California Punitives by Horvitz & Levy

  • Court of Appeal affirms $8 million punitive damages award against owner of mobile home park (Belanger v. Biggs)

    Here’s a belated post about a decision issued last month.  I’ve been meaning to write about it for a while  but I’ve been unable to get to it until now.

    The case involves a protracted dispute between the owners of a mobile home park and two individual mobile home owners.  The dispute began in 2005, when heavy rains caused a landslide on the hillside above the two mobile homes owned by the plaintiffs, rendering the homes uninhabitable.  Litigation ensued, and the parties reached a settlement in 2011.  The settlement permitted the plaintiffs to keep their homes in the park and did not permit the park owners to remove them unless specifically ordered to do so by a governmental agency, or if their removal was necessary to stabilize the hillside.
    The park owners decided to remove the plaintiffs’ mobile homes and sell them to third parties, even though the neither of the two conditions had been satisfied.  To complete the sale, the owners forged signatures on bills of sale and title applications.
    The plaintiffs sued for fraud and breach of contract.  A jury awarded them each about $470,000 in compensatory damages and $4 million in punitive damages (a ratio in excess of eight to one).
    The defendants appealed, challenging the punitive damages as excessive. The Court of Appeal (Second District, Division Three) rejected that argument in an unpublished opinion.
    First, the court found that the defendants’ conduct implicated nearly all of the factors that indicate a high level of reprehensibility.  Typically, conduct that causes purely economic injury is viewed as less reprehensible than conduct that involves intentional physical injuries (as in the O.J. Simpson civil case), but the court here was so outraged by the defendants’ deliberate deceit that it placed the conduct at the top of the reprehensibility scale.
    Next, the court rejected the defendants’ reliance on the principle that the ratio of punitive damages to compensatory damages should be low, perhaps no more than one-to-one, where the compensatory damages are substantial.  The Supreme Court first announced this principle in State Farm v. Campbell, where it explained that the principle applies with even more force when the compensatory damages include an award for emotional distress.  The Court of Appeal declined to follow that aspect of State Farm, on the ground that the plaintiffs presented evidence of emotional and mental harm.  That aspect of the opinion is a bit puzzling, because every plaintiff who recovers emotional distress damages must present some evidence of emotional distress.  Otherwise the award would be vacated.  So it is difficult to see how this case differs from the other cases in which courts have applied the State Farm rationale.  Fortunately, the opinion is not published, so lower courts will not need to figure out how to harmonize this opinion with the reasoning of State Farm.

  • Supreme Court grants cert in punitive damages case, but declines to consider punitive damages issue (TransUnion v. Ramirez)

    Today the Supreme Court granted a certiorari petition that raised two remedies issues, the second of which involves punitive damages:

    1. Whether either Article III or Rule 23 permits a damages class action where the vast majority of the class suffered no actual injury, let alone an injury anything like what the class representative suffered. 

    2. Whether a punitive damages award that is multiple times greater than an already-substantial classwide award of statutory damages, and is orders of magnitude larger than any actual proven injury, violates due process. 

    However, the order granting certiorari expressly limits review to the first issue.  The Supreme Court has not considered the issue of excessive punitive damages since Exxon Shipping in 2008, and the justices apparently have no interest in revisiting that issue again anytime soon.

    Hat tip: Rick Hasen  

  • Court of Appeal reverses $6 million punitive damages award in products liability case (Soulliere v. Suzuki)

    This unpublished Court of Appeal opinion doesn’t directly address any punitive damages issues, but is noteworthy because it wipes out a substantial punitive damages award.

    The plaintiff was involved in an accident while riding a Suzuki motorcycle.  He sued Suzuki, claiming the motorcycle’s brakes were defective, and persuaded a jury to award $1.7 million in compensatory damages and $6 million in punitive damages.

    The Court of Appeal (Fourth District, Division Three) reversed.  The court concluded that the plaintiff failed to introduce sufficient evidence that the accident resulted from a defect in the motorcycle, and that the trial court made multiple evidentiary and instructional errors. Accordingly, the court vacated the entire judgment including the punitive damages.

  • Texas appellate court affirms $50 million punitive damages award in drunk driving case

    Law 360 reports that a Texas intermediate appellate court has affirmed a jury’s award of $9.8 million in compensatory damages and $50 million in punitive damages. The defendant caused a fatal collision while intoxicated.

  • Court of Appeal allows rec league hockey player to seek punitive damages for on-ice collision (Szarowicz v. Birenbaum)

    In this published opinion, the Court of Appeal allows a plaintiff to seek punitive damages for injuries he sustained in a recreational hockey game when he was violently checked by another player.

    Ordinarily, under the primary assumption of risk doctrine, a participant in a sporting event cannot sue another participant for an injury that results from the inherent risks of the sport.  The trial court applied that doctrine here and granted the defendant’s motion for summary judgment.  The trial court noted that, although the plaintiff was participating in a “no check” hockey league, the parties’ witnesses agreed that “no check” does not mean “no contact,” and that being checked is still an inherent risk of playing “no-check” hockey. 

    The Court of Appeal (First District, Division Two) reversed the judgment and reinstated all of the plaintiff’s claims, including his claim for punitive damages.  The court held that the primary assumption of risk doctrine does not apply when the defendant intentionally injures the plaintiff.  The court pointed to testimony from plaintiff’s teammates, who said it appeared that the defendant in this case was intentionally trying to injure the plaintiff, rather than trying to make any legitimate hockey play.  According to the court, a jury could rely on that testimony and find that the defendant intended to harm the plaintiff, which would not only permit the plaintiff to recover compensatory damages, but would potentially support an award of punitive damages as well.

