California Punitives by Horvitz & Levy

  • Unpublished opinion drastically cuts compensatory damages, but leaves punitive damages award intact (Moran v. Quest Communications)

    This unpublished opinion furthers the continuing split of authority in California appellate courts about what a reviewing court should do with a punitive damages award when it reduces the amount of compensatory damages on appeal.

    As mentioned in prior posts, our courts are all over the map on this issue.  When a compensatory damages award is reduced on appeal, some courts will order a new trial on punitive damages, some will reduce the punitive damages to maintain the punitive-to-compensatory ratio set by the jury, some courts will send the case back to the trial court to determine whether the punitive damages should be reduced, and some courts do nothing, simply leaving the punitive damages untouched.  This unpublished opinion in this case (Moran v. Qwest Communications), falls into the “do nothing” category.  The court rules that the jury’s award of $2.8 million in noneconomic damages is excessive, and that a new trial should be conducted unless the plaintiff  accepts a reduction of that award to $750,000.  If the plaintiff agrees to the reduction, the judgment is affirmed in full.  In other words, the $1 million punitive damages award will stand even if the compensatory damages are reduced by over $2 million.

    In my view, the “do nothing” approach is the least defensible.  Juries are instructed to award punitive damages based on the amount of harm suffered by the plaintiff.  If a Court of Appeal later concludes that the amount of harm was actually less than the jury thought it was, the court should not affirm a punitive damages award that was based on the erroneous compensatory award.  I hope the California Supreme Court will sort this issue out soon, even though it passed on the opportunity to do so last year.

  • Law review article predicts the end of punitive damages in America

    Law professor Jill Wieber Lens has posted “Justice Holmes’sBad Man and the Depleted Purposes of Punitive Damages” on SSRN.  The thesis of the article is that the U.S. Supreme Court’s opinion in ExxonShipping v. Baker contains the seeds of the destruction of punitive damages in America.  As I read the article, that thesis is based on the following logic:
    • Punitive damages have been held constitutional because, under common law, punitive damages are designed to punish and deter misconduct, which is a legitimate state interest 
    •  In the Exxon Shipping case, the Supreme Court identified a different common law purpose for punitive damages: informing a bad actor what price he will pay for misconduct
    •  By not relying on the traditional common law justifications for punitive damages, Exxon Shipping tacitly undermined those justifications 
    • Now that the Supreme Court has undermined the traditional justifications for punitive damages, state legislatures will move to eliminate punitive damages under state law and, if they don’t, state courts will declare punitive damages unconstitutional
     It’s certainly a bold prediction.  But I’m a bit skeptical, even from my perspective as an appellate lawyer who regularly challenges punitive damages awards on appeal.  There is no question that a growing number of state legislatures have enacted laws curtailing punitive damages.  That trend was in place well before Exxon Shipping and shows no signs of slowing any time soon.  But many holdout jurisdictionsstill permit punitive damages without any statutory limitations on amount (e.g., California), and I don’t think it likely that we’ll see a wave of proposed legislation to do away with punitive damages in those jurisdictions, much less decisions declaring punitive damages unconstitutional as a result of Exxon Shipping. 

  • ABA soliciting nominations for the Blawg 100

    The American Bar Association is working on its annual list of the top 100 legal blogs, and invites readers to nominate their favorite blogs by filling out a short online form.  If any of our readers think Cal Punitives should be on that list, we’d love to be nominated.  And please consider nominating our sister blog, At the Lectern, as well.   

  • Santa Monica jury awards punitive damages against hotel for discriminating against Jews

    According to the NY Times, a Santa Monica jury has awarded $440,000 in punitive damages against a hotel and its owner for violations of California’s civil rights laws.  The jury had previously awarded $1.2 million in compensatory damages, as reported by the LA Times. 

    The plaintiffs are 18 individuals who belonged to a group called the Friends of the Israeli Defense Forces.  They were holding a poolside event at the Hotel Shangri-La in 2010 when, according to their lawsuit, the owner of the hotel found out the nature of the event and ordered them to remove their literature and banners and get out of the pool.  The jury found the hotel liable for violating the Unruh Civil Rights Act, which prohibits discrimination on the basis of religion. The hotel’s chief business development officer (who is Jewish) says the hotel will appeal.

    Hat tip: Prof. François-Xavier Licari.

  • SCOTUS scheduled to rule on Icicle Seafoods cert. petition on September 24

    For those of you tracking the status of the Icicle Seafoods cert. petition, the Supreme Court’s online docket indicates the petition has been distributed for the September 24 conference.

    Related posts:

    Justice Kennedy issues stay in Icicle Seafoods v. Clausen

    Cert. petition raises punitive damages issues (Icicle Seafoods v. Clausen)

  • Does the “clear and convincing evidence” standard of proof for punitive damages make any difference?

    In California and many other U.S. jurisdictions, plaintiffs seeking punitive damages must meet a higher burden of proof than the usual “preponderance of the evidence” standard that applies to civil cases.  Plaintiffs must prove by clear and convincing evidence that the defendant engaged in punishable misconduct.  That higher standard of proof is thought to provide defendants with a significant procedural protection against unwarranted punitive damages.

