Should courts rely on the BMW v. Gore line of authority, which limits excessive punitive damages as a matter of federal due process, as a basis for reducing excessive compensatory damages? According to one federal district court judge, the answer is “yes.”

Ben Sheffner of the NBC Universal legal department reports in this Washington Legal Foundation Legal Backgrounder about a recent decision in which a federal judge relied on BMW to reduce a compensatory damages award as excessive in a copyright infringement case.

In cases where the “compensatory” damages award is more in the nature of a penalty (e.g., cases involving pre-set statutory fines for certain misconduct), it isn’t much of a stretch to say that the penalty should be subject to the same Due Process Clause concerns identified in BMW. But defense counsel will have a more difficult time extending that sort of reasoning to cases involving garden-variety compensatory damages awards that are designed to reimburse the plaintiff for actual out-of-pocket losses.

Hat tip: WLF Legal Pulse

A Los Angeles superior court judge has vacated the $200 million punitive damages award that a jury awarded against Certainteed back in April.

The judge’s ruling on posttrial motions states that a complete new trial on all issues is required because no substantial evidence supports the jury’s determination that a nonparty tortfeasor was 0% at fault for the plaintiff’s injuries. According to the judge, undisputed evidence established that some fault should have been assigned to that nonparty.

Although the ruling orders a complete new trial, it also addresses some punitive damages issues, in recognition of the fact that the new trial order could be reversed on appeal. The order states that substantial evidence supports the jury’s finding that the defendant acted with malice, oppression, or fraud within the meaning of Civil Code section 3294. But the order also states that the amount of the award was grossly excessive, and that the maximum permissible punitive damages award on the facts of this case is $5.9 million (equal to the amount of the compensatory damages award, after reducing the compensatory damages to account for allocation of fault).

In May we reported on a case in which a Sacramento jury awarded $1.1 million in compensatory damages and $28 million in punitive damages against a nursing home company. As reported by the Sacramento Bee, the trial judge in that case has denied the defendant’s posttrial motions, declining to vacate or reduce the punitive damages award.

We won’t comment any further on the case because our firm has been retained to represent the defendant on appeal.

Times are tough for the lawyers representing a group of Nicaraguan banana workers who claimed they were harmed by pesticides that Dole used in the 1970’s. Law.com is reporting that a Los Angeles judge has dismissed the last remnants of a verdict in which a jury awarded those workers over $5 million in damages, including $2.5 million in punitive damages.

In November 2007, the jury in Tellez v. Dole awarded $3.2 million in compensatory damages and $2.5 million in punitive damages. The punitive damages award was vacated during posttrial proceedings, but Dole appealed the remaining portion of the award. Dole argued that the case should be thrown out in light of evidence that plaintiffs’ counsel falsified medical records and work certificates and intimidated Dole’s investigators in Nicaragua. The Court of Appeal refused to vacate the judgment, but ruled that a prima facie case of fraud existed and returned the case to the trial court for further proceedings. Court of Appeal Justice Victoria Chaney, who presided over the trial court proceedings on remand because she had been involved in the case before she was elevated to the Court of Appeal, found evidence of fraud, and vacated the entire verdict.

In related news, the Ninth Circuit recently sanctioned prominent plaintiffs’ attorneys Walter Lack and Tommy Girardi for their own fraudulent attempts to enforce a Nicaraguan judgment that was based on the same allegations.

The plaintiffs’ lawyers came very close to collecting millions of dollars from these cases, but they ultimately ended up with nothing.

In May we blogged about a $250 million punitive damages award against drug maker Novartis in an employment discrimination class action. The jury awarded $3.3 million in compensatory damages to 12 plaintiffs, but compensatory damages for the remaining 5,588 plaintiffs remained to be determined. At that rate, the compensatory damages could easily have eclipsed the punitives.

The Washington Post reports that Novartis has settled that case for $152.5 million. So it looks like that case will not be the vehicle for an appellate opinion on the availability of punitive damages in class actions.

The on-line Nigerian news outlet Vanguard is reporting that a court in Nigeria has ordered Shell Petroleum Development Company of Nigeria to pay 15.4 billion in Nigerian Nairas for an oil spill that occurred in 1970. That’s equivalent to about $102.7 million in U.S. dollars, if I’ve done the currency conversion correctly.

