California Punitives by Horvitz & Levy

  • 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.

  • 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.

  • “Punitive Damages: Inching Towards Predictability”

    I wrote a short article for this month’s online edition of Claims magazine.

  • 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.

  • 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?

  • 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

  • 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.

  • 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.

  • $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

  • 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.