California Punitives by Horvitz & Levy

  • Law professors win $5M in punitive damages

    The ABA Journal reports that two law professors won a large jury verdict against West Publishing, including compensatory damages of $90,000 each and punitive damages of $2.5 million each.  That’s a ratio of nearly 28 to 1.

    The ABA Journal story says the professors, who authored a West treatise on criminal procedure, asked for a pay increase to continue providing the annual updates for the treatise.  They claim West refused to increase their pay but continued to list them as the authors of the updates, even though the work was performed by others and was below their standards.

    If I were one of these professors, I wouldn’t be spending my millions just yet.  This doesn’t sound like the type of misconduct that could come close to supporting such a high ratio of punitive to compensatory damages.  Even if this case involves intentional misconduct (and I don’t know whether it does), it doesn’t seem to implicate the other indicia of reprehensibility such as physical harm, or preying upon a financial vulnerable victim.  It sounds more like a garden variety fraud case with purely economic damages, for which a low single-digit ratio would be the maximum.  I’d be very surprised if the punitive damages could survive post-trial and appellate review. 

    Three Geeks and a Law Blog has links to the complaint, the verdict form, and the judgment.

  • Massachusetts jury awards $81M in punitive damages to smoker’s estate

    Boston.com reports that a jury has awarded $81 million in punitive damages, on top of $50 million in compensatory damages, to the estate of Marie Evans, a lifelong smoker who began smoking at age 13.  The jury also awarded $21 million in compensatory damages to Evans’ son. 

    This award tops the recent $72 million punitive damages award in the Florida smoker litigation.  The Boston.com article says the compensatory damages award alone is believed to be the largest such award ever delivered by a jury in a wrongful death lawsuit against a tobacco company, and the largest total award standing today. Prior juries have awarded much higher punitive damages awards, but none of them survived appeal.

  • French Supreme Court rules that American punitive damages awards are enforceable, as long as they don’t exceed compensatory damages

    Conflict of Laws has an interesting post about a recent decision by the French Supreme Court for private and criminal matters (Cour de Cassation).  According to the post, and I’ll have to take their word for it since I can’t read French, the French court held that foreign punitive damages awards do not violate public policy per se.  That’s a departure from the French appellate decision discussed here.

    The French Supreme Court went on to say, however, that a foreign punitive damages award would violate public policy if it were disproportionate to the plaintiff’s harm.  The particular punitive damages award at issue (awarded by a California jury judge) was $1.46 million.  The compensatory damages award was $1.39 million.  The French Supreme Court found the punitive damages award to be “clearly” disproportionate to the actual harm, and therefore unenforceable. 

    Thanks to professor François-Xavier Licari for alerting me to this story.

  • Vargas v. Martinez-Senftner Law Firm: defendant who fails to show up for trial cannot complain about plaintiff’s failure to present financial condition evidence

    In this unpublished opinion, the California Court of Appeal (Third Appellate District) affirms $300,000 in punitive damages against three defendants.

    The court rejects the defendants’ argument that the evidence was insufficient to support a finding of malice, fraud or oppression.  The court also rejects one defendant’s argument that the record contained insufficient evidence of his financial condition.  As we have observed, California defendants often get punitive damages reversed on this basis.  But not this time.  Here, the defendant in question did not appear for trial.  Plaintiff served him with a notice to appear, and he moved to quash the subpoena on the ground that he was not subject to the court’s jurisdiction because he now resides in Germany.  The trial court disagreed and upheld the validity of the subpoena.  But the defendant still refused to appear for trial.

    The Court of Appeal concluded that the defendant’s failure to appear deprived the plaintiff of a meaningful opportunity to meet her burden of proof on the issue of the defendant’s financial condition.  And because the defendant’s failure to appear was a violation of a court order, the defendant forfeited his right to complain about the lack of such evidence on appeal.  (See Mike Davidov v. Issod (2000) 78 Cal.App.4th 597, 608-609 [defendant who disobeys a valid court order to produce information on his financial condition waives the right to object to a punitive damages award for lack of such evidence].)

  • Cert. denied in Shell Oil v. Hebble

    Today, the U.S. Supreme Court denied Shell’s petition for certiorari in Shell Oil v. Hebble.  (See today’s order list.)  Back when the Court called for an opposition to this petition, and re-listed another petition raising punitive damages issues, it appeared that the Court might be interested in wading into the issue of punitive damages once again.  Apparently not.

  • Shell Oil v. Hebble cert. petition up for consideration today

    The cert. petition in Shell Oil v. Hebble, which we’ve been tracking on this blog, is on the U.S. Supreme Court’s conference list today.  That means we’re likely to have a ruling on Monday morning, unless the Court re-lists the case for a later conference.

    Links: Petition for certiorari, National Association of Manufacturers (NAM) amicus brief, Supreme Court docket.

    Related posts:

    “Will new justices remake Court’s stance on punitive damages?”

    U.S. Supreme Court requests response to cert. petition in Shell v. Hebble

    Pending cert. petitions raise punitive damages issues

    Oklahoma jury hits Shell with $53 million in punitive damages for underpayment of royalties

  • Cert. granted in Dukes v. Wal-Mart; review limited to first question plus new issue added by the Court

    The U.S. Supreme Court today granted Wal-Mart’s petition for certiorari in the Dukes case.  Wal-Mart’s petition raised two issues, but the Court’s order granting certiorari states that review will be limited to the first issue: “Whether claims for monetary relief can be certified under Federal Rule of Civil Procedure 23(b)(2)—which by its terms is limited to injunctive or corresponding declaratory relief—and, if so, under what circumstances.”  As we noted in a previous post, the Supreme Court’s answer to this question could affect whether punitive damages are subject to class certification.

