We report on every California punitive damages decision, published or unpublished, but sometimes there isn’t much to say. In this unpublished opinion, the California Court of Appeal (Fourth Appellate District, Division One) affirms a trial court’s decision to strike a plaintiff’s claim for punitive damages on the ground that the facts alleged in the complaint, even if true, could not support a finding of malice, fraud, or oppression. Yawn.
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Oregon Supreme Court Reverses $100 Million Punitive Damages Award Against Philip Morris
Here’s a case that proves the adage, “If at first you don’t succeed, try, try again.”
As readers of this blog will recall, Philip Morris was unable to persuade the Oregon Supreme Court to overturn a $79.5 million punitive damages award in the Williams case, even after the U.S. Supreme Court had seemingly ruled in Philip Morris’ favor.
In Schwarz v. Philip Morris, the Oregon Supreme Court has ordered a new trial for nearly the same error at issue in Williams: a defect in the jury instructions on the question of imposing punitive damages for harm to nonparties. In Schwarz, as in Williams, the Oregon Supreme Court ruled that the trial court properly rejected Philip Morris’ proposed instruction because it was not “accurate in all respects” as required by Oregon law. But the Schwarz court agreed with Philip Morris that the trial court erred by giving the jury an standard pattern instruction that improperly allowed the jury to use evidence of harm to others in arriving at its punitive damages verdict.
The ruling is a big win for Philip Morris. The jury in Schwarz had awarded $169,000 in compensatory damages and $150 million in punitive damages, reduced to a mere $100 million by the trial court. As a result of the Supreme Court’s decision, the compensatory damages award will stand, but the issue of punitive damages will be retried.
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Florida Appellate Court Reverses $351 Million Punitive Damages Award
This Florida appellate opinion reverses a judgment that awarded $159 million in compensatory damages and $351 million punitive damages award against accounting firm BDO Seitman for an allegedly botched audit. The court ordered a new trial because it concluded that the trial court unfairly “trifurcated” the original trial, allowing the jury to make a key finding relevant to the issue of punitive damages before the jury had even considered liability issues such as causation and reliance.
Related post:
Foreign Corporation Not Liable for Punitive Damages Against U.S. Affiliate
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San Diego Jury Awards Over $10 Million in Punitive Damages Against Title Companies
The New York Times reports that a San Diego jury has awarded the $1.1 million in compensatory damages and $5.7 million in punitive damages against the Chicago Title Company and the Chicago Title Insurance Company for their role in an allegedly fraudulent real estate transaction. The story reports that the same jury also awarded $2.1 million in compensatory damages and $5.2 million in punitive damages against Rollo Richard Norton II, the alleged mastermind of the fraudulent scheme.
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Trattman v. Key: Punitive Damages Claim Reinstated Because Trial Court Fumbled Bifurcation Procedure
In this unpublished opinion, the California Court of Appeal (Second Appellate District, Division 8) corrects an obvious error by the trial court.
The case involves Civil Code section 3295, which gives defendants the right to request a bifurcated trial on punitive damages. If a defendant invokes its rights under section 3295, the trial court must bifurcate the trial so that the jury does not hear any evidence of the defendant’s financial condition (or any other evidence relating to the amount of punitive damages), until the trier of fact has already ruled in the plaintiff’s favor on liability and ruled that the defendant acted with malice, oppression, or fraud, the prerequisites for awarding punitive damages under Civil Code section 3294.
The defendant in this case requested bifurcation under section 3295. The first phase went forward and the trial court, acting as the trier of fact, ruled in favor of the plaintiff on liability and found that the defendant had acted with malice, oppression, or fraud. But the court concluded that the plaintiff waived his right to punitive damages by failing to introduce evidence of the defendant’s financial condition during the first phase.
I can’t figure out what the trial court could have been thinking. Under section 3295, the plaintiff was prohibited from presenting any evidence of the defendant’s financial condition during the first phase of trial. Clearly the plaintiff did not waive any rights by complying with the plain language of the statute. That’s exactly what the Court of Appeal said, and reversed the case for a limited retrial on the punitive damages. (See our prior discussion of problems associated with limited retrials on punitive damages.)
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Cert. Denied in Wyeth v. Scroggin (Constitutionality of Partial Retrials)
A few months ago we blogged about the cert. petition in Wyeth v. Scroggin. Today, the Supreme Court denied that petition (see the order list). We’ll have to wait a while for the Supreme Court (or some other court) to tackle the problems that can arise when a new trial is limited to the issue of punitive damages.
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Texas Jury Hits JDA Software with Big Punitive Damages, But How Big?
Various media outlets are reporting that a jury in Dallas has awarded $246 million in damages against DJA Software Group in a software-licensing dispute with Dillard’s Inc. Exactly how much of that award is punitive damages, I can’t tell.
