California Punitive Damages – Page 176 – News and commentary on punitive damages litigation in California and nationwide.

June 18, 2010

Senate Adopts Proposal to Eliminate Tax Deduction for Punitive Damages

A few months ago we blogged about a proposed bill that would prevent defendants from treating payments of punitive damages as tax-deductible business expenses. The Senate adopted that proposal yesterday, stating that the revenues from the proposal would be used to fund a 90-day extension of the home buyer’s tax credit.

Hat tip: TaxProf Blog.

UPDATE (6/18/10 at 2:07 pm): The National Law Journal has more on this story. The NLJ story clarifies that the Senate adopted this proposal as an amendment to the American Jobs and Closing Tax Loopholes Act of 2010, which was approved by the House last month. The Senate has not yet acted on the full act.
June 8, 2010

Richard Epstein: Punitive Damages Against BP Will Only Make Matters Worse

Law professor Richard A. Epstein of the University of Chicago has a column in Forbes magazine entitled “BP’s Endless Nightmare in the Gulf,” in which he argues against the imposition of punitive damages for the oil spill in the Gulf of Mexico.

Prof. Epstein contends that punitive damages against BP, Transocean, and Halliburton would be a bad idea for two reasons: (1) a large punitive damages award could deplete the funds that would otherwise be available to provide full compensation for all injured parties, including those whose injuries may not be immediately apparent, and (2) tying up the companies in punitive damages litigation will distract them from the more pressing task of stopping the leak and cleaning up the damage.

Related posts:

The “Big Oil Polluter Pays Act”: Probably Unconstitutional

Gulf Oil Spill: Punitive Damages Bonanza?
June 4, 2010

W. Va. Supreme Court Denies Rehearing of Punitive Damages Award Against DuPont, Citing “Fact” Established at Oral Argument

We’ve been following this case, which involved a $196.2 million punitive damages award against DuPont in West Virginia, for a while. The case has taken some interesting twists and turns, but this latest installment may be the most bizarre.

When we last checked in, the W. Va. Supreme Court had reversed the judgment and remanded for further proceedings to determine whether the claim was barred by the statute of limitations. The court also ordered that, if the claims are not barred altogether, then the punitive damages should be reduced by $20 million to reflect payments DuPont had already made, and then further reduced 40 percent. The court determined that 40 percent of the punitive damages were attributable to the plaintiffs’ claims for medical monitoring, and the court determined that medical monitoring claims could not support a punitive damages award because punitive damages can only be based on “actual harm.”

That brings us to the latest stage of the proceedings. DuPont petitioned for rehearing, arguing that the punitive damages should be reduced by 70 percent, rather than 40 percent, because the lower court had allocated 70 percent of the punitive damages to the medical monitoring claims.

The Supreme Court denied DuPont’s petition, finding that DuPont had waived this point by failing to raise it during oral argument. At oral argument, the court asked plaintiffs’ counsel how much of the punitive damages were attributable to the medical monitoring claims. Plaintiffs’ counsel answered “40 percent.” When DuPont’s counsel later got up to argue, he focused on other issues and never addressed the plaintiffs’ “40 percent” representation.

The Supreme Court concluded that DuPont’s silence at oral argument amounted to a waiver, and therefore the 40 percent figure could be treated as an established fact, even though it was not supported by any evidence. In fact, it was actually contrary to documents in the record showing that the lower court had allocated 70 percent of the punitive damages to the medical monitoring claims, at the request of plaintiffs’ counsel.

In other words, plaintiffs’ counsel misrepresented the record at oral argument, but since that misrepresentation was unchallenged, the court could treat it as an established “fact.” Perhaps that is consistent with West Virginia law, but I am confident that no California appellate court would take such an approach.