    Presumably, plaintiffs’ counsel will use this opinion as a template to pursue punitive damages for in-game collisions in other contact sports, and will oppose summary judgment motions with declarations by eyewitnesses who testify that the defendant appeared to have an intent to injure.

  • Supreme Court denies review in Albarracin v. Fidelity National

    The Supreme Court of California has denied Fidelity National’s petition for review in the Albarracin case, discussed here and here.

  • California Supreme Court to rule soon on Fidelity National’s petition for review (Albarracin v. Fidelity National)

    We previously reported on the Court of Appeals’ affirmance of a $2 million punitive damages award in this employment case.  As we noted, the court concluded that a $250,000 compensatory damages award was not “substantial” for purposes of the rule that lower punitive-to-compensatory ratios are warranted in cases with substantial compensatory damages.

    Fidelity National has petitioned for review, raising the following issues (quoted directly from the petition):

    1.    Under Auto Equity Sales, Inc. v. Superior Court
    (1962) 57 Cal.2d 450, 455 (Auto Equity Sales), this Court’s
    decisions “are binding upon and must be followed by all the state
    courts of California.”
         Does this stare decisis doctrine require the intermediate
    appellate courts, in unpublished decisions, to either follow or
    meaningfully distinguish this Court’s relevant holdings? 

    2.        This Court and the U.S. Supreme Court require
    reviewing courts to independently determine the constitutionality
    of punitive damages awards, including whether such an award
    bears a reasonable relationship to compensatory damages.
        Does the fact that a compensatory award is moderate—that
    is, neither large enough to suggest an inherent punitive element
    nor small and purely economic—itself justify “a much higher
    ratio” of punitive damages (here, nearly 8-to-1)?

    The Supreme Court has granted itself a 30-day extension of time to rule on the petition, moving the due date from November 21 to December 21.  Expect a ruling soon.

  • Court of Appeal affirms $6 million punitive damages award in asbestos case (Barr v. Parker-Hannifin)

    This unpublished opinion affirms a punitive damages award against Parker-Hannifin, a company that sold asbestos-containing replacement brakes in the late 1970s and 1980s.

    Parker-Hannifin argued on appeal that the punitive damages should be reversed because the plaintiff presented no evidence that anyone at the company knew during the relevant time that its products were harmful.  The Court of Appeal (First District, Division Three) rejected that argument, citing evidence that the company complied with OSHA regulations at its own factory, to protect its workers from asbestos exposure.  From that evidence, the court concludes that the company knew asbestos was dangerous, and therefore should have protected consumers of brakes.

    The court’s analysis does not confront the fact that asbestos exposures in the factory would have been orders of magnitude higher than any exposures experienced by users of the finished product, or the fact that the factory workers were potentially exposed to raw asbestos, whereas the end users could only have been exposed to heavily processed fibers with different potential for causing disease. Given those differences between the two types of exposures, many manufacturers in the 1970s took precautions in their factories without believing that any risks existed for end users.  But the Court of Appeal’s opinion does not grapple with that issue, and instead concludes that substantial evidence supports the conclusion that the manufacturer acted despicably and in conscious disregard of a known risk to consumers.

    Disclosure: Horvitz & Levy participated in this case, representing Parker-Hannifin’s co-defendant, Standard Motor Products, which was not found liable for punitive damages. 

  • Supreme Court denies review in King v. US Bank

     The Supreme Court has denied US Bank’s petition for review in the case discussed here.

  • California Supreme Court to rule soon on US Bank’s petition for review (King v. U.S. Bank)

    We reported in August about this decision in which the Court of Appeal partially reinstated a big punitive damages award against U.S. Bank.  As you may recall, the case involved a U.S. Bank supervisor who was accused of harassment by his subordinates. The company investigated and fired him.  He then sued the bank for wrongful termination and defamation and won a jury verdict for $24.3 million including $15.6 million in punitive damages.  The trial court reduced the amount to $2.7 million but the Court of Appeal bumped it back up to $8.5 million.

    U.S. Bank has filed a petition for review with the California Supreme Court raising the following issues (these are quoted directly from the petition):

    1. Whether evidence of errors of judgment by human resources (“HR”) employees who repeat allegedly false statements during an internal investigation of alleged workplace misconduct is sufficient to defeat the common-interest privilege and sustain a defamation claim. 

    2. Whether an employer that terminates an employee for misconduct may be held liable for wrongful termination and breach of the covenant of good faith and fair dealing based on an inference that the employer rushed the termination so that the employee would not qualify for a bonus.

    3. Whether evidence that an entry-level HR employee exercised discretion when investigating alleged workplace misconduct is sufficient to support a determination that she was a “managing agent” whose conduct can subject her employer to punitive damages.

    4. Whether the decision below misapplied this Court’s decision—issued the day before—requiring courts to view the evidence supporting a finding of punitive liability through the lens of the clear-and-convincing-evidence standard.

    5. Whether the Court of Appeal accorded legally insufficient deference to the trial court’s order granting a new trial or remittitur. 

    6. Whether the $8,469,696 punitive award approved by the Court of Appeal—six times the maximum permissible punitive award for the more severe conduct and injuries in Roby v. McKesson Corp. (2009) 47 Cal.4th 686—is unconstitutionally excessive, given the punitive and deterrent effects of the $5,000,000 in non-economic damages and USBNA’s minimal to non-existent ill-gotten gain.

    Horvitz & Levy filed a letter on behalf of the Association of Southern California Defense Counsel, asking the Supreme Court to grant the petition. The CELC and the US Chamber of Commerce also submitted letters (see here and here).

    The Supreme Court’s original deadline to rule on the petition was November 3, but the court issued an order extending its time until December 3.  Expect a ruling soon.