    The Supreme Court declined to answer a second question raised by the petition: “Whether the certification order conforms to the requirements of Title VII, the Due Process Clause, the Seventh Amendment, the Rules Enabling Act, and Federal Rule of Civil Procedure 23.”  The Court did, however, add a second question of its own: “Whether the class certification ordered under Rule 23(b)(2) was consistent with Rule 23(a).”

    Links:

    Supreme Court’s on-line docket

    Wal-Mart’s cert. petition (via SCOTUSblog)

    Related posts:

    Wal-Mart v. Dukes cert. petition redistributed for Dec. 3 conference

    Wal-Mart v. Dukes cert. petition up for consideration next week

    Cert. Petition in Wal-Mart v. Dukes raises class certification issues that may impact whether punitive damages are subject to class treatment

    Ninth Circuit’s Dukes v. Wal-Mart decision addresses class certification of punitive damages claims

     

  • Are contracts limiting punitive damages enforceable?

    One of our readers sent us an email with an interesting question about whether the law permits enforcement of contractual provisions that purport to limit or eliminate punitive damages claims.  I must confess I’m not aware of any authority directly addressing this question, but here are my initial thoughts:

    The issue probably doesn’t come up very often, because in most if not all U.S. jurisdictions, punitive damages are unavailable in a lawsuit for breach of contract. For that reason, parties to the contract would not ordinarily include any provisions in the contract regarding punitive damages.

    Despite the unavailability of punitive damages for breach of contract, parties to a contract might want to include a provision about punitive damages, in anticipation of the possibility that one of the parties might sue the other for a tort claim independent of the contract.  In California, we have a statute that prohibits releases that are intended to “exempt” a party from responsibility for his own fraud or willful misconduct. (California Civil Code section 1668.)  Some might argue that, under section 1668, contracts purporting to eliminate liability for punitive damages would be unenforceable because punitive damages necessarily involve willful conduct.  But that argument would work only if a court construes a contractual limitation on one element of damages to be an “exemption” from responsibility. Arguably, a limitation is not the same as an exemption. I am not aware of any case addressing that question.

    Arbitration contracts are one type of contract for which limits on punitive damages might be enforceable,  because arbitration contracts are subject to special deference. The California Supreme Court has held that arbitration clauses cannot eliminate “statutorily imposed remedies such as punitive damages and attorney fees.”  (Armendariz v. Foundation Health (2000) 24 Cal.4th 83, 103.)  But in Armendariz the plaintiff’s liability claim was based on a statute (the California Fair Employment and Housing Act).  What happens when a plaintiff is asserting a common law tort claim?  The plaintiff in such a case might say that the language in Armendariz, taken literally, prohibits any sort of arbitration clause eliminating punitive damages, since all punitive damages claims in California are statute-based (Civil Code 3294).  But if that’s what the California Supreme Court meant, why didn’t they just say that?  The Court’s focus on statutory-based claims suggests their analysis might be limited to that context.  Even if Armendariz applies to all types of punitive damages claims, there would still be an argument that an arbitration clause limiting (as opposed to eliminating) punitive damages would still be permissible. 

    These are just my preliminary thoughts.  If any readers have thoughts or are aware of relevant authorities, I’d love to hear about them.  Thanks to professor François Xavier Licari, of the University of Metz law faculty, for raising the issue.

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

    Home of the Colorado Supreme Court

    Law Week Colorado reports that the Colorado Supreme Court will hear oral arguments on Thursday in Blood v. Qwest Communications. The case presents the question of whether an $18 million punitive damages award is excessive in violation of due process. It’s surprising that the issue of excessive punitive damages would make it to the Colorado Supreme Court at all, because Colorado has a statute capping punitive damages at a 1-to-1 ratio. In this case, however, the compensatory damages are so large ($22 million), that the $18 million award actually falls below the cap.

    Link: Chamber of Commerce Amicus Brief in Support of Defendant (courtesy of http://www.appellate.net/)

    UPDATE: in a May 23, 2011 decision, the Colorado Supreme Court upheld the punitive damages award in this case, finding the defendant’s failure to inspect its utility poles was sufficiently reprehensible to justify the $18 million award on top of the $22 million in compensatory damages owed to a utility worker who was paralyzed when a pole collapsed on him.

  • Turman v. Turning Point: order striking punitive damages claim affirmed

    We have observed that California defendants sometimes overlook the possibility of moving to strike punitive damages claims at the pleading stage.  In this unpublished opinion, the defendant filed such a motion, the trial court granted it, and the California Court of Appeal (Sixth Appellate District) affirmed. The court did so even though it awarded the plaintiff a new trial on her compensatory damages claim, on the ground that no substantial evidence supported the jury’s defense verdict (you don’t see that one every day).

    UPDATE:  Here’s another unpublished opinion issued by the Sixth District on the same day, affirming an order granting a motion to strike punitive damages: Foresta v. Board of Directors of Homestead Park.  We’ve only seen a few California opinions like this during the three years since this blog was launched, so it’s quite surprising to see the same court issue two on the same day.