California Punitives by Horvitz & Levy

  • Holmes v. Burke: punitive damages affirmed against defendant with negative net worth

    This blog has reported on many decisions in which the California Court of Appeal reversed a punitive damages award because the plaintiff failed to introduce meaningful evidence of the defendant’s financial condition.  The appellant in this unpublished opinion from the Fourth Appellate District, Division Three, was hoping to add another decision to that list, but the court concluded that the plaintiff’s evidence, although imperfect, was enough to constitute “meaningful” evidence.   

    The interesting twist here is that the defendant had a negative net worth, but the court affirmed anyway.  The record showed that the defendant had $120,000 in net annual income, but had no significant assets (his home is underwater and proceeding to foreclosure) and a tax liability approaching $2 million.  Nevertheless, the court affirmed the punitive damages award because the defendant waived any argument that the punitive damages were excessive.  It seems that the defendant argued only that the record lacked meaningful financial condition evidence, but did not argue that the award was excessive in relation to the defendant’s financial condition evidence. 

    UPDATE:  Odds are good that, if the defendant had raised an excessiveness argument, the court would have reversed the punitive damages, based on what the same court did in another case last year.

  • Martinucci v. So. Cal. Permanente: Trial court properly vacated a $7.5 million punitive damages award

    This unpublished opinion from the California Court of Appeal (Second Appellate District, Division Two) affirms a trial court order tossing out a $7.5 million punitive damages award in an employment case. 

    The plaintiff, a doctor of radiology, claimed he was fired from a Kaiser medical facility because he insisted on the highest standards of patient care, causing resentment among other personnel and staff.  He sued for retaliatory termination in violation of public policy and various other claims.  After a three-week trial, a jury awarded $3.9 million in compensatory damages and $7.5 million in punitive damages.

    The defendant moved for a new trial and for judgment notwithstanding the verdict (JNOV).  The trial court granted a complete new trial on various grounds, including instructional error.  The court also took the issue of punitive damages off the table for the retrial by granting a JNOV on that issue.  The court found that the plaintiff failed to meet his burden of proving malice, oppression, or fraud, the prerequisites to punitive damages under Civil Code section 3294.

    The Court of Appeal affirmed both the new trial order and the JNOV on punitive damages, agreeing that the plaintiff presented no evidence of malice.  The court also rejected the plaintiff’s argument that his allegations of retaliatory discharge amounted to “per se malice and/or oppression.” The court said he waived that argument by not raising it when the trial court asked him to identify all evidence of malice, fraud or oppression.  Instead of finding waiver, the court could have just said that “per se malice and/or oppression” does not exist under California law.

  • Wyeth v. Scofield cert. petition raises punitive damages issues

    Drug maker Wyeth has filed a petition for certiorari in Wyeth v. Scofield, asking the U.S. Supreme Court to decide two questions:

    1. Whether, when a verdict has been tainted by a jury’s passion or prejudice, due process requires a trial court to grant a new trial instead of a remittitur.

    2.Whether, and in what circumstances, a trial court violates due process when it awards a substantial amount in compensatory damages but nevertheless proceeds to award punitive damages in an amount exceeding the one-to-one ratio indicated in State Farm Mutual Automobile Insurance Co. v. Campbell, 538 U.S. 408 (2003) and Exxon Shipping v. Baker, 554 U.S. 471 (2008).

    California courts have already grappled with the first question as a matter of state law.  The California Supreme Court held in Schelbauer v. Butler Manufacturing Co. (1984) 35 Cal.3d 442, 454 that the proper use of a remittitur, as opposed to ordering a new trial, is “confined to cases in which an excessive damage award [is] the only error in the jury’s verdict.”   And the Court of Appeal held in Fidler v. Hollywood Park Operating Co. (1990) 223 Cal.App.3d 483, 489 that courts should order a new trial rather than a remittitur in cases where it appears the jury was influenced by passion and prejudice: “[t]he fairest result is to remand the matter for a new trial.”  (See also Tan Jay Internat., Ltd. v. Canadian Indemnity Co. (1988) 198 Cal.App.3d 695, 705 [trial court properly ordered a new trial where it appeared that “the jury was impermissibly swayed by passion and prejudice”].)  Although California is fairly well settled on the issue, it couldn’t hurt to have a definitive opinion on this issue from the U.S. Supreme Court.      

    The second issue is one where courts nationwide have been all over the map.  The cert. petition does an excellent job of listing all the cases in which courts have, or have not, adhered to the U.S. Supreme Court’s admonition that a one-to-one ratio is appropriate in cases involving “substantial” compensatory damages award.  For the most part, California courts have followed the Supreme Court’s guidance, in cases like Jet Source Charter v. Doherty, Walker v. Farmers, and most recently, the California Supreme Court’s decision in Roby v. McKesson.  But we have observed a few instances in which, in unpublished opinions, our courts have affirmed punitive damages awards that exceeded an already substantial compensatory award.  (See our prior posts here and here.)

