DuPont has issued a press release announcing that they have petitioned the West Virginia Supreme Court to review a class-action pollution case with a $251 million judgment, including $196.2 million in punitive damages. According to this story from the West Virginia Record, the verdict in this case was the fifth largest verdict in the nation in 2007.
-
Grimes v. Rave Motion Pictures: District Court Holds FACTA Punitive Damages Provision Unconstitutional
The Fair and Accurate Credit Transactions Act (FACTA), 15 U.S.C. sections 1681c(g) and 1681n, prohibits anyone who accepts credit cards for a business transaction from printing more than the last 5 digits of the credit card number or the expiration date of the credit card on any receipt provided to the cardholder. FACTA also provides that any person who “willfully fails to comply” with the act is subject either to actual damages suffered or strict liability damages of not less than $100 and not more than $1000, and such amount of punitive damages as the court may allow. This act has spawned numerous class action lawsuits across the country. The Northern District of Alabama ruled that those provisions of FACTA as applied in that case are unconstitutional under the Due Process Clause. The court first found that the strict liability provision standing alone was unconstitutional because there is no criteria for determining whether the strict liability award should be $100 or $1000 or any amount in between. To the extent the higher award was given as a form of punishment, that would run into difficulties if punitive damages were also given in that the defendant would be punished twice for the same conduct.
The court went on to find that the statute’s allowance of punitive damages where there are no actual damages (i.e., strict liability awards between $100 and $1000) is independently unconstitutional because “to impose punitive damages without the suffering of any harm is inherently disproportionate” and thus suspect under State Farm v. Campbell. The court distinguishes these damages from nominal damages, which in some cases are a substitute for actual damages. But, here, the damages “are by statute expressly not compensatory in nature.”
The reasoning in this opinion, especially if affirmed on appeal, could have an important impact on a host of similar statutes.
Hat Tip: Overlawyered.
-
The Complex Litigator Weighs in on the Likely Impact of Savaglio v. Wal-Mart
H. Scott Leviant at The Complex Litigator has a thoughtful and detailed post referring to our post last week on the pending Savaglio v. Wal-Mart appeal. He argues that the “new right-exclusive remedy” rule that Wal-Mart urges as a bar to the punitive damages award is inapplicable to claims based on a right to wages, since he contends that the right to wages was a common law “right[] in existence prior to California’s Labor Code . . . .” But even if that were so, as Scott correctly acknowledges the Savaglio class action is primarily a case about meal periods. One could certainly characterize the right at issue in Savaglio (for purposes of the “new right-exclusive remedy” rule) as a right to meal periods rather than a right to wages. Several courts appear to have recognized that the right to such meal periods did not exist at common law but are instead the product of wage orders and statutory law. (E.g., Murphy v. Kenneth Cole Productions, Inc. (2007) 40 Cal.4th 1094, 1105 [explaining that the Industrial Welfare Commission “issued wage orders mandating the provision of meal and rest periods in 1916 and 1932”].)
Moreover, even if courts were to accept the argument that the right to wages was a common law right, perhaps courts may distinguish between a right to wages generally and an entitlement to certain premium payments created by statute. For example, the California Supreme Court has indicated that both overtime pay and Labor Code section 226.7 payments for missed or late meal periods are “premium” payments. (Murphy, supra, 40 Cal.4th at pp. 1109, 1120.) At least one federal district court, applying the “new right-exclusive remedy” rule, has held that a plaintiff could not maintain a conversion claim based on the right to overtime pay on the ground that this was a right created by statute rather than by common law for which the detailed remedial scheme in the Labor Code provided exclusive remedies. (See, e.g., Green v. Party City Corp. (C.D.Cal. Apr. 9, 2002), Case No. CV-01-09681 CAS (EX), 2002 WL 553219, at pp. *4-*5.) If other courts arrive at the same conclusion, the “new right-exclusive remedy” rule may bar punitive damages claims based on the right to premium wage payments.
-
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.
-
Mortgage Lenders Hit with $99 Million in Punitive Damages
It seems doubtful that this punitive damage award (at nearly a 20 to 1 ratio) can survive constitutional scrutiny.
-
A Class Action Lawsuit Filed by Parents of Soldiers Who Died in Iraq Seeks $36 Billion in Punitive Damages from Anti-War T-Shirt Company
The Associated Press reports that “A Tennessee couple who lost their son in Iraq want an Arizona merchant to pay more than $40 billion in damages to survivors of soldiers whose names are on the anti-war shirts he is selling online. A complaint seeking class-action status for the lawsuit by Robin and Michael Read says Dan Frazier of Flagstaff has no right to profit from commercial sale of products that use the dead soldiers’ names without permission. The change, requested Tuesday in federal court in Tennessee, would cover the heirs of all U.S. service members killed in the Middle East since Sept. 11, 2001, and seek $4 billion in compensatory damages and $36.5 billion of punitive damages. . . . Frazier’s ‘Bush lied — They died’ T-shirts, sold at his site CarryaBigSticker.com, list Iraq war casualties’ names, and Frazier contends he is covered by First Amendment free-speech protections. . . . The Reads’ amended complaint says Frazier has no right to make a profit from the commercial sale of products using the casualties’ names without permission.”
-
How the Supreme Court’s Recent Punitive Damages Decisions Limit Class Actions
Professor Sheila Scheuerman of the Charleston College of Law has posted this forthcoming Baylor Law Review article on SSRN: “Two Worlds Collide: How the Supreme Court’s Recent Punitive Damages Decisions Affect Class Actions.” Here’s the abstract, summarizing Scheuerman’s thesis that punitive damages are no longer available as a class-wide remedy except in cases in which the plaintiffs have uniform injuries:
This article examines the intersection between two controversial areas of the law – punitive damages and class actions – and argues that the Supreme Court’s recent jurisprudence clarifying the due process limits on punitive damages has broad implications on the procedural laws governing the types of cases that can properly be certified as a class action. Specifically, the article discusses the Supreme Court’s evolving approach to punitive damages from one that considered the harm a defendant’s conduct caused to society as a whole to one that now focuses almost exclusively on the harm to the specific individual bringing the lawsuit. This shift, which recently culminated in the Court’s 2007 decision in Philip Morris USA v. Williams, constitutionally requires that the amount of a punitive damages award relate to the amount of harm suffered by the party bringing the suit. That requirement is at odds with class action practices that treat punitive damages as a common, class-wide issue and that have allowed juries to assess a punitive damages award before evaluating the harm to the individual class members. The article argues, therefore, that where injuries are not uniform among class members, punitive damages cannot be pursued as a class-wide remedy.
Hat tip: TortsProf Blog.
-
Plaintiffs’ Attorneys Win $218 Million Fee Award for Helping Obtain a Punitive Damages Verdict that Was Reversed on Appeal
Law.com has this story today about a $218 million fee award to two plaintiffs’ lawyers for their work on a now defunct tobacco class action. If I’m reading this story correctly, the attorneys received these fees for laying the groundwork for the Engle class action litigation in Florida, which resulted in a whopping $145 billion verdict against tobacco manufacturers. The Florida Supreme Court threw out that award on appeal, but apparently the trial court has awarded fees to the plaintiffs’ attorneys out of a fund that the defendants deposited in lieu of an appeal bond.
The trial court accepted the representation of plaintiffs’ counsel that they had worked an average of 77 hours a week on the case. Said the court: “These are reasonable and conservative hours.”
$218 million for losing a case? I certainly don’t know the whole story behind this litigation, but that doesn’t seem quite right to me.