California Punitives by Horvitz & Levy

  • Sex and punitive damages

    Here’s an interesting cross section of punitive damages news over the last week, offering a non-statistically significant glimpse into the punishment meted out for certain inappropriate (bit of understatement there) behavior:

    Gang rape — $1.03 million compensatory damages; $1.5 million punitive damages (about 1.5:1 ratio). As reported by the Wisconsin Law Journal, a state appellate court found last week that $1.5 million is not an excessive punitive damages award for the trial judge to have awarded against three men after a default prove-up hearing in a case in which the men were alleged to have drugged and raped the plaintiff. (See opinion in Pausch v. Cormier.) However, because the judge’s ruling did not make clear whether the award was assessed individually against the defendants ($500,000 owed by each), or was to be awarded jointly and severally against them, the court of appeal could not determine whether the trial court should have taken the defendants’ financial condition into account (which, under Wisconsin law, would be appropriate only if the awards were made individually and not jointly). The matter was remanded for clarification by the trial judge.

    Diocese’s fraudulent concealment of molestation — $2.4 million compensatory damages; $2.6 million punitive damages (less than 1:1 ratio). The National Catholic Reporter notes that last month the Illinois Supreme Court rejected a final plea for relief from the Catholic Diocese of Belleville, which had sought review of an intermediate appellate court decision affirming an adverse judgment that included punitive damages awarded to molestation victim James Wisniewski. Notably, the diocese did not argue that the punitive award was excessive, but instead challenged the liability finding on statute of limitations and evidentiary error grounds.

    Adultery resulting in “alienation of affection” — $1.275 million compensatory damages; $1.025 million punitive damages (a bit more than 1:1 ratio). A North Carolina jury has awarded compensatory and punitive damages against a man who, the plaintiff claimed, had an affair with the plaintiff’s wife and caused the breakup of a marriage that the plaintiff said had been characterized by “genuine love and affection.” Specifically, according to a Salisbury Post article, the jury awarded $425,000 for alienation of affection and $175,000 in punitive damages on that count, plus $850,000 for “criminal conversation” (i.e., sex outside of marriage) and the same amount for punitive damages on that count. The article observes that this was far more than the plaintiff had asked for, the defendant filed for bankruptcy, and the case (McCoy v. Freeman) settled after trial, effectively insulating the award from any appellate review.

    Update (8/26): last March another North Carolina court case involving “criminal conversation” (reported here and here) resulted in a default judgment of $30 million to a jilted spouse (Carol Puryear) who sued the cheating spouse’s lover (Betty Devin). The total is comprised of $10 million in compensatory damages and $20 million in punitive damages.

    Update (8/21/11): see this article (“Even a sex-toy purveyor can have a sexually hostile workplace“) about a divided New Jersey appellate division ruling last week in Longo v. Pleasure Productions Inc. The court upheld a Florida jury’s award in an employment discrimination case brought by a plaintiff who worked at a sex toy company. She complained of harrassment by a co-worker and retaliatory discharge, and received a compensatory damages award of $150,000 (awarded jointly against an individual and against the employer), plus $500,000 in punitive damages against the employer only.

  • The French dip deeper into punitive damages jurisprudence

    We have in prior posts touched on the historic reluctance outside of the United States (such as in France) to embrace the routine awarding of punitive damages. Last fall we noted commentary suggesting that reluctance may be fading, as indicated by a French high court ruling allowing enforcement of certain foreign punitive awards. A recent newsletter from ILO (International Law Office) notes a similar trend, and offers some thoughts on the subject, particularly with regard to insurance coverage for such awards.

    The introduction to the newsletter reads, “Recent developments point towards greater receptivity to punitive damages. In the past few months punitive damages have received increasing attention, not only from the legislature (leading to a proposed revision to the Civil Code), but also from the Court of Cassation. On December 1 2010 the Court of Cassation issued an interesting decision with regard to foreign judgments granting punitive damages. Whether insurance coverage will be available for foreign decisions awarding punitive damages may be a vital question for insureds, insurers and plaintiffs.”

    Check out the rest of the article online, titled, “Punitive Damages: is coverage available in France?” for more info.

    Update (8/3/11): Professor Francois Xavier Licari, at the University of Metz,
    has provided these additional helpful links:

    Professor Xavier’s comment published in a French law review and posted on SSRN (in
    French, but with an English abstract).

    A case summary with link to the opinion decided by the court of cassation.

