California Punitives by Horvitz & Levy

  • Court of Appeal affirms $30 million punitive damages award – the third largest to survive appeal in California (Asahi v. Actelion)

    This published opinion by the California Court of Appeal (First Appellate District, Division Five) affirms a judgment consisting of $377 million in compensatory damages and $30 million in punitive damages.  The punitive damages award, although small in comparison to the compensatory damages, appears to be the third largest punitive damages award to survive appeal in California.  The punitive damages portion of the opinion, however, is unpublished.

    Here’s our updated list of the largest awards that our appellate courts have ever affirmed:

    1. Buell-Wilson v. Ford (2008) [depublished]: $55 million

    2. Boeken v. Philip Morris (2005) 127 Cal.App.4th 1640: $50 million

    3.  Asahi Kasei Pharma Corporation v. Actelion Ltd. (2013) ___ Cal.App.4th ____: $30 million

    4. Rufo v. Simpson (2001) 86 Cal.App.4th 573: $25 million

    5. Vann v. Travelers (1998) [unpublished]: $25 million

    I’m swamped with other work right now, but I hope to make time to write a further post analyzing the substance of this opinion.  In the meantime, for further reading about this case, see this November 8 story in The Recorder:  With Appeal Pending, Gloves Come Off in Pharmaceutical Feud (subscription required).

  • California listed as the nation’s worst “judicial hellhole” (again)

    The American Tort Reform Foundation has once again listed California at the top of its Judicial Hellhole rankings.  The report mentions, among other things, the $11 million punitive damages award in the Grigg v. Owens-Illinois case, which we discussed here.  That certainly wasn’t the largest award of the year, but it made the report because of some surprising rulings by the trial court.  Among other things, the articles says that the trial judge determined in posttial proceedings that that the punitive damages claim never should have gone to the jury, but she nonetheless refused to vacate the award.

    Related posts:

    Oakland jury awards $11M in punitive damages against Owens-Illinois

  • California Supreme Court grants review in Nickerson v. Stonebridge

    Today the California Supreme Court granted review in Nickerson v. Stonebridge, according to the court’s online docket.  The issues raised by the petition for review are:

    1. In calculating the 10:1 ratio between punitive and compensatory damages, the Court of Appeal held that the policy proceeds must be excluded. Two other published California decisions follow this approach; and one published opinion rejects it. Does due process require that the policy proceeds be excluded from the compensatory damages used to compute the ratio between punitive and compensatory damages?

    2. In Brandt v. Superior Court (1985) 37 Cal.3d 818, this Court held that a policyholder’s damages in an insurance bad-faith case included the attorney’s fees incurred to recover the policy proceeds. In calculating the 10:1 ratio between punitive and compensatory damages, the Court of Appeal excluded the Brandt fees because they were awarded by the trial court in post-trial proceedings, and not by the jury. The court followed another  published opinion that took this approach. But there is also a published opinion that, without comment, included post-judgment Brandt fees in the ratio. Does due process require that Brandt fees must be awarded by the jury in order for them to be factored into the ratio between punitive and compensatory damages? 

    3. Both the trial court and the Court of Appeal stated that the $350,000 punitive-damage award in this case was too low to deter Stonebridge from engaging in the same misconduct. Yet both courts felt “constrained” by due process to award no more than 10 times the compensatory award. If the courts determine that punitive damages reduced on the basis of a 10:1 ratio to compensatory damages will not deter a defendant from repeating its misconduct, can they permit substantially higher ratios without offending due process?

    Related posts:

    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

  • “Punitive Damages Based on Gross Negligence: Massachusetts Bucks the Trend”

    The December 2013 edition of Wilson Elser’s Product Liability Newsletter discusses the Massachusetts Supreme Court’s decision in Aleo v. SLB Toys, which affirmed an $18 million punitive damages award.  The newsletter notes that Massachusetts is one of only eight states that permit punitive damages based on gross negligence, and is the only one of those eight that has not restricted, by statute or judicial decision, the circumstances in which gross negligence can support punitive damages. 

    Related posts:

    Massachusetts Supreme Court upholds $18 million punitive damages award (Aleo v. Toys R Us)

  • Court of Appeal finds no inconsistency where jury ruled for defense on liability, but ruled for plaintiff on punitive damages (Marini v. Regenesis Power, LLC)

    The jurors in this case were awfully confused.  They were asked to decide two theories of liability: false promise and breach of fiduciary duty.  They were instructed that, if they found that the defendant’s conduct harmed the plaintiff, they should also decide whether the defendant acted with malice, oppression, or fraud, and therefore is subject to punitive damages.

    The jurors clearly did not understand that instruction, because they ruled in favor of the defendants on the liability issues and then proceeded to answer the punitive damages questions, finding that the defendants acted with malice, oppression, and fraud.

    After the verdict was read, the court reminded the jurors of the instructions, particularly this one: “[i]f you decide that defendants’ conduct caused harm, you must decide whether that conduct justifies an award of punitive damages.”  The judge asked the jurors to tell the court how they understood that sentence.  The answers did little to explain the odd verdict.  One juror said “it means that if I think the defendant did something that would cause this person to lose money . . . then I will have to award him some punitive damages.”

