California Punitives by Horvitz & Levy

  • Kelemen v. John Crane, Inc.: new trial ordered in case where jury awarded $18.3 million in punitive damages

    There’s a lot of interesting stuff in this unpublished opinion.

    Its a personal injury action for asbestos exposure, with a fairly typical fact pattern: Plaintiff is massively exposed to asbestos-containing insulation in the Navy and develops mesothelioma years later, but the manufacturers of the insulation aren’t around anymore, so the case goes to trial against a company that made asbestos-containing gaskets and packing, which were used inside some of the ship-board equipment.  The jury finds for the plaintiff, assigns 70 percent fault to the defendant, and awards $900,000 in economic damages, $2 million in past noneconomic damages, $14 million in future noneconomic damages, and $18.3 million in punitive damages.  After posttrial motions, the trial court orders a reduction of the punitive damages to $4.5 million.  Both sides appeal.

    The California Court of Appeal (Second Appellate District, Division Two), addresses several punitive damages issues in its opinion:

    • First, the opinion holds that substantial evidence supports the jury’s determination that the defendant acted with malice, fraud or oppression within the meaning of Civil Code section 3294.  The court follows the Shade Foods line of authority which holds that the reviewing court must review the evidence through the prism of the “clear and convincing evidence” burden of proof.  The court does not discuss the conflicting line of authority which holds that the clear and convincing evidence standard has no impact on appellate review.   (As readers of this blog may recall, that conflict was taken up by California Supreme Court in 2008, but the case was later dismissed after the parties settled).  In the end, however, the court concludes that the evidence is sufficient to support a finding even under the heightened burden of proof.
    • Next, the opinion holds that a new trial is required due to irregularities in the presentation of evidence of the defendant’s financial condition.  This analysis is pretty interesting.  As we have discussed many times on this blog (e.g., here), when a California appellate court concludes that a plaintiff has failed to meet its burden of presenting meaningful evidence of the defendant’s financial condition, the court will send the case back to the trial court with directions to enter judgment in favor the defendant on the issue of punitive damages.  On the other hand, if the court concludes that the defendant failed to comply with a court order to produce financial condition evidence, the court will find a waiver by the defendant and affirm the award.  (As we reported here.) In this case, the court finds that the defendant failed to comply with a court order, but also concludes that the order itself was defective.  So instead of ordering judgment for the defendant or finding a waiver, the court orders a new trial on the issue of punitive damages. That’s an approach I haven’t seen before.

    The opinion also holds that the jury’s award of $14 million in non-economic damages is excessive in relation to the plaintiff’s life expectancy.  That issue is beyond the scope of this blog, but those with a general interest in California tort damages might want to check it out.

  • Oil spill plaintiffs allowed to pursue punitive damages claims against BP

    I’m jumping back into blogging after 6 weeks away from the office.  Thanks to my colleagues Lisa Perrochet and Jeremy Rosen for keeping the blog rolling in my absence.

    Here’s a bit of news from earlier in the week: AP reports that U.S. district judge Carl Barbier of the Eastern District of Louisiana will allow thousands of fisherman and businesses affected by the Gulf of Mexico oil spill to seek punitive damages from BP, Halliburton, Transocean Ltd., and a host of other defendants.  You can find Judge Barbier’s order and other materials from the litigation on this special page on the court’s website.

    The order permits the plaintiffs to seek punitive damages under general maritime law, which allows punitive damages based on a showing of “gross negligence.”  The order concludes that such claims are not preempted by the Oil Pollution Act of 1990 (“OPA”), a comprehensive statute that addresses responsibility for oil spills, but is silent as to the availability of punitive damages.  The order declines to follow a First District Circuit decision (South Port Marine v. Gulf Oil Limited Partnership), which held that punitive damages were not available under the OPA.  You can bet BP and the other defendants will take that up on appeal.

  • L.A. verdict against film producer Jon Peters awards $2.5 million in punitive damages for sexual harrassment

    Reuters reports that film producer Jon Peters has been hit with a verdict for $822,000 in compensatory damages and $2.5 million in punitive damages (about a 3:1 ratio) in a case involving claims of sexual harrassment and hostile work environment.

    Given that the compensatory damages are “substantial” by most courts’ definition (but see the recent Bullock appellate court decision, discussed here), and given that this case does not appear to involve physical injury, it will be interesting to see whether the punitive damages (if found to be supported by clear and convincing evidence of malice) will be cut on postrial motions or on appeal to a 1:1 ratio, on excessiveness grounds.

    Related posts:

    $1.16 punitive damages verdict returned against Walgreens: will 13:1 ratio stick? [describing recent Calfornia punitive damages verdict in an employment tort case]

    Thomas v. iStar Financial, Inc.: $1.6 million punitive damages award in retaliatory discharge case is excessive [discussing appellate opinion that affirmed a trial court order reducing the $1.6 million punitive award to $190,000 (less than a 1:1 ratio)];

    Sex and punitive damages [referencing recent New Jersey appellate court ruling on punitive damages in a sexual harrassment case]

  • A potpourri of recent eight-figure punitive awards against medical care providers

    $18 million punitive damages award (on top of $18.7 million compensatory award): A Florida jury was not pleased with the behavior of a suspended doctor (James Scott Pendergraft IV), whose clinic reportedly mishandled the medical services provided to patient who sought an abortion, but who ended up giving birth to a severely disabled child. The Orlando Sentinel reports that the trial judge last week denied posttrial motions challenging the July 2011 verdict.