  • Punitive damages may be available in copyright infringement actions under the U.S. Copyright Act

    In a prior post, we noted a case where Viacom was denied punitive damages under the copyright act. A law review article by Marketa Trimble makes the claim that the copyright act does not bar punitive damages simply because it does not affirmatively provide for them. The article also discusses cases in the Southern District of New York which suggest that plaintiffs may elect punitive damages under the act, and which differ from the Viacom ruling we discussed in our prior post.

  • Two unpublished California court of appeal opinions reach different results in writ petitions involving claims for punitive damages

    In Newland v. Superior Court, the California Court of Appeal, Third Appellate District, granted plaintiff’s writ petition challenging the trial court’s grant of summary adjudication on the plaintiff’s punitive damages claim. The potentially punitive conduct was an insurance company’s denial of a claim for a stolen car based upon the insurance adjuster’s opinion that the insured had been responsible for the theft. The Court of Appeal found that the insurance company had not met its burden to show that the conduct could not be punitive given the allegedly inappropriate manner in which the insured was treated.

    By contrast, in Old Republic Home Protection Co., Inc. v. Superior Court, the California Court of Appeal, Fourth Appellate District, Division Two, granted defendant’s writ petition challenging the trial court’s overruling of its demurrer to an insurance bad faith complaint that included a prayer for punitive damages. The lawsuit involved a claim for breach of a home warranty contract. The Court of Appeal held that breach of contract actions should not lightly be turned into tort actions outside the insurance context. Therefore, the bad faith claim, and the attendant claim for punitive damages, should be dismissed with prejudice.

  • Yet more from Prof. Markel on taxing and deducting punitive damages awards

    We’ve chronicled some of the academic debate concerning the ins and outs of tax treatment of punitive damages awards. One of the debaters, Professor Dan Markel, posted an update this week (“What will Congress do regarding the tax treatment of punitive damages?“), outlining more recent papers on the subject, authored by himself and others, including Professors Larry Zelenak and Paul Mogin. He remarks, “in an Escheresque-turn, we now invite comments on our comments on their comments on our paper.” Some readers of this blog just might want to take him up on the offer!

    For our last analysis of thoughts from Professor Markel, see “More from Professor Markel on Tax Policy and Punitive Damages.”

  • District Judge in air crash action analyzes choice of law rules specific to punitive damages; finds no-cap New York law trumps Virginia’s $350,000 cap

    Judge William Skretny, sitting in the Western District of New York, has undertaken a lengthy analysis of competing principles concerning the question of what jurisdiction’s law to apply in a mass tort case raising punitive damages issues. Noting that the choice-of-law analysis may result in application of different state law with respect to compensatory damages, the judge focused on the fact that punitive damages are meant to be “conduct regulating” rather than “loss allocating.” Accordingly, the court concluded that the “lex loci delicti” rule should be the default rule, such that the law of the jurisdiction where the tort occurred will generally apply because that jurisdiction has the greatest interest in regulating behavior within its borders.

    The practical effect of this ruling is that families suing over the deaths of 50 people resulting from a 2009 Continental plane crash into a house near Buffalo, New York, will have the benefit of New York’s punitive damages law, which does not impose any cap. The defendant flight operator was based in Virginia at the time of the crash, and had argued that Virginia’s $350,000 cap should apply. The judge agreed that, in plane crash cases, the domicile of the plaintiffs is not determinitive, nor is the fortuitous location of the crash. Moreover, the judge said he “does not lightly dismiss Defendants’ arguments that Virginia law should apply because of the number of significant contacts relating to punitive damages that occurred there.” The judge nonetheless ruled that the allegedly wrongful conduct at issue largely occurred in New York rather than in Virginia:

    “Plaintiffs’ punitive damages claims are not limited to what occurred in Defendants’ boardroom. Although Plaintiffs allege that punitive damages are warranted because Defendants failed to implement adequate safety programs and negligently hired and trained their flight crews — allegations that reasonably implicate corporate decision-making and policies — they also allege that Defendants failed to adequately supervise their flight crews and negligently operated an aircraft in New York in an unsafe manner, resulting in the crash of Flight 3407. Essentially, Plaintiffs maintain that punitive damages are in order because Defendants recklessly operated Flight 3407 in New York with deficient, unfit pilots who lacked the fundamental knowledge and ability to safely operate the Q400 aircraft. New York therefore has a compelling interest in seeing its punitive damages laws applied.”

    The judge added that Virgnia’s interest in having its law applied was diminished because, since the time of the accident, the defendants had moved their center of operations out of Virginia.

