This story today on CNNMoney.com reports that a West Virginia trial judge has denied DuPont’s new trial motion in a class-action pollution case involving a $196.2 million punitive damages award. The way things have been going in West Virginia for corporate defendants in punitive damages cases, DuPont is unlikely to obtain any relief from the appellate courts.
UPDATE (2/26/08 at 1:52): DuPont plans to appeal. No surprise there.
The state of Alabama won a huge $175 million punitive damages award today against AstraZeneca, the maker of Nexium and Crestor. A jury found that AstraZeneca had overcharged Alabama’s Medicaid agency. Alabama was once famous for its punitive damages awards, especially the awards that led to the U.S. Supreme Court decisions in Pacific Mutual v. Haslip and BMW v. Gore. After the high-profile reversal in BMW, however, Alabama’s appellate courts have reined in the big awards. Earlier this year the Alabama Supreme Court vacated a $3.5 billion punitive damages award against Exxon Mobil. We’ll see what Alabama’s courts do with this one.
UPDATE (by Curt Cutting on 2/21/08 at 7:39): AstraZeneca has issued a statement, which you can find here. (Scroll down.) You probably won’t believe this, but they plan to appeal.
The New York Law Journal discusses an opinion by the New York Court of Appeals involving the allowance of consequential damages in breach of contract actions involving insurance policies. According to the article, “The Court of Appeals’ determination Tuesday that commercial property owners can assert a claim for consequential damages against insurers that breached their policies prompted a sharp disagreement among the judges. Five agreed in a ruling by Judge Eugene F. Pigott Jr. that commercial insurance consumers should be entitled to recover damages more than the stated value of their policies if those damages are the ‘natural and probable consequence’ of a breach of contract. But Judges Robert S. Smith and Susan Phillips Read, in a dissent written by Smith, accused their colleagues of legitimizing hitherto prohibited punitive damages in breach-of-contract claims by renaming them ‘consequential’ damages. The dissenters predicted on Tuesday that the ‘bad policy choice’ will come at ‘too great a cost’ to the insurance system in New York. ‘Insurers will fear that juries will view even legitimate claim denials unsympathetically, and that insurers will thus be exposed to damages without any predictable limit,’ Smith wrote. ‘This fear will inevitably lead insurers to increase their premiums — and so will inflect a burden on every New Yorker who buys insurance.’”
According to this Forbes article, a Nevada trial court has reduced a jury’s $99 million punitive damages award against Wyeth down to $35 million. The court also reduced the compensatory damages from $35 million to $23 million. The resulting $58 million judgment is still the largest personal injury award in Nevada history, according to the article.
The case involves Wyeth’s hormone replacement drugs, Premarin and Prempro. The plaintiffs claim they developed breast cancer as a result of those drugs.
On February 15, the Texas Supreme Court issued an opinion deciding the following certified question from the Fifth Circuit: “Does Texas public policy prohibit a liability insurance provider from indemnifying an award for punitive damages imposed on its insured because of gross negligence?” The court answered that question in the negative. That puts Texas law at odds with California law, which provides that punitive damages are not insurable.
According to this Associated Press article issued today, President Bush is asking Congress to pass legislation aimed at reducing Medicare’s drain on the general treasury. The article says Bush’s proposal would impose limits on non-economic and punitive damages awarded in medical malpractice cases.
When he was a practicing lawyer, Senator Obama successfully defended an arbitration award of punitive damages in the Seventh Circuit. According to the Sun Times, “In 1994, Obama went before the 7th Circuit to defend Ahmad Baravati, a trader blackballed by his bosses after he reported them for fraud. An arbitrator awarded Baravati $60,000 in damages plus $120,000 in punitive damages against the former bosses. They appealed, saying arbitrators don’t have the power to award punitive damages. Obama had a tough job because the same court had ruled a week earlier that an arbitrator could not award punitive damages. But Obama convinced them this case was different. ‘You’re suggesting that there’s a federal common law that likes punitive damages, but this could be preempted by a state law that says ‘no punitive damages,’ Posner told Obama. ‘I don’t think I’m saying there’s a federal law that ‘likes punitive damages,’ Obama responded, not dropping his tone of respect. ‘I think what I’m saying is that there’s a federal law that likes the notion that the same remedies that will be available in court will be available in arbitration.’ Obama won, and Baravati got to keep the extra $120,000. He still is grateful. ‘I found he’s a very smart, innovative, skilled, relentless advocate for his client,’ Baravati said. ‘When I met him, he reminded me of Abraham Lincoln.’”
It appears the individual defendants’ focus has been on a comparison of the awards to the individuals’ net worth and claimed inability to pay. The Court of Appeal, however, held the trial court had discretion to infer that the defendants were well able to pay the judgment, concluding that they “intentionally concealed their assets, testified falsely regarding many factual issues, and were, at best, evasive and nonresponsive in answering questions as to their financial condition. This conduct gave the court wide latitude to make inferences from the evidence unfavorable to [defendants] Mays and Walsh.”
A few months ago, in McGee v. Tucoemas Federal Credit Union, the California Court of Appeal held federal credit unions were not entitled to sovereign immunity from punitive damages claims.
As counsel of record for the defendant, we (Horvitz & Levy LLP) are filing today a cert petition to the US Supreme Court challenging this holding. Here’s a summary from the petition outlining the question presented:
“Federal credit unions are federal instrumentalities chartered under the Federal Credit Union Act, 12 U.S.C. §§ 1751 to 1795k. Does their authority under that Act to ‘sue and be sued,’ 12 U.S.C. § 1757(2), waive their immunity as federal instrumentalities from punitive damage claims? The decision of the Court of Appeal of the State of California, which allowed the punitive damage claims here, declined to follow decisions of the Sixth, Eighth, Ninth, and Eleventh Circuits of the United States Court of Appeals.”
Stay tuned!
The estate of author J.R.R. Tolkien has sued New Line Cinema for more than $150 million in compensatory damages for the alleged failure to pay the estate contractual royalties from the three Lord of the Rings movies. The lawsuit apparently also seeks punitive damages. However, whether the Tolkien estate can claim punitive damages for New Line’s alleged breach of the contract may well be determined by the City of Hope case recently argued in the California Supreme Court.