Wall Street Journal: Adidas Wins Suit Against Shoe Chain Over Trademark

Wall Street Journal Blogs: Adidas v. Payless: $100 Million for Every Stripe; Payless Could Pay More

ABA Journal: Adidas Award of $305M in Trademark Infringement Case May Be Record

The Oregonian: Portland Jury Orders Payless to Pay Adidas $304.6 Million

Topeka Capital Journal: Collective Brands Calls Verdict Excessive

One of the most interesting things about this case, aside from the eye-popping $137 million punitive damages award, is the full-color illustrated verdict form.

Our prior post on this case appears here.

According to this report on HeraldNet, Judge Linda Krese of the Snohomish County Superior Court denied Edwards Lifescience Inc.’s motions for relief from a $40 million verdict. The case, which was widely publicized, involved the failure of a machine that was supposed to monitor blood flow and other conditions during a heart bypass surgery. The machine overheated and “cooked” the plaintiff’s heart, requiring him to undergo a heart transplant.

The jury’s $40 million award included $8 million in punitive damages. Edwards argued in its posttrial motions that punitive damages were unwarranted, but Judge Krese concluded that Edwards had acted with “reckless disregard for the safety of others” when it failed to warn doctors that the device could overheat under certain circumstances.

As we mentioned in our original blog post about this story, the large punitive damages award is s quite unusual in Washington, where state law generally does not allow punitive damages.

The Portland Business Journal reports that “A Portland jury awarded Adidas America Inc. nearly $305 million in a trademark infringement case late Monday. ‘It’s my understanding that, if it’s not the largest, it’s one of the largest trademark infringement verdicts ever,’ said Stephen Feldman, an attorney with Perkins Coie who helped represent Adidas. In the case, Adidas alleged that Payless infringed on its patented three-stripe design. The verdict included $30.6 million in actual damages, $137 million for willful infringement and an additional $137 million in punitive damages. ‘The company is reviewing the verdict and assessing its impact,’ Topeka, Kan.-based Collective Brands, owner of Payless, said in a statement. ‘The company believes that the verdict was excessive and unjustified.’ ‘The company will ask the court to set aside the verdict and, if it is not granted, intends to take all necessary steps to overturn it.’”

It seems likely that reduction in the punitive damage award must occur because with a substantial compensatory damage award, a one-to-one ratio of punitive to compensatory damages is the upper end that should be permitted. Arguably, the $137 million for willful infringement should further reduce the punitive damage award as that already includes a significant penalty component.

Tony Mauro describes a recent episode of Boston Legal which engaged in a direct attack on the United States Supreme Court. Among other things, the main character, Alan Shore, played by actor James Spader “lights into the court as he argues before look-alike justices on behalf of a Louisiana child rapist facing the death penalty. The episode aired just six days after the real court heard arguments in Kennedy v. Louisiana, an actual child rape/death penalty case. A sample of the rhetoric: Shore attacks the ‘overtly and shamelessly pro-business’ court, and takes a sharp detour from the rape case to slam Justice Antonin Scalia for his seemingly likely support for Exxon Mobil in the case – also argued recently – involving punitive damages awarded after the Exxon Valdez oil spill. ‘Nineteen years after the Valdez oil spill and the plaintiffs are still waiting to be fully compensated,’ Shore says. When the Scalia character interjects sharply, ‘You are getting so far off point,’ Shore shoots back: ‘My point is, who are you people? You’ve transformed this court from being a governmental branch devoted to civil rights and liberties into a protector of discrimination, a guardian of government, a slave to monied interests and big business and today, hallelujah, you seek to kill a mentally disabled man.’”

Michael Roberts at Injuryboard.com has a post entitled “Trial Lawyers and the Bible,” in which he states that the work of plaintiffs’ lawyers has biblical roots. He cites several biblical passages which support the notion of providing compensation for property damages and personal injuries. He also cites a passage from the book of Exodus that contemplates an early form of punitive damages. I wonder whether the bible also authorizes the concept of defending against false or excessive claims.

ADDITIONAL COMMENT (BY Jeremy Rosen): Assuming biblical passages are a good source for punitive damages, it is interesting that one of the cited passages suggests that single digit ratios between punitive and compensatory damages are required: “If a man steals an ox or a sheep, and kills it or sells it, he shall pay five oxen for an ox and four sheep for a sheep. . . . (Exodus 22:1-4).”