    $80 million punitive award (on top of $11.5 million compensatory award): According to a plaintiffs’ firm press release, a West Virginia jury found that the defendant nursing home was responsible for the dehydration death of one of its patients. An appeal is apparently in the works. The case is Douglas v. Manor Care Inc.

    Honorable mention — punitive damages anticipated after jury awarded $2.287 compensatory damages: the Pennsylvania Record says that, after a three week trial in a case titled Williams vs. Willow Terrace et al., a jury found nursing home defendants were responsible for the poor care of a patient who developed pressure ulcers and ultimately died from them.

  • Judgment awarding punitive damages voided by Missouri court where no compensatory damages were awarded

    We recently mentioned a pending case in which a Missouri woman sued her mom (Alberta Comstock) for wrongful death after the mom allegedly shot her ex-husband (the plaintiff’s adoptive father). The civil jury (no criminal charges have ever been filed) found no compensatory damages were owed, but awarded $125,000 in punitive damages.

    According to various news reports (e.g., Judge Tosses Judgment in Springfield Man’s Death), the trial judge voided the judgment as being “so inconsistent as to be self-destructive.” The judge reportedly rejected the plaintiff’s request to add nominal damages to the judgment in order to support the punitive award, which the judge found he had no authority to do. The judge also rejected plaintiff’s request for a new trial because her counsel failed to seek appropriate curative measures while the jury was still empaneled. The judge reasoned, “This Court does not have the latitude to grant her a new trial as a result of the inconsistent verdict,” and explained his view the plaintiff’s attorney should have recognized the inconsistent verdict and asked the judge “to instruct the jury to award . . . nominal damages.”

    For more on the topic of punitive damages in the context of nominal or nonexistent compensatory damages, see our prior post here.

  • $1.16 punitive damages verdict returned against Walgreens: will 13:1 ratio stick?

    The Fresno Bee has reported that a jury last Friday awarded $88,000 in compensatory damages and $1.16 million in punitive damages to pharmacist Sami Mitri, who said Walgreen fired him in retaliation for reporting Medicare fraud. The case (no. 1:10-cv-00538-AWI -SKO) was brought in federal court under a whistleblower statute.

    Five-figure and low six-figure compensatory damages awards have, in some cases, been found to be substantial enough to trigger a presumption that a single-digit ratio between compensatory and punitive damages is the most that can withstand a due process challenge for excessiveness. (See, e.g., the recent case survey discussed here.) The Walgreen award represents a double-digit ratio of more than 13:1. But Walgreen Co. is a pretty big company (the largest drug store company in the U.S.). Under the analysis in the recent Bullock v. Philip Morris opinion (discussed here), might an appellate court find a departure from the single-digit presumptive limit is warranted? Or might a court reviewing the award in this case hew to the U.S. Supreme Court’s statement that “The wealth of a defendant cannot justify an otherwise unconstitutional punitive damages award”? (See State Farm Mut. Auto. Ins. Co. v. Campbell (2003) 538 U.S. 408, 427 [123 S.Ct. 1513, 155 L.Ed.2d 585].)

  • Here’s a handy survey on cases finding 1:1 to be the maximum punitive damages allowable

    In a timely post (given this week’s Bullock v. Philip Morris opinion) the folks at Dechert LLP have posted the results of punitive damages research they did to “list of all the cases we’ve been able to find where a court held that, constitutionally, punitive damages could not be assessed in an amount greater than a one-to-one ratio.”

  • Bullock v. Philip Morris Court of Appeal opinion affirms 16:1 punitive damages

    We’ve blogged many times about the saga of the Bullock v. Philip Morris case, which has bounced up and down through the California trial and appellate court system for a while now. Most recently, we reported on the second jury verdict (on remand after the judgment on the first jury verdict was reversed). That 2009 verdict reflected the finding that $13.8 million was the appropriate amount of punitive damages to award on account of harm to a plaintiff who, a prior jury had found, suffered $850,000 in actual damages. As we noted, the resulting judgment allows for a greater than 16:1 ratio between punitive and compensatory damages.

    The Court of Appeal (Second District, Division Three) yesterday affirmed the judgment in a divided opinion. Justice Croskey, writing for the majority, acknowledged that, when “substantial” compensatory damages are awarded, there is a presumption of unconstitutionality as to punitive awards exceeding a single-digit ratio (in comparison to the compensatory damages) to a significant degree. (See opn., fn. 18.) However, he concluded that a departure from a single-digit ratio was acceptable because, in his view, an $850,000 compensatory award is not “substantial” within the meaning of United States Supreme Court jurisprudence, when the award is viewed in light of the defendant’s financial condition.

