Punitive damages arise in some strange contexts. In this opinion, the Wisconsin Court of Appeals reinstated a $5 million punitive damages award in a father-son feud over control of a beef jerky empire.
The trial court had reduced the award to $736,000, but the appellate court determined that the trial court had no power to order the reduction because the defendant filed his posttrial motion one day late. Oops.
Hat tip: Beef Jerky Blog (“The Undisputed King of Beef Jerky!”)
Drug and Device Law has a lengthy post arguing that punitive damages should be unavailable in most product liability lawsuits against prescription drug manufacturers. The post collects authorities from various jurisdictions for the proposition that punitive damages are inappropriate when the defendant’s conduct complied with applicable regulations or industry standards. We touched on this issue a few months ago, in a post about a decision from the Montana Supreme Court.
The Oregon courts are once again making news in punitive damages litigation. Last week, the Oregon Court of Appeals issued this opinion in Wieber v. Fed Ex, reversing a $7 million punitive damages award as excessive. The reversal is noteworthy, since Oregon courts rarely overturn punitive damages awards on excessiveness grounds. But even more noteworthy is the court’s internal disagreement about how to remedy the excessiveness problem.
The plaintiff in Wieber, who had a delivery route with Fed Ex, argued that Fed Ex fraudulently terminated his contract without notice. The jury awarded $350,000 in compensatory damages for fraud and intentional interference with economic relations, plus $7 million in compensatory damages.
On appeal, Fed Ex challenged the liability findings and the amount of punitive damages. On liability, the court concluded Fed Ex was entitled to judgment on the claim for intentional interference with economic relations, but ruled that the plaintiff presented sufficient evidence to support the fraud verdict. Having upheld the liability findings, the court addressed Fed Ex’s argument that the punitive damages were excessive. The court concluded that Fed Ex’s conduct was very low on the reprehensibility scale, and therefore any award of punitive damages in excess of three times the amount of compensatory damages would violate due process.
Here’s where it gets a little interesting. The court ordered a new trial, but gave the plaintiff the option of accepting the constitutional maximum award (roughly $1 million) and foregoing a new trial. A dissenting justice argued that the plaintiff should not be permitted to choose a remittitur, and that the defendant was entitled to a new trial. The dissent pointed out that the jury, while considering punitive damages, was improperly directed to award punishment for both intentional interference and for fraud.
The dissent seems to have the better argument. Ordinarily, when an appellate reverses a punitive damages award solely on the ground that the award is unconstitutionally excessive, the court has the power to reduce the award to the maximum award that would be permitted under the constitution. (See Johansen v. Combustion Engineering (11th Cir. 1999) 170 F.3d 1320, 1332, fn. 19; see also Simon v. San Paolo U.S. Holding Co., Inc. (2005) 35 Cal.4th 1159, 1187-1188 [following Johansen].) In a such a situation, the court need not give the plaintiff the option of a new trial, because the plaintiff could not possibly achieve a better result on retrial; by definition, the constitutional maximum award is the ceiling on the plaintiff’s recovery.
But the analysis should be very different when a court reverses an award not just for excessiveness, but for a trial error, like an evidentiary error or an instructional error. In such cases, the defendant is entitled to a new trial so that a properly instructed jury can decide the appropriate amount of punitive damages based on proper evidence. It is unfair for an appellate court to simply order the defendant to pay the maximum constitutional award, because the jury in a properly conducted trial might have chosen to award a lesser amount.
Apropos of the season, fake news service CarbolicSmokeBall has this story: “Dracula Files Products Liability Suit Against Wooden Stake Manufacturers.“
Is this really a punitive damages case? As reported by the Associated Press, a judge in Montana is deciding whether to impose punitive damages on a manufacturer of aluminum baseball bats. A jury has already found the defendant liable for failure to warn and awarded $850,000 in compensatory damages.
The plaintiffs’ son was struck and killed by a baseball while playing in a baseball game. The article does not explain what warnings the plaintiffs contend should have been given, or how those warnings would have prevented the tragic death of the plaintiffs’ son. Obviously I haven’t heard the evidence presented to the jury, but I am skeptical that there could be any proof of malice here.