    But how does this play out in practice?  Does empirical data confirm that juries are less likely to award punitive damages when the plaintiff is saddled with a higher burden of proof?  The answer is “no,” according a recent study entitled Jurors’ Use of Standards of Proof in Decisions about Punitive Damages, published in Behavioral Sciences and the Law.  Here’s the abstract of the article:

    Standards of proof define the degree to which jurors must be satisfied that a fact is true, and plaintiffs in civil lawsuits assume the burden of proving their claims to the requisite standard of proof. Three standards—preponderance of evidence, clear and convincing evidence, and beyond a reasonable doubt—are used by different jurisdictions in trials involving liability for punitive damages. We investigated whether individual mock jurors apply these standards appropriately by instructing them to read two personal injury trial summaries and to use one of three standards in either qualitative or quantitative format when deciding punitive liability. Results showed that jurors tended not to incorporate the standard into their judgments: defendants were just as likely to be found liable when the plaintiff’s burden was high (“beyond a reasonable doubt”) as when the burden was low (“preponderance of evidence”). The format of the instruction also had a negligible effect. We suggest that nonuse of the standard of proof is related to jurors’ preferences for less effortful or experiential processing in situations involving complicated or ambiguous material.

    That’s sobering stuff for defendants facing punitive damages in California.  Worse yet, some of our appellate courts have held that the clear and convincing evidence standard is irrelevant in appeal challenging the sufficiency of the plaintiffs’ evidence of malice, oppression, or fraud.  In other words, according to those courts, if the plaintiff fails to meet its higher burden at trial but the jury awards punitive damages anyway, there is absolutely nothing the defendant can do about it.  Some of our appellate courts, however, have rejected that notion and held that the sufficiency of the evidence must be measured through the prism of the clear and convincing standard.  Our Supreme Court granted review to resolve that split a few years ago but dismissed review when the parties settled the case.  We assume they’ll take the issue up again when the right vehicle comes along.  

    Hat tip: Robert Richards on Twitter

  • BDO Seidman denied insurance coverage for $55 million punitive damages award

    Last year we reported on a $55 million punitive damages award against accounting firm BDO Seidman in Florida State Court.  That was one of the biggest punitive awards of 2011, although it didn’t make our top five.

    Last week a judge in New York ruled that the $55 million award is not covered by insurance.  (Certain Underwriters at Lloyd’S v BDO Seidman LLP, 2012 NY Slip Op 51425(U).)  The ruling confirms that, despite the views of some commentators, defendants should not expect coverage for punitive damages awards.

  • San Diego jury awards $7.5 million in punitive damages in medical device case

    We don’t see many cases involving punitive damages in medical malpractice cases, but the San Diego Union-Tribune reports that a jury there has awarded $500,000 in punitive damages against a doctor who allegedly mismanaged the plaintiff’s treatment following knee surgery.  The jury also awarded $7 million in punitive damages against Breg Inc., the maker of a medical device (the Polar Care 500) that allegedly gave the plaintiff frostbite.  The compensatory damages award is $5.2 million. (Engler v. Chao, SDSC no. GIC870982.)

    The article describes accusations of negligence against the doctor, but does not explain the plaintiffs’ theory for recovering punitive damages – there’s no discussion of how the plaintiff proved the defendants acted with malice, oppression, or fraud.   

    The case seems to be getting more press than the usual civil lawsuit because the doctor involved happens to be the team physician for the San Diego Chargers.  As the story notes, the California Medical Board is seeking to revoke his license based on three alleged incidents of negligent care in unrelated cases.

  • $44 million punitive damages award reversed in unpublished opinion (VW Credit v. Keuylian)

    In California, two recurring scenarios appear in the unpublished opinions on punitive damages: (1) the court reverses a punitive damages award because the plaintiff obtained a default judgment but did not provide the defendant with adequate notice of the amount of punitive damages the plaintiff was seeking, or (2) the court reverses a punitive damages award because plaintiff failed to introduce meaningful evidence of the defendant’s financial condition.

    In this unpublished opinion from the Fourth Appellate District, Division Three, we have a twofer: the plaintiff provided insufficient notice of the amount it was seeking by default and failed to introduce meaningful evidence of the defendant’s financial condition.  The $44 million punitive damages award in this case never had a chance.

  • Videotaped debate over “Hot Coffee” and tort reform

    Last year we blogged about the documentary “Hot Coffee,” which focuses on Liebeck v. McDonald’s and a few other cases to illustrate the evils of tort reform.  As noted in our prior post, the film’s director Susan Saladoff said she made the film as an antidote to what she perceives as a pro-defendant bias in the mainstream media’s treatment of tort reform.

    In this video provided by Widener University School of Law, you can view a debate between Ms. Saladoff and Victor Schwartz, general counsel for the American Tort Reform Association.  The video has something for folks on both sides of the issue.  If you’re a fan of the movie, you’ll enjoy seeing Ms. Saladoff passionately explain why everyone should see this film, because it opens people’s eyes to the corporate takeover of the American justice system.  If you’re not a fan of the movie, you’ll enjoy seeing Mr. Schwartz identify all the parts of the film he believes are false or misleading.

    Warning, this video was recorded via Skype and its a little garbled in places.  There are some moments when students are asking questions of Ms. Saladoff and Mr. Schwartz, but the questions are inaudible.  And the video begins in the middle of Ms. Saladoff’s comments.  Despite these technical glitches, I found the video quite interesting.

    Hat tip: TortsProf Blog

    Related posts:

    “Hot Coffee” documentary takes aim at media depictions of civil litigation