California Punitives by Horvitz & Levy

  • Unpublished opinion: an agent of a public entity can be liable for punitive damages

    Public entities are immune from punitive damages in California under Government Code section 818. What about agents performing a public entity’s functions?  This unpublished opinion says the statutory immunity doesn’t extend to them.

    Plaintiff Thomas Madeiros filed a tort claim with the City of Palo Alto.  Defendant George Hills Co. (GHC) was a third party-contractor responsible for administering claims against the city.  After GHC told Madeiros his claim was untimely, he sued GHC for false representation, seeking punitive damages.  The trial court granted GHC’s motion to strike the punitive damages claim under section 818, under the theory that GHC was entitled to immunity as an agent performing the duties of a public entity.

    The California Court of Appeal (Third Appellate District) reversed and reinstated the punitive damages claim. It held that a contractor for a public entity is not immune from punitive damages for its own tortious conduct. The case will go back to the trial court, and Medeiros will have the chance to prove that GHC acted with malice, oppression, or fraud in its processing of his claim.

  • The top punitive damages awards of 2012 (UPDATED 1/11/13)

    It’s time for our annual recap of the biggest punitive damages awards of the previous year.  As the list below shows, California juries continued to dish out enormous punitive damages in 2012. 

    Top 10 California punitive damages verdicts of 2012

    1.  $125 million against Catholic Healthcare West.
    2.  $21 million against Jehovah’s Witnesses.
    3.  $20 million against Joe Francis.
    4.  $18 million against Union Carbide.
    5.  $15.9 million against UPS, Inc.
    6.  $15 million against Donald Sterling.
    7.  $10 million against Allstate.
    7.  $10 million against Hans Reiser.
    9.  $7.7 million against The Price is Right.
    10. $7.5 million against Breg, Inc. and Dr. David Chao.

    The #1 verdict on the list was higher than any California verdict in 2011.  The total of the top ten verdicts, however, is smaller than 2011.  The total for the top 10 of 2012 is $250.1 million, compared to $306 million in 2011.

    Top 10 U.S. punitive damages verdicts of 2012

    In 2011, none of the top California awards cracked the top 5 nationwide.  In 2012, California verdicts show up at #4 and #10 in the top 10 largest awards in the United States.

    1.  $6 billion (federal district court in New York)
    2.  $1.67 billion (federal district court in D.C.)
    3.  $236 million (federal district court in D.C.)
    4.  $125 million (California)
    5.  $100 million (Illinois)
    6.  $75 million (Oregon)
    7.  $55 million (Florida)
    8.  $32 million (Montana)
    9.  $25 million (Oregon)
    10. $21 million (California) 

    Of course, many of these awards will not survive appeal, as these 2012 stories illustrate:

    Case that generated $300 million punitive damages verdict ends with defense verdict

    Court of Appeal wipes out $207 million punitive damages award in Boeing case

    4th highest punitive damages verdict of 2011 is headed for a new trial 

    Florida appellate court reverses $79 million judgment in tobacco case

    Judge vacates $20 million punitive damages award against Joe Francis

    It’s entirely possible that some big awards are missing from our list, especially the nationwide list.  We gathered our information from media reports and the Westlaw jury verdicts database, but we know from experience that some large awards escape media attention and the Westlaw database is incomplete.  If anyone is aware of an award that should be on this list, please let us know. 

    Related posts:

    A big year for big verdicts: the top punitive damages awards of 2011

  • Unpublished opinion finds that defendant waived challenge to punitive damages award

    As a general rule, when a California defendant wants to challenge a jury’s damages award as excessive, the defendant must raise that issue in a new trial motion to preserve it for appeal.  This unpublished opinion (Silas v. Arden) from the Second Appellate District, Division One, applies that rule and finds that a defendant waived his right to challenge a punitive damages award by not raising excessive damages in a motion for new trial.

    In Silas, the defendant argued that the award was excessive because the plaintiff’s counsel inflamed the passions and prejudices of the jury with improper arguments.  That seems like the sort of argument that is a trial court should probably decide in the first instance.  In other situations, however, a defendant might be able to challenge a punitive damages award on appeal even without moving for a new trial.  A defendant who argues that an award is excessive as a matter of law under the Due Process Clause should be able to raise that argument for the first time on appeal, because it is a pure legal issue that does not require the appellate court to resolve evidentiary conflicts.  See, for example, Storage Services v. Ooosterbaan (1989) 214 Cal.App.3d 498, 515, fn. 9 [no waiver where excessive damages argument does not involve conflicting testimony or issues of credibility].    