As reported by Bloomberg and the Associated Press (via the Seattle Times), a Philadelphia jury has awarded an undisclosed amount of punitive damages against Pfizer in litigation over its hormone replacement drug, Prempro. The judge has sealed the amount of the punitive damages award because another trial involving Prempro is pending in the same courthouse. Other lawsuits involving Prempro have resulted in some very large punitive awards.
An order sealing a punitive damages award is rare, but not unheard of. Last year a Los Angeles judge sealed the $50 million award against iPayment CEO Greg Daily. An anonymous source leaked the amount to the press immediately after the award was rendered. The court later ordered the award unsealed. (Full disclosure: Horvitz & Levy is now representing Mr. Daily in his effort to overturn that award.)
As reported by Bloomberg, a federal district judge in Washington D.C. has awarded $310 million, including $300 million in punitive damages, to a victim of the 1983 embassy bombing in Lebanon. The judge determined that Iran was liable because it funded the Hezbollah terrorists who launched the attack.
The sheer size of this award and the 30-to-1 ratio would seem to raise some constitutional questions, but those questions will never be litigated because Iran is not defending itself. The Bloomberg story reports that U.S. courts have awarded $3.5 billion against Iran in the last few years. Iran has not contested any of the suits or paid any of the judgments. Like the $393 million judgment against Cuba earlier this year, this award is purely symbolic.
Although I have no sympathy for these particular defendants, I wonder whether these “funny money” awards are contributing to a culture that views 9-digit punitive damages awards as an accepted part of our legal system.
As reported by Bloomberg, a U.S. District Judge in Manhattan has ruled that New York City has not produced sufficient evidence to proceed with a claim for punitive damages in its lawsuit against Exxon Mobil Corp. for allegedly poisoning city wells with MTBE, a gasoline additive.
The City is seeking $250 million in compensatory damages. It probably would have asked for that much or more in punitive damages if the court had permitted it to do so. We’ll apparently never know, because the city’s lawyers are not commenting on the ruling.
Ford has filed a petition for certiorari in Buell-Wilson v. Ford Motor Co., a case with a long procedural history that has already included one stop at the U.S. Supreme Court. (See the long list of related posts below.)
Ford’s petition asks the court to clarify the standard for resolving a claim that a state punitive damages statute is unconstitutionally vague as applied to the facts of a particular case. Specifically, Ford argues that California’s punitive damages statute (Civil Code section 3294) is unconstitutionally vague as applied to cases involving manufacturers whose products comply with applicable regulatory standards and industry customs.
Ford’s approach is a bold one. The Supreme Court has never addressed an as-applied vagueness challenge to a punitive damages statute, as far as I know. But there’s a first time for everything. If Ford can get cert. in this case, it could be the same kind of game-changing event as BMW v. Gore.
Related posts:
California Supreme Court Denies Request to Re-Publish Buell-Wilson
The Largest Punitive Damages Award to Survive Appeal in California?
Cal. Supreme Court Dismisses Review in Buell-Wilson v. Ford
Plaintiff Asks California Supreme Court to Dismiss Review in Buell-Wilson v. Ford
California Supreme Court Grants Review in Buell-Wilson v. Ford
Court of Appeal May Have Been Too Quick on the Trigger in Buell-Wilson Post-Opinion Order
Court of Appeal Denies Petition for Rehearing in Buell-Wilson v. Ford
The U.S. Supreme Court’s on-line docket for Stevens v. Vons indicates that the court denied the petition for certiorari yesterday. As we noted in a prior post, the petitioner was essentially arguing that state courts are not permitted to reduce punitive damages awards under state law unless those awards are excessive under the Due Process Clause. Not surprisingly, the Supreme Court declined to take up that issue.
Related posts:
Stevens v. Vons: $16.7M in Punitive Damages Reduced to $1.2M, Ratio of 1-to-1