This published opinion addresses an issue of first impression: whether the Reporting by School Employees of Improper Activities Act (the Act) authorizes recovery of punitive damages against school districts.

The plaintiff, a former employee of the Visalia Unified School District, sued the District for retaliation in violation of the Act, seeking compensatory and punitive damages.  The Act authorizes recovery of punitive damages against a “person” who intentionally and maliciously engages in an act of retaliation.  For purposes of the Act, a “person” includes any state or local government.

The District moved to strike the punitive damages claim under Government Code section 818, which prohibits punitive damages against public entities.  The superior court denied the motion, finding that the Act impliedly supersedes section 818 because the Legislature adopted the Act in 2000, long after it adopted section 818 (in 1983). 

The Fifth Appellate District granted the District’s petition for writ relief and reversed the trial court’s ruling.  The Court of Appeal concluded that the trial court had overlooked key language in section 818, which bars punitive damages against public entities “notwithstanding any other provision of law.”  The Court of Appeal also held that section 818 is a fundamental part of California public entity law, supported by strong public policy.  The court concluded that, if the Legislature had intended to overturn such an important rule, it would have done so expressly.

This published opinion from the Sixth Appellate District holds that Labor Code section 1102.5, which prohibits retaliation against whistleblowers, impliedly authorizes punitive damages as a remedy.

Disclosure: Horvitz & Levy represents the defendant in this action.  Litigation is ongoing, so we will not comment on the court’s analysis.

This published opinion provides an overview of the proper remedies that a trial court can use to correct an an excessive award of punitive damages.  The opinion doesn’t contain anything new or surprising, but it provides a good overview of existing law:

1.  If a trial court finds that a punitive damages award is constitutionally excessive (i.e., the award exceeds the maximum amount permitted by due process), the trial court should grant judgment notwithstanding the verdict and reduce the award to the constitutional maximum. 

2.  If a trial court finds that a punitive damages award is excessive under state law (i.e., the award appears to be the product of passion and prejudice, or is disproportionate to the defendant’s financial condition), the trial court should grant a new trial.  The new trial can be conditional, subject to the plaintiff’s acceptance of a remittitur of the award to a lesser amount.

The trial court in this case used the wrong procedure.  The court found the award was excessive under state law, but instead of granting a new trial, the court granted judgment notwithstanding the verdict.  The Court of Appeal (First District, Division Two) agreed that the award was excessive, but faulted the trial court for employing the wrong remedy.  The Court of Appeal nevertheless affirmed the judgment, because the plaintiff’s counsel stipulated at oral argument that he would prefer to accept the reduced amount rather than undergoing a new trial.  Thus, if the trial court had ordered a conditional new trial subject to a remittitur, the plaintiff would have accepted the remittitur.  So in the end, the trial court’s procedural error was harmless.

In this unpublished opinion, the California Court of Appeal (Fourth District, Division One) affirms a punitive damages award that is roughly equal to the amount of compensatory damages. In theory, even a one-to-one ratio can be constitutionally excessive, if for example the reprehensibility of the defendant’s conduct is extremely low (which is what the defendant argued here).  In practice, however, we rarely ever see a California appellate court reducing an award as excessive when the ratio is already one to one.