Bloomberg News: Genentech Must Pay $300 Million Award, Court Rules

Reuters: Calif. Court Upholds $200 Mln Genentech Settlement

Associated Press: Court Cuts $200M from Royalty Judgment Against Genentech

San Francisco Business Times: State Supreme Court Cuts Amount Genentech Must Pay in City of Hope Fight

(UPDATES):

The Recorder (via Law.com): $300 Million Award Stands Against Genentech, but $200 Million in Punitives Get Tossed

Daily Journal (subscription): High Court Cuts Punitives for Genentech

As Howard Bashman observes, we are not. Since we launched this blog at the start of 2008, we’ve been discussing punitive damages cases and linking to other blogs, law review articles, and press reports about punitive damages. Sometimes we comment on those stories, and our comments are generally from a defense perspective, since our firm (and the three of us who post on this blog in particular) regularly represents defendants who are challenging large punitive damages awards on appeal. But personally, I believe that punitive damages awards can be appropriate in certain cases, so long as proper procedures are followed and the amount of the award is not unreasonable. Unfortunately, in California we have juries that are all too willing to hand out punitive damages awards that are way out of proportion to the actual harm involved or the gravity of the conduct at issue, or for some other reason just aren’t the right way to deter conduct.

The 2008 State Liability Systems Ranking Study was conducted for the U.S. Chamber Institute for Legal Reform among a national sample of in-house general counsel or other senior corporate litigators to explore how reasonable and balanced the tort liability system is perceived to be by U.S. business. According to the nationwide survey, California came in 44th, making it the 7th worst state in the nation. Los Angeles county was judged the worst county in the nation. The best five states were Delaware, Nebraska, Maine, Indiana, and Utah. The five worst states were Illinois, Alabama, Mississippi, Louisiana and West Virginia. A significant factor in California’s poor performance in the survey was the perception that California courts were too permissive with awarding punitive damages.

The full printable .pdf version of the survey is available here.

UPDATE (by Curt Cutting): The trial lawyers of West Virginia are taking umbrage with their state’s last place ranking. According to this article from the West Virginia Record, the West Virginia Association for Justice calls the survey: “propaganda created to dupe West Virginia lawmakers into destroying important consumer protection laws.” The president of West Virginia Citizens Against Lawsuit Abuse responds by pointing out that West Virginia has also received dismal ratings from Forbes, the American Tort Reform Association, Directorship Magazine, and the Pacific Research Institute.

FURTHER UPDATE (by Jeremy Rosen): The American Association for Justice, formerly the Association of Trial Lawyers of America, issued its own press release Tuesday, calling the report’s rankings “phony” and saying its purpose is to serve the extreme corporate agenda.

The Ithaca Journal reports on a recent $1 million punitive damage award against the Ithaca Public School District because the plaintiff student was harassed by other students. The article reports that the entire yearly budget for the school district is $95 million. Thus, more than one percent of the entire year’s budget will go to a single student. A glance at the website for the school district shows that there are 12 schools and over 5,000 students in the school district. Thus, the other 5,000 plus students end up having to suffer because of the failures to act by school officials. This brings up a recurring issue in cases against public entities where the public (taxpayers) end up paying for the mistakes made by the public employees. This is not to say that people injured by a public entity should not be compensated. However, it does raise the serious question whether punitive damages should also be awarded. California, for example, does not permit punitive damages against public entities. (See Cal. Gov. Code section 818.)

[Observation by Lisa Perrochet, 10:03 a.m.: One thought to consider is that public entities are arguably directly accountable to the public in a way that private entities are not, so while punitive damages are used to make private entitites change behavior that harms the public, voters have other means to correct government behavior that harms them, without saddling themselves with an enormous financial debt.]

Los Angeles attorney H. Scott Leviant has launched a blog called The Complex Litigator, which he describes as “A California-centric collection of comments and procedures that makes complex litigation and class actions uniquely challenging.” Undoubtedly, the subject matter of the Complex Litigator will overlap with the subject of this blog, given that complex litigation often involves claims for punitive damages. We’re late to this party, since several other California bloggers have already taken note of Scott’s blog, but better late than never. Welcome, Scott!

Hat Tip to Greg May at The California Blog of Appeal.