  • Illinois Supreme Court to decide whether administrative body can award punitive damages

    The Illinois Supreme Court has granted review to decide whether the Cook County Commission on Human Rights is authorized to award punitive damages.  The intermediate appellate court said no, in a case called Crittenden v. Cook County Commission on Human Rights.  Kirk Jenkins of the appellate strategist has the full story.   

  • Italian Supreme Court confirms that it will not enforce U.S. judgments containing punitive damages

    Mondaq reports that Italy’s Supreme Court, the Court of Cassazione, has reaffirmed that it will not enforce U.S. judgments containing punitive damages.

    Back in 2007, in Parrott v. Soc. Fimez., the Court of Cassazione ruled that an Alabama judgment containing punitive damages was unenforceable in Italy, because punitive damages are incompatible with Italy’s public policy. 

    This case, Ruffinatti v. Oyola-Rosado, involved a Massachusetts judgment.  According to the Mondaq story, the judgment on its face did not include punitive damages.  But the Italian Supreme Court apparently concluded that the $8 million compensatory damages was so large, and so disconnected from the plaintiff’s actual injuries, that it must be punitive in nature.  Accordingly, the court refused to enforce the judgment under the reasoning set forth in Parrott.

    Related post:

    Law Review Article: “Recognition and Enforcement of U.S. Punitive Damages Awards in Continental Europe: The Italian Supreme Court’s Veto”

  • Indiana trial judge refuses to apply cap on punitive damages; state Solicitor General asks Indiana Supreme Court to step in

    The Associated Press is reporting (via the Houston Chronicle) about a case involving the constitutionality of Indiana’s $50,000 cap on punitive damages.  A jury awarded $150,000 in punitive damages to a plaintiff who alleged he was molested by his uncle, a Catholic priest.  The trial court rejected the defendant’s request to reduce the award to $50,000, reasoning that the cap violates the separation of powers doctrine.  The judge also refused to apply Indiana’s split-recovery statute, which allows the state to collect 75 percent of every punitive damages award. That got the attention of Indiana Solicitor General Thomas Fisher, who has petitioned the Indiana Supreme Court for review.

    By our count 30 states currently have statutory caps on punitive damages.  In a few other states (most recently Arkansas), state courts have held such caps unconstitutional.  

  • Florida Court of Appeal orders new trial on punitive damages claim against Philip Morris

    We’ve mentioned this case (Naugle v. Philip Morris) a few times before.  Back in November 2009, a jury awarded $300 million, including $244 in punitive damages.  During the posttrial phase, the trial court reduced the total damages to less than 40 million.  And now the Florida Court of Appeal has ruled that the trial judge should have granted a new trial on damages instead of ordering a remittitur.  The appellate court reasoned that Philip Morris was entitled to a new trial based on the trial court’s finding that the jury was motivated by passions, anger, and sympathy.

    The California Supreme Court made a similar holding in Schelbauer v. Butler Manufacturing Co. (1984) 35 Cal.3d 442, 454, when it expressly disapproved the use of a remittitur as a means to cure legal error, holding that use of remittitur is “confined to cases in which an excessive damage award [is] the only error in the jury’s verdict.”

    Last year Wyeth asked the U.S. Supreme Court to decide whether a remittitur can be used to cure a verdict tainted by passion and prejudice, but Wyeth’s petition was denied.

    This case is part of the continuing fallout from the Florida Supreme Court’s Engle decision reversing a $145 billion verdict in a class action against five tobacco defendants. Point of Law has a post summarizing the saga.

  • Trial court properly dismissed punitive damages claim because plaintiff introduced no evidence of corporate ratification (Betson v. Rite Aid)

    This unpublished opinion (Betson v. Rite Aid) allows a plaintiff to proceed with her claims for disability discrimination and retaliation, but prohibits her from seeking punitive damages.  Although she accused her manager of numerous malicious acts, she presented no evidence that the manager’s misconduct was authorized or ratified by the defendant’s upper management.

