California Punitives by Horvitz & Levy

  • Ninth Circuit affirms district court’s bifurcation of punitive damages trial (Phanpradith v. Griego)

    In California state court, defendants have a statutory right to request bifurcation in punitive damages trials.  (See Civil Code section 3295, subsection (d).)  The statute provides that the plaintiff cannot present evidence of the defendant’s financial condition until after the jury finds that the defendant acted with malice, oppression, or fraud.  

    Federal law does not require such bifurcation, but leaves it to the discretion of the district court. In this prisoner’s civil rights case in federal court, the district court exercised its discretion to bifurcate a punitive damages trial after the plaintiff attempted to introduce evidence about a prison official’s income before the plaintiff had established liability for punitive damages. 

    When the prisoner challenged that bifurcation order on appeal, the Ninth Circuit affirmed in an unpublished memorandum disposition, finding that the district court did not abuse its discretion in ordering because such financial evidence could have been confusing to the jury when the plaintiff had not yet established entitlement to punitive damages.  

  • Ninth Circuit vacates Monster Energy’s $5 million punitive damages award (Monster Energy v. Integrated Supply Network)

    This case involves a trademark dispute between Monster Energy Drinks and a tool manufacturer that produced a line of tools using the name Monster and the same green and black color scheme used by Monster Energy.

    In 2018, a federal court jury in the Central District of California ruled in favor of Monster Energy, awarding $0 in actual damages and $5 million in punitive damages.  (You can read a story about the verdict here.)

    In this unpublished opinion, the Ninth Circuit reverses the punitive damages award.  The opinion explains that Monster’s claim for punitive damages was based on California common law, which prohibits an award of punitive damages to a plaintiff who suffered no actual damages.  But the opinion is not all bad news for Monster Energy.  The Ninth Circuit reinstated some of Monster’s claims that the district court had dismissed, including claims for violation of California’s Unfair Competition Law and for disgorgement of profits under the Lanham Act.

    Law 360 has a story on the decision.

      

  • Ninth Circuit affirms $2.5 million punitive damages award in insurance bad faith case (McClure v. Country Life)

    The unpublished opinion affirms $2.5 million in punitive damages and $1.29 million in compensatory damages in an insurance bad faith case.  The analysis is sparse, as usual for a memorandum disposition.  The court affirms the punitive damages because the plaintiff presented sufficient evidence that the defendant acted with an “evil mind” under Arizona punitive damages law.  Apparently the defendant did not argue that the punitive damages were excessive.

  • Ninth Circuit reduces punitive damages from $52 million to $32 million (Ramirez v. TransUnion LLC)

    In this published opinion, the Ninth Circuit reduced a punitive damages award from roughly $52 million to roughly $32 million.  Even that reduced figure represents one of the largest sums of punitive damages that has ever survived a Ninth Circuit appeal. 

    In this class action against credit reporting agency TransUnion, the plaintiffs alleged that TransUnion incorrectly placed terrorist alerts on the front page of their credit reports and send confusing and incomplete information about the alerts and how to remove them.  A jury awarded punitive damages in the amount of $6,353.08 per class member, for a total of $52 million.  That resulted in a 6.45 to 1 ratio of punitive to compensatory damages.

    The Ninth Circuit rejected most of TransUnion’s arguments on appeal but concluded that the award of punitive damages is constitutionally excessive, primarily because the defendant’s conduct, although “egregious,” did not involve health or safety and was not the result of intentional malice, trickery, or deceit.  The court determined that the 4 to 1 is the maximum ratio permitted by due process on the facts of this case.  Accordingly, the court directed the district court to modify the judgment to reduce each class member’s award of punitive damages to $3,936.88.  Judge Murguia wrote the opinion, joined by Judge Fletcher.  Judge McKeown dissented.

  • Ninth Circuit vacates $7.9 million punitive damages award in dispute between Steinbeck heirs (Kaffaga v. Estate of Thomas Steinbeck)

    This published Ninth Circuit opinion holds that a $7.9 million punitive damages award must be vacated under California law because the plaintiff failed to introduce meaningful evidence of the defendant’s financial condition.

