California Punitives by Horvitz & Levy

  • California Court of Appeal affirms trial court’s reduction of punitive damages from $7 million to $1 million (Torres v. B/E Aerospace)

    This unpublished opinion demonstrates that, under the right circumstances, California courts can find a punitive damages award excessive even when it is less than ten times the amount of compensatory damages.

    A jury in this employment discrimination case awarded $1.5 million in compensatory damages and $7 million in punitive damages.  The trial court ordered a new trial conditioned on the plaintiff’s acceptance of a reduction in the punitive damages to $1 million.  The plaintiff accepted the remittitur and both sides appealed.

    The Court of Appeal (Second District, Division Four) affirmed across the board.  First, it rejected the defendant’s argument that the plaintiff failed to prove malice on the part of an officer, director, or managing agent.  In the process, the court held that the defendant’s adoption of an anti-discrimination policy did not act as a shield against punitive damages, because although the company adopted the policy in good faith, it did not implement the policy in good faith.

    Second, the Court of Appeal rejected the plaintiff’s argument that the trial court erred by ordering the remittitur from $7 million to $1 million.  The court noted that single-digit punitive-to-compensatory ratios are not presumptively valid, especially when the compensatory damages itself is substantial or contains a punitive element.  The court noted that the compensatory damages award here was 19 times more than the plaintiff’s annual salary, and included a large emotional distress component, which has both a punitive aspect and a deterrent effect.  Accordingly, the Court of Appeal concluded that the trial court properly reduced the award to a 1-to-1 ratio.

  • Oregon jury awards $20 million in punitive damages against California landlord

    Oregon Live reports that a jury in Portland has awarded $295,000 in compensatory damages and $20 million in punitive damages against a California landlord for failing to maintain an apartment complex in Portland.  The plaintiff is a man who claimed he fell through a rotting second-story walkway at the complex.

    Under Oregon’s split-recovery statute, 70 percent of the punitive damages award will go to the state if the award is upheld.  With a punitive-to-compensatory ratio of 68-to-1, the award will almost certainly be reduced.

  • California Court of Appeal affirms $784,000 punitive damages award (Burlingame Investments)

    This unpublished opinion involves a complicated set of facts, but the upshot is that a jury awarded roughly $784,000 in compensatory damages and $784,000 in punitive damages against an attorney who allegedly participated in an illegal scheme to take over a group of closely-held businesses.

    The defendant attorney argued on appeal that the Court of Appeal should reverse the punitive damages award entirely because the plaintiffs presented no evidence that he acted with malice, oppression, or fraud as required for a punitive damages award under Civil Code section 3294.  The Court of Appeal (First District, Division One), however, had no trouble concluding that the record supported the jury’s finding that the defendant knew what he was doing was illegal.

    The Court of Appeal also rejected the defendant’s challenge to the amount of the punitive damages. The court agreed with the defendant that his conduct did not implicate most of the reprehensibility factors that the Supreme Court set forth in BMW v. Gore as indicators of highly reprehensible conduct.  But the court found that the reprehensibility of the conduct was “severe” because it implicated one of those factors—the harm was the result of intentional malice, not mere accident.

    That analysis is interesting.  In California, punitive damages can never be awarded for “mere accident.”  If that factor alone were enough for a court to deem conduct severely reprehensible, then the vast majority of punitive damages case in California would qualify.  Compare that approach to the Supreme Court of California’s analysis in Roby v. McKesson, which held that the reprehensibility of the defendant’s conduct implicated four of the five BMW reprehensibility factors but was nevertheless “at the low end of the range of wrongdoing that can support an award of punitive damages.”

    In any event, it probably wouldn’t have made any difference whether the court characterized the defendant’s conduct as severe or mild in this case, given the one-to-one ratio of punitive damages to compensatory damages.  California courts would rarely find such a ratio excessive, especially where the punitive damages are less than $1 million.

  • Oregon jury awards $20 million in punitive damages against California landlord

    Oregon Live reports that a jury in Portland has awarded $295,000 in compensatory damages and $20 million in punitive damages against a California landlord for failing to maintain an apartment complex in Portland.  The plaintiff is a man who claimed he fell through a rotting second-story walkway at the complex.

    Under Oregon’s split-recovery statute, 70 percent of the punitive damages award will go to the state if the award is upheld.  With a punitive-to-compensatory ratio of 68-to-1, the award will almost certainly be reduced.

  • California Court of Appeal affirms $784,000 punitive damages award (Burlingame Investments)

    This unpublished opinion involves a complicated set of facts, but the upshot is that a jury awarded roughly $784,000 in compensatory damages and $784,000 in punitive damages against an attorney who allegedly participated in an illegal scheme to take over a group of closely-held businesses.

