California Punitives by Horvitz & Levy

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

    The West Virginia Supreme Court has issued its opinion in a pollution/medical monitoring case involving a $400 million verdict against DuPont, including $196.2 million in punitive damages. The case had generated a lot of attention, not only because it was the fifth largest punitive damages award in the country in 2005, but also because the governor of West Virginia filed an amicus brief supporting DuPont’s petition for review to the West Virginia Supreme Court.

    The opinion remands the case for further proceedings to determine whether the this entire class action should be dismissed on punitive damages statute of limitations grounds. It also holds that, even if the plaintiffs’ claims are not barred the statute of limitations, the punitive damages should be reduced because (1) they were based in part on medical monitoring damages, which shouldn’t be used to calculate punitive damages because punitive damages can only be based on “actual harm,” and (2) DuPont should be credited for $20 million it already paid for cleanup expenses.

    Hat tip: West Virginia Citizens Against Lawsuit Abuse

    Related posts:

    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

  • A Curious Punitive Damages Opinion from Florida

    Florida has been making a lot of punitive damages news lately. In addition to the series of big punitive awards being handed out to smokers and their heirs, Florida’s intermediate appellate court issued an interesting (and in my mind, questionable) opinion this week in Lawnwood Medical Center v. Sadow.

    In Lawnwood, the jury awarded nominal tort damages against a hospital for slandering a doctor, and then added $5 million in punitive damages. The hospital appealed the award as excessive under the Florida law and the Due Process Clause of the federal constitution.

    The District Court of Appeal (Fourth District) analyzed the U.S. Supreme Court’s decisions in BMW v. Gore and State Farm v. Campbell, noted the ratio-based analysis in those cases, but suggested that those decisions might only apply to the specific types of misconduct involved, and not to cases involving malice. The court then suggested that cases involving malice are perhaps governed by the U.S. Supreme Court’s earlier decision in TXO v. Alliance, which the Florida court viewed as imposing no ratio limits on punitive damages imposed for malicious conduct.

    Obviously I am influenced by my perspective as a defense lawyer, but I think the court’s analysis is deeply flawed. Nothing in BMW and Campbell suggest that the Supreme Court’s three-guidepost test is inapplicable to cases involving malice. To the contrary, Campbell expressly contemplated that the test would be applied to cases involving malice. Campbell instructs lower courts to consider a variety of factors when analyzing the reprehensibility of the defendant’s conduct (the first “guidepost”), including whether the defendant acted with malice. That wouldn’t make much sense if the whole analysis is inapplicable to malice cases. Campbell suggested that in some situations involving extreme reprehensibility and small compensatory damages, ratios in excess of single digits might be permissible. But the court did not suggest that ratio limitations are simply inapplicable in such cases. Such an exception would dramatically undermine the BMW/Campbell analysis, given that malice is perhaps the most frequent basis for imposing punitive damages under state law.

    Fortunately, the Florida court in Lawnwood stopped short of actually holding that BMW and Campbell are inapplicable to malice cases. Instead, the court certified the following question to the Florida Supreme Court:

    Are punitive damages of $5,000,000 arbitrary or excessive under the Federal Constitution where the jury awarded no compensation beyond presumed nominal damages but found that defendant intentionally and maliciously harmed plaintiff by slanders per se?

    Stay tuned to see what the Florida Supreme Court does with this issue.

    Hat tip: Florida Legal Blog

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

    The Associated Press is reporting yet another punitive damages award in the Florida tobacco litigation: $20 million in punitive damages and $6.6 in compensatory damages. $25 million here, $12.5 million there, pretty soon it will add up to some real money.

    Related posts:

    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

  • Amerigraphics v. Mercury: $1.7 Million Punitive Damages Award Reduced to $500,000

    In this published opinion, the California Court of Appeal (Second Appellate District, Division Two) holds that a punitive damages award of $1.7 million is excessive and must be reduced to $500,000.

    The jury in this insurance bad faith case originally awarded $170,000 in compensatory damages, plus $3 million in punitive damages, for a 17.6-to-1 ratio. After the verdict, the trial court awarded $346,541.25 in attorney’s fees as additional damages under Brandt v. Superior Court (1985) 37 Cal.3d 813. The trial court also concluded, however, that the jury’s punitive damages award was excessive and should be reduced to $1.7 million, ten times the jury’s compensatory damages award.

