California Punitives by Horvitz & Levy

  • Kimes v. Grosser: court reinstates punitive damages claim for attack on Pumkin the cat

    Don’t mess with Pumkin the cat, or you may end up paying punitive damages.  That’s the message of this published opinion from the California Court of Appeal (First Appellate District, Division One).

    The plaintiff alleged that the defendants shot his beloved cat Pumkin with a pellet gun while Pumkin was perched on a fence between the plaintiff’s property and the defendants’ property.  Pumkin needed emergency surgery costing $6,000.  She survived but was left partially paralyzed.  Plaintiff sued to recover the cost of the surgery, increased costs of care due to Pumkin’s paralysis, and punitive damages.  The trial court ruled, however, that plaintiff could only recover Pumkin’s fair market value.  The plaintiff conceded that Pumkin had no market value, so the trial court dismissed his case.

    The Court of Appeal reversed the judgment of dismissal, ruling that the plaintiff was entitled to recover damages for the reasonable and necessary costs he incurred due to the wrongful injury of his cat.  More importantly for purposes of this blog, the court ruled that the plaintiff could recover punitive damages under California Civil Code section 3340(f), which provides that “exemplary damages may be given” in cases involving “wrongful injuries to animals . . committed willfully or by gross negligence, in disregard of humanity.”  The statutory language leaves me wondering whether there are any cases defining “disregard of humanity,” but I’ll leave that issue for another day.  

    UPDATE (6/2/11):  Bob Egelko of the San Francisco Chronicle reports: Brentwood man cleared to sue over cat’s shooting (the article contains a photo of Pumkin)

  • Gonzalez v. ATI Systems: trial court properly rejected punitive damages claim in disability discrimination case

    In this unpublished opinion, the California Court of Appeal (Second District, Division Five) reverses a trial court order that granted summary adjudication for the defense on the plaintiffs’ disability discrimination claims, but affirms the trial court’s grant of summary adjudication for the defense on the issue of punitive damages.  The Court of Appeal thought the plaintiff had enough evidence to proceed with his liability claims, but the court ruled that the plaintiff presented no clear and convincing evidence that his employer’s possibly tortious conduct was the result of malice, oppression, or fraud.

  • Oregon Supreme Court affirms $8 million punitive damages award

    A little while ago I posted about a Colorado Supreme Court opinion that affirmed an $18 million punitive damages award, and I observed that state supreme courts don’t often affirm blockbuster punitive damages awards.  One of our readers then alerted me to the Oregon Supreme Court’s opinion last week in Strawn v. Farmers Insurance Co. of Oregon, which affirmed an $8 million punitive damages award.  (Technically, the court reinstated an $8 million punitive damages award that had been reversed by the Court of Appeal.) 

    That doesn’t quite qualify as a “blockbuster,” but it is surprising that the court affirmed the award given that the compensatory damages were only $800,000.  A 10-to-1 ratio seems awfully high in a case that involves purely economic harm (underpayment of insurance policy benefits).  Then again, the Oregon Supreme Court has a history of marching to the beat of its own drum when it comes to punitive damages; this is the court that affirmed the $79.5 million punitive damages award in Philip Morris v. Williams even after the U.S. Supreme Court held that the jury instructions in that case violated Due Process.

    DISCLOSURE: Horvitz & Levy was not involved in the Strawn case, but we do represent Farmers in other matters.

  • Colorado Supreme Court affirms $18 million punitive damages award

    It’s not often that a state supreme court affirms a blockbuster punitive damages award, but yesterday the Colorado Supreme Court affirmed a $39.6 million judgment in a personal injury action, including $18 million in punitive damages, in the case of Qwest Services Corp. v. Blood.  The plaintiff, a lineman for an electric utility, was injured during a climb on a wooden utility pole.  The 46-year-old pole was rotten and collapsed under the plaintiff’s weight.  He sued the defendant, the company that owned of the pole, for failure to implement a routine pole inspection program.

    The Colorado Supreme Court’s opinion has three primary holdings:

    1.  Colorado’s punitive damages statute does not violate the Due Process Clause as interpreted by the U.S. Supreme Court in Philip Morris v. Williams; the statute does not suggest that a jury can or should award punitive damages to punish the defendant for harm to nonparties.

    2.  The evidence was sufficient to support a punitive damages award against the defendant, because a reasonable jury could conclude that the defendant’s failure to implement a pole inspection problem was “wilful and wanton” within the meaning of Colorado’s punitive damages statute. 

    3.  The amount of the award was not excessive under the three guideposts of BMW v. Gore because the reprehensibility of the defendant’s conduct was sufficient to support a punitive damages award that was less than the amount of compensatory damages.

    Related posts:

    Colorado Supreme Court to consider excessive punitive damages, despite statutory cap

  • Proposed California bill would prevent tax deductions for punitive damages

    Somehow I missed this when it happened, but I learned today that Assemblyman Mike Feuer introduced a bill in February – – Assembly Bill 1276 – – to prevent California taxpayers from deducting punitive damages payments as business expenses.  In general, taxpayers engaged in a business are permitted to deduct all expenses that are ordinary and necessary in conducting that business, unless specifically excluded by statute.  This proposal would eliminate the deduction for payments of punitive damages.  The bill has been approved by the Assembly Committee on Tax & Revenue and has been referred to the Appropriations committee. 

