The Sacramento Bee is reporting that a Sacramento jury has awarded $1.1 million in compensatory damages and $28 million in punitive damages against Horizon West Healthcare, a nursing home company. The plaintiffs claimed that Horizon was responsible for the death of their 79-year-old mother. With a ratio like that (25.5 to 1), this award is going down.
Hat tip: Fred Pilot
Judge Rex Heeseman of the Los Angeles Superior Court contributes regularly to the Los Angeles Daily Journal on various topics, including punitive damages. In his latest piece, Calculation of the “PD Ratio” (May 11, 2010), which you can view here if you have a subscription, Judge Heeseman discusses the decision a few months ago in Amerigraphics v. Mercury.
Judge Heeseman’s article provides a nice overview of some of the major California appellate decisions addressing the proper ratio of punitive damages to compensatory damages. The article discusses the Amerigraphics decision in light of these precedents, and examines some of the questions raised by Amerigraphics.
For example, Judge Heeseman notes that in Amerigraphics, an insurance bad faith case, the court excluded from the ratio calculation any amounts awarded to the policyholder as “Brandt” fees (fees that the policyholder incurred in order to obtain wrongfully withheld policy benefits). Judge Heeseman notes that other decisions (such as Major v. Western Home) included Brandt fees in the ratio analysis. He suggests that California law is now unclear as to whether Brandt fees should be considered for ratio purposes.
Judge Heeseman also notes that the Amerigraphics court ultimately settled upon a ratio of 3.8 to 1 as the constitutional maximum on the facts of that case, and he says “[i]t appears this is the first occasion, in California at least, where an appellate court utilized a ‘fraction’ in the ratio.”
I think it’s true that California appellate courts generally adopt whole-number ratios, but fractional ratios are fairly common in California, because appellate courts often prefer to set the punitive damages at a nice round number. (See, e.g., Diamond Woodworks v. Argonaut (2003) 109 Cal.App.4th 1020, 1056-1057 [ordering a remittitur of punitive damages to $1 million, for a ratio of 3.8 to one, exactly the same ratio adopted in Amerigraphics]; Notrica v. State Compensation Insurance Fund (1999) 70 Cal.App.4th 911, 951-954 [ordering a remititur of punitive damages to $5 million, for a ratio of 10.3 to 1]; Rosener v. Sears, Roebuck & Co. (1980) 110 Cal.App.3d 740, 746, 757 [ordering a remittitur of punitive damages to $2.5 million, resulting in a ratio of 15.8 to one].) In the most recent example, the Court of Appeal in Roby v. McKesson adopted a ratio of 1.4 to 1, only to see that number reduced to 1 to 1 by the California Supreme Court.
For those of you wondering where have all the punitive damages gone, they’re baaack! With a vengeance. On the heels of a $200 million punitive damages award by a jury in Los Angeles, a jury in Las Vegas has topped that by dishing out $500 million in punitive damages.
As reported by the Associated Press, a jury awarded awarded $5 million in compensatory damages and $500 million in punitive damages to a husband and wife who alleged that the husband was infected with Hepatitis C during a colonoscopy. The jury awarded punitive damages not against the medical facility that infected the plaintiff, but against two drug companies that made and distributed propofol, the anesthetic drug used during the procedure. The plaintiffs alleged that the companies, Teva Parenteral Medicines and Baxter Healthcare Corp., supplied the drugs in vials that were larger than necessary, tempting the healthcare providers to re-use the vials on multiple patients, even though the vials were labeled for individual use. During the trial, the plaintiffs’ attorney referred to the vials as “weapons of mass infection.” (See this report in the Sun Times.)
This award is destined to be reversed or reduced. The basis for imposing punitive damages seems shaky and the amount of the award is simply absurd. An affirmance of this award would literally be unprecedented. Not surprisingly, the defendants have announced their plans to appeal. But even if the defendants get this award tossed, they won’t be out of the woods. Apparently there are series of similar cases in the pipe-line. This was just the first to make it to trial.