    Justice Kitching, dissenting, pointed out that those two concepts have not previously been linked. In fact, in many cases around the country, considerably smaller compensatory awards against very well-heeled companies have been deemed “substantial” within the meaning of the due process principles set out by the United States Supreme Court, and have triggered reversal or reduction of punitive awards that exceed single-digit ratios. It will be interesting to see what happens with the Bullock opinion, and whether other courts will similarly veer off in this new direction for punitive damages jurisprudence.

  • Jim & Ray Telecom v. Kim: unpublished appellate decision shows the Supreme Court really should clarify the status of punitive damages awards after compensatories are cut

    As we’ve discussed a number of times before (see related posts linked below), there’s a lot of uncertainty out there about what’s supposed to happen when a jury does its job of weighing the amount of punitive damages in light of a reasonable relationship to compensatory damages, but then the compensatory damages are cut on posttrial motions or on appeal. The Supreme Court recently declined to take up that question, denying review in Behr v. Redmond, despite the split of authority on the recurring issue.

    An unpublished decision handed down last week from the California Court of Appeal is yet another case in point confirming that some guidance is needed here. In that matter involving a commercial dispute, the jury awarded $374,646.01 in compensatory damages and a matching $375,000 in punitive damages, for a 1:1 ratio. The trial court then found the compensatory damages were subject to an offset for amounts owed by the plaintiff to the defendant, and thus reduced those damages to $202,533.75. The court did not, however, adjust the punitive damages accordingly. So much for a 1:1 ratio.

    Now, it may be that a postverdict reduction of compensatory damages due to a counterclaim by the defendant is treated differently from a reduction on excessiveness or legal error grounds. But this case won’t provide a vehicle for the Supreme Court to analyze that issue because, while the court of appeal noted that the defendant (acting in pro per) raised six arguments on appeal, a challenge to the amount of punitive damages was not among them. Nonetheless, the case highlights another example of the interconnected complex questions arising when compensatory damages are reduced in a punitive damages case.

    Related posts:

    Rex Heeseman op-ed discusses Behr v. Redmond

    Two out of three ain’t bad: Supreme Court denies review in Behr v. Richmond, despite my prediction that they’d take the case

    Petition for review asks Cal. Supreme Court to resolve split in authority regarding the proper treatment of a punitive damages award after reduction of compensatories

    Behr v. Redmond: Court of Appeal publishes previously unpublished opinion, creates split of authority

    Behr v. Redmond: $2.8M punitive award affirmed, despite reduction of compensatory damages from $4M to $1.6M

  • Bratz attack pins Barbie to the mat — to the tune of $85 million in punitive damages

    There’s epic litigation, and then there’s Bryant v. Mattel (aka “Mattel v. MGA”). Back in 2008, we had a post right here on this blog titled “No Punitive Damages Awarded in Bratz Trial.” Well, a bit more of the dolly drama has played out since then, requiring this update. In the megalitigation pitting the House of Barbie against the Bratz pack, the parties are up to two trials before two different district judges, plus one big trip to the Ninth Circuit and several smaller trips, and more than 10,700 filings generated by the parties.

    Now, as recounted in a great many media reports (e.g., from the LA Times and Bloomberg), federal district court judge David Carter yesterday handed down an order awarding MGA $85 million in punitive damages. Awards of that size can be good candidates for a constitutional excessiveness challenge, often because such awards tend to be many times greater than the 1:1 ratio (or sometimes higher single-digit ratio) recognized as appropriate in comparison to significant compensatory damages. But in this case, the award of punitive damages is equal to the award of compensatory damages, so a ratio argument may not be the focus of any excessiveness challenge that Mattel mounts in posttrial motions or on appeal.

    This award is atypical of most large punitive damages awards because it was made by a judge, not a jury. MGA’s basis for seeking punitive damages arose from a claim for willful misappropriation of trade secrets. That claim was tried to the jury, but the applicable California statute authorizes the court to award punitive damages, and the statute caps any award at twice the compensatory damages. Cal. Civ. Code § 3426.3(c). MGA asked the district court to award the maximum amount of punitive damages—double its compensatory damages—but the court declined to do so.

    This won’t be the last time you hear about this case. In addition to the large awards of compensatory and punitive damages, the district court’s companion order saddled Mattel with paying MGA some $140 million in attorney’s fees and costs. (Yes, that’s a nine-figure fee award.) With combined awards of more than $300 million, you can expect Mattel to appeal.

    All in all, it’s quite a reversal of fortune for Mattel, which won the first trial and obtained millions in damages against MGA, only to see the Ninth Circuit reverse the judgment and order this new trial. According to one analyst’s estimate (as quoted in the Financial Times), it has likely cost Mattel some $400 million in legal fees since 2004 to get to this point. For MGA’s part, its CEO Isaac Larian reportedly said yesterday that the protracted litigation has damaged the Bratz brand by an estimated $1 billion, and that MGA intends to seek recompense in a separate antitrust proceedings against Mattel.