Related posts:

West Virginia Supreme Court Reduces $196.2 Million Punitive Damages Award to $98 Million

West Virginia Supreme Court Agrees to Review $196.2 Million Punitive Damages Award Against Dupont

W. Va. Supreme Court Candidates Support Appellate Review of Punitive Damages

West Virginia Gov. Defends His Amicus Brief in Punitive Damages Case

West Virginia Governor Draws Fire for Intervening in Punitive Damages Case

Does West Virginia’s Lack of a Right to Appeal a Punitive Damages Award Violate Due Process?

West Virginia Governor Files Amicus Brief Urging West Virginia Supreme Court to Review Punitive Damages Award Against DuPont

DuPont Asks West Virginia Supreme Court to Review $196.2 Million Punitive Damages Award
June 3, 2010

New Law Review Article: “Punitive Damages – Something for Everyone”

Doug Rendleman of Washington & Lee School of Law has posted an article on SSRN entitled “Punitive Damages – Something for Everyone.”

Here’s the abstract:

Common-law punitive damages have some feature that will upset everyone: A civil court meting out punishment. A sanction imposed after mere civil procedure. A private plaintiff receiving a “windfall” that exceeds any reasonable estimate of loss. And the Supreme Court wielding the discredited doctrine of substantive Due Process.

After the Exxon-Valdez’s massive oil spill washed on the shoals of maritime common-law punitive damages, a two-decade pavane featured an angry Alaska jury, a sympathetic trial judge, and a Court of Appeals trying to interpret and apply several muddled Supreme Court punitive-damages decisions. In the denouement, Exxon Shipping v. Baker, the Supreme Court imposed a reduction of the punitive damages that ended the protracted litigation without satisfying anyone.

This article was prepared for a University of St. Thomas Law Journal symposium on punitive damages following the Exxon-Valdez oil spill. It examines punitive damages’ controversial features, summarizes and criticizes the Supreme Court’s decision, and suggests legislative principles of confinement that will preserve common-law punitive damages.
June 1, 2010

The “Big Oil Polluter Pays Act”: Probably Unconstitutional

Senator Sheldon Whitehouse (D-RI) has introduced a proposed bill called the “Big Oil Polluter Pays Act” (S.3345), which is intended to overrule the U.S. Supreme Court’s decision in Exxon Shipping v. Baker. In light of the Gulf of Mexico oil spill disaster, the proposal is likely to be popular. But the Act’s constitutionality is questionable at best.

The Act would amend the U.S. Code to provide:

In a civil action for damages arising out of a maritime tort, punitive damages may be assessed without regard to the amount of compensatory damages assessed in the action.

There’s nothing unconstitutional about the basic premise of passing legislation to override the Exxon Shipping decision. The majority in that case adopted a 1-to-1 ratio of punitive damages to compensatory damages for maritime cases as a matter of federal common law, and not as a matter of constitutional law. Congress clearly has the authority to change a common law rule.

The actual text of the act, however, goes much further than just changing the common law rule adopted in Exxon Shipping. The act says that punitive damages would be assessed “without regard to the amount of compensatory damages” in maritime actions. That language is directly contrary to the Supreme Court’s decisions in BMW v. Gore and State Farm v. Campbell, which held that the constitution requires proportionality between punitive damages and actual damages.

Thus, if the Act passed, the lower courts would be required to strike it down under BMW and Campbell. The more interesting question is: what would happen if the Act passed and the question of its constitutionality made its way up to the Supreme Court? There is no guarantee that the court as presently constituted would adhere to the BMW and Campbell analysis. Justices Souter and O’Connor, who joined the majority in both cases, are gone. Justices Thomas, Scalia, and Ginsburg dissented in both cases. If the dissenters could pick up two more votes from the new members of the court, they might be willing to jettison the BMW/Campbell analysis.
May 28, 2010

$25 Million Punitive Damages Award in Florida Tobacco Litigation

Bloomberg news is reporting that a smoker’s widow has recovered $4.1 million in compensatory damages and $25 million in punitive damages in the latest installment of the ongoing series of Florida tobacco trials. The awards in these cases are piling up. I’ve lost track of the exact count, but the total punitive damages seem to be in the neighborhood of $200 million. That’s still a far cry from the $145 billion class-action award that the Florida Supreme Court reversed, launching this series of individual trials.