Yesterday, a Los Angeles jury awarded $8.8 million in compensatory damages and $200 million in punitive damages in an asbestos case against Certainteed Corporation and the Los Angeles Department of Water & Power (DWP). (The case is Evans v. AW Chesterton Co et al., case no. BC418867.)
It’s not clear to me whether the punitive damages were assessed against both defendants, or just one of them. Either way, the ratio of punitive damages to compensatory damages is 22.7 to 1. If that award remains intact through posttrial motions and appeal (not likely), it would dwarf the largest punitive damages award ever to to survive appeal in California ($55 million in Buell-Wilson v. Ford).
Hat tip: CVN Blog.
UPDATE: The Recorder (via Law.com) has a story on this verdict.
BusinessWeek reports that a Florida jury has awarded $10 million in compensatory damages and $80 million in punitive damages to a smoker’s widow in a lawsuit against R.J. Reynolds, as part of the ongoing series of post-Engle trials in that state.
The jury allocated 49% of the fault to the smoker. As a result, the Florida trial judge reduced the total award against R.J. Reynolds, including the punitive damages, by 49 percent. The net result was a judgment of $46.3 million.
I have never seen a California defendant ask a judge to reduce a punitive damages by the percentage of fault allocated to the plaintiff. I have seen many cases in which a defendant argues that the issue of excessiveness should be evaluated in light of the compensatory damages as reduced by the allocation of fault. But aside from arguments on excessiveness, I haven’t seen anyone argue that the allocation of fault should result in a direct, corresponding reduction in the punitive damages. Although I haven’t researched this extensively, I’m not aware of any California law directly on point. When the California Supreme Court adopted the doctrine of comparative negligence in Yi v. Yellow Cab, the court expressly declined to address the effect of that rule on punitive damages, saying only that “[t]he law of punitive damages remains a separate consideration.”
Related posts:
Florida Jury Awards $20 Million in Punitive Damages to Smoker’s Widow
Smoker’s Widow Wins $12.5 Million in Punitive Damages
Florida Trial Judge Cuts $244 Million Punitive Damages Award
Florida Jury Awards $25 Million in Punitive Damages to Smoker’s Widow
The New York Times reports that an Oregon jury has awarded $1.4 million in compensatory damages and $18.5 million in punitive damages (a ratio over 13 to one) against Boy Scouts of America. The plaintiff alleged that he was molested by an assistant scoutmaster in the 1980s, and that the Boy Scouts allowed the perpetrator to participate in scouting events even after he admitted to a Scouts official that he had previously molested boys.
The Boy Scouts say they plan to appeal. It will be interesting to see how this plays out. The ratio is quite high, but Oregon appellate courts have historically been hostile to defendants challenging punitive damages awards. In addition, Oregon has a split-recovery statute that entitles the state to 60 percent of any punitive damages award. That makes these cases hard to settle, because regardless of what the parties want to do, Oregon will insist on getting its 60 percent of the punitive damages award (as it did in the cases described here, here, and here).
We haven’t seen many media reports of big punitive damages awards lately, in California or elsewhere. But here’s a report from the Associated Press (via the Columbia Daily Tribune) that a jury in Arkansas has awarded $5.9 million in compensatory damages and $42 million in punitive damages against Bayer CropScience. The plaintiffs, a dozen farmers, alleged that Bayer allowed genetically modified herbicide-resistant rice into the American rice market, causing some nations to ban American rice, which thereby depressed prices.
Last year we posted about a case in which McDonald’s was hit for punitive damages because a prank caller supposedly tricked a McDonald’s store manager into performing a strip search on a store employee. Actually, the manager asked her boyfriend, who was not even a store employer, to perform a body cavity search. He ended up sexually abusing the employee in the process.