    The Court of Appeal concluded that the trial court’s reduced award was still excessive. First, the court noted that the defendant’s conduct, which involved no physical harm or disregard for health and safety, implicated only one of the five “reprehensibility factors” identified by the U.S. Supreme Court in State Farm v. Campbell. The court held that the defendant could not be treated as a repeat offender merely because its conduct in this case involved a course of dealing with the plaintiff, rather than a single isolated incident; the court observed that the case involved only one insured and one claim, without any evidence that the defendant had engaged in similar conduct towards other insureds in the past.

    Next, the court addressed the ratio of the punitive damages award to the compensatory damages award, and concluded that the defendant’s conduct could not support a 10-to-1 ratio. The court rejected the plaintiff’s invitation to add the trial court’s Brandt fee award to the jury’s compensatory damages award, which would yield a 3.2-to-1 ratio. The court said that the Brandt fees could not be considered for ratio purposes because they were awarded after the jury’s verdict.

    Having concluded that a 10-to-1 ratio was too high, the court then turned to the question of what the maximum ratio should be. Although the court discussed the U.S. Supreme Court’s Exxon Shipping opinion and other recent decisions imposing a 1-to-1 ratio (including the California Supreme Court’s recent decision in Roby v. McKesson), the court ultimately decided upon a 3.8-to-1 ratio, which results in an award of $500,000. The court picked that figure not just because it’s a nice round number, but because defense counsel had suggested during closing argument that the jury could award as much as $500,000. The court didn’t assign any evidentiary value to counsel’s argument, and did not find estoppel based on that argument, but the court said it independently agreed that $500,000 was the appropriate ceiling.

    Full disclosure: Horvitz & Levy LLP represented the defendant on appeal.

  • Pennsylvania Jury Awards $95 Million in Punitive Damages Against Mass Murderer

    According to this press release on New York Injury News, a jury in Pennsylvania has awarded $95 million in punitive damages against a former nurse who admitted to killing 29 people and attempting to kill six more by administering lethal doses of drugs. It would be awfully difficult to argue against a big punitive damages award in a case like that. Unfortunately for the plaintiffs, the defendant has no assets, so they’re not likely to see a penny of this award. Unless, of course, the defendant writes a book about his experiences, but a killer would never do something like that, right?

  • Survey Ranks California’s Litigation Climate Among Worst in the Nation, Again.

    We’re 46th! According to this survey conducted by the US Chamber of Commerce’s Institute for Litigation Reform, California’s litigation climate ranks 46th in the nation in the eyes of corporate counsel and executives. That’s down from 44th in 2008, the last time the survey was conducted. The same survey lists Los Angeles County as the second worst venue in the nation. Unlike the 2008 survey, this year’s survey does not include a separate ranking for each state on the issue of punitive damages.

    Hat tip: CJAC

  • Gellerman v. Aldrich: Another Reversal for Failure to Present Financial Condition Evidence

    Regular readers of this blog are well aware that California appellate courts frequently reverse punitive damages awards if the plaintiff failed to introduce meaningful evidence of the defendant’s financial condition. In this unpublished opinion, the Sixth Appellate District reverses another judgment on that basis, with a bit of a twist.

    The trial court made a highly unorthodox damages award after a bench trial; the court awarded a lump sum amount of damages, without differentiating between compensatory damages and punitive damages. The Court of Appeal criticizes that practice, and then goes on to point out flaws in both the compensatory and punitive elements of the undifferentiated award.

    First, the court concludes that the trial court used the wrong measure of compensatory damages. Then the court concludes that the trial court should have decided whether the plaintiff presented sufficient evidence of the defendant’s financial condition to permit an award of punitive damages. The trial court had expressed doubt about the sufficiency of the plaintiff’s evidence, but never actually decided the issue. The plaintiff tried to argue on appeal that California law does not require plaintiffs to introduce financial condition evidence, but the Court of Appeal summarily rejected that contention as a misreading of the law. So the case goes back to the trial court to make evaluate the sufficiency of the plaintiff’s evidence. (And consistent with California law, the plaintiff should not be permitted to introduce new financial condidtion evidence on remand – – see Kelly v. Haag (2006) 145 Cal.App.4th 910, 914.)

