California Punitives by Horvitz & Levy

  • Plaintiff Files Petition for Review in Bullock v. Philip Morris

    The plaintiff in Bullock v. Philip Morris has filed a petition for review in the California Supreme Court. (We previously blogged about the petition for review filed by Philip Morris.) The plaintiff’s petition raises three issues:

    1. “Is a punitive damages defendant entitled by federal due process to demand that: (a) the jury be instructed “not to impose punishment” based on the harm the defendant has inflicted on non-plaintiffs; while (b) keeping from the jury the well-accepted principle that in setting punitive damages it may consider the harm imposed by the defendant on non-parties in its evaluation of the reprehensibility of its misconduct toward the plaintiff.”

    2. “Assuming federal due process does not entitle a defendant to such a one-sided, incomplete instruction, following an adverse verdict may a defendant a defendant nonetheless assert prejudicial error based on the failure of the plaintiff and/or the trial court to supply assistance in rewording the flawed instruction into a correct statement of federal due process law?”

    3. “If a jury’s punitive damages verdict was reached based on instructions which contain a federal due process flaw, rather than simply ordering a retrial of the amount of punitive damages, which could consume two months of court time, is a review court required to consider whether a remittitur of the jury’s verdict is an appropriate and more efficient means of remedying any federal due process issue regarding the jury instructions?”

    We will update this post with a link to the petition.

    UPDATE: Here’s the link to the petition.

  • Philip Morris Files Petition for Review in Bullock v. Philip Morris

    Philip Morris has filed a petition for review to the California Supreme Court from the Second Appellate District’s Jan. 30 opinion, which reversed a $28 million punitive damages award. Philip Morris is asking the Supreme Court to review the portions of the opinion that rejected Philip Morris’ preemption argument and rejected its request to expand the retrial beyond just the amount of punitive damages.

    For further posts on this case, see our original post about the Bullock opinion, our follow-up post about the impact of Bullock on the CACI punitive damages instructions, and our follow-up post about the use of remittitur to cure legal error.

  • Further Commentary on Buell-Wilson Opinion

    Bruce Nye at Cal Biz Lit has a post entitled Cal Court of Appeal to US Supremes: Here’s A Thumb In Your Eye, summarizing the recent Buell-Wilson opinion that approved a $55 million punitive damages award against Ford. Bruce observes that much of the court’s opinion seems to be designed as “a bulwark against further US Supreme Court action.”

  • Press Coverage of Buell-Wilson Decision

    Law.com features this article from The Recorder on the Buell-Wilson decision (which we blogged about yesterday afternoon): Despite Remand, Ford Motor’s Loss Stands at $82.6 Million.

    The San Jose Mercury News website has an AP story entitled Appeals Court Reiterates $82.6 Million Award for Paralyzed Woman.

    The Daily Journal reports Panel Upholds $82 Million Rollover Judgment (subscription required).

    And the Fox television affiliate in San Diego reports Damage Award Reduced in Rollover Crash.

  • Buell-Wilson v. Ford—Court of Appeal Says Ford Waived Due Process Protections Against Excessive Punitive Damages

    Today’s opinion from the Fourth Appellate District, Division One, in San Diego holds Ford waived any claim to a new trial based on its argument that that the jury improperly imposed punitive damages to punish Ford for harm caused to nonparties.

    In the third of three recent California appellate decisions to confront the fallout from the United States Supreme Court’s opinion in Philip Morris USA v. Williams (2007) 166 L.Ed.2d 940, 127 S.Ct. 1057 (see our earlier post on Bullock v. Philip Morris and our post on Holdgrafer v. Unocal), the court summarized its views as follows in the introduction to its decision:

    “Philip Morris holds that upon request, courts must adopt procedures to ensure juries do not punish defendants for harm caused to third parties when determining the amount of punitive damages to award. The Supreme Court also reiterated, however, juries could consider harm to third parties in determining the reprehensibility of a defendant’s conduct.

    “Ford asserts that based on Philip Morris it is entitled to a new trial (or at least a further reduction in the punitive damages award) because there is a “significant risk” the punitive damages verdict in this case was based on improper evidence and arguments concerning third party harm. Ford also asserts that we should reconsider our original decision’s rejection of its arguments that (1) California’s punitive damages statute (Civil Code section 3294) is unconstitutionally vague as applied to this case, and (2) the trial court erred in excluding its industry custom and practice evidence.
    ….
    “Based on our analysis of Philip Morris and our review of our original decision and the proceedings in the trial court, we conclude Philip Morris does not compel a reversal or a further reduction of the punitive damages awarded in this case. Ford has forfeited the right to assert there is a significant risk the punitive damages verdict in this case was based on improper evidence and arguments concerning third party harm because Ford (1) submitted incorrect and misleading jury instructions on third party harm; (2) did not timely object to plaintiffs’ closing argument at the punitive damages phase of the trial; (3) did not request a limiting instruction during the liability phase of the trial; and (4) did not raise instructional error as an issue on its original appeal. We also conclude our original decision reduced the punitive damages award to a constitutionally permissible amount that does not punish Ford for harm to third parties. We hold there was no evidence or argument at trial that created a significant risk that the jury, in deciding the amount of punitive damages to award, punished Ford for harm it caused to third parties.”
    ___________

