According to Bloomberg.com, Adidas and Wal-Mart have settled a lawsuit in which Adidas contended that Wal-Mart infringed on Adidas’s trademark by copying its distinctive three-stripe sneaker design. As we previously reported, Adidas had boldly predicted it would obtain a huge punitive damages award in this case. The prediction wasn’t all that far fetched, since Adidas recently won $137 million in punitive damages in the same court in a nearly identical lawsuit against Collective Brands, the parent company of Payless Shoes.

Both parties may have been motivated to settle in part because the state of Oregon (where this case was pending) claims 60 percent of all punitive damages awards. Indeed, Oregon stepped forward to claim its share of Adidas’ big win against Payless. As previous experience has shown, if an Oregon plaintiff wins a big punitive damages award, the parties will have difficulty settling without giving the state its cut. As a result, parties in Oregon (and other states with similar statutes) have an added incentive to settle before trial if they think a major punitive damages award is possible.

Mattel’s lawsuit against MGA Entertainment, Inc., the maker of Bratz dolls, has been widely covered in the media. In case you missed it, Mattel claims that former employer Carter Bryant conceived the idea for the Bratz dolls and prepared the initial sketches for the dolls while he was still working for Mattel, before he took his idea and sketches to MGA. Last month, a jury ruled in Mattel’s favor in the liability phase of the trial.

In the damages phase, Mattel sought nearly $2 billion in compensatory damages plus an additional award of punitive damages. Today the jury returned a verdict awarding $100 million in compensatory damages and no punitives.

UPDATE: Everyone agrees that the jury awarded no punitive damages, but reporters are having a very difficult time figuring out exactly how much the jury awarded in compensatory damages. Reuters says $100 million. AP (via the Washington Post) is calling it $40 million. Either way, it’s a far cry from the $2B that Mattel was hoping for.

UPDATE #2: This story on the Huffington Post explains the discrepancy in the media reports. The jury apparently awarded damages totaling $100 million, including three awards of $30 million on three related causes of action plus another $10 million on another cause of action. MGA contends the three $30 million awards on the related claims are duplicative, and is asking the trial court to reduce the total award to no more than $40 million.

This isn’t one of those headline-grabbing punitive damages cases. It’s only for those readers with an abiding interest in the most minute details of California’s procedural rules for punitive damages claims in medical malpractice actions.

What? You’re still reading? OK, if you really care about this stuff, here’s a summary of this published opinion from California’s Fourth Appellate District, Division Three (Santa Ana):

Section 425.13(a) of the California Code of Civil Procedure bars a plaintiff from including a punitive damages claim in a complaint based upon a health care provider’s professional negligence. To assert a punitive damages claim in such a case, the plaintiff must file a motion for leave to amend the complaint and show a substantial probability of prevailing on the punitive damages claim. The plaintiff must file the motion within two years after the complaint is
filed, or not less than nine months before trial, whichever is earlier.

In Goodstein v. Superior Court (1996) 42 Cal.App.4th 1635, the Court of Appeal carved out an exception to the strict time limits of section 425.13(a). In that case, which was governed by “fast track” rules, a status conference was held and the clerk set a trial date less than nine months after the status conference. Thus, the plaintiff could not comply with the statutory deadline once trial was set. Moreover, the plaintiff had no meaningful opportunity to object at the status conference, which was conducted not by the court but by a clerk who was merely following the quick trial setting practices that apply to fast track cases.

Freedman was not a fast track case. In Freedman, the trial date was set 11 months after the trial setting conference, so the plaintiff effectively had two months to file a motion to amend the complaint to add a punitive damages claim. But the plaintiff’s counsel conducted no discovery and filed no such motion. Less than nine months before trial, the plaintiff hired a new counsel who moved to amend the complaint to add a claim for punitives. The trial court granted the motion, even though it was untimely under section 425.13. The court relied on Goodstein as authority for excusing the plaintiffs’ noncompliance with the statute. The defendant petitioned for writ relief and the Court of Appeal summarily denied the petition. The California Supreme Court, however, intervened in the case, granting review and transferring the case back to the Court of Appeal to consider the defendant’s arguments the merits.

The Court of Appeal took a closer look at the case and granted the defendant’s petition. It ruled that Goodstein was inapplicable because, unlike the plaintiff in Goodstein, the plaintiff here had sufficient time to file a motion under section 425.13 and simply failed to do so. The Court of Appeal, however, did not seem very happy with this result, and expressed its frustration with the strict deadlines established by the Legislature:

The court’s decision to allow leave to amend and continue the trial date appears reasonable. But section 425.13(a) demands strict adherence to the Legislature’s chosen deadline. It may have been better had the Legislature left case management decisions to the sound discretion of trial judges, who are in the best position to weigh the competing interests and circumstances in particular cases. Bright line statutory rules governing the timing nuts and bolts of the trial court’s management of a case, without at least providing exceptions for good cause, have the potential to impair the fair administration of justice. But trial judges are nonetheless obliged to follow the rules established by the Legislature, even if doing so does not always advance a fair resolution of the case.

The plaintiff in Freedman was represented on appeal by appellate specialist Donna Bader, who maintains a blog entitled An Appeal to Reason.

