California Punitives by Horvitz & Levy

  • Court of Appeal affirms $6 million punitive damages award in asbestos case (Barr v. Parker-Hannifin)

    This unpublished opinion affirms a punitive damages award against Parker-Hannifin, a company that sold asbestos-containing replacement brakes in the late 1970s and 1980s.

    Parker-Hannifin argued on appeal that the punitive damages should be reversed because the plaintiff presented no evidence that anyone at the company knew during the relevant time that its products were harmful.  The Court of Appeal (First District, Division Three) rejected that argument, citing evidence that the company complied with OSHA regulations at its own factory, to protect its workers from asbestos exposure.  From that evidence, the court concludes that the company knew asbestos was dangerous, and therefore should have protected consumers of brakes.

    The court’s analysis does not confront the fact that asbestos exposures in the factory would have been orders of magnitude higher than any exposures experienced by users of the finished product, or the fact that the factory workers were potentially exposed to raw asbestos, whereas the end users could only have been exposed to heavily processed fibers with different potential for causing disease. Given those differences between the two types of exposures, many manufacturers in the 1970s took precautions in their factories without believing that any risks existed for end users.  But the Court of Appeal’s opinion does not grapple with that issue, and instead concludes that substantial evidence supports the conclusion that the manufacturer acted despicably and in conscious disregard of a known risk to consumers.

    Disclosure: Horvitz & Levy participated in this case, representing Parker-Hannifin’s co-defendant, Standard Motor Products, which was not found liable for punitive damages. 

  • Court of Appeal re-issues opinion vacating $16 million punitive damages award and orders reduction to $2.5 million (Tilkey v. Allstate)

    In May of this year we reported on a decision affirming a $1.7 million compensatory damages award for the tort of “self-published defamation” but vacating the jury’s $16 million punitive damages award as excessive.

    The Court of Appeal (Fourth District, Division One) granted defendant Allstate’s petition for rehearing, which identified some facts omitted from the opinion.  After accepting supplemental briefing and considering the additional facts, the Court of Appeal reached the same conclusion in its new opinion: compensatory damages affirmed, punitive damages vacated as excessive.  

    The new opinion, however, adopted a different remedy with respect to the excessive punitive damages.  The first opinion simply vacated the award and sent the case back to the trial court for further proceedings, rather than reducing the punitive damages to a fixed amount.  That’s because the Court of Appeal had also eliminated one element of the jury’s damages award (a $1 million award for wrongful termination), and the court said it was impossible to know to what extent the jury based its punitive damages award on that claim.

    In the new opinion, the court decides to reduce the punitive damages rather than ordering a new trial.  The court says “[t]here is some authority that doing so is appropriate,” but no authority is cited.  The opinion reduces the punitive damages award to the amount of $2.5 million, which is about 1.5 times the amount of compensatory damages. 

    That remedy seems to deprive Allstate of its right to have a jury decide in the first instance the proper  punishment for the defamation alone.  Perhaps a jury would award less than $2.5 million.  But given the relatively low ratio that the court adopted, Allstate may actually prefer to simply pay that amount rather than undergoing a new trial and risking a larger award that would generate another appeal.

  • Court of Appeal vacates $725k punitive damages award due to improper expert testimony (Margeson v. Ford)

    In this Lemon Law case, a jury awarded the plaintiff roughly $72,500 in compensatory damages, $142,000 in civil penalties, and $1.4 million in punitive damages (20 times the amount of compensatory damages). The trial court reduced the punitive damages to $725,000 (10 times the compensatory damages) and Ford appealed.

    In an unpublished opinion, the Court of Appeal (Second District, Division Five) vacated the punitive damages award and ordered a new trial on the amount of punitive damages. The court found that the trial court had improperly allowed expert testimony from the plaintiff’s forensic accountant, who purported to advise the jury on how to properly calculate punitive damages. The Court of Appeal ruled that the expert’s testimony usurped the role of the jury in determining the amount of punitive damages and usurped the role of the trial court in instructing the jury on the law of punitive damages.
    I won’t comment on the court’s analysis, because Horvitz & Levy represents Ford in this case.

     

  • Court of Appeal reverses $1 million punitive damages award against Chrysler (Santana v. FCA)

     I’m catching up on the unpublished opinions that came out the past few weeks.  