    As far as I’m aware, no U.S. jurisdiction has prohibited deduction of punitive damages.  But as noted in prior posts, the Obama administration has advocated for a change in federal law, a proposal that has drawn sharp criticism from law professors.

    Related posts:

    Proposal to eliminate [federal] tax deduction for punitive damages still alive

    More from Prof. Markel on Tax Policy and Punitive Damages

    “Taxing Punitive Damages”

    Proposed [federal] legislation would eliminate tax deduction for punitive damages

    Obama administration proposes to eliminate tax deduction for payment of punitive damages

  • California Supreme Court declines to review or depublish opinion allowing punitive damages for insufficiently detailed ibuprofen warnings

    The California Supreme Court has denied the petition for review in Johnson & Johnson v. Superior Court, the case in which the Court of Appeal held that punitive damages could be imposed on Johnson & Johnson for failing to include enough details in its warning labels for ibuprofen.  You can view the order on the Supreme Court’s on-line docket.

    The Supreme Court also denied a request for depublication that Horvitz & Levy submitted on behalf of Honeywell.  Our request argued that the opinion, which was originally unpublished, does not merit publication because the factual discussion is so sparse that it provides no meaningful guidance for evaluation of punitive damages claims in future failure-to-warn cases, and could create confusion about the applicable standards.

    Related posts:

    Johnson & Johnson asks California Supreme Court to review case allowing punitive damages for ibuprofen warnings

    Court of Appeal publishes opinion on punitive damages against Johnson & Johnson for ibuprofen warnings

    Johnson & Johnson v. Superior Court; plaintiffs can seek punitive damages for incomplete ibuprofen warnings

  • Mississippi jury awards $300 million in punitive damages in asbestos case

    The Associated Press is reporting (via the Washington Post) that a jury in Mississippi awarded $322 million last week to a man who claimed he developed asbestosis as a result of working with drilling mud additives.  The defendants are Chevron and Union Carbide, who were each found 50 percent at fault for the plaintiff’s injuries.  (Brown v. Phillips 66, et al., Miss. Cir. Ct., Smith Cty.)

    The AP story says the $322 million award is the largest single plaintiff’s asbestos verdict in U.S. history, according to the plaintiff’s attorney.  The AP story doesn’t say how much of that award was attributable to punitive damages, but this story in the HarrisMartin asbestos litigation reporter (subscription required) says the breakdown was as follows: $22 million in compensatory damages and $300 million in punitive damages.  That’s a ratio of 13.7 to one, which cannot possibly withstand scrutiny under BMW and Campbell.  The award also appears to violate Mississippi law, which places limits on punitive damages based on a sliding scale according to the defendant’s net worth.  The maximum award permitted under that statute (Miss. Code Ann. 11-1-65) is $20 million for a defendant with a net worth in excess of $1 billion.  Any way you slice it, this award doesn’t figure to last very long.

  • San Mateo jury awards $30 million in punitive damages and $547 million in compensatory damages against Swiss pharma giant Actelion

    Reuters is reporting that Swiss biopharmaceutical firm Actelion Ltd. plans to appeal from a jury award of $547 million in compensatory damages and $30 million in punitive damages in a dispute with rival drug company Asahi Kasei Pharma Corp.  Asahi accused Actelion of intentionally interfering with Asahi’s attempts to develop a drug for the treatment of heart disease, in order to preserve Actelion’s dominant position in that market.

    Ordinarily, when a jury awards tens of millions in punitive damages, that award becomes the focal point of the appeal.  But in this case the punitive damages issues will obviously take a back seat to arguments challenging the colossal compensatory award.

    Asahi’s lawyers have issued this press release touting their victory.

  • Virginia jury awards $200 million in punitive damages against Allergan

    Reuters is reporting that a federal district court jury in Virginia has awarded $12 million in compensatory damages and $200 million in punitive damages to a plaintiff who claims he suffered brain damage after receiving injections of Botox made by defendant Allergan.  This is one of the largest U.S. punitive damages awards we’ve seen in a while, but it doesn’t appear to have any chance of standing up.  The case is proceeding under Virginia law, which caps punitive damages at $350,000. 

  • Shahinian v. Cedars-Sinai Medical Center: Court of Appeal declines to review amount of arbitrator’s punitive damages award

    In a prior post we pointed out that there are strong arguments that punitive damage awards issued by arbitrators should be subject to judicial review for constitutional error notwithstanding the general rule against review of arbitration awards for legal error. The California Court of Appeal (Second Appellate District, Division Eight) rejected that argument in a published opinion, re-affirming Rifkind & Sterling, Inc. v. Rifkind (1994) 28 Cal.App.4th 1282 and holding that the amount of punitive damages awarded in a private arbitration is not subject to judicial review for constitutional error because the constitutional limits on punitive damages apply only when a state is imposing punitive damages through a court proceeding, not when a private arbitrator is imposing them in a contractual arbitration proceeding.

    The court rejected the argument that judicial confirmation and enforcement of the arbitrator’s punitive damage award is a form of state action that triggers the protections of the Due Process Clause. But the court did not rule out the possibility that, in some cases, a private arbitration award may be so excessive and contrary to public policy that judicial review is appropriate. The court concluded, however, that the punitive damages award in this case, which was only 1.2 times the amount of the compensatory damages award, did not represent an exceptional circumstance in which judicial review is required.