California Punitives by Horvitz & Levy

  • Court of Appeal reissues opinion approving jury instruction on clear and convincing evidence (Nevarrez v. San Marino Skilled Nursing)

    In June we reported on this case, in which the defendant challenged the wording of CACI 201, the pattern jury instruction that defines “clear and convincing evidence.”  After our initial post, the Court of Appeal granted rehearing to reexamine a different aspect of the case.

    The court has now reissued its published opinion. It contains the same analysis of CACI 201, i.e., the opinion once again holds that CACI 201 is correct as written and should not be augmented to reflect the definition of clear and convincing evidence set forth by the California Supreme Court in In re Angelia P.

  • Court of Appeal affirms punitive damages award, rejects defendant’s complaint about modified jury instructions (Sacramento Singh Society v. Tatla)

    I have doubts about whether this opinion is correct.  The opinion is only partially published, and the punitive damages analysis appears in the unpublished portion.

     The plaintiff in this action, a nonprofit religious corporation, sued a group of defendants for slander of title and obtained a compensatory damages award of $359,021.22.  The jury also awarded punitive damages in various amounts against the different defendants, ranging from $60,000 to $167,500.  The opinion does not reveal the total amount of punitive damages.

     On appeal, the defendants complained about the trial court’s modifications to the standard CACI jury instructions.  Among other things, the trial court instructed the jury that the defendants could be liable for punitive damages if they acted with malice, or conspired to engage in malice.

    The California Court of Appeal (Third Appellate District) rejected the defendants’ challenge to those modifications.  First, the court said defendants waived their objections because, although they objected to the instruction in an unreported conference with the judge, they did not later specify the precise nature of their objection when they placed the objection on the record, beyond noting that they disagreed with the substance of the instruction.  The court found that was inadequate to preserve the issue:

    It was, of course, incumbent on defendants to place on the record their objection to the instruction in order to preserve it for appeal. Although it is clear defendants had some objection to the instruction, we are left to guess what that might have been.

    That aspect of the court’s opinion seems obviously wrong. The California Code of Civil Procedure provides that a party need not make any objection to a jury instruction in the trial court in order to challenge the validity of that instruction on appeal. All instructions are deemed objected to as a matter of law. (See CCP 647.) So there appears to be no basis for finding a waiver here.

    The court went on to say that, waiver aside, the defendants’ challenge to the instruction fails on the merits because there is nothing wrong with permitting punitive damages for conspiracy to commit malice.  That holding seems pretty shaky too, since the instruction did not require that the defendant be found to have acted with malice in performing any of the acts that effected a conspiracy. Permitting punitive damages against a defendant who merely may have non-maliciously conspired with others who acted with malice is akin to imposing vicarious liability for punitive damages. The Court of Appeal admits as much: “the fact that a given defendant conspired with the others to harm the Society but then left it to the others to do the dirty work and put the plan into action is hardly a reason to deny an award of punitive damages against that defendant.” What about the Supreme Court case law prohibiting vicarious liability for punitive damages? And what about Civil Code section 3294, which authorizes punitive damages only for a defendant who is actually guilty of malice, oppression, or fraud, and says nothing about allowing punitive damages for conspiring with someone else who is guilty of malice?

  • Proposed Revisions to California Punitive Damages Jury Instructions

    The California Judicial Council’s advisory committee on civil jury instructions (aka the “CACI committee”) has circulated a set of proposed revisions to the CACI instructions, including proposed changes to the instructions dealing with the amount of punitive damages.

    The proposed changes to the text of the punitive damages instructions are minor – – the committee proposes taking language that already appears in the instructions (instructing the jury under Philip Morris v. Williams not to punish the defendant for harm to nonparties), and moving that language to the end of each instruction as a stand alone sentence.

    The committee also proposes adding additional authorities to the “Sources and Authority” section that follows each punitive damages instruction. The committee proposes: (1) adding a quote from footnote 21 in Bullock v. Philip Morris regarding the proper and improper uses of evidence of harm to others, and (2) adding several quotes from State Farm v. Campbell, including the point that the ratio of punitive damages to compensatory damages should not exceed single digits, and the point that one-to-one may be the maximum ratio in cases with substantial compensatory damages.

