In a timely post (given this week’s Bullock v. Philip Morris opinion) the folks at Dechert LLP have posted the results of punitive damages research they did to “list of all the cases we’ve been able to find where a court held that, constitutionally, punitive damages could not be assessed in an amount greater than a one-to-one ratio.”

There’s epic litigation, and then there’s Bryant v. Mattel (aka “Mattel v. MGA”). Back in 2008, we had a post right here on this blog titled “No Punitive Damages Awarded in Bratz Trial.” Well, a bit more of the dolly drama has played out since then, requiring this update. In the megalitigation pitting the House of Barbie against the Bratz pack, the parties are up to two trials before two different district judges, plus one big trip to the Ninth Circuit and several smaller trips, and more than 10,700 filings generated by the parties.

Now, as recounted in a great many media reports (e.g., from the LA Times and Bloomberg), federal district court judge David Carter yesterday handed down an order awarding MGA $85 million in punitive damages. Awards of that size can be good candidates for a constitutional excessiveness challenge, often because such awards tend to be many times greater than the 1:1 ratio (or sometimes higher single-digit ratio) recognized as appropriate in comparison to significant compensatory damages. But in this case, the award of punitive damages is equal to the award of compensatory damages, so a ratio argument may not be the focus of any excessiveness challenge that Mattel mounts in posttrial motions or on appeal.

This award is atypical of most large punitive damages awards because it was made by a judge, not a jury. MGA’s basis for seeking punitive damages arose from a claim for willful misappropriation of trade secrets. That claim was tried to the jury, but the applicable California statute authorizes the court to award punitive damages, and the statute caps any award at twice the compensatory damages. Cal. Civ. Code § 3426.3(c). MGA asked the district court to award the maximum amount of punitive damages—double its compensatory damages—but the court declined to do so.

This won’t be the last time you hear about this case. In addition to the large awards of compensatory and punitive damages, the district court’s companion order saddled Mattel with paying MGA some $140 million in attorney’s fees and costs. (Yes, that’s a nine-figure fee award.) With combined awards of more than $300 million, you can expect Mattel to appeal.

All in all, it’s quite a reversal of fortune for Mattel, which won the first trial and obtained millions in damages against MGA, only to see the Ninth Circuit reverse the judgment and order this new trial. According to one analyst’s estimate (as quoted in the Financial Times), it has likely cost Mattel some $400 million in legal fees since 2004 to get to this point. For MGA’s part, its CEO Isaac Larian reportedly said yesterday that the protracted litigation has damaged the Bratz brand by an estimated $1 billion, and that MGA intends to seek recompense in a separate antitrust proceedings against Mattel.

Here’s an interesting cross section of punitive damages news over the last week, offering a non-statistically significant glimpse into the punishment meted out for certain inappropriate (bit of understatement there) behavior:

Gang rape — $1.03 million compensatory damages; $1.5 million punitive damages (about 1.5:1 ratio). As reported by the Wisconsin Law Journal, a state appellate court found last week that $1.5 million is not an excessive punitive damages award for the trial judge to have awarded against three men after a default prove-up hearing in a case in which the men were alleged to have drugged and raped the plaintiff. (See opinion in Pausch v. Cormier.) However, because the judge’s ruling did not make clear whether the award was assessed individually against the defendants ($500,000 owed by each), or was to be awarded jointly and severally against them, the court of appeal could not determine whether the trial court should have taken the defendants’ financial condition into account (which, under Wisconsin law, would be appropriate only if the awards were made individually and not jointly). The matter was remanded for clarification by the trial judge.

Diocese’s fraudulent concealment of molestation — $2.4 million compensatory damages; $2.6 million punitive damages (less than 1:1 ratio). The National Catholic Reporter notes that last month the Illinois Supreme Court rejected a final plea for relief from the Catholic Diocese of Belleville, which had sought review of an intermediate appellate court decision affirming an adverse judgment that included punitive damages awarded to molestation victim James Wisniewski. Notably, the diocese did not argue that the punitive award was excessive, but instead challenged the liability finding on statute of limitations and evidentiary error grounds.