  • Proposed Bill to Cap Punitive Damages in California Is Dead

    Last month we blogged about a proposed bill to cap punitive damages in California at three times the amount of compensatory damages (AB X8 40). According to the state legislature’s bill tracking website, the current status of that bill is: “Died at Desk.”

  • “Taxing Punitive Damages”

    Professors Gregg Polsky & Dan Markel of Florida State College of Law have posted an article on SSRN entitled Taxing Punitive Damages. Here’s the abstract:

    There is a curious anomaly in the law of punitive damages. Jurors assess punitive damages in an amount that they believe will best “punish” the defendant. But, in fact, defendants are not always punished to the degree that the jury intends. Under the Internal Revenue Code, punitive damages paid by business defendants are tax deductible and, as a result, these defendants often pay (in real dollars) far less than the jury believed they deserved to pay.

    To solve this problem of under-punishment, many scholars and policymakers, including President Obama, have proposed making punitive damages nondeductible in all cases. In our view, however, such a blanket nondeductibility rule would, notwithstanding its theoretical elegance, be ineffective in solving the under-punishment problem. In particular, defendants could easily circumvent the nondeductibility rule by disguising punitive damages as compensatory damages in pre-trial settlements.

    Instead, the under-punishment problem is best addressed at the state level by making juries “tax aware.” Tax-aware juries would adjust the amount of punitive damages to impose the desired after-tax cost to the defendant. As we explain, the effect of tax awareness cannot be circumvented by defendants through pre-trial settlements. For this and a number of other reasons, tax awareness would best solve the under-punishment problem even though it does come at the cost of enlarging plaintiff windfalls. Given the defendant-focused features of current punitive damages doctrine, this cost is not particularly troubling. Nonetheless, a related paper of ours furnishes a strategy for overcoming this tradeoff through some basic reforms to punitive damages law.

    Hat tip: TortsProfBlog

  • Federal Judge Tosses $100 Million Punitive Damages Award Against BP

    In December of last year we reported on a jury’s award of $100 million in punitive damages to ten workers who claimed they were exposed to toxic fumes at a BP plant in Galveston. We noted that the award was not likely to hold up because of the absurdly high ratio of punitive damages to compensatory damages.

    As it turns out, we were correct that the award wouldn’t hold up, but the ratio issue never came into play. The Associated Press is reporting that the trial judge (U.S. District Judge Kenneth M. Hoyt) has ruled that the plaintiffs are not entitled to any punitive damages in this case. According to the story, Judge Hoyt has issued a posttrial ruling stating that the plaintiffs failed to present clear and convincing evidence that BP acted with intent to harm or engaged in gross negligence, and plaintiffs are therefore entitled to no punitive damages.

    I have no evidence to back this up, but my sense is that judges are more inclined to do this sort of thing (toss out a punitive damages award altogether) when the amount of the award is obviously excessive. Thus, even if they don’t reach the issue of excessiveness, they are influenced by the size of the award. Maybe it’s just because an obviously excessive award is a clear indication that something went awry during the jury’s deliberative process.

    UPDATE: California appellate specialist Donna Bader has posted some commentary about this story on her Appeal to Reason Blog. She writes:

    Some will celebrate this reduction as a victory for companies. Those
    who do so may believe that individual plaintiffs should not be entitled to
    punitive damages at all or that the award just seems like a lot of money. Others
    will despair, as this case is just one of many where judges have reduced
    punitive damages – ignoring the jury’s verdict – until they do nothing to punish
    wrongdoers. As stated by plaintiff’s attorney, the decision gives BP a “free pass” to
    continue hurting its workers.

    Personally, I don’t see this case a victory for companies. Nor do I see it as a cause for despair because a trial judge has ignored a jury’s verdict. Instead, I presume that the judge honestly concluded that the plaintiffs in this particular case had failed to introduce evidence to satisfy the legal standard for imposing punitive damages. That type of post-verdict review is an integral part of our justice system; trial and appellate judges are not supposed to reflexively accept any result reached by a jury, even if that result is unsupported by the evidence. In particular, judicial review of punitive damages awards has existed as a safeguard for as long as punitive damages have been awarded. (See, e.g., Huckle v. Money (C.P. 1763) 2 Wils. 205, 95 Eng. Rep. 768.) Sometimes that review works in favor of a defendant (corporate or otherwise), and sometimes it doesn’t.