    In this one, the plaintiff brought lemon law and fraud claims against FCA (Chrysler) in connection with alleged electrical problems in a 2012 Dodge Durango.  A jury awarded $32,000 in economic damages on the lemon law claim, $134,000 in economic damages on the fraud claim, and punitive damages of $1 million. Chrysler appealed, arguing among other things that the plaintiff failed to present any substantial evidence of fraud.

    The Court of Appeal (Fourth District, Division Three) agreed and reversed all the fraud damages, including the punitive damages, in an unpublished opinion. The court said the plaintiff failed to present any evidence that Chrysler fraudulently concealed material information. The evidence showed at most that Chrysler was aware of electrical issues that had occurred different vehicles and was working on fixing the problem.  Because that evidence could not support a finding of fraudulent concealment, and that tort was the sole support for the punitive damages award, the court vacated the punitive damages.

    Horvitz & Levy represents FCA in other matters, so I won’t comment on the court’s analysis.

    Update (10/28/20): the Court of Appeal has now changed the status of the opinion from unpublished to published

  • Court of Appeal affirms $1.95 million punitive damages award in wrongful termination case (Albarracin v. Fidelity National Financial)

    I’m catching up on some unpublished opinions from the past few weeks. In this one, the plaintiff alleged she was fired after complaining that her supervisor sexually harassed her.  A jury found defendant Fidelity National liable for intentional infliction of emotional distress, retaliation, and wrongful termination.  The jury awarded $250,000 in emotional distress damages and $1,950,000 in punitive damages.

    Fidelity appealed, challenging only the punitive damages award.  Fidelity argued that the plaintiff failed to present clear and convincing evidence of malice or oppression within the meaning of Civil Code section 3294.  Fidelity argued that the evidence showed at most that Fidelity’s investigation of the plaintiff’s sexual harassment complaint was negligent, but not malicious.  

    The Court of Appeal (Second District, Division Three) rejected that argument because Fidelity had not challenged the jury’s finding that Fidelity intentionally inflicted emotional distress.  The court said that finding was inconsistent with Fidelity’s appellate argument that its conduct was merely negligent, and because Fidelity had not challenged that finding on appeal, it could not characterize its conduct as mere negligence.

    Next, Fidelity argued that the punitive damages award was excessive and should be reduced to no more than $250,000, the amount of the jury’s emotional distress award. The court rejected that argument too, finding that Fidelity’s conduct was reprehensible enough to justify a nearly eight-to-one ratio.  Fidelity relied on caselaw holding that the maximum ratio may be one-to-one in cases where the compensatory damages are substantial.  But the Court of Appeal rejected that argument on the grounds that the $250,000 award was not all that large. Your mileage may vary; other courts have found that lesser amounts qualified as “substantial.”

  • In the first opinion after the Supreme Court’s decision in Conservatorship of O.B., Court of Appeal rejects substantial evidence argument and partially reinstates $15.6 million punitive damages award (King v. U.S. Bank)

    In this published opinion, the Third Appellate District restores millions of dollars in both compensatory and punitive damages that the trial court had stricken from a jury’s verdict in an employment dispute.