    This case arises out of decades of litigation between John Steinbeck’s heirs.  When Steinbeck died in 1968, he left his interests in his works to his third wife, Elaine.  He left $50,000 each to his two sons by previous marriages.  It seems that his sons were unhappy with that arrangement, resulting in decades of acrimonious litigation.

    The litigation ultimately culminated in this federal lawsuit by Waverly Kaffaga (the executrix of Elaine’s estate) against Gail Steinbeck (executrix of the estate Thomas Steinbeck, John’s son).  Kaffaga claimed that Gail had unreasonably asserted rights in John Steinbeck’s works, which caused multiple Holllywood producers to abandon negotiations with Kaffaga to develop screenplays for remakes of The Grapes of Wrath and East of Eden.

    A jury ruled in favor Kaffaga and awarded $5.25 million in compensatory damages for slander of title, breach of contract, and tortious interference with economic advantage, and $7.9 million in punitive damages.

    On appeal, the Ninth Circuit affirmed the judgment except for the punitive damages award.  As often happens with punitive damages appeals in California state court, the court held that the plaintiff had failed to introduce meaningful evidence of the defendant’s financial condition.  Kaffaga presented evidence that Gail had various television series and films in development, but introduced no evidence about the potential income from those projects.  Nor did Kaffaga present evidence from an expert accountant to examine Gail’s financial records to estimate her liabilities or net worth.

    The opinion mentions that at oral argument, Kaffaga’s counsel blamed Gail for the lack of evidence, arguing that she was uncooperative during discovery.  The Ninth Circuit rejected this contention because Kaffaga could not point to anything in the record showing that she moved to compel production of additional evidence, and because Kaffaga had not asked for a jury instruction seeking an adverse inference from Kaffaga’s alleged failure to disclose.

    The tone of the opinion strongly suggests that the court wants this opinion to be the last chapter in the Steinbeck litigation.  But the history of this litigation suggests that is unlikely.

  • Supreme Court reverses Ninth Circuit, holds that punitive damages are unavailable under maritime law for claims of unseaworthiness (Dutra Group v. Batterton)

    The Ninth Circuit created a circuit split last year when it held that punitive damages are available under general maritime law for personal-injury unseaworthiness claims (i.e., claims that a vessel owner willfully and wantonly failed to provide a vessel reasonably fit for its intended purpose, resulting in personal injury).

    Yesterday, the Supreme Court reversed the Ninth Circuit in a 6-3 decision written by Justice Alito (with Justices Ginsburg, Breyer, and Sotomayor dissenting).   

    Justice Alito based his majority opinion on two grounds: (1) “overwhelming historical evidence” indicating that punitive damages have not been available for personal-injury unseaworthiness claims, and (2) the need to preserve a parallelism between maritime common law and maritime statutory law (the Jones Act), which generally limits a seaman’s damages to pecuniary losses.

    Justice Alito had to distinguish the Court’s 2009 in Atlantic Sounding v. Townsend, which allowed recovery of punitive damages under the Jones Act and general maritime law for willful and wanton failure to provide “maintenance and cure” (a term of art referring to a vessel owner’s obligation to provide food, lodging, and medical services to injured seamen).  The majority opinion in Atlantic Sounding relied on historical evidence that punitive damages were traditionally available in maintenance and cure cases.  Justice Alito found no such evidence supporting recovery of punitive damages for unseaworthiness.  Interestingly, Justice Thomas, who wrote the majority opinion in Atlantic Sounding, signed on to Justice Alito’s opinion in Dutra.

    The opinion is not likely to have any impact outside the maritime context. 

  • Supreme Court reverses Ninth Circuit, holds that punitive damages are unavailable under maritime law for claims of unseaworthiness (Dutra Group v. Batterton)

    The Ninth Circuit created a circuit split last year when it held that punitive damages are available under general maritime law for personal-injury unseaworthiness claims (i.e., claims that a vessel owner willfully and wantonly failed to provide a vessel reasonably fit for its intended purpose, resulting in personal injury).

    Yesterday, the Supreme Court reversed the Ninth Circuit in a 6-3 decision written by Justice Alito (with Justices Ginsburg, Breyer, and Sotomayor dissenting).

