California Punitives by Horvitz & Levy

  • U.S. Supreme Court Punts on Exxon Valdez Interest Issue

    We previously blogged about the dispute between the parties over the interest to be award in Exxon Shipping Co. v. Baker. Today the Supreme Court issued its final judgment in the case, declining to decide the interest issue.

    The Supreme Court’s opinion was silent on the question of interest, so the plaintiffs filed a post-opinion “submission” with the Supreme Court, asking the Supreme Court to clarify that they are entitled to post-judgment interest on the $507 million punitive damages award dating back to the date of the original judgment in September 1996. That would bring the total interest to $488 million, according to the plaintiffs’ calculations.

    Exxon responded that the plaintiffs are not entitled to any interest at all. Exxon argued that the Supreme Court should either (1) decide the issue and declare that plaintiffs are not entitled to interest, or (2) remain silent on this issue, which (according to Exxon) would make plain that interest should not run from the date of the original judgment.

    The Supreme Court’s judgment declined to decide the interest issue, but it expressly directed the Ninth Circuit “to address the parties’ contentions about respondents’ entitlement to interest on the award remaining, a matter on which this Court declines to rule in the first instance, without prejudice to the position of any party.” So neither party really got what they wanted. The plaintiffs didn’t get their interest award (not yet anyway), and Exxon doesn’t get to argue that the Supreme Court’s silence constitutes a tacit denial of interest.

    As always, SCOTUSblog has full coverage.

  • Rex Heeseman Op-Ed in Daily Journal Discusses Impact of Exxon Valdez

    Rex Heeseman, a superior court judge in Los Angeles County and an adjunct law professor at Loyola Law School, wrote an op-ed in the Daily Journal entitled “Award Season” (subscription required) discussing the Exxon Valdez decision (Exxon Shipping Co. v. Baker).

    Judge Heeseman predicts that the Supreme Court’s decision will be influential on punitive damages law beyond the narrow confines of maritime cases:

    [S]ome have remarked that, as a maritime case, Exxon will not influence the general law regarding punitive damages. While an understandable view from a plaintiff perspective, much in Exxon suggests otherwise.

    I tend to agree, and have made the same observation on this blog (scroll down to the last paragraph of the post). I think that Judge Heeseman may be taking this a little too far, however, when he suggests that the Supreme Court may adopt a one-to-one ratio limit for all punitive damages case. As I said in that same post, I don’t see enough votes on the Court for that point of view. But you never know what might happen with this issue the next time a new justice joins the court.

  • Exxon Valdez Plaintiffs File Reply In Support of Request for Interest

    The plaintiffs in Exxon Shipping Co. v. Baker have filed their reply brief in support of their request for interest on the $500 million punitive damages award. You can read our prior posts on this subject here, here, and here, plus the plaintiffs’ original submission and Exxon’s response (courtesy of SCOTUSblog).

    On a related note, the Alaska Public Radio Network reports a disagreement among Alaska state officials on whether the state should weigh in on the interest dispute. Three state legislators thing the state should get involved, but a state attorney who has represented the state in Exxon Shipping thinks otherwise. Personally, I don’t see how an amicus brief would have much influence with the court on a question like this.

  • Exxon Valdez Interest Issue Should Be Resolved by July 28

    The Anchorage Daily News reports, in a story entitled “Resolution of Exxon interest issue may be soon,” that the Supreme Court typically issues its final judgment 32 days after issuance of the opinion. In this case, the 32nd day falls on July 28. Thus, the court is likely to either clarify the interest issue by July 28, or issue a final judgment without addressing the interest issue. Both sides have argued that they should win if the final judgment is silent on the question of interest.

  • Exxon Opposes Plaintiffs’ Request for Interest on $500 Million Punitive Damages Award

    Last week, the plaintiffs in Exxon Shipping Co. v. Baker asked the Supreme Court to clarify whether they are entitled to interest on their punitive damages award. The plaintiffs were concerned that they might be denied interest under Supreme Court Rule 42.1, which provides: “If a judgment is modified or reversed with a direction that a judgment for money be entered below, the mandate will contain instructions with respect to the allowance of interest.” In this case, the Supreme Court’s opinion did not contain any instructions regarding interest. The plaintiffs claim they are entitled to about $488 million in interest.

    Exxon has now filed a response. Exxon agrees that the Supreme Court should resolve the interest issue, but Exxon contends the plaintiffs are not entitled to any interest. Exxon argues that the purpose of awarding postjudgment interest is to compensate a plaintiff for the lost use of their money during the time between the ascertainment of the damages and the payment of the judgment. But Exxon contends that the plaintiffs in this case have no right to compensation of any kind, because they have already been fully compensated by the compensatory damages award. The punitive damages were awarded purely for the public purposes of punishment and deterrence, and those purposes will be served regardless of whether interest is added to the award. Exxon also argues that the extraordinary delay between the date of the original judgment and the Supreme Court’s decision was caused by the plaintiffs, who repeatedly persuaded the district court to ignore the decisions of the Ninth Circuit and the Supreme Court.

    Hat tip: SCOTUSblog.

  • CQ Politics Emphasizes Supreme Court’s Observation that Punitive Damages Are Not “Out of Control”

    CQ Politics has a post by columnist Kenneth Jost entitled “Courts & the Law: Damage Controlled.” Jost writes that most commentators on Exxon Shipping Co. v. Baker have overlooked a fundamental premise of the Court’s reasoning, namely, that most punitive damages awards are infrequent, have not increased in recent years, and are generally lower than the amount of compensatory damages.