    The Supreme Court recently denied another petition asking for further guidance on State Farm‘s one-to-one ratio.  We’ll see if this one fares any better.

    Hat tip: Drug & Device Law

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

    Johnson & Johnson has filed a petition for review with the California Supreme Court in Johnson & Johnson v. Superior Court, the case in which the California Court of Appeal (Second Appellate District, Division Four) held that punitive damages could be imposed on Johnson & Johnson for failing to include enough details in its warning labels for ibuprofen.  The labels warned about the possibility of severe allergic reactions, but didn’t specifically warn about skin reddening, blisters, or rash.  You can view the Supreme Court’s on-line docket to track the status of the petition.  As I said in earlier posts, the Court of Appeal’s opinion allowing plaintiffs to proceed with a punitive damages claim, in a case that seems marginal at best on the issue of liability, is inconsistent with California’s stringent requirements for the proof necessary to recover punitive damages.

    Related posts:

    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

  • Assembly Judiciary Committee rejects bill that would prevent juries from deciding the amount of punitive damages

    The Judiciary Committee of the California Assembly has rejected AB 556, which would have given California’s trial judges the exclusive authority to decide the appropriate amount of punitive damages, even in cases that are otherwise decided by a jury.

    Related post:

    Proposed bill would require that judges, not juries, determine the amount of punitive damages in California

  • L.A. jury awards $19 million in punitive damages and $35,000 in compensatory damages in insurance bad faith case

    Bloomberg Businessweek is reporting that a jury in Los Angeles has awarded a former Marine $19 million in punitive damages and $35,000 in compensatory damages, in an insurance bad faith case against Stonebridge Life Insurance.  The plaintiff claimed that Stonebridge unreasonably refused to pay for a lengthy hospital stay, agreeing to pay only for 19 days out of a 109-day stay.

    Stonebridge says it intends to appeal.  An appeal may not be necessary, however, if Stonebridge files post-trial motions asking the trial court to reduce or vacate the punitive damages.  Although there is some case law stating that a low compensatory damages award can support a higher punitive-to-compensatory ratio, nothing would support the extreme ratio here.  The trial court may conclude that the punitive is so high and so disproportionate to the actual harm that it raises a presumption that the jury acted out of passion and prejudice.

  • Bill on punitive damages in products cases fails to pass Senate Judiciary Committee

    The Judiciary Committee of the California Senate held a hearing yesterday on Assembly Bill 158, which would eliminate punitive damages in products liability cases in which the defendant complied with applicable regulations.  The committee did not approve the bill, but will consider it again at a future hearing.

    Related posts:

    Proposed cap on punitive damages in California is deleted from amended version of bill

    Another year, another proposal to cap punitive damages in California

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

    A week ago we reported on the unpublished opinion in Behr v. Redmond, in which the Court of Appeal reduced a jury’s award of compensatory damages from $4 million to $1.6 million, without disturbing the jury’s award of $2.8 million in punitive damages.  As we noted at the time, the opinion’s treatment of the punitive damages conflicts with published cases, making the court’s decision not to publish its opinion rather surprising.

    Today, the Court of Appeal ordered publication of its opinion.  It appears from the court’s online docket that neither of the parties requested publication; the court ordered publication on its own motion.

    Now that there is a split in California case law about the proper treatment of a punitive damages award following a large reduction in compensatory damages, this case may end up in the California Supreme Court.

  • Proposed bill would require that judges, not juries, determine the amount of punitive damages in California

    California Assembly member Don Wagner has introduced a bill that would give trial courts exclusive authority to determine the amount of punitive damages awards in California.  The bill, Assembly Bill 556, provides that juries will continue to determine whether punitive damages can be imposed, i.e., juries will still decide whether the plaintiff has proved by clear and convincing evidence that the defendant acted with malice, oppression, or fraud.  But if the jury answers “yes” to that question, the jury would not be permitted to determine the amount of punitive damages.  That would be determined by the judge.

    This is the first time I have seen anyone propose this type of bill in California.  Someone seems to propose a cap on punitive damages every year, but I don’t recall seeing this one before.  This bill is scheduled for a hearing before the Assembly Judiciary Committee on March 22.

  • Proposed cap on punitive damages in California is deleted from amended version of bill

    We previously blogged about Assembly Bill 158, which, in its original form, would have limited punitive damages in California to three times compensatory damages.  The bill also included proposals to (1) eliminate punitive damages in products liability cases in which the defendant could establish that its product was in compliance with applicable regulations, and (2) limit noneconomic damages to $250,000 in all negligence cases.

    An amended version of the bill is now scheduled for a hearing on March 1315.  The amended version of the bill, however, no longer includes the caps on punitive damages or noneconomic damages.  It contains only the limitation on punitive damages for products liability cases.