California Punitives by Horvitz & Levy

  • Are punitive damages available under the ADEA?

    The EEOC believes that the Age Discrimination in Employment Act authorizes punitive damages.  (See Enforcement Guidance on Retaliation and Related Issues.)  Courts often find the EEOC’s interpretations of federal employment laws persuasive.  But in this case, the Fifth Circuit was not persuaded.

    The Fifth Circuit issued an opinion last week reaffirming its view that the ADEA does not authorize punitive damages.  (Vaughn v. Anderson Regional Medical Center.)

    Plaintiff’s counsel in that case told Bloomberg BNA that the Fifth Circuit stands alone in holding that punitive damages are unavailable under the ADEA.  Not so, according to the author of an ADEA treatise.  Howard Eglit, who writes the treatise Age Discrimination, says numerous courts have addressed whether the ADEA authorizes punitive damages, and “the response has been unanimously in the negative.”  (2 Age Discrimination § 8:110 (2d ed.).)

    The plaintiff’s counsel in Vaughn plans to seek Supreme Court review to resolve the split of authority that he says the Fifth Circuit has created, but Eglit’s treatise suggests it will be an uphill battle to show that such a split even exists.

     

  • Missouri jury awards $20 million in punitive damages in employment case

    Claims Journal reports that a Jackson County Missouri jury has awarded $20 million in punitive damages and $450,000 in compensatory damages to a plaintiff suing American Family Insurance for retaliation and age and sex discrimination.  Missouri is proving to be a very friendly venue for plaintiffs seeking punitive damages.  Just ask Johnson & Johnson and Abbott. 

  • Johnson & Johnson vows to appeal $1 billion punitive damages award in hip implant case

    Last Thursday, a federal jury in Dallas awarded $32 million in compensatory damages and $1 billion in punitive damages to six California plaintiffs who alleged they were injured by defective hip implants made by Johnson & Johnson’s DePuy Orthopedics unit.  The company immediately announced its plans to appeal, Reuters reports. 

    Before any appeal, however, it is likely that the trial judge will reduce the punitive damages.  The judge in this case already reduced a big punitive damages award involving the same hip implants.  He ruled in July that a $500 million verdict was excessive, and reduced it to $151 million under Texas state law.

    Johnson & Johnson was able to avoid punitive damages when facing similar claims in Los Angeles a few years ago, as we reported at the time.  But now Johnson & Johnson has to contend with this massive award, on top of the three big punitive damages verdicts in the Missouri talc litigation.  2016 has not been a good year for Johnson & Johnson in the courtroom. 

  • Court of Appeal reverses $7.5 million in punitive damages (Bigler-Engler v. Breg)

    The $7.5 million punitive damages verdict in this case was #10 on our list of the biggest punitive damages verdicts in California in 2012.  Four years later, only $150,000 of that award survived appeal.

    The plaintiff brought a personal injury action against a medical device manufacturer (Breg) and the doctor (Chao) who recommended and sold the device.  The jury awarded roughly $5.8 million in compensatory damages, plus $7 million in punitive damages against Breg and $500,000 against Chao. Both defendants appealed.

    In a partially published opinion, the California Court of Appeal (Fourth Appellate District, Division One) reversed.

    It tossed the entire punitive damages award against Breg, because the plaintiff’s intentional concealment against Breg was not supported by substantial evidence. The jury’s malice finding against Breg was based solely on that claim, so without it there could be no punitive damages as to Breg.

    As for Chao, the court found that both the compensatory damages and the punitive damages were excessive.  California courts rarely reverse non-economic damages as excessive, but the court concluded that $5.1 million awarded by the jury for plaintiff’s pain and suffering was simply too much.  Although plaintiff sustained an injury that required multiple surgeries, by the time of trial she was suffering only “minimal physical discomfort, intermittent curtailment of daily activities, and some anxiety over the condition of her scar.”  The court ordered a new trial, subject to the plaintiff’s agreement to accept a reduction of the compensatory damages to $1.3 million.