West Virginia Governor Joe Manchin probably had no idea he would stir up a hornet’s nest of controversy by filing an amicus brief in the West Virginia Supreme Court, supporting DuPont’s petition for review of a case involving a $196.2 million punitive damages award. (See our prior posts on this subject here and here.)

According to this report, Gov. Manchin visited the offices of the Charleston Gazette to defend himself against a Gazette editorial that harshly criticized him for supporting DuPont’s petition. Gov. Manchin says the newspaper has wrongly portrayed him as taking DuPont’s side in the dispute. He says he has not taken an position on the merits of the case, and has only asked the West Virginia Supreme Court to address the issues.

The governor’s argument rings hollow. Even if he hasn’t taken a position on the merits, he has effectively taken DuPont’s “side” by asking the West Virginia Supreme Court to get involved. The only way DuPont can win this case now is to get review from a higher court. The plaintiffs, having prevailed below, certainly don’t want any further review. The governor may have legitimate arguments that his amicus brief was in the best interests of the people of West Virginia, but he’s being disingenuous when he tries to pretend that his involvement in this case has been neutral with respect to the interests of the parties.

Unbelievably, the subject of punitive damages continues to provide comedic inspiration. The always amusing Lowering the Bar has this humorous take on the Exxon Valdez punitive damages saga.

A California jury awarded $25 million in punitive damages in the civil lawsuit against O.J. Simpson. Compare that to the $60 million in punitives awarded yesterday by a Kentucky jury for a single homicide: “Jury Hits Ragland with $63.3 Million Verdict.” Like OJ, the defendant in this case is a free man. He was convicted of murder, but the Kentucky Supreme Court overturned the conviction and he pleaded guilty to second-degree manslaughter, receiving a sentence of time served plus three days. He now has to contend with a $63.3 million jury verdict, but at least he’s better off than this guy.

The Sacramento Bee reports that a jury in federal district court in Nevada last week awarded not only $138.1 million to Las Vegas inventor Gilbert P. Hyatt for invasion of privacy and emotional distress, but also an additional $250 million in punitive damages against the California Franchise Tax Board. The Tax Board began investigating Hyatt in 1993 in an attempt to get him to pay a multi-million dollar California income tax bill—Hyatt apparently moved from California to Nevada, which has no income tax, right around the time he started cashing in big from a computer-related patent. Hyatt disputed the claimed tax obligation and sued the Tax Board on a variety of intentional tort theories. According to the Sacramento Bee article, Hyatt’s complaint alleged that “board auditors went through his garbage and mailbox, spread the word he was being audited to his business associates, and sent letters containing his Social Security number to third parties that included newspapers and doctors who had never treated Hyatt.”

This case has already gone up once to the US Supreme Court, which ruled Hyatt could sue the California agency in a Nevada court. If the state appeals to the Nevada Supreme Court, it’ll be interesting to see whether the unprecedented $138 million emotional distress award holds up and, if so, whether any of the justices think that award is punishment enough so as to obviate the need for any punitive damages, or at least is sufficiently “substantial” within the meaning of State Farm v. Campbell to warrant reducing the punitive damages to a 1:1 ratio. No offense to Mr. Hyatt but, as a California taxpayer, I have to hope this windfall verdict goes away—there have got to be better ways (maybe something involving the democratic process?) to punish and deter bad behavior by folks within a state agency like the FTB.

[Note: I should add that California’s Government Code section 818 provides, “Notwithstanding any other provision of law, a public entity is not liable for damages awarded under Section 3294 of the Civil Code or other damages imposed primarily for the sake of example and by way of punishing the defendant.” Nevada apparently doesn’t have a counterpart to that statute. – LP]

My co-blogger Jeremy Rosen has noted that Senator Obama won an appeal involving a modest punitive damages award. Now comes this story from the Associated Press indicating that Senator McCain also had a personal connection to a punitive damages case. According to the story, McCain and his ex-wife Carol filed a lawsuit in 1990 against a property management firm, claiming the firm had mistakenly removed some family treasures from a garage that they shared with an adjacent townhouse. The complaint asked for $1 million in punitive damages. The parties settled the case for an undisclosed amount.

According to news reports here, here, here and here, a Utah jury has awarded plaintiff $3,606,214 in compensatory damages and $60 million in punitive damages against American National Insurance Company. American National plans to appeal, and seems to have a very strong ratio argument especially given the rather substantial compensatory award.

Last month we blogged about the amicus brief that the Governor of West Virginia filed in support of Dupont’s petition for review to the West Virginia Supreme Court in a case involving a $196.2 million punitive damages award. The New York Times now reports that the governor’s brief has stirred up quite a controversy.

According to the article, questions have been raised about how Governor Manchin came to be involved in this case. He says Dupont provided him with an unsolicited draft of the amicus brief. But a spokesperson for Dupont claims that the governor contacted Dupont and requested that they prepare a draft brief for him. When questioned by plaintiffs’ counsel, the governor’s office said that correspondence between the governor and Dupont had been lost. But now they tell the Times that any correspondence of note has been preserved.

It bears mentioning that the governor’s brief did not actually take sides on the merits of the dispute, but simply asked the West Virginia Supreme Court to review the case. But even without taking a position on the merits, the govenor’s action benefitted only Dupont, since the plaintiffs had prevailed in the trial court.

UPDATE: The West Virginia Record now has a story on this issue: “Gov. Manchin a ‘Puppet’ of Dupont’s, Attorney Says“