Adultery resulting in “alienation of affection” — $1.275 million compensatory damages; $1.025 million punitive damages (a bit more than 1:1 ratio). A North Carolina jury has awarded compensatory and punitive damages against a man who, the plaintiff claimed, had an affair with the plaintiff’s wife and caused the breakup of a marriage that the plaintiff said had been characterized by “genuine love and affection.” Specifically, according to a Salisbury Post article, the jury awarded $425,000 for alienation of affection and $175,000 in punitive damages on that count, plus $850,000 for “criminal conversation” (i.e., sex outside of marriage) and the same amount for punitive damages on that count. The article observes that this was far more than the plaintiff had asked for, the defendant filed for bankruptcy, and the case (McCoy v. Freeman) settled after trial, effectively insulating the award from any appellate review.

Update (8/26): last March another North Carolina court case involving “criminal conversation” (reported here and here) resulted in a default judgment of $30 million to a jilted spouse (Carol Puryear) who sued the cheating spouse’s lover (Betty Devin). The total is comprised of $10 million in compensatory damages and $20 million in punitive damages.

Update (8/21/11): see this article (“Even a sex-toy purveyor can have a sexually hostile workplace“) about a divided New Jersey appellate division ruling last week in Longo v. Pleasure Productions Inc. The court upheld a Florida jury’s award in an employment discrimination case brought by a plaintiff who worked at a sex toy company. She complained of harrassment by a co-worker and retaliatory discharge, and received a compensatory damages award of $150,000 (awarded jointly against an individual and against the employer), plus $500,000 in punitive damages against the employer only.

As we’ve previously reported, a Wisconsin jury awarded $5 million in punitive damages to the son of Jay Link, the aptly named founder of a meat snacks company. The son proved a breach of fiduciary duty claim based on allegations that the father squeezed him out of the family’s beef jerky business.

As recounted in several publications, including a write-up by the Courthouse News Service, the Wisconsin Supreme Court has now agreed with the intermediate appellate court that Mr. Link’s challenge to the award was procedurally defective because his new trial motion was filed two minutes after the normal 4:30 p.m. closing time for the clerk’s office. Although the clerk accepted the filing as timely, the high court held the clerk had no discretion to do so, and that the trial court therefore had no authority to enter its order reducing the damages to $736,000.

As they say, “timing is everything.” The delay in filing comes out to a more than $2 million-per-minute mistake, assuming that other proceedings on remand (concerning the underlying fiduciary duty claims) don’t indirectly lead to some relief from the punitive damages award.

Starting tomorrow, I will be taking a six-week sabbatical in order to do some traveling and spend time with my family.  I probably won’t be doing much blogging my sabbatical, but my colleagues will be filling in for me, keeping an eye out for noteworthy developments in punitive damages law and litigation.  See you in September!

I’ve been meaning to post about HBO’s “Hot Coffee” documentary ever since reading this Reuters interview with the filmmaker (“Hot Coffee” shows the other side of “frivolous lawsuits”).  I can’t comment on the film itself because I haven’t seen it yet, but I was struck by the overall theme of the article: the author felt compelled to make a film to tell “the other side” of civil litigation, because “[n]obody talks about frivolous defenses” and the other evils perpetrated by defense lawyers and their clients. 

I guess it’s all a matter of perspective.  The author perceives that plaintiffs’ lawyers have been unfairly vilified and portrayed as bad guys to the American public.  From my perspective, the opposite seems true.  My perception is that nearly every depiction of civil litigation in the media and pop culture portrays plaintiffs’ lawyers as heroes, fighting for the little guys against evil corporations who will stop at nothing to make a buck.  I can think of quite a few films that glorify plaintiffs’ lawyers, such as Erin Brockovich, A Civil Action, Philadelphia, Class Action.  And didn’t we just have another documentary film, Bananas, depicting plaintiffs’ lawyers fighting against evil corporations?  I can’t really think of any films that glorify civil defense lawyers.  Don’t get me wrong, I’m not quitting my job to make a film about the virtues of defense lawyers.  I just don’t share the author’s views about how civil litigation is usually presented to the American public.   

