The Sacramento Bee reports that a jury in Sacramento this week awarded $39.6 million in damages, including $17.4 million in punitive damages, against Patriot Rail Corp. of Florida. The plaintiff in the case is Sierra Railroad Co., a privately held corporation that operates a number of tourist trains in California. Sierra alleged that Patriot breached a nondisclosure information between the two companies and used Sierra’s information to poach one of Sierra’s biggest clients. Patriot says it plans to appeal the jury’s award, which includes $22.2 million in compensatory damages.
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Court of Appeal vacates another punitive damages award due to insufficient financial condition evidence (Mobasser v.Yermian)
This unpublished opinion from the California Court of Appeal (Second Appellate District, Division Seven) vacates a $481,000 punitive damages award because the plaintiff failed to present meaningful evidence of the defendant’s financial condition. I won’t comment any further on this one because I represented the defendant on appeal.
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Cert. petition on class action punitive damages distributed for May 2 conference (Allstate v. Jacobsen)
We previously reported on this pending cert. petition, which raises questions about due process constraints on the award of punitive damages in state court class action proceedings. The Supreme Court’s online docket now indicates that the petition will be considered during the Court’s May 2 conference.
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Defendant forfeited challenge to $1.2 million punitive damages award by refusing to produce witness on financial condition (Smally v. Nationwide)
In this insurance bad faith case, a jury awarded $686,000 in compensatory damages and $1.2 million in punitive damages to one of the plaintiffs. (A second plaintiff also recovered compensatory damages, but no punitive damages).
On appeal, the insurer argued that the punitive damages should be vacated because the plaintiff failed to meet its burden of presenting meaningful evidence of the defendant’s financial condition. California courts frequently strike down punitive damages awards on that basis, but not this time.
The Court of Appeal (First Appellate District, Division Four) held in an unpublished opinion that the defendant forfeited its right to complain about the absence of financial condition because the defendant refused to produce a witness on that issue. The court noted that the plaintiff asked the defendant to produce a witness knowledgeable about the defendant’s financial condition, and the defendant did not object to that request. By neither objecting to nor complying with the request, the defendant forfeited its right to complain about the lack of evidence of its financial condition.
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Louisiana jury awards $9 billion in punitive damages against Takeda Pharmaceutical and Eli Lilly
Bloomberg news reports that a jury in federal district court in Lafayette, Louisiana has awarded $1.5 million in compensatory damages and $9 billion in punitive damages in a lawsuit over the diabetes medicine Actos. That’s a ratio of 6000 to 1. Bloomberg predicts the punitive damages “will probably be reduced.” Yeah, that’s a pretty safe prediction.
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San Diego jury awards $1.3 million in punitive damages against SDG&E
We missed this story when it came down last week: Times of San Diego reported on March 27 that a jury awarded $1.3 million in punitive damages, on top of $860,000 in compensatory damages, against San Diego Gas & Electric.
The plaintiff brought a whistleblower suit claiming he was fired after complaining that SDG&E was targeting low-income customers with delinquent notices in order to make money on late fees. SDG&E responded that it fired the plaintiff for engaging in “extremely inappropriate conduct” in his role as a supervisor. The company says it plans to appeal.
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Billionaire loses his $12M punitive damages award in fake wine case
Reuters reports (via the Huffington Post) that a federal judge in New York has vacated the $12 million punitive damages that a jury awarded to billionaire William Koch in his lawsuit alleging he was duped into buying 24 bottles of phony wine.
We reported on the jury’s $12 million punitive damages award back in April 2013. The Reuters story doesn’t reveal why the posttrial motion process has taken so long, but the story reports that U.S.District Judge J. Paul Oetken of the Southern District of New York found the punitive damages award excessive in relation to the compensatory damages. Judge Oetken reduced the compensatory damages from $355,811 to $212,699, and ordered a new trial on punitive damages unless Koch agrees to accept a reduced amount of $711,622 (a ratio of about 3.3 to one).
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Court of Appeal holds that California trial court erred by applying Michigan law to bar punitive damages (Scott v. Ford Motor Co.)
Punitive damages are not permitted under Michigan law. So what happens when a Michigan corporation is sued for punitive damages in California, based on corporate acts that took place in Michigan?