Amazingly, the Kentucky Court of Appeals ordered McDonald’s to pay $1 million in punitive damages to the manager who authorized the body cavity search, plus another $5 million to the victim of the strip search. The Courier-Journal of Louisville, Kentucky is now reporting that McDonald’s has settled the case for an undisclosed amount.
The West Virginia Supreme Court has issued its opinion in a pollution/medical monitoring case involving a $400 million verdict against DuPont, including $196.2 million in punitive damages. The case had generated a lot of attention, not only because it was the fifth largest punitive damages award in the country in 2005, but also because the governor of West Virginia filed an amicus brief supporting DuPont’s petition for review to the West Virginia Supreme Court.
The opinion remands the case for further proceedings to determine whether the this entire class action should be dismissed on punitive damages statute of limitations grounds. It also holds that, even if the plaintiffs’ claims are not barred the statute of limitations, the punitive damages should be reduced because (1) they were based in part on medical monitoring damages, which shouldn’t be used to calculate punitive damages because punitive damages can only be based on “actual harm,” and (2) DuPont should be credited for $20 million it already paid for cleanup expenses.
Hat tip: West Virginia Citizens Against Lawsuit Abuse
Related posts:
West Virginia Supreme Court Agrees to Review $196.2 Million Punitive Damages Award Against Dupont
W. Va. Supreme Court Candidates Support Appellate Review of Punitive Damages
West Virginia Gov. Defends His Amicus Brief in Punitive Damages Case
West Virginia Governor Draws Fire for Intervening in Punitive Damages Case
Does West Virginia’s Lack of a Right to Appeal a Punitive Damages Award Violate Due Process?
DuPont Asks West Virginia Supreme Court to Review $196.2 Million Punitive Damages Award
Florida has been making a lot of punitive damages news lately. In addition to the series of big punitive awards being handed out to smokers and their heirs, Florida’s intermediate appellate court issued an interesting (and in my mind, questionable) opinion this week in Lawnwood Medical Center v. Sadow.
In Lawnwood, the jury awarded nominal tort damages against a hospital for slandering a doctor, and then added $5 million in punitive damages. The hospital appealed the award as excessive under the Florida law and the Due Process Clause of the federal constitution.
The District Court of Appeal (Fourth District) analyzed the U.S. Supreme Court’s decisions in BMW v. Gore and State Farm v. Campbell, noted the ratio-based analysis in those cases, but suggested that those decisions might only apply to the specific types of misconduct involved, and not to cases involving malice. The court then suggested that cases involving malice are perhaps governed by the U.S. Supreme Court’s earlier decision in TXO v. Alliance, which the Florida court viewed as imposing no ratio limits on punitive damages imposed for malicious conduct.
Obviously I am influenced by my perspective as a defense lawyer, but I think the court’s analysis is deeply flawed. Nothing in BMW and Campbell suggest that the Supreme Court’s three-guidepost test is inapplicable to cases involving malice. To the contrary, Campbell expressly contemplated that the test would be applied to cases involving malice. Campbell instructs lower courts to consider a variety of factors when analyzing the reprehensibility of the defendant’s conduct (the first “guidepost”), including whether the defendant acted with malice. That wouldn’t make much sense if the whole analysis is inapplicable to malice cases. Campbell suggested that in some situations involving extreme reprehensibility and small compensatory damages, ratios in excess of single digits might be permissible. But the court did not suggest that ratio limitations are simply inapplicable in such cases. Such an exception would dramatically undermine the BMW/Campbell analysis, given that malice is perhaps the most frequent basis for imposing punitive damages under state law.
Fortunately, the Florida court in Lawnwood stopped short of actually holding that BMW and Campbell are inapplicable to malice cases. Instead, the court certified the following question to the Florida Supreme Court:
Are punitive damages of $5,000,000 arbitrary or excessive under the Federal Constitution where the jury awarded no compensation beyond presumed nominal damages but found that defendant intentionally and maliciously harmed plaintiff by slanders per se?
Stay tuned to see what the Florida Supreme Court does with this issue.
Hat tip: Florida Legal Blog