    Given the minor nature of these revisions (rearranging existing text in the instructions and adding quotes from authorities), they shouldn’t generate much controversy. The deadline for public comments is August 29.

  • Punitive Damages Articles from Charleston Law Review Symposium Now Available Online

    Our prior posts have discussed some of the papers generated by the Charleston Law Review symposium on punitive damages last September. TortsProfBlog now has this post linking to online versions of all the articles from the symposium volume of the Charleston Law Review.

    Here are the titles of all articles (see the TortsProfBlog post for the links):

    Anthony J. Sebok, After Philip Morris v. Williams: What is Left of the “Single-Digit” Ratio?

    Anthony J. Franze, Clinging to Federalism: How Reluctance to Amend State Law-Based Punitive Damages Procedures Impedes Due Process.

    Neil Vidmar & Matthew W. Wolfe, Fairness Through Guidance: Jury Instruction on Punitive Damages after Philip Morris v. Wiliams.

    Christopher J. Robinette, Peace: A Public Purpose for Punitive Damages.

    Keith N. Hylton, Due Process and Punitive Damages: An Economic Approach.

    Victor E. Schwartz & Christopher E. Appel, Putting the Cart Before the Horse: The Prejudicial Practice of a “Reverse Bifurcation” Approach to Punitive Damages.

    Elizabeth J. Cabraser & Robert J. Nelson, Class Action Treatment of Punitive Damages Issues After Philip Morris v. Williams: We Can Get There From Here.

    Byron G. Stier, Now It’s Personal: Punishment and Mass Tort Litigation After Philip Morris v. Williams.

    Michael L. Rustad, The Uncert-Worthiness of the Court’s Unmaking of Punitive Damages.

  • Charleston Law Review Article on Punitive Damages Jury Instructions

    In September 2007, the Charleston School of Law held a symposium on punitive damages entitled “Punitive Damages, Due Process, and Deterrence.”

    One of the papers from that conference, published in the Spring 2008 edition of the Charleston Law Review, has just become available on Westlaw. (We previously blogged about another paper from that conference, available on SSRN.)

    The paper is entitled “Clinging to Federalism: How Reluctance to Amend State Law-Based Punitive Damages Procedures Impedes Due Process,” authored by Anthony J. Franze, Counsel with Arnold & Porter’s DC office. The citation is 2 Charleston L. Rev. 297. Here is the introduction, with the footnotes omitted:

    Over a decade ago, when a majority of the Supreme Court first recognized substantive due process limits on punitive damages, Justice Scalia lamented that “[t]he Constitution provides no warrant for federalizing yet another aspect of our Nation’s legal culture.” Justice Ginsburg similarly echoed that the Court “unwisely venture[d] into territory traditionally within the States’ domain.” Those sentiments, while not carrying the day, have not died. From judicial complaints that the tort process has been improperly federalized, to academics’ arguments that the Supreme Court is “serving as a punitive damages puppeteer who interferes with the ability of the states to constrain corporate wrongdoing,” criticism of the so-called federalization of punitive damages lingers. While I disagree with these views on a number of grounds, in this short essay I focus on a practical concern: the extent to which clinging to federalism has impeded needed procedural reform at the trial level. In particular, I focus on model jury instructions. Despite calls for reform, the punitive damages model instructions relied on by litigants and courts across the country continue to reflect state law standards notwithstanding that, more often than not, those standards ignore or facially conflict with the Supreme Court’s federal constitutional benchmarks. Though there may be any number of reasons for the slow pace of legislative and instructional reform, this essay argues that it is time to cast aside any federalism-based resistance to conducting the needed overhaul of model punitive damages instructions. To this end, I provide three reasons why I believe the time for instructional reform is now.

