This story in the New York Daily News reports that a federal jury in Manhattan has awarded $2 million in compensatory damages and $16 million in punitive damages to a plaintiff who claimed that her employer sexually harassed her and then defamed her. The plaintiff was seeking $850 million, so perhaps the jury thought they were showing restraint by awarding “only” $16 million in punitives.
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San Bernardino jury awards $2 million in punitive damages in murder-for-hire case
The Associated Press reported over the weekend that a San Bernardino jury awarded $2 million in punitive damages, on top of $4.5 million in compensatory damages, to a man who claimed that the defendants plotted to murder him. According to a press release by the plaintiff’s attorneys, the two defendants conspired with members of the Mexican Mafia to kill the plaintiff as a result of some sort of confrontation that occurred at a bar.
When a jury awards such a large amount of punitive damages against individual defendants, it usually raises questions about whether the award is disproportionate to the defendants’ ability to pay. Several California decisions have referenced a 10 percent rule of thumb, i.e., awards that exceed 10 percent of a defendant’s net worth are presumed to be excessive. In this case, the AP story reports that the defendants are members of an Indian tribe and receive in excess of $1 million per year in proceeds from a casino. If the plaintiff can use that evidence to demonstrate that the defendants each have a net worth in excess of $10 million, the plaintiff may be able to fend off the argument that the award exceeds the defendants’ ability to pay.
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Canadian smokers win $15 billion in punitive damages
CBC News reports that a judge in Montreal has ordered three tobacco companies to pay $15 billion in a class action brought by one million Canadian smokers. The plaintiffs alleged that the defendants failed to warn about the dangers of smoking and engaged in unscrupulous marketing. The defendants are Imperial Tobacco, Rothmans Benson & Hedges, and JTI-MacDonald.
Canadian courts are not known for dishing out large punitive damages awards. A few years ago we reported on a case before the Supreme Court of Canada involving a $500,000 punitive damages award, which was reportedly the largest amount ever awarded in an employment case in Canada. So this $15 billion award is somewhat of a shock.
Not surprisingly, the tobacco defendants say they intend to appeal. But the story also says that the judge will permit the plaintiffs to enforce the judgment up to $1 billion while the appeal is pending. So even if the defendants win on appeal, they’ll be left with the prospect of trying to claw back $1 billion from a million individual smokers throughout Canada.
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Supreme Court calls for response to cert. petition raising punitive damages issues (Quicken Loans v. Brown)
The Supreme Court has asked the plaintiffs to respond to the cert. petition filed by Quicken Loans in Quicken Loans v. Brown. As we noted a few weeks ago, the cert. petition raises the following issues:
1. Whether a state court may evade its obligation to apply the United States Constitution and this Court’s cases by asserting that expressly and pervasively raised federal constitutional claims were purported waived.
2. Whether, in applying the punitive to compensatory damages ratio of State Farm v. Campbell [citation], court awarded attorney’s fees are properly included as compensatory damages?
Despite the request for a response, this petition still seems like a longshot, given that the Supreme Court has denied other petitions raising similar issues in recent years. Nevertheless, the request for a response should be welcome news for Quicken Loans. At least it keeps alive the possibility of a grant.
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Supreme Court declines to review Fifth Circuit decision that disallowed punitive damages in unseaworthiness cases (McBride v. Estis Well Service)
Last year we reported on this en banc Fifth Circuit opinion, which held that punitive damages are not available under the Jones Act or general maritime law for a defendant’s failure to maintain a seaworthy vessel.
Yesterday, the Supreme Court denied the cert. petition filed on behalf of the injured seamen in that case. You can view the Court’s online docket here.
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Ninth Circuit wipes out $75 million punitive damages award against defense contractor
A few years ago we reported on this $75 million punitive damages award against defense contractor Kellog Brown & Root for conduct that took place in Iraq. Today, the Ninth Circuit vacated that award in its entirety.
Members of the Oregon National Guard sued KBR in federal district court in Oregon, seeking recovery under Oregon law. The plaintiffs blamed KBR for causing them to be exposed to hexavalent chromium in Iraq. A jury awarded over $80 million in damages, including $75 million in punitive damages. KBR appealed to the Ninth Circuit and our firm filed an amicus brief, arguing that the Constitution prohibits imposition of punitive damages under state law for conduct that occurred solely in a foreign country.Today the Ninth Circuit issued a memorandum disposition reversing the judgment. The Ninth Circuit didn’t reach the question of extraterritorial punishment. Instead, it reversed the judgment on the ground that KBR is not subject to personal jurisdiction in Oregon because KBR did not engage in any acts expressly aimed at Oregon. The fact that KBR engaged in conduct towards members of the Oregon National Guard was not sufficient to create jurisdiction in Oregon.
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Amicus briefs support SCOTUS review of West Virginia punitive damages award (Quicken Loans v. Brown)
Last week the U.S. Chamber of Commerce and the Washington Legal Foundation filed amicus briefs asking the Supreme Court to once again provide guidance on issues that arise when a court reviews (or in this case, declines to review) a punitive damages award for excessiveness.
In the case of Quicken Loans v. Brown, the plaintiff sued Quicken Loans for fraud, claiming it lent her more money than her house was worth. A jury awarded $2.17 million in punitive damages and $17,500 in compensatory damages, a ratio of 124 to 1. The plaintiff also recovered over $596,000 in fees and costs, which the trial court cited during post-trial proceedings as a basis for upholding the punitive damages award.Quicken Loans appealed to the West Virginia Supreme Court, raising a constitutional challenge to the size of the punitive damages award. The court never reached that issue because it reversed the judgment on other grounds. The case went back to the trial court, which entered a new judgment that increased both the compensatory and punitive damages.