    The defendant attorney argued on appeal that the Court of Appeal should reverse the punitive damages award entirely because the plaintiffs presented no evidence that he acted with malice, oppression, or fraud as required for a punitive damages award under Civil Code section 3294.  The Court of Appeal (First District, Division One), however, had no trouble concluding that the record supported the jury’s finding that the defendant knew what he was doing was illegal.

    The Court of Appeal also rejected the defendant’s challenge to the amount of the punitive damages. The court agreed with the defendant that his conduct did not implicate most of the reprehensibility factors that the Supreme Court set forth in BMW v. Gore as indicators of highly reprehensible conduct.  But the court found that the reprehensibility of the conduct was “severe” because it implicated one of those factors—the harm was the result of intentional malice, not mere accident.

    That analysis is interesting.  In California, punitive damages can never be awarded for “mere accident.”  If that factor alone were enough for a court to deem conduct severely reprehensible, then the vast majority of punitive damages case in California would qualify.  Compare that approach to the Supreme Court of California’s analysis in Roby v. McKesson, which held that the reprehensibility of the defendant’s conduct implicated four of the five BMW reprehensibility factors but was nevertheless “at the low end of the range of wrongdoing that can support an award of punitive damages.”

    In any event, it probably wouldn’t have made any difference whether the court characterized the defendant’s conduct as severe or mild in this case, given the one-to-one ratio of punitive damages to compensatory damages.  California courts would rarely find such a ratio excessive, especially where the punitive damages are less than $1 million.

  • District court rejects constitutional challenge to North Carolina cap on punitive damages

    Last week we blogged about a nuisance lawsuit in which 10 plaintiffs each won $5 million in punitive damages against a hog farm. WRAL.com reports that the trial judge, U.S. District Judge W. Earl Britt, has reduced each award to $250,000 under North Carolina’s cap, rejecting the plaintiffs’ argument that the cap is unconstitutional.   

  • District court rejects constitutional challenge to North Carolina cap on punitive damages

    Last week we blogged about a nuisance lawsuit in which 10 plaintiffs each won $5 million in punitive damages against a hog farm. WRAL.com reports that the trial judge, U.S. District Judge W. Earl Britt, has reduced each award to $250,000 under North Carolina’s cap, rejecting the plaintiffs’ argument that the cap is unconstitutional.

  • San Diego jury awards $16 million in punitive damages against Allstate in employment case

    The San Diego Union Tribune reports that a jury this week awarded $2.6 million in compensatory damages and $16 million in punitive damages against Allstate Insurance in an employment case involving some unusual facts.   

    According to the story, Michael Tilkey, a longtime Allstate employee, was arrested on domestic violence charges after an argument with his then-girlfriend.  Prosecutors dismissed he charges after Tilkey entered into a plea deal requiring him to attend anger-management classes. His ex-girlfriend, however, sent an email to Allstate accusing Tilkey of threatening her.  She demanded that the company investigate Tilkey’s conduct. Allstate fired him three months later, after concluding that he violated company policy by engaging in threatening behavior.

    Tilkey’s lawsuit accused Allstate of violating state law by firing him for an arrest that did not result in a conviction.  Apparently the jury not only agreed with that theory, but was sufficiently outraged by Allstate’s misconduct that they awarded a huge amount of punitive damages.  Allstate says it will appeal.

  • San Diego jury awards $16 million in punitive damages against Allstate in employment case

    The San Diego Union Tribune reports that a jury this week awarded $2.6 million in compensatory damages and $16 million in punitive damages against Allstate Insurance in an employment case involving some unusual facts.

    According to the story, Michael Tilkey, a longtime Allstate employee, was arrested on domestic violence charges after an argument with his then-girlfriend.  Prosecutors dismissed he charges after Tilkey entered into a plea deal requiring him to attend anger-management classes. His ex-girlfriend, however, sent an email to Allstate accusing Tilkey of threatening her.  She demanded that the company investigate Tilkey’s conduct. Allstate fired him three months later, after concluding that he violated company policy by engaging in threatening behavior.

    Tilkey’s lawsuit accused Allstate of violating state law by firing him for an arrest that did not result in a conviction.  Apparently the jury not only agreed with that theory, but was sufficiently outraged by Allstate’s misconduct that they awarded a huge amount of punitive damages.  Allstate says it will appeal.

  • Orange County jury awards $13 million in punitive damages against GEICO for bad faith

    A reader tipped me off to this verdict, which was handed down a few weeks ago in Orange County.  A jury awarded just under $10 million in compensatory damages, plus $13 million in punitive damages, against GEICO Insurance Co. 

    Omar Daoud, a GEICO insured, was injured in an auto accident with a driver who had $100,000 in liability coverage.  Daoud demanded that GEICO pay the $400,000 underinsured motorist policy limits on his policy.  According to Daoud, GEICO unreasonably delayed in paying those benefits, which caused him to lose two homes to foreclosure.

    GEICO says it plans to appeal, according to this story in the Orange County Register.