    Personally, I find this aspect of the Supreme Court’s opinion very ironic. For years, a contingent of lawyers who oppose restrictions on punitive damages have written articles and published studies showing that punitive damages are rarely awarded, and when they are, the awards are usually modest. (See, e.g., the writings of Neil Vidmar and Michael Rustad.) I have always thought that such studies are effective in countering the perception that punitive damages are “out of control,” but they really don’t support the argument that the monster awards, rare as they may be, shouldn’t be reined in.

    Justice Souter, in his opinion in Exxon Shipping Co., actually turned these stats against the people who have long been touting them. He pointed to these stats as evidence that plaintiffs’ advocates have no basis for complaining about a 1-to-1 ratio limit, because it will only affect a small subset of all punitive damages cases.

  • Alliance For Justice Responds to Ted Frank’s WSJ Op-Ed on Exxon Shipping v. Baker

    A few days ago we linked to Ted Frank’s Wall Street Journal op-ed on Exxon Shipping Co. v. Baker. Justice Watch, a blog maintained by the Alliance for Justice, responds to that op-ed in a post entitled “WSJ Editorial Attempts to Exonerate Exxon.” The Justice Watch blog post criticizes Frank for suggesting that state legislatures should impose restrictions on punitive damages. It also criticizes the Supreme Court’s opinion in Exxon Shipping Co. for reducing the the punitive damages to the point that they no longer have any deterrent value.

  • Ted Frank Op-Ed in Wall Street Journal: “The Era of Big Punitive Damage Awards Is Not Over”

    Ted Frank, a resident fellow of the American Enterprise Institute and a frequent contributor to Overlawyered.com, has this op-ed in the Wall Street Journal.

    The op-ed says that Exxon Shipping Co. did not foreclose the possibility of mega-punitive awards in future cases. That position is not likely to be very controversial. Everyone seems to agree that Exxon Shipping Co. is not binding authority for punitive damages awards under state law. While some state court judges may be influcenced by the Supreme Court’s reasoning, they aren’t bound by it, meaning that the judges who have been inclined to approve colossal awards in the past will feel free to continue doing so in the future.

  • Exxon Valdez Plaintiffs Ask Supreme Court to Confirm Their Entitlement to Interest on the $500 Million Punitive Damages Award

    The plaintiffs in Exxon Shipping Co. v. Baker have filed a “submission” with the Supreme Court, seeking clarification of their entitlement to interest on the reduced punitive damages award, dating back to the date of the original judgment.

    Supreme Court Rule 42.1 provides: “If a judgment is modified or reversed with a direction that a judgment for money be entered below, the mandate will contain instructions with respect to the allowance of interest.” In this case, however, the Supreme Court’s opinion did not contain any instructions regarding interest. The plaintiffs seek interest at the rate of 5.9 percent, compounded annually, dating back to Sept. 24, 1996, for a total of $488 million. Not exactly chump change.

    SCOTUSblog has full coverage of this issue.

  • Where Does the Exxon Valdez Punitive Damages Award Rank on the List of Largest Punitive Damages Awards to Survive Appeal?

    Wall Street Journal reporter Russell Gold emailed us with the following question: “If the full $507.5 million is upheld by the lower court, where does the Exxon Valdez award rank among largest punitive damage awards upheld by appeals courts?”

    As far as we can tell, the Exxon Valdez award is third on the list, behind these two:

    1. The $1.2 billion award against the estate of Ferdinand Marcos for human rights violations, affirmed in Hilao v. Estate of Marcos (9th Cir. 1996) 103 F.3d 767.

    2. The $1 billion award affirmed by the Second Circuit last year in Motorola Credit Corp. v. Uzan (2d Cir. 2007) 509 F.3d 74.

    A few others have reached into the hundreds of millions. See Time Warner Entertainment v. Six Flags Over Georgia (Ga. Ct. App. 2002) 563 S.E.2d 178, cert. denied [$257 million in punitives affirmed]. Just recently, the West Virginia Supreme Court declined to review a $270 million punitive damages award against NiSource, Inc., which plans to petition for certiorari.

    So we’ll put this question to our readers: are you aware of any other punitive damages awards larger than $507 million that have survived appeal? (We’re aware of many larger awards that didn’t survive appellate scrutiny, like the $28 billion award in Bullock v. Philip Morris.) Let us know by emailing or leaving a comment.

    UPDATE (on 7/5/08): A commentor has posed the question whether any other punitive damages awards have been reduced to a one-to-one ratio by appellate review. We’re aware of quite a few awards fall into that category. In California, for example, the relatively recent opinions in Jet Source Charter, Inc. v. Doherty (2007) 148 Cal.App.4th 1, 11 and Walker v. Fire Ins. Exchange (2007) 153 Cal.App.4th 965, 975 both reduced punitive damages awards down to a one-to-one ratio. A number of cases from other jurisdictions have done the same thing. (See, e.g., Williams v. ConAgra Poultry Co. (8th Cir. 2004) 378 F.3d 790, 799; Boerner v. Brown & Williamson Tobacco Co. (8th Cir. 2005) 394 F.3d 594, 603; TVT Records v. Island Def Jam Music Group (S.D.N.Y. 2003) 279 F.Supp.2d 413, 461, revd. on other grounds (6th Cir. 2005) 412 F.3d 82.) Such decisions are not exactly commonplace, but they happen often enough not to be particularly newsworthy.

    A case in which a punitive damages award was reduced to a 1.4-to-one ratio is currently pending before the California Supreme Court in Roby v. McKesson (2006) 146 Cal.App.4th 63, review granted April 18, 2007 , S149752. The ratio issue hasn’t gotten much attention in the briefing compared to other issues, but the issue might take on an increased prominence now in light of Exxon Shipping Co. The California Supreme Court also has the opportunity to address this issue by granting the pending petition in Buell-Wilson v. Ford.