    One reason the court gave for holding Ford could and should have proposed a better jury instruction during the 2004 trial in this product liability case is kind of interesting: in an earlier case (White v. Ford Motor Co. (9th Cir. 2007) 500 F.3d 963), the company offered an instruction that the court believed more accurately presaged the 2007 Philip Morris v. Williams decision. From this, the court in Buell-Wilson concluded:

    “Here, counsel for Ford was aware during the 2004 trial that United States Supreme Court and California precedent provided that, in determining the reprehensibility of a defendant’s conduct, juries could consider (1) whether the defendant’s conduct demonstrated an indifference or reckless disregard for the health or safety of others; and (2) whether a defendant’s actions were repeated or an isolated act that only impacted the plaintiff, both factors relating to third party harm. (State Farm, supra, 538 U.S. at p. 419; Simon, supra, 35 Cal.4th at p. 1180.) As discussed, ante, Ford argued against giving such an instruction to the jury and instead proposed a jury instruction that would have forbidden the jury from considering these factors.”
    ____________________

    One other interesting note is that the court did not see any need for a retrial on punitives even though both the trial court and the court of appeal found both compensatory and punitive elements of the jury’s verdict to be excessive – by tens of millions of dollars. Finding that plaintiff’s Ford Explorer was defectively unstable, that it lacked sufficient roof strength, and that Ford failed to warn plaintiff of these defects, the jury awarded plaintiff over $109 million in compensatory damages, including $105 million in noneconomic damages. The jury also awarded plaintiff’s husband $5 million for loss of consortium. The jury further found that Ford acted with oppression, fraud, or malice, and awarded $246 million in punitive damages. The trial court reduced plaintiff’s noneconomic damages award to $65,393,996 and reduced the punitive damages to $75 million, a one-to-one ratio to the total compensatory damages. On appeal, the court further reduced the damages, concluding that the jury’s compensatory award resulted from passion and prejudice, and ordering a remittitur of the noneconomic damages to $18 million, roughly four times the economic damages. Finally, the court reduced the punitive damages to $55 million, which represents about twice the amount of compensatory damages awarded, after reduction by the trial and appellate courts. It’s notable that, with the jury’s damages findings so thoroughly discredited, the court decided to come up with a new number on its own rather than sending the whole thing back for a retrial untainted by legal error, passion and prejudice, and so forth.

    The net result? A total reduced award to the Wilsons of $82,606,004 ($4,606,004 in economic damages + $18 million in noneconomic damages + $5 million in loss of consortium + $55 million in punitive damages).

  • Commentary on Holdgrafer v. Unocal Opinion

    The Cal Biz Lit Blog has a post analyzing our recent win in Holdgrafer v. Unocal, summarizing the central holding as follows: “State Farm held that dissimilar incidents were not admissible to prove the amount of punitive damages. The California court held that dissimilar incidents are inadmissible to prove the entitlement to punitive damages.” The Metropolitan News makes the same point: “Reversing a $5 million dollar punitive damage award against the Unocal Corporation, Div. Six held that the due process proscription against the introduction of ‘dissimilar acts’ in punitive damages cases must apply to both the jury’s predicate determination of whether a defendant is liable for punitive damages as well as its assessment of the amount of damages to be awarded.”

    I have one quibble with the Cal Biz Lit Law post; it suggests that the fact that the trial court reduced the punitive damage award from $10,000,000.76 to $5,000,000 shows that the San Luis Obisbo courts are “conservative.” Considering the Court of Appeal’s conclusion that the entire award was invalid for failure to comport with due process, I am not sure that the trial court’s reduction by half constitutes a “conservative” result. On the other hand, as I have blogged about previously, considering that two of the most “conservative” justices on the United States Supreme Court do not believe that there is any due process limitation on punitive damages, perhaps it is “conservative” to affirm high punitive damage awards.

    The local San Luis Obispo paper describes the opinion here.

  • Sare v. Rosa—Unpublished Opinion Reverses Punitive Damages Obtained in Default Judgment

    This unpublished opinion serves as a reminder of the rule that a plaintiff cannot recover punitive damages in a default judgment unless the plaintiff first serves the defendant with a notice specifying the amount of punitive damages sought. Here, the plaintiff obtained a punitive damages award by default but the Third Appellate District reversed because the plaintiff had not served the required notice.

    The opinion contains a rather pointed concurring opinion by Justice Robie: “I completely concur in the opinion of my colleagues and write separately only to point out that the conduct of the trial judge in granting the default judgment is inexcusable. The appellate courts should not be burdened by appeals from default judgments exceeding the demand of the complaint. The law is long settled and every trial judge in the state should be aware of it.”

