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.

According to the Los Angeles Times, “Two members of a Bell Gardens family who said police beat them at a Halloween costume party in 2005 have been awarded a $4.5-million civil rights judgment, their attorneys said Monday. Gerardo Cazares, 30, and his father-in-law, Manuel Moreno, 46, had alleged that Bell Gardens officers who responded to a complaint of loud music at the party beat them without provocation, shot them with pepper spray and fired a beanbag gun at such close range that the older man was left with a permanent chest scar. . . . At the conclusion of a federal civil rights trial Friday, jurors ordered the Bell Gardens Police Department and five officers to pay the men $3.2 million in general damages and $1.3 million in punitive damages. . . The city insisted that police officers acted appropriately and that the two men attacked officers.
Officers arrived to find numerous fights going on, the city contended. Cazares, who was dressed as the Grim Reaper, led a large group of partygoers toward Det. Michael Cox and tried to push him out of the party, city attorneys said. A violent struggle erupted between Cazares and Cox, and Moreno struck the detective in the head with a folding metal chair, city lawyers said. Several officers were injured, including Cox, who needed staples for his head wound, the city said. Officers eventually fired a beanbag from a shotgun to stop the fight, city lawyers argued.”

According to the Sacramento Bee, “A federal jury deliberated 30 minutes Thursday, then awarded a woman more than $4.1 million in punitive damages after finding that her former employer acted with ‘malice, oppression or with reckless indifference’ in failing to protect her from aggravated sexual assault by a state worker. The jury of five women and three men awarded Sharon Paterson $827,500 in general damages three weeks ago against Inter-Con Security Systems Inc., a private firm that contracts with the state Department of General Services for guards at state facilities in Sacramento. . . . In a hallway interview, Inter-Con trial attorney Matthew Ruggles pointed out Thursday’s award was made under that part of the federal civil code dealing with workplace discrimination and hostility, and it caps punitive damages at $300,000. ‘We don’t think punitive damages should have been awarded at all, but it’s kind of academic,’ Ruggles said. Paterson attorney Lawrence King said he will oppose a motion to reduce the award on the ground that U.S. District Judge Morrison C. England Jr. erred in not detailing for the jury the elements of punitive damages under comparable state law, which has no cap. As to Thursday’s award, King said, ‘I’m gratified the jury understood that, to get the attention of a company like Inter-Con, the verdict must be substantial, so something like this won’t happen again.’ . . . ‘It didn’t seem like they really took sexual harassment seriously, and there was nothing we saw to show that things changed’ after Paterson’s lawsuit was filed in 2005, one juror said.”

It will be interesting to see if this analysis works in California and other jurisdictions. There is certainly support for the argument in United States Supreme Court cases and California cases. (Cf. State Farm Mut. Auto. Ins. Co. v. Campbell (2003) 538 U.S. 408, 426 [123 S. Ct. 1513, 155 L.Ed.2d 585] [emotional distress damages include a punitive component]; Simon v. San Paolo U.S. Holding Co., Inc. (2005) 35 Cal.4th 1159, 1189 [same]; Gober v. Ralphs Grocery Co. (2006) 137 Cal.App.4th 204, 222-223 [same].) One case, though, seems to have rejected such an approach. (See Westphal v. Wal-Mart Stores, Inc. (1998) 68 Cal.App.4th 1071, 1080-1083 [sanctioning appellant for bringing a frivolous appeal by arguing that a noneconomic damage award was excessive in light of the modest amount of economic damages awarded].)

An intermediate appellate court in New York overturned a tobacco verdict yesterday in the case of Norma Rose v. Philip Morris USA. The jury had awarded $3.4 million in compensatory damages and $17.1 million in punitive damages based on claimed negligence in the design of cigarettes with higher levels of tar and nicotine than so-called “light cigarettes.” As has been reported by the NY Law Journal (“Tobacco Companies Win Upset of Damages Award“) the three-judge majority threw out the entire verdict for failure to prove the elements of the negligence claim. Two judges dissented, arguing that negligence liability could be found even if, as the majority put it, “plaintiffs offered no evidence of consumer acceptability of light cigarettes — which was the only way to prove that light cigarettes were a feasible alternative design.”

What may be most interesting to readers of this blog is that, despite the dissenters’ view that the plaintiffs’ tort claim was viable, they asserted that the punitive damages claim was not:

To warrant an award of punitive damages, there must be proof of recklessness, or a conscious disregard of the rights of others. [Citation] It is also well settled that punitive damages may not be premised upon mere negligence. [Citations] . . . [T]here was evidence to suggest that the defendant consciously disregarded the health risks posed to billions of consumers.