The Vanguard story says 10 billion of the award is for “punitive damages . . . for general inconveniences, acid rain, pollution of underground water and hardship to the population . . .” That doesn’t really sound like “punitive damages” as we know them in the U.S.; it sounds more like compensation for actual injuries.

I have no idea whether Shell has any avenue for challenging the award on appeal, whether it might succeed in such a challenge, or whether the plaintiffs will be able to enforce the award if it sticks. I’ll try to keep an eye out for more details on this story.

Here’s a case that proves the adage, “If at first you don’t succeed, try, try again.”

As readers of this blog will recall, Philip Morris was unable to persuade the Oregon Supreme Court to overturn a $79.5 million punitive damages award in the Williams case, even after the U.S. Supreme Court had seemingly ruled in Philip Morris’ favor.

In Schwarz v. Philip Morris, the Oregon Supreme Court has ordered a new trial for nearly the same error at issue in Williams: a defect in the jury instructions on the question of imposing punitive damages for harm to nonparties. In Schwarz, as in Williams, the Oregon Supreme Court ruled that the trial court properly rejected Philip Morris’ proposed instruction because it was not “accurate in all respects” as required by Oregon law. But the Schwarz court agreed with Philip Morris that the trial court erred by giving the jury an standard pattern instruction that improperly allowed the jury to use evidence of harm to others in arriving at its punitive damages verdict.

The ruling is a big win for Philip Morris. The jury in Schwarz had awarded $169,000 in compensatory damages and $150 million in punitive damages, reduced to a mere $100 million by the trial court. As a result of the Supreme Court’s decision, the compensatory damages award will stand, but the issue of punitive damages will be retried.

This Florida appellate opinion reverses a judgment that awarded $159 million in compensatory damages and $351 million punitive damages award against accounting firm BDO Seitman for an allegedly botched audit. The court ordered a new trial because it concluded that the trial court unfairly “trifurcated” the original trial, allowing the jury to make a key finding relevant to the issue of punitive damages before the jury had even considered liability issues such as causation and reliance.

Related post:

Foreign Corporation Not Liable for Punitive Damages Against U.S. Affiliate

The New York Times reports that a San Diego jury has awarded the $1.1 million in compensatory damages and $5.7 million in punitive damages against the Chicago Title Company and the Chicago Title Insurance Company for their role in an allegedly fraudulent real estate transaction. The story reports that the same jury also awarded $2.1 million in compensatory damages and $5.2 million in punitive damages against Rollo Richard Norton II, the alleged mastermind of the fraudulent scheme.

Various media outlets are reporting that a jury in Dallas has awarded $246 million in damages against DJA Software Group in a software-licensing dispute with Dillard’s Inc. Exactly how much of that award is punitive damages, I can’t tell.

The Wall Street Journal reports that the jury awarded $238 million in punitive damages. The Associated Press, however, says the jury awarded $238 million in “indirect or punitive damages.” Reuters reports that the jury awarded $238 million in “consequential, special or punitive damages.”

To the non-legal press, those might not seem like significant differences. But for purposes of analyzing whether the award is excessive, it obviously makes a big difference whether the $238 million was entirely punitive damages, or whether it included some compensatory damages. If the jury really awarded $8 million in compensatory damages and $238 million in punitive damages, JDA could virtually guarantee that the punitive damages would be overturned as excessive. Under that scenario, the punitive damages award would quite possibly be reduced to $8 million, resulting in a 1-to-1 ratio.

But if a big chunk of the $238 million includes compensatory damages, the analysis changes dramatically. The award might not be reduced at all, if the total compensatory damages already exceed the punitive damages.

Bradenton.com, the website for the Bradenton Herald, contains a press release from Susman Godfrey, counsel for Dillard’s, indicating that the jury actually awarded $96 million in various types of compensatory damages and $150 million in punitive damages. Assuming that’s accurate, the punitive damages may be excessive, but Dillard’s may still end up with a total award in excess of $100 million (assuming there are no other defects in the award besides the excessiveness of the punitive damages).