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.

It’s not often that a state supreme court affirms a blockbuster punitive damages award, but yesterday the Colorado Supreme Court affirmed a $39.6 million judgment in a personal injury action, including $18 million in punitive damages, in the case of Qwest Services Corp. v. Blood.  The plaintiff, a lineman for an electric utility, was injured during a climb on a wooden utility pole.  The 46-year-old pole was rotten and collapsed under the plaintiff’s weight.  He sued the defendant, the company that owned of the pole, for failure to implement a routine pole inspection program.

The Colorado Supreme Court’s opinion has three primary holdings:

1.  Colorado’s punitive damages statute does not violate the Due Process Clause as interpreted by the U.S. Supreme Court in Philip Morris v. Williams; the statute does not suggest that a jury can or should award punitive damages to punish the defendant for harm to nonparties.

2.  The evidence was sufficient to support a punitive damages award against the defendant, because a reasonable jury could conclude that the defendant’s failure to implement a pole inspection problem was “wilful and wanton” within the meaning of Colorado’s punitive damages statute. 

3.  The amount of the award was not excessive under the three guideposts of BMW v. Gore because the reprehensibility of the defendant’s conduct was sufficient to support a punitive damages award that was less than the amount of compensatory damages.

Related posts:

Colorado Supreme Court to consider excessive punitive damages, despite statutory cap

The Associated Press is reporting (via the Washington Post) that a jury in Mississippi awarded $322 million last week to a man who claimed he developed asbestosis as a result of working with drilling mud additives.  The defendants are Chevron and Union Carbide, who were each found 50 percent at fault for the plaintiff’s injuries.  (Brown v. Phillips 66, et al., Miss. Cir. Ct., Smith Cty.)

The AP story says the $322 million award is the largest single plaintiff’s asbestos verdict in U.S. history, according to the plaintiff’s attorney.  The AP story doesn’t say how much of that award was attributable to punitive damages, but this story in the HarrisMartin asbestos litigation reporter (subscription required) says the breakdown was as follows: $22 million in compensatory damages and $300 million in punitive damages.  That’s a ratio of 13.7 to one, which cannot possibly withstand scrutiny under BMW and Campbell.  The award also appears to violate Mississippi law, which places limits on punitive damages based on a sliding scale according to the defendant’s net worth.  The maximum award permitted under that statute (Miss. Code Ann. 11-1-65) is $20 million for a defendant with a net worth in excess of $1 billion.  Any way you slice it, this award doesn’t figure to last very long.

Reuters is reporting that Swiss biopharmaceutical firm Actelion Ltd. plans to appeal from a jury award of $547 million in compensatory damages and $30 million in punitive damages in a dispute with rival drug company Asahi Kasei Pharma Corp.  Asahi accused Actelion of intentionally interfering with Asahi’s attempts to develop a drug for the treatment of heart disease, in order to preserve Actelion’s dominant position in that market.

Ordinarily, when a jury awards tens of millions in punitive damages, that award becomes the focal point of the appeal.  But in this case the punitive damages issues will obviously take a back seat to arguments challenging the colossal compensatory award.

Asahi’s lawyers have issued this press release touting their victory.

Reuters is reporting that a federal district court jury in Virginia has awarded $12 million in compensatory damages and $200 million in punitive damages to a plaintiff who claims he suffered brain damage after receiving injections of Botox made by defendant Allergan.  This is one of the largest U.S. punitive damages awards we’ve seen in a while, but it doesn’t appear to have any chance of standing up.  The case is proceeding under Virginia law, which caps punitive damages at $350,000. 

Last December we reported on a $5 million punitive damages award in favor of two law professors against West Publishing.  The professors, as you may recall, were the authors of a West treatise on criminal procedure.  They won the big punitive award (along with $180,000 in compensatory damages) based on allegations that West wrongly identified them as the authors of shoddy updates to the treatise.

Predictably, that punitive award did not survive post-trial review.  The trial court has issued an order (link via Courthouse news) finding that the award is excessive and that the professors must choose between a new trial or a remittitur of the total punitive damages to $220,000.

UPDATE:  The original post erroneously reported that the trial court ordered a remittitur of the punitive damages to $400,000.  The correct figure is $220,000 (for a total award of $400,000 including the compensatory damages).  The text of the post has been corrected.

Bloomberg Businessweek is reporting that a jury in Los Angeles has awarded a former Marine $19 million in punitive damages and $35,000 in compensatory damages, in an insurance bad faith case against Stonebridge Life Insurance.  The plaintiff 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.

Stonebridge says it intends to appeal.  An appeal may not be necessary, however, if Stonebridge files post-trial motions asking the trial court to reduce or vacate the punitive damages.  Although there is some case law stating that a low compensatory damages award can support a higher punitive-to-compensatory ratio, nothing would support the extreme ratio here.  The trial court may conclude that the punitive is so high and so disproportionate to the actual harm that it raises a presumption that the jury acted out of passion and prejudice.

I haven’t been following this case, but apparently a former associate at the Orrick Herrington law firm is suing the firm for $100 million, including punitive damages, because they promised to make him a partner but didn’t.  This New York Law Journal story reports that the trial judge granted Orrick’s motion to strike the claim for punitive damages, on the ground that being passed over for partnership isn’t the sort of egregious misconduct that could support an award of punitive damages.  The plaintiff says he will appeal.  Good luck with that.