California Punitives by Horvitz & Levy

  • 9th Circuit hears oral arguments in punitive damages case where jury awarded no compensatory damages

    Today’s Recorder has a story on an interesting punitive damages case pending before the Ninth Circuit.

    In a sexual harassment case (Aguilar v. ASARCO), the jury awarded $0 in compensatory damages, $1 in nominal damages, and $868,750 in punitive damages.  The district court reduced the punitive damages to $300,000 and the defendant appealed, challenging that amount as excessive.  Oral argument was held on Wednesday.  As Scott Graham of the Recorder reports, Judges O’Scannlain and Hurwitz jousted with counsel over how to apply the single-digit-ratio rubric of BMW and State Farm to the facts of this case.  Stay tuned.  This is the sort of case in which the losing side might seek certiorari.

  • Court of Appeal affirms order vacating $1.75 million punitive damages award and ordering new trial (Radford v. BAE Systems)

    This unpublished opinion contains a very interesting discussion about the validity of some unusual posttrial procedures involving a punitive damages award.  Or at least it’s very interesting if you are into the arcana of California posttrial and appellate procedure.  If that’s not your thing, you might want to stop reading now.

    The jury in this case awarded $420,000 in compensatory damages and $1.75 million in punitive damages.  Before judgment was entered, the defendant asked the trial court to rule that the punitive damages were constitutionally excessive.  The plaintiff objected, arguing that the court should enter judgment and the defendant should then raise the excessive damages through posttrial motions.

    The trial court overruled the plaintiff’s objections and decided the excessiveness issue before entering judgment.  The court ruled that the maximum constitutionally permissible punitive damages award is $420,000 on the facts of this case.

    The court then entered judgment and the defendant filed a new trial motion and a JNOV motion.  The plaintiff argued that the trial court had no jurisdiction to grant either motion because the court had already considered the plaintiff’s prejudgment motion, which was effectively a new trial motion.

    The trial court overruled the plaintiff’s objections again, and granted the defendant’s new trial motion.  The court ruled that plaintiff’s counsel committed misconduct, depriving the defendant of a fair trial.  The court granted a new trial conditioned on the plaintiff’s acceptance of a remittitur of the amount of the compensatory and punitive damages to a total of less than $500,000.  The plaintiff accepted the remittitur.

    After the trial court’s jurisdiction to grant a new trial expired, the court issued its specification of reasons for granting a new trial.  In the specification of reasons, the court amended its earlier new trial order to eliminate the conditional part of the order and to eliminate the plaintiff’s right to avoid a new trial by accepting a remittitur.

    The plaintiff appealed and the Court of Appeal (First Appellate District, Division Five) affirmed. It found nothing wrong with the judge deciding the issue of excessive punitive damages before entering judgment.  The Court of Appeal said the trial court’s prejudgment ruling was effectively a de facto JNOV motion, not a de facto new trial motion, because the issue of constitutional excessiveness is a JNOV issue, not a new trial issue.

    The plaintiff argued that even a de facto JNOV motion before judgment would be improper because by statute the trial court is supposed to hear and decide the JNOV motion at the same time as a new trial motion.  The Court of Appeal said that argument might have been valid if the plaintiff had raised it below, but since he didn’t, the argument was waived.

    The Court of Appeal also found nothing nothing wrong with the court “amending” the new trial order in the specification of reasons and taking away the plaintiff’s right to accept a remittitur.  The Court of Appeal said that the remittitur part of the original new trial order was void all along because trial courts are not permitted to order a remittitur when granting a new trial on grounds other than excessive damages.  Therefore, because the remittitur was never legally valid in the first place, the trial court did not err by revoking the remittitur in its specification of reasons.

  • Massachusetts Supreme Court reverses smoker’s $81M punitive damages award

    The Boston Herald reports that the Massachusetts Supreme Judicial Court has reversed an $81 million punitive damages award given to the family of a smoker in a lawsuit against Lorillard Tobacco Co. 

    In a unanimous opinion, the court ruled that the trial court improperly instructed the jury on the issues of negligent design and marketing, and that those erroneous instructions may have tainted the punitive damages award.  The court ordered a new trial on punitive damages, but affirmed the jury’s $35 million compensatory damages award, which was supported by alternate theories of liability not impacted by the erroneous instructions.

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

    Law 360 reports (subscription required) that a jury in Alameda County has awarded $16.3 million in compensatory damages and $11 million in punitive damages against Owens-Illinois Inc. 