    Plaintiff King was a senior vice president at a bank. He gave bad performance reviews to two of his subordinates, who then turn accused him of gender discrimination, harassment, and falsification of records. The bank’s human resources director investigated and recommended that King be fired. When the bank fired him, he sued it for defamation, based on statements made by bank employees during the HR investigation. He also sued for wrongful termination, alleging that the bank’s human resources director conducted an inadequate investigation.
    A jury awarded King $8.5 million in compensatory damages and $15.6 million in punitive damages. The trial court partially granted the bank’s post-trial motions, refusing to vacate the award but chopping the compensatory damages down to $2.7 million and then limiting the punitive damages to the same amount. Both sides appealed.
    The bank argued that King failed to prove by clear and convincing evidence that any officer, director, or managing agent of the bank acted with malice. The Court of Appeal acknowledged that, under the Supreme Court’s decision earlier this week in Conservatorship of O.B., appellate courts must take the “clear and convincing” evidence standard into account when reviewing the sufficiency of the evidence supporting a punitive damages award. Although the Court of Appeal acknowledged that standard, it also stated that it did not matter that the conduct at issue could just as easily have been mere negligence, rather than malice. That statement seems incongruous with O.B. and with prior caselaw holding that evidence of malice cannot be clear and convincing if the evidence merely supports an inference of malice, but is also consistent with the possibility of mere negligence.
    Although the court affirmed the jury’s malice finding, the court also agreed with the trial court that the jury’s punitive damages award was excessive, and that a one-to-one ratio is the constitutional maximum under the circumstances of this case. However, because the court reversed the trial court’s rulings with respect to the compensatory damages and reinstated the jury’s $8.5 million compensatory damages award, application of the one-to-one ratio on appeal resulted in an $8.5 million punitive damages award, much higher than the $2.7 million maximum that the trial court had imposed.
    This opinion, if viewed as a test for how appellate courts will apply the new O.B. standard, suggests that O.B. may not move needle much in some courts. This opinion was clearly written well before O.B. was decided. When the Supreme Court issued its opinion in O.B. on Monday, the Court of Appeal proceeded to publish this opinion the very next day, adding a few citations to O.B. but otherwise not apparently seeing a need to take any additional time to revisit its analysis. Of course this is just one data point. It will take several more decisions before we can really measure the impact of O.B.

  • Court of Appeal concludes that $2.1 million punitive damages award is excessive, limits maximum amount to $371,000 (Orozco v. Conrad)

    I’m a bit tardy in reporting on this unpublished decision, which was issued last week. 

    The opinion arises out of a rather unusual dispute between a restaurant owner and her commercial landlord.  The dispute culminated with the landlord sending a crew of workers to forcibly remove equipment and supplies from the restaurant.  The tenant sued on various theories and a jury awarded her $50,000 in emotional distress damages, $3,000 for trespass to chattels, and $2.1 million in punitive damages.  The trial court determined that the punitive damages were excessive, and ordered a new trial unless the plaintiff consented to accept a reduce amount of $250,000 in punitive damages.

    Both sides appealed.  The Third Appellate District largely affirmed the judgment, agreeing with the trial court that the jury’s award of punitive damages was excessive.  But the court concluded that the maximum permissible amount is $371,000, rather than the $250,000 figure selected by the trial court. 

    The court cited its prior opinion in Bardis v. Oates for the proposition that a four-to-one ratio of punitive damages to compensatory damages is usually the limit in a case in which the compensatory damages are neither exceptionally high nor low, and the defendant’s conduct is neither exceptionally extreme nor trivial.  But the court concluded that the defendant’s conduct in this case registered “high on the reprehensibility meter,” and therefore warranted a ratio of seven to one, rather than the usual four to one. 

  • Court of Appeal reduces Roundup punitive damages from $39.3 million to $10.3 million (Johnson v. Monsanto)

    In 2018, a San Francisco jury awarded $39.3 million in compensatory damages and $250 million in punitive damages to a man who claimed he developed cancer as a result of using Monsanto’s weedkillers Roundup and Ranger Pro.  The trial court reduced the punitive damages to $39.3 million in response to Monsanto’s post-trial motions, resulting in a 1-to-1 ratio between the punitive and compensatory damages.

    The Court of Appeal (First District, Division One), affirmed the judgment in a partially published opinion, but reduced the compensatory damages to $10.3 million and then reduced the punitive damages to $10.3 to preserve the trial court’s 1-to-1 ratio.

    I won’t comment on the court’s analysis, because Horvitz & Levy represents Monsanto in this case.

  • Court of Appeal reverses $750,000 punitive damages award due to the absence of current evidence of the defendant’s finances (Saxton v. Hip Hop Beverage Corp.)

    Here is another installment in the long line of unpublished California opinions reversing a punitive damages award on the grounds that the plaintiff failed to present evidence of the defendant’s financial condition.  This opinion addresses a recurring sub-issue in this area: if the defendant has no current balance sheets or other financial documents, does that excuse the plaintiff from presenting evidence of the defendant’s current finances?  The answer is no.

    The plaintiff sued his former employer for discrimination and harassment.  Shortly before trial, he served the defendant with a notice to produce documents at trial, including the defendant’s financial records.  The defendant objected and the plaintiff filed a motion to compel production of the documents.  The trial court granted the motion and ordered the defendant to produce its tax returns, income statements, and balance sheets. 

