California Punitives by Horvitz & Levy

  • 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.

  • Plaintiffs’ Petition for Rehearing Denied in Holdgrafer v. Unocal

    According to the Court of Appeal’s docket, the court has denied the Holdgrafers’ petition for rehearing. We previously blogged about this case here, here, here, and here.

  • Garza v. Asbestos Corporation: Court of Appeal Affirms $10 Million Punitive Damages Award

    The First Appellate District, Division Three, upheld a $10 million punitive damages award in an asbestos case. The opinion is only partially published, and the punitive damages issues are discussed in the unpublished portion of the opinion. The opinion was authored by Judge Horner, a superior court judge sitting on the Court of Appeal by temporary assignment.

    The ratio of punitive-to-compensatory damages, six-to-one, is not particularly noteworthy by itself. But the court’s reasoning in upholding the award is surprising in several respects, and seems to depart from established principles of California law.

    First, in upholding the jury’s finding that the defendant acted with malice and oppression, the court relied on historical studies, dating back to 1918, showing a link between asbestos and health problems. But the court cites no evidence that the defendant knew, back in the 1930’s through the 1950’s when it sold the products at issue, that those particular products would generate the sort of exposure levels that might cause health problems. That is an important element of a punitive damages claim in asbestos cases, because the scientists who prepared the early studies believed (incorrectly as it turns out) that asbestos was hazardous only in cases of prolonged exposure at high concentrations. The tragedy of asbestos is that it took decades for anyone to realize that even relatively low-level exposures could result in health problems. When that became clear, most everyone stopped using asbestos. For that reason, few asbestos cases involve punitive damages awards, because plaintiffs are ordinarily unable to show that the defendant knew about hazards that were unknown even to the scientific community at the time. Indeed, in most asbestos cases the plaintiffs do not even seek punitive damages. Yet this opinion seems to conclude that punitive damages can be obtained based on nothing more than a showing that the defendant was aware of some connection between asbestos and health risks, regardless of the exposure levels at issue.

    The second surprising aspect of the court’s opinion is its discussion of the defendant’s financial condition. According to the plaintiffs’ own expert testimony, the $10 million punitive damages award represents between 28 and 77 percent of the company’s value. As the court acknowledged, California courts have repeatedly stated that punitive damages should not exceed 10 percent of the defendant’s net worth. But the court avoided this rule by stating that the plaintiffs’ evidence of net worth was “patchy and limited,” and that the defendant “could have presented evidence on these questions but chose not to do so.” According to the court, the plaintiffs “filled the evidentiary void” as best they could. There is a serious problem with that analysis: the California Supreme Court held in Adams v. Murakami that the plaintiff has the burden of introducing evidence of the defendant’s financial condition, and if the evidence is lacking the plaintiff cannot recover punitive damages. Thus, unless the plaintiff can show that the defendant wrongly refused discovery requests regarding its financial condition, the plaintiff’s failure to prove the defendant’s ability to pay the punitive damages award should be a reason to reverse the award, not affirm it. The court’s opinion does not even mention Adams.

  • Fotheringham v. Avery Dennison: Unpublished Opinion Reverses Summary Adjudication on Punitive Damages Claim

    The Second Appellate District, Division Seven, issued this unpublished opinion yesterday reversing the trial court’s summary adjudication of the plaintiff’s punitive damages claim. The court held that the defendant’s summary adjudication motion was deficient because it rested on argument alone and failed to allege facts showing that the plaintiff could not recover punitive damages. The court highlighted the difference between California and federal standards regarding summary judgment/adjudication motions:

    “Pointing out through argument, as Avery Dennison has done, that Fotheringham has no evidence of malice and oppression or of the requisite managing agent conduct is inadequate. . . . ‘Whereas, under federal law, “pointing out through argument” [citation] may be sufficient [citation], under state law, it is not.’ (Id. at p. 855, fn. omitted.) As Avery Dennison did not meet its initial burden in moving for summary adjudication of this claim, the trial court erred in granting summary adjudication here.”

  • More Commentary on Buell-Wilson Opinion

    The blog Shield of Achilles has this lengthy post on the recent Buell-Wilson v. Ford opinion.

    UPDATE (3/16/08 at 11:21 PM): Overlawyered discusses Buell-Wilson here.