    The plaintiff claims she developed mesothelioma as a result of her exposure to asbestos fibers while shaking out and washing her husband’s clothes.  It is not clear to what extent such “take home” claims are viable in California.  Last year the Second Appellate District, Division Seven, ruled that Ford could not be liable to a plaintiff who claimed she developed mesothelioma as a result of her exposure to asbestos fibers from laundering her father’s and brother’s clothes after they worked as independent contractors installing asbestos at a Ford manufacturing plant. (Campbell v. Ford Motor Co.)  Related issues are pending before the First Appellate District, Division Three, in Kesner v. Pneumo Abex and before the Second Appellate District, Division Three, in Petitpas v. Borgwarner.

  • Court of Appeal reverses $1.4M punitive damages award because plaintiff failed to prove defendant’s current ability to pay (Dunlap v. Starz)

    This is yet another unpublished opinion reversing a punitive damages award because the plaintiff failed to present meaningful evidence of the defendant’s financial condition.

    According to the Court of Appeal (Second Appellate District, Division Seven), the plaintiff presented evidence of the defendant’s assets, but not her liabilities.  Also, most of plaintiff’s evidence dated from the 2003-2007 time period, even though the trial took place in March 2010.  Thus, the plaintiff failed to provide a complete picture of the defendant’s ability to pay punitive damages at the time of trial.  Due to the plaintiff’s failure of proof, the Court of Appeal directed the trial court to vacate the punitive damages award and enter judgment for the defendant on that issue.

  • Court of Appeal rejects plaintiffs’ bid for retrial on punitive damages, finds waiver of objections to financial disclosures (Lanning v. Kramer)

    This case involves a species of waiver we haven’t seen before.

    A jury found that several defendants acted with malice in committing various torts, including trespass and intentional infliction of emotional distress.  But the jury declined to award any punitive damages.

    On appeal, the plaintiffs sought a new trial on the amount of punitive damages.  They argued that one of the defendants failed to disclose sufficient information about his financial condition, and thereby prevented plaintiffs’ financial expert from offering evidence of his net worth.

    The Court of Appeal (Second Appellate District, Division Seven) held in an unpublished opinion that plaintiffs waived their right to seek a new trial because they failed to make a timely objection to the adequacy of the defendant’s disclosures.  The court noted that the plaintiffs’ expert opined about the defendant’s net worth, gave a specific dollar amount, and never mentioned that the information provided to him was insufficient to allow him to render an opinion.

    We’ve seen a lot of cases finding waiver because plaintiffs failed to present meaningful evidence of the defendant’s financial condition, or because the defendant failed to comply with a court order compelling disclosure of financial information, but this is the first time we have seen a case imposing a waiver because plaintiffs failed to object to the defendant’s disclosure.

  • Court of Appeal rejects defendant’s claim of inability to pay punitive damages, citing evidence that defendant failed to improve her financial condition (Morton v. Spotts)

    This unpublished opinion contains a rather unusual twist on an issue that frequently arises in punitive damages cases in California, namely, whether a punitive damages award is disproportionate to the defendant’s ability to pay.

    In an appeal from a $15,000 punitive damages award, the defendant argued the award was excessive in light of her negative net worth.  The plaintiff disagreed with the defendant’s interpretation of the evidence, and argued that the defendant’s net worth was worth at least $350,000.  The Court of Appeal (Fourth Appellate District, Division One) affirmed the award.  The court could have just adopted the plaintiff’s view of the evidence and left it at that.  But instead, the court cited the defendant’s failure to fully utilize her financial assets, and said the jury could have concluded defendant was “failing to maximize her net worth or improve her financial condition.”

    That’s a new one on me.  I don’t recall ever seeing any other opinion suggesting that an award could be upheld on the theory that the defendant’s inability to pay was the result of the defendant’s failure to maximize his or her own net worth.    

  • Court of Appeal approves pattern jury instruction on “clear and convincing” evidence (Nevarrez v. San Marino Skilled Nursing)

    This is not a punitive damages case. But it merits discussion here because it addresses the adequacy of the official California jury instruction on the clear and convincing evidence standard of proof, which applies in all punitive damages cases.

    This is not the first time the California Court of Appeal has considered how courts should explain the clear and convincing evidence standard to jurors. Far from it. Back in the early 1990’s, the Second Appellate District, Division Three, criticized the definition of clear and convincing evidence set forth in BAJI No. 2.62, the pattern instruction in use at the time. That instruction defined clear and convincing evidence as “evidence of such convincing force that it demonstrates, in contrast to opposing evidence, a high probability of the truth of the fact[s] for which it is offered as proof.”

    In a case called Mock v. Michigan Millers Mutual, Division Three said the BAJI No. 2.62 definition was too weak, because it did not reflect the stringent standard established by the California Supreme Court in In re Angelia P.: “so clear as to leave no substantial doubt”; “sufficiently strong to command the unhesitating assent of every reasonable mind.”

