California Punitives by Horvitz & Levy

  • Las Vegas jury awards another $162.5 million in punitive damages against Propofol companies

    We blogged last year about a whopping $500 million punitive damages award out of state court in Las Vegas, based on allegations that the manufacturers and suppliers of the anesthetic Propofol acted with malice by supplying the drug in vials larger than necessary for single use, thereby tempting healthcare providers to reuse the vials.  That case is currently pending before the Nevada Supreme Court. 

    Bloomberg now reports that another Vegas jury has awarded an additional $162 million in another lawsuit based on the same allegations.  And stay tuned, because a separate jury in the same courthouse has just awarded $14 million in compensatory damages in a similar case, and will consider punitive damages later this week.  (The defendants in these cases are Teva Parenteral Medicines Inc., Baxter Healthcare Corp., and McKesson Corp.)

    UPDATE (10/13/11):  Bloomberg reports that jury #3 has awarded another $90 million in punitive damages.  So the defendants are looking at a combined $752 million in punitive damages in these three cases.

  • Unpublished opinion affirms $500,000 punitive award (Plikaytis v. Roth)

    The defendant in this case challenged a $500,000 punitive damages award as excessive in relation to his net worth. Documentary evidence showed the defendant had a net worth of $8 million in 2008.  But this case was tried in 2009, and it’s net worth at the time of trial that counts.  (See, e.g., Washington v. Farlice (1991) 1 Cal.App.4th 766, 777.)   The defendant argued at trial that his net worth dropped to $500,000 in 2009, mostly due to a decline in the value of his real estate holdings.  But he provided no evidence to substantiate his statements about his reduced property value.

    The California Court of Appeal (Fourth Appellate District, Division One) didn’t buy it.  In this unpublished opinion, the court said the jury could have properly rejected the defendant’s self-appraisal of his real estate assets, and concluded that his net worth was at least $5 million, even considering the evidence of the defendant’s increased liabilities as of 2009.  Accordingly, the court concluded the $500,000 was not excessive in relation to the defendant’s net worth.

    Related posts:

    Las Vegas Jury Awards $500 Million in Punitive Damages

  • L.A. jury awards $15.6 million in punitive damages against Johnson & Johnson

    We previously reported on the appellate decision that allowed a plaintiff to proceed with a punitive damages claim against Johnson & Johnson for allegedly failing to provide sufficiently specific warnings for its pain reliever Motrin, and allegedly withholding information about Motrin from the FDA.  As we noted in May, the California Supreme Court denied Johnson & Johnson’s petition for review (and our request for depublication.)

    Today’s Daily Journal (subscription required) reports that, after a six-and-a-half week trial, a jury awarded the plaintiff $48.2 million in damages, including $15.6 million in punitive damages.

  • Punitive damages cap goes into effect in Tennessee

    On October 1st, the Tennessee Civil Justice Reform Act of 2011 took effect, capping punitive damages at $500,000 or two times compensatory damages, whichever is greater. By my count, 31 states now impose caps on punitive damages (or prohibit them altogether).

    Hat tip: Torts Prof Blog

  • Petition for review filed in Bullock v. Philip Morris

    Last month we reported on the California Court of Appeal’s latest decision in the ongoing saga of Bullock v. Philip Morris.  Yesterday, Philip Morris filed its petition for review.  You can track the status of the petition on the court’s online docket.

  • Two recent unpublished opinions adress the sufficiency of financial condition evidence (Sylester Flowers v. Hillyer and Madriz v. Ochoa)

    On Sept. 23 the California Court of Appeal issued two unpublished opinions addressing whether a plaintiff had presented sufficient evidence of the defendant’s financial condition to sustain an award of punitive damages.

    In Sylester Flowers v. Hillyer, the First Appellate District, Division Five, reversed a $4.8 million punitive damages award because the plaintiff’s presentation on the defendant’s financial condition was insufficient.  Interestingly, the defendant in that case had repeatedly refused the plaintiff’s requests for financial documents, and failed to comply with an initial court order requiring disclosure of financial information.  Other cases have found that a defendant who fails to comply with such an order cannot later complain about the absence of financial condition evidence. (See, e.g., Mike Davidov v. Issod.)  But the court here found no waiver, in part because it was not clear whether the defendant ultimately complied with the trial court’s final order compelling discovery of financial records, and also because the plaintiff failed to request the financial condition evidence for the purpose of obtaining punitive damages.  The court noted, “There is no indication that plaintiffs sought — or that the trial court ordered — pretrial discovery of [defendant’s] financial condition pursuant to Civil Code section 3295, subdivision (c),” and there was no indication that plaintiffs served a trial subpoena to bring financial records to court, or sought a court order for discovery regarding finances after the liability finding.  In other words, just asking for the info is not enough; the plaintiff has to explain that the info is needed in connection with punitive damages.

    In Madriz v. Ochoa, the Sixth Appellate District affirms $30,000 in punitive damages, finding that the plaintiff’s evidence on financial condition, although not perfect, was good enough.  The evidence established that the defendant earned at least $100,000 per year, owned some real property, had at least $26,000 in cash, and had a history of making large cash deposits to various accounts.  Although the evidence didn’t establish the defendant’s liabilities, the court said the evidence of income and assets was sufficient to sustain the jury’s relatively modest punitive award.

  • Ninth Circuit calls on district court to consider whether punitive damages claims can be certified for class treatment in light of Wal-Mart v. Dukes

    When the U.S. Supreme Court decided Wal-Mart v. Dukes back in June, we observed that the Court’s interpretation of Federal Rule of Civil Procedure 23(b)(2) might lead federal courts to conclude that claims for punitive damages cannot be certified for class treatment under this rule. Late last week, the Ninth Circuit instructed a federal district court to consider this very question in Ellis v. Costco Wholesale Corp.

