California Punitives by Horvitz & Levy

  • Judge vacates $20 million punitive damages award against Joe Francis

    A few months ago we reported about Steve Wynn’s $20 million punitive damages award against Girls Gone Wild founder Joe Francis.  According to the Hollywood Reporter, the trial judge has vacated that award in its entirety because Wynn failed to produce any evidence of Francis’ financial condition at the time of trial. We have seen a lot of appellate reversals of punitive damages awards on that basis, but not many instances of a trial court granting posttrial relief under that rationale.  Typically, if the trial court believes the plaintiff has not provided sufficient evidence of the defendant’s financial condition, the court will grant a nonsuit or a directed verdict before the case goes to the jury.

    In addition to vacating the punitive damages award, the trial court also trimmed the compensatory damages by $1 million.  Francis says his legal team is predicting a “100 percent chance of success of appealling the remaining part of the case.”

  • L.A. jury awards $3.6 million in punitive damages aginst game maker for trademark infringement

    Today’s Daily Journal (subscription required) reports that a federal court jury here in Los Angeles has awarded $5 million in compensatory damages and $3.6 million in punitive damages against a board game maker who allegedly infringed upon the plaintiff’s trademarked phrase “Would You Rather . . .?”  This litigation has been going on for seven years and has already been up to the Ninth Circuit once.  It’s going up again, according to the statements of defense counsel quoted in the article.

  • Oregon jury awards $75 million in punitive damages against defense contractor

    Last month we reported on a defense contractor’s failed attempt to have Iraqi law applied to a lawsuit in federal court alleging that the contractor knowingly exposed members of the Oregon National Guard to hexavalent chromium while they were serving in Iraq.  The Seattle Times reports that a jury in that case has awarded a total of $75 million in punitive damages.  The verdict requires Halliburton spin-off Kellogg Brown & Root (KBR) to pay $850,000 in compensatory damages and $6.25 million in punitive damages to each of the 12 plaintiffs. This one is almost certainly headed to the Ninth Circuit.

  • UC Irvine professor seeks punitive damages from Johnny Depp

    We rarely report on pretrial proceedings in punitive damages cases.  Most cases end up settling, so we don’t usually cover them until they reach a final verdict or decision by the court.  But this story is so odd it’s worth a quick mention.  The Daily Pilot reports that a professor at UC Irvine’s medical school is suing actor Johnny Depp for punitive damages.  The plaintiff claims that Depp’s bodyguards roughed her up in the VIP area of an Iggy & the Stooges concert.  The story says the trial judge permitted plaintiff to proceed with her punitive damages claim, but the story doesn’t explain whether the court made that ruling in connection with a motion to strike, a summary adjudication motion, or some other procedure.  In any event, I found it amusing that Iggy Pop’s fan base has matured to the point that, when a fight breaks out at a show, it involves a medical professor and a celebrity entourage.

  • Second Circuit punitive damages decision draws criticism

    Yesterday, the New York Law Journal published an op-ed (subscription required) criticizing a recent decision on punitive damages from the Second Circuit.

    The decision in question is Payne v. Jones. A jury awarded $60,000 in compensatory damages and $300,000 in punitive damages against a police officer who assaulted the plaintiff.  The defendant appealed to the Second Circuit, which concluded that any punitive damages award over $100,000 would be excessive in light of the reprehensibility of the defendant’s conduct. 

    The op-ed criticizes the opinion for, among other things, creating confusion about the appropriate standard of review.  The op-ed suggests the Second Circuit gave insufficient deference to the district court.

    I agree with the op-ed that the opinion contains an unnecessarily complicated discussion of the standard of review, but I do not agree that the court gave insufficient deference to the district court.  The Second Circuit cited a 1978 case for the proposition that the traditional standard of review is whether the amount of the award “shock[s] the judicial conscience.”  The court then stated that the traditional standard is “informed” by the due process principles contained in the Supreme Court’s BMW v. Gore opinion. The Second Circuit noted, however, that BMW involved a federal court reviewing a state court punitive damages award, and that a federal court can overturn a state court punitive damages award only if it violates the Due Process Clause, whereas a federal court has broader supervisory powers over a district court.  In other words, a federal appellate court can second-guess a district court’s ruling on the amount of punitive damages even when there is no due process violation.  The court then went on to explain why the award was excessive under the BMW standards.  

    Curiously, the Second Circuit did not cite the governing Supreme Court precedent on the standard of review issue: Cooper v. Leatherman.  In that case, the Supreme Court held that appellate courts must apply a de novo standard of review to a lower court’s ruling on the excessiveness of a punitive damages award under BMW v. Gore.  Lower courts have held that Cooper v. Leatherman applies regardless of whether the punitive damages award was rendered in state court or federal court.   Indeed, the Second Circuit itself has repeatedly held that de novo review applies to a district court’s ruling on excessiveness of punitive damages. One such case involved the same sort factual scenario as Payne – an assault and battery by a police officer, DiSorbo v. Hoy.  So there was no need for the Second Circuit to engage in a lengthy discussion of the standard of review.  It should have just followed Cooper (and its own prior decisions) and applied de novo review.  Undoubtedly, it would have reached the same ultimate conclusion and found the award excessive.