The trial court in this asbestos injury case applied Michigan law and dismissed the punitive damages claim. After the jury ruled for the plaintiff and awarded compensatory damages, the plaintiff appealed, arguing he should have been allowed to seek punitive damages as well.
The California Court of Appeal (First Appellate District, Division One), agreed with the plaintiff and reversed the trial court’s ruling in a published opinion (Scott v. Ford Motor Co.).
Applying the “governmental interest analysis” test for conflicts of law issues, the Court of Appeal concluded that Michigan has little interest in having its law applied to the punitive damages claim in this case.
Ford argued that Michigan’s policy should apply because Ford is domiciled in Michigan, but the Court of Appeal was not buying that argument at all:
Because the same argument would hold in all 40-odd other states permitting punitive damages, Ford effectively argues it should be found to carry a nationwide shield from punitive damage liability because the state in which it maintains its headquarters has decided punitive damages are poor public policy. We cannot agree, any more than we expect a Michigan court would yield to a plaintiff’s plea to impose punitive damages on a California-based corporation because its home state has made the opposite policy judgment
That reasoning is not too surprising. I can’t imagine any California court agreeing that businesses that incorporate in Michigan can come to California and commit acts of malice without fear of punitive damages.
But Ford also argued that Michigan law should apply because the allegedly malicious acts actually took place in Michigan, not California. The Court of Appeal struggled to explain its reasoning for rejecting that argument. Ultimately, the court said Michigan courts have never expressly articulated that the purpose of Michigan’s ban on punitive damages is to preclude punitive damages for conduct occurring in Michigan:
In Ford’s telling, the Michigan ban on punitive damages represents a declaration that corporate conduct occurring in Michigan should not be subject to punitive damages, regardless of its nature. . . . Michigan has never articulated this as a motive for banning punitive damages, and Michigan courts do not preclude punitive damages based on conduct occurring only within the state. Rather, the ban on punitive damages is entirely independent of the location of the alleged conduct in connection with which punitive damages are sought and applies to any defendant’s conduct, regardless of where it occurred.
That seems a little questionable. Isn’t it a safe assumption that, when the Michigan Supreme Court outlawed punitive damages in 1884, the court was thinking, at least primarily, about Michigan conduct? Do we really need a Michigan court to say that? (A federal district court in Michigan has said that, but the Court of Appeal here did not believe that was sufficient.)
In any event, this may not be a big deal for Ford in this case. Although this case is going back to the trial court for a trial on punitive damages, the Court of Appeal’s opinion indicates that the evidence here would not support a punitive damages award. To get punitive damages, the plaintiff would have to prove that Ford consciously disregarded a known risk in the 1960s, when the conduct occurred. But the opinion explains (while discussing an unrelated issue) that there was no known risk associated with Ford’s asbestos products at the time:
From 1966, the beginning of the relevant time period, there appears to have been a scientific consensus that industrial exposure to the type of asbestos used in insulation was dangerous. There was no similar consensus about exposure to asbestos through automotive work, given the far less potent type of asbestos involved.
The court explains that a known risk for high-exposure to one type of asbestos does not establish a known risk for low-dose exposure to a different type:
That workers with relatively heavy and constant exposure to one type of asbestos fiber develop asbestosis does not necessarily mean that workers with intermittent, lower level exposure to a different type of asbestos fiber will also be adversely affected, particularly by an entirely different disease.
That does not sound like a punitive damages case to me. Ford cannot have disregarded a known risk if, according to the Court of Appeal, the risk was not known at the time.
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California Supreme Court declines to review $30 million punitive damages award (Asahi v. Actelion)
The California Supreme Court’s online docket indicates that the court has denied review in Asahi Kasei Pharma v. Actelion Ltd. So the punitive damages award in that case will stand as the third largest ever to survive appeal in California.
Related posts:
Defendants seek California Supreme Court review in Asahi v. Actelion
Court of Appeal affirms $30 million punitive damages award – the third largest to survive appeal in California (Asahi v. Actelion) -
“WV SC hears appeal of $91M nursing home verdict”
The West Virginia Record has this report about oral arguments in the West Virginia Supreme Court in a case involving an $80 million punitive damages award.