Quicken Loans appealed again, and the West Virginia Supreme Court invalidated the part of the trial court’s order that increased the damages. The Supreme Court ordered the original amounts reinstated, but declined (by a 3-2 vote) to review the amount of the punitive damages. The majority said Quicken Loans had waived the issue by not raising it in the first appeal. The dissenting opinion pointed out, however, that the “one of the petitioner’s most significant assignments of error [in the first appeal] was that the punitive damages award was ‘grossly excessive.’” For whatever reason, the justices in the majority did not see it that way.
Quicken Loans has now petitioned for certiorari, raising these two issues:
1. Whether a state court may evade its obligation to apply the United States Constitution and this Court’s cases by asserting that expressly and pervasively raised federal constitutional claims were purported waived.
2. Whether, in applying the punitive to compensatory damages ratio of State Farm v. Campbell [citation], court awarded attorney’s fees are properly included as compensatory damages?
The Supreme Court has had many opportunities to delve back into this area in recent years, including other cases raising the second issue presented here (treatment of attorney’s fees as compensatory damages for ratio purposes), but the justices haven’t seemed interested. Perhaps the unusual procedural history of this case will grab their attention.
WLF’s amicus brief is available at this link.
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Ninth Circuit affirms punitive damages award against UPS; verdict was the fifth largest in California in 2012 (Marlo v. UPS)
By our count, the $15.9 million punitive damages award in Marlo v. UPS was the fifth largest punitive damages verdict in California in 2012. The district court reduced that award to $6.6 million, which was still three times the amount of compensatory damages.
The Ninth Circuit has affirmed the reduced award in this memorandum disposition, by a vote of two to one. The memorandum is short on analysis, as such dispositions typically are. It doesn’t explain what sort of conduct warranted such a large award. It does explain, however, that the UPS vice president who committed the misconduct had sufficient policymaking authority that he qualified as a “managing agent” under Civil Code section 3294.The memorandum ends with the conclusory statement that the amount of the award, as reduced, is not constitutionally excessive. It contains no explanation of why a one-to-one ratio is not the maximum permissible ratio in this case given the substantial
punitivecompensatory damages award. (See State Farm v. Campbell and Roby v. McKesson.)The dissenting opinion by James G. Carr, a senior district judge sitting with the Ninth Circuit by designation, is even more terse. It says, in its entirety:
Respectfully, and aware of my lesser familiarity with California law relating to managing agents, I dissent.
Yes, that’s the same Judge Carr who wrote the order we blogged about yesterday, vacating a $20 million punitive damages award against Philip Morris.
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Federal judge vacates smoker’s $20 million punitive damages award
A federal judge in Florida has issued an order vacating a $20 million punitive damages award against Philip Morris.
In one of the many Engle-progeny cases in Florida (see links below for more stories on this ongoing saga), the plaintiff in this case sued on theories of negligence, strict liability, fraudulent concealment, and conspiracy. A jury awarded $6.25 million in compensatory damages, plus $20 million in punitive damages based on the fraud and conspiracy claims.
Judge James G. Carr, a senior district judge from Ohio sitting by designation in the Middle District of Florida, ruled that Philip Morris is entitled to judgment as a matter of law on the fraud and conspiracy claims because the plaintiff failed to prove that she actually relied on any misrepresentations when she decided to smoke, or when she decided to switch to “light” or filtered cigarettes. Because the fraud and conspiracy claims were the sole basis for punitive damages, Judge Carr ordered judgment for Philip Morris on that issue.
If I’m reading the order correctly, there’s still a chance the judge may order a new trial on the plaintiffs’ negligence and strict liability claims, based on the 11th Circuit’s decision in a case called Graham v. R.J. Reynolds. I won’t get into that here, because Graham raises preemption issues that are beyond the scope of this blog.
Related posts:
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 casePhilip 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
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Court of Appeal affirms reduction of punitive damages to a 1-to-1 ratio (Banks v. General Atomics)
A few years ago, we observed a mini-trend of California courts reducing punitive damages to match the amount of the compensatory damages, at least in cases involving substantial compensatory damages awards. That trend reached its peak in 2009 when the California Supreme Court imposed a 1-to-1 ratio in Roby v. McKesson.
Ironically, we haven’t seen many 1-to-1 ratios from the California Court of Appeal in the years since Roby. But in this unpublished opinion, the Court of Appeal (Fourth District, Division One) affirms a trial court’s decision that ordered a remittitur of a punitive damages award from $5.8 million to $2.9 million, resulting in a 1-to-1 ratio.
The plaintiff argued on appeal that the trial court went too far in imposing a 1-to-1 ratio. The plaintiff pointed to provisions in the Labor Code authorizing double damages for comparable misconduct, and cited the U.S. Supreme Court’s statements that courts should defer to legislative judgments regarding the appropriate level of punishment (see State Farm v. Campbell at p. 528). According to the plaintiff, “[Labor Code] section 972’s penalty of double damages contemplates the precise 2-to-1 ratio of punitive to compensatory damages the jury originally awarded.”
That argument backfired. The Court of Appeal agreed with plaintiff that Labor Code section 972 offers an appropriate analogy, but the court observed that the plaintiff’s math was wrong. Double damages result in a 1-to-1 ratio, not a 2-to-1 ratio. Therefore, the Court of Appeal concluded that the Labor Code only provided further support for the trial court’s imposition of a 1-to-1 ratio.