    On the first day of trial, the defendant provided the plaintiff with its documents through 2015, but did not produce any documents for 2016 or 2017.  (The trial took place in 2018.)  The company had apparently stopped operating in 2017.  When the plaintiff asked the defendant to produce records for 2016 and 2017, the defendant argued that it had “produced what existed” and was not required to “go create things.”  The trial court agreed, and informed the plaintiff that he still needed to carry his burden of proof on the financial condition issue.

    The case proceeded to trial and the plaintiff won a jury verdict for $72,000 in compensatory damages and $750,000 in punitive damages.  The defendant appealed, arguing that the plaintiff had failed to present evidence of the defendant’s financial condition at the time of trial.

    The Court of Appeal (Second District, Division Four) agreed and reversed the punitive damages award. The court held that the record contained evidence of the defendant’s finances in 2016, but absolutely no evidence of the defendant’s finances in 2018.  The record showed that the defendant ceased operations in 2017, and there was no evidence that it maintained the same assets or equity in 2017 or 2018 that it had in 2016. 

    The plaintiff argued that the defendant should be estopped from complaining about the lack of  evidence of its current finances because the defendant failed to produce financial records for 2017 or 2018.  The Court of Appeal rejected that argument, citing the trial court’s finding that the defendant produced all the information in its possession, and was not required to create non-existent documents in order to comply with the court’s discovery order.  The court also rejected the plaintiff’s request to consider new evidence that the plaintiff obtained while the appeal was pending.  The plaintiff bore the burden of presenting financial condition evidence at trial, and that failure could not be cured by supplementing the record after the fact.

  • California Court of Appeal overturns three large punitive damages awards (Curry v. Academy Pointe, Colucci v. T-Mobile, and Tilkey v. Allstate)

    The pandemic-related shutdown has brought civil litigation in California to a screeching halt in the trial courts.  But the California Court of Appeal has continued processing cases and issuing opinions, and has overturned three large punitive damages awards since the shutdown began.

    1.  In Curry v. Academy Pointe, Inc., a landlord-tenant dispute over disability accommodations, a jury awarded $750,000 in compensatory damages and $4.5 million in punitive damages.  The landlord appealed and the Court of Appeal (Second Appellate District, Division One) reversed the punitive damages award in an unpublished opinion.

    The court found the punitive damages award was excessive because it bore no reasonable relation to  the low reprehensibility of defendants’ conduct, the severity of the plaintiff’s harm (which was completely compensated by the substantial compensatory damages award), and the possible civil penalties authorized by the Legislature for similar conduct. The court therefore reduced the punitive damages award to $750,000, resulting in a 1 to 1 ratio between punitive and compensatory damages.

    [Disclosure: Horvitz & Levy represented the landlord on appeal in Curry.]

    2.  In Colucci v. T-Mobile, a workplace retaliation case, a jury awarded $1 million in compensatory damages and $4 million in punitive damages.  T-Mobile appealed and the Court of Appeal (Fourth Appellate District, Division One), in a published opinion, ordered a reduction of the punitive damages award to $1.5 million.

    The court concluded that the reprehensibility of T-Mobile’s retaliatory conduct was “in the low or moderate range of wrongdoing that can support an award of punitive damages.”  And the court acknowledged that the California Supreme Court in Roby v. McKesson set a maximum ratio of 1 to 1 in another case involving a significant compensatory damages award and a low level of reprehensibility.  But the court did not explain why it chose a 1.5 to 1 ratio instead of following Roby‘s guidance and setting the maximum at 1 to 1.

    3. In Tilkey v. Allstate, a jury awarded $2.7 million in compensatory damages and $16 million in punitive damages to a plaintiff asserting a claim of “compelled self-published defamation.”  Allstate appealed, arguing that compelled self-published defamation is not a viable tort theory and, even if it were, it could not support an award of punitive damages.  The same court that issued the Colucci opinion, the Fourth Appellate District, Division One, issued a published opinion rejecting those arguments, but reversing the punitive damages award as excessive.  The court noted that the ratio of punitive damages to compensatory damages was more than 9 to 1, comparing the punitive damages only to the portion of the compensatory damages award attributable to defamation ($1.7 million).  Rather than reducing the punitive damages award to a specific number, the Court of Appeal sent the case back to the trial court to determine the constitutional maximum.