Nevertheless, Philip Morris’s conduct in marketing different cigarette brands with a range of tar and nicotine yields cannot subject it to punishment under New York law. As a matter of due process, an award of punitive damages cannot be based upon conduct – such as that at issue here – that the defendant could reasonably have believed to be lawful. In BMW of N. Am., Inc. v. Gore (517 U.S. 599, 574, 116 S.Ct 1589, 1598, 134 L.Ed.2d 809, 826 (1996)), the Supreme Court explained that “[e]lementary notions of fairness enshrined in our constitutional jurisprudence dictate that a person receive fair notice… of the conduct that will subject him to punishment.” See also Bouie v. City of Columbia, 378 U.S. 347, 355, 84 S.Ct. 1697, 1703, 12 L.Ed.2d 894, 900 (1964)(when punishment is imposed based on novel construction of statute, “the effect is to deprive [defendant] of due process of law in the sense of fair warning that his contemplated conduct constitutes a crime”).

Philip Morris did not have “fair notice” that the conduct at issue in this case might result in severe punishment. Indeed, the verdict in this case is novel. Congress not only has made a purposeful choice to regulate sales and advertising rather than to bar the sales of regular cigarettes, but has also blocked attempts to regulate tar and nicotine levels. The Surgeon General has never recommended removing regular-yield cigarettes from the market. No state or federal legislator or regulator has ever adopted a rule banning or restricting full-flavored cigarettes. And until this case, no court had ever held any tobacco manufacturer liable simply for continuing to sell regular brands, much less suggested that such conduct was punishable. In my view, punitive damages may not be imposed under such circumstances.
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This question of punitives may go up to the next level—the article linked above reports that plaintiffs’ counsel intend to appeal to New York’s high court, and the fact that there’s a two-judge dissent means they get to do this as a matter of right.

Today’s LA Times has this story about a $3.5 million punitive damages award against USAA, an insurer that provides coverage for military personnel. The plaintiff, a Marine captain serving in Iraq, claims USAA mishandled a claim for damage to his home. The plaintiff deployed for his third tour in Iraq a few days before the verdict. After the verdict he thanked the jurors by phone.

The compensatory damages in this case are apparently only $134,000, which means the punitive-to-compensatory damages ratio exceeds 26 to 1. That would seem difficult for the plaintiff to justify on appeal. This doesn’t seem like the sort of case where the compensatory damage award is so small that a higher ratio is justified. Indeed, the defendant may argue that, because the compensatory damage award is substantial and already includes a punitive component in the form of emotional distress damages, anything but a very low ratio would violate due process.

It’s a slow news day. At least as far as punitive damages news is concerned. So lacking any real substantive news to report, we bring you this story about a woman who is seeking punitive damages over a wardrobe malfunction. No, not that woman or that wardrobe malfunction. Hat tip to Jonathan Turley.

Today, the Fourteenth Court of Appeals in Texas issued its opinion in Exxon Mobil Corporation v. Altimore, reversing a punitive damages award against Exxon Mobil in an asbestos case.

In this “take home” or “secondhand” asbestos exposure case, the plaintiff claimed she developed mesothelioma as a result of exposure to asbestos dust that her husband brought home on his clothes. The plaintiff’s husband had worked with asbestos at an Exxon refinery from 1942 through 1977. The jury found Exxon guilty of malice and awarded roughly $1 million in punitive damages.

In Texas, malice requires a showing that the defendant knowingly subjected the plaintiff to an extreme degree of risk. The appellate court found that the record contained insufficient evidence to support the conclusion that Exxon was aware of an extreme degree of risk to the plaintiff during the relevant time period. First, the court noted that although asbestos had been associated with health risks since at least the 1930’s, knowledge about the risks evolved over time. During the relevant time period, 1942 to 1972, scientists incorrectly believed that certain exposure levels would be safe. The court also found that the plaintiff had failed to introduce a single study from the relevant time period showing that family members of refinery workers were exposed to an extreme degree of risk.

This opinion provides an interesting contrast to the recent California opinion in Garza v. Asbestos Corporation. As we mentioned last week, the court in that case affirmed a punitive damages award based solely on the fact that studies in the 1930’s and earlier had established a link between asbestos and health problems. Unlike the Altimore court, the Garza court did not take into account the evolving understanding of asbestos hazards, and did not consider whether the defendant knew during the relevant time period that the exposure levels involved created a risk to the plaintiff’s health.