Related posts:

Another Punitive Damages Award in Florida Tobacco Litigation

Florida Jury Awards $20 Million in Punitive Damages to Smoker’s Widow

Smoker’s Widow Wins $12.5 Million in Punitive Damages

Florida Trial Judge Cuts $244 Million Punitive Damages Award

Florida Jury Awards $25 Million in Punitive Damages to Smoker’s Widow

“Smokers, tobacco, both winners in early Engle cases”

Jury Rules For Plaintiff in First Phase of Retrial After Reversal of $145 Billion Punitive Damages Award

After Reversal of $145 Billion Class Action Punitive Damages Award, Florida Smokers Seek Punitive Damages in Individual Suits

Plaintiffs’ Attorneys Win $218 Million Fee Award for Helping Obtain a Punitive Damages Verdict that Was Reversed on Appeal
May 21, 2010

Rodriguez v. Daniel: $100,000 in Punitive Damages Reversed

Here’s another unpublished opinion that reverses a punitive damages award because a plaintiff failed to present meaningful evidence of the defendant’s financial condition.

The plaintiff argued that he met his burden because he introduced evidence about the profitability of the defendant’s misconduct. The California Court of Appeal (Second District, Division Four) said that’s not good enough; a plaintiff must provide evidence of the defendant’s overall financial condition, including assets and liabilities. Because the plaintiff here didn’t do that, he gets no punitive damages. He doesn’t get a new trial because he failed to prove his case the first time around, and is not entitled to a second bite at the apple.

I’ve lost track of how many times we seen punitive damages get reversed for this reason since we started this blog. Without a doubt, this is most frequent basis for reversal of punitive damages in California.
May 21, 2010

Oliver v. Pacific Real Estate: Default Judgment Awarding $292,717 in Punitive Damages Affirmed

In this unpublished opinion, the California Court of Appeal (Fifth District) affirmed a default judgment that includes a $50,000 punitive damages award.

The appellant asked the court to strike the punitive damages award because the plaintiff did not comply with Code of Civil Procedure section 425.115. Under that statute, a plaintiff cannot obtain punitive damages in a default judgment unless the plaintiff serves the defendant with a statement requesting a specific amount of punitive damages. The idea is to notify the defendant of the amount at stake so the defendant can decide whether to put up a fight.

In this case, the plaintiff did not serve a statement of damages as described in section 425.115. But he did attach a document to his complaint indicating that he sought $500,000 in punitive damages. The court said that was close enough to satisfy section 425.115.
May 19, 2010

New York Jury Awards $250 Million in Punitive Damages Against Novartis

Wow. After a brief lull in blockbuster punitive damages awards, juries seem to be making up for lost time. Reuters is reporting that a New York jury has awarded $250 million in punitive damages against drugmaker Novartis AG in an employment discrimination class action.

The Reuters story says that the jury awarded $3.3 million in compensatory damages to 12 of the plaintiffs, but compensatory damages have not yet been determined for the other 5,588 women in the class.

The availability of punitive damages in class actions is a hot topic in punitive damages litigation. As we have previously noted, some commentators believe that awarding punitive damages via class action is inconsistent with the U.S. Supreme Court’s recent decisions on punitive damages, particularly Philip Morris v. Williams. This case may also be a vehicle for challenging the so-called “reverse bifurcation” procedure, which some courts have used in mass tort cases to decide the amount of punitive damages before the amount of compensatory damages have been determined. (See our prior posts about two cert. petitions that were filed back in 2008 on this issue.)
May 14, 2010

Sacramento Jury Awards $28 Million in Punitive Damages

The Sacramento Bee is reporting that a Sacramento jury has awarded $1.1 million in compensatory damages and $28 million in punitive damages against Horizon West Healthcare, a nursing home company. The plaintiffs claimed that Horizon was responsible for the death of their 79-year-old mother. With a ratio like that (25.5 to 1), this award is going down.

Hat tip: Fred Pilot