The Associated Press is reporting that a Maryland jury has awarded $1 billion in punitive damages and $495 million in compensatory damages against Exxon Mobil in a lawsuit brought by 160 families and businesses affected by a gasoline leak at a gas station.  Exxon will undoubtedly file post-trial motions and, if necessary, an appeal.  If they can’t knock out the punitive damages entirely, there’s a good chance they’ll succeed in getting the ratio reduced to 1 to 1.  The Exxon Shipping decision won’t provide direct precedent, because the punitive damages in that case were reduced under federal maritime law.  But even without Exxon Shipping, Exxon will have a strong argument that any ratio in excess of 1 to 1 is excessive. 

Whatever happens, the appellate process shouldn’t drag on for nearly as long as the Exxon Valdez case.  In that case the Ninth Circuit repeatedly remanded to the district court to re-evaluate the amount of punitive damages in light of the latest Supreme Court decisions.  By the time the case would make it up on appeal again, the Supreme Court would issue a new decision.  I don’t foresee another string of Supreme Court decisions on excessive punitive damages this time around; the Court as presently constituted has declined several opportunities to jump back into this area.   

Earlier this year we reported on an insurance bad faith case against Stonebridge Life Insurance in which a Los Angeles jury verdict awarded $35,000 in compensatory damages and $19 million in punitive damages. The plaintiff, who purchased a hospital accidental indemnity policy from Stonebridge, claimed that Stonebridge unreasonably refused to pay for a lengthy hospital stay, agreeing to pay only for 19 days out of a 109-day stay.

The defendant brought posttrial motions seeking a reduction of the punitive damages award. The trial court’s order (see discussion beginning on page 13) reluctantly concludes that any award in excess of $350,000 (10-to-1 ratio) would violate the federal Due Process Clause. Interestingly, the order written by Judge Mary Ann Murphy states that an award of $350,000 is unlikely to deter Stonebridge from engaging in similar misconduct in the future, but “the Court is constrained to reduce the punitive damages award to 10:1 based on recent California and federal authority.”

The plaintiff will probably appeal, arguing that the 10-to-1 ratio is too low and relying on the statement in State Farm v. Campbell that higher ratios are appropriate when “a particularly egregious act has resulted in only a small amount of economic damages.” The defendant is likely to respond that the conduct at issue here is not so egregious as to warrant even a 10-to-1 ratio (if it warrants punitive damages at all).

The Daily Journal has coverage of this story here. (Subscription required).

Related post:

L.A. jury awards $19 million in punitive damages and $35,000 in compensatory damages in insurance bad faith case

Reuters reports that a former Orrick, Herrington & Sutfliffe associate who sued the firm has lost an appeal seeking to reinstate his punitive damages claim against the firm. The associate claimed that Orrick failed to make him a partner despite assurances that his promotion would be guaranteed if he stayed at the firm.  As we reported in an earlier post, the trial court tossed his claim for punitive damages on the ground that he failed to allege that Orrick’s conduct was egregious enough to warrant punitives.  Not surprisingly, the court of appeal affirmed.

Related posts:

No punitive damages for former law firm associate who was passed over for partnership

A little while ago I posted about a Colorado Supreme Court opinion that affirmed an $18 million punitive damages award, and I observed that state supreme courts don’t often affirm blockbuster punitive damages awards.  One of our readers then alerted me to the Oregon Supreme Court’s opinion last week in Strawn v. Farmers Insurance Co. of Oregon, which affirmed an $8 million punitive damages award.  (Technically, the court reinstated an $8 million punitive damages award that had been reversed by the Court of Appeal.) 

That doesn’t quite qualify as a “blockbuster,” but it is surprising that the court affirmed the award given that the compensatory damages were only $800,000.  A 10-to-1 ratio seems awfully high in a case that involves purely economic harm (underpayment of insurance policy benefits).  Then again, the Oregon Supreme Court has a history of marching to the beat of its own drum when it comes to punitive damages; this is the court that affirmed the $79.5 million punitive damages award in Philip Morris v. Williams even after the U.S. Supreme Court held that the jury instructions in that case violated Due Process.

DISCLOSURE: Horvitz & Levy was not involved in the Strawn case, but we do represent Farmers in other matters.