  • Philip Morris v Williams—It’s Baaaaaaack (Yet Another Punitive Damages Cert Petition to SCOTUS)

    When the Oregon Supreme Court thumbed its nose at the directives from the US Supremes in Philip Morris v. Williams, affirming a punitive damages award (one that’s 97 times the amount of the compensatory award) despite the trial court’s failure to instruct the jury that it should not punish for harm to nonparties, many of us were a bit surprised. (We’ve since noticed that the Oregon Supreme Court has something of a pattern going here.)

    Philip Morris is now knocking on the Supreme Court’s door again, this time with a cert petition that offers up these issues:

    QUESTIONS PRESENTED

    When this case was last before it, this Court reversed the decision of the Oregon Supreme Court and held that due process precludes a jury from imposing punitive damages to punish for alleged injuries to persons other than the plaintiff. Philip Morris USA v. Williams, 127 S. Ct. 1057, 1065 (2007). This Court then remanded the case to the Oregon Supreme Court with directions to “apply the [constitutional] standard we have set forth.” Ibid. On remand, however, the Oregon Supreme Court refused to follow this Court’s directive. Instead, the Oregon court “adhered to” the judgment that this Court had vacated because it found that Philip Morris had procedurally defaulted under state law and thereby forfeited its claim of federal constitutional error. App., infra, 22a.

    The questions presented—the second of which was accepted for review but not reached when this case was last before the Court—are:

    1. Whether, after this Court has adjudicated the merits of a party’s federal claim and remanded the case to state court with instructions to “apply” the correct constitutional standard, the state court may interpose—for the first time in the litigation—a state-law procedural bar that is neither firmly established nor regularly followed.

    2. Whether a punitive damages award that is 97 times the compensatory damages may be upheld on the ground that the reprehensibility of a defendant’s conduct can “override” the constitutional requirement that punitive damages be reasonably related to the plaintiff’s harm.

  • 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.

  • Anthony Sebok’s Criticism of the Oregon Supreme Court’s Goddard Decision Is Unwarranted

    Professor Anthony Sebok of the Benjamin N. Cardozo School of Law has a column on Findlaw.com entitled The Oregon Supreme Court’s Recent Decision on Punitive Damages: Why It Took the Wrong Approach.

    Professor Sebok criticizes the court’s recent decision in Goddard v. Farmers Insurance, which appears to be the first time the Oregon Supreme Court has ever reversed a punitive damages award as unconstitutionally excessive. Sebok’s primary criticism is that the court reduced the punitive damages award to four times the compensatory damages award. He says the four-to-one ratio was based on nothing more than an offhand remark by the U.S. Supreme Court, and that the court’s approach improperly crosses over into the realm of judicial lawmaking: “When courts are debating between whether the ratio should be 3:1, 4:1 or 9:1, they do look an awful lot like members of a legislature dickering over the terms of a statute they are drafting.”

    But that’s not really a fair criticism. The U.S. Supreme Court’s decisions in BMW v. Gore, Cooper v. Leatherman, and State Farm v. Campbell mandate that lower courts scrutinize punitive damages awards closely and, absent extraordinary circumstances, reduce those awards to single-digit ratios. The Supreme Court has left it to the discretion of the lower courts to determine which ratio is appropriate in a particular case, but they have left no doubt that courts must pick some new ratio when they find an award to be excessive. The Supreme Court’s references to a 4:1 ratio in BMW and State Farm may have been off-hand remarks with respect to that particular ratio, but there can be no serious debate that the Supreme Court has directed the lower courts to reduce excessive awards. Whenever courts follow that mandate, they will necessarily adopt a new ratio other than the ratio chosen by the jury. So to the extent Professor Sebok believes that courts have no business deciding the appropriate ratios, that criticism is more properly aimed at the U.S. Supreme Court, not the Oregon Supreme Court.