    We have previously observed that California courts are divided on whether an appellate court should automatically reverse a punitive damages award after making a substantial reduction to the compensatory damages award.  In our view, the better reasoned answer is “yes.”  Punitive damages are supposed to bear a reasonable relationship to the plaintiff’s actual harm.  Juries are instructed to make that determination in every case, and the defendant is entitled to have the jury decide that issue in the first instance.

    This court, however, took the alternative approach, and held that the Chao was not entitled to have a jury decide the reasonable relationship question in the first instance.  In other words, no automatic reversal of the punitive damages.  Instead, the court held Chao would be entitled to a reversal only if the court determined that the punitive damages were excessive, taking into account the reduced compensatory award.  Fortunately for him, the court answered that question in the affirmative.  The court held that the $500,000 punitive damages award against Chao was excessive as a matter of state law.  The court noted that the award exceeded 14% of Chao’s net worth, and that California courts have held that anything over 10% is presumptively excessive.  The court ordered a new trial, subject to plaintiff’s acceptance of a reduction of the punitive damages to $150,000, which is roughly 5 percent of Chao’s net worth.

    Having found the punitive damages excessive under state law, the court did not consider Chao’s alternative argument that the award was also excessive as a matter of federal due process.

  • Missouri appellate court affirms $23 million punitive damages award against Abbott

    The Missouri Court of Appeals, Eastern District, has affirmed a judgment awarding $15 million in compensatory damages and $23 million in punitive damages against drug maker Abbott Laboratories.  The plaintiffs consisted of 29 individuals who claimed they suffered birth defects because their mothers took Abbott’s antiepileptic drug Depakote.  The appellate court rejected Abbott’s argument that plaintiffs failed to prove Abbott deliberately disregarded the safety of others when marketing the drug.   

    Johnson & Johnson will soon be challenging some very large Missouri punitive damages awards, so they can’t be too happy to see this opinion.  But the court in this case applied Minnesota law to the punitive damages claim, so the decision should not have any direct impact on J&J’s talc appeals.

  • Court of Appeal issues slightly modified opinion in long-running insurance bad faith case (Nickerson v. Stonebridge)

    A few days ago the California Court of Appeal published what may be the final chapter in the lengthy saga involving a $19 million punitive damages award in an insurance bad faith case.

    We have discussed this case at length in prior posts (see the links below).  I don’t want to rehash all of that, but here’s a brief recap:

    • A jury awarded $19 million in punitive damages and $35,000 in compensatory damages against an insurer.  After the verdict, the trial court tacked on an additional $12,500 in damages to compensate the insured for the legal fees he incurred to obtain his wrongfully withheld policy benefits (Brandt fees).
    • The trial court decided the punitive damages were excessive and ordered a new trial unless the plaintiff accepted a reduction of the punitive damages to $350,000, ten times the compensatory damages awarded by the jury.
    • The Court of Appeal (Second Appellate District, Division Three) affirmed.  In the process, it said the trial court properly excluded the $12,500 in Brandt fees from the ratio calculations.  The Court of Appeal reasoned that punitive damages award could not be based on a multiplier of the Brandt fees because the jury did not know about the Brandt fees when it made the initial punitive damages award.
    • The Supreme Court disagreed, and held that the Brandt fees should have been included as part of the compensatory damages for ratio purposes.  Instead of modifying the judgment itself, the Supreme Court sent the case back to the Court of Appeal for further proceedings.

    That brings us to this week.  The Court of Appeal’s new published opinion is nearly identical to its prior decision.  The court simply deleted the prior discussion of the Brandt fee issue, and inserted a summary of the Supreme Court’s decision.  The court then added the Brandt fees onto the jury’s compensatory damages award, for a total of $47,500 in compensatory damages.  Keeping the same 10-to-1 ratio as in the previous decision, the Court of Appeal concluded that the final punitive damages award should be $475,000.

    That’s a lot of litigation over $175,000.

    P.S.  Two of the justices involved in the original decision were not part of the panel for new opinion.  Justice Croskey died while the case was pending before the Supreme Court, and Justice Klein retired.  Justice Croskey had dissented from the original opinion, taking the view that punitive damages should never have been awarded in this case.  But there is no dissent this time around.  The new decision is unanimous.

