California Punitives by Horvitz & Levy

  • 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.

  • Cal. Supreme Court dismisses review in Nelson v. Exxon Mobil (assignability of punitive damages)

    The Supreme Court has granted Exxon Mobil’s motion to dismiss review in Nelson v. Exxon Mobil, which raised the question whether punitive damages claims could be assignable in certain circumstances.  The text of the order (which you can view on the court’s on-line docket) confirms that the motion was part of a settlement between the parties.  The docket does not indicate that either party has asked the Supreme Court to reinstate the published status of the Court of Appeal’s opinion, so the opinion remains depublished and nonprecedential.

    Interestingly, the Supreme Court had to appoint a temporary justice (Presiding Justice Barbara Jones of the First Appellate District) to rule on the motion to dismiss.  As noted in our prior post, the court is short-handed due to the retirement of Justice Moreno, and three of the remaining six justices on the court were recused from participating in this case.  So a temporary justice was needed to provide the fourth vote necessary to dismiss review.

    Today’s Daily Journal (subscription required) has a story about the dismissal, as an illustration of the complications created by the open seat on the court.

    Related posts:

    Exxon Mobil asks California Supreme Court to dismiss case on assignability of punitive damages

    California Supreme Court grants review in case involving assignability of punitive damages

    Nelson v. Exxon Mobil: punitive damages claims can be assigned

  • 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

    The defendant in Behr v. Redmond has filed a petition for review with the California Supreme Court, asking the court to decide the following three issues:

    1. When an appellate court substantially reduces a compensatory damages award, must it remand for a new trial on the corresponding punitive damages award—which the jury calibrated in part on the basis of the excessive compensatory award—or may it simply affirm the punitive award?

    2. Does article I, section 16 of the California Constitution create a constitutional right to a jury trial on punitive damages?

    3. Does a 1.75-to-i ratio of punitive to compensatory damages violate the Fourteenth Amendment’s due process clause, where non-economic damages overwhelmingly predominate in the compensatory award?

    As mentioned in prior posts, there is a split of Court of Appeal authority on the first question.  As the petition explains, the lower courts have taken five different approaches on this issue: (1) send the case back to the trial court to conduct a new trial on punitive damages, (2) reduce the punitive damages award to maintain the jury’s original punitive-to-compensatory ratio, (3) remand to the trial court so that the trial court, not a jury, can decide whether to retry, reduce, or let stand the punitive damages award, (4) affirm the trial court’s decision to leave the punitive damages award undisturbed where the trial court had itself ordered a reduction of compensatory damages and determined that no reduction of the punitive damages was necessary, and (5) affirm the punitive damages award so long as the Court of Appeal finds the award is not excessive.

    There is no question in my mind that this is a recurring issue of statewide importance that merits Supreme Court review.  I’m going out on a limb to predict the Supreme Court will grant review.  (So far I’m two for two on such predictions; see here and here).

    Related posts:

    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

  • Miller v. Faiz: California Court of Appeal considers an excessiveness argument not raised below, and cuts $250,000 punitive damages award in half

    This unpublished opinion from the California Court of Appeal (Fourth District, Division Three) addresses a recurring procedural question: can an appellate court consider a defendant’s argument that a punitive damages award is excessive even if the defendant did not raise that argument in a new trial motion?

    Ordinarily, a defendant who wants to argue excessive damages must do so in a new trial motion, or waive the right to make the argument on appeal.  The idea is that the trial court is in the best position to evaluate any factual disputes regarding the appropriate amount of damages.

    The plaintiff tried to invoke that rule here, to argue that the defendant had waived any right to challenge the amount of punitive damages appeal by not raising that argument in a new trial motion.  The Court of Appeal disagreed, holding that a constitutional challenge to the amount of a punitive damages award is a purely legal issue that the Court of Appeal reviews de novo, and therefore can be considered for the first time on appeal.  (That seems entirely correct to me, but I’m not sure any published California opinion says so.)

    The court’s ruling on that procedural issue turned out to be important for the parties to this case, because the court went on to determine that the jury’s $250,000 punitive damages award (ratio of 8.3 to 1) was excessive, and that any award in excess of $125,000 (ratio of 4.2 to 1) would be unconstitutional.

    Justice Aronson dissented, disagreeing with the court’s decision to reduce the award. In his view, the defendant’s conduct (fraudulently promising to take care of the plaintiff’s elderly father, and then neglecting him) was sufficient to support the jury’s award.  The dissenting opinion also cites the defendant’s wealth as a basis for affirming a higher award, which seems inconsistent with the U.S. Supreme Court’s statement in State Farm v. Campbell that “[t]he wealth of a defendant cannot justify an otherwise unconstitutional punitive damages award.”

  • Exxon Mobil asks California Supreme Court to dismiss case on assignability of punitive damages

    Exxon Mobil has asked the California Supreme Court to dismiss review in Nelson v. Exxon Mobil, the case in which the Court of Appeal held that plaintiffs in certain cases can assign their claims for punitive damages.  Exxon Mobil persuaded the Supreme Court to grant review in the first place, so Exxon Mobil’s motion to dismiss suggests that the parties have reached a settlement.  (We’re just speculating here; we have no first-hand information about the reason for the motion).

    The short-handed Supreme Court (which has only six justices following the retirement of Carlos Moreno) will probably be more than happy to grant the motion to dismiss.  To reach a decision in this case, the Supreme Court would have needed to appoint four temporary justices: one to replace Justice Moreno, two to replace Justices Chin and Baxter who recused themselves from participation in this case when review was granted, and one to replace Chief Justice Cantil-Sakauye, who is disqualified from participation in this case because she wrote the Court of Appeal’s opinion when she was still a member of that court.

    Related posts:

    California Supreme Court grants review in case involving assignability of punitive damages

    Nelson v. Exxon Mobil: punitive damages claims can be assigned

  • Atlas Flooring v. Porcelanite: 9th Circuit affirms $25M punitive damages award

    In this memorandum disposition, the Ninth Circuit affirms a $25 million punitive damages award in a business dispute involving claims of fraud and intentional interference.  That’s an awfully big number for conduct that caused purely economic harm.

    The panel, composed of Judges O’Scannlain, Trott and Campbell (a federal district court judge sitting by designation), affirmed the award based on the egregious nature of the defendant’s conduct and the low ratio (1.5 to one) of punitive to compensatory damages.  But the memorandum disposition doesn’t elaborate on the facts, so it’s hard to tell why the court thought this case warranted a departure from the statement in State Farm v. Campbell that cases with substantial compensatory damages will often support no more than a 1 to 1 ratio.

  • Tran v. Lecong: $100,000 in punitive damages vacated due to lack of meaningful financial condition evidence

    Here we go again: this unpublished opinion from the California Court of Appeal (Second Appellate District, Division Five) reverses a punitive damages award because the plaintiff failed to introduce meaningful evidence of the defendant’s financial condition. “There is little evidence of [defendant]’s actual assets or income and no evidence of his liabilities. . . . Accordingly, the punitive damage award is reversed and retrial is unnecessary.”