In May we reported on a case in which a Sacramento jury awarded $1.1 million in compensatory damages and $28 million in punitive damages against a nursing home company. As reported by the Sacramento Bee, the trial judge in that case has denied the defendant’s posttrial motions, declining to vacate or reduce the punitive damages award.
We won’t comment any further on the case because our firm has been retained to represent the defendant on appeal.
Times are tough for the lawyers representing a group of Nicaraguan banana workers who claimed they were harmed by pesticides that Dole used in the 1970’s. Law.com is reporting that a Los Angeles judge has dismissed the last remnants of a verdict in which a jury awarded those workers over $5 million in damages, including $2.5 million in punitive damages.
In November 2007, the jury in Tellez v. Dole awarded $3.2 million in compensatory damages and $2.5 million in punitive damages. The punitive damages award was vacated during posttrial proceedings, but Dole appealed the remaining portion of the award. Dole argued that the case should be thrown out in light of evidence that plaintiffs’ counsel falsified medical records and work certificates and intimidated Dole’s investigators in Nicaragua. The Court of Appeal refused to vacate the judgment, but ruled that a prima facie case of fraud existed and returned the case to the trial court for further proceedings. Court of Appeal Justice Victoria Chaney, who presided over the trial court proceedings on remand because she had been involved in the case before she was elevated to the Court of Appeal, found evidence of fraud, and vacated the entire verdict.
In related news, the Ninth Circuit recently sanctioned prominent plaintiffs’ attorneys Walter Lack and Tommy Girardi for their own fraudulent attempts to enforce a Nicaraguan judgment that was based on the same allegations.
The plaintiffs’ lawyers came very close to collecting millions of dollars from these cases, but they ultimately ended up with nothing.
In May we blogged about a $250 million punitive damages award against drug maker Novartis in an employment discrimination class action. The jury awarded $3.3 million in compensatory damages to 12 plaintiffs, but compensatory damages for the remaining 5,588 plaintiffs remained to be determined. At that rate, the compensatory damages could easily have eclipsed the punitives.
The Washington Post reports that Novartis has settled that case for $152.5 million. So it looks like that case will not be the vehicle for an appellate opinion on the availability of punitive damages in class actions.
This is a very long unpublished opinion, only a small portion of which relates to punitive damages.
In a nutshell, the jury awarded $30 million in compensatory damages against one of the defendants, Guez, who succeeded in knocking out $3.8 million of that award on appeal. Despite the reduction of the compensatory damages, the Court of Appeal (Second Appellate District, Division Seven) declined to order a reduction of the punitive damages. Instead, the court examined the amount of the punitive damages award under state law (because the defendant did not challenge the amount of the award on federal due process grounds) and concluded that the award was not excessive.
It’s not all that surprising that the court affirmed the amount of this punitive damages award, since the compensatory damages, even as reduced, were still much larger than the punitive damages. But it’s interesting that the court did not discuss the case law stating that a reduction in compensatory damages necessarily requires a reduction of the punitive damages award, or at least a new trial on punitive damages. As we have noted before, California courts have taken conflicting positions on this issue. Neither line of authorities is discussed in this opinion.
The on-line Nigerian news outlet Vanguard is reporting that a court in Nigeria has ordered Shell Petroleum Development Company of Nigeria to pay 15.4 billion in Nigerian Nairas for an oil spill that occurred in 1970. That’s equivalent to about $102.7 million in U.S. dollars, if I’ve done the currency conversion correctly.
The Vanguard story says 10 billion of the award is for “punitive damages . . . for general inconveniences, acid rain, pollution of underground water and hardship to the population . . .” That doesn’t really sound like “punitive damages” as we know them in the U.S.; it sounds more like compensation for actual injuries.
I have no idea whether Shell has any avenue for challenging the award on appeal, whether it might succeed in such a challenge, or whether the plaintiffs will be able to enforce the award if it sticks. I’ll try to keep an eye out for more details on this story.
We previously blogged about the Senate’s recent approval of a measure to prevent corporations from taking tax deductions for punitive damages awards.
Law Professors Gregg Polsky and Dan Markel criticize that proposal in a New York Times op-ed entitled “Damages Control.” Profs. Polsky and Markel argue that the proposal won’t work because parties will still be able to settle punitive damages cases, and the defendants can characterize the settlements as payments of compensatory damages, which will remain deductible.
Polsky and Markel contend that, instead of eliminating the tax deduction, we should allow plaintiffs’ lawyers to explain to juries that punitive damages awards are tax deductible, which would then encourage juries to award higher amounts to offset the fact that the award will be deductible. Polsky and Markel concede, however, that “tax-aware” juries would have to know the defendant’s marginal tax rate in order to figure out the appropriate amount to offset the deduction.
It seems to me that the jury would have to know more than that; the jury would have to understand the defendant’s overall tax situation to calculate any such offset. If the defendant were not expected to report any income for the year in question, would any offset be appropriate? Would the jury be asked to consider the effect of carry-overs from one tax year to the next? Would the jury be asked to determine the defendant’s expected tax liability, based on speculation about what was likely to occur during the remainder of the tax year?
California courts decided long ago that juries should not be asked to consider the tax consequences of any damages awards, because juries would have to engage in “intense speculation about the future” in order to accurately adjust their awards. (See Rodriguez v. McDonnell Douglas Corp. (1978) 87 Cal.App.3d 626, 667-668.) Any proposal that increases speculation by the jury is probably not a good idea.
In this published opinion, the California Court of Appeal (Second Appellate District, Division Three) reversed a $350,000 punitive damages award because the jury’s factual findings were fundamentally inconsistent.
The plaintiff alleged that the defendant, his former employer, made intentional misrepresentations in order to lure him to to the U.S. to work. In a confusing a contradictory verdict, the jury found that the defendant did not make the alleged misrepresentations, but also found that the defendant acted with malice, oppression, or fraud (the prerequisites for punitive damages under Civil Code section 3294). The Court of Appeal concluded that those findings were fundamentally inconsistent, requiring a new trial.
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.
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.
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