The Wall Street Journal reports that the jury awarded $238 million in punitive damages. The Associated Press, however, says the jury awarded $238 million in “indirect or punitive damages.” Reuters reports that the jury awarded $238 million in “consequential, special or punitive damages.”
To the non-legal press, those might not seem like significant differences. But for purposes of analyzing whether the award is excessive, it obviously makes a big difference whether the $238 million was entirely punitive damages, or whether it included some compensatory damages. If the jury really awarded $8 million in compensatory damages and $238 million in punitive damages, JDA could virtually guarantee that the punitive damages would be overturned as excessive. Under that scenario, the punitive damages award would quite possibly be reduced to $8 million, resulting in a 1-to-1 ratio.
But if a big chunk of the $238 million includes compensatory damages, the analysis changes dramatically. The award might not be reduced at all, if the total compensatory damages already exceed the punitive damages.
Bradenton.com, the website for the Bradenton Herald, contains a press release from Susman Godfrey, counsel for Dillard’s, indicating that the jury actually awarded $96 million in various types of compensatory damages and $150 million in punitive damages. Assuming that’s accurate, the punitive damages may be excessive, but Dillard’s may still end up with a total award in excess of $100 million (assuming there are no other defects in the award besides the excessiveness of the punitive damages).
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New Law Review Article on Punitive Damages After Exxon Shipping v. Baker
Professor Alexandra Klass of the University of Minnesota Law School has posted an article on SSRN entitled “Punitive Damages After Exxon Shipping Company v. Baker: The Quest for Predictability and the Role of Juries.” Among other things, it contains a collection of lower court opinions that have followed the reasoning of Exxon Shipping outside the maritime context.
Here’s the abstract:
This Symposium Essay considers the impact of the Supreme Court’s 2008 decision in Exxon Shipping Company v. Baker on the ability of juries to award punitive damages in a manner that comports with the law. In that case, the Court continued its two-decade crusade to place federal limits on punitive damages awards. The Exxon case was a federal maritime case arising out of the 1989 grounding of the Exxon Valdez in Prince William Sound, Alaska, resulting in arguably the biggest environmental disaster in U.S. history. In its decision, the Court for the first time identified “unpredictability” as the fundamental problem with punitive damages today. It then set out to make those damages more predictable by reaffirming the need for very low ratios, in this case 1:1, between punitive damages and compensatory damages. In this Essay, I argue that the Court’s quest for predictability has resulted in reviewing courts being forced to rely too heavily on the facts of other cases involving similar claims in order to determine if the punitive damages award in the case at bar is constitutional. Such a system is fraught with error and, more importantly, creates a situation where juries cannot possibly render punitive damages verdicts that meet due process requirements because the very evidence they need to assess predictability – the facts and damage awards in other cases – cannot be made available to them.
Part I provides a brief discussion of punitive damages generally and the Court’s recent effort to place federal constitutional limits on those damages. Part II discusses the Exxon case itself and highlights the Court’s focus on “unpredictability” as the fundamental problem with punitive damages. Part III shows how lower courts have applied the Exxon case. This Part reveals that even though courts recognize that the Exxon case is a federal maritime case rather than a substantive due process case, courts have embraced the call for predictable awards by ensuring punitive damages awards are in line (both as a matter of ratio and as an absolute dollar amount) with other similar cases. Part IV illustrates how the quest for predictability requires information on other similar cases that cannot be given to juries, and how the premium now placed on predictable damages awards makes it difficult, if not impossible, for juries to arrive at constitutional verdicts.
Hat tip: TortsProf Blog.
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Media Misses the Boat on Parallels Between BP Oil Spill Fund and Exxon Valdez Punitive Damages Litigation
Many of the recent media reports about the Gulf of Mexico oil spill have, understandably, compared that spill to the Exxon Valdez disaster. But there’s one recurring theme in the media reports that is a bit misleading.
The press often reports that the Valdez victims had to wait 20 years to be compensated, because Exxon litigated the case all the way to the Supreme Court. For example, this story in the Wall Street Journal discusses the $20 billion fund that BP is establishing to satisfy claims arising from the gulf disaster, and says that the fund will speed up payouts to claimants, who won’t have to wait 20 years like the Valdez claimants did.
That’s misleading because the award ExxonMobil litigated for 20 years was a punitive damages award. It had nothing to do with compensating the plaintiffs. Like all punitive damages awards, the Exxon Valdez punitive award was a windfall to the plaintiffs. ExxonMobil paid all the compensatory damages years before the punitive damages litigation made its way to the Supreme Court. So it doesn’t really make sense to compare that litigation to the fund being established by BP. The BP fund will be for compensation, not for punitive damages.
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“Punitive Damages: Inching Towards Predictability”
I wrote a short article for this month’s online edition of Claims magazine.