    Justice Alito based his majority opinion on two grounds: (1) “overwhelming historical evidence” indicating that punitive damages have not been available for personal-injury unseaworthiness claims, and (2) the need to preserve a parallelism between maritime common law and maritime statutory law (the Jones Act), which generally limits a seaman’s damages to pecuniary losses.

    Justice Alito had to distinguish the Court’s 2009 in Atlantic Sounding v. Townsend, which allowed recovery of punitive damages under the Jones Act and general maritime law for willful and wanton failure to provide “maintenance and cure” (a term of art referring to a vessel owner’s obligation to provide food, lodging, and medical services to injured seamen).  The majority opinion in Atlantic Sounding relied on historical evidence that punitive damages were traditionally available in maintenance and cure cases.  Justice Alito found no such evidence supporting recovery of punitive damages for unseaworthiness.  Interestingly, Justice Thomas, who wrote the majority opinion in Atlantic Sounding, signed on to Justice Alito’s opinion in Dutra.

    The opinion is not likely to have any impact outside the maritime context.

  • Supreme Court grants cert. in Ninth Circuit case involving maritime punitive damages (Batterton v. Dutra Group)

    When the Ninth Circuit issued this opinion back in January, we observed that it had the makings of a good cert. petition.  The Supreme Court thought so too, and issued an order today granting the defendant’s petition.

    Here’s a link to the Supreme Court’s online docket.

    Related posts:

    “Circuit Split Encourages Forum Shopping by Injured Seamen”

    Ninth Circuit creates circuit split on availability of punitive damages in unseaworthiness cases (Batterton v. Dutra Group)

  • Supreme Court grants cert. in Ninth Circuit case involving maritime punitive damages (Batterton v. Dutra Group)

    When the Ninth Circuit issued this opinion back in January, we observed that it had the makings of a good cert. petition.  The Supreme Court thought so too, and issued an order today granting the defendant’s petition.

    Here’s a link to the Supreme Court’s online docket.

    Related posts:

    “Circuit Split Encourages Forum Shopping by Injured Seamen”

    Ninth Circuit creates circuit split on availability of punitive damages in unseaworthiness cases (Batterton v. Dutra Group)

  • Divided Ninth Circuit affirms punitive damages award in unpublished decision (Fair Housing Center of Washington v. Breier-Scheetz Properties)

    This unpublished memorandum disposition from the Ninth Circuit affirms a punitive damages award in a housing discrimination case. 

    The defendant landlord limited occupancy in certain studio apartments to one person per studio.  The Fair Housing Center of Washington argued that this policy unfairly discriminated against families, in violation of federal, state, and local housing laws. The district court ruled agreed and imposed punitive damages on the landlord, who appealed.

    The Ninth Circuit affirmed in an opinion with very little analysis, as is typical of unpublished memorandum dispositions.  The discussion is so cursory, it does not even reveal the amount of punitive damages at issue.  (Press reports indicate the award was $100,000.)

    Although the majority seemed to think the case was a slam-dunk, Judge Bea dissented from the decision to affirm the punitive damages.  He explained that the plaintiff presented no evidence that the defendant acted with an “evil motive” as required for punitive damages under the Fair Housing Act:

    [The defendant] was simply unwilling to change a longstanding and reasonable business policy—which [the defendant] maintained was legal—until ordered to do so by a court. It cannot be the case that in order to avoid being subjected to punitive damages, a business must immediately change its policies whenever it is accused of misconduct by an advocacy group or an administrative agency, rather than insist that the group or agency prove liability in a court of law. A defendant similarly cannot be subjected to punitive damages for failing prophetically to cease conduct that is only subsequently enjoined by a court order. . . . . None of the district court’s findings in this case come close to evincing the “reckless or callous indifference” required to award punitive damages under the FHA.

    This is an issue that comes up fairly often in California punitive damages litigation.  Plaintiffs’ counsel will sometimes argue that a defendant’s failure to admit liability is itself a reason for punishment.  California courts have recognized, however, that a defendant cannot be punished merely for defending itself.  In light of Judge Bea’s dissent on this point, it’s a bit surprising that the judges in the majority did not bother to offer any response to his arguments.