    The plaintiff worked as a shift supervisor at a Rite Aid drug store in Beverly Hills.  She sued Rite Aid for various theories of discrimination, retaliation and harassment.  She claimed that the store manager routinely mocked her because she had a limp, refused to accommodate her disability, and fired her based on false accusations of stealing money from a cash register.  The trial court granted summary adjudication on many of plaintiff’s claims, including her claim for punitive damages.  The case went to trial on the remaining claims and the jury awarded the plaintiff $500,000.  The trial court, however, granted Rite Aid’s motion for judgment notwithstanding the verdict and entered judgment for Rite Aid.

    Plaintiff appealed and the California Court of Appeal (Second Appellate District, Division Four), held that the trial court erred in granting JNOV and erred in granting summary adjudication on plaintiff’s claims for disability discrimination and retaliation.  Nevertheless, the court affirmed the trial court’s decision to toss out the plaintiff’s claim for punitive damages, because plaintiff presented no evidence that the store manager’s misconduct was ratified by any officer, director, or managing agent of Rite Aid.  The plaintiff argued that Rite Aid’s continued employment of the store manager was sufficient evidence of ratification, but the Court of Appeal rejected that contention as a matter of law.

    This case is a reminder that a corporate employee with the title of “manager” may not qualify as a “managing agent” within the meaning of Civil Code section 3294. As the California Supreme Court has explained, managing agents include only those corporate employees who have sufficient authority in the corporation such that their decisions ultimately determine corporate policy.  (See White v. Ultramar.)

  • Los Angeles jury awards $7.7M in punitive damages to former “The Price is Right” model; try to guess the final award without going over

    The Associated Press reports that a Los Angeles jury has awarded $777,000 in compensatory damages and $7.7 million in punitive damages in an employment discrimination suit brought by a former model on “The Price is Right.”  The plaintiff, Brandi Cochran, claims she was not permitted to return to work on the show after she took maternity leave.  The defendant, Freemantle Media, contends the trial judge erroneously excluded evidence that over 40 percent of the models on the show have been pregnant.

    Given the size of the compensatory damages and the high punitive-to-compensatory ratio, this award is not likely to survive through posttrial motions and an appeal.  Our readers are invited to guess the final amount of the punitive damages award, without going over. 

  • Supreme Court of Mississippi adopts an unusual procedural rule

    Our readers are well aware that California has a unique procedural rule that puts the burden on plaintiffs to introduce meaningful evidence of the defendant’s financial condition in order to obtain punitive damages.  A plaintiff who fails to introduce such evidence forfeits any claim for punitive damages. 

    As far as I know, no other state has such a rule. In 1992, the Mississippi Supreme Court expressly rejected our rule and held that neither party is required to introduce financial condition evidence, but if no such evidence is presented, neither party can challenge the amount of the punitive damages award on appeal.  (See C & C Trucking Co. v. Smith (Miss. 1992) 612 So. 2d 1092, 1105.) 
     
    This recent opinion (Coleman & Coleman v. Waller Funeral Home) from the same court puts a surprising twist on that rule.  In Coleman & Coleman, a jury awarded $25,000 in punitive damages against the defendant.  The defendant challenged the award in a posttrial motion by submitting evidence of its negative net worth.  Based on that evidence, the trial court vacated the punitive damages award.  The plaintiff appealed, citing C & C Trucking and arguing that the defendant waived its right to challenge the amount of the punitive damages by failing to present its financial condition evidence at trial.  The Supreme Court agreed that C & C Trucking is the controlling authority, but it found a waiver by the plaintiff rather than the defendant.  The Supreme Court said that the plaintiff, by failing to introduce the defendant’s financial condition at trial, waived its right to challenge the trial court’s posttrial ruling.

    Even from my perspective as a defense lawyer, that seems unfair to the plaintiff.  I could understand a court saying that a party has to present financial condition evidence to the jury in the first instance before that party can raise the issue on appeal.  But I don’t understand how a court can allow one party to present such evidence after the verdict and then preclude the other party from challenging the post-verdict ruling based on that evidence. 

    Absent a waiver, the court in this case might have reached the opposite result, based on a decision it issued just three months ago holding that a defendant with a negative net worth is not immune from punitive damages.  (See Canadian Nat’l Ry. Co. v. Waltman (Miss 2012) 94 So.3d 1111.)