  • Wisonsin Supreme Court affirms $5 million punitive damages award in jerky family dispute.

    As we’ve previously reported, a Wisconsin jury awarded $5 million in punitive damages to the son of Jay Link, the aptly named founder of a meat snacks company. The son proved a breach of fiduciary duty claim based on allegations that the father squeezed him out of the family’s beef jerky business.

    As recounted in several publications, including a write-up by the Courthouse News Service, the Wisconsin Supreme Court has now agreed with the intermediate appellate court that Mr. Link’s challenge to the award was procedurally defective because his new trial motion was filed two minutes after the normal 4:30 p.m. closing time for the clerk’s office. Although the clerk accepted the filing as timely, the high court held the clerk had no discretion to do so, and that the trial court therefore had no authority to enter its order reducing the damages to $736,000.

    As they say, “timing is everything.” The delay in filing comes out to a more than $2 million-per-minute mistake, assuming that other proceedings on remand (concerning the underlying fiduciary duty claims) don’t indirectly lead to some relief from the punitive damages award.

  • Are lower courts thumbing their noses at SCOTUS guidelines for reviewing large punitive damages awards?

    University of Iowa College of Law professor N. William Hines was intrigued by the creative approach that the Oregon Supreme Court followed in 2008 when reaffirming a 97-to-1 punitive award against Philip Morris after the United States Supreme Court decision in Philip Morris v. Williams. (See our original post on that development.) The latter decision had seemed at first blush to dictate a reversal and retrial due to instructional error, but the Oregon court found an end run around that result. Upon contemplating the procedural history of Williams, Professor Hines undertook a study (abstracted here) to see “whether lower courts could be counted upon to faithfully implement the Supreme Court’s new constitutional jurisprudence regarding punitive damages.” To that end, he “decided to collect and study all of the reported punitive damages cases decided by lower courts since the 2003 State Farm decision.”

    The results of the study are interesting, leading Professor Hines to conclude, among other things, that the more than 400 cases analyzed show “much wider diversity in the types of modern cases in which punitive damages are sought and awarded” than one might assume. The professor’s ultimate conclusion is that court review of those awards has generally reflected a high degree of faithfulness to the guidance from the Supreme Court (notwithstanding the Oregon court’s approach in Williams): “In case after case, the lower courts correctly invoked the new constitutional doctrine based on Due Process and dutifully proceeded to analyze the reasonableness and size of the punitive damages award before them by applying the three Guideposts.”

    For those tracking Due Process jurisprudence as applied to punitive damages awards, the full study, including the appendix charting objective data about the types of cases and ratios between compensatory and and punitive damages, is worth a read. The July 2011 paper is titled, “Marching to a Different Drummer? Are Lower Courts Faithfully Implementing the Evolving Due Process Guideposts to Catch and Correct Excessive Punitive Damages Awards?”

  • A (temporary) changing of the guard around here

    Starting tomorrow, I will be taking a six-week sabbatical in order to do some traveling and spend time with my family.  I probably won’t be doing much blogging my sabbatical, but my colleagues will be filling in for me, keeping an eye out for noteworthy developments in punitive damages law and litigation.  See you in September!

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

    I’ve been meaning to post about HBO’s “Hot Coffee” documentary ever since reading this Reuters interview with the filmmaker (“Hot Coffee” shows the other side of “frivolous lawsuits”).  I can’t comment on the film itself because I haven’t seen it yet, but I was struck by the overall theme of the article: the author felt compelled to make a film to tell “the other side” of civil litigation, because “[n]obody talks about frivolous defenses” and the other evils perpetrated by defense lawyers and their clients. 

    I guess it’s all a matter of perspective.  The author perceives that plaintiffs’ lawyers have been unfairly vilified and portrayed as bad guys to the American public.  From my perspective, the opposite seems true.  My perception is that nearly every depiction of civil litigation in the media and pop culture portrays plaintiffs’ lawyers as heroes, fighting for the little guys against evil corporations who will stop at nothing to make a buck.  I can think of quite a few films that glorify plaintiffs’ lawyers, such as Erin Brockovich, A Civil Action, Philadelphia, Class Action.  And didn’t we just have another documentary film, Bananas, depicting plaintiffs’ lawyers fighting against evil corporations?  I can’t really think of any films that glorify civil defense lawyers.  Don’t get me wrong, I’m not quitting my job to make a film about the virtues of defense lawyers.  I just don’t share the author’s views about how civil litigation is usually presented to the American public.