    Rule 23(b)(2) allows for class treatment only when “the party opposing the class has acted or refused to act on grounds that apply generally to the class, so that final injunctive relief or corresponding declaratory relief is appropriate respecting the class as a whole.” In Wal-Mart, the Supreme Court assessed whether this rule justified class certification where the class sought not only declaratory and injunctive relief but backpay as well. The Court held that Rule 23(b)(2) does not authorize class certification where, as with claims for backpay, each class member would be entitled to an individualized award of monetary damages.

    As we explained at that time, the Supreme Court has previously held that any punitive damages award must be tied to the harm suffered by a plaintiff. (See, e.g., State Farm Mutual Auto. Ins. Co. v. Campbell (2003) 538 U.S. 408, 422-423.) We therefore noted that, in the future, courts may well conclude that claims for punitive damages, like claims for backpay, are claims for an individualized award of monetary damages that cannot be certified for class treatment under Rule 23(b)(2). Since then, several federal district courts have reached precisely that conclusion. (See, e.g., Morrow v. Washington (E.D. Tex. Aug. 29, 2011) 2011 WL 3847985, at *30 [claims for punitive damages “are not appropriate for Rule 23(b)(2) certification” because they “would require an individualized, factual determination for each claim”]; Altier v. Worley Catastrophe Response, LLC (E.D. La. July 26, 2011) 2011 WL 3205229, at *13 [denying class certification under Rule 23(b)(2) with respect to punitive damages claim because such a claim “requires a focus on individualized issues to comply with constitutional protections”].)

    This issue also came up in Ellis. There, the Ninth Circuit vacated a district court’s order granting class certification and remanded to the district court to consider whether class certification should be granted pursuant to the legal standards established in Wal-Mart. In doing so, the Ninth Circuit “highlight[ed] several factors for the district court to consider” on remand. Among those factors, the Ninth Circuit—rather than deciding the issue itself—said the district court may consider on remand whether plaintiffs’ claim for punitive damages could be certified in accordance with Wal-Mart‘s interpretation of Rule 23(b)(2).

    Of course, it’s possible the district court may sidestep this Rule 23(b)(2) issue since the Ninth Circuit also indicated the district court could consider whether to certify the punitive damages claim pursuant to Rule 23(b)(3). But there is no guarantee the district court would do so. As we’ve previously pointed out, although some courts have certified punitive damages claims for class treatment, several federal courts have declined to do so because the necessity of assessing an award of punitive damages in light of the defendant’s conduct toward a particular plaintiff requires individualized inquiries that prevent a plaintiff from satisfying Rule 23(b)(3)’s predominance requirement.

  • Kahaner v. Salamon: unpublished opinion further illustrates split on how to handle punitive damages after reduction of compensatory damages

    We’ve noted in prior posts that California appellate courts have split on the question of what to do about a punitive damages award when the court determines that the compensatory damages must be reduced.  Traditionally, courts would order a reduction of the punitive damages, or at least a new trial, to account for the change in the compensatories.  But more recently we’ve seen some courts simply affirming the punitive damages without regard to the change in the compensatories (and therefore without regard to the change in the punitive-to-compensatory ratio).  This unpublished opinion from the Second Appellate District, Division Seven, falls into that category.  The court orders the trial court to reevaluate the amount of compensatory damages, but affirms an award of $50,000 in punitive damages without even knowing what the final compensatory amount will be.

    This case isn’t as extreme as Behr v. Redmond, where the Court of Appeal reduced the compensatory damages from $4 million to $1.6 but left a $2.8 million punitive damages award undisturbed.   Unfortunately, when the defendant in Behr petitioned for review to the California Supreme Court, he didn’t get a single vote.  Perhaps the Supreme Court didn’t think that case was the right vehicle to settle this issue, but will take up the issue in a future case.  I hope so, because the lower courts are all over the map on this issue and could use some guidance.

  • U.S. punitive damages in German courts

    The Federal Supreme Court of Germany held in 1992 that U.S. punitive damages awards are unenforceable in Germany because they violate the “ordre public” – – the fundamental values of Germany’s justice system.  The Federal Supreme Court got it wrong, according to this article by Madeleine Tolani (U.S. Damages Before German Courts: A Comparative Analysis with Respect to the Ordre Public).

  • Plaintiffs’ group issues white paper purporting to dispel “myths” about punitive damages

    The Center for Justice & Democracy, an advocacy group founded by plaintiffs’ lawyers, has released a white paper which, according to the press release, debunks common myths about punitive damages.  The paper argues that punitive damages serve a vitally important role in deterring unsafe practices, and it takes aim at critics of punitive damages by reciting Department of Justice statistics showing that punitive damages are rarely awarded, and are usually awarded only in modest amounts.  (We reported on the same stats in 2009.)

    The article fails to explain, however, how the cited statistics dispel any actual “myths” about punitive damages.  The unstated premise of the paper is that critics of punitive damages are claiming that punitive damages are awarded in a high-percentage of cases, and that most of those awards are excessive.  But that’s not really what critics are saying.  The real criticism is that punitive damages are awarded arbitrarily and irrationally.  The CJ&D response seems to be, “Yeah, but not very often.”  That doesn’t seem like much of a myth-buster.

    If the CJ&D really wants to prove that punitive damages are necessary to deter unsafe practices, they should study whether such practices are more common in countries and jurisdictions that don’t allow punitive damages. Or they could prove the value of unlimited punitive damages by showing a greater incidence of unsafe practices in jurisdictions that have imposed statutory caps.  That kind of study could take the debate beyond mere rhetoric and into the realm of actual substance.  But as far as I know, no advocacy group on either side has attempted to perform that type of study.