those blog posts with a post of its own. The post defends USAA’s conduct in the case and expresses confidence that the verdict will be overturned on appeal.

  • Court of Appeal Denies Petition for Rehearing in Buell-Wilson v. Ford

    The Court of Appeal in the Buell–Wilson case (see prior discussion here) denied Ford’s petition for rehearing today. The order not only denies the rehearing petition but goes further and modifies the published opinion to express the court’s disagreement with one of Ford’s rehearing arguments. That seems unusually harsh, consistent with the tone of the rest of the opinion.

    UPDATE: Professor Martin at California Appellate Report blogs about the modification of the opinion.

  • Ford’s Petition for Rehearing in Buell-Wilson v. Ford

    Ford’s petition for rehearing in the Buell-Wilson case is now available for your reading pleasure. (Scroll down a couple of posts for more links relating to Buell-Wilson).

  • Petition for Rehearing Filed in Buell-Wilson v. Ford

    According to the online docket, Ford has filed a petition for rehearing in the Buell-Wilson case, which we have previously blogged about here, here, and here.