California Punitive Damages – Page 129 – News and commentary on punitive damages litigation in California and nationwide.

January 26, 2016

Recent California punitive awards: $6.5 million against yoga guru and $62.5 million against drunk driver

Law360 is reporting (subscription required) that a Los Angeles jury awarded $6,471,000 in punitive damages today, on top of $924,000 in compensatory damages, in a sexual harassment case against a yoga guru. According to the article, the defendant tried to avoid the punitive damages award by claiming to be penniless, but the jurors apparently didn’t buy that theory. The article says the jurors laughed at the defendant’s testimony that he built his fleet of luxury cars himself using parts he bought in junkyards.

The defendant may have better luck arguing that the ratio of punitive damages to compensatory damages is too high, especially considering that the compensatory damages award already contains a punitive component in the form of a large award for noneconomic damages.

Another Southern California jury was even more generous in awarding punitive damages last week. The Ventura Star reported last Friday that a jury in Oxnard awarded $125 million, half of which is punitive damages, to a man who was injured by a drunk driver. According to the story, the plaintiff’s lawyer concedes that the punitive damages are not collectible because the defendant, who is in prison, probably doesn’t have $62.5 million.
January 13, 2016

Court of Appeal holds that compensatory damages award does not impact defendant’s financial condition (O’Brien v. AMBS Diagnostics)

This unpublished opinion from the California Court of Appeal (Second Appellate District, Division Two) affirms a $125,000 punitive damages award. In the process, the court makes a peculiar statement that seems contrary to published authority.

The defendant argued on appeal that the award was excessive under state law because it was disproportionate to his ability to pay. According to the defendant, the $427,926 compensatory damages award completely wiped out his net worth, leaving him with no ability to pay an additional award of punitive damages.

The court refused to consider the compensatory damages award when evaluating the defendant’s financial condition. The court cited cases stating that the defendant’s financial condition should be measured “at the time of trial.” Thus, the court concluded that a judgment entered after trial cannot be considered.

That doesn’t seem quite right. Under California law, the purpose of considering the defendant’s financial condition is to ensure that a punitive damages award does not destroy the defendant financially. To figure out whether the defendant will be destroyed, the court needs to consider the impact of the entire judgment. For example, the Court of Appeal in Washington v. Farlice, in deciding whether a $125,000 punitive damages award was excessive, evaluated the defendant’s financial condition by taking into account the value of the defendant’s interest in real property after the jury found during the first phase of trial that the defendant’s interest should be cut in half.

The court here was correct to consider the finances “at the time of trial,” but there is no reason why that should not include the verdict that was rendered during the trial. In any event, this opinion is unpublished and unciteable, leaving Washington v. Farlice as the law of the land on this issue.
January 8, 2016

Court of Appeal orders partial publication of punitive damages case, but leaves punitive damages discussion unpublished (Vardanyan v. AMCO Insurance)

Last month we reported on the California Court of Appeal’s unpublished decision in Vardanyan v. AMCO Insurance, which reinstated a plaintiff’s claim for insurance bad faith but affirmed the trial court’s order granting a directed verdict on the plaintiff’s claim for punitive damages. Today that court issued an order certifying part of the opinion for publication, but the published portion does not include the discussion of the directed verdict on punitive damages.
December 29, 2015

South Carolina judge awards $32.4 million in punitive damages in dispute over employee incentive plan

Moultrie News (of Mount Pleasant South Carolina) is reporting that a trial court has awarded $21.1 million in compensatory damages and $32.4 million in punitive damages to a group of current and former paper employees of ArborGen, Inc. The plaintiffs claimed that, under an incentive program, they were entitled to $11.3 million in equity in ArborGen, but were given only $414,330 in equity.

The Post and Courier of Charleston has additional coverage.
December 24, 2015

Florida jury awards $25 million in punitive damages to husband of smoker

Law 360 (subscription required) reports on the latest verdict in the ongoing Florida tobacco litigation: $10 million in compensatory damages and $25 million in punitive damages.

Related posts:

Federal judge vacates smoker’s $20 million punitive damages award

Another large verdict in Florida smoker litigation

Florida jury awards $14 million in punitive damages to smoker’s family

Florida jury awards smoker’s family $22.5M in punitive damages

Florida appellate court reverses $79 million judgment in tobacco case

Florida appellate court reverses $40 million punitive damages award in tobacco case

Philip Morris wins sixth straight trial in Florida smoker litigation

Florida jury awards relatively modest punitive damages in smoker lawsuit

Another punitive damages award in Florida tobacco litigation

Florida jury awards $20 million in punitive damages to smoker’s widow

Smoker’s widow wins $12.5 million in punitive damages

Florida trial judge cuts $244 million punitive damages award

Florida jury awards $25 million in punitive damages to smoker’s widow

“Smokers, tobacco, both winners in early Engle cases”

Jury rules for plaintiff in first phase of retrial after reversal of $145 billion punitive damages award

After reversal of $145 billion class action punitive damages award, Florida smokers seek punitive damages in individual suits
December 17, 2015

Court of Appeal affirms directed verdict on punitive damages in insurance dispute (Vardanyan v. AMCO Insurance)

This unpublished opinion by the California Court of Appeal concludes that the plaintiff presented some evidence that his insurer made mistakes, but the mistakes were not egregious enough to support punitive damages.