    Thanks to Richard Montes and Ben Shatz for calling the opinion and the op-ed to my attention.

  • Court of Appeal affirms $25 million punitive damages award against co-founder of Guess, Inc. (Gottlieb v. Fahs)

    In 2009 we reported on a Los Angeles jury verdict awarding $370 million, including $25 million in punitive damages, against Georges Marciano, the co-founder of Guess, Inc.  This unpublished opinion (Gottlieb v. Fahs) from the California Court of Appeal (Second Appellate District, Division Two) affirms the punitive damages, rejecting the defendant’s claim that the record contained insufficient evidence of his financial condition.  But the Court of Appeal did grant him some relief.  It reduced the compensatory damages to a total of $25 million.

    The end result is a much higher punitive-to-compensatory ratio than the jury originally awarded.  The defendant could have sought a new trial on that basis, although there is a split of authority on this issue as we have noted.  As far as the opinion reveals, the defendant did not raise that as a ground for a new trial.

  • Plaintiff can pursue tort claim solely to obtain punitive damages (Fullington v. Equilon Enterprises LLC)

    This published opinion (Fullington v. Equilon Enterprises) addresses an issue of first impression in California law: whether a plaintiff can pursue a tort claim solely for the purpose of punitive damages, when the plaintiff has already been compensated for the alleged loss caused by the tort.

    The plaintiff, who leased and operated a Shell gas station, brought several lawsuits against Shell.  In one of those cases (the Marquez litigation), he claimed that Shell failed to offer him an opportunity to purchase his station before Shell transferred ownership of the station to another company.  He accepted a settlement with Shell in which Shell agreed to refund all the rent that plaintiff paid on his gas station from 1998 through 2001.

    In the instant case, he brought a fraud claim against Shell for overcharging him on rent from 1998 through 2000.  The trial court granted summary adjudication on the fraud claim, finding that plaintiff could not establish any damage because he had already received a complete refund of all rent in the Marquez action.  The plaintiff appealed, arguing that he should be allowed to pursue the fraud claim for the purpose of obtaining punitive damages.  While a plaintiff cannot ordinarily obtain punitive damages in the absence of compensatory damages, the plaintiff argued that what matters is whether he suffered a compensable injury, regardless of whether he was already compensated for that injury through another lawsuit.

    The California Court of Appeal (Second District, Division Four) agreed with the plaintiff and reversed the grant of summary adjudication on the fraud claim.  The court held on October 25 that a defendant cannot avoid an award of punitive damages by paying the plaintiff for his alleged injuries. The court noted that “California law has a variety of doctrines—none of which [defendant] invoked here—that prohibit the filing of multiple suits arising out of the same wrongful conduct. If none of those doctrines applies—and thus the filing of two separate actions does not offend California law—we perceive no reason why the maintenance of one action should become impermissible because a judgment or settlement is entered in the other.”

  • PG&E exposed to potential punitive damages for San Bruno explosion

    2012 has been a relatively quiet year for blockbuster punitive damages awards in California.  But that trend could change in January 2013 according to this report in the San Mateo County Times.  Judge Steven Dylina of the San Mateo County Superior Court has tentatively denied PG&E’s request to dismiss the plaintiff’s claim for punitive damages in a lawsuit arising out of the 2010 San Bruno explosion that killed eight people and destroyed 38 homes.  If Dylina sticks to his tentative ruling, a jury could be asked to award punitive damages in a case involving 350 plaintiffs and a very large amount of compensatory damages.

  • L.A. jury awards punitive damages against former Lakers coach Rudy T.

    PacificPalisadesPatch reports that a Los Angeles jury has ordered former Lakers coach (and longtime Houston Rockets coach) Rudy Tomjanovich and his wife to pay $250,000 in punitive damages and $2.7 million in compensatory damages to the buyer of their Pacific Palisades home.  The plaintiff, Strata Capital founder Steven Bardack, accused Tomjanovich of acting with malice when he sold the house without disclosing water intrusion and mold problems. 

    The house was previously owned by Girls Gone Wild founder Joe Francis, who was recently hit with a punitive damages award himself.  The PacificPalisadesPatch reports that a further stage of trial is set to begin against Francis and other defendants.  

  • Federal judge rejects application of Iraqi law to punitive damages claim

    The Oregonian reports that United States Magistrate Judge Paul Papak has denied a defendant’s request to apply Iraqi law to a claim for punitive damages based on conduct that occurred in Iraq. 

    The plaintiffs are Oregon National Guard soldiers who accuse defense contractor KBR, Inc. of knowingly exposing them to hexavelent chromium (which you may remember from such films as Erin Brockovich).  KPR argued that Iraqi law should apply because the alleged misconduct took place in Iraq, not Oregon where the case is pending. Iraqi law, like the law of most countries in the world, prohibits punitive damages.