    The judge then tried to explain more clearly to the jurors that they should not reach the issue of punitive damages unless they find for the plaintiff on liability:

    If you decide that the defendants’ conduct caused harm to the plaintiff under either or both of the causes of action, then you can award punitive damages.  But if you did not find any harm under those two causes of action, you cannot award punitive damages . . . the way things stand, I’m going to have to nullify the punitive damages.

    Nevertheless, the foreperson told the court after further deliberations that the jury chose not to change the verdict.

    The court then dismissed the jury and entered judgment for the defendant.  The plaintiffs moved for a new trial, arguing that the jury’s finding of malice, oppression, or fraud was inconsistent with the defense verdict on liability.  The court denied the motion and the plaintiffs appealed.

    The California Court of Appeal (Second Appellate District, Division Three) affirmed.  In this unpublished opinion, the court explained that the verdict was not inconsistent, because the liability issues and the punitive damages issues were distinct.  The malice finding did not conflict with the liability issue–it was merely superfluous.  Accordingly, the court held that the trial court acted properly by effectively striking the punitive damages finding and entering judgment in favor of the defendants.

  • Daily Journal op-ed: “Punitive damages: too big to pass muster, sometimes”

    Today’s Daily Journal has an article (subscription required) by Judge Rex Heeseman of the Los Angeles County Superior Court.  Judge Heeseman was written several editorials on the topic of punitive damages.  In this one, he discusses some of the published California decisions on punitive damages, including Nickerson, Davis, and Nevarrez.  He concludes that none of these cases can be described as “blockbusters.” I tend to agree, although I think there’s a chance the California Supreme Court may take an interest in Nevarrez.

    You can read our posts on those opinions at the links below.

    Related posts:

    Court of Appeal reissues opinion approving jury instruction on clear and convincing evidence (Nevarrez v. San Marino Skilled Nursing)

    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

    Court of Appeal reverses order granting summary adjudication of punitive damages in harassment case (Davis v. Kiewit)

  • Court of Appeal affirms $200,000 punitive damages award in a published opinion (Powerhouse Motorsports v. Yamaha Motor)

    This published opinion affirms a judgment awarding $1.1 million in compensatory damages and $200,000 in punitive damages against Yamaha Motor Corp. in a dispute between Yamaha and a former franchisee.

    Yamaha argued on appeal, among other things, that the punitive damages should be vacated under Civil Code section 3294, which provides that punitive damages cannot be awarded for the breach of obligations arising solely from a contract.  Yamaha claimed the plaintiff’s various claims all arose from Yamaha’s alleged breach of a franchise agreement.  The California Court of Appeal (Second Appellate District, Division Six) disagreed, finding that the plaintiff had a valid tort claim for interference with a separate contract (to which Yamaha was not a party), between the plaintiff and a third party.

    Yamaha also argued that the plaintiff failed to prove, as section 3294 requires, that any misconduct was committed by an officer, director, or managing agent of Yamaha.  Again, the Court of Appeal disagreed.  It held that Yamaha’s regional sales manager, who testified that he was responsible for the total well-being of between 140 and 240 dealerships, was a managing agent within the meaning of section 3294.

  • Punitive damages in Taiwan?

    China Post reports on proposed legislation to authorize punitive damages as a remedy under Taiwan’s civil code.  The article says that the proposal is supported by 19 lawmakers, but opposed by the Deputy Minister of Justice, who argues that punitive damages should be authorized only for violation of specific laws. 

  • Court of Appeal reissues opinion approving jury instruction on clear and convincing evidence (Nevarrez v. San Marino Skilled Nursing)

    In June we reported on this case, in which the defendant challenged the wording of CACI 201, the pattern jury instruction that defines “clear and convincing evidence.”  After our initial post, the Court of Appeal granted rehearing to reexamine a different aspect of the case.

    The court has now reissued its published opinion. It contains the same analysis of CACI 201, i.e., the opinion once again holds that CACI 201 is correct as written and should not be augmented to reflect the definition of clear and convincing evidence set forth by the California Supreme Court in In re Angelia P.

  • Court of Appeal reverses $500,000 punitive damages award because plaintiff failed to provide evidence of the defendant’s financial condition at the time of trial (Oggi’s Pizza v. Durrant)

    This unpublished opinion from the California Court of Appeal (Fourth Appellate District, Division One) reminds us that plaintiffs seeking punitive damages must not only introduce meaningful evidence of the defendant’s financial condition, but they must present evidence of the defendant’s finances at the time of trial.

    The trial in this case took place in December 2011.  The plaintiff presented evidence that the defendant had a net worth of $2.2 million as of June 2009.  Plaintiff’s counsel did not ask the defendant (who testified during the punitive damages phase of trial) about his current assets or liabilities.  The plaintiff introduced a copy of the defendant’s most recent tax return, but that showed only his income, not his assets or liabilities.

    That evidence was not enough to sustain the jury’s punitive damages award, according to the Court of Appeal.  The court reversed the $500,000 punitive award and directed the trial court to enter judgment in favor of the defendant on that issue.