    UPDATE (by Lisa Perrochet 3/11/08 at 11:06 AM): On the other hand, there may be some cases where a complete new trial–rather than a new ratio selected by the court–is the only logical cure for an excessive punitive award because the jury’s verdict suffers from so many flaws (such as wildly excessive compensatory damages that have to be reduced by the trial court and further reduced by the Court of Appeal, incomplete or inaccurate jury instructions on punitive damages, conflicting ratio analyses by the trial court and court of appeal, for example – if this sounds like a familiar scenario, see below for yesterday’s post on the Buell-Wilson decision from the California Court of Appeal).

  • 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).

  • The Implications of the Exxon Valdez Oral Argument

    We have reviewed the transcript of this morning’s oral argument in the Exxon Valdez case and generally agree with the comments expressed elsewhere. Although the questions indicate a divided Court, Exxon seems unlikely to prevail on the argument that the actions of a ship captain cannot, as a matter of law, expose the ship owner to punitive damages. And Exxon is unlikely to prevail on the argument that the Clean Water Act prohibits the imposition of punitive damages in this case as a matter of law.

    Nor does the Court seem likely to agree that Exxon is entitled to a new trial because the jury instructions erroneously allowed the jury to conclude that Captain Hazelwood had sufficient managerial authority to make Exxon liable for punitive damages. There is at least some possibility of a new trial on that issue, as the Chief Justice and Justices Scalia and Kennedy asked some hostile questions to plaintiffs’ counsel about the jury instruction. Justice Thomas was silent as usual, but is probably in Scalia’s camp on that issue. One more vote for Exxon could yield a new trial, but that vote may be hard to come by, especially since Justice Alito has recused himself.

    The most likely outcome seems to be a split-decision affirming the plaintiffs’ entitlement to punitive damages, but holding the amount of the award excessive under federal common law. If the Court adopts an excessiveness test as a matter of maritime law or federal common law, technically that test won’t apply to many cases. But the Supreme Court’s reasoning may influence many state court judges in applying the common law excessiveness standards that many state courts have developed

    Perhaps more importantly, if the Supreme Court holds that the ratio in this case should only be two-to-one (as some of the justices’ questions suggested), such a holding might lend additional weight to the court’s prior holdings on the ratio issue in the cases involving the due process limits on punitive damages. (BMW v. Gore and State Farm v. Campbell). In State Farm, for example, the Court suggested that the ratio of punitive to compensatory damages should be low, perhaps only one-to-one, where the compensatory damages are substantial. Few courts have paid any attention to that holding, but perhaps this case will serve as a reminder to the lower courts about this aspect of the Court’s earlier holdings. Indeed, it seems likely that the Court would refer to its ratio analysis in State Farm if the Court addresses the ratio issue in the Exxon Valdez case.

    We’ve recently seen two California cases in which the courts reduced punitive damage awards down to a one-to-one ratio (Jet Source v. Doherty and Walker v. Farmers Insurance) based on State Farm. This may become a growing trend if the Supreme Court revisits this notion in the Exxon Valdez opinion.

    If the Court focuses on the ratio between the punitive damages and the plaintiffs’ actual harm, that will raise some interesting questions about exactly what the plaintiffs’ “actual harm” is. The Ninth Circuit’s opinion included not only the compensatory damages awarded, but also settlements and judgments obtained by “various plaintiffs.” The opinion does not make clear whether those “various plaintiffs” included parties not before the court in this case. Does that sort of analysis comport with the U.S. Supreme Court’s opinion last year in Philip Morris v. Williams, which held that defendants may not be punished for harm to others?

    Exxon argued that, for purposes of calculating its “actual harm,” the court should subtract Exxon’s payment of $493 million through its voluntary claims program and other settlements. Thus, if the actual harm was $513.1 million (as found by the Ninth Circuit), the remaining total would be only $20.1 million. Even at the maximum ratio of nine-to-one, that would cap the punitive damages at $180 million, a far cry from the $2.5 billion approved by the Ninth Circuit.

    It will be interesting to see if the Court resolves any of these issues surrounding the calculation of the proper ratio, or simply sends the case back to the Ninth Circuit with directions to re-assess the ratio under some new standard announced by the Supreme Court.