  • Holdgrafer v. Unocal—California Court of Appeal Reverses Punitive Damages on Due Process Grounds

    Division Six of the Second District Court of Appeal in Ventura, California has just issued its opinion in Holdgrafer v. Unocal. [Our firm is counsel for defendant Unocal.] Based on the US Supreme Court decisions in Philip Morris v. Williams and State Farm v. Campbell, the court found the $5 million punitive damages award was tainted by improperly admitted evidence. We’ll offer further thoughts once we’ve fully digested the decision but, in the meantime, here’s language from the opinion’s s introduction:

    In deciding whether a punitive damages award violates the constitutional prohibition of arbitrary or grossly excessive punishment, the most important factor to be considered is the reprehensibility of the defendant’s conduct.[1] The United States Supreme Court has instructed courts undertaking this inquiry that “[a] defendant’s dissimilar acts, independent from the acts upon which liability was premised, may not serve as the basis for punitive damages.”[2] On de novo review, we conclude that evidence of two massive oil spills is too dissimilar to be considered in assessing defendant’s reprehensibility in causing and responding to the underground contamination of plaintiffs’ commercial property. We further conclude that in order to comply with due process, the proscription of “dissimilar acts” evidence in punitive damages cases must apply to boththe jury’s predicate determination whether a defendant is liable for punitive damages (Civ. Code, § 3294, subd. (a)), as well as to its subsequent evaluation of a defendant’sreprehensibility in assessing the amount of punitive damages to be awarded.
    …
    We agree with Unocal that the punitive damages award does not comport with due process because the jury was effectively invited to punish Unocal for injuring persons or entities that are not parties to this litigation, for conduct that had nothing to do with that which harmed the plaintiffs in this case. Because Unocal’s dissimilar conduct was admitted not only for the purpose of evaluating the degree of Unocal’s reprehensibility in setting the amount of punitive damages, but also to prove that Unocal was guilty of malice, fraud or oppression, the jury’s findings of liability for punitive damages and the amount of the award are both fatally undermined. Accordingly, although we affirm the award of compensatory damages, we reverse and remand for anew trial on punitive damages liability and the amount of such damages to be awarded, if any.

    Update (3/5/2008): Here is media coverage of the opinion.

  • SEIU v. Colcord—Punitive Damages Must Be Reconsidered After Compensatory Damages Are Reduced

    In this published opinion, the California Court of Appeal (First Appellate District, Division One) reduced the amount of compensatory damages by $300,000 and then remanded the case for reconsideration of the punitive damages award in light of the reduced amount. That seems like a straightforward proposition. Juries are instructed that punitive damages must bear a reasonable relationship to the plaintiff’s actual harm, so if a jury or trial court awards punitive damages based on an a false understanding of the plaintiff’s actual harm, they should reconsider their award in light of the correct amount of compensatory damages. At the least, the punitive damages award should be reduced to preserve the original ratio of punitive to compensatory damages (assuming that ratio was not excessive). (See Las Palmas Associatesv. Las Palmas Center Associates (1991) 235 Cal.App.3d 1220, 1254 [reducing compensatory damages and reducing punitive damages to preserve the ratio awarded by the jury]; but see Stevens v. Owens-Corning Fiberglas Corp. (1996) 49 Cal.App.4th 1645, fn. 11 [dicta stating “there is no rule requiring preservation of the original ratio between punitive damages and compensatory damages”].)

    But compare this decision to the Fifth Appellate District’s opinion in McGee v. Tucoemas, in which the court refused to order a reconsideration (or reduction) of the punitive damages award after a reduction of the compensatory damages award.

    Full disclosure: our firm (Horvitz & Levy) represents the defendant in McGee, in which a cert. petition is currently pending before the U.S. Supreme Court (on a different issue).

  • Gnesda v. UPS—California Court of Appeal Vacates Punitive Damages Award in Unpublished Opinion

    This opinion is unpublished, but notable for a few reasons.

    First, the punitive damages verdict was a big one – $20 million. Compared to roughly $750,000 in compensatory damages, that’s a ratio of about 27 to one. The trial court reduced the punitive damages to $3.5 million (a ratio of 4.7 to one) and both sides appealed.

    Second, the Court of Appeal vacated the punitive damages award in its entirety because the plaintiff failed to meet his burden of proving the defendant’s financial condition. California has a unique requirement that a plaintiff must introduce evidence of the defendant’s financial condition in order to recover punitives. The evidence must provide meaningful insight on the defendant’s ability to pay, as of the time of trial. Evidence of earnings or assets, without evidence of liabilities, is not enough. The California Supreme Court announced this rule in 1991, but every year there are a few appellate decisions reversing a punitive damages award on this basis. Here, plaintiff introduced evidence of the defendant’s income a few years before trial, but did not prove the defendant’s net worth at the time of trial. Because of that, the plaintiff is out $3.5 million.

    Incidentally, this case featured two prominent California appellate lawyers: professor Erwin Chemerinsky for the plaintiff and former appellate justice Dan Kolkey for the defense.