The plaintiff owned a rental home that had some serious problems. Parts of the house were sinking, water damage and termite damage were popping up throughout, every room was moldy, and the front door would not open. The plaintiff’s insurer declined to provide coverage for the needed repairs, on the ground that the damage was caused in party by non-covered hazards.

When the plaintiff sued for breach of contract and bad faith, the trial court granted a directed verdict for the defense. The Court of Appeal (Fifth Appellate District) reversed and ordered a new trial, ruling that the plaintiff should have been allowed to argue to the jury that he was entitled to coverage if the damage was predominately caused by a covered hazard.

The Court of Appeal also ruled, however, that the plaintiff could not seek punitive damages in the retrial. The court concluded that the plaintiff failed to make a case for punitive damages during the first trial and was not entitled to a do-over on that issue. According to the court, the plaintiff’s evidence “may be consistent with some improprieties in claims handling, but it does not rise to the level of reprehensibility necessary to support an award of punitive damages.”

Notably, the Court of Appeal stated it analyzed the plaintiff’s evidence while keeping in mind the “clear and convincing” standard of proof. Contrast that statement to this recent unpublished opinion, which said that the clear and convincing evidence standard does not apply on appeal. So far, the docket in that case does not indicate that the defendant has asked the California Supreme Court to review that issue.
December 15, 2015

Alameda jury awards $70 million in punitive damages against Ethicon Inc. for defective medical device

Law 360 (subscription required) is reporting that yesterday an Alameda County jury awarded $70 million in punitive damages to a woman who claimed injury from a defective hemorrhoid stapler manufactured by Ethicon, Inc., a subsidiary of Johnson & Johnson. The plaintiff’s lawyers have also issued a press release touting their victory.

It’s a safe bet that the defendant will challenge the punitive damages as excessive, especially since the compensatory damages in this case were already substantial ($9.8 million). If the defendant is facing a multitude of other claims based on the same misconduct, that may give rise to additional arguments for challenging the award. (See this post by the folks at Guideposts, discussing another award in the medical device context.) We’ll keep an eye out for further developments in this one.
December 4, 2015

Atlanta jury awards $10 million in punitive damages against hip implant manufacturer

Guideposts examines this apparently excessive punitive damages award: “Federal Jury Awards $1 Million in Compensatory Damages and $10 Million in Punitive Damages in Bellwether Hip Implant Trial“
December 3, 2015

Another unpublished opinion departs from precedent on the clear and convincing evidence standard (Sharim v. Amin)

This unpublished opinion from the California Court of Appeal (Second Appellate District, Division Seven) is mostly unremarkable. It addresses the sufficiency of the evidence to support a $500,000 punitive damages award, and finds ample evidence that the defendant committed fraud within the meaning of Civil Code section 3294.

Yet one aspect of the court’s reasoning is a bit peculiar. In a footnote, the court states that the “clear and convincing” evidence standard, which governs California punitive damages claims, does not apply in the Court of Appeal:

Although the heightened “clear and convincing evidence” standard of proof applied to the trial court’s findings on punitive damages (see Civil Code, § 3294), that does not affect our standard of review on appeal in determining whether there is substantial evidence to support the court’s findings.

That statement is contrary to the holdings of published cases. (See, e.g. Shade Foods v. Innovative Products [“since the jury’s findings were subject to a heightened burden of proof, we must review the record in support of these findings in light of that burden . . . . we must inquire whether the record contains ‘substantial evidence to support a determination by clear and convincing evidence’”]; Pfeifer v. John Crane [“we review the evidence in the light most favorable to the Pfeifers, give them the benefit of every reasonable inference, and resolve all conflicts in their favor, with due attention to the heightened standard of proof“].)

This is not the first time we have seen this. When another unpublished opinion did this in 2008, the Supreme Court of California granted review on the issue. That case was later dismissed when the parties settled, and we have since seen other unpublished opinions take the same approach. Nevertheless, we continue to believe that if courts are not going to follow existing law on this issue, they should publish their opinions and explain the basis for their differing view. It is not as if the Court of Appeal in this case was unaware of the Shade Foods decision—the court cited Shade Foods on another point.

The court’s footnote cites a 1973 Supreme Court opinion to support the notion that the clear and convincing evidence standard disappears when a case goes up on appeal. But that opinion no longer reflects the Supreme Court’s view. The modern Supreme Court has taken the clear and convincing evidence standard into account when reviewing factual findings subject to that standard. (See Conservatorship of Wendland (2001) [“The ‘clear and convincing evidence’ test requires a finding of high probability . . . we ask whether the evidence [on the issue before the court] has that degree of clarity”]; Estate of Ford (2004) [finding that certain testimony “was not clear and convincing evidence” on the issue of equitable adoption].)

If the defendant in this case petitions for review on this issue, it will be interesting to see if the California Supreme Court decides to take it up once again.
November 19, 2015

“Man Gets $21.5M Verdict for Door Injury, But IRS is Biggest Winner”

Robert W. Wood wrote this piece for Forbes, using the recent verdict against Holland America to illustrate the tax consequences of punitive damages awards.