    A few years later, however, Division Three backed away from that criticism in a 2-1 decision. In that case, Mattco Forge v. Arthur Young & Co., the court said that the In re Angelia P. formula was too close to the “reasonable doubt” standard used in criminal cases.

    In 2003, the Judicial Council approved the CACI instructions as the official preferred jury instructions for use in California. The CACI instructions contained a definition of clear and convincing evidence that was even weaker than the BAJI formulation that Division Three criticized in Mock.  CACI No. 201 says that clear and convincing evidence means “that the party must persuade you that it is highly probable that the fact is true.” By watering down the definition of clear and convincing evidence, the CACI instructions arguably opened the door to revisiting the Mock/Mattco Forge debate. Indeed, we are aware of several cases in which trial courts agreed to give special instructions on this issue because they concluded that the standard set forth in CACI No. 201 is inadequate.

    Today, however, the Court of Appeal (Second Appellate District, Division Four) gave CACI No. 201 its blessing in this published opinion. The opinion acknowledges the history on this issue, but declines to embrace the Mock rationale. Instead, the opinion follows the reasoning of Mattco Forge and holds that the trial court properly rejected the defendants’ proposed special instruction, which incorporated the In re Angelia P. definition of clear and convincing evidence.

    We decline to hold that CACI No. 201 should be augmented to require that “the evidence must be ‘so clear as to leave no substantial doubt‘ and ‘sufficiently strong as to command the unhesitating assent of every reasonable mind.’ ” Neither In re Angelia P., supra, 28 Cal.3d 908, nor any more recent authority mandates that augmentation, and the proposed additional language is dangerously similar to that describing the burden of proof in criminal cases. (Mattco Forge, supra, 52 Cal.App.4th at p. 849.) The trial court did not err in rejecting it.

    We wouldn’t be surprised to see this case end up in the California Supreme Court.

  • Indiana Supreme Court declares punitive damages cap constitutional

    A few years ago we reported on an order by an Indiana trial judge invalidating that state’s cap on punitive damages.  Under Indiana’s rules of appellate procedure, when a trial court declares a statute unconstitutional, the appeal goes directly to the Indiana Supreme Court.  The Supreme Court has now reversed the trial court’s ruling and upheld the constitutionality of the cap.  The concise 9-page opinion holds that the statute (which limits punitive damages to the greater of $50,000 or three times compensatory damages) neither infringes on the right to a jury trial nor violates the separation of powers doctrine. 

    This decision brings Indiana law into line with what appears to be a growing majority of state supreme courts to address this issue, although some states have gone the other way.  (See, e.g., this post about a contrary ruling from the Arkansas Supreme Court.) 

    For further discussion of the opinion and Indiana punitive damages law in general, see the Hoosier Litigation Blog.

  • Court of Appeal affirms $40,000 in punitive damages after reversing $3.8 million in compensatory damages (Corenbaum v. Lampkin)

    Our report on this case is a bit tardy, because I was traveling abroad when the decision was issued.  The main issue in this case has nothing to do with punitive damages, but it merits a brief mention here because the court’s treatment of the punitive damages award is somewhat unusual.

    The primary question in this appeal was whether, in light of the California Supreme Court’s opinion in Howell v. Hamilton Meats, personal injury plaintiffs can present evidence of the amounts their medical providers billed for services, even though the providers agreed to accept lesser amounts as payment in full for their services.  Howell held that a plaintiff’s damages are properly measured by the amount paid, not the amount billed.  The question here was whether the amount billed was nonetheless admissible as relevant on the issues of future medical expenses and noneconomic damages.

    The trial court allowed the plaintiffs to introduce evidence of the amount billed, but the California Court of Appeal (Second Appellate District, Division Three) held, in a published opinion, that the evidence was inadmissible.  Accordingly, the Court of Appeal reversed the jury’s $3.8 million compensatory damages award for a new trial.  Interestingly, the court chose not to reverse the jury’s award of $40,000 in punitive damages.  Ordinarily, when an appellate court reverses a compensatory damages award for a new trial, reversal of the punitive damages is virtually automatic.  But perhaps the court in this case thought that the small amount of punitive damages awarded here dictated a different result.

    Full disclosure: Horvitz & Levy represented the defendant in this appeal, although we did not brief or argue the punitive damages issues.  We associated into the case after the initial briefing, submitting a supplemental brief and presenting oral argument for the defendant.   The Court of Appeal inadvertently omitted our firm’s name from the slip opinion (presumably because we were not the initial counsel of record).