    Related posts:

    California Supreme Court rules for plaintiff in dispute over ratio calculations in insurance bad faith cases (Nickerson v. Stonebridge)

    California Supreme Court limits issues for review in Nickerson v. Stonebridge

    California Supreme Court grants review in Nickerson v. Stonebridge

    Court of Appeal orders reduction of $19M punitive damages award to $350,000 (Nickerson v. Stonebridge) – PART II

    Court of Appeal orders reduction of $19M punitive damages award to $350,000 (Nickerson v. Stonebridge) – PART I

    L.A. trial court reduces punitive damages award against Stonebridge insurance from $19 million to $350,000

    L.A. jury awards $19 million in punitive damages and $35,000 in compensatory damages in insurance bad faith case

     

  • Johnson & Johnson hit for $65 million in punitive damages in third big talc verdict

    Fortune reports that a jury in Missouri has awarded $65 million in punitive damages and $2.5 in compensatory damages against Johnson & Johnson, in favor of a woman who claims J&J’s baby powder caused her to develop ovarian cancer.

    This is the third time a Missouri jury has returned a huge verdict against Johnson & Johnson based on claims that its talc-based powders caused ovarian cancer.  The company has appealed the other two verdicts and plans to appeal this one too. It seems unlikely that the 26-to-1 ratio of punitive damages to compensatory damages in this case could survive post-trial motions and appeal.

  • Two big punitive damages awards in Florida this week

    It’s a good week to be a Florida plaintiff seeking punitive damages.

    CVN news reports that a Fort Lauderdale jury has awarded a smoker’s family $20 million in punitive damages (on top of $9 million in compensatory damages) against R.J. Reynolds.

    And The Real Deal reports that a bankruptcy judge in Miami has awarded $12.5 million in punitive damages against developer D.R. Horton for allegedly improper lending practices that contributed to the bankruptcy of a homeowners association.

  • Ninth Circuit reduces $1.16 million punitive damages award to $352,000 (Mitri v. Walgreen)

    Law 360 reported yesterday on the Ninth Circuit’s memorandum disposition in this wrongful termination case in which the plaintiff claimed he was fired for reporting potential Medicare fraud.  It’s only five pages long, so there isn’t much analysis.  In a nutshell, the jury awarded $88,000 in economic damages and $1.155 million in punitive damages, a ratio of 13 to 1.  The Ninth Circuit determined the punitive damages award was constitutionally excessive and reduced it to $352,000, a ratio of 4 to 1.

    Interestingly, the Ninth Circuit noted that a lower ratio was appropriate in light of the “substantial” compensatory damages.  Contrast that approach to the California Court of Appeal’s decision in Bullock v. Philip Morris, which held that a compensatory damages award of $850,000 (nearly ten times larger than the award in this case) was not substantial.  The Bullock court reached that conclusion by comparing the amount of the award to the defendant’s wealth.  We are not aware of any other decisions following that approach, and the Ninth Circuit certainly didn’t follow it here.

    The Ninth Circuit also observed that the jury’s punitive damages award was excessive in relation to the $10,000 fine that the California Labor Code authorizes for unlawful retaliation against whistleblowers.  California courts have gotten into the habit of saying that such comparisons are “not useful” (see Bullock again), even though the third guidepost of BMW v. Gore calls for courts to “accord substantial deference to legislative judgments concerning appropriate sanctions for the conduct at issue.”

  • Jury awards $1.7 million in punitive damages against Long Beach hospital

    The Long-Beach Press Telegram reported earlier this week on a $1.7 million punitive damages verdict against the Community Hospital of Long Beach and a co-defendant, Memorial Psychiatric Health Services.

    According to the article, the case involved three former hospital employees who claimed they were subjected to harassment and discrimination by an openly gay male nurse who worked for the defendants.  The jury awarded one of the plaintiffs $1.5 million in punitive damages and $165,175 in compensatory damages (a 9-to-1 ratio), and awarded the other two each $100,000 in punitive damages and $1.4 million in compensatory damages (a .07 to 1 ratio).

    According to the article, both defendants presented evidence that they could not afford to pay even the compensatory damages, much less a sizable punitive damages award.  That suggests the defendants